<PAGE>
As filed with the Securities and Exchange Commission on February 23, 1996
1933 Act Registration No. 33-62872
1940 Act Registration No. 811-7724
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [__X__]
Pre-Effective Amendment No. [_____] [_____]
Post-Effective Amendment No. [__3__] [__X__]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [__X__]
Amendment No. [__3__] [__X__]
(Check Appropriate Box or Boxes)
NEUBERGER & BERMAN INCOME TRUST
(Exact Name of the Registrant as Specified in Charter)
605 Third Avenue
New York, New York 10158-0180
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (212) 476-8800
Theresa A. Havell, President
Neuberger & Berman Income Trust
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)
Approximate Date of Proposed Public Offering: Continuous
It is proposed that this filing will become effective:
____ immediately upon filing pursuant to paragraph (b)
__X__ on February 27, 1996 pursuant to paragraph (b)
_____ 60 days after filing pursuant to paragraph (a)(1)
_____ on __________ pursuant to paragraph (a)(1)
_____ 75 days after filing pursuant to paragraph (a)(2)
_____ on __________ pursuant to paragraph (a)(2)
Registrant has filed a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940, as amended, and filed the notice required
by such Rule for its 1995 fiscal year on November 15, 1995.
<PAGE>
Neuberger & Berman Equity Trust is a "master/feeder fund." This
Post-Effective Amendment No. 3 includes a signature page for the master
fund, Income Managers Trust, and appropriate officers and trustees
thereof.
Page _____ of _____
Exhibit Index
Begins on Page _____
<PAGE>
NEUBERGER & BERMAN INCOME TRUST
CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 3 ON FORM N-1A
This Post-Effective Amendment consists of the following papers and
documents:
Cover Sheet
Contents of Post-Effective Amendment No. 3 on Form N-1A
Cross Reference Sheet
Neuberger & Berman Limited Maturity Bond Trust
Neuberger & Berman Ultra Short Bond Trust
----------------------------------------------
Part A - Prospectus
Part B - Statement of Additional Information
Part C - Other Information
Signature Pages
Exhibits
<PAGE>
NEUBERGER & BERMAN INCOME TRUST
CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 3 ON FORM N-1A
CROSS REFERENCE SHEET
This cross reference sheet relates to the Prospectus
and Statement of Additional Information for
Neuberger & Berman Limited Maturity Bond Trust
and Neuberger & Berman Ultra Short Bond Trust
<TABLE>
<CAPTION>
Form N-1A Item No. Caption in Part A Prospectus
------------------ -----------------------------
<S> <C> <C>
Item 1. Cover Page Front Cover Page
Item 2. Synopsis Expense Information; Summary
Item 3. Condensed Financial Financial Highlights; Information
Performance Information
Item 4. General Description of Investment Programs; Description of
Registrant Investments; Special Information
Regarding Organization,
Capitalization, and Other Matters
Item 5. Management of the Fund Management and Administration; Back
Cover Page
Item 6. Capital Stock and Other Front Cover Page; Dividends, Other
Securities Distributions, and Taxes; Special
Information Regarding Organization,
Capitalization, and Other Matters
Item 7. Purchase of Securities Being Shareholder Services; Share Prices
Offered and Net Asset Value; Management and
Administration
Item 8. Redemption or Repurchase Shareholder Services; Share Prices
and Net Asset Value
Item 9. Pending Legal Proceedings Not Applicable
Caption in Part B Statement of
Form N-1A Item No. Additional Information
------------------ ------------------------------
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
<PAGE>
Item 12. General Information and Not Applicable
History
Item 13. Investment Objectives and Investment Information; Certain
Policies Risk Considerations
Item 14. Management of the Fund Trustees And Officers
Item 15. Control Persons and Principal Control Persons And Principal
Holders of Securities Holders of Securities
Item 16. Investment Advisory and Other Investment Management and
Services Administration Services; Trustees
And Officers; Distribution
Arrangements; Reports To
Shareholders; Custodian And
Transfer Agent; Independent
Auditors
Item 17. Brokerage Allocation Portfolio Transactions
Item 18. Capital Stock and Other Investment Information; Additional
Securities Redemption Information; Dividends
and Other Distributions
Item 19. Purchase, Redemption and Distribution Arrangements;
Pricing of Securities Being Additional Exchange Information;
Offered Additional Redemption Information
Item 20. Tax Status Dividends and Other Distributions;
Additional Tax Information
Item 21. Underwriters Investment Management and
Administration Services;
Distribution Arrangements
Item 22. Calculation of Performance Performance Information
Data
Item 23. Financial Statements Financial Statements
</TABLE>
Part C
------
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Post-Effective Amendment.
<PAGE>
Neuberger&Berman
INCOME TRUST
No-Load Bond Funds
--------------------------------------------------------------------------
Neuberger&Berman ULTRA SHORT BOND TRUST
Neuberger&Berman LIMITED MATURITY BOND TRUST
YOU CAN BUY, OWN, AND SELL FUND SHARES ONLY THROUGH AN ACCOUNT WITH
A PENSION PLAN ADMINISTRATOR, BROKER-DEALER, OR OTHER INSTITUTION (EACH AN
"INSTITUTION") WHICH PROVIDES ACCOUNTING, RECORDKEEPING AND OTHER SERVICES
TO INVESTORS AND WHICH HAS AN ADMINISTRATIVE SERVICES AGREEMENT WITH
NEUBERGER&BERMAN MANAGEMENT INCORPORATED ("N&B MANAGEMENT").
--------------------------------------------------------------------------
EACH OF THE ABOVE-NAMED FUNDS (A "FUND") INVESTS ALL OF ITS NET
INVESTABLE ASSETS IN A CORRESPONDING PORTFOLIO (A "PORTFOLIO") OF INCOME
MANAGERS TRUST ("MANAGERS TRUST"), AN OPEN-END MANAGEMENT INVESTMENT
COMPANY MANAGED BY N&B MANAGEMENT. EACH PORTFOLIO INVESTS IN SECURITIES IN
ACCORDANCE WITH AN INVESTMENT OBJECTIVE, POLICIES, AND LIMITATIONS
IDENTICAL TO THOSE OF ITS CORRESPONDING FUND. THE INVESTMENT PERFORMANCE
OF EACH FUND DIRECTLY CORRESPONDS WITH THE INVESTMENT PERFORMANCE OF ITS
CORRESPONDING PORTFOLIO. THIS "MASTER/FEEDER FUND" STRUCTURE IS DIFFERENT
FROM THAT OF MANY OTHER INVESTMENT COMPANIES WHICH DIRECTLY ACQUIRE AND
MANAGE THEIR OWN PORTFOLIOS OF SECURITIES. FOR MORE INFORMATION ON THIS
UNIQUE STRUCTURE THAT YOU SHOULD CONSIDER, SEE "SUMMARY" ON PAGE 3 AND
"SPECIAL INFORMATION REGARDING ORGANIZATION, CAPITALIZATION, AND OTHER
MATTERS" ON PAGE 13.
The Funds are no-load mutual funds, so there are no sales
commissions or other charges when buying or redeeming shares. The Funds do
not pay "12b-1 fees" to promote or distribute their shares. The Funds
declare income dividends daily and pay them monthly.
Please read this Prospectus before investing in either of the Funds
and keep it for future reference. It contains information about the Funds
that a prospective investor should know before investing. A Statement of
Additional Information ("SAI") about the Funds and Portfolios, dated
March 1, 1996, is on file with the Securities and Exchange Commission. The
SAI is incorporated herein by reference (so it is legally considered a
part of this Prospectus). You can obtain a free copy of the SAI by calling
N&B Management at 800-877-9700. PROSPECTUS DATED MARCH 1, 1996
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY BANK OR OTHER DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY
THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY, AND ARE SUBJECT
TO INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT
INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR
<PAGE>
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
The Funds and Portfolios . . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . 4
Management . . . . . . . . . . . . . . . . . . . . . . . . . . 4
EXPENSE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 4
Shareholder Transaction Expenses for Each Fund . . . . . . . . 5
Annual Fund Operating Expenses . . . . . . . . . . . . . . . . 5
Example . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . 7
Selected Per Share Data and Ratios . . . . . . . . . . . . . . 7
Ultra Short Bond Trust . . . . . . . . . . . . . . . . . . . . 7
Limited Maturity Bond Trust . . . . . . . . . . . . . . . . . 8
INVESTMENT PROGRAMS . . . . . . . . . . . . . . . . . . . . . . . . . 10
Short-Term Trading; Portfolio Turnover . . . . . . . . . . . . 11
Ratings of Securities . . . . . . . . . . . . . . . . . . . . 11
Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Other Investments . . . . . . . . . . . . . . . . . . . . . . 12
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 12
Yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Total Return . . . . . . . . . . . . . . . . . . . . . . . . . 12
Yield and Total Return Information . . . . . . . . . . . . . . 13
SPECIAL INFORMATION REGARDING ORGANIZATION, CAPITALIZATION, AND OTHER
MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
The Funds . . . . . . . . . . . . . . . . . . . . . . . . . . 13
The Portfolios . . . . . . . . . . . . . . . . . . . . . . . . 14
SHAREHOLDER SERVICES . . . . . . . . . . . . . . . . . . . . . . . . 15
How to Buy Shares . . . . . . . . . . . . . . . . . . . . . . 15
How to Sell Shares . . . . . . . . . . . . . . . . . . . . . . 16
Exchanging Shares . . . . . . . . . . . . . . . . . . . . . . 16
SHARE PRICES AND NET ASSET VALUE . . . . . . . . . . . . . . . . . . 17
DIVIDENDS, OTHER DISTRIBUTIONS, AND TAXES . . . . . . . . . . . . . . 17
Distribution Options . . . . . . . . . . . . . . . . . . . . . 17
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
MANAGEMENT AND ADMINISTRATION . . . . . . . . . . . . . . . . . . . . 19
Trustees and Officers . . . . . . . . . . . . . . . . . . . . 19
Investment Manager, Administrator, Distributor, and
Sub-Adviser . . . . . . . . . . . . . . . . . . . . . . . . . 19
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . 21
DESCRIPTION OF INVESTMENTS . . . . . . . . . . . . . . . . . . . . . 21
OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Directory . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Funds Eligible for Exchange . . . . . . . . . . . . . . . . . . 26
<PAGE>
SUMMARY
The Funds and Portfolios
--------------------------------------------------------------------------
Each Fund is a series of Neuberger&Berman Income Trust (the "Trust")
and invests in a corresponding Portfolio that, in turn, invests in
securities in accordance with an investment objective, policies, and
limitations that are identical to those of the Fund. This is sometimes
called a master/feeder fund structure, because each Fund "feeds"
shareholders' investments into its corresponding Portfolio, a "master"
fund. The structure looks like this:
-----------------------------------------
Shareholders
-----------------------------------------
/ BUY SHARES IN
-----------------------------------------
Funds
-----------------------------------------
/ INVEST IN
-----------------------------------------
Portfolios
-----------------------------------------
/ INVEST IN
-----------------------------------------
Debt Securities & Other Securities
-----------------------------------------
The trustees who oversee the Funds believe that this structure may
benefit shareholders; investment in a Portfolio by investors in addition
to a Fund may enable the Portfolio to achieve economies of scale that
could reduce expenses. For more information about the organization of the
Funds and the Portfolios, including certain features of the master/feeder
fund structure, see "Special Information Regarding Organization,
Capitalization, and Other Matters" on page 13.
The following table is a summary highlighting features of the Funds
and their corresponding Portfolios. You may want to invest in one or both
of the Funds depending on your particular investment needs. Of course,
there can be no assurance that a Fund will meet its investment objective.
<PAGE>
<TABLE>
<CAPTION>
Neuberger&Berman Investment Principal Portfolio Comparative
Income Trust Objective Investments Information
----------------- ------------ -------------------- ------------
<S> <C> <C> <C>
Ultra Short Higher total return than is High-quality money market Lower expected price
available from money market instruments and short-term fluctuation; dollar-
funds, with minimal risk to debt securities of govern- weighted average portfolio
principal and liquidity ment and non-government maturity of up to two
issuers years
Limited Maturity Highest current income Short- to intermediate- term More potential price
consistent with low risk to debt securities of at least fluctuation; dollar-
principal and liquidity and, investment grade weighted average portfolio
secondarily, total return maturity of up to five
years
</TABLE>
Risk Factors
--------------------------------------------------------------------------
An investment in either Fund involves certain risks, depending upon
the types of investments made by its corresponding Portfolio. The
Portfolios invest in fixed income securities, which are likely to decline
in value in times of rising interest rates and to rise in value in times
of falling interest rates. In general, the longer the maturity of a fixed
income security, the more pronounced is the effect of a change in market
interest rates on the value of the security. Special risk factors apply
to investments, which may be made by one or both Portfolios, in foreign
securities, options and futures contracts, and zero coupon bonds. For more
details about each Portfolio, its investments and their risks, see
"Investment Programs" on page 10 and "Description of Investments" on
page 21.
Management
-------------------------------------------------------------------------
N&B Management, with the assistance of Neuberger&Berman, L.P.
("Neuberger&Berman") as sub-adviser, selects investments for the
Portfolios. N&B Management also provides administrative services to the
Portfolios and the Funds and acts as distributor of Fund shares. See
"Management and Administration" on page 26. If you want to know how to buy
and sell shares of the Funds or exchange them for shares of other
- 2 -
<PAGE>
Neuberger&Berman Funds[SERVICEMARK] made available through an Institution,
see "Shareholder Services - How to Buy Shares" on page 21, "Shareholder
Services - How to Sell Shares" on page 21, "Shareholder Services -
Exchanging Shares" on page 21, and the policies of the Institution through
which you are purchasing shares.
EXPENSE INFORMATION
This section gives you certain information about the expenses of
each Fund and its corresponding Portfolio. See "Performance Information"
for important facts about the investment performance of each Fund, after
taking expenses into account.
Shareholder Transaction Expenses for Each Fund
-------------------------------------------------------------------------
As shown by this table, there are no transaction charges when you
buy or sell Fund shares.
Sales Charge Imposed on Purchases NONE
Sales Charge Imposed on Reinvested
Dividends NONE
Deferred Sales Charges NONE
Redemption Fees NONE
Exchange Fees NONE
Annual Fund Operating Expenses
(as a percentage of average daily net assets)
-------------------------------------------------------------------------
The following table shows annual Total Operating Expenses for each
Fund, which are paid out of the assets of the Funds and which include each
Fund's pro rata portion of the Operating Expenses of its corresponding
Portfolio. These expenses are borne indirectly by Fund shareholders. Each
Fund pays N&B Management an administration fee based on the Fund's average
daily net assets. Each Portfolio pays N&B Management a management fee,
based on the Portfolio's average daily net assets; a pro rata portion of
this fee is borne indirectly by the corresponding Fund. Therefore, the
table combines management and administration fees. The Funds and
Portfolios also incur other expenses for things such as accounting and
legal fees, maintaining shareholder records, and furnishing shareholder
statements and Fund reports. "Operating Expenses" exclude interest, taxes,
brokerage commissions, and extraordinary expenses. The Funds' expenses are
factored into their share prices and dividends and are not charged
directly to Fund shareholders. For more information, see "Management and
Administration" and the SAI.
- 3 -
<PAGE>
Management and Total
Neuberger&Berman Administration 12b-1 Other Operating
Income Trust Fees* Fees Expenses* Expenses*
---------------- -------------- ------ --------- ---------
ULTRA SHORT 0.00% None 0.75% 0.75%
LIMITED MATURITY 0.00% None 0.80% 0.80%
* (Reflects N&B Management's expense reimbursement undertaking described
below)
Total Operating Expenses for each Fund are annualized projections
based upon current administration fees for the Fund and management fees
for its corresponding Portfolio, with "Other Expenses" based on each
Fund's and Portfolio's expenses for the past fiscal year. The trustees of
the Trust believe that the aggregate per share expenses of each Fund and
its corresponding Portfolio will be approximately equal to the expenses
the Fund would incur if its assets were invested directly in the type of
securities held by its corresponding Portfolio. The trustees of the Trust
also believe that investment in a Portfolio by investors in addition to a
Fund may enable the Portfolio to achieve economies of scale which could
reduce expenses. The expenses and, accordingly, the returns of other funds
that may invest in the Portfolios may differ from those of the Funds.
The previous table reflects N&B Management's voluntary undertaking
until February 28, 1997, to reimburse each Fund for its Operating Expenses
and pro rata share of its corresponding Portfolio's Operating Expenses
which, in the aggregate, exceed the following percentage per annum of the
Fund's average daily net assets: Ultra Short, 0.75%; Limited Maturity,
0.80%. Each undertaking can be terminated by N&B Management by giving a
Fund at least 60 days' prior written notice. Absent the reimbursement,
Management and Administration Fees would be ___% and ___%, Other Expenses
would be ___% and ___%, and Total Operating Expenses would be 2.50% and
2.18% per annum of the average daily net assets of Ultra Short and Limited
Maturity, respectively, based upon the expenses of each Fund for its 1995
fiscal year.
For more information about the current expense reimbursement
undertakings, see "Expenses" on page 21.
Example
-------------------------------------------------------------------------
To illustrate the effect of Operating Expenses, let's assume that
each Fund's annual return is 5% and that it had Total Operating Expenses
described in the table above. For every $1,000 you invested in each Fund,
- 4 -
<PAGE>
you would have paid the following amounts of total expenses if you closed
your account at the end of each of the following time periods:
Neuberger&Berman
Income Trust 1 year 3 years 5 years 10 years
---------------- ------ ------- ------- --------
ULTRA SHORT $8 $24 $42 $93
LIMITED MATURITY $8 $26 $44 $99
The assumption in this example of a 5% annual return is required by
regulations of the Securities and Exchange Commission applicable to all
mutual funds. THE INFORMATION IN THE TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OR RATES OF RETURN; ACTUAL
EXPENSES OR RETURNS MAY BE GREATER OR LESS THAN THOSE SHOWN, AND MAY
CHANGE IF EXPENSE REIMBURSEMENTS CHANGE.
- 5 -
<PAGE>
FINANCIAL HIGHLIGHTS
Selected Per Share Data and Ratios
-------------------------------------------------------------------------
The financial information in the following tables is for each Fund
as of October 31, 1995, and the prior periods. This information has been
audited by the Funds' independent auditors. You may obtain, at no cost,
further information about the performance of the Funds in their annual
report to shareholders. The annual report contains the auditors' reports.
Please call 800-877-9700 for a free copy and up-to-date information. Also,
see "Performance Information."
Neuberger&Berman
Ultra Short Bond Trust
-------------------------------------------------------------------------
The following table includes selected data for a share outstanding
throughout each year and other performance information derived from the
Financial Statements. The per share amounts and ratios which are shown
reflect income and expenses, including the Fund's proportionate share of
its corresponding Portfolio's income and expenses. It should be read in
conjunction with its corresponding Portfolio's Financial Statements and
notes thereto.
<TABLE>
<CAPTION>
Period from
September 7,
Year Ended 1993(1) to
October 31, October 31,
------------ -------------
1995 1994 1993
---- ---- -----
<S> <C> <C> <C>
Net Asset Value, Beginning of
Year $9.79 $9.97 $10.00
Income From Investment Operations
Net Investment Income .53 .37 .05
Net Gains or Losses on
Securities (both realized and
unrealized) .06 (.18) (.03)
Total from Investment
Operations .59 .19 .02
Less Distributions
Dividends (from net investment
income) (.53) (.37) (.05)
Net Asset Value, End of Year $9.85 $9.79 $9.97
Total Return+ +6.15% +1.92% +0.17%(2)
- 6 -
<PAGE>
Period from
September 7,
Year Ended 1993(1) to
October 31, October 31,
------------ -------------
1995 1994 1993
---- ---- -----
Ratios/Supplemental Data
Net Assets, End of Year (in
millions) $1.7 $1.2 $0.2
Ratio of Expenses to Average
Net Assets(3) .72% .65% .65%(4)
Ratio of Net Income to Average
Net Assets(3) 5.42% 3.86% 2.98%(4)
Portfolio Turnover Rate(5) ---- ---- ----
See Notes to Financial Highlights.
</TABLE>
- 7 -
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
Limited Maturity Bond Trust
-------------------------------------------------------------------------
The following table includes selected data for a share outstanding
throughout each year and other performance information derived from the
Financial Statements. The per share amounts and ratios which are shown
reflect income and expenses, including the Fund's proportionate share
of its corresponding Portfolio's income and expenses. It should be read
in conjunction with its corresponding Portfolio's Financial Statements
and notes thereto.
<TABLE>
<CAPTION>
Period from
Year Ended August 30, 1993(1) to
October 31, October 31,
------------ ---------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Net Asset Value, Beginning of Year $9.43 $9.97 $10.00
Income from Investment Operations
Net Investment Income .58 .54 .08
Net Gains or Losses on Securities
(both realized and unrealized) .18 (.54) (.03)
Total From Investment Operations .76 - .05
Less Distributions
Dividends (from net investment
income) (.58) (.54) (.08)
Net Asset Value, End of Year $9.61 $9.43 $9.97
Total Return+ +8.36% -0.01% +0.55%(2)
Ratios/Supplemental Data
Net Assets, End of Year (in
millions) $11.9 $6.7 $0.1
Ratio of Expenses to Average Net
Assets(3) .77% .70% .65%(4)
Ratio of Net Income to Average Net
Assets(3) 6.16% 5.72% 4.99%(4)
Portfolio Turnover Rate(5) -- -- --
</TABLE>
See Notes to Financial Highlights.
- 8 -
<PAGE>
NOTES TO FINANCIAL HIGHLIGHTS
1) The date investment operations commenced.
2) Not annualized.
3) After reimbursement of expenses of Neuberger&Berman ULTRA SHORT Bond
Trust and Neuberger & Berman LIMITED MATURITY Bond Trust by N&B
Management. Had N&B Management not undertaken such action the
annualized ratios to average daily net assets would have been:
Neuberger&Berman Period from
ULTRA SHORT Year Ended October 31, September 7, 1993
Bond Trust ---------------------- to October 31,
---------------- - ------------------
1995 1994 1993
----- ----- -----
Expenses 2.50% 2.50% 2.50%
----- ----- -----
Net Investment 3.64% 2.01% 1.13%
Income ---- ----- -----
Neuberger&Berman Period from
LIMITED MATURITY August 30, 1993 to
Bond Trust Year Ended October 31, October 31,
---------------- ---------------------- --------------------
1995 1994 1993
---- ---- ----
Expenses 2.18% 2.50% 2.50%
Net Investment 4.75% 3.92% 3.14%
Income ----- ----- -----
4) Annualized.
5) Each Fund invests only in its corresponding Portfolio, and that
Portfolio, rather than the Fund, engages in securities transactions.
Therefore, neither Portfolio calculates a portfolio turnover rate.
The portfolio turnover rates for each Portfolio were as follows:
Period from July 2,
Year Ended October 31, 1993 to October 31,
---------------------- -------------------
1995 1994 1993
---- ---- ----
Neuberger&Berman Ultra 148% 94% 46%
Short Bond Portfolio ----- ----- -----
Neuberger&Berman Limited 88% 102% 71%
Maturity Bond Portfolio ----- ----- -----
+ Total return based on per share net asset value reflects the effects
of changes in net asset value on the performance of each Fund during
each year or other fiscal period shown in the table and assumes
- 9 -
<PAGE>
dividends and other distributions, if any, were reinvested. Results
represent past performance and do not guarantee future results.
Investment returns and principal may fluctuate, and shares when
redeemed may be worth more or less than original cost. Total returns
would have been lower if N&B Management had not reimbursed certain
expenses.
INVESTMENT PROGRAMS
The investment policies and limitations of each Fund and its
corresponding Portfolio are identical. Each Fund invests only in its
corresponding Portfolio. Therefore, the following shows you the kinds of
securities in which each Portfolio invests. For an explanation of some
types of investments, see "Description of Investments" on page 21.
Investment policies and limitations of the Funds and Portfolios are
not fundamental unless otherwise specified in this Prospectus or the SAI.
While a non-fundamental policy or limitation may be changed by the
trustees of the Trust or of Managers Trust without shareholder approval,
the Funds intend to notify shareholders before making any material change
to such policies or limitations. Fundamental policies may not be changed
without shareholder approval.
The investment objectives of the Funds and Portfolios are not
fundamental. The Funds have undertaken not to change their investment
objectives without 30 days' prior notice to shareholders. There can be no
assurance that the Funds or Portfolios will achieve their objectives.
Each Fund, by itself, does not represent a comprehensive investment
program.
Additional investment techniques, features, and limitations
concerning the Portfolios' investment programs are described in the SAI.
The value of fixed income securities is likely to rise in times of
falling market interest rates and fall in times of rising interest rates.
Investments in shorter-term income securities normally are less affected
by interest rate changes than are investments in longer-term securities.
The value of income securities is also affected by changes in the
creditworthiness of the issuer.
The investment objective of Neuberger&Berman ULTRA SHORT Bond Trust
and Portfolio is to provide a higher total return than is available from
money market funds, with minimal risk to principal and liquidity. The
investment objective of Neuberger&Berman LIMITED MATURITY Bond Trust and
Portfolio is to provide the highest current income consistent with low
risk to principal and liquidity and, secondarily, total return.
- 10 -
<PAGE>
Each Portfolio invests in a diversified portfolio of fixed and
variable rate debt securities and seeks to increase income and preserve or
enhance total return by actively managing average portfolio maturity in
light of market conditions and trends.
Neuberger&Berman ULTRA SHORT Bond Portfolio invests in a diversified
portfolio of U.S. Government and Agency Securities and high-quality debt
securities issued by financial institutions, corporations, and others.
These securities include mortgage-backed and asset-backed securities,
money market instruments, repurchase agreements with respect to U.S.
Government and Agency Securities, and U.S. dollar-denominated securities
of foreign issuers. The Portfolio may also purchase and sell options,
futures contracts and options on futures contracts. The Portfolio may
invest 25% or more of its total assets in U.S. Government and Agency
Securities or in certificates of deposit or bankers' acceptances issued by
domestic branches of U.S. banks. The Portfolio's dollar-weighted average
portfolio maturity ranges up to two years, providing greater flexibility
than money market funds.
Neuberger&Berman LIMITED MATURITY Bond Portfolio invests in a
diversified portfolio of short- to intermediate-term U.S. Government and
Agency Securities and debt securities issued by financial institutions,
corporations, and others of at least investment grade. These securities
include mortgage-backed and asset-backed securities, repurchase agreements
with respect to U.S. Government and Agency Securities, and foreign
investments. The Portfolio may purchase and sell covered call and put
options, interest rate futures contracts, and options on those futures
contracts and may lend portfolio securities. The Portfolio may invest up
to 5% of its net assets in municipal securities when N&B Management
believes such securities may outperform other available issues. The
Portfolio's dollar-weighted average portfolio maturity may range up to
five years.
Short-Term Trading; Portfolio Turnover
-------------------------------------------------------------------------
Although neither Portfolio purchases securities with the intention
of profiting from short-term trading, each Portfolio may sell portfolio
securities prior to maturity when N&B Management believes that such action
is advisable. The portfolio turnover rates for the periods of
Neuberger&Berman Ultra Short Bond Portfolio and Neuberger&Berman Limited
Maturity Bond Portfolio for 1995 and earlier years are set forth under
"Notes to Financial Highlights." Turnover rates in excess of 100%
generally result in higher transaction costs (which are borne directly by
the Portfolio) and a possible increase in realized short-term capital
gains or losses.
Ratings of Securities
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<PAGE>
-------------------------------------------------------------------------
HIGH-QUALITY DEBT SECURITIES. High-quality debt securities are
securities that have received a rating from at least one nationally
recognized statistical rating organization ("NRSRO"), such as Standard &
Poor's ("S&P") or Moody's Investors Service, Inc. ("Moody's"), in one of
the two highest rating categories (the highest category in the case of
commercial paper) or, if not rated by any NRSRO, such as U.S. Government
and Agency Securities, have been determined by N&B Management to be of
comparable quality.
INVESTMENT GRADE DEBT SECURITIES. Investment grade debt securities
are securities that have received a rating from at least one NRSRO in one
of the four highest rating categories or, if not rated by any NRSRO, have
been determined by N&B Management to be of comparable quality. Moody's
deems securities rated in its fourth highest category (Baa) to have
speculative characteristics; a change in economic factors could lead to a
weakened capacity of the issuer to repay.
If the quality of securities held by a Portfolio deteriorates so
that the securities would no longer satisfy that Portfolio's standards,
the Portfolio will engage in an orderly disposition of the downgraded
securities to the extent necessary to ensure that the Portfolio's holdings
of such securities do not exceed 5% of its net assets. Further information
regarding the ratings assigned to securities purchased by the Portfolios
and their meanings is included in the SAI and in the Funds' annual report.
Borrowings
-------------------------------------------------------------------------
Each Portfolio has a fundamental policy that it may not borrow
money, except that it may (1) borrow money from banks for temporary or
emergency purposes and not for leveraging or investment and (2) enter into
reverse repurchase agreements for any purpose, so long as the aggregate
amount of borrowings and reverse repurchase agreements does not exceed
one-third of the Portfolio's total assets (including the amount borrowed)
less liabilities (other than borrowings). Neither Portfolio expects to
borrow money. As a non-fundamental policy, neither Portfolio may purchase
portfolio securities if its outstanding borrowings, including reverse
repurchase agreements, exceed 5% of its total assets. Dollar rolls are
treated as reverse repurchase agreements.
Other Investments
-------------------------------------------------------------------------
For temporary defensive purposes, each Portfolio may invest up to
100% of its total assets in cash or cash equivalents, commercial paper,
U.S. Government and Agency Securities and certain other money market
instruments, as well as repurchase agreements on U.S. Government and
Agency Securities, and may adopt shorter weighted average maturities than
normal.
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<PAGE>
PERFORMANCE INFORMATION
The performance of the Funds can be measured as yield or as total
return. The Portfolios invest in various kinds of fixed income securities,
so their performance is related to changes in interest rates. Generally,
investments in shorter-term income securities are less affected by
interest rate changes than are investments in longer-term income
securities. For this reason, longer-term bond funds usually have higher
yields and carry more risk than shorter-term bond funds. The
creditworthiness of issuers of income securities also affects their risk;
for example, U.S. Government and Agency Securities are generally
considered to have less risk than bonds rated "investment grade."
The table under "Summary - The Funds and Portfolios" shows the
investment objective, principal types of investments, and comparative
information for each Fund and its corresponding Portfolio. This should
help you decide which Fund best fits your needs. For more detailed
information, see "Investment Programs" and "Description of Investments."
Further information regarding each Fund's performance is presented in its
annual report to shareholders, which is available without charge by
calling 800-877-9700.
Yield
-------------------------------------------------------------------------
YIELD refers to the income generated by an investment over a
particular period of time, which is annualized (assumed to have been
generated for one year) and expressed as an annual percentage rate.
EFFECTIVE YIELD is yield assuming that all distributions are reinvested.
Total Return
-------------------------------------------------------------------------
Total return is the change in value of an investment in a fund over
a particular period, assuming that all distributions have been reinvested.
Thus, total return reflects not only income earned, but also variations in
share prices from the beginning to the end of a period.
An average annual total return is a hypothetical rate of return
that, if achieved annually, would result in the same cumulative total
return as was actually achieved for the period. This smooths out
variations year-to-year in actual performance. Past results do not, of
course, guarantee future performance. Share prices may vary, and your
shares when redeemed may be worth more or less than your original purchase
price.
Yield and Total Return Information
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<PAGE>
-------------------------------------------------------------------------
You can obtain current performance information about each Fund by
calling N&B Management at 800-877-9700. N&B Management has reimbursed the
Funds for certain expenses, which has the effect of increasing their
yields and total returns.
SPECIAL INFORMATION REGARDING ORGANIZATION, CAPITALIZATION, AND OTHER
MATTERS
The Funds
-------------------------------------------------------------------------
Each Fund is a separate series of the Trust, a Delaware business
trust organized pursuant to a Trust Instrument dated as of May 6, 1993.
The Trust is registered under the Investment Company Act of 1940 (the
"1940 Act") as a diversified, open-end management investment company,
commonly known as a mutual fund. The Trust has two separate series. Each
Fund invests all of its net investable assets in its corresponding
Portfolio, in each case receiving a beneficial interest in that Portfolio.
The trustees of the Trust may establish additional series or classes of
shares without the approval of shareholders. The assets of each series
belong only to that series, and the liabilities of each series are borne
solely by that series and no other.
DESCRIPTION OF SHARES. Each Fund is authorized to issue an unlimited
number of shares of beneficial interest (par value $0.001 per share).
Shares of each Fund represent equal proportionate interests in the assets
of that Fund only and have identical voting, dividend, redemption,
liquidation, and other rights. All shares issued are fully paid and
non-assessable, and shareholders have no preemptive or other right to
subscribe to any additional shares.
SHAREHOLDER MEETINGS. The trustees of the Trust do not intend to
hold annual meetings of shareholders of the Funds. The trustees will call
special meetings of shareholders of a Fund only if required under the 1940
Act or in their discretion or upon the written request of holders of 10%
or more of the outstanding shares of that Fund entitled to vote.
CERTAIN PROVISIONS OF TRUST INSTRUMENT. Under Delaware law, the
shareholders of a Fund will not be personally liable for the obligations
of any Fund; a shareholder is entitled to the same limitation of personal
liability extended to shareholders of corporations. To guard against the
risk that the Delaware law might not be applied in other states, the Trust
Instrument requires that every written obligation of the Trust or a Fund
contain a statement that such obligation may be enforced only against the
assets of the Trust or Fund and provides for indemnification out of Trust
or Fund property of any shareholder nevertheless held personally liable
for Trust or Fund obligations, respectively.
- 14 -
<PAGE>
The Portfolios
-------------------------------------------------------------------------
Each Portfolio is a separate series of Managers Trust, a New York
common law trust organized as of December 1, 1992. Managers Trust is
registered under the 1940 Act as a diversified, open-end management
investment company. Managers Trust has seven separate operating
portfolios. The assets of each Portfolio belong only to that Portfolio,
and the liabilities of each Portfolio are borne solely by that Portfolio
and no other.
FUNDS' INVESTMENTS IN PORTFOLIOS. Each Fund is a "feeder fund" that
seeks to achieve its investment objective by investing all of its net
investable assets in its corresponding Portfolio, which is a "master
fund." The Portfolio, which has the same investment objective, policies,
and limitations as the Fund, in turn invests in securities; its
corresponding Fund thus acquires an indirect interest in those securities.
Historically, N&B Management, which is the administrator of each Fund and
the investment manager of each Portfolio, has sponsored, with
Neuberger&Berman, traditionally structured funds since 1950. However, it
has operated 12 master funds and 20 feeder funds since August 1993 and now
operates 21 master funds and 28 feeder funds. This "master/feeder fund"
structure is depicted in the "Summary" on page 3.
Each Fund's investment in its corresponding Portfolio is in the form
of a non-transferable beneficial interest. Members of the general public
may not purchase a direct interest in a Portfolio. Two mutual funds that
are series of Neuberger&Berman Income Funds ("N&B Income Funds"),
Neuberger&Berman ULTRA SHORT Bond Fund and Neuberger&Berman LIMITED
MATURITY Bond Fund, invest all of their respective net investable assets
in the two Portfolios described herein. The shares of each series of N&B
Income Funds are available for purchase by members of the general public.
Each Portfolio may also permit other investment companies and/or other
institutional investors to invest in the Portfolio. All investors will
invest in a Portfolio on the same terms and conditions as a Fund and will
pay a proportionate share of the Portfolio's expenses. The Trust does not
sell its shares directly to members of the general public. Other investors
in a Portfolio (including the series of N&B Income Funds) that might sell
shares to members of the general public are not required to sell their
shares at the same public offering price as a Fund, could have a different
administration fee and expenses than a Fund, and (except N&B Income Funds)
might charge a sales commission. Therefore, Fund shareholders may have
different returns than shareholders in another investment company that
invests exclusively in the Portfolio. Information regarding any fund that
may invest in a Portfolio in the future will be available from N&B
Management by calling 800-877-9700.
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<PAGE>
The trustees of the Trust believe that investment in a Portfolio by
a series of N&B Income Funds or other potential investors in addition to a
Fund may enable the Portfolio to realize economies of scale that could
reduce its operating expenses, thereby producing higher returns and
benefitting all shareholders. However, a Fund's investment in its
corresponding Portfolio may be affected by the actions of other large
investors in the Portfolio, if any. For example, if a large investor in a
Portfolio (other than a Fund) redeemed its interest in the Portfolio, the
Portfolio's remaining investors (including the Fund) might, as a result,
experience higher pro rata operating expenses, thereby producing lower
returns.
Each Fund may withdraw its entire investment from its corresponding
Portfolio at any time, if the trustees of the Trust determine that it is
in the best interests of the Fund and its shareholders to do so. A Fund
might withdraw, for example, if there were other investors in a Portfolio
with power to, and who did by a vote of all investors (including the
Fund), change the investment objective, policies, or limitations of the
Portfolio in a manner not acceptable to the trustees of the Trust. A
withdrawal could result in a distribution in kind of securities (as
opposed to a cash distribution) by the Portfolio. That distribution could
result in a less diversified portfolio of investments for the Fund and
could affect adversely the liquidity of the Fund's investment portfolio.
If the Fund decided to convert those securities to cash, it usually would
incur brokerage fees or other transaction costs. If a Fund withdrew its
investment from a Portfolio, the trustees would consider what action might
be taken, including the investment of all of the Fund's net investable
assets in another pooled investment entity having substantially the same
investment objective as the Fund or the retention by the Fund of its own
investment manager to manage its assets in accordance with its investment
objective, policies, and limitations. The inability of the Fund to find a
suitable replacement could have a significant impact on shareholders.
INVESTOR MEETINGS AND VOTING. Each Portfolio normally will not hold
meetings of investors except as required by the 1940 Act. Each investor in
a Portfolio will be entitled to vote in proportion to its relative
beneficial interest in the Portfolio. On most issues subjected to a vote
of investors, as required by the 1940 Act and other applicable law, a Fund
will solicit proxies from its shareholders and will vote its interest in
the Portfolio in proportion to the votes cast by the Fund's shareholders.
If there are other investors in a Portfolio, there can be no assurance
that any issue that receives a majority of the votes cast by Fund
shareholders will receive a majority of votes cast by all Portfolio
investors; indeed, if other investors hold a majority interest in a
Portfolio, they could have voting control of the Portfolio.
CERTAIN PROVISIONS. Each investor in a Portfolio, including a Fund,
will be liable for all obligations of the Portfolio. However, the risk of
an investor in a Portfolio incurring financial loss on account of such
liability would be limited to circumstances in which the Portfolio had
inadequate insurance and was unable to meet its obligations out of its
assets. Upon liquidation of a Portfolio, investors would be entitled to
- 16 -
<PAGE>
share pro rata in the net assets of the Portfolio available for
distribution to investors.
SHAREHOLDER SERVICES
How to Buy Shares
-------------------------------------------------------------------------
YOU CAN BUY AND OWN FUND SHARES ONLY THROUGH AN ACCOUNT WITH AN
INSTITUTION WHICH PROVIDES ACCOUNTING, RECORDKEEPING, AND OTHER SERVICES
TO INVESTORS AND WHICH HAS AN ADMINISTRATIVE SERVICES AGREEMENT WITH N&B
MANAGEMENT. N&B Management and the Funds do not recommend, endorse, or
receive payments from any Institution. N&B Management compensates
Institutions for services they provide under an administrative services
agreement. N&B Management does not provide investment advice to any
Institution or its clients or make decisions regarding their investments.
Each Institution will establish its own procedures for the purchase
of Fund shares in its account, including minimum initial and additional
investments for shares of each Fund and the acceptable methods of payment
for shares. Shares are purchased at the next price calculated on a day the
New York Stock Exchange ("NYSE") is open, after a purchase order is
received and accepted by an Institution. Prices for Fund shares are
usually calculated as of 4 p.m. Eastern time. Your Institution may be
closed on days when the NYSE is open. As a result, prices for Fund shares
may be significantly affected on days when you have no access to your
Institution to buy shares. The Funds will not issue a certificate for your
shares.
Other Information:
. An Institution must pay for shares it purchases in U.S.
dollars.
. Each Fund has the right to suspend the offering of its shares
for a period of time. Each Fund also has the right to accept
or reject a purchase order in its sole discretion, including
certain purchase orders through an exchange of shares. See
"Shareholder Services - Exchanging Shares."
How to Sell Shares
-------------------------------------------------------------------------
You can sell (redeem) all or some of your Fund shares only through
an account with an Institution. Each Institution will establish its own
procedures for the sale of Fund shares. Shares are sold at the next price
calculated on a day the NYSE is open, after a sales order is received and
accepted by an Institution. Prices for Fund shares are usually calculated
as of 4 p.m. Eastern time. Your Institution may be closed on days when the
- 17 -
<PAGE>
NYSE is open. As a result, prices for Fund shares may be significantly
affected on days when you have no access to your Institution to sell
shares.
Each Fund has reserved the right, if conditions exist which make
cash payments undesirable, to honor any request for a redemption by making
payments in securities valued in the same way as they would be valued for
purposes of computing that Fund's net asset value per share. If payment is
made in securities, an Institution 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.
Other Information:
. Redemption proceeds will be paid to Institutions as agreed
with each Fund, but in any case within three calendar days
(under unusual circumstances a Fund may take longer, as
permitted by law).
. Each Fund may suspend redemptions or postpone payments on
days when the NYSE is closed (besides weekends and holidays),
when trading on the NYSE is restricted, or as permitted by
the Securities and Exchange Commission.
Exchanging Shares
-------------------------------------------------------------------------
Through an account with an Institution, you may be able to exchange
shares of a Fund for shares of another Neuberger & Berman Fund. Each
Institution will establish its own exchange policy and procedures for its
accounts. Shares are exchanged at the next price calculated on a day the
NYSE is open, after the exchange order is received and accepted by an
Institution.
. Shares can be exchanged only between accounts registered in
the same name, address, and taxpayer ID number of the
Institution.
. An exchange can be made only into a mutual fund whose shares
are eligible for sale in the state where the Institution is
located.
. An exchange may have tax consequences.
. Each Fund may refuse any exchange orders from any Institution
if for any reason they are not deemed to be in the best
interests of the Fund and its shareholders.
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<PAGE>
. Each Fund may impose other restrictions on the exchange
privilege, or modify or terminate the privilege, but will try
to give each Institution advance notice whenever it can
reasonably do so.
SHARE PRICES AND NET ASSET VALUE
Each Fund's shares are bought or sold at a price that is the Fund's
net asset value ("NAV") per share. The NAVs for each Fund and its
corresponding Portfolio are calculated by subtracting liabilities from
total assets (in the case of a Portfolio, the market value of the
securities the Portfolio holds plus cash and other assets; in the case of
a Fund, its percentage interest in its corresponding Portfolio, multiplied
by the Portfolio's NAV, plus any other assets). Each Fund's per share NAV
is calculated by dividing its NAV by the number of Fund shares outstanding
and rounding the result to the nearest full cent. Each Fund and its
corresponding Portfolio calculate their NAVs as of the close of regular
trading on the NYSE, usually 4 p.m. Eastern time, on each day the NYSE is
open.
Each Portfolio values securities on the basis of bid quotations from
independent pricing services or principal market makers, or, if quotations
are not available, by a method that the trustees of Managers Trust believe
accurately reflects fair value. The Portfolios periodically verify
valuations provided by the pricing services. Short-term securities with
remaining maturities of less than 60 days are valued at cost which, when
combined with interest earned, approximates market value.
DIVIDENDS, OTHER DISTRIBUTIONS, AND TAXES
Each Fund distributes substantially all of its share of any net
investment income (net of the Fund's expenses) and net realized capital
gains earned by its corresponding Portfolio. Income dividends are declared
daily for each Fund at the time its NAV is calculated and are paid
monthly, and net realized capital gains, if any, are normally distributed
annually in December. Investors who are considering the purchase of Fund
shares in December should take this into account because of the tax
consequences of such distributions. Income dividends will accrue beginning
on the day after an investor's purchase order is converted to "federal
funds."
Distribution Options
-------------------------------------------------------------------------
REINVESTMENT IN SHARES. All dividends and other distributions paid
on shares of a Fund are automatically reinvested in additional shares of
that Fund, unless an Institution elects to receive them in cash. Dividends
are reinvested at the Fund's per share NAV on the last business day of
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<PAGE>
each month. Each other distribution is reinvested at the Fund's per share
NAV, usually as of the date the distribution is payable.
DISTRIBUTIONS IN CASH. An Institution may elect to receive dividends
in cash, with other distributions being reinvested in additional Fund
shares, or to receive all dividends and other distributions in cash.
Taxes
-------------------------------------------------------------------------
Each Fund intends to continue to qualify for treatment as a
regulated investment company for federal income tax purposes so that it
will be relieved of federal income tax on that part of its taxable income
and realized gains that it distributes to its shareholders.
An investment has certain tax consequences, depending on the type of
account in which you invest. IF YOU HAVE AN ACCOUNT UNDER A QUALIFIED
RETIREMENT PLAN OR AN INDIVIDUAL RETIREMENT ACCOUNT, TAXES ARE DEFERRED.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income
tax and may also be subject to state and local income taxes. Distributions
are taxable when they are paid, whether in cash or by reinvestment in
additional Fund shares, except that distributions declared in December to
shareholders of record on a date in that month and paid in the following
January are taxable as if they were paid on December 31 of the year in
which the distributions were declared.
For federal income tax purposes, income dividends and distributions
of net short-term capital gain are taxed as ordinary income. Distributions
of net capital gain (the excess of net long-term capital gain over net
short-term capital loss), when designated as such, are generally taxed as
long-term capital gain no matter how long you have owned your shares.
Distributions of net capital gain may include gains from the sale of
portfolio securities that appreciated in value before you bought your
shares.
Every January, each Fund will send each Institution that is a
shareholder therein a statement showing the amount of distributions paid
in the previous year. Information accompanying that statement shows the
portion of those distributions that generally are not taxable in certain
states.
TAXES ON REDEMPTIONS. Capital gains realized on redemption of Fund
shares, including redemptions in connection with exchanges to other
Neuberger&Berman Funds[SERVICEMARK], are subject to tax. A capital gain
(or loss) is the difference between the amount paid for shares (including
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<PAGE>
the amount of any dividends and other distributions that were reinvested)
and the amount received when shares are sold.
When an Institution sells shares, it will receive a confirmation
statement showing the number of shares sold and the price. Every January,
Institutions will also receive a consolidated transaction statement for
the previous year.
Each Institution annually will send investors in its accounts
statements showing distribution and transaction information for the
previous year.
The foregoing is only a summary of some of the important tax
considerations affecting each Fund and its shareholders. See the SAI for
additional tax information. There may be other federal, state, local, or
foreign tax considerations applicable to a particular investor. Therefore,
investors should consult their tax advisers.
MANAGEMENT AND ADMINISTRATION
Trustees and Officers
-------------------------------------------------------------------------
The trustees of the Trust and the trustees of Managers Trust, who
are currently the same individuals, have oversight responsibility for the
operations of each Fund and each Portfolio, respectively. The SAI contains
general background information about each trustee and officer of the Trust
and of Managers Trust. The trustees and officers of the Trust and of
Managers Trust who are officers and/or directors of N&B Management and/or
partners of Neuberger&Berman serve without compensation from the Funds or
the Portfolios. The trustees of the Trust and of Managers Trust, including
a majority of those trustees who are not "interested persons" (as defined
in the 1940 Act) of any Fund, have adopted written procedures reasonably
appropriate to deal with potential conflicts of interest between the Trust
and Managers Trust, including, if necessary, creating a separate board of
trustees of Managers Trust.
Investment Manager, Administrator, Distributor, and Sub-Adviser
-------------------------------------------------------------------------
N&B Management serves as the investment manager of each Portfolio,
as administrator of each Fund, and as distributor of the shares of each
Fund. N&B Management and its predecessor firms have specialized in the
management of no-load mutual funds since 1950. In addition to serving the
two Portfolios, N&B Management currently serves as investment manager of
other mutual funds. Neuberger&Berman, which acts as sub-adviser for the
Portfolios and other mutual funds managed by N&B Management, also serves
as investment adviser of three investment companies. The mutual funds
- 21 -
<PAGE>
managed by N&B Management and Neuberger&Berman had aggregate net assets of
approximately $11.9 billion as of December 31, 1995.
As sub-adviser, Neuberger&Berman furnishes N&B Management with
investment recommendations and research without added cost to the
Portfolios. Neuberger&Berman is a member firm of the NYSE and other
principal exchanges and may act as the Portfolios' principal broker to the
extent that a broker is used in the purchase and sale of portfolio
securities and the sale of covered call options. Neuberger&Berman and its
affiliates, including N&B Management, manage securities accounts that had
approximately $38.7 billion of assets as of December 31, 1995. All of the
voting stock of N&B Management is owned by individuals who are general
partners of Neuberger&Berman.
Theresa A. Havell, the President and a Trustee of the Trust and of
Managers Trust, is a general partner of Neuberger&Berman and a director
and Vice President of N&B Management. Ms. Havell is the Manager of the
Fixed Income Group of Neuberger&Berman, which she established in 1984. The
Fixed Income Group manages fixed income accounts that had approximately
$11.1 billion of assets as of December 31, 1995. Ms. Havell has had
overall responsibility for the activities of the Fixed Income Group since
1984.
The following members of the Fixed Income Group are, along with
Theresa Havell, primarily responsible for the day-to-day management of the
listed Portfolios:
Neuberger&Berman ULTRA SHORT Bond Portfolio - Josephine Mahaney.
Ms. Mahaney, who has been a Senior Portfolio Manager in the Fixed Income
Group since 1984 and a Vice President of N&B Management since
November 1994, has been primarily responsible for Neuberger&Berman ULTRA
SHORT Bond Portfolio since July 1993. She was an Assistant Vice President
of N&B Management from 1986 to 1994.
Neuberger&Berman LIMITED MATURITY Bond Portfolio - Thomas G. Wolfe.
Mr. Wolfe has been primarily responsible for Neuberger&Berman LIMITED
MATURITY Bond Portfolio since October 1, 1995. Mr. Wolfe has been a
Senior Portfolio Manager in the Fixed Income Group since July 1993,
Director of Fixed Income Credit Research since July 1993 and a Vice
President of N&B Management since October 1995. From November 1987 to June
1993, he was Vice President in the Corporate Finance Department of
Standard & Poor's.
The partners and employees of Neuberger&Berman and officers and
employees of N&B Management, together with their families, have invested
over $100 million of their own money in Neuberger&Berman Funds .
- 22 -
<PAGE>
To mitigate the possibility that a Portfolio will be adversely
affected by employees' personal trading, the Trust, Managers Trust, N&B
Management, and Neuberger&Berman have adopted policies that restrict
securities trading in the personal accounts of the portfolio managers and
others who normally come into possession of information on portfolio
transactions.
Expenses
-------------------------------------------------------------------------
N&B Management provides investment management services to each
Portfolio that include, among other things, making and implementing
investment decisions and providing facilities and personnel necessary to
operate the Portfolio. N&B Management provides administrative services to
each Fund that include furnishing similar facilities and personnel for the
Fund and performing accounting, recordkeeping, and other services for
Institutions and their accounts. For such administrative services, each
Fund pays N&B Management a fee at the annual rate of 0.50% of that Fund's
average daily net assets. With a Fund's consent, N&B Management may
subcontract to third parties, including Institutions, some of its
responsibilities to that Fund under the administration agreement and may
compensate third parties that provide such services. For investment
management services, each Portfolio pays N&B Management a fee at the
annual rate of 0.25% of the first $500 million of that Portfolio's average
daily net assets, 0.225% of the next $500 million, 0.20% of the next
$500 million, 0.175% of the next $500 million, and 0.15% of average daily
net assets in excess of $2 billion. During the fiscal year ended
October 31, 1995, each Fund accrued administration fees, and a pro rata
portion of the corresponding Portfolio's management fees, of 0.75% of the
Fund's average daily net assets.
See "Expense Information - Annual Fund Operating Expenses" for
anticipated fees for the current fiscal year.
Each Fund bears all expenses of its operations other than those
borne by N&B Management as administrator of the Fund and as distributor of
its shares. Each Portfolio bears all expenses of its operations other than
those borne by N&B Management as investment manager of the Portfolio.
These expenses include, but are not limited to, for the Funds and
Portfolios, legal and accounting fees and compensation for trustees who
are not affiliated with N&B Management; for the Funds, transfer agent
fees, and the cost of printing and sending reports and proxy materials to
shareholders; and for the Portfolios, custodial fees for securities.
N&B Management has voluntarily undertaken until February 28, 1997 to
reimburse each Fund for its Operating Expenses (including its
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<PAGE>
administration fees) and its pro rata share of its corresponding
Portfolio's Operating Expenses (including its management fees) that
exceed, in the aggregate, the following percentage per annum of the Fund's
average daily net assets:
Neuberger&Berman ULTRA SHORT Bond Trust 0.75%
Neuberger&Berman LIMITED MATURITY Bond Trust 0.80%
Each undertaking can be terminated by N&B Management by giving a
Fund at least 60 days' prior written notice, and will terminate on
February 28, 1997 if not extended by N&B Management. The effect of
reimbursement by N&B Management is to reduce a Fund's expenses and thereby
increase its total return.
For the fiscal year ended October 31, 1995, each Fund bore Total
Operating Expenses as a percentage of its average daily net assets (after
taking into consideration N&B Management's expense reimbursement for each
Fund), as follows:
Neuberger&Berman ULTRA SHORT Bond Trust 0.72%
Neuberger&Berman LIMITED MATURITY Bond Trust 0.77%
Transfer Agent
-------------------------------------------------------------------------
The Funds' transfer agent is State Street Bank and Trust Company
("State Street"). State Street administers purchases, redemptions, and
transfers of Fund shares with respect to Institutions and the payment of
dividends and other distributions to Institutions. All correspondence
should be sent to Neuberger&Berman Funds, Institutional Services,
605 Third Avenue, 2nd Floor, New York, NY 10158-0180.
DESCRIPTION OF INVESTMENTS
In addition to the securities referred to in "Investment Programs"
herein, each Portfolio, as indicated below, may make the following
investments, among others, individually or in combination, although it may
not necessarily buy all of the types of securities or use all of the
investment techniques that are described. For additional information on
the following investments or other types of investments which the
Portfolios may make, see the SAI.
- 24 -
<PAGE>
U.S. GOVERNMENT AND AGENCY SECURITIES. 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 instrumentalities; by other U.S.
Government-sponsored enterprises, such as the Government National Mortgage
Association ("GNMA"), Federal National Mortgage Association ("FNMA"),
Federal Home Loan Mortgage Corporation ("FHLMC"), Student Loan Marketing
Association, and Tennessee Valley Authority; and by various federally
chartered or sponsored banks. Some U.S. Government Agency Securities are
supported by the full faith and credit of the United States, while others
may be supported by the issuer's ability to borrow from the U.S. Treasury,
subject to the Treasury's discretion in certain cases, or only by the
credit of the issuer. U.S. Government Agency Securities include U.S.
Government mortgage-backed securities. The market prices of U.S.
Government securities are not guaranteed by the Government and generally
fluctuate with changing interest rates.
VARIABLE AND FLOATING RATE SECURITIES. Variable and floating rate
securities have interest rate adjustment formulas that may help to
stabilize their market value. Many of these instruments carry a demand
feature which permits a Portfolio to sell them during a determined time
period at par value plus accrued interest. The demand feature is often
backed by a credit instrument, such as a letter of credit, or by a
creditworthy insurer. A Portfolio may rely on the credit instrument or the
creditworthiness of the insurer in purchasing a variable or floating rate
security. For purposes of determining its dollar-weighted average
maturity, each Portfolio calculates the remaining maturity of variable and
floating rate instruments as provided in Rule 2a-7 under the 1940 Act.
REPURCHASE AGREEMENTS/SECURITIES LOANS. In a repurchase agreement, a
Portfolio buys a security from a Federal Reserve member bank or a
securities dealer and simultaneously agrees to sell it back at a higher
price, at a specified date, usually less than a week later. The underlying
securities must fall within the Portfolio's investment policies and
limitations (but not limitations as to maturity). The Portfolios also may
lend portfolio securities to banks, brokerage firms or institutional
investors to earn income. Costs, delays, or losses could result if the
selling party to a repurchase agreement or the borrower of portfolio
securities becomes bankrupt or otherwise defaults. N&B Management monitors
the creditworthiness of sellers and borrowers.
ILLIQUID SECURITIES. Each Portfolio may invest up to 10% of its net
assets in illiquid securities, which are securities that cannot be
expected to be sold within seven days at approximately the price at which
they are valued. Due to the absence of an active trading market, a
Portfolio may experience difficulty in valuing or disposing of illiquid
securities. N&B Management determines the liquidity of the Portfolios'
securities, under general supervision of the trustees of Managers Trust.
Securities that are freely tradeable in their country of origin or in
- 25 -
<PAGE>
their principal market are not considered illiquid securities even if they
are not registered for sale in the U.S.
RESTRICTED SECURITIES AND RULE 144A SECURITIES. Each Portfolio may
invest in restricted securities and Rule 144A securities. Restricted
securities cannot be sold to the public without registration under the
Securities Act of 1933 ("1933 Act"). Unless registered for sale, these
securities can be sold only in privately negotiated transactions or
pursuant to an exemption from registration. Restricted securities are
generally considered illiquid. Rule 144A securities, although not
registered, may be resold to qualified institutional buyers in accordance
with Rule 144A under the 1933 Act. Unregistered securities may also be
sold abroad pursuant to Regulation S under the 1933 Act. N&B Management,
acting pursuant to guidelines established by the trustees of Managers
Trust, may determine that some restricted securities are liquid.
REVERSE REPURCHASE AGREEMENTS AND DOLLAR ROLLS. In a reverse
repurchase agreement, a Portfolio sells securities to a bank or securities
dealer and simultaneously agrees to repurchase the same securities at an
agreed upon price on a specific date. During the period before the
repurchase, the Portfolio continues to receive principal and interest
payments on the securities. A Portfolio will maintain a segregated account
consisting of cash or high-grade, liquid debt obligations to cover its
obligations under reverse repurchase agreements. Dollar rolls are similar
to reverse repurchase agreements. In a dollar roll, a Portfolio sells
securities for delivery in the current month and simultaneously contracts
to repurchase substantially similar (same type and coupon) securities on a
specified future date from the same party. During the period before the
repurchase, the Portfolio forgoes principal and interest payments on the
securities. The Portfolio is compensated by the difference between the
current sales price and the forward price for the future purchase (often
referred to as the "drop"), as well as by the interest earned on the cash
proceeds of the initial sale. Reverse repurchase agreements and dollar
rolls may increase the fluctuation in the market value of a Portfolio's
assets and are a form of leverage. N&B Management monitors the
creditworthiness of parties to reverse repurchase agreements and dollar
rolls.
WHEN-ISSUED TRANSACTIONS. In a when-issued transaction, a Portfolio
commits to purchase securities at a future date (generally within three
months) in order to secure an advantageous price and yield at the time of
the commitment and pays for the securities when they are delivered. If the
seller fails to complete the sale, a Portfolio may lose the opportunity to
obtain a favorable price and yield. When-issued securities may decline or
increase in value during the period from the Portfolio's investment
commitment to the settlement of the purchase, which may magnify
fluctuations in a Portfolio's and its corresponding Fund's NAVs.
- 26 -
<PAGE>
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities represent
interests in, or are secured by and payable from, pools of mortgage loans,
including collateralized mortgage obligations. These securities include
U.S. Government mortgage-backed securities, which are issued or guaranteed
by a U.S. Government agency or instrumentality (though not necessarily
backed by the full faith and credit of the United States), such as GNMA,
FNMA, and FHLMC certificates. Other mortgage-backed securities are issued
by private issuers, generally originators of and investors in mortgage
loans. These include savings associations, mortgage bankers, commercial
banks, investment bankers, and special purpose entities. Private
mortgage-backed securities may be supported by U.S. Government
mortgage-backed securities or some form of non-governmental credit
enhancement. Mortgage-backed securities may have either fixed or
adjustable interest rates. Tax or regulatory changes may adversely affect
the mortgage securities market. In addition, changes in the market's
perception of the issuer may affect the value of mortgage-backed
securities. The rate of return on mortgage-backed securities may be
affected by prepayments of principal on the underlying loans, which
generally increase as market interest rates decline; as a result, when
interest rates decline, holders of these securities normally do not
benefit from appreciation in market value to the same extent as holders of
other non-callable debt securities. N&B Management determines the
effective life of mortgage-backed securities based on industry practice
and current market conditions. If N&B Management's determination is not
borne out in practice, it could positively or negatively affect the value
of the Portfolio when market interest rates change. Increasing market
interest rates generally extend the effective maturities of
mortgage-backed securities.
ASSET-BACKED SECURITIES. Asset-backed securities represent interests
in, or are secured by and payable from, pools of assets, such as consumer
loans, CARS[SERVICEMARK] ("Certificates for Automobile
Receivables[SERVICEMARK]"), credit card receivables, and installment loan
contracts. Although these securities may be supported by letters of credit
or other credit enhancements, payment of interest and principal ultimately
depends upon individuals paying the underlying loans, which may be
affected adversely by general downturns in the economy. The risk that
recovery on repossessed collateral might be unavailable or inadequate to
support payments on asset-backed securities is greater than in the case of
mortgage-backed securities.
FOREIGN INVESTMENTS. The Portfolios may invest in U.S.
dollar-denominated foreign securities. Foreign securities may be affected
by political or economic developments in foreign countries, the investment
significance of which may be difficult to discern. Foreign companies may
not be subject to accounting standards or governmental supervision
comparable to U.S. companies, and there may be less public information
about their operations. In addition, foreign markets may be less liquid or
more volatile than U.S. markets and may offer less protection to
investors. It may be difficult to invoke legal process abroad.
- 27 -
<PAGE>
Neuberger&Berman LIMITED MATURITY Bond Portfolio may also invest in
foreign securities denominated in or indexed to foreign currencies. Such
securities may be affected by special risks, such as governmental
regulation of foreign exchange transactions and the fluctuation of foreign
currencies relative to the U.S. dollar, which could result in losses
irrespective of the performance of the underlying investment. N&B
Management considers these factors in making investments for the
Portfolio. Neuberger&Berman LIMITED MATURITY Bond Portfolio may enter into
forward foreign currency contracts or futures contracts (agreements to
exchange one currency for another at a specified price at a future date)
and related options to manage currency risks and to facilitate
transactions in foreign securities. Although these contracts can protect
the Portfolio from adverse exchange rate changes, they involve a risk of
loss if N&B Management fails to predict foreign currency values correctly;
see the discussion of Hedging Instruments, below.
PUT AND CALL OPTIONS, FUTURES CONTRACTS, AND OPTIONS ON FUTURES
CONTRACTS. Each Portfolio may try to reduce the risk of securities price
changes (hedge) or manage portfolio maturity by (1) entering into interest
rate futures contracts traded on futures exchanges and (2) purchasing and
writing options on futures contracts. Neuberger&Berman LIMITED MATURITY
Bond Portfolio also may write covered call options and purchase put
options on debt securities in its portfolio or on foreign currencies for
hedging purposes or for the purpose of producing income. Neuberger&Berman
LIMITED MATURITY Bond Portfolio will write a call option on a security or
currency only if it holds that security or currency or has the right to
obtain the security or currency at no additional cost. These investment
practices involve certain risks, including price volatility and a high
degree of leverage. The Portfolios may engage in transactions in futures
contracts and related options only as permitted by regulations of the
Commodity Futures Trading Commission.
The primary risks in using put and call options, futures contracts,
options on futures contracts, forward foreign currency contracts or
options on foreign currencies ("Hedging Instruments") are (1) imperfect
correlation or no correlation between changes in market value of the
securities held by a Portfolio and the prices of Hedging Instruments;
(2) possible lack of a liquid secondary market for Hedging Instruments and
the resulting inability to close out Hedging Instruments when desired;
(3) the fact that the skills needed to use Hedging Instruments are
different from those needed to select a Portfolio's securities; and
(4) the fact that, although use of these instruments for hedging purposes
can reduce the risk of loss, they also can reduce the opportunity for
gain, or even result in losses, by offsetting favorable price movements in
hedged investments. When a Portfolio uses Hedging Instruments, the
Portfolio will place cash or high-grade, liquid debt securities in a
segregated account to the extent required by SEC staff policy. Another
risk of Hedging Instruments is the possible inability of a Portfolio to
purchase or sell a security at a time that would otherwise be favorable
for it to do so, or the possible need for a Portfolio to sell a security
- 28 -
<PAGE>
at a disadvantageous time, due to its need to maintain "cover" or to
segregate securities in connection with its use of these instruments.
Futures, options, and forward contracts are considered "derivatives."
Losses that may arise from certain futures transactions are potentially
unlimited.
MUNICIPAL OBLIGATIONS (NEUBERGER&BERMAN LIMITED MATURITY BOND
PORTFOLIO). Municipal obligations are issued by or on behalf of states,
the District of Columbia, and U.S. territories and possessions and their
political subdivisions, agencies, and instrumentalities. The interest on
municipal obligations is exempt from federal income tax. Municipal
obligations include "general obligation" securities, which are backed by
the full taxing power of a municipality, and "revenue" securities, which
are backed by the income from a specific project, facility, or tax.
Municipal obligations also include industrial development and other
private activity bonds - the interest on which may be a tax preference
item for purposes of the federal alternative minimum tax - which are
issued by or on behalf of public authorities and are not backed by the
credit of any governmental or public authority. "Anticipation notes" are
issued by municipalities in expectation of future proceeds from the
issuance of bonds, or from taxes or other revenues, and are payable from
those bond proceeds, taxes, or revenues. Municipal obligations also
include tax-exempt commercial paper, which is issued by municipalities to
help finance short-term capital or operating requirements. Current efforts
to restructure the federal budget and the relationship between the federal
government and state and local governments may adversely impact the
financing of some issuers of municipal securities. Some states and
localities are experiencing substantial deficits and may find it difficult
for political or economic reasons to increase taxes. Efforts are underway
that may result in a "flat tax" or other restructuring of the federal
income tax system. These developments could reduce the value of al
municipal securities or the securities of particular issuers.
ZERO COUPON SECURITIES. Zero coupon securities do not pay interest
currently; instead, they are sold at a deep discount from their face value
and are redeemed at face value when they mature. Because zero coupon
securities do not pay current income, their prices can be very volatile
when interest rates change. In calculating their daily income, the
Portfolios accrue a portion of the difference between a zero coupon
security's purchase price and its face value.
USE OF JOINT PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION
-------------------------------------------------------------------------
Each Fund and its corresponding Portfolio acknowledges that it is
solely responsible for all information or lack of information about that
Fund and Portfolio in this Prospectus or in the SAI, and no other Fund or
Portfolio is responsible therefor. The trustees of the Trust and of
Managers Trust have considered this factor in approving each Fund's use of
a single combined Prospectus and combined SAI.
- 29 -
<PAGE>
OTHER INFORMATION
DIRECTORY FUNDS ELIGIBLE FOR EXCHANGE
INVESTMENT MANAGER, ADMINISTRATOR, EQUITY TRUST
AND DISTRIBUTOR Neuberger&Berman Focus Trust
Neuberger&Berman Management Neuberger&Berman
Incorporated Genesis Trust
605 Third Avenue, 2nd Floor Neuberger&Berman
New York, NY 10158-0180 Guardian Trust
800-877-9700 Neuberger&Berman
Manhattan Trust
SUB-ADVISER Neuberger&Berman
Neuberger&Berman, L.P. Partners Trust
605 Third Avenue
New York, NY 10158-3698
Custodian and Transfer Agent EQUITY ASSETS
State Street Bank and Trust Company Neuberger&Berman Socially
225 Franklin Street Responsive Trust
Boston, MA 02110
Address correspondence to: INCOME TRUST
Neuberger&Berman Funds Neuberger&Berman
Institutional Services Limited Maturity Bond Trust
605 Third Avenue Neuberger&Berman
New York, NY 10158-0180 Ultra Short Bond Trust
800-877-9700
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, NW
2nd Floor
Washington, D.C. 20036-1800
Neuberger&Berman, Neuberger&Berman Management Inc., and the above named
Funds are service marks of Neuberger&Berman Management Inc.
[COPYRIGHT] 1996 Neuberger&Berman Management Inc.
- 30 -
<PAGE>
_________________________________________________________________
NEUBERGER & BERMAN INCOME TRUST AND PORTFOLIOS
STATEMENT OF ADDITIONAL INFORMATION
DATED MARCH 1, 1996
Neuberger & Berman Neuberger & Berman
Ultra Short Bond Trust Limited Maturity Bond Trust
(and Neuberger & Berman (and Neuberger & Berman
Ultra Short Bond Limited Maturity Bond
Portfolio) Portfolio)
No-Load Mutual Funds
605 Third Avenue, 2nd Floor, New York, NY 10158-0180
Toll-Free 800-877-9700
_________________________________________________________________
Neuberger & Berman Ultra Short Bond Trust ("Ultra Short") and
Neuberger & Berman Limited Maturity Bond Trust ("Limited Maturity") (each
a "Fund") are no-load mutual funds that offer shares pursuant to a
Prospectus dated March 1, 1996. The above-named Funds invest all of their
net investable assets in Neuberger & Berman Ultra Short Bond Portfolio and
Neuberger & Berman Limited Maturity Bond Portfolio (each a "Portfolio"),
respectively.
An investor can buy, own, and sell Fund shares ONLY through an
account with a broker-dealer, pension plan administrator, or other
institution (each an "Institution") that provides accounting,
recordkeeping, and other services to investors and that has an
administrative services agreement with Neuberger & Berman Management
Incorporated ("N&B Management").
The Funds' Prospectus provides basic information that an
investor should know before investing. A copy of the Prospectus may be
obtained, without charge, from N&B Management, Institutional Services, 605
Third Avenue, 2nd Floor, New York, NY 10158-0180 or by calling 800-877-
9700.
This Statement of Additional Information ("SAI") is not a
prospectus and should be read in conjunction with the Prospectus.
No person has been authorized to give any information or to
make any representations not contained in the Prospectus or in this SAI in
connection with the offering made by the Prospectus, and, if given or
made, such information or representations must not be relied upon as
having been authorized by a Fund or its distributor. The Prospectus and
this SAI do not constitute an offering by a Fund or its distributor in any
jurisdiction in which such offering may not lawfully be made.
<PAGE>
Table of Contents
-----------------
Page
----
INVESTMENT INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 5
Investment Policies and Limitations . . . . . . . . . . . . . 5
Rating Agencies . . . . . . . . . . . . . . . . . . . . . . . 10
Theresa A. Havell and Josephine P. Mahaney, Co-Portfolio
Managers of Neuberger & Berman Ultra Short Bond
Portfolio . . . . . . . . . . . . . . . . . . . . . . . 10
Theresa A. Havell and Thomas G. Wolfe, Co-Portfolio
Managers of Neuberger & Berman Limited Maturity Bond
Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Additional Investment Information . . . . . . . . . . . . . . 12
Risks of Fixed Income Securities . . . . . . . . . . . . . . . 31
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 31
Yield Calculations . . . . . . . . . . . . . . . . . . . . . . 31
Total Return Computations . . . . . . . . . . . . . . . . . . 33
Comparative Information . . . . . . . . . . . . . . . . . . . 34
Other Performance Information . . . . . . . . . . . . . . . . 35
CERTAIN RISK CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . 36
TRUSTEES AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . 37
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES . . . . . . . . . . 43
Investment Manager and Administrator . . . . . . . . . . . . . 43
Sub-Adviser . . . . . . . . . . . . . . . . . . . . . . . . . 46
Investment Companies Managed . . . . . . . . . . . . . . . . . 47
Management and Control of N&B Management . . . . . . . . . . . 49
DISTRIBUTION ARRANGEMENTS . . . . . . . . . . . . . . . . . . . . . . 50
ADDITIONAL EXCHANGE INFORMATION . . . . . . . . . . . . . . . . . . . 50
ADDITIONAL REDEMPTION INFORMATION . . . . . . . . . . . . . . . . . . 52
DIVIDENDS AND OTHER DISTRIBUTIONS . . . . . . . . . . . . . . . . . . 53
ADDITIONAL TAX INFORMATION . . . . . . . . . . . . . . . . . . . . . 54
Taxation of the Funds . . . . . . . . . . . . . . . . . . . . 54
Taxation of the Portfolios . . . . . . . . . . . . . . . . . . 55
Taxation of the Funds' Shareholders . . . . . . . . . . . . . 57
PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . 58
Portfolio Turnover . . . . . . . . . . . . . . . . . . . . . . 59
REPORTS TO SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . 59
- i -
<PAGE>
CUSTODIAN AND TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . 59
INDEPENDENT AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . 60
LEGAL COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES . . . . . . . . . 60
REGISTRATION STATEMENT . . . . . . . . . . . . . . . . . . . . . . . 61
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . 62
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . 63
RATINGS OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . 63
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . 66
THE ART OF INVESTMENT: A CONVERSATION
WITH ROY NEUBERGER . . . . . . . . . . . . . . . . . . . . . . 66
- ii -
<PAGE>
INVESTMENT INFORMATION
Each Fund is a separate series of Neuberger & Berman Income
Trust ("Trust"), a Delaware business trust that is registered with the
Securities and Exchange Commission ("SEC") as an open-end management
investment company. Each Fund seeks its investment objective by investing
all of its net investable assets in a Portfolio of Income Managers Trust
("Managers Trust") that has an investment objective identical to, and a
name similar to, that of the Fund. Each Portfolio, in turn, invests in
accordance with an investment objective, policies, and limitations
identical to those of its corresponding Fund. (The Trust and Managers
Trust, which is an open-end management investment company managed by N&B
Management, are together referred to below as the "Trusts.")
The following information supplements the discussion in the
Prospectus of the investment objective, policies, and limitations of each
Fund and Portfolio. The investment objective and, unless otherwise
specified, the investment policies and limitations of each Fund and
Portfolio are not fundamental. Although any investment policy or
limitation that is not fundamental may be changed by the trustees of the
Trust ("Fund Trustees") or of Managers Trust ("Portfolio Trustees")
without shareholder approval, each Fund intends to notify its shareholders
before changing its investment objective or implementing any material
change in any non-fundamental policy or limitation. The fundamental
investment policies and limitations of a Fund or a Portfolio may not be
changed without the approval of the lesser of (1) 67% of the total units
of beneficial interest ("shares") of the Fund or Portfolio represented at
a meeting at which more than 50% of the outstanding Fund or Portfolio
shares are represented or (2) a majority of the outstanding shares of the
Fund or Portfolio. This vote is required by the Investment Company Act of
1940 ("1940 Act") and is referred to in this SAI as a "1940 Act majority
vote." Whenever a Fund is called upon to vote on a change in a
fundamental investment policy or limitation of its corresponding
Portfolio, the Fund casts its votes thereon in proportion to the votes of
its shareholders at a meeting thereof called for that purpose.
Investment Policies and Limitations
-----------------------------------
Each Fund has the following fundamental investment policy, to
enable it to invest in its corresponding Portfolio:
Notwithstanding any other investment policy of the Fund, the
Fund may invest all of its investable assets (cash,
securities, and receivables relating to securities) in an
open-end management investment company having substantially
the same investment objective, policies, and limitations as
the Fund.
All other fundamental investment policies and limitations and
the non-fundamental investment policies and limitations of each Fund and
its corresponding Portfolio are identical. Therefore, although the
<PAGE>
following discusses the investment policies and limitations of the
Portfolios, it applies equally to their corresponding Funds.
For purposes of the investment limitation on concentration in
particular industries, N&B Management identifies the "issuer" of a
municipal obligation which is not a general obligation note or bond by the
obligation's characteristics. The most significant of these character-
istics is the source of funds for the payment of principal and interest on
the obligation. If an obligation is backed by an irrevocable letter of
credit or other guarantee, without which the obligation would not qualify
for purchase under a Portfolio's quality restrictions, the issuer of the
letter of credit or the guarantee is considered an issuer of the
obligation. If an obligation meets Neuberger & Berman Limited Maturity
Bond Portfolio's quality restrictions without credit support, the
Portfolio treats the commercial developer or the industrial user, rather
than the governmental entity or the guarantor, as the only issuer of the
obligation, even if the obligation is backed by a letter of credit or
other guarantee.
Except for the limitation on borrowing and the limitation on
ownership of portfolio securities by officers and trustees, any investment
policy or limitation that involves a maximum percentage of securities or
assets will not be considered to be violated unless the percentage
limitation is exceeded immediately after, and because of, a transaction by
a Portfolio.
The Portfolios' fundamental investment policies and
limitations are as follows:
1. Borrowing. Neither Portfolio may borrow money, except
that a Portfolio may (i) borrow money from banks for temporary or
emergency purposes and not for leveraging or investment and (ii) enter
into reverse repurchase agreements; provided that (i) and (ii) in
combination do not exceed 33-1/3% of the value of its total assets
(including the amount borrowed) less liabilities (other than borrowings).
If at any time borrowings exceed 33-1/3% of the value of a Portfolio's
total assets, that Portfolio will reduce its borrowings within three days
(excluding Sundays and holidays) to the extent necessary to comply with
the 33-1/3% limitation.
2. Commodities. Neither Portfolio may purchase physical
commodities or contracts thereon, unless acquired as a result of the
ownership of securities or instruments, but this restriction shall not
prohibit a Portfolio from purchasing futures contracts or options
(including options on futures contracts, but excluding options or futures
contracts on physical commodities) or from investing in securities of any
kind.
- 2 -
<PAGE>
3. Diversification. Neither Portfolio may, with respect
to 75% of the value of its total assets, purchase the securities of any
issuer (other than securities issued or guaranteed by the U.S. Government
or any of its agencies or instrumentalities ("U.S. Government and Agency
Securities")) if, as a result, (i) more than 5% of the value of the
Portfolio's total assets would be invested in the securities of that
issuer or (ii) the Portfolio would hold more than 10% of the outstanding
voting securities of that issuer.
4. Industry Concentration. Neither Portfolio may purchase
any security if, as a result, 25% or more of its total assets (taken at
current value) would be invested in the securities of issuers having their
principal business activities in the same industry. This limitation does
not apply to (i) purchases of U.S. Government and Agency Securities, or
(ii) investments by Neuberger & Berman Ultra Short Bond Portfolio in
certificates of deposit ("CDs") or banker's acceptances issued by domestic
branches of U.S. banks. Mortgage- and asset-backed securities are
considered to be a single industry.
5. Lending. Neither Portfolio may lend any security or
make any other loan if, as a result, more than 33-1/3% of its total assets
(taken at current value) would be lent to other parties, except, in
accordance with its investment objective, policies, and limitations, (i)
through the purchase of a portion of an issue of debt securities or (ii)
by engaging in repurchase agreements.
6. Real Estate. Neither Portfolio may purchase real
estate unless acquired as a result of the ownership of securities or
instruments, but this restriction shall not prohibit a Portfolio from
purchasing securities issued by entities or investment vehicles that own
or deal in real estate or interests therein or instruments secured by real
estate or interests therein.
7. Senior Securities. Neither Portfolio may issue senior
securities, except as permitted under the 1940 Act.
8. Underwriting. Neither Portfolio may underwrite securi-
ties of other issuers, except to the extent that a Portfolio, in disposing
of portfolio securities, may be deemed to be an underwriter within the
meaning of the Securities Act of 1933 ("1933 Act").
The Portfolios' non-fundamental investment policies and
limitations are as follows:
1. Investments in Any One Issuer. Neuberger & Berman
Ultra Short Bond Portfolio may not purchase the securities of any one
- 3 -
<PAGE>
issuer (other than securities issued or guaranteed by the U.S. Government
or any of its agencies or instrumentalities) if, as a result, more than 5%
of the Portfolio's total assets would be invested in the securities of
that issuer.
2. Illiquid Securities. Neither Portfolio may purchase
any security if, as a result, more than 10% of its net assets would be
invested in illiquid securities. Illiquid securities include securities
that cannot be sold within seven days in the ordinary course of business
for approximately the amount at which the Portfolio has valued the
securities, such as repurchase agreements maturing in more than seven
days.
3. Unseasoned Issuers. Neither Portfolio may purchase the
securities of any issuer (other than securities issued or guaranteed by
domestic or foreign governments or political subdivisions thereof) if, as
a result, more than 5% of the Portfolio's total assets would be invested
in the securities of business enterprises that, including predecessors,
have a record of less than three years of continuous operation.
4. Ownership of Portfolio Securities by Officers and
Trustees. Neither Portfolio may purchase or retain the securities of any
issuer if, to the knowledge of N&B Management, those officers and trustees
of Managers Trust and officers and directors of N&B Management who each
owns individually more than 1/2 of 1% of the outstanding securities of
such issuer, together own more than 5% of such securities.
5. Investments in Other Investment Companies. Neither
Portfolio may purchase securities of other investment companies, except to
the extent permitted by the 1940 Act and in the open market at no more
than customary brokerage commission rates. This limitation does not apply
to securities received or acquired as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
6. Oil and Gas Programs. Neither Portfolio may invest in
participations or other direct interests in oil, gas, or other mineral
exploration or development programs or leases.
7. Borrowing. Neither Portfolio may purchase securities
if outstanding borrowings, including any reverse repurchase agreements,
exceed 5% of its total assets.
8. Lending. Except for the purchase of debt securities
and engaging in repurchase agreements, neither Portfolio may make any
loans other than securities loans.
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9. Margin Transactions. Neither Portfolio may purchase
securities on margin from brokers or other lenders, except that a
Portfolio may obtain such short-term credits as are necessary for the
clearance of securities transactions. Margin payments in connection with
transactions in futures contracts and options on futures contracts shall
not constitute the purchase of securities on margin and shall not be
deemed to violate the foregoing limitation.
10. Short Sales. Neither Portfolio may sell securities
short, unless it owns, or has the right to obtain without payment of
additional consideration securities equivalent in kind and amount to the
securities sold. Transactions in forward contracts, futures contracts and
options shall not constitute selling securities short.
11. Puts, Calls, Straddles, or Spreads. Neither Portfolio
may invest in puts, calls, straddles, spreads, or any combination thereof,
except that each Portfolio may (i) purchase securities with rights to put
the securities to the seller in accordance with its investment program and
(ii) purchase call options and write (sell) put options to close out
options previously written by the Portfolio, and Neuberger & Berman
Limited Maturity Bond Portfolio may write covered call options and
purchase put options. The Portfolios do not construe the foregoing
limitation to preclude them from purchasing or selling options on futures
contracts or from purchasing securities with rights to put the security to
the issuer or a guarantor.
12. Real Estate Limited Partnerships. Neither Portfolio
may invest in real estate limited partnerships.
Rating Agencies
---------------
As discussed in the Prospectus, the Portfolios may purchase
securities rated by Standard & Poor's ("S&P"), Moody's Investors Service,
Inc. ("Moody's"), or any other nationally recognized statistical rating
organization ("NRSRO"). 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. Among the NRSROs,
the Portfolios rely primarily on ratings assigned by S&P and Moody's,
which are described in Appendix A to this SAI.
Theresa A. Havell and Josephine P. Mahaney: Co-Portfolio Managers of
Neuberger & Berman Ultra Short Bond Portfolio
---------------------------------------------------------------------
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Investors are accustomed to thinking of yield or interest
rate figures as the same as total return on their investment, because
savings accounts, conventional money market funds, and CDs almost always
do indeed return the stated yield. But bond funds are different -- bonds
not only pay interest, they also fluctuate in value. For example, a
decline in prevailing levels of interest rates generally increases the
value of debt securities in a bond fund's portfolio, while an increase in
rates usually reduces the value of those securities. As a result,
interest rate fluctuations will affect a bond fund's net asset value (and
total return) but not necessarily the income received by the fund from its
portfolio securities. Both the yield and risk of principal usually
increase as the maturity of the bond increases.
So looking at yield alone carries high risk because the
highest yielding bonds historically tend to be the ones with the longest
maturities. The risk to principal in these bonds can be nearly as great
as the risk in stocks and may not produce the same reward.
What advice does Ms. Theresa Havell, the manager of the Fixed
Income Group of Neuberger & Berman, L.P. ("Neuberger & Berman"), have for
investors seeking the highest returns on their fixed income investments?
"Look beyond interest rates to total return," she states unequivocally.
Total return includes the yield from the bond and the increase or decrease
in the market value (price) of the bond.
"Once you consider the risk to principal, then total return
is the only concept that can measure what you are actually earning from
your fixed income securities," Ms. Havell says.
Ultra Short is appropriate for investors who seek a higher
total return alternative to money market funds with minimal risk to
principal and liquidity.
Theresa A. Havell and Thomas G. Wolfe: Co-Portfolio Managers of Neuberger
& Berman Limited Maturity Bond Portfolio
--------------------------------------------------------------------------
Limited Maturity is intended for investors who seek the
highest current income with less net asset value fluctuations from
interest rate changes than that of a longer-term bond fund. Both the
yield and risk to principal usually increase as the maturity of the bond
increases. The Fund's corresponding Portfolio provides active fixed
income portfolio management through investment in securities with an
average weighted portfolio maturity of no longer than five years. Studies
of bond returns have shown total returns were best in bonds having
maturities of two to five years. These limited maturity bonds have
historically provided the best value in the bond market and outperformed
both shorter- and longer-term securities.
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"Bonds of two-to-five year maturities have yields that have
historically captured up to 95% of yields of longer bonds, but with
substantially less price volatility," Ms. Havell explains. That's why
studies show that limited maturity bonds may provide the best value in the
bond market.
"Fixed income securities should preserve capital and provide
the highest total return consistent with preservation of capital," says
Mr. Wolfe, manager of Neuberger & Berman Limited Maturity Bond Portfolio.
Additional Investment Information
---------------------------------
Some or all of the Portfolios, as indicated below, may make
the following investments, among others, although they may not buy all of
the types of securities or use all of the investment techniques that are
described.
Repurchase Agreements (Both Portfolios). Repurchase
agreements are agreements under which a Portfolio purchases securities
from a bank that is a member of the Federal Reserve System or from a
securities dealer that agrees to repurchase the securities from the
Portfolio at a higher price on a designated future date. Repurchase
agreements generally are for a short period of time, usually less than a
week. Neither Portfolio may enter into a repurchase agreement with a
maturity of more than seven days if, as a result, more than 10% of the
value of its net assets would then be invested in such repurchase agree-
ments and other illiquid securities. A Portfolio may enter into a
repurchase agreement only if (1) the underlying securities are of the type
(excluding maturity limitations) that the Portfolio's investment policies
and limitations would allow it to purchase directly, (2) the market value
of the underlying securities, including accrued interest, at all times
equals or exceeds the value of the repurchase agreement, and (3) payment
for the underlying securities is made only upon satisfactory evidence that
the securities are being held for the Portfolio's account by its custodian
or a bank acting as the Portfolio's agent.
Securities Loans (Both Portfolios). In order to realize
income, each Portfolio may lend portfolio securities with a value not
exceeding 33-1/3% of its total assets to banks, brokerage firms, or
institutional investors judged creditworthy by N&B Management. Borrowers
are required continuously to secure their obligations to return securities
on loan from the Portfolio by depositing collateral in a form determined
to be satisfactory by the Portfolio Trustees. The collateral, which must
be marked to market daily, must be equal to at least 100% of the market
value of the loaned securities, which will also be marked to market daily.
N&B Management believes the risk of loss on these transactions is slight
because, if a borrower were to default for any reason, the collateral
should satisfy the obligation. However, as with other extensions of
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secured credit, loans of portfolio securities involve some risk of loss of
rights in the collateral should the borrower fail financially.
Restricted Securities and Rule 144A Securities (Both
Portfolios). Each Portfolio may invest in restricted securities, which
are securities that may not be sold to the public without an effective
registration statement under the 1933 Act or, if they are unregistered,
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 further
to facilitate efficient trading among institutional investors by
permitting the sale of certain unregistered securities to qualified
institutional buyers. To the extent privately placed securities held by a
Portfolio qualify under Rule 144A, and an institutional market develops
for those securities, the Portfolio likely will be able to dispose of the
securities without registering them under the 1933 Act. To the extent
that institutional buyers become, for a time, uninterested in purchasing
these securities, investing in Rule 144A securities could increase the
level of a Portfolio's illiquidity. N&B Management, acting under
guidelines established by the Portfolio Trustees, may determine that
certain securities qualified for trading under Rule 144A are liquid.
Foreign securities that can be freely sold in the markets in which they
are principally traded are not considered to be restricted. Regulation S
under the 1933 Act permits the sale abroad of securities that are not
registered for sale in the United States.
Where registration is required, a Portfolio may be obligated
to pay all or part of the registration expenses, and a considerable period
may elapse between the decision to sell and the time the Portfolio may be
permitted to sell a security under an effective registration statement.
If, during such a period, adverse market conditions were to develop, the
Portfolio might obtain a less favorable price than prevailed when it
decided to sell. To the extent privately placed securities, including
Rule 144A securities, are illiquid, purchases thereof will be subject to
each Portfolio's 10% limit on investments in illiquid securities.
Restricted securities for which no market exists are priced at fair value
as determined in accordance with procedures approved and periodically
reviewed by the Portfolio Trustees.
Commercial Paper (Both Portfolios). Commercial paper is a
short-term debt security issued by a corporation, bank, municipality, or
other issuer for purposes such as financing current operations. Each
Portfolio may invest in commercial paper that cannot be resold to the
public without an effective registration statement under the 1933 Act.
While restricted commercial paper normally is deemed illiquid, N&B
Management may in certain cases determine that such paper is liquid,
pursuant to guidelines established by the Portfolio Trustees.
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<PAGE>
Reverse Repurchase Agreements (Both Portfolios). In a
reverse repurchase agreement, a Portfolio sells portfolio securities
subject to its agreement to repurchase the securities at a later date for
a fixed price reflecting a market rate of interest; these agreements are
considered borrowings for purposes of the Portfolios' investment policies
and limitations concerning borrowings. While a reverse repurchase
agreement is outstanding, a Portfolio will maintain with its custodian in
a segregated account cash, U.S. Government or Agency Securities, or other
liquid, high-grade debt securities, marked to market daily, in an amount
at least equal to the Portfolio's obligations under the agreement. There
is a risk that the contra-party to a reverse repurchase agreement will be
unable or unwilling to complete the transaction as scheduled, which may
result in losses to the Portfolio.
Banking and Savings Institution Securities (Both Portfolios).
The Portfolios may invest in banking and savings institution obligations,
which include CDs, time deposits, bankers' acceptances, and other short-
term debt obligations issued by commercial banks and savings institutions.
CDs are receipts for funds deposited for a specified period of time at a
specified rate of return; time deposits generally are similar to CDs, but
are uncertificated. Bankers' acceptances are time drafts drawn on
commercial banks by borrowers, usually in connection with international
commercial transactions. The CDs, time deposits, and bankers' acceptances
in which the Portfolios invest typically are not covered by deposit
insurance.
The Portfolios may invest in securities issued by a commer-
cial bank or savings institution only if (1) the bank or institution has
total assets of at least $1,000,000,000, (2) the bank or institution is on
N&B Management's approved list, (3) in the case of a U.S. bank or insti-
tution, its deposits are insured by the Federal Deposit Insurance
Corporation, and (4) in the case of a foreign bank or institution, the
securities are, in N&B Management's opinion, of an investment quality
comparable with other debt securities that may be purchased by the Port-
folio. These limitations do not prohibit investments in securities issued
by foreign branches of U.S. banks that meet the foregoing requirements.
The Portfolios do not currently intend to invest in any security issued by
a foreign savings institution.
Variable or Floating Rate Securities; Demand and Put
Features (Both Portfolios). Variable rate securities provide for
automatic adjustment of the interest rate at fixed intervals (e.g., daily,
monthly, or semi-annually); floating rate securities provide for automatic
adjustment of the interest rate whenever specified interest rate index
changes. The interest rate on variable and floating rate securities
(collectively, "Variable Rate Securities") ordinarily is determined by
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<PAGE>
reference to a particular bank's prime rate, the 90-day U.S. Treasury Bill
rate, the rate of return on commercial paper or bank CDs, an index of
short-term tax-exempt rates, or some other objective measure.
The Variable Rate Securities in which the Portfolios invest
frequently permit the holder to demand payment of the obligations'
principal and accrued interest at any time or at specified intervals not
exceeding one year. The demand feature usually is backed by a credit
instrument (e.g., a bank letter of credit) from a creditworthy issuer and
sometimes by insurance from a creditworthy insurer. Without these credit
enhancements, the Variable Rate Securities might not meet the Portfolios'
quality standards. Accordingly, in purchasing these securities, each
Portfolio relies primarily on the creditworthiness of the credit
instrument issuer or the insurer. A Portfolio may not invest more than 5%
of its total assets in securities backed by credit instruments from any
one issuer or by insurance from any one insurer (excluding securities that
do not rely on the credit instrument or insurance for their rating, i.e.,
stand on their own credit).
A Portfolio can also buy fixed rate securities accompanied by
a demand feature or a put option, which permits the Portfolio to sell the
security to the issuer or third party at a specified price. A Portfolio
may rely on the creditworthiness of issuers of puts in purchasing these
securities.
In calculating its maturity, each Portfolio is permitted to
treat certain Variable Rate Securities as maturing on a date prior to the
date on which principal is due to be paid. In applying such maturity
shortening devices, N&B Management considers whether the interest rate
reset is expected to cause the security to trade at approximately its par
value.
Mortgage-Backed Securities (Both Portfolios). Mortgage-
backed securities represent direct or indirect participations in, or are
secured by and payable from, pools of mortgage loans. They may be issued
or guaranteed by a U.S. Government agency or instrumentality (though not
necessarily backed by the full faith and credit of the United States),
such as the Government National Mortgage Association ("GNMA"), Federal
National Mortgage Association ("FNMA"), and Federal Home Loan Mortgage
Corporation ("FHLMC"), or may be issued by private issuers.
Mortgage-backed securities may be issued in the form of col-
lateralized mortgage obligations ("CMOs") or mortgage-backed bonds. CMOs
are obligations fully collateralized directly or indirectly by a pool of
mortgages; payments of principal and interest on the mortgages are passed
through to the holders of the CMOs, although not necessarily on a pro rata
basis, on the same schedule as they are received. Mortgage-backed bonds
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<PAGE>
are general obligations of the issuer fully collateralized directly or
indirectly by a pool of mortgages. The mortgages serve as collateral for
the issuer's payment obligations on the bonds, but interest and principal
payments on the mortgages are not passed through either directly (as with
mortgage-backed "pass-through" securities issued or guaranteed by U.S.
Government agencies or instrumentalities) or on a modified basis (as with
CMOs). Accordingly, a change in the rate of prepayments on the pool of
mortgages could change the effective maturity of a CMO but not that of a
mortgage-backed bond (although, like many bonds, mortgage-backed bonds may
be callable by the issuer prior to maturity).
Governmental, government-related, and private entities may
create mortgage loan pools to back mortgage pass-through and mortgage-
collateralized investments. Commercial banks, savings institutions,
private mortgage insurance companies, mortgage bankers, and other
secondary market issuers, including securities broker-dealers and special
purpose entities (which generally are affiliates of the foregoing estab-
lished to issue such securities), also create pass-through pools of
residential mortgage loans. Such issuers may be the originators and/or
servicers of the underlying mortgage loans, as well as the guarantors of
the mortgage-backed securities. Pools created by non-governmental issuers
generally offer a higher rate of interest than government and government-
related pools because of the absence of direct or indirect government or
agency guarantees. Various forms of insurance or guarantees, including
individual loan, title, pool, and hazard insurance, and letters of credit
may support timely payment of interest and principal of non-governmental
pools. Governmental entities, private insurers, and the mortgage poolers
issue these forms of insurance and guarantees. Such insurance and
guarantees, as well as the creditworthiness of the issuers thereof, are
considered in determining whether a mortgage-backed security meets a
Portfolio's investment quality standards. There can be no assurance that
the private insurers or guarantors can meet their obligations under the
insurance policies or guarantee arrangements.
A Portfolio may buy mortgage-backed securities without
insurance or guarantees, if N&B Management determines that the securities
meet the Portfolio's quality standards. A Portfolio may not purchase
mortgage-backed securities or any other assets that, in N&B Management's
opinion, are illiquid if, as a result, more than 10% of the value of the
Portfolio's net assets would be illiquid. N&B Management will, consistent
with the Portfolios' investment objective, policies and limitations, and
quality standards, consider making investments in new types of mortgage-
backed securities as such securities are developed and offered to
investors.
Because many mortgages are repaid early, the actual maturity
of mortgage-backed securities may be shorter than their stated final
maturity. In calculating its maturity, a Portfolio may apply certain
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<PAGE>
industry conventions regarding the maturity of mortgage-backed
instruments.
Asset-Backed Securities (Both Portfolios). The Portfolios
may purchase asset-backed securities, including commercial paper. Asset-
backed securities represent direct or indirect participations in, or are
secured by and payable from, pools of assets such as motor vehicle
installment sales contracts, installment loan contracts, leases of various
types of real and personal property, and receivables from revolving credit
(credit card) agreements. These assets are securitized through the use of
trusts and special purpose corporations. Credit enhancements, such as
various forms of cash collateral accounts or letters of credit, may
support payments or distributions of principal and interest on asset-
backed securities. Like mortgage-backed securities, asset-backed
securities are subject to the risk of prepayment. The risk that recovery
on repossessed collateral might be unavailable or inadequate to support
payments, however, is greater for asset-backed securities, than is the
case for mortgage-backed securities.
Certificates for Automobile Receivables(SERVICEMARK)
("CARS(SERVICEMARK)") represent undivided fractional interests in a trust
whose assets consist of a pool of motor vehicle retail installment sales
contracts and security interests in the vehicles securing those contracts.
Payments of principal and interest on the underlying contracts are
"passed-through" monthly to certificate holders and are guaranteed up to
specified amounts by a letter of credit issued by a financial institution
unaffiliated with the trustee or originator of the trust. Underlying
installment sales contracts are subject to prepayment, which may reduce
the overall return to certificate holders. Certificate holders also may
experience delays in payment or losses on CARS(SERVICEMARK) if the trust
does not realize the full amounts due on underlying installment sales
contracts because of unanticipated legal or administrative costs of
enforcing the contracts; depreciation, damage, or loss of the vehicles
securing the contracts; or other factors.
Credit card receivable securities are backed by receivables
from revolving credit card agreements ("Accounts"). Credit balances on
Accounts are generally paid down more rapidly than are automobile
contracts. Most of the credit card receivable securities issued publicly
to date have been pass-through certificates. In order to lengthen their
maturity, most such securities provide for a fixed period during which
only interest payments on the underlying Accounts are passed through to
the security holder; principal payments received on the Accounts are used
to fund the transfer of additional credit card charges made on the
Accounts to the pool of assets supporting the securities. Usually, the
initial fixed period may be shortened if specified events occur signaling
a potential deterioration in the quality of the assets backing the secu-
rity, such as the imposition of a cap on interest rates. An issuer's
ability to extend the life of an issue of credit card receivable
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<PAGE>
securities thus depends on the continued generation of principal amounts
in the underlying Accounts and the non-occurrence of the specified events.
The nondeductibility of consumer interest, as well as competitive and
general economic factors, could adversely affect the rate at which new
receivables are created in an Account and conveyed to an issuer, thereby
shortening the expected weighted average life of the related security and
reducing its yield. An acceleration in cardholders' payment rates or any
other event that shortens the period during which additional credit card
charges on an Account may be transferred to the pool of assets supporting
the related security could have a similar effect on its weighted average
life and yield.
Credit cardholders are entitled to the protection of state
and federal consumer credit laws. Many of those laws give a holder the
right to set off certain amounts against balances owed on the credit card,
thereby reducing amounts paid on Accounts. In addition, unlike most other
asset-backed securities, Accounts are unsecured obligations of the
cardholder.
U.S. Dollar-Denominated Foreign Debt Securities (Both Portfo-
lios). The Portfolios may invest in U.S. dollar-denominated debt
securities issued by foreign issuers (including banks, governments and
quasi-governmental organizations) and foreign branches of U.S. banks,
including negotiable CDs, bankers' acceptances, and commercial paper.
These investments are subject to each Portfolio's quality and maturity
standards. While investments in foreign securities are intended to reduce
risk by providing further diversification, such investments involve sover-
eign 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) and the potentially adverse effects of unavailabil-
ity of public information regarding issuers, less governmental supervision
and regulation of financial markets, reduced liquidity of certain finan-
cial markets, and the lack of uniform accounting, auditing, and financial
standards or the application of standards that are different or less
stringent than those applied in the United States.
Foreign Currency Denominated Foreign Securities (Neuberger &
Berman Limited Maturity Bond Portfolio). The Portfolio may invest in debt
or other income-producing securities (of issuers in countries whose
governments are considered stable by N&B Management) that are denominated
in or indexed to foreign currencies, including (1) CDs, commercial paper,
fixed time deposits, and bankers' acceptances issued by foreign banks,
(2) obligations of other corporations, and (3) obligations of foreign
governments or their subdivisions, agencies, and instrumentalities,
international agencies, and supranational entities. Investing in foreign
currency denominated securities includes the special risks associated with
investing in non-U.S. issuers described in the preceding section and the
additional risks of (1) adverse changes in foreign exchange rates, (2)
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nationalization, expropriation, or confiscatory taxation, (3) adverse
changes in investment or exchange control regulations (which could prevent
cash from being brought back to the United States), and (4) expropriation
or nationalization of foreign portfolio companies. Additionally,
dividends and interest payable on foreign securities may be subject to
foreign taxes, including taxes withheld from those payments.
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.
Interest rates prevailing in other countries may affect
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 the 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.
Foreign markets also have different clearance and settlement
procedures, and, 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. Such
delays in settlement could result in temporary periods when a portion of
the assets of the Portfolio are uninvested and no return is earned
thereon. The inability of the Portfolio to make intended security
purchases due to settlement problems could cause the Portfolio to miss
attractive investment opportunities. Inability to dispose of portfolio
securities due to settlement problems could result in losses to the
Portfolio due to subsequent declines in value of the portfolio securities,
or, if the Portfolio has entered into a contract to sell the securities,
could result in possible liability to the purchaser.
In order to limit the risk inherent in investing in foreign
currency denominated securities, the Portfolio may not purchase any such
security if, after such purchase, more than 25% of its net assets (taken
at market value) would be invested in foreign currency denominated
securities. Within that limitation, however, the Portfolio is not
restricted in the amount it may invest in securities denominated in any
one foreign currency.
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Dollar Rolls (Both Portfolios). In a "dollar roll," a
Portfolio sells securities for delivery in the current month and
simultaneously agrees to repurchase substantially similar (same type and
coupon) securities on a specified future date from the same party. A
"covered roll" is a specific type of dollar roll in which the Portfolio
holds an offsetting cash position or a cash equivalent security position
that matures on or before the forward settlement date of the dollar roll
transaction. Dollar rolls are considered borrowings for purposes of the
Portfolios' investment policies and limitations concerning borrowings.
There is a risk that the contra-party will be unable or unwilling to
complete the transactions as scheduled, which may result in losses to the
Portfolio.
When-Issued Transactions (Both Portfolios). The Port-folios
may purchase securities (including mortgage-backed securities such as
GNMA, FNMA, and FHLMC certificates) on a when-issued basis. In such a
transaction, a Portfolio commits to purchase securities (to secure an
advantageous price and yield at the time of the commitment) and completes
the purchase by making payment against delivery of the securities at a
future date. When-issued purchases are negotiated directly with the other
party, and such commitments are not traded on an exchange.
In periods of falling interest rates and rising prices, a
Portfolio might purchase a security on a when-issued basis and sell a
similar security to settle such purchase, thereby obtaining the benefit of
currently higher yields.
The value of securities purchased on a when-issued basis and
any subsequent fluctuations in their value are reflected in the
computation of a Portfolio's net asset value ("NAV") starting on the date
of the agreement to purchase the securities. The Portfolio does not earn
interest on securities it has committed to purchase until the securities
are paid for and delivered on the settlement date. Settlement of when-
issued purchase transactions generally takes place within two months after
the date of the transaction, but a Portfolio may agree to a longer
settlement period.
A Portfolio will purchase securities on a when-issued basis
only with the intention of completing the transaction and actually
purchasing or selling the securities. If deemed advisable as a matter of
investment strategy, however, a Portfolio may dispose of or renegotiate a
commitment after it has been entered into. A Portfolio also may sell
securities it has committed to purchase before those securities are
delivered to the Portfolio on the settlement date. The Portfolio may
realize capital gains or losses in connection with these transactions.
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<PAGE>
When a Portfolio purchases securities on a when-issued basis,
it will maintain in a segregated account with its custodian, until payment
is made, cash, U.S. Government and Agency Securities, or other liquid,
high-grade debt securities having an aggregate market value (determined
daily) at least equal to the amount of the Portfolio's purchase
commitments. This procedure is designed to ensure that each Portfolio
maintains sufficient assets at all times to cover their obligations under
when-issued purchases.
Futures Contracts and Options Thereon (Both Portfolios). Each
Portfolio may purchase and sell interest-rate and bond index futures
contracts and options thereon, and Neuberger & Berman Limited Maturity
Bond Portfolio may purchase and sell foreign currency futures contracts
(with interest-rate and bond index futures contracts, "Futures" or
"Futures Contracts") and options thereon. The Portfolios engage in inter-
est-rate Futures and options transactions in an attempt to hedge against
changes in securities prices resulting from expected changes in prevailing
interest rates; Neuberger & Berman Limited Maturity Bond Portfolio engages
in foreign currency Futures and options transactions in an attempt to
hedge against expected changes in prevailing currency exchange rates.
Because the futures markets may be more liquid than the cash markets, the
use of Futures permits a Portfolio to enhance portfolio liquidity and
maintain a defensive position without having to sell portfolio securities.
The Portfolios do not engage in transactions in Futures or options thereon
for speculation. The Portfolios view investment in (1) interest-rate
Futures and options thereon as a maturity management device and/or a
device to reduce risk and preserve total return in an adverse interest
rate environment and (2) foreign currency Futures and options thereon as a
means of establishing more definitely the effective return on securities
denominated in foreign currencies held or intended to be acquired by them.
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 bond index
Futures, are settled on a net cash payment basis rather than by the sale
and delivery of the securities underlying the Futures.
"Margin" with respect to Futures is the amount of assets that
must be deposited by a Portfolio with, or for the benefit of, a futures
commission merchant in order to initiate and maintain the Portfolio's
Futures positions. The margin deposit made by a Portfolio when it enters
into a Futures Contract ("initial margin") is intended to assure its
performance of the contract. If the price of the Futures Contract changes
-- increases in the case of a short (sale) position or decreases in the
case of a long (purchase) position -- so that the unrealized loss on the
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contract causes the margin deposit not to satisfy margin requirements, the
Portfolio will be required to make an additional margin deposit ("vari-
ation margin"). However, if favorable price changes in the Futures
Contract cause the margin on deposit to exceed the required margin, the
excess will be paid to the Portfolio. In computing its daily NAV, each
Portfolio marks to market the current value of its open Futures positions.
A Portfolio also must make margin deposits with respect to options on
Futures that it has written. If the futures commission merchant holding
the deposit goes bankrupt, the Portfolio could suffer a delay in
recovering its funds and could ultimately suffer a loss.
U.S. Futures (except certain currency Futures) are traded on
exchanges that have been designated as "contract markets" by the Commodity
Futures Trading Commission ("CFTC"), an agency of the U.S. Government;
Futures transactions must be executed through a futures commission
merchant that is a member of the relevant contract market. The 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, without the parties having to make
or take delivery of the assets. 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.
Although each Portfolio believes that the use of Futures Con-
tracts will benefit it, if N&B Management's judgment about the general
direction of the markets is incorrect, a Portfolio's overall return would
be lower than if it had not entered into any such contracts. Moreover,
the spread between values in the cash and futures markets is subject to
distortion due to differences in the character of those markets. Because
of the possibility of distortion, even a correct forecast of general
market trends by N&B Management may not result in a successful transac-
tion.
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 assumption of offsetting Futures positions by the writer and
holder of the option is accompanied by delivery of the accumulated cash
balance in the writer's Futures margin account. That balance represents
the amount by which the market price of the Futures Contract at exercise
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<PAGE>
exceeds, in the case of a call, or is less than, in the case of a put, the
exercise price of the option.
The prices of Futures 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 and of the securities
and currencies being hedged can be only approximate. Decisions regarding
whether, when, and how to hedge involve skill and judgment. Even a well-
conceived hedge may be unsuccessful to some degree because of unexpected
market behavior or interest rate or currency exchange rate trends, or lack
of correlation between the futures markets and the securities markets.
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 an immediate and substantial
loss, or gain, to the investor. Losses that may arise from certain
Futures transactions are potentially unlimited.
Most U.S. futures exchanges limit the amount of fluctuation
in the price of a Futures Contract or option thereon during a single
trading day; once the daily limit has been reached, no trades thereof 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, because the limit may prevent the
liquidation of unfavorable positions. Prices can move to the daily limit
for several consecutive trading days with little or no trading, thereby
preventing liquidation of Futures and options positions and subjecting
investors to substantial losses. If this were to happen with respect to a
position held by a Portfolio, it could (depending on the size of the
position) have an adverse impact on the NAV of the Portfolio.
Covered Call and Put Options (Neuberger & Berman Limited
Maturity Bond Portfolio). This Portfolio may write or purchase put and
call options on securities. Generally, the purpose of writing and
purchasing these options is to reduce the effect of price fluctuations of
securities held by the Portfolio on the Portfolio's and its corresponding
Fund's NAVs. The Portfolio may also write covered call options to earn
premium income.
The obligation under any option terminates upon expiration of
the option or, at an earlier time, when the writer offsets the option by
entering into a "closing purchase transaction" to purchase an option of
the same series. If an option is purchased by the Portfolio and is never
exercised, the Portfolio will lose the entire amount of the premium paid.
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<PAGE>
The Portfolio will receive a premium for writing a put
option, which obligates the Portfolio to acquire a certain security at a
certain price at any time until a certain date, if the purchaser of the
option decides to sell such security. The Portfolio may be obligated to
purchase the underlying security at more than its current value.
When the Portfolio purchases a put option, it pays a premium
to the writer for the right to sell a security to the writer for a
specified amount at any time until a certain date. The Portfolio would
purchase a put option in order to protect itself against a decline in the
market value of a security it owns.
When the Portfolio writes a call option, it is obligated to
sell a security to a purchaser at a specified price at any time the
purchaser requests until a certain date and receives a premium for writing
the option. The Portfolio writes only "covered" call options on
securities it owns. So long as the obligation of the call option
continues, the Portfolio may be assigned an exercise notice, requiring it
to deliver the underlying security against payment of the exercise price.
The Portfolio may be obligated to deliver securities underlying an option
at less than the market price, thereby giving up any additional gain on
the security.
When the Portfolio purchases a call option, it pays a premium
for the right to purchase a security from the writer at a specified price
until a specified date. The Portfolio would purchase a call option in
order to protect against an increase in the price of securities it intends
to purchase or to offset a previously written call option.
Portfolio securities on which call and put options may be
written and purchased by the Portfolio are purchased solely on the basis
of investment considerations consistent with the Portfolio's investment
objective. The writing of covered call options is a conservative
investment technique that is believed to involve relatively little risk
(in contrast to the writing of "naked" or uncovered call options, which
the Portfolio will not do), but is capable of enhancing the Portfolio's
total return. When writing a covered call option, the Portfolio, in
return for the premium, gives up the opportunity for profit from a price
increase in the underlying security above the exercise price, but
conversely retains the risk of loss should the price of the security
decline. When writing a put option, the Portfolio, in return for the
premium, takes the risk that it must purchase the underlying security at
the exercise price, which may be higher than the current market price of
the security. If a call or put option that the Portfolio has written
expires unexercised, the Portfolio will realize a gain in the amount of
the premium; however, in the case of a call option, that gain may be
offset by a decline in the market value of the underlying security during
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<PAGE>
the option period. If the call option is exercised, the Portfolio will
realize a gain or loss from the sale of the underlying security.
Options are traded both on national securities exchanges and
in the over-the-counter ("OTC") market. Exchange-traded options in the
U.S. are issued by a clearing organization affiliated with the exchange on
which the option is listed; the clearing organization in effect guarantees
completion of every exchange-traded option. In contrast, OTC options are
contracts between the Portfolio and its counter-party with no clearing
organization guarantee. Thus, when the Portfolio sells (or purchases) an
OTC option, it generally will be able to "close out" the option prior to
its expiration only by entering into a "closing transaction" with the
dealer to whom (or from whom) the Portfolio originally sold (or purchased)
the option. There can be no assurance that the Portfolio would be able to
liquidate an OTC option at any time prior to expiration. Unless the
Portfolio is able to effect a closing purchase transaction in a covered
OTC call option it has written, it will not be able to liquidate
securities used as cover until the option expires or is exercised or until
different cover is substituted. In the event of the counter-party's
insolvency, the Portfolio may be unable to liquidate its options position
and the associated cover. N&B Management monitors the creditworthiness of
dealers with which the Portfolio may engage in OTC options transactions
and limits the Portfolio's counter-parties in such transactions to dealers
with a net worth of at least $20 million as reported in their latest
financial statements.
The assets used as cover for OTC options written by the
Portfolio will be considered illiquid unless the OTC options are sold to
qualified dealers who agree that the Portfolio may repurchase any OTC
option it writes at a maximum price to be calculated by a formula set
forth in the option agreement. The cover for an OTC call option written
subject to this procedure will be considered illiquid only to the extent
that the maximum repurchase price under the formula exceeds the intrinsic
value of the option.
The premium received (or paid) by the Portfolio when it
writes (or purchases) a call or put option is the amount at which the
option is currently traded on the applicable exchange, less (or plus) a
commission. 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 general interest rate environment. The
premium received by the Portfolio for writing a covered call or put option
is recorded as a liability on the Portfolio's statement of assets and
liabilities. This liability is adjusted daily to the option's current
market value, which is the sales price on the option's last reported trade
on that day before the time the Portfolio's NAV is computed or, in the
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<PAGE>
absence of any trades thereof on that day, the mean between the bid and
ask prices as of that time.
Closing transactions are effected in order to realize a
profit 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 Portfolio to
write another call option on the underlying security with either a
different exercise price or expiration date or both. If the Portfolio
desires to sell a security on which it has written a call option, it will
seek to effect a closing transaction prior to, or concurrently with, the
sale of the security. There is, of course, no assurance that the
Portfolio will be able to effect closing transactions at favorable prices.
If the Portfolio cannot enter into such a transaction, it may be required
to hold a security that it might otherwise have sold (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 Portfolio will realize a profit or loss from a closing
purchase transaction if the cost of the transaction is less or more than
the premium received from writing the call or put option. However,
because increases in the market price of a call option generally reflect
increases in the market price of the underlying security, any loss
resulting from the repurchase of a call option is likely to be offset in
whole or in part by appreciation of the underlying security owned by the
Portfolio.
The Portfolio pays brokerage commissions in connection with
purchasing or writing options, including those used to close out existing
positions. These brokerage commissions normally are higher than those
applicable to purchases and sales of portfolio securities.
Options normally have expiration dates between three and nine
months from the date written. 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. From time to time, the Portfolio may
purchase an underlying security for delivery in accordance with an
exercise notice of a call option assigned to it, rather than delivering
the security from its portfolio. In those cases, additional brokerage
commissions are incurred.
Options on Foreign Currencies (Neuberger & Berman Limited
Maturity Bond Portfolio). This Portfolio may write and purchase covered
call and put options on foreign currencies. The Portfolio would engage in
such transactions to protect against declines in the U.S. dollar value of
portfolio securities or increases in the U.S. dollar cost of securities to
be acquired, or to protect the dollar equivalent of dividends, interest,
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<PAGE>
or other payments on those securities. As with other types of options,
however, writing an option on foreign currency constitutes only a partial
hedge, up to the amount of the premium received, and the Portfolio could
be required to purchase or sell foreign currencies at disadvantageous
exchange rates, thereby incurring losses. The risks of currency options
are similar to the risks of other options, discussed herein. Certain
options on foreign currencies are traded on the OTC market and involve
liquidity and credit risks that may not be present in the case of
exchange-traded currency options.
Forward Foreign Currency Contracts (Neuberger & Berman
Limited Maturity Bond Portfolio). This Portfolio may enter into contracts
for the purchase or sale of a specific foreign currency at a future date
at a fixed price ("forward contracts"). The Portfolio enters into
forward contracts in an attempt to hedge against expected changes in
prevailing currency exchange rates. The Portfolio does not engage in
transactions in forward contracts for speculation; it views investments in
forward contracts as a means of establishing more definitely the effective
return on securities denominated in foreign currencies that are held or
intended to be acquired by it. Forward contract transactions include
forward sales or purchases of foreign currencies for the purpose of pro-
tecting the U.S. dollar value of securities held or to be acquired by the
Portfolio or protecting the U.S. dollar equivalent of dividends, interest,
or other payments on those securities.
N&B Management believes that the use of foreign currency
hedging techniques, including "cross-hedges," can help protect against
declines in the U.S. dollar value of income available for distribution and
declines in the Portfolio's NAV resulting from adverse changes in currency
exchange rates. For example, the return available from securities denomi-
nated 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 cross-hedge
involving a forward contract to sell that foreign currency or a cross-
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 and which is available on more
advantageous terms. N&B Management believes that hedges and cross-hedges
can, therefore, provide significant protection of NAV in the event of a
general rise in the U.S. dollar against foreign currencies. However, a
hedge or cross-hedge cannot protect against exchange rate risks perfectly,
and, if N&B Management is incorrect in its judgment of future exchange
rate relationships, the Portfolio could be in a less advantageous position
than if such a hedge or cross-hedge had not been established. In
addition, because forward contracts are not traded on an exchange, the
assets used to cover such contracts may be illiquid. If the Portfolio
uses cross-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
vary with the expected degree of correlation.
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<PAGE>
GENERAL CONSIDERATIONS INVOLVING FUTURES, OPTIONS ON FUTURES,
OPTIONS ON SECURITIES AND FOREIGN CURRENCIES, AND FORWARD
CONTRACTS (COLLECTIVELY, "HEDGING INSTRUMENTS")
Futures Contracts and Options on Futures Contracts and
Foreign Currencies. To the extent a Portfolio sells or purchases Futures
Contracts and/or writes options thereon or options on foreign currencies
that are traded on an exchange regulated by the CFTC other than for bona
fide hedging purposes (as defined by the CFTC), the aggregate initial
margin and premiums on these positions (excluding the amount by which
options are "in-the-money") may not exceed 5% of the Portfolio's net
assets.
In addition, pursuant to state securities laws, (1) the
aggregate premiums paid by a Portfolio on all options (both exchange-
traded and OTC) held by it at any time may not exceed 20% of its net
assets and (2) the aggregate margin deposits required on all exchange-
traded Futures Contracts and related options held at any time by a Portfo-
lio may not exceed 5% of its total assets. Pursuant to an undertaking to
a state securities law administrator, Neuberger & Berman Limited Maturity
Bond Portfolio may not purchase a put option if, as a result, more than 5%
of its total assets would be invested in put options.
Risks Involved in Using Hedging Instruments. The primary
risks in using Hedging Instruments are (1) imperfect correlation or no
correlation between changes in market value of the securities held or to
be acquired by a Portfolio and changes in market value 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 Instru-
ments are different from those needed to select a Portfolio's securities;
(4) the fact that, although use of these instruments for hedging purposes
can reduce the risk of loss, they also can reduce the opportunity for
gain, or even result in losses, by offsetting favorable price movements in
hedged investments; and (5) the possible inability of a Portfolio to
purchase or sell a portfolio security at a time that would otherwise be
favorable for it to do so, or the possible need for a Portfolio to sell a
portfolio security at a disadvantageous time, due to its need to maintain
"cover" or to segregate securities in connection with its use of Hedging
Instruments. N&B 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 a Portfolio's underlying
securities. N&B Management intends to reduce the risk that a Portfolio
will be unable to close out Hedging Instruments by entering into such
transactions only if N&B Management believes there will be an active and
liquid secondary market. Hedging Instruments used by the Portfolios are
generally considered "derivatives." There can be no assurance that a
Portfolio's use of Hedging Instruments will be successful.
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<PAGE>
The Portfolios' use of Hedging Instruments may be limited by
provisions of the Internal Revenue Code of 1986, as amended ("Code"), with
which each Portfolio must comply if its corresponding Fund is to continue
to qualify as a regulated investment company ("RIC"). See "Additional Tax
Information -- Taxation of Portfolios."
Cover for Hedging Instruments. Each Portfolio will comply
with SEC guidelines regarding cover for Hedging Instruments and, if the
guidelines so require, set aside in a segregated account with its
custodian cash, U.S. Government or Agency Securities, or other liquid,
high-grade debt securities in the prescribed amount. Securities held in a
segregated account cannot be sold while the Futures, option or forward
strategy covered by those securities is outstanding, unless they are
replaced with other suitable assets. As a result, segregation of a large
percentage of a Portfolio's assets could impede portfolio management or
the Portfolio's ability to meet current obligations. A Portfolio may be
unable promptly to dispose of assets which cover, or are segregated with
respect to, an illiquid Futures, option or forward position; this
inability may result in a loss to the Portfolio.
Indexed Securities (Neuberger & Berman Limited Maturity Bond
Portfolio). This Portfolio may invest in securities linked to foreign
currencies, interest rates, commodities, indices, or other financial
indicators ("indexed securities"). Most indexed securities are short- to
intermediate-term fixed income securities whose value at maturity or
interest rate rises or falls according to the change in one or more
specified underlying instruments. Indexed securities may be positively or
negatively indexed (i.e., their value may increase or decrease if the
underlying instrument appreciates) and may have return characteristics
similar to direct investments in the underlying instrument or to one or
more options thereon. Indexed securities may be more volatile than the
underlying instrument itself.
Zero Coupon Securities (Both Portfolios). Each Portfolio may
invest in zero coupon securities, which are debt obligations that do not
entitle the holder to any periodic payment of interest prior to maturity
or that specify a future date when the securities begin to pay current
interest. Zero coupon securities are issued and traded at a discount from
their face amount or par value. This discount varies depending on
prevailing interest rates, the time remaining until cash payments begin,
the liquidity of the security, and the perceived credit quality of the
issuer.
The discount on zero coupon securities ("original issue dis-
count") is taken into account ratably by each Portfolio prior to the
receipt of any actual payments. Because each Fund must distribute
substantially all of its net income (including its pro rata share of its
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<PAGE>
corresponding Portfolio's original issue discount) to its shareholders
each year for income and excise tax purposes (see "Additional Tax Informa-
tion -- Taxation of the Funds"), a Portfolio may have to dispose of
portfolio securities under disadvantageous circumstances to generate cash,
or may be required to borrow, to satisfy its corresponding Fund's
distribution requirements.
The market prices of zero coupon securities generally are
more volatile than the prices of securities that pay interest periodi-
cally. Zero coupon securities are likely to respond to changes in
interest rates to a greater degree than other types of debt securities
having similar maturities and credit quality.
Municipal Obligations (Neuberger & Berman Limited Maturity
Bond Portfolio). This Portfolio may invest up to 5% of its net assets in
municipal obligations which are issued by or on behalf of states (as used
herein, including the District of Columbia), territories, and possessions
of the United States and their political subdivisions, agencies, and
instrumentalities, and interest that is exempt from federal income tax.
Municipal obligations include "general obligation" securities, which are
backed by the full taxing power of a municipality, and "revenue"
securities, which are backed only by the income from a specific project,
facility, or tax. Municipal obligations also include industrial
development and private activity bonds which are issued by or on behalf of
public authorities, but are not backed by the credit of any governmental
or public authority. "Anticipation notes" are issued by municipalities in
expectation of future proceeds from the issuance of bonds or from taxes or
other revenues, and are payable from those bond proceeds, taxes, or
revenues. Municipal obligations also include tax-exempt commercial paper,
which is issued by municipalities to help finance short-term capital or
operating requirements.
The value of municipal obligations is dependent on the
continuing payment of interest and principal when due by the issuers of
the municipal obligations (or, in the case of industrial development
bonds, the revenues generated by the facility financed by the bonds or, in
certain other instances, the provider of the credit facility backing the
bonds). As with other fixed income securities, an increase in interest
rates generally will reduce the value of the Portfolio's investments in
municipal obligations, whereas a decline in interest rates generally will
increase that value. Current efforts to restructure the federal budget
and the relationship between the federal government and state and local
governments may impact the financing of some issuers of municipal
securities. Some states and localities are experiencing substantial
deficits and may find it difficult for political or economic reasons to
increase taxes. Efforts are underway that may result in a "flat tax" or
other restructuring of the federal income tax system. Any of these
factors could affect the value of municipal securities.
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<PAGE>
Risks of Fixed Income Securities
--------------------------------
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 general market liquidity ("market
risk"). Lower-rated securities are more likely to react to developments
affecting market and credit risk than are more highly rated securities,
which react primarily to movements in the general level of interest rates.
Changes in economic conditions or developments regarding the individual
issuer are more likely to cause price volatility and weaken the capacity
of the issuer of such securities to make principal and interest payments
than is the case for higher-grade debt securities. An economic downturn
affecting the issuer may result in an increased incidence of default. The
market for lower-rated securities may be thinner and less active than for
higher-rated securities. Pricing of thinly traded securities requires
greater judgment than pricing of securities for which market transactions
are regularly reported.
Subsequent to its purchase by a Portfolio, an issue of debt
securities may cease to be rated or its rating may be reduced, so that the
securities would not be eligible for purchase by that Portfolio. In such
a case, with respect to the non-money market Portfolios, N&B Management
will engage in an orderly disposition of the downgraded securities to the
extent necessary to ensure that the Portfolio's holdings of such
securities will not exceed 5% of its net assets. With respect to the
money market Portfolios, N&B Management will consider the need to dispose
of such securities in accordance with the requirements of Rule 2a-7 under
the 1940 Act.
PERFORMANCE INFORMATION
Each Fund's performance figures are based on historical
earnings and are not intended to indicate future performance. The yield
and total return of each Fund will vary. The share prices of each Fund
will vary, and an investment in a Fund, when redeemed, may be worth more
or less than an investor's original cost.
Yield Calculations
------------------
Each Fund may advertise its "yield" based on a 30-day (or
one-month) period. This yield is computed by dividing the net investment
income per share earned during the period by the maximum offering price
per share on the last day of the period. The result then is annualized
and shown as an annual percentage of an investment.
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The annualized yields for Limited Maturity and Ultra Short
for the 30-day period ended October 31, 1995 were 5.45% and 5.33%,
respectively.
Total Return Computations
-------------------------
Each Fund may advertise certain total return information. An
average annual compounded rate of return ("T") may be computed by using
the redeemable value at the end of a specified period ("ERV") of a
hypothetical initial investment of $1,000 ("P") over a period of time
("n") according to the formula:
n
P(1+T) = ERV
Average annual total return smooths out year-to-year
variations and, in that respect, differs from actual year-to-year results.
Although Limited Maturity and Ultra Short did not commence
operations until August 30, 1993 and September 7, 1993, respectively, each
Fund's investment objective, limitations, and policies are the same as
another mutual fund administered by N&B Management, which has a name
similar to the Fund's and invests in the same Portfolio ("Sister Fund").
Each Sister Fund had a predecessor. The following total return data is
for each Fund since its inception and, for periods prior to each Fund's
inception, its Sister Fund and that Sister Fund's predecessor. The total
returns for periods prior to the Funds' inception would have been lower
had they reflected the higher fees of the Funds, as compared to those of
the Sister Funds and their predecessors. This information is based on
historical performance and is not intended to indicate future performance.
The average annual total returns for Ultra Short, its Sister
Fund and that Sister Fund's predecessor for the one- and five-year periods
ended October 31, 1995, and for the period November 7, 1986 (commencement
of operations of the Sister Fund's predecessor) through October 31, 1995,
were +6.15%, +4.73%, and +5.89%, respectively. If an investor had
invested $10,000 in that predecessor's shares on November 7, 1986 and had
reinvested all capital gain distributions and income dividends, the NAV of
that investor's holdings would have been $16,726 on October 31, 1995.
The average annual total returns for Limited Maturity, its
Sister Fund and that Sister Fund's predecessor for the one- and five-year
periods ended October 31, 1995 and for the period June 9, 1986
(commencement of operations of the Sister Fund's predecessor) through
October 31, 1995, were +8.36%, +6.81%, and +7.16%, respectively. If an
investor had invested $10,000 in that predecessor's shares on June 9, 1986
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<PAGE>
and had reinvested all capital gain distributions and income dividends,
the NAV of that investor's holdings would have been $19,147 on October 31,
1995.
N&B Management reimbursed the Sister Funds and their
predecessors for certain expenses during the periods mentioned above,
which has the effect of increasing yield and total return. Of course,
past performance cannot guarantee future results.
Comparative Information
-----------------------
From time to time each Fund's performance may be compared
with:
(1) data (that may be expressed as rankings or ratings) published
by independent services or publications (including news-
papers, newsletters, and financial periodicals) that monitor
the performance of mutual funds, such as Lipper Analytical
Services, Inc., C.D.A. Investment Technologies, Inc.,
Wiesenberger Investment Companies Service, IBC/Donoghue's
Money Market Fund Report, Investment Company Data Inc.,
Morningstar, Inc., Micropal Incorporated, and quarterly
mutual fund rankings by Money, Fortune, Forbes, Business
Week, Personal Investor, and U.S. News & World Report
magazines, The Wall Street Journal, The New York Times,
Kiplingers Personal Finance, and Barron's Newspaper, or
(2) recognized bond, stock, and other indices such as the Shear-
son Lehman Bond Index, the Standard & Poor's 500 Composite
Stock Price Index ("S&P 500 Index"), Dow Jones Industrial
Average ("DJIA"), S&P/BARRA Index, Russell Index, and various
other domestic, international, and global indices and changes
in the Consumer Price Index. The S&P 500 Index is a broad
index of common stock prices, while the DJIA represents a
narrower segment of industrial companies. Each assumes
reinvestment of distributions and is calculated without
regard to tax consequences or the costs of investing. Each
Portfolio may invest in different types of securities from
those included in these indices.
Each Fund's performance also may be compared from time to
time with the following specific indices and other measures of per-
formance:
Ultra Short's performance may be compared with the Merrill
Lynch 2-year Treasury Index and the Salomon Brothers 6-month
- 28 -
<PAGE>
and 1-year Treasury Bill Indices, as well as the performance
of Treasury Securities and the Lipper Short Investment Grade
Debt Funds category.
Limited Maturity's performance may be compared with the
Merrill Lynch 1-3 year Treasury Index and the Lehman Brothers
Intermediate Government/Corporate Bond Index, as well as the
performance of Treasury Securities, corporate bonds, and the
Lipper Short Investment Grade Debt Funds category.
In addition, each Fund's performance may be compared at times
with that of various bank instruments (including bank money market
accounts and CDs of varying maturities) as reported in publications such
as The Bank Rate Monitor. Any such comparisons may be useful to investors
who wish to compare a Fund's past performance with that of certain of its
competitors. Of course, past performance is not a guarantee of future
results. Unlike an investment in a Fund, bank CDs pay a fixed rate of
interest for a stated period of time and are insured up to $100,000.
Evaluations of the Funds' performance and their yield/total
returns and comparisons may be used in advertisements and in information
furnished to current and prospective shareholders (collectively,
"Advertisements"). The Neuberger & Berman Funds(SERVICEMARK) may also be
compared to individual asset classes such as common stocks, small-cap
stocks, or Treasury bonds, based on information supplied by Ibbotson and
Sinquefield.
Other Performance Information
-----------------------------
From time to time, information about a Portfolio's portfolio
allocation and holdings as of a particular date may be included in
Advertisements for its corresponding Fund. This information, for example,
may include the Portfolio's diversification by asset type. Information
used in Advertisements may include statements or illustrations relating to
the appropriateness of types of securities and/or mutual funds that may be
employed to meet specific financial goals, such as (1) funding retirement,
(2) paying for children's education, and (3) financially supporting aging
parents.
Information (including charts and illustrations) showing the
effects of compounding interest may be included in Advertisements from
time to time. Compounding is the process of earning interest on principal
plus interest that was earned earlier. Interest can be compounded at
different intervals, such as annually, semi-annually, quarterly, monthly,
or daily; for example, $1,000 compounded annually at 9% will grow to
$1,090 at the end of the first year (an increase of $90) and $1,188 at the
end of the second year (an increase of $98). The extra $8 that was earned
on the $90 interest from the first year is the compound interest. One
- 29 -
<PAGE>
thousand dollars compounded annually at 9% will grow to $2,367 at the end
of ten years and $5,604 at the end of twenty years. Other examples of
compounding are as follows: at 7% and 12% annually, $1,000 will grow to
$1,967 and $3,106, respectively, at the end of ten years and $3,870 and
$9,646, respectively, at the end of twenty years. All these examples are
for illustrative purposes only and are not indicative of any Fund's
performance.
Information relating to inflation and its effects on the
dollar also may be included in Advertisements. For example, after ten
years, the purchasing power of $25,000 would shrink to $16,621, $14,968,
$13,465, and $12,100, respectively, if the annual rates of inflation
during that period were 4%, 5%, 6%, and 7%, respectively. (To calculate
the purchasing power, the value at the end of each year is reduced by the
inflation rate for the ten year period.) Information (including charts
and illustrations) showing the total return performance for government
funds, 6-month CDs and money market funds may be included in
Advertisements from time to time.
Information regarding the effects of automatic investment and
systematic withdrawal plans, investing at market highs and/or lows, and
investing early versus late for retirement plans also may be included in
Advertisements, if appropriate.
From time to time the investment philosophy of N&B Man-
agement's founder, Roy R. Neuberger, may be included in the Funds'
Advertisements. This philosophy is described in further detail in "The
Art of Investing: A Conversation with Roy Neuberger," attached as
Appendix B to this SAI.
CERTAIN RISK CONSIDERATIONS
Although each Portfolio seeks to reduce risk by investing in
a diversified portfolio, diversification does not eliminate all risk.
There can, of course, be no assurance that any Portfolio will achieve its
investment objective, and an investment in a Fund involves certain risks
that are described in the sections entitled "Investment Programs" and
"Description of Investments" in the Prospectus and "Investment
Information--Additional Investment Information" in this SAI.
TRUSTEES AND OFFICERS
The following table sets forth information concerning the
trustees and officers of the Trusts, including their addresses and
principal business experience during the past five years. Some persons
named as trustees and officers also serve in similar capacities for other
- 30 -
<PAGE>
funds, and (where applicable) their corresponding portfolios, administered
or managed by N&B Management and Neuberger & Berman.
<TABLE>
<CAPTION>
Name, Address Positions Held
and Age(1) With the Trusts Principal Occupation(s)(2)
------------- --------------- --------------------------
<S> <C> <C>
John Cannon (66) Trustee of each President, AMA Investment Advisers,
CDC Associates, Inc. Trust Inc. (registered investment adviser)
620 Sentry Parkway (1976 - 1991); Senior Vice President
Suite 220 AMA Investment Advisers, Inc. (1991 -
Blue Bell, PA 19422 1993); President of AMA Family of
Funds (investment companies) (1976 -
1991); Chairman and Treasurer of CDC
Associates, Inc. (registered
investment adviser) (1993 - present)
Charles DeCarlo (74) Trustee of each President Emeritus of Sarah Lawrence
33 West 67th Street Trust College; Chief Executive Officer of
New York, NY 10023 Xicon Systems (animation company).
Stanley Egener* (61) Chairman of the Partner of Neuberger & Berman;
Board, Chief Exec- President and Director of N&B Manage-
utive Officer, and ment; Chairman of the Board, Chief
Trustee of each Executive Officer, and Trustee of
Trust eight other mutual funds for which N&B
Management acts as investment manager
or administrator.
Theresa A. Havell* (49) President and Partner of Neuberger & Berman; Vice
Trustee of each President and Director of N&B Manage-
Trust ment; President and Trustee of one
other mutual fund for which N&B
Management serves as administrator.
Barry Hirsch (62) Trustee of each Senior Vice President, Secretary, and
Loews Corporation Trust General Counsel of Loews Corporation
667 Madison Avenue (diversified financial corporation).
7th Floor
New York, NY 10021
Robert A. Kavesh (68) Trustee of each Professor of Finance and Economics at
110 Bleeker Street Trust Stern School of Business, New York
Apt. 24B University; Director of Del
New York, NY 10012 Laboratories, Inc. and Greater New
York Mutual Insurance Co.
- 31 -
<PAGE>
Name, Address Positions Held
and Age(1) With the Trusts Principal Occupation(s)(2)
------------- --------------- --------------------------
Harold R. Logan (74) Trustee of each Chairman of Comstock Resources, Inc.
19 Norfield Road Trust (natural resources company); Vice
Weston, CT 06883 Chairman, Retired, of W.R. Grace & Co.
(chemicals, natural resources, and
selected consumer services).
William E. Rulon (63) Trustee of each Senior Vice President and Secretary of
Foodmaker, Inc. Trust Foodmaker, Inc. (operator and fran-
9330 Balboa Avenue chisor of restaurants).
San Diego, CA 92123
Candace L. Straight (48) Trustee of each Managing Director of Head & Company,
Head & Company, LLC Trust LLC (limited liability company
1330 Avenue of the Americas providing investment banking and con-
12th Floor sulting services to the insurance
New York, NY 10019 industry); President of Integon Corpo-
ration (marketer of life insurance,
annuities, and property and casualty
insurance), 1990-1992; Director of and
Drake Holdings (U.K. motor insurer).
Daniel J. Sullivan (56) Vice President of Senior Vice President of N&B
each Trust Management since 1992; prior thereto,
Vice President of N&B Management; Vice
President of eight other mutual funds
for which N&B Management acts as
investment manager or administrator.
Michael J. Weiner (49) Vice President and Senior Vice President and Treasurer of
Principal Finan- N&B Management since 1992; Treasurer
cial Officer of of N&B Management from 1992 to 1996;
each Trust prior thereto, Vice President and
Treasurer of N&B Management and
Treasurer of certain mutual funds for
which N&B Management acted as
investment adviser; Vice President and
Principal Financial Officer of eight
other mutual funds for which N&B Man-
agement acts as investment manager or
administrator.
Claudia A. Brandon (39) Secretary of each Vice President of N&B Management;
Trust Secretary of eight other mutual funds
for which N&B Management acts as
investment manager or administrator.
- 32 -
<PAGE>
Name, Address Positions Held
and Age(1) With the Trusts Principal Occupation(s)(2)
------------- --------------- --------------------------
Richard Russell (49) Treasurer and Vice President of N&B Management since
Principal Account- 1993; prior thereto, Assistant Vice
ing Officer of President of N&B Management; Treasurer
each Trust and Principal Accounting Officer of
eight other mutual funds for which N&B
Management acts as investment manager
or administrator.
Stacy Cooper-Shugrue (33) Assistant Secre- Assistant Vice President of N&B
tary of each Trust Management since 1993; prior thereto,
employee of N&B Management; Assistant
Secretary of eight other mutual funds
for which N&B Management acts as
investment manager or administrator.
C. Carl Randolph (58) Assistant Secre- Partner of Neuberger & Berman since
tary of each Trust 1992; prior thereto, employee of
Neuberger & Berman; Assistant
Secretary of eight other mutual funds
for which N&B Management acts as
investment manager or administrator.
</TABLE>
____________________
(1) Unless otherwise indicated, the business address of each listed
person is 605 Third Avenue, 2nd Floor, New York, NY 10158-0180.
(2) Except as otherwise indicated, each individual has held the positions
shown for at least the last five years.
* Indicates a trustee who is an "interested person" of each Trust
within the meaning of the 1940 Act. Mr. Egener and Ms. Havell are
interested persons by virtue of the fact that they are officers and
directors of N&B Management and partners of Neuberger & Berman.
The Trust's Trust Instrument and Managers Trust's Declaration
of Trust each provides that it 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 engaged in bad faith, willful
misfeasance, gross negligence, or reckless disregard of the duties
involved in the conduct of their offices. In the case of settlement, such
indemnification will not be provided unless it has been determined (by a
- 33 -
<PAGE>
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 fees and expenses were accrued and paid to Fund
and Portfolio Trustees who are not affiliated with N&B Management or
Neuberger & Berman for the year ending October 31, 1995: Neuberger &
Berman Ultra Short Bond Trust and Portfolio $468, and Neuberger & Berman
Limited Maturity Bond Trust and Portfolio $1,753.
The following table sets forth information concerning the
compensation of the trustees and officers of the Trust. None of the
Neuberger & Berman Funds(SERVICEMARK) has any retirement plan for its
trustees or officers.
<TABLE>
<CAPTION>
TABLE OF COMPENSATION
FOR FISCAL YEAR ENDED 10/31/95
------------------------------
Total Compensation from
Aggregate Compensation Trusts in the Neuberger &
Name and Position with the Trust from the Trust Berman Fund Complex Paid to
-------------------------------- ---------------------- Trustees
---------------------------
<S> <C> <C>
John Cannon $ 77 $ 20,500
Trustee (2 other investment
companies)
Charles DeCarlo $ 128 $ 33,500
Trustee
Stanley Egener $ 0 $0
Chairman of the Board, Chief (9 other investment
Executive Officer, and Trustee companies)
Theresa Havell $ 0 $ 0
President and Trustee (2 other investment
companies)
- 34 -
<PAGE>
TABLE OF COMPENSATION
FOR FISCAL YEAR ENDED 10/31/95
------------------------------
Total Compensation from
Aggregate Compensation Trusts in the Neuberger &
Name and Position with the Trust from the Trust Berman Fund Complex Paid to
-------------------------------- ---------------------- Trustees
---------------------------
Barry Hirsch $ 128 $ 33,500
Trustee (2 other investment
companies)
Robert A. Kavesh $ 113 $ 30,500
Trustee (2 other investment
companies)
Harold R. Logan $ 104 $ 28,000
Trustee (2 other investment
companies)
William E. Rulon $ 115 $ 30,500
Trustee (2 other investment
companies)
Candace L. Straight $ 119 $ 32,000
Trustee (2 other investment
companies)
</TABLE>
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
Investment Manager and Administrator
------------------------------------
Because all of the Funds' net investable assets are invested
in their corresponding Portfolios, the Funds do not need an investment
manager. N&B Management serves as the Portfolios' investment manager
pursuant to a management agreement with Managers Trust on behalf of the
Portfolio dated as of July 2, 1993 ("Management Agreement"). The
Management Agreement was approved for each Portfolio by the Portfolio
Trustees, including a majority of the Portfolio Trustees who were not
"interested persons" of N&B Management or Managers Trust ("Independent
Portfolio Trustees"), on April 27, 1993, and was approved by the holders
of the interests in all the Portfolios on July 2, 1993.
- 35 -
<PAGE>
The Management Agreement provides, in substance, that N&B
Management will make and implement investment decisions for the Portfolios
in its discretion and will continuously develop an investment program for
the Portfolios' assets. The Management Agreement permits N&B Management
to effect securities transactions on behalf of each Portfolio through
associated persons of N&B Management. The Management Agreement also
specifically permits N&B Management to compensate, through higher
commissions, brokers and dealers who provide investment research and
analysis to the Portfolios, although N&B Management has no current plans
to do so.
N&B Management provides to each Portfolio, without separate
cost, office space, equipment, and facilities and the personnel necessary
to perform executive, administrative, and clerical functions. N&B
Management pays all salaries, expenses, and fees of the officers,
trustees, and employees of Managers Trust who are officers, directors, or
employees of N&B Management. Two officers and directors of N&B Management
(who also are partners of Neuberger & Berman), presently serve as trustees
and officers of the Trusts. See "Trustees and Officers." Each Portfolio
pays N&B Management a management fee based on the Portfolio's average
daily net assets as described in the Prospectus.
N&B Management provides similar facilities, services, and
personnel to each Fund pursuant to an administration agreement dated July
2, 1993 ("Administration Agreement"). For such administrative services,
each Fund pays N&B Management a fee based on the Fund's average daily net
assets, as described in the Prospectus. N&B Management enters into
administrative services agreements with Institutions, pursuant to which it
compensates such Institutions for accounting, recordkeeping and other
services that they provide to investors who purchase shares of the Funds.
During the fiscal years ended October 31, 1995 and 1994 and
the fiscal period ended October 31, 1993, each Fund accrued management and
administration fees as follows: Limited Maturity - $65,572, $18,788, and
$111; and Ultra Short - $11,176, $5,804, and $115, respectively.
N&B Management has agreed to reimburse each Fund for its
Operating Expenses (including fees under the Administration Agreement) and
its pro rata share of its corresponding Portfolio's Operating Expenses
(including fees under the Management Agreement) that exceed, in the
aggregate, 0.75% and 0.80% per annum of the average daily net assets
("Expense Limitation") of Ultra Short and Limited Maturity, respectively.
From March 1, 1994 to February 28, 1995, N&B Management reimbursed each
Fund for its Operating Expenses (including fees under the Administration
Agreement) and its pro rata share of its corresponding Portfolio's
Operating Expenses (including fees under the Management Agreement) that
exceeded, in the aggregate, 0.65% and 0.70% per annum of the average daily
net assets of Ultra Short and Limited Maturity, respectively; prior to
- 36 -
<PAGE>
that, the limits were 0.65% and 0.65%, respectively. "Operating Expenses"
exclude interest, taxes brokerage costs and extraordinary expenses.
During the fiscal years ended October 31, 1995 and 1994 and
the fiscal period ended October 31, 1993, N&B Management reimbursed each
Fund the following amounts of expenses under the above arrangements:
Limited Maturity - $123,568, $90,718, and $14,957; and Ultra Short -
$104,135, $91,185, and $15,612, respectively.
N&B Management can terminate an expense limitation by giving
the Fund at least 60 days' prior written notice.
The Management Agreement continues with respect to each
Portfolio for a period of two years after the date the Portfolio became
subject thereto. The Management Agreement is renewable thereafter from
year to year with respect to each Portfolio, so long as its continuance is
approved at least annually (1) by the vote of a majority of the
Independent Portfolio Trustees, cast in person at a meeting called for the
purpose of voting on such approval, and (2) by the vote of a majority of
the Portfolio Trustees or by a 1940 Act majority vote of the outstanding
interests in the Portfolio. The Administration Agreement continues with
respect to each Fund for a period of two years after the date the Fund
became subject thereto. The Administration Agreement is renewable from
year to year with respect to a Fund, so long as its continuance is
approved at least annually (1) by the vote of the Fund Trustees who are
not "interested persons" of N&B Management or the Trust ("Independent Fund
Trustees"), cast in person at a meeting called for the purpose of voting
on such approval, and (2) by the vote of a majority of the Fund Trustees
or by a 1940 Act majority vote of the outstanding shares in the Fund.
The Management Agreement is terminable, without penalty, with
respect to a Portfolio on 60 days' written notice either by Managers Trust
or by N&B Management. The Administration Agreement is terminable, without
penalty, with respect to a Fund on 60 days' written notice either by N&B
Management or by the Trust if authorized by the Fund Trustees, including a
majority of the Independent Fund Trustees. Each Agreement terminates
automatically if it is assigned.
In addition to the voluntary expense reimbursement noted
above and described in the Prospectus under "Management and Administration
-- Expenses," N&B Management has agreed in the Management Agreement to
reimburse each Fund's expenses as follows. If, in any fiscal year, a
Fund's Aggregate Operating Expenses (as defined below) exceed the most
restrictive expense limitation imposed under the securities laws of the
states in which the Fund's shares are qualified for sale ("State Expense
Limitation"), then N&B Management will pay to the Fund the amount of that
excess, less the amount of any reduction of the administration fee payable
- 37 -
<PAGE>
by the Fund under a similar State Expense Limitation contained in the
Administration Agreement. N&B Management will have no obligation to pay a
Fund, however, for any expenses that exceed the pro rata portion of the
advisory fees attributable to that Fund's interest in its corresponding
Portfolio. At the date of this SAI, the most restrictive expense limita-
tion to which the Funds expect to be subject is 2 1/2% of the first $30
million of average net assets, 2% of the next $70 million of average net
assets, and 1 1/2% of average net assets over $100 million. For the
fiscal year ended October 31, 1995, there were no expense reimbursements
required of N&B Management because of the State Expense Limitation.
For purposes of the State Expense Limitation, the term
"Aggregate Operating Expenses" means a Fund's operating expenses plus its
pro rata portion of its corresponding Portfolio's operating expenses
(including any fees or expense reimbursements payable to N&B Management
and any compensation payable thereto pursuant to (1) the Administration
Agreement or (2) any other agreement or arrangement with Managers Trust in
regard to the Portfolio, but excluding (with respect to both the Fund and
the Portfolio) interest, taxes, brokerage commissions, litigation and
indemnification expenses, and other extraordinary expenses not incurred in
the ordinary course of business).
Sub-Adviser
-----------
N&B Management retains Neuberger & Berman, 605 Third Avenue,
New York, NY 10158-3698, as sub-adviser with respect to each Portfolio
pursuant to a sub-advisory agreement dated July 2, 1993 ("Sub-Advisory
Agreement"). The Sub-Advisory Agreement was approved by the Portfolio
Trustees, including a majority of the Independent Portfolio Trustees, on
April 27, 1993 and was approved by the holders of the interests in the
Portfolios on July 2, 1993.
The Sub-Advisory Agreement provides in substance that
Neuberger & Berman will furnish to N&B Management, upon reasonable
request, such investment recommendations and research as Neuberger &
Berman, from time to time, provides to its partners and employees for use
in managing client accounts. In this manner, N&B Management expects to
have available to it, in addition to research from other professional
sources, the capability of the research staff of Neuberger & Berman. This
staff consists of approximately fourteen investment analysts, each of whom
specializes in studying one or more industries, under the supervision of
the Director of Research, who is also available for consultation with N&B
Management. The Sub-Advisory Agreement provides that N&B Management will
pay for the services rendered by Neuberger & Berman based on the direct
and indirect costs to Neuberger & Berman in connection with those
services. Neuberger & Berman also serves as a sub-adviser for all of the
other mutual funds managed by N&B Management.
- 38 -
<PAGE>
The Sub-Advisory Agreement continues with respect to each
Portfolio for a period of two years after the date the Portfolio became
subject thereto, and is renewable thereafter 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 each Portfolio by the Portfolio Trustees, by a
1940 Act majority vote of the outstanding interests in the Portfolio, by
N&B 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 each Portfolio if it is assigned or if the
Management Agreement terminates with respect to that Portfolio.
Most money managers that come to the Neuberger & Berman
organization have at least fifteen years experience. Neuberger & Berman
and N&B Management employ experienced professionals that work in a
competitive environment.
Investment Companies Managed
----------------------------
N&B Management currently serves as investment manager of the
following investment companies. As of December 31, 1995, these companies,
along with three investment companies advised by Neuberger & Berman, had
aggregate net assets of approximately $11.9 billion, as shown in the
following list:
Approximate
Net Assets at
Name December 31, 1995
---- -----------------
Neuberger & Berman Cash Reserves Portfolio . . . . . . . . $ 433,504,363
(investment portfolio for Neuberger & Berman Cash Reserves)
Neuberger & Berman Government Money Portfolio . . . . . . . $ 275,569,350
(investment portfolio for Neuberger & Berman Government Money Fund)
Neuberger & Berman Limited Maturity Bond Portfolio . . . . $ 318,037,698
(investment portfolio for Neuberger & Berman Limited Maturity Bond
Fund and Neuberger & Berman Limited Maturity Bond Trust)
Neuberger & Berman Ultra Short Bond Portfolio . . . . . . . $ 102,724,936
- 39 -
<PAGE>
(investment portfolio for Neuberger & Berman Ultra Short Bond Fund
and Neuberger & Berman Ultra Short Bond Trust)
Neuberger & Berman Municipal Money Portfolio . . . . . . . $ 152,876,653
(investment portfolio for Neuberger & Berman Municipal Money Fund)
Neuberger & Berman Municipal Securities Portfolio . . . . . $ 43,859,557
(investment portfolio for Neuberger & Berman Municipal Securities
Trust)
Neuberger & Berman New York Insured
Intermediate Portfolio . . . . . . . . . . . . . . . $ 11,742,945
(investment portfolio for Neuberger & Berman New York Insured
Intermediate Fund)
Neuberger & Berman Genesis Portfolio . . . . . . . . . . . $ 152,439,092
(investment portfolio for Neuberger & Berman Genesis Fund and
Neuberger & Berman Genesis Trust)
Neuberger & Berman Guardian Portfolio . . . . . . . . . $ 5,321,221,497
(investment portfolio for Neuberger & Berman Guardian Fund,
Neuberger & Berman Guardian Trust, and Neuberger & Berman Guardian
Assets)
Neuberger & Berman Manhattan Portfolio . . . . . . . . . $ 638,295,408
(investment portfolio for Neuberger & Berman Manhattan Fund,
Neuberger & Berman Manhattan Trust, and Neuberger & Berman Manhattan
Assets)
Neuberger & Berman International Portfolio . . . . . . . . $ 33,320,099
(investment portfolio for Neuberger & Berman International Fund)
Neuberger & Berman Partners Portfolio . . . . . . . . . . $ 1,741,742,815
(investment portfolio for Neuberger & Berman Partners Fund,
Neuberger & Berman Partners Trust, and Neuberger & Berman Partners
Assets)
Neuberger & Berman Focus Portfolio . . . . . . . . . . . $ 1,057,224,027
(investment portfolio for Neuberger & Berman Focus Fund, Neuberger &
Berman Focus Trust, and Neuberger & Berman Focus Assets)
Neuberger & Berman Socially Responsive Portfolio . . . . $ 115,240,931
- 40 -
<PAGE>
(investment portfolio for Neuberger & Berman Socially Responsive
Fund, Neuberger & Berman Socially Responsive Trust, and Neuberger &
Berman NYCDC Socially Responsive Trust)
Advisers Managers Trust (six series) . . . . . . . . . $ 1,306,566,805
In addition, Neuberger & Berman serves as investment
adviser to three investment companies, Plan Investment Fund, Inc., AHA
Investment Fund, Inc., and AHA Full Maturity, with assets of $64,302,128,
$99,396,468, and $26,077,793, respectively, at December 31, 1995.
The investment decisions concerning the Portfolios and
the other funds and portfolios managed by N&B Management (collectively,
"Other N&B Funds") have been and will continue to be made independently of
one another. In terms of their investment objectives, most of the Other
N&B Funds differ from the Portfolios. Even where the investment
objectives are similar, however, the methods used by the Other N&B Funds
and the Portfolios to achieve their objectives may differ.
There may be occasions when a Portfolio and one or more
of the Other N&B Funds or other accounts managed by Neuberger & Berman are
contemporaneously engaged in purchasing or selling the same securities
from or to third parties. When this occurs, the transactions are averaged
as to price and allocated as to amounts in accordance with a formula con-
sidered 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 a Portfolio, in other cases it is believed that a
Portfolio's ability to participate in volume transactions may produce
better executions for it. In any case, it is the judgment of the
Portfolio Trustees that the desirability of the Portfolios' having their
advisory arrangements with N&B Management outweighs any disadvantages that
may result from contemporaneous transactions. The investment results
achieved by all of the funds managed by N&B Management have varied from
one another in the past and are likely to vary in the future.
Management and Control of N&B Management
----------------------------------------
The directors and officers of N&B Management, all of whom have
offices at the same address as N&B Management, are Richard A. Cantor,
Chairman of the Board and director; Stanley Egener, President and
director; Theresa A. Havell, Vice President and director; Irwin Lainoff,
director; Marvin C. Schwartz, director; Lawrence Zicklin, director;
Daniel J. Sullivan, Senior Vice President; Michael J. Weiner, Senior Vice
President; Claudia A. Brandon, Vice President; Robert Conti, Treasurer;
William Cunningham, Vice President; Peter E. Sundman, Senior Vice
President; Clara Del Villar, Vice President; Mark R. Goldstein, Vice
- 41 -
<PAGE>
President; Farha-Joyce Haboucha, Vice President; Michael M. Kassen, Vice
President; Michael Lamberti, Vice President; Josephine P. Mahaney, Vice
President; Lawrence Marx III, Vice President; Ellen Metzger, Vice
President and Secretary; Janet W. Prindle, Vice President; Felix Rovelli,
Vice President; Richard Russell, Vice President; Kent C. Simons, Vice
President; Frederick B. Soule, Vice President; Judith M. Vale, Vice
President; Thomas Wolfe, Vice President; Andrea Trachtenberg, Vice
President of Marketing; Patrick T. Byrne, Assistant Vice President; Stacy
Cooper-Shugrue, Assistant Vice President; Robert Cresci, Assistant Vice
President; Barbara DiGiorgio, Assistant Vice President; Roberta D'Orio,
Assistant Vice President; Robert I. Gendelman, Assistant Vice President;
Joseph G. Galli, Assistant Vice President; Leslie Holliday-Soto, Assistant
Vice President; Jody L. Irwin, Assistant Vice President; Carmen G.
Martinez, Assistant Vice President; Paul Metzger, Assistant Vice
President; Susan Switzer, Assistant Vice President; Susan Walsh, Assistant
Vice President and Celeste Wischerth, Assistant Vice President. Messrs.
Cantor, Egener, Lainoff, Schwartz, Zicklin, Goldstein, Kassen, Marx, and
Simons and Mmes. Havell and Prindle are general partners of Neuberger &
Berman.
Ms. Havell and Mr. Egener are trustees and officers, and
Messrs. Sullivan, Weiner, and Russell and Mmes. Brandon and Cooper-Shugrue
are officers, of each Trust. C. Carl Randolph, a general partner of
Neuberger & Berman, also is an officer of each Trust.
All of the outstanding voting stock in N&B Management is
owned by persons who are also general partners of Neuberger & Berman.
DISTRIBUTION ARRANGEMENTS
N&B Management serves as the distributor ("Distributor")
in connection with the offering of each Fund's shares on a no-load basis
to Institutions. In connection with the sale of its shares, each Fund has
authorized the Distributor to give only the information, and to make only
the statements and representations, contained in the Prospectus and this
SAI or that properly may be included in sales literature and
advertisements in accordance with the 1933 Act, the 1940 Act, and
applicable rules of self-regulatory organizations. Sales may be made only
by the Prospectus, which may be delivered either personally, through the
mails, or by electronic means. The Distributor is the Funds' "principal
underwriter" within the meaning of the 1940 Act and, as such, acts as
agent in arranging for the sale of each Fund's shares to Institutions
without sales commission or other compensation and bears all advertising
and promotion expenses incurred in the sale of the Funds' shares.
From time to time, N&B Management may enter into
arrangements pursuant to which it compensates a registered broker-dealer
or other third party for services in connection with the distribution of
Fund shares.
- 42 -
<PAGE>
The Trust, on behalf of each Fund, and the Distributor
are parties to a Distribution Agreement that continues until July 2, 1996.
The Distribution Agreement may be renewed annually if specifically
approved by (1) the vote of a majority of the Fund Trustees or a 1940 Act
majority vote of the Fund's outstanding shares and (2) the vote of a
majority of the Independent Fund Trustees, cast in person at a meeting
called for the purpose of voting on such approval. The Distribution
Agreement may be terminated by either party and will automatically
terminate on its assignment, in the same manner as the Management
Agreement.
ADDITIONAL EXCHANGE INFORMATION
As more fully set forth in the section of the Prospectus
entitled "Exchanging Shares," an Institution may exchange shares of either
Fund for shares of one or more of the other Funds, or the equity funds
that are briefly described below ("Equity Funds").
<TABLE>
<CAPTION>
<S> <C>
Neuberger & Berman Seeks long-term capital appreciation through investments
Focus Trust principally in common stocks selected from 13 industry eco-
nomic sectors. The corresponding portfolio uses a value-
oriented approach to select individual securities and then
focuses its investments in the sectors in which the
undervalued stocks are clustered. Through this approach,
90% or more of the fund's investments are normally focused
in not more than six sectors.
Neuberger & Berman Seeks capital appreciation through investments principally
Genesis Trust in common stocks of companies with small market capital-
izations, up to $750 million. The corresponding portfolio
uses a value-oriented approach to the selection of
individual securities.
Neuberger & Berman Seeks capital appreciation through investments primarily in
Guardian Trust a large number of common stocks of long-established, high-
quality companies that N&B Management believes are well-
managed. Its corresponding portfolio uses a value-oriented
approach to the selection of individual securities. Current
income is a secondary objective. The Sister Fund and its
predecessor have paid its shareholders an income dividend
every quarter, and a capital gain distribution every year,
since its inception in 1950, although there can be no assur-
ance that it will be able to continue to do so.
- 43 -
<PAGE>
Neuberger & Berman Seeks capital appreciation, without regard to income,
Manhattan Trust through investments generally in securities of medium-to-
large-capitalization companies that N&B Management believes
have a maximum potential for increasing total NAV. The
corresponding portfolio's "growth at a reasonable price"
investment approach involves greater risks and share price
volatility than programs that invest in more conservative
securities.
Neuberger & Berman Seeks capital growth through an investment approach that is
Partners Trust designed to increase capital with reasonable risk. Its
investment program seeks securities believed to be
undervalued based on strong fundamentals such as low price-
to-earnings ratios, consistent cash flow, and the company's
track record through all parts of the market cycle. The
corresponding portfolio uses the value-oriented investment
approach to the selection of individual securities.
Neuberger & Berman Socially Seeks long-term capital appreciation through investments
Responsive Trust primarily in securities of companies that meet both
financial and social criteria.
</TABLE>
Any Fund described herein, and any of the Other N&B
Funds, may terminate or modify its exchange privilege in the future.
Fund shareholders who are considering exchanging shares
into any of the funds listed below should note that (1) the Equity Funds
are series of a Delaware business trust (named "Neuberger & Berman Equity
Trust") that is registered with the SEC as an open-end management
investment company, except Neuberger & Berman Socially Responsive Trust,
which is a series of Neuberger & Berman Equity Assets; and (2) each such
series invests all of its net investable assets in a portfolio of Equity
Managers Trust, an open-end management investment company that is managed
by N&B Management. Each such portfolio has an investment objective
identical to that of its corresponding fund and invests in accordance with
investment policies and limitations identical to those of that fund.
Before effecting an exchange, Fund shareholders must
obtain and should review a currently effective prospectus of the fund into
which the exchange is to be made. In this regard, it should be noted that
the Equity Funds share a prospectus, except for Neuberger & Berman
Socially Responsive Trust. An exchange is treated as a sale for federal
income tax purposes and, depending on the circumstances, a short- or long-
term capital gain or loss may be realized.
ADDITIONAL REDEMPTION INFORMATION
- 44 -
<PAGE>
Suspension of Redemptions
-------------------------
The right to redeem a Fund's shares may be suspended or
payment of the redemption price postponed (1) when the New York Stock
Exchange ("NYSE") is closed (other than weekend and holiday closings), (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 corresponding
Portfolio to dispose of securities it owns or fairly to determine the
value of its net assets, or (4) for such other period as the SEC may by
order permit for the protection of a Fund's shareholders; provided that
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
-------------------
Each 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 under "Share Information -- Share Prices
and Net Asset Value" in the Prospectus. If payment is made in securities,
a shareholder generally will incur brokerage expenses in converting those
securities into cash and will be subject to fluctuations in the market
price of those securities until they are sold. The Funds do not redeem in
kind under normal circumstances, but would do so when the Fund Trustees
determine that it is in the best interests of a Fund's shareholders as a
whole. Redemptions in kind will be made with readily marketable
securities to the extent possible.
DIVIDENDS AND OTHER DISTRIBUTIONS
Each Fund distributes to its shareholders amounts equal
to substantially all of its proportionate share of any net investment
income (after deducting expenses incurred directly by the Fund), net
capital gains (both long-term and short-term), and net gains from foreign
currency transactions earned or realized by its corresponding Portfolio.
Each Fund calculates its net investment income and share price as of the
close of regular trading on the NYSE on each Business Day (usually 4:00
p.m. Eastern time). Shares of the Funds begin earning income dividends on
the Business Day after the proceeds of the purchase order have been
converted to "federal funds" and continue to earn dividends through the
Business Day they are redeemed. Dividends declared for each month are
paid on the last Business Day of the month.
- 45 -
<PAGE>
A Portfolio's net investment income consists of all
income accrued on portfolio assets less accrued expenses but does not
include realized gains and losses Net investment income and realized gains
and losses are reflected in a Portfolio's NAV (and, hence, its
corresponding Fund's NAV) until they are distributed. Dividends from net
investment income and distributions of net realized capital and foreign
currency gains, if any, normally are paid once annually, in December.
Income dividends are declared daily and paid monthly.
Dividends and other distributions, if any, are
automatically reinvested in additional shares of the distributing Fund,
unless and until the Institution elects to receive them in cash ("cash
election"). To the extent dividends and other distributions are subject
to federal, state, or local income taxation, they are taxable to the
shareholders whether received in cash or reinvested in Fund shares. A
cash election with respect to any Fund remains in effect until the
Institution notifies the Fund in writing to discontinue the election.
ADDITIONAL TAX INFORMATION
Taxation of the Funds
---------------------
In order to continue to qualify for treatment as a RIC
under the Code, each Fund must distribute to its shareholders for each
taxable year at least 90% of the sum of its investment company taxable
income (consisting generally of net investment income, net short-term
capital gain, and for Limited Maturity, net gains from certain foreign
currency transactions) ("Distribution Requirement") and must meet several
additional requirements. With respect to each Fund, these requirements
include the following: (1) the Fund must derive at least 90% of its gross
income each taxable year from dividends, interest, payments with respect
to securities loans, and gains from the sale or other disposition of
securities or foreign currencies, or other income (including gains from
Hedging Instruments) derived with respect to its business of investing in
securities or those currencies ("Income Requirement"); (2) the Fund must
derive less than 30% of its gross income each taxable year from the sale
or other disposition of securities, or any of the following, that were
held for less than three months (i) Hedging Instruments (other than those
on foreign currencies), or (ii) foreign currencies or Hedging Instruments
thereon that are not directly related to the Fund's principal business of
investing in securities (or options and Futures with respect thereto)
("Short-Short Limitation"); and (3) at the close of each quarter of the
Fund's taxable year, (i) at least 50% of the value of its total assets
must be represented by cash and cash items, U.S. Government securities,
and other securities limited, in respect of any one issuer, to an amount
that does not exceed 5% of the value of the Fund's total assets and 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
- 46 -
<PAGE>
invested in securities (other than U.S. Government securities) of any one
issuer.
Certain funds managed by N&B Management, including the
Sister Funds, have received a ruling from the Internal Revenue Service
("Service") that each such fund, as an investor in a corresponding portfo-
lio of Managers Trust or Equity Managers Trust, will be deemed to own a
proportionate share of the portfolio's assets and income for purposes of
determining whether the fund satisfies all the requirements described
above to qualify as a RIC. Although that ruling may not be relied on as
precedent by the Funds, N&B Management believes that the reasoning thereof
and, hence, its conclusion apply to the Funds as well.
Each Fund will be subject to a nondeductible 4% excise
tax ("Excise Tax") to the extent it fails to distribute by the end of any
calendar year substantially all of its ordinary income for that year and
capital gain net income for the one-year period ending on October 31 of
that year, plus certain other amounts.
See the next section for a discussion of the tax conse-
quences to Ultra Short and Limited Maturity of hedging and certain other
transactions engaged in by their corresponding Portfolios.
Taxation of the Portfolios
--------------------------
The Portfolios have received a ruling from the Service to
the effect that, among other things, each Portfolio will be treated as a
separate partnership for federal income tax purposes and will not be a
"publicly traded partnership." As a result, neither Portfolio is subject
to federal income tax; instead, each investor in a Portfolio, such as a
Fund, is required to take into account in determining its federal income
tax liability its share of the Portfolio's income, gains, losses,
deductions, and credits, without regard to whether it has received any
cash distributions from the Portfolio. Each Portfolio also is not subject
to Delaware or New York income or franchise tax.
Because each Fund is deemed to own a proportionate share
of its corresponding Portfolio's assets and income for purposes of
determining whether the Fund satisfies the requirements to qualify as a
RIC, each Portfolio intends to continue to conduct its operations so that
its corresponding Fund will be able to continue to satisfy all those
requirements.
Distributions to a Fund from its corresponding Portfolio
(whether pursuant to a partial or complete withdrawal or otherwise) will
- 47 -
<PAGE>
not result in the Fund's recognition of any gain or loss for federal
income tax purposes, except that (1) gain will be recognized to the extent
any cash that is distributed exceeds the Fund's basis for its interest in
the Portfolio before the distribution, (2) income or gain will be
recognized if the distribution is in liquidation of the Fund's entire
interest in the Portfolio and includes a disproportionate share of any
unrealized receivables held by the Portfolio, (3) loss will be recognized
if a liquidation distribution consists solely of cash and/or unrealized
receivables, and (4) gain (and, in certain situations, loss) may be
recognized on an in-kind distribution by the Portfolios. A Fund's basis
for its interest in its corresponding Portfolio generally equals the
amount of cash the Fund invests in the Portfolio, increased by the Fund's
share of the Portfolio's net income and gains and decreased by (1) the
amount of cash and the basis of any property the Portfolio distributes to
the Fund and (2) the Fund's share of the Portfolio's losses.
Dividends and interest received by a Portfolio may be
subject to income, withholding, or other taxes imposed by foreign
countries and U.S. possessions that would reduce the yield on its
securities. Tax conventions 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 Portfolios' use of hedging strategies, such as writ-
ing (selling) and purchasing Futures Contracts and options and entering
into forward contracts, involves complex rules that will determine for
income tax purposes the character and timing of recognition of the gains
and losses the Portfolios realize in connection therewith. Gains from the
disposition of foreign currencies (except certain gains therefrom that may
be excluded by future regulations), and gains from transactions in Hedging
Instruments derived by a Portfolio with respect to its business of
investing in securities or foreign currencies, will qualify as permissible
income for its corresponding Fund under the Income Requirement. However,
income from the disposition by a Portfolio of Hedging Instruments (other
than those on foreign currencies) will be subject to the Short-Short
Limitation for its corresponding Fund if they are held for less than three
months. Income from the disposition of foreign currencies, and Hedging
Instruments on foreign currencies, that are not directly related to a
Portfolio's principal business of investing in securities (or options and
Futures with respect thereto) also will be subject to the Short-Short
Limitation for its corresponding Fund if they are held for less than three
months.
If a Portfolio satisfies certain requirements, any in-
crease in value of a position that is part of a "designated hedge" will be
offset by any decrease in value (whether realized or not) of the
offsetting hedging position during the period of the hedge for purposes of
determining whether its corresponding Fund satisfies the Short-Short
- 48 -
<PAGE>
Limitation. Thus, only the net gain (if any) from the designated hedge
will be included in gross income for purposes of that limitation. Each
Portfolio will consider whether it should seek to qualify for this
treatment for its hedging transactions. To the extent a Portfolio does
not so qualify, it may be forced to defer the closing out of certain
Hedging Instruments beyond the time when it otherwise would be advan-
tageous to do so, in order for its corresponding Fund to continue to
qualify as a RIC.
Exchange-traded Futures Contracts and listed options
thereon constitute "Section 1256 contracts." Section 1256 contracts are
required to be marked to market (that is, treated as having been sold at
market value) at the end of a Portfolio's taxable year. Sixty percent of
any 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, and the remainder
is treated as short-term capital gain or loss.
Neuberger & Berman Limited Maturity Bond Portfolio may
invest in municipal bonds that are purchased with market discount (that
is, at a price less than the bond's principal amount or, in the case of a
bond that was issued with original issue discount ("OID"), a price less
than the amount of the issue price plus accrued OID) ("municipal market
discount bonds"). If a bond's market discount is less than the product
of (1) 0.25% of the redemption price at maturity times (2) the number of
complete years to maturity after the taxpayer acquired the bond, then no
market discount is considered to exist. Gain on the disposition of a
municipal market discount bond purchased by the Portfolio (other than a
bond with a fixed maturity date within one year from its issuance), gener-
ally is treated as ordinary (taxable) income, rather than capital gain, to
the extent of the bond's accrued market discount at the time of
disposition. Market discount on such a bond generally is accrued ratably,
on a daily basis, over the period from the acquisition date to the date of
maturity. In lieu of treating the disposition gain as above, the
Portfolio may elect to include market discount in its gross income cur-
rently, for each taxable year to which it is attributable.
Each Portfolio may acquire zero coupon or other securi-
ties issued with OID. As a holder of those securities, each Portfolio
(and, through it, its corresponding Fund) must take into account the OID
that accrues on the securities during the taxable year, even if it
receives no corresponding payment on the securities during the year.
Because each Fund annually must distribute substantially all of its
investment company taxable income (plus its share of its corresponding
Portfolio's accrued OID) to satisfy the Distribution Requirement and to
avoid imposition of the Excise Tax, the Fund may be required in a
particular year to distribute as a dividend an amount that is greater than
its proportionate share of the total amount of cash its corresponding
- 49 -
<PAGE>
Portfolio actually receives. Those distributions will be made from a
Fund's (or its proportionate share of its corresponding Portfolio's) cash
assets or, if necessary, from the proceeds of sales of that Portfolio's
securities. A Portfolio may realize capital gains or losses from those
sales, which would increase or decrease its corresponding Fund's
investment company taxable income and/or net capital gain (the excess of
net long-term capital gain over net short-term capital loss). In
addition, any such gains may be realized on the disposition of securities
held for less than three months. Because of the Short-Short Limitation,
any such gains would reduce a Portfolio's ability to sell other
securities, or certain Hedging Instruments, held for less than three
months that it might wish to sell in the ordinary course of its portfolio
management.
Taxation of the Funds' Shareholders
-----------------------------------
If Fund shares are sold at a loss after being held for
six months or less, the loss will be treated as long-term, instead of
short-term, capital loss to the extent of any capital gain distributions
received on those shares. Investors also should be aware that if shares
of Fund are purchased shortly before the record date for a dividend or
other distribution, the purchaser will receive some portion of the
purchase price back as a taxable distribution.
PORTFOLIO TRANSACTIONS
Purchases and sales of portfolio securities generally are
transacted with issuers, underwriters, or dealers that serve as primary
market-makers acting as principals for the securities on a net basis. The
Portfolios typically do not pay brokerage commissions for such purchases
and sales. Instead, the price paid for newly issued securities usually
includes a concession or discount paid by the issuer to the underwriter,
and the prices quoted by market-makers reflect a spread between the bid
and the asked prices from which the dealer derives a profit.
In purchasing and selling portfolio securities other than
as described above (for example, in the secondary market), each Portfolio
seeks to obtain best execution at the most favorable prices through
responsible broker-dealers and, in the case of agency transactions, at
competitive commission rates. In selecting broker-dealers to execute
transactions, N&B Management considers such factors as the price of the
security, the rate of commission, the size and difficulty of the order,
and the reliability, integrity, financial condition, and general execution
and operational capabilities of competing broker-dealers. N&B Management
also may consider the brokerage and research services that broker-dealers
provide to the Portfolio or N&B Management. Under certain conditions, a
Portfolio may pay higher brokerage commissions in return for brokerage and
research services, although no Portfolio has a current arrangement to do
so. In any case, each Portfolio may effect principal transactions with a
- 50 -
<PAGE>
dealer who furnishes research services, designate any dealer to receive
selling concessions, discounts, or other allowances, or otherwise deal
with any dealer in connection with the acquisition of securities in
underwritings.
During the fiscal year ended October 31, 1995, Neuberger
& Berman Ultra Short Bond Portfolio acquired securities of the following
"regular brokers or dealers" (as defined in the 1940 Act): Canadian
Imperial Bank of Commerce, Goldman, Sachs & Co., Merrill Lynch, Pierce,
Fenner & Smith Inc., and Morgan Stanley & Co. Inc. At October 31, 1995,
that Portfolio held none of the securities of its "regular brokers or
dealers."
During the fiscal year ended October 31, 1995, Neuberger
& Berman Limited Maturity Bond Portfolio acquired securities of the
following "regular brokers or dealers": Canadian Imperial Bank of
Commerce. At October 31, 1995, that Portfolio held none of the securities
of its "regular brokers or dealers."
No affiliate of any Portfolio receives give-ups or
reciprocal business in connection with its portfolio transactions. No
Portfolio effects transactions with or through broker-dealers in
accordance with any formula or for selling shares of any Fund. However,
broker-dealers who effect or execute portfolio transactions may from time
to time effect purchases of Fund shares for their customers. The 1940 Act
generally prohibits Neuberger & Berman from acting as principal in the
purchase of portfolio securities from, or the sale of portfolio securities
to, a Portfolio account unless an appropriate exemption is available.
Portfolio Turnover
------------------
The portfolio turnover rate is the lesser of the cost of
the securities purchased or the value of the securities sold, excluding
all securities, including options, whose maturity or expiration date at
the time of acquisition was one year or less, divided by the average
monthly value of such securities owned during the year.
REPORTS TO SHAREHOLDERS
Shareholders of each Fund receive unaudited semi-annual
financial statements, as well as year-end financial statements audited by
the independent auditors for the Fund and for its corresponding Portfolio.
Each Fund's statements show the investments owned by its corresponding
Portfolio and the market values thereof and provide other information
about the Fund and its operations, including the Fund's beneficial
interest in its corresponding Portfolio.
- 51 -
<PAGE>
CUSTODIAN AND TRANSFER AGENT
Each Fund and Portfolio has selected State Street Bank
and Trust Company, 225 Franklin Street, Boston, MA 02110 as custodian for
its securities and cash. All correspondence should be mailed to
Neuberger & Berman Funds, Institutional Services, 605 Third Avenue, 2nd
Floor, New York, NY 10158-0180. State Street also serves as each Fund's
transfer agent, administering purchases, redemptions, and transfers of
Fund shares with respect to Institutions and the payment of dividends and
other distributions to Institutions.
INDEPENDENT AUDITORS
Each Fund and Portfolio has selected Ernst & Young LLP,
200 Clarendon Street, Boston, MA 02116, as the independent auditors who
will audit its financial statements.
LEGAL COUNSEL
Each Fund and Portfolio has selected Kirkpatrick &
Lockhart LLP, 1800 Massachusetts Avenue, N.W., 2nd Floor, Washington, D.C.
20036, as its legal counsel.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
The following table sets forth the name, address, and
percentage of ownership of each person was known by each Fund to own
beneficially or of record, 5% or more of that Fund's outstanding shares at
January 31, 1996:
<TABLE>
<CAPTION>
Percentage of
Ownership at
Name and Address January 31, 1996
---------------- ----------------
<S> <C> <C>
Limited Maturity: D. Leon Leonhardt PSP 42.55%
---------------- for Partners & Principals
of Price Waterhouse dtd 6/28/85
1410 N. Westshore Blvd.
Tampa, FL 33607-4519
- 52 -
<PAGE>
Percentage of
Ownership at
Name and Address January 31, 1996
---------------- ----------------
North American Trust Co. 13.97%
Omnibus Acct.
P.O. Box 84419
San Diego, CA 92138-4419
National Financial Serv. Corp. 10.51%
for the Exclusive Benefit of Our
Customers
P.O. Box 3908
Church Street Station
New York, NY 10008-3908
Chase Manhattan Bank TTEE 5.57%
Various Retirement Plans under PPI
Retirement Program
Professional Pensions Inc.
444 Foxon Road
East Haven, CT 06513-2019
Ultra Short: Gary N. Skoloff, etc. 64.06%
----------- Skoloff & Wolfe Target Benefit
Trust dtd 11/1/95
293 Eisenhower Pkwy.
Livingston, NJ 07039-1711
Aetna Life Insurance & Annuity Co. 13.21%
ACES - separate account F
Attn: Michael Weiner - RTAL
15 Farmington Avenue
Hartford, CT 06156-0001
</TABLE>
At January 31, 1996, the trustees and officers of the
Trusts, as a group, owned beneficially or of record less than 1% of the
outstanding shares of each Fund.
REGISTRATION STATEMENT
This SAI and the Prospectus do not contain all the infor-
mation included in the Trust's registration statement filed with the SEC
under the 1933 Act with respect to the securities offered by the
Prospectus. Certain portions of the registration statement have been
omitted pursuant to SEC rules and regulations. The registration
statement, including the exhibits filed therewith, may be examined at the
SEC's offices in Washington, D.C.
- 53 -
<PAGE>
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, and in each instance reference is made to the copy
of the contract or other document filed as an exhibit to the registration
statement, each such statement being qualified in all respects by such
reference.
FINANCIAL STATEMENTS
The following financial statements and related documents
are incorporated herein by reference to the Funds' Annual Report to
shareholders for the fiscal year ended October 31, 1995:
The audited financial statements of the
Funds and Portfolios and notes thereto
for the fiscal year ended October 31,
1995, and the reports of Ernst & Young
LLP, independent auditors, with respect
to such audited financial statements.
- 54 -
<PAGE>
Appendix A
RATINGS OF SECURITIES
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 - Debt rated 'BB' is regarded, unbalanced, as
predominately 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. While such debt will likely
have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions.
BB - Debt rated 'BB' has less near-term vulnerability to
default then other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, or economic conditions
which could leave to an inadequate capacity to meet timely interest and
principal payments. The 'BB' rating category is also used for debt
subordinated to senior debt that is assigned an actual implied 'BBB-'
rating.
B - Debt rated 'B' has a greater vulnerability to default
but current has the capacity to meet interest payments and principal
repayments. Adverse business, financial, or economic conditions will
likely impair capacity or willingness to pay interest and repay principal.
The 'B' rating category is also used for debt subordinated to senior debt
that is assigned an actual or implied 'BB' or 'BB-' rating.
- 55 -
<PAGE>
Plus (+) or Minus (-) - The ratings above may be modified by the
addition of a plus or minus sign to show relative standing within major
categories.
Moody's corporate bond ratings:
------------------------------
Aaa - Bonds rated Aaa are judged to be of the best qual-
ity. They carry the smallest degree of investment risk and are generally
referred to as "gilt edged." 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, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
Aa - Bonds rated Aa are judged to be of high quality by
all standards. Together with the Aaa group, they comprise what are
generally known as "high-grade bonds." They are rated lower than the best
bonds because margins of protection may not be as large as in Aaa-rated
securities, fluctuation of protective elements may be of greater
amplitude, or there may be other elements present that make the long-term
risks appear somewhat larger than in Aaa-rated securities.
A - Bonds rated A possess many favorable investment
attributes and are considered to be upper-medium grade obligations.
Factors giving security to principal and interest are considered adequate,
but elements may be present that suggest a susceptibility to impairment
sometime in the future.
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 which are 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 characterizes bonds in this class.
B - Bonds which are 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.
Modifiers - Moody's may apply numerical modifiers 1, 2,
and 3 in each generic rating classification described above. The modifier
- 56 -
<PAGE>
1 indicates that the company 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 company ranks in the lower end of its generic rating
category.
S&P commercial paper ratings:
----------------------------
A-1 - This highest category indicates that the degree of
safety regarding timely payment is strong. Those issuers determined to
possess extremely strong safety characteristics are denoted with a plus
sign (+).
A-2 - This designation denotes satisfactory capacity for
timely payment. However, the relative degree of safety is not as high as
for issues designated A-1.
Moody's commercial paper ratings:
--------------------------------
Issuers rated PRIME-1 (or related supporting institu-
tions), 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.
Issuers rated PRIME-2 (or related supporting institu-
tions), also known as P-2, have a strong capacity for repayment of short-
term promissory obligations. This will normally be evidenced by many of
the characteristics cited above, but to a lesser degree. Earnings trends
and coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
- 57 -
<PAGE>
Appendix B
ROY NEUBERGER'S ALMANAC
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<PAGE>
The Art of Investing:
A Conversation with Roy Neuberger
"I firmly believe that
if you want to manage
your own money, you
must be a student of
the market. If you are
unwilling or unable to
do that, find someone
else to manage your
money for you."
NEUBERGER & BERMAN
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<PAGE>
[THIS PAGE IS BLANK - IT IS AN INSIDE PAGE OF THIS BROCHURE]
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<PAGE>
[PICTURE OF ROY NEUBERGER]
During my more than sixty-five
years of buying and selling securities,
I've been asked many questions about my
approach to investing. On the pages
that follow are a variety of my
thoughts, ideas and investment
principles which have served me well
over the years. If you gain useful
knowledge in the pursuit of profit as
well as enjoyment from these comments, I
shall be more than content.
\s\ Roy R.
Neuberger
- 1 -
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
YOU'VE BEEN ABLE TO CONDENSE SOME OF THE
CHARACTERISTICS OF SUCCESSFUL INVESTING INTO
FIVE "RULES." WHAT ARE THEY?
Rule #1: Be flexible. My philosophy has
necessarily changed from time to time because
of events and because of mistakes. My views
change as economic, political, and
technological changes occur both on and
sometimes off our planet. It is imperative
that you be willing to change your thoughts to
meet new conditions.
Rule #2: Take your temperament into account.
Recognize whether you are by nature very
speculative or just the opposite - fearful,
timid of taking risks. But in any event --
Diversify your investments, Rule #3: Be broad-gauged. Diversify your
make sure that some of your investments, make sure that some of your
principal is kept safe, and principal is kept safe, and try to increase
try to increase your income your income as well as your capital.
as well as your capital.
[PICTURE OF ROY NEUBERGER]
Rule #4: Always remember there are many ways to
skin a cat! Ben Graham and David Dodd did it by
understanding basic values. Warren Buffet
invested his portfolio in a handful of long-
term holdings, while staying involved with the
companies' managements. Peter Lynch chose to
understand, first-hand, the products of many
hundreds of the companies he invested in.
George Soros showed his genius as a hedge fund
investor who could decipher world currency
trends. Each has been successful in his own
way. But to be successful, remember to
- 2 -
<PAGE>
Rule #5: Be skeptical. To repeat a few well-
worn useful phrases:
A. Dig for yourself.
B. Be from Missouri.
C. If it sounds too good to be true,
it probably is.
IN YOUR 65 YEARS OF INVESTING ARE THERE ANY
GENERAL PATTERNS YOU'VE OBSERVED AS TO HOW THE
MARKET BEHAVES?
Every decade that I've been involved with Wall
Street has a nuance of its own, an economic and
social climate that influences investors. But
generally, bull markets tend to be longer than
bear markets, and stock prices tend to go up
more slowly and erratically than they go down.
Bear markets tend to be shorter and of greater
intensity. The market rarely rises or declines
concurrently with business cycles longer than
six months.
AS A LEGENDARY "VALUE INVESTOR," HOW DO YOU
DEFINE VALUE INVESTING?
Value investing means finding the best values -
- either absolute or relative. Absolute means
a stock has a low market price relative to its
own fundamentals. Relative value means the
price is attractive relative to the market as a
whole.
COULD YOU DESCRIBE A STOCK WITH "GOOD VALUE"?
A classic example is a company that has a low
price to earnings ratio, a low price to book
ratio, free cash flow, a strong balance sheet,
undervalued corporate assets, unrecognized
earnings turnaround and is selling at a
discount to private market value.
These characteristics usually lead to companies
that are under-researched and have a high
degree of inside ownership and entrepreneurial
management.
- 3 -
<PAGE>
One of my colleagues at Neuberger & Berman says
he finds his value stocks either "under a
cloud" or "under a rock." "Under a cloud"
stocks are those Wall Street in general doesn't
like, because an entire industry is out of
favor and even the good stocks are being
dropped. "Under a rock" stocks are those Wall
Street is ignoring, so you have to uncover them
on your own.
ARE THERE OTHER KEY CRITERIA YOU USE TO JUDGE
STOCKS?
I'm more interested in longer-term trends in
earnings than short-term trends. Earnings
gains should be the product of long-term
strategies, superior management, taking
advantage of business opportunities and so on.
If these factors are in their proper place,
short-term earnings should not be of major
concern. Dividends are an important extra
because, if they're stable, they help support
the price of the stock.
WHAT ABOUT SELLING STOCKS?
Most individual investors should invest for the
long term but not mindlessly. A sell
discipline, often neglected by investors, is
vitally important.
"One should fall in love One should fall in love with ideas, with
with ideas, with people or people, or with idealism. But in my book, the
with idealism. But in my last thing to fall in love with is a particular
book, the last thing to security. It is after all just a sheet of paper
fall in love with is a indicating a part ownership in a corporation
particular security." and its use is purely mercenary. If you must
love a security, stay in love with it until it
gets overvalued; then let somebody else fall in
love.
[PICTURE OF ROY NEUBERGER]
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<PAGE>
ANY OTHER ADVICE FOR INVESTORS?
I firmly believe that if you want to manage
your own money, you must be a student of the
market. If you're unwilling or unable to do
that, find someone else to manage your money
for you. Two options are a well-managed no-
load mutual fund or, if you have enough assets
for separate account management, a money
manager you trust with a good record.
HOW WOULD YOU DESCRIBE YOUR PERSONAL INVESTING
STYLE?
Every stock I buy is bought to be sold. The
market is a daily event, and I continually
review my holdings looking for selling
opportunities. I take a profit occasionally on
something that has gone up in price over what
was expected and simultaneously take losses
whenever misjudgment seems evident. This
creates a reservoir of buying power that can be
used to make fresh judgments on what are the
best values in the market at that time. My
active investing style has worked well for me
over the years, but for most investors I
recommend a longer-term approach.
I tend not to worry very must about the day to
day swings of the market, which are very hard
to comprehend. Instead, I try to be rather
clever in diagnosing values and trying to win
70 to 80 percent of the time.
YOU BEGAN INVESTING IN 1929. WHAT WAS YOUR
EXPERIENCE WITH THE "GREAT CRASH"?
- 5 -
<PAGE>
The only money I managed in the Panic of 1929
was my own. My portfolio was down about 12
percent, and I had an uneasy feeling about the
market and conditions in general. Those were
the days of 10 percent margin. I studied the
lists carefully for a stock that was overvalued
in my opinion and which I could sell short as a
hedge. I came across RCA at about $100 per
share. It had recently split 5 for 1 and
appeared overvalued. There were no dividends,
little income, a low net worth and a weak
financial position. I sold RCA short in the
amount equal to the dollar value of my long
portfolio. It proved to be a timely and
profitable move.
HOW DID THE CRASH OF 1929 AFFECT YOUR INVESTING
STYLE?
I am prematurely bearish when the market goes
up for a long time and everybody is happy
because they are richer. I am very bullish
when the market has gone down perceptibly and I
feel it has discounted any troubles we are
going to have.
HOW IMPORTANT ARE PSYCHOLOGICAL FACTORS TO
MARKET BEHAVIOR?
There are many factors in addition to economic
statistics or security analysis in a buy or
sell decision. I believe psychology plays an
important role in the Market. Some people
follow the crowd in hopes they'll be swept
along in the right direction, but if the crowd
is late in acting, this can be a bad move.
I like to be contrary. When things look bad, I
become optimistic. When everything looks rosy,
and the crowd is optimistic, I like to be a
seller. Sometimes I'm too early, but I
generally profit.
AS A RENOWNED ART COLLECTOR, DO YOU FIND
SIMILARITIES BETWEEN SELECTING STOCKS AND
SELECTING WORKS OF ART?
- 6 -
<PAGE>
Both are an art, although picking stocks is a
minor art compared with painting, sculpture or
"When things look bad, I literature. I started buying art in the 30s,
become optimistic. When and in the 40s it was a daily, almost hourly
everything looks rosy, and occurrence. My inclination to buy the works of
the crowd is optimistic, I living artists comes from Van Gogh, who sold
like to be a seller." only one painting during his lifetime. He died
in poverty, only then to become a legend and
have his work sold for millions of dollars.
[PICTURE OF ROY NEUBERGER]
There are more variables to consider now in
both buying art and picking stocks. In the
modern stock markets, the heavy use of futures
and options has changed the nature of the
investment world. In past times, the stock
market was much less complicated, as was the
art world.
Artists rose and fell on their own merits
without a lot of publicity and attention. As
more and more dealers are involved with
artists, the price of their work becomes
inflated. So I almost always buy works of
unknown, relatively undiscovered artists,
which, I suppose is similar to value investing.
But the big difference in my view of art and
stocks is that I buy a stock to sell it and
make money. I never bought paintings or
sculptures for investment in my life. The
objective is to enjoy their beauty.
- 7 -
<PAGE>
WHAT DO YOU CONSIDER THE BUSINESS MILESTONES IN
YOUR LIFE?
Being a founder of Neuberger & Berman and
creating one of the first no-load mutual funds.
I started on Wall Street in 1929, and during
the depression I managed my own money and that
of my clientele. We all prospered, but I
wanted to have my own firm. In 1939 I became a
founder of Neuberger & Berman, and for about 10
years we managed money for individuals with
substantial financial assets. But I also
wanted to offer the smaller investor the
benefits of professional money management, so
in 1950 I created the Guardian Mutual Fund (now
known as the Neuberger & Berman Guardian Fund).
The Fund was kind of an innovation in its time
because it didn't charge a sales commission. I
thought the public was being overcharged for
mutual funds, so I wanted to create a fund that
would be offered directly to the public without
a sales charge. Now of course the "no-load"
fund business is a huge industry. I managed
the Fund myself for over 28 years.
[PICTURE OF ROY NEUBERGER]
YOU'RE IN YOUR NINETIES AND STILL YOU GO INTO
THE OFFICE EVERY DAY TO MANAGE YOUR
INVESTMENTS. WHY?
I like the fun of being nimble in the stock
market, and I'm addicted to the market's
fascinations.
WHAT CLOSING WORDS OF ADVICE DO YOU HAVE ABOUT
INVESTING?
Realize that there are opportunities at all
times for the adventuresome investor. And stay
in good physical condition. It's a strange
thing. You do not dissipate your energies by
using them. Exercise your body and your brain
every day, and you'll do better in investments
and in life.
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<PAGE>
ROY NEUBERGER: A BRIEF BIOGRAPHY
Roy Neuberger is a founder of the investment
management firm Neuberger & Berman, and a
renowned value investor. He is also a
recognized collector of contemporary American
art, much of which he has given away to museums
and colleges across the country.
During the 1920s, Roy studied art in
Paris. When he realized he didn't possess the
talent to become an artist, he decided to
collect art, and to support this passion, Roy
turned to investing -- a pursuit for which his
talents have proven more than adequate.
A TALENT FOR INVESTING
Roy began his investment career by
joining a brokerage firm in 1929, seven months
before the "Great Crash." Just weeks before
"Black Monday," he shorted the stock of RCA,
thinking it was overvalued. He profited from
the falling market and gained a reputation for
market prescience and stock selection that has
lasted his entire career.
NEUBERGER & BERMAN'S FOUNDING
Roy's investing acumen attracted many
people who wished to have him manage their
money. In 1939, at the age of 36, after
purchasing a seat on the New York Stock
Exchange, Roy founded Neuberger & Berman to
provide money management services to people who
lacked the time, interest or expertise to
manage their own assets.
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<PAGE>
NEUBERGER & BERMAN -- OVER FIVE DECADES OF
GROWTH
Neuberger & Berman has grown through
the years and now manages approximately $30
billion of equity and fixed income assets, both
domestic and international, for individuals,
institutions, and its family of no-load mutual
funds. Today, as when the firm was founded,
Neuberger & Berman follows a value approach to
investing, designed to enable clients to
advance in good markets and minimize losses
when conditions are less favorable.
For more complete information about
the Neuberger & Berman Guardian Fund,
including fees and expenses, call
Neuberger & Berman Management at 800-
877-9700 for a free prospectus.
Please read it carefully, before you
invest or send money.
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<PAGE>
Neuberger & Berman Management
Inc.[SERVICE MARK]
605 Third Avenue, 2nd
Floor
New York, NY 10158-
0006
Shareholder Services
(800) 877-9700
[COPYRIGHT
SYMBOL]1995 Neuberger
& Berman
PRINTED ON RECYCLED PAPER
WITH SOY BASED INKS
- 11 -
<PAGE>
NEUBERGER & BERMAN INCOME TRUST
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
----------------------------------
(a) Financial Statements:
The audited financial statements contained in the Annual Report
to Shareholders of the Registrant for the fiscal year ended
October 31, 1995 for Neuberger & Berman Income Trust (with
respect to Neuberger & Berman Limited Maturity Bond Trust and
Neuberger & Berman Ultra Short Bond Trust) and Income Managers
Trust (with respect to Neuberger & Berman Limited Maturity Bond
Portfolio and Neuberger & Berman Ultra Short Bond Portfolio) and
the reports of the independent auditors are incorporated into the
Statement of Additional Information by reference.
Included in Part A of this Post-Effective Amendment:
FINANCIAL HIGHLIGHTS for the periods
indicated therein for Neuberger & Berman
Limited Maturity Bond Trust and
Neuberger & Berman Ultra Short Bond
Trust.
(b) Exhibits:
Exhibit
Number Description
(1) (a) Certificate of Trust. Filed herewith.
(b) Trust Instrument of Neuberger & Berman Income
Trust. Filed herewith.
(c) Schedule A - Current Series of Neuberger &
Berman Income Trust. Filed herewith.
(2) By-laws of Neuberger & Berman Income Trust. Filed
herewith.
(3) Voting Trust Agreement. None.
(4) Specimen Share Certificate. None.
(5) (a) (i) Management Agreement Between Income
Managers Trust and Neuberger & Berman
Management Incorporated.
C-1
<PAGE>
Incorporated by Reference to Post-
Effective Amendment No. 21 to
Registration Statement of Neuberger &
Berman Income Funds, File Nos. 2-
85229 and 811-3802, EDGAR Accession
No. to be Provided by Amendment.
(ii) Schedule A - Portfolios of Income
Managers Trust Currently Subject to
the Management Agreement.
Incorporated by Reference to Post-
Effective Amendment No. 21 to
Registration Statement of Neuberger &
Berman Income Funds, File Nos. 2-
85229 and 811-3802, EDGAR Accession
No. to be Provided by Amendment.
(iii) Schedule B - Schedule of Compensation
Under the Management Agreement.
Incorporated by Reference to Post-
Effective Amendment No. 21 to
Registration Statement of Neuberger &
Berman Income Funds, File Nos.
2-85229 and 811-3802, EDGAR Accession
No. to be Provided by Amendment.
(b) (i) Sub-Advisory Agreement Between
Neuberger & Berman Management
Incorporated and Neuberger & Berman,
L.P. with Respect to Income Managers
Trust. Incorporated by Reference to
Post-Effective Amendment No. 21 to
Registration Statement of Neuberger &
Berman Income Funds, File Nos. 2-
85229 and 811-3802, EDGAR Accession
No. to be Provided by Amendment.
(ii) Schedule A - Portfolios of Income
Managers Trust Currently Subject to
the Sub-Advisory Agreement.
Incorporated by Reference to Post-
Effective Amendment No. 21 to
Registration Statement of Neuberger &
Berman Income Funds, File Nos.
2-85229 and 811-3802, EDGAR Accession
No. to be Provided by Amendment.
(6) (a) Distribution Agreement Between Neuberger &
Berman Income Trust and Neuberger & Berman
Management Incorporated. Filed herewith.
C-2
<PAGE>
(b) Schedule A - Series of Neuberger & Berman
Income Trust Currently Subject to the
Distribution Agreement. Filed herewith.
(7) Bonus, Profit Sharing or Pension Plans. None.
(8) (a) Custodian Contract Between Neuberger & Berman
Income Trust and State Street Bank and Trust
Company. Filed herewith.
(b) Schedule A - Approved Foreign Banking
Institutions and Securities Depositories
Under the Custodian Contract. Incorporated
by Reference to Post-Effective Amendment
No. 21 to Registration Statement of Neuberger
& Berman Income Funds, File Nos. 2-85229 and
811-3802, EDGAR Accession No. to be Provided
by Amendment.
(9) (a) (i) Transfer Agency Agreement Between
Neuberger & Berman Income Trust and
State Street Bank and Trust Company.
Filed herewith.
(ii) First Amendment to Transfer Agency
and Service Agreement between
Neuberger & Berman Income Trust and
State Street Bank and Trust Company.
Filed herewith.
(b) (i) Administration Agreement Between
Neuberger & Berman Income Trust and
Neuberger & Berman Management
Incorporated. Filed herewith.
(ii) Schedule A - Series of Neuberger &
Berman Income Trust Currently Subject
to the Administration Agreement.
Filed herewith.
(iii) Schedule B - Schedule of Compensation
Under the Administration Agreement.
Filed herewith.
(10) Opinion and Consent of Kirkpatrick & Lockhart on
Securities Matters. Incorporated by Reference to
Registrant's Registration Statement, File Nos. 33-
62872 and 811-7724.
(11) Other Opinions, Appraisals, Rulings and Consents:
C-3
<PAGE>
Consent of Ernst & Young LLP, Independent Auditors.
Filed Herewith.
(12) Financial Statements Omitted from Prospectus.
None.
(13) Letter of Investment Intent. None.
(14) Prototype Retirement Plan. None
(15) Plan Pursuant to Rule 12b-1. None.
(16) Schedule of Computation of Performance Quotations.
Incorporated by Reference to Post-Effective
Amendment No. 1 to Registrant's Registration
Statement, File Nos. 33-62872 and 811-7724.
(17) Financial Data Schedule. Filed herewith.
(18) Plan Pursuant to Rule 18f-3. None.
Item 25. Persons Controlled By or Under Common Control with
Registrant.
--------------------------------------------------
No person is controlled by or under common control with the
Registrant.
Item 26. Number of Holders of Securities.
-------------------------------
The following information is given as of December 29, 1995.
Number of
Title of Class Record Holders
-------------- --------------
Shares of beneficial
interest, $0.001 par value, of:
Neuberger & Berman Limited Maturity Bond Trust 49
Neuberger & Berman Ultra Short Bond Trust 25
Item 27. Indemnification.
---------------
A Delaware business trust may provide in its governing instrument
for indemnification of its officers and trustees from and against any and
all claims and demands whatsoever. Article IX, Section 2 of the Trust
Instrument provides that the Registrant shall indemnify any present or
former trustee, officer, employee or agent of the Registrant ("Covered
C-4
<PAGE>
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 Agreement between Income Managers Trust
("Managers Trust") and Neuberger and Berman Management Incorporated ("N&B
Management") provides that neither N&B Management nor any director,
officer or employee of N&B Management performing services for any series
of Managers Trust (each a "Portfolio") at the direction or request of N&B
Management in connection with N&B Management's discharge of its
obligations under the Agreement shall be liable for any error of judgment
or mistake of law or for any loss suffered by a Portfolio in connection
with any matter to which the Agreement relates; provided, that nothing in
the Agreement shall be construed (i) to protect N&B Management against any
liability to Managers Trust or a Portfolio or its interestholders to which
N&B Management would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of its
duties, or by reason of N&B Management's reckless disregard of its
obligations and duties under the Agreement, or (ii) to protect any
director, officer or employee of N&B Management who is or was a trustee or
officer of Managers Trust against any liability to Managers Trust or a
C-5
<PAGE>
Portfolio or its interestholders 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 Trust.
Section 1 of the Sub-Advisory Agreement between N&B Management and
Neuberger & Berman, L.P. ("Neuberger & Berman") with respect to Managers
Trust provides that in the absence of willful misfeasance, bad faith or
gross negligence in the performance of its duties, or of reckless
disregard of its duties and obligations under the Agreement, Neuberger &
Berman will not be subject to liability for any act or omission or any
loss suffered by any Portfolio or its interestholders in connection with
the matters to which the Agreement relates.
Section 11 of the Agreement provides that N&B Management shall look
only to the assets of a Series for the Registrant's performance of the
Agreement by the Registrant on behalf of such Series, and neither the
trustees nor any of the Registrant's officers, employees or agents,
whether past, present or future, shall be personally liable therefor.
Section 12 of the Administration Agreement provides that each Series
shall indemnify N&B Management and hold it harmless from and against any
and all losses, damages and expenses, including reasonable attorneys' fees
and expenses, incurred by N&B Management that result from: (i) any claim,
action, suit or proceeding in connection with N&B Management's entry into
or performance of the Agreement with respect to such Series; or (ii) any
action taken or omission to act committed by N&B Management in the
performance of its obligations hereunder with respect to such Series; or
(iii) any action of N&B Management upon instructions believed in good
faith by it to have been executed by a duly authorized officer or
representative of the Trust with respect to such Series; provided, that
N&B Management shall not be entitled to such indemnification in respect of
actions or omissions constituting negligence or misconduct on the part of
N&B Management or its employees, agents or contractors.
Section 13 of the Administration Agreement provides that N&B
Management shall indemnify each Series and hold it harmless from and
against any and all losses, damages and expenses, including reasonable
attorneys' fees and expenses, incurred by such Series which result from:
(i) N&B Management's failure to comply with the terms of this Agreement
with respect to such Series; or (ii) N&B Management's lack of good faith
in performing its obligations hereunder with respect to such Series; or
(iii) N&B Management's negligence or misconduct of its employees, agents
or contractors in connection herewith with respect to such Series. A
Series shall not be entitled to such indemnification in respect of actions
or omissions constituting negligence or misconduct on the part of that
Series or its employees, agents or contractors other than N&B Management
unless such negligence or misconduct results from or is accompanied by
negligence or misconduct on the part of N&B Management, any affiliated
person of N&B Management, or any affiliated person of an affiliated person
of N&B Management.
C-6
<PAGE>
Section 11 of the Distribution Agreement between the Registrant and
N&B Management contains provisions similar to Section 11 of the
Administration Agreement, with respect to N&B Management.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 ("1933 Act") may be permitted to trustees, officers
and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the 1933 Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred
or paid by a trustee, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is asserted by
such trustee, officer or controlling person, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed
in the 1933 Act and will be governed by the final adjudication of such
issue.
Item 28. Business and Other Connections of Adviser and Sub-Adviser.
---------------------------------------------------------
There is set forth below information as to any other business,
profession, vocation or employment of a substantial nature in which each
director or officer of N&B Management and each partner of Neuberger &
Berman is, or at any time during the past two years has been, engaged for
his or her own account or in the capacity of director, officer, employee,
partner or trustee.
NAME BUSINESS AND OTHER CONNECTIONS
---------------------- -------------------------------
Claudia A. Brandon Secretary, Neuberger & Berman
Vice President, N&B Advisers Management Trust (Delaware
Management business trust); Secretary, Advisers
Managers Trust; Secretary, Neuberger
& Berman Advisers Management Trust
(Massachusetts business trust) (1);
Secretary, Neuberger & Berman Income
Funds; Secretary, Neuberger & Berman
Income Trust; Secretary, Neuberger &
Berman Equity Funds; Secretary,
Neuberger & Berman Equity Trust;
Secretary, Income Managers Trust;
Secretary, Equity Managers Trust;
Secretary, Global Managers Trust;
Secretary, Neuberger & Berman Equity
Assets.
C-7
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
---------------------- -------------------------------
Stacy Cooper-Shugrue Assistant Secretary, Neuberger &
Assistant Vice President, Berman Advisers Management Trust
N&B Management (Delaware business trust); Assistant
Secretary, Advisers Managers Trust;
Assistant Secretary, Neuberger &
Berman Advisers Management Trust
(Massachusetts business trust) (1);
Assistant Secretary, Neuberger &
Berman Income Funds; Assistant
Secretary, Neuberger & Berman Income
Trust; Assistant Secretary,
Neuberger & Berman Equity Funds;
Assistant Secretary, Neuberger &
Berman Equity Trust; Assistant
Secretary, Income Managers Trust;
Assistant Secretary, Equity Managers
Trust; Assistant Secretary, Global
Managers Trust; Assistant Secretary,
Neuberger & Berman Equity Assets.
Robert Cresci Assistant Portfolio Manager, BNP-N&B
Assistant Vice President, Global Asset Management L.P. (joint
N&B Management venture of Neuberger & Berman and
Banque Nationale de Paris) (2);
Assistant Portfolio Manager, Vontobel
(Swiss bank) (3).
C-8
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
---------------------- -------------------------------
Stanley Egener Chairman of the Board and Trustee,
President and Director, Neuberger & Berman Advisers
N&B Management; General Management Trust (Delaware business
Partner, Neuberger & Berman trust); Chairman of the Board and
Trustee, Advisers Managers Trust;
Chairman of the Board and Trustee,
Neuberger & Berman Advisers
Management Trust (Massachusetts
business trust) (1); Chairman of the
Board and Trustee, Neuberger & Berman
Income Funds; Chairman of the Board
and Trustee, Neuberger & Berman
Income Trust; Chairman of the Board
and Trustee, Neuberger & Berman
Equity Funds; Chairman of the Board
and Trustee, Neuberger & Berman
Equity Trust; Chairman of the Board
and Trustee, Income Managers Trust;
Chairman of the Board and Trustee,
Equity Managers Trust; Chairman of
the Board and Trustee, Global
Managers Trust; Chairman of the Board
and Trustee, Neuberger & Berman
Equity Assets.
Theodore P. Giuliano Executive Vice President and Trustee,
Vice President, N&B Neuberger & Berman Income Funds (5);
Management (4); General Executive Vice President and Trustee,
Partner, Neuberger & Berman Neuberger & Berman Income Trust (5);
Executive Vice President and Trustee,
Income Managers Trust (5).
Theresa A. Havell President and Trustee, Neuberger &
Vice President and Berman Income Funds; President and
Director, N&B Management; Trustee, Neuberger & Berman Income
General Partner, Neuberger & Trust; President and Trustee, Income
Berman Managers Trust
C-9
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
---------------------- -------------------------------
C. Carl Randolph Assistant Secretary, Neuberger &
General Partner, Neuberger & Berman Advisers Management Trust
Berman (Delaware business trust); Assistant
Secretary, Advisers Managers Trust;
Assistant Secretary, Neuberger &
Berman Advisers Management Trust
(Massachusetts business trust) (1);
Assistant Secretary, Neuberger &
Berman Income Funds; Assistant
Secretary, Neuberger & Berman Income
Trust; Assistant Secretary,
Neuberger & Berman Equity Funds;
Assistant Secretary, Neuberger &
Berman Equity Trust; Assistant
Secretary, Income Managers Trust;
Assistant Secretary, Equity Managers
Trust; Assistant Secretary, Global
Managers Trust; Assistant Secretary,
Neuberger & Berman Equity Assets.
Felix Rovelli Senior Vice President-Senior Equity
Vice President, Portfolio Manager, BNP-N&B Global
N&B Management Asset Management L.P. (joint venture
of Neuberger & Berman and Banque
Nationale de Paris) (2); Portfolio
Manager, Vontobel (Swiss bank) (6).
Richard Russell Treasurer, Neuberger & Berman
Vice President, Advisers Management Trust (Delaware
N&B Management business trust); Treasurer, Advisers
Managers Trust; Treasurer,
Neuberger & Berman Advisers
Management Trust (Massachusetts
business trust) (1); Treasurer,
Neuberger & Berman Income Funds;
Treasurer, Neuberger & Berman Income
Trust; Treasurer, Neuberger & Berman
Equity Funds; Treasurer, Neuberger &
Berman Equity Trust; Treasurer,
Income Managers Trust; Treasurer,
Equity Managers Trust; Treasurer,
Global Managers Trust; Treasurer,
Neuberger & Berman Equity Assets.
Susan Switzer Portfolio Manager, Mitchell Hutchins
Assistant Vice President, Asset Management Inc. (7).
N&B Management
C-10
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
---------------------- -------------------------------
Daniel J. Sullivan Vice President, Neuberger & Berman
Senior Vice President, Advisers Management Trust (Delaware
N&B Management business trust); Vice President,
Advisers Managers Trust; Vice
President, Neuberger & Berman
Advisers Management Trust
(Massachusetts business trust) (1);
Vice President, Neuberger & Berman
Income Funds; Vice President,
Neuberger & Berman Income Trust; Vice
President, Neuberger & Berman Equity
Funds; Vice President, Neuberger &
Berman Equity Trust; Vice President,
Income Managers Trust; Vice
President, Equity Managers Trust;
Vice President, Global Managers
Trust; Vice President, Neuberger &
Berman Equity Assets.
Michael J. Weiner Vice President, Neuberger & Berman
Senior Vice President, N&B Advisers Management Trust (Delaware
Management business trust); Vice President,
Advisers Managers Trust; Vice
President, Neuberger & Berman
Advisers Management Trust
(Massachusetts business trust) (1);
Vice President, Neuberger & Berman
Income Funds; Vice President,
Neuberger & Berman Income Trust; Vice
President, Neuberger & Berman Equity
Funds; Vice President, Neuberger &
Berman Equity Trust; Vice President,
Income Managers Trust; Vice
President, Equity Managers Trust;
Vice President, Global Managers
Trust; Vice President, Neuberger &
Berman Equity Assets.
C-11
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
---------------------- -------------------------------
Lawrence Zicklin President and Trustee, Neuberger &
Director, N&B Management; Berman Advisers Management Trust
General Partner, Neuberger & (Delaware business trust); President
Berman and Trustee, Advisers Managers Trust;
President and Trustee, Neuberger &
Berman Advisers Management Trust
(Massachusetts business trust) (1);
President and Trustee, Neuberger &
Berman Equity Funds; President and
Trustee, Neuberger & Berman Equity
Trust; President and Trustee, Equity
Managers Trust; President, Global
Managers Trust; President and
Trustee, Neuberger & Berman Equity
Assets
The principal address of N&B Management, Neuberger & Berman, BNP-N&B
Global Asset Management L.P. and of each of the investment companies named
above, is 605 Third Avenue, New York, New York 10158. Other addresses to
be provided by amendment.
____________________________
(1) Until April 30, 1995.
(2) Until October 31, 1995.
(3) Until May 1994.
(4) Until November 4, 1994.
(5) Until June 22, 1994.
(6) Until April 1994.
(7) Until 1994.
Item 29. Principal Underwriters.
----------------------
(a) N&B Management, the principal underwriter distributing
securities of the Registrant, is also the principal underwriter and
distributor for each of the following investment companies and any series
thereof:
Neuberger & Berman Advisers Management Trust
Neuberger & Berman Equity Assets
Neuberger & Berman Equity Funds
Neuberger & Berman Equity Trust
Neuberger & Berman Income Funds
N&B Management is also the investment manager to the master
funds in which the above-named investment companies invest.
C-12
<PAGE>
(b) Set forth below is information concerning the directors and
officers of the Registrant's principal underwriter. The principal
business address of each of the persons listed is 605 Third Avenue, New
York, New York 10158-0180, which is also the address of the Registrant's
principal underwriter.
</TABLE>
<TABLE>
<CAPTION>
NAME POSITIONS AND OFFICES POSITIONS AND OFFICES
WITH UNDERWRITER WITH REGISTRANT
<S> <C> <C>
Claudia A. Brandon Vice President Secretary
Patrick T. Byrne Assistant Vice President None
Richard A. Cantor Chairman of the Board and None
Director
Robert Conti Treasurer None
Stacy Cooper-Shugrue Assistant Vice President Assistant Secretary
Robert Cresci Assistant Vice President None
William Cunningham Vice President None
Barbara DiGiorgio Assistant Vice President None
Roberta D'Orio Assistant Vice President None
Stanley Egener President and Director Chairman of the Board
of Trustees
(Chief Executive
Officer)
Joseph G. Galli Assistant Vice President None
Robert I. Gendelman Assistant Vice President None
Mark R. Goldstein Vice President None
Farha-Joyce Haboucha Vice President None
Theresa A. Havell Vice President and Director None
Leslie Holliday-Soto Assistant Vice President None
Jody L. Irwin Assistant Vice President None
Michael M. Kassen Vice President None
Irwin Lainoff Director None
Michael Lamberti Vice President None
Josephine Mahaney Vice President None
Carmen G. Martinez Assistant Vice President None
Lawrence Marx III Vice President None
C-13
<PAGE>
NAME POSITIONS AND OFFICES POSITIONS AND OFFICES
WITH UNDERWRITER WITH REGISTRANT
Ellen Metzger Vice President and Secretary None
Paul Metzger Assistant Vice President None
Janet W. Prindle Vice President None
Felix Rovelli Vice President None
Richard Russell Vice President Treasurer (Principal
Accounting Officer)
Marvin C. Schwartz Director None
Kent C. Simons Vice President None
Frederick B. Soule Vice President None
Susan Switzer Assistant Vice President None
Daniel J. Sullivan Senior Vice President Vice President
Peter E. Sundman Senior Vice President None
Andrea Trachtenberg Vice President of Marketing None
Judith M. Vale Vice President None
Clara Del Villar Vice President None
Susan Walsh Assistant Vice President None
Michael J. Weiner Senior Vice President Vice President
(Principal Financial
Officer)
Celeste Wischerth Assistant Vice President None
Thomas Wolfe Vice President None
Lawrence Zicklin Director Trustee and President
</TABLE>
(c) No commissions or other compensation were received directly
or indirectly from the Registrant by any principal underwriter who was not
an affiliated person of the Registrant.
Item 30. Location of Accounts and Records.
--------------------------------
All accounts, books and other documents required to be
maintained by Section 31(a) of the 1940 Act, as amended, and the rules
promulgated thereunder with respect to the Registrant are maintained at
the offices of State Street Bank and Trust Company, 225 Franklin Street,
Boston, Massachusetts 02110, except for the Registrant's Trust Instrument
and By-Laws, minutes of meetings of the Registrant's Trustees and
C-14
<PAGE>
shareholders and the Registrant's policies and contracts, which are
maintained at the offices of the Registrant, 605 Third Avenue, New York,
New York 10158.
Item 31. Management Services
-------------------
Other than as set forth in Parts A and B of this Registration
Statement, the Registrant is not a party to any management-related service
contract.
Item 32. Undertakings
------------
Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.
C-15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, NEUBERGER & BERMAN INCOME
TRUST has duly caused this Post-Effective Amendment No. 3 to its
Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City and State of New York on the 22nd day
of February, 1996.
NEUBERGER & BERMAN INCOME TRUST
By: /s/ Stanley Egener
-----------------------------
Stanley Egener
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 3 has been signed below by the following
persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Charles De Carlo* Trustee February 22, 1996
---------------------
Charles DeCarlo
/s/ Stanley Egener Chairman of the Board February 22, 1996
---------------------- of Trustee (Chief
Stanley Egener Executive Officer)
Trustee February 22, 1996
----------------------
John Cannon
/s/ Theresa A. Havell President and Trustee February 22, 1996
----------------------
Theresa A. Havell
(signatures continued on next page)
<PAGE>
Signature Title Date
--------- ----- ----
/s/ Barry Hirsch* Trustee February 22, 1996
----------------------
Barry Hirsch
/s/ Robert A. Kavesh* Trustee February 22, 1996
---------------------
Robert A. Kavesh
Trustee February 22, 1996
---------------------
Harold R. Logan
/s/ William E. Rulon* Trustee February 22, 1996
---------------------
William E. Rulon
Trustee February 22, 1996
-----------------------
Candace L. Straight
/s/ Michael J. Weiner Vice President February 22, 1996
----------------------- (Principal Financial
Michael J. Weiner Officer)
/s/ Richard Russell Treasurer (Principal February 22, 1996
----------------------- Accounting Officer)
Richard Russell
</TABLE>
* Signatures affixed by Dana L. Platt pursuant to a power of attorney
dated June 24, 1993, and filed herewith.
- 2 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, INCOME MANAGERS TRUST certifies that it
meets all of the requirements for effectiveness of Post-Effective
Amendment No. 3 to the Registration Statement pursuant to Rule 485(b)
under the Securities Act of 1933 and has duly caused this Post-Effective
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City and State of New York on
the 22nd day of February, 1996.
INCOME MANAGERS TRUST
By: /s/ Stanley Egener
------------------------
Stanley Egener
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, Post-
Effective Amendment No. 3 has been signed below by the following persons
in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Charles De Carlo* Trustee February 22, 1996
---------------------
Charles DeCarlo
/s/ Stanley Egener Chairman of the Board February 22, 1996
---------------------- of Trustee (Chief
Stanley Egener Executive Officer)
Trustee February 22, 1996
----------------------
John Cannon
(signatures continued on next page)
<PAGE>
Signature Title Date
--------- ----- ----
/s/ Theresa A. Havell President and Trustee February 22, 1996
----------------------
Theresa A. Havell
/s/ Barry Hirsch* Trustee February 22, 1996
----------------------
Barry Hirsch
/s/ Robert A. Kavesh* Trustee February 22, 1996
---------------------
Robert A. Kavesh
/s/ Harold R. Logan* Trustee February 22, 1996
---------------------
Harold R. Logan
/s/ William E. Rulon* Trustee February 22, 1996
---------------------
William E. Rulon
/s/ Candace L. Straight* Trustee February 22, 1996
-----------------------
Candace L. Straight
/s/ Michael J. Weiner Vice President February 22, 1996
----------------------- (Principal Financial
Michael J. Weiner Officer)
/s/ Richard Russell Treasurer (Principal February 22, 1996
----------------------- Accounting Officer)
Richard Russell
</TABLE>
* Signatures affixed by Dana L. Platt pursuant to a power of attorney
dated December 20, 1994, and filed herewith.
- 2 -
<PAGE>
POWER OF ATTORNEY
-----------------
NEUBERGER & BERMAN INCOME TRUST, a Delaware business trust (the
"Trust"), and each of its undersigned officers and trustees hereby
nominates, constitutes and appoints Theresa A. Havell, Michael J. Weiner,
Richard M. Phillips, Alan R. Dynner and Dana L. Platt (with full power to
each of them to act alone) its/his/her true and lawful attorney-in-fact
and agent, for it/him/her and on its/his/her behalf and in its/his/her
name, place and stead in any and all capacities, to make, execute and sign
any and all amendments to the Trust's Registration Statement on Form N-1A
under the Securities Act of 1933 and the Investment Company Act of 1940,
any registration statements on Form N-14, and to file with the Securities
and Exchange Commission, and any other regulatory authority having
jurisdiction over the offer and sale of shares of the Beneficial Interest
of the Trust, any such amendment, and any and all supplements thereto or
to any prospectus or statement of additional information forming a part
thereof, and any and all exhibits and other documents requisite in
connection therewith, granting unto said attorneys, and each of them, full
power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises as fully to
all intents and purposes as the Trust and the undersigned officers and
trustees itself/themselves might or could do.
IN WITNESS WHEREOF, NEUBERGER & BERMAN INCOME TRUST has caused this
power of attorney to be executed in its name by its President, and
attested by its Secretary, and the undersigned officers and trustees have
hereunto set their hands and seals this 24th day of June, 1993.
NEUBERGER & BERMAN INCOME TRUST
By: /s/ Theresa A. Havell
-----------------------------
Theresa A. Havell, President
[SEAL]
ATTEST:
/s/ Claudia A. Brandon
______________________________
Claudia A. Brandon,
Secretary
[Signatures Continued on Next Page]
<PAGE>
Signature Title
--------- -----
/s/ Stanley Egener Chairman of the Board, Chief
________________________ Executive Officer, and
Stanley Egener Trustee
/s/ Theresa A. Havell President and Trustee
________________________
Theresa A. Havell
------------------------ Executive Vice President and
Theodore P. Giuliano (Crossed Out) Trustee (Crossed Out)
(Resigned)
/s/ Michael J. Weiner Vice President and Principal
------------------------ Financial Officer
Michael J. Weiner
/s/ Richard Russell Treasurer and Principal
------------------------ Accounting Officer
Richard Russell
/s/ Claudia A. Brandon Secretary
------------------------
Claudia A. Brandon
/s/ Charles DeCarlo Trustee
------------------------
Charles DeCarlo
------------------------ Trustee (Crossed Out)
A. Leon Ferguson (Crossed Out) (Retired)
------------------------ Trustee (Crossed Out)
Ann Maynard Gray (Crossed Out) (Resigned)
[Signatures Continued on Next Page]
/s/ Barry Hirsch Trustee
------------------------
Barry Hirsch
- 4 -
<PAGE>
Signature Title
--------- -----
------------------------ Trustee (Crossed Out)
Leslie A. Jacobson (Crossed Out) (Retired)
/s/ Robert A. Kavesh Trustee
------------------------
Robert A. Kavesh
Trustee
------------------------
Harold R. Logan
/s/ William E. Rulon Trustee
------------------------
William E. Rulon
------------------------ Trustee (Crossed Out)
Herbert R. Silverman (Crossed Out) (Retired)
Trustee
------------------------
Candace L. Straight
- 5 -
<PAGE>
POWER OF ATTORNEY
-----------------
INCOME MANAGERS TRUST, a New York trust (the "Trust"), and each of
its undersigned officers and trustees hereby nominates, constitutes and
appoints Theresa A. Havell, Michael J. Weiner, Alan R. Dynner, Richard M.
Phillips, Dana L. Platt, and Arthur C. Delibert (with full power to each
of them to act alone) its/his/her true and lawful attorney-in-fact and
agent, for it/him/her and on its/his/her behalf and in its/his/her name,
place and stead in any and all capacities, to make, execute and sign any
and all amendments to the Registration Statements of the Trust and any
"feeder fund" on Form N-1A under the Securities Act of 1933 and the
Investment Company Act of 1940, and any registration statements on Form N-
14, and to file with the Securities and Exchange Commission, and any other
regulatory authority having jurisdiction over the offer and sale of
interests in the Trust, any such amendment, and any and all supplements
thereto or to any prospectus or statement of additional information
forming a part thereof, and any and all exhibits and other documents
requisite in connection therewith, granting unto said attorneys, and each
of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises as
fully to all intents and purposes as the Trust and the undersigned
officers and trustees itself/themselves might or could do.
IN WITNESS WHEREOF, INCOME MANAGERS TRUST has caused this power of
attorney to be executed in its name by its President, and attested by its
Secretary, and the undersigned officers and trustees have hereunto set
their hands and seals this 20th day of December, 1994.
INCOME MANAGERS TRUST
By: /s/ Theresa A. Havell
--------------------------------
Theresa A. Havell, President
[SEAL]
ATTEST:
/s/ Claudia A. Brandon
______________________________
Claudia A. Brandon,
Secretary
[Signatures Continued on Next Page]
<PAGE>
Signature Title
--------- -----
/s/ Stanley Egener Chairman of the Board, Chief
________________________ Executive Officer, and Trustee
Stanley Egener
/s/ Theresa A. Havell President and Trustee
________________________
Theresa A. Havell
/s/ Michael J. Weiner Vice President and Principal
------------------------ Financial Officer
Michael J. Weiner
/s/ Richard Russell Treasurer and Principal
------------------------ Accounting Officer
Richard Russell
/s/ Claudia A. Brandon Secretary
------------------------
Claudia A. Brandon
/s/ Charles DeCarlo Trustee
------------------------
Charles DeCarlo
------------------------ Trustee (Retired)
A. Leon Fergenson (Crossed Out)
______________________________ Trustee
John Cannon
/s/Barry Hirsch Trustee
------------------------
Barry Hirsch
------------------------ Trustee (Crossed Out)
Leslie A. Jacobson (Crossed Out)
[Signatures Continued on Next Page]
- 2 -
<PAGE>
Signature Title
--------- -----
/s/ Robert A. Kavesh Trustee
------------------------
Robert A. Kavesh
/s/ Harold R. Logan Trustee
------------------------
Harold R. Logan
/s/ William E. Rulon Trustee
------------------------
William E. Rulon
------------------------ Trustee (Retired)
Herbert R. Silverman (Crossed Out)
/s/ Candace L. Straight Trustee
______________________________
Candace L. Straight
- 3 -
<PAGE>
NEUBERGER & BERMAN INCOME TRUST
POST-EFFECTIVE AMENDMENT NO. 3 ON FORM N-1A
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
<S> <C> <C>
(1) (a) Certificate of Trust. Filed herewith. ____
(b) Trust Instrument of Neuberger & Berman ____
Income Trust. Filed herewith.
(c) Schedule A - Current Series of Neuberger ____
& Berman Income Trust. Filed herewith.
(2) By-laws of Neuberger & Berman Income Trust. ____
Filed herewith.
(3) Voting Trust Agreement. None. N.A.
(4) Specimen Share Certificate. None. N.A.
(5) (a) (i) Management Agreement Between N.A.
Income Managers Trust and
Neuberger & Berman Management
Incorporated. Incorporated by
Reference to Post-Effective
Amendment No. 21 to
Registration Statement of
Neuberger & Berman Income
Funds, File Nos. 2-85229 and
811-3802, EDGAR Accession No.
to be Provided by Amendment.
(ii) Schedule A - Portfolios of N.A.
Income Managers Trust Currently
Subject to the Management
Agreement. Incorporated by
Reference to Post-Effective
Amendment No. 21 to
Registration Statement of
Neuberger & Berman Income
Funds, File Nos. 2-85229 and
811-3802, EDGAR Accession No.
to be Provided by Amendment.
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
(iii) Schedule B - Schedule of N.A.
Compensation Under the
Management Agreement.
Incorporated by Reference to
Post-Effective Amendment No. 21
to Registration Statement of
Neuberger & Berman Income
Funds, File Nos. 2-85229 and
811-3802, EDGAR Accession No.
to be Provided by Amendment.
(b) (i) Sub-Advisory Agreement Between N.A.
Neuberger & Berman Management
Incorporated and Neuberger &
Berman, L.P. with Respect to
Income Managers Trust.
Incorporated by Reference to
Post-Effective Amendment No. 21
to Registration Statement of
Neuberger & Berman Income
Funds, File Nos. 2-85229 and
811-3802, EDGAR Accession No.
to be Provided by Amendment.
(ii) Schedule A - Portfolios of N.A.
Income Managers Trust Currently
Subject to the Sub-Advisory
Agreement. Incorporated by
Reference to Post-Effective
Amendment No. 21 to
Registration Statement of
Neuberger & Berman Income
Funds, File Nos. 2-85229 and
811-3802, EDGAR Accession No.
to be Provided by Amendment.
(6) (a) Distribution Agreement Between Neuberger ____
& Berman Income Trust and Neuberger &
Berman Management Incorporated. Filed
herewith.
(b) Schedule A - Series of Neuberger & ____
Berman Income Trust Currently Subject to
the Distribution Agreement. Filed
herewith.
(7) Bonus, Profit Sharing or Pension Plans. None. N.A.
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
(8) (a) Custodian Contract Between Neuberger & ____
Berman Income Trust and State Street
Bank and Trust Company. Filed herewith.
(b) Schedule A - Approved Foreign Banking N.A.
Institutions and Securities Depositories
Under the Custodian Contract.
Incorporated by Reference to Post-
Effective Amendment No. 21 to
Registration Statement of Neuberger &
Berman Income Funds, File Nos. 2-85229
and 811-3802, EDGAR Accession No. to be
Provided by Amendment.
(9) (a) (i) Transfer Agency Agreement
Between Neuberger & Berman
Income Trust and State Street
Bank and Trust Company. Filed
herewith.
(ii) First Amendment to Transfer ____
Agency and Service Agreement
between Neuberger & Berman
Income Trust and State Street
Bank and Trust Company. Filed
herewith.
(b) (i) Administration Agreement ____
Between Neuberger & Berman
Income Trust and Neuberger &
Berman Management Incorporated.
Filed herewith.
(ii) Schedule A - Series of ____
Neuberger & Berman Income Trust
Currently Subject to the
Administration Agreement.
Filed herewith.
(iii) Schedule B - Schedule of ____
Compensation Under the
Administration Agreement.
Filed herewith.
(10) Opinion and Consent of Kirkpatrick & Lockhart on N.A.
Securities Matters. Incorporated by Reference
to Registrant's Registration Statement, File
Nos. 33-62872 and 811-7724.
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
(11) Other Opinions, Appraisals, Rulings and
Consents:
Consent of Ernst & Young LLP,
Independent Auditors. Filed Herewith.
(12) Financial Statements Omitted from Prospectus. N.A.
None.
(13) Letter of Investment Intent. None. N.A.
(14) Prototype Retirement Plan. None. N.A.
(15) Plan Pursuant to Rule 12b-1. None. N.A.
(16) Schedule of Computation Performance N.A.
Quotation. Incorporated by Reference to Post-
Effective Amendment No. 1 to Registrant's
Registration Statement, File Nos. 33-62872 and
811-7724.
(17) Financial Data Schedule. Filed herewith. ____
(18) Plan Pursuant to Rule 18-3f. None. N.A.
</TABLE>
<PAGE>
<PAGE>
CERTIFICATE OF TRUST
OF
NEUBERGER & BERMAN INCOME TRUST
This Certificate of Trust ("Certificate") is filed in accordance
with the provisions of the Delaware Business Trust Act (12 Del. Code Ann.
Tit. 12 Section 3801 et seq.) and sets forth the following:
1. The name of the trust is: Neuberger & Berman Income Trust
("Trust").
2. The business address of the registered office of the Trust
and of the registered agent of the Trust is:
The Corporation Trust Company
Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
3. This Certificate is effective upon filing.
4. The Trust is a Delaware business trust to be registered under
the Investment Company Act of 1940. Notice is hereby given
that the Trust shall consist of one or more series. The
debts, liabilities, obligations and expenses incurred,
contracted for or otherwise existing with respect to a
particular series of the Trust shall be enforceable against
the assets of such series only, and not against the assets of
the Trust generally or any other series.
IN WITNESS WHEREOF, the undersigned, being the initial Trustees,
have executed this Certificate on this 11th day of May, 1993.
/s/ Claudia A. Brandon
---------------------------------------
Claudia A. Brandon, as
Trustee and not individually
/s/ Ellen Metzger
---------------------------------------
Ellen Metzger, as
Trustee and not individually
/s/ Michael J. Weiner
---------------------------------------
Michael J. Weiner, as
Trustee and not individually
Address: 605 Third Avenue
New York, NY 10158
<PAGE>
STATE OF NEW YORK
CITY OF NEW YORK
Before me this 11th day of May, 1993, personally appeared the
above-named Claudia A. Brandon, Ellen Metzger, and Michael J. Weiner,
known to me to be the persons who executed the foregoing instrument and
who acknowledged that they executed the same.
/s/ Loraine Olavarria
---------------------------------------
Notary Public
My commission expires April 15, 1995
<PAGE>
<PAGE>
NEUBERGER & BERMAN INCOME TRUST
TRUST INSTRUMENT
This TRUST INSTRUMENT is made on May 6, 1993 by the Trustees, to
establish a business trust for the investment and reinvestment of funds
contributed to the Trust by investors. The Trustees declare that all
money and property contributed to the Trust shall be held and managed in
trust pursuant to this Trust Instrument. The name of the Trust created by
this Trust Instrument is Neuberger & Berman Income Trust.
ARTICLE I
---------
DEFINITIONS
-----------
Unless otherwise provided or required by the context:
(a) "By-laws" means the By-laws of the Trust adopted by the
Trustees, as amended from time to time;
(b) "Class" means the class of Shares of a Series established
pursuant to Article IV;
(c) "Commission," "Interested Person," and "Principal Underwriter"
have the meanings provided in the 1940 Act;
(d) "Covered Person" means a person so defined in Article IX,
Section 2;
(e) "Delaware Act" means Chapter 38 of Title 12 of the Delaware
Code entitled "Treatment of Delaware Business Trusts," as amended from
time to time;
(f) "Majority Shareholder Vote" means "the vote of a majority of
the outstanding voting securities" as defined in the 1940 Act;
(g) "Net Asset Value" means the net asset value of each Series of
the Trust, determined as provided in Article V, Section 3;
(h) "Outstanding Shares" means Shares shown in the books of the
Trust or its transfer agent as then issued and outstanding, but does not
include Shares which have been repurchased or redeemed by the Trust and
which are held in the treasury of the Trust;
(i) "Series" means a series of Shares established pursuant to
Article IV;
(j) "Shareholder" means a record owner of Outstanding Shares;
(k) "Shares" means the equal proportionate transferable units of
interest into which the beneficial interest of each Series or Class is
<PAGE>
divided from time to time (including whole Shares and fractions of
Shares);
(l) "Trust" means Neuberger & Berman Income Trust established
hereby, and reference to the Trust, when applicable to one or more Series,
refers to that Series;
(m) "Trustees" means the persons who have signed this Trust
Instrument, so long as they shall continue in office in accordance with
the terms hereof, and all other persons who may from time to time be duly
qualified and serving as Trustees in accordance with Article II, in all
cases in their capacities as Trustees hereunder;
(n) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the Trust or any
Series or the Trustees on behalf of the Trust or any Series;
(o) The "1940 Act" means the Investment Company Act of 1940, as
amended from time to time.
ARTICLE II
----------
THE TRUSTEES
------------
Section 1. MANAGEMENT OF THE TRUST. The business and affairs of
the Trust shall be managed by or under the direction of the Trustees, and
they shall have all powers necessary or desirable to carry out that
responsibility. The Trustees may execute all instruments and take all
action they deem necessary or desirable to promote the interests of the
Trust. Any determination made by the Trustees in good faith as to what is
in the interests of the Trust shall be conclusive.
Section 2. INITIAL TRUSTEES; ELECTION AND NUMBER OF TRUSTEES. The
initial Trustees shall be the persons initially signing this Trust
Instrument. The number of Trustees (other than the initial Trustees)
shall be fixed from time to time by a majority of the Trustees; provided,
that there shall be at least two (2) Trustees. The Shareholders shall
elect the Trustees (other than the initial Trustees) on such dates as the
Trustees may fix from time to time.
Section 3. TERM OF OFFICE OF TRUSTEES. Each Trustee shall hold
office for life or until his successor is elected or the Trust terminates;
except that (a) any Trustee may resign by delivering to the other Trustees
or to any Trust officer a written resignation effective upon such delivery
or a later date specified therein; (b) any Trustee may be removed with or
without cause at any time by a written instrument signed by at least
two-thirds of the other Trustees, specifying the effective date of
removal; (c) any Trustee who requests to be retired, or who has become
physically or mentally incapacitated or is otherwise unable to serve, may
be retired by a written instrument signed by a majority of the other
Trustees, specifying the effective date of retirement; and (d) any Trustee
<PAGE>
may be removed at any meeting of the Shareholders by a vote of at least
two-thirds of the Outstanding Shares.
Section 4. VACANCIES; APPOINTMENT OF TRUSTEES. Whenever a vacancy
shall exist in the Board of Trustees, regardless of the reason for such
vacancy, the remaining Trustees shall appoint any person as they determine
in their sole discretion to fill that vacancy, consistent with the
limitations under the 1940 Act. Such appointment shall be made by a
written instrument signed by a majority of the Trustees or by a resolution
of the Trustees, duly adopted and recorded in the records of the Trust,
specifying the effective date of the appointment. The Trustees may
appoint a new Trustee as provided above in anticipation of a vacancy
expected to occur because of the retirement, resignation, or removal of a
Trustee, or an increase in number of Trustees, provided that such
appointment shall become effective only at or after the expected vacancy
occurs. As soon as any such Trustee has accepted his appointment in
writing, the trust estate shall vest in the new Trustee, together with the
continuing Trustees, without any further act or conveyance, and he shall
be deemed a Trustee hereunder. The power of appointment is subject to
Section 16(a) of the 1940 Act.
Section 5. TEMPORARY VACANCY OR ABSENCE. Whenever a vacancy in
the Board of Trustees shall occur, until such vacancy is filled, or while
any Trustee is absent from his domicile (unless that Trustee has made
arrangements to be informed about, and to participate in, the affairs of
the Trust during such absence), or is physically or mentally
incapacitated, the remaining Trustees shall have all the powers hereunder
and their certificate as to such vacancy, absence, or incapacity shall be
conclusive. Any Trustee may, by power of attorney, delegate his powers as
Trustee for a period not exceeding six (6) months at any one time to any
other Trustee or Trustees.
Section 6. CHAIRMAN. The Trustees shall appoint one of their
number to be Chairman of the Board of Trustees. The Chairman shall
preside at all meetings of the Trustees, shall be responsible for the
execution of policies established by the Trustees and the administration
of the Trust, and may be the chief executive, financial and/or accounting
officer of the Trust.
Section 7. ACTION BY THE TRUSTEES. The Trustees shall act by
majority vote at a meeting duly called (including at a telephonic meeting,
unless the 1940 Act requires that a particular action be taken only at a
meeting of Trustees in person) at which a quorum is present or by written
consent of a majority of Trustees (or such greater number as may be
required by applicable law) without a meeting. A majority of the Trustees
shall constitute a quorum at any meeting. Meetings of the Trustees may be
called orally or in writing by the Chairman of the Board of Trustees or by
any two other Trustees. Notice of the time, date and place of all
Trustees meetings shall be given to each Trustee by telephone, facsimile
or other electronic mechanism sent to his home or business address at
least twenty-four hours in advance of the meeting or by written notice
mailed to his home or business address at least seventy-two hours in
advance of the meeting. Notice need not be given to any Trustee who
attends the meeting without objecting to the lack of notice or who signs a
<PAGE>
waiver of notice either before or after the meeting. Subject to the
requirements of the 1940 Act, the Trustees by majority vote may delegate
to any Trustee or Trustees authority to approve particular matters or take
particular actions on behalf of the Trust. Any written consent or waiver
may be provided and delivered to the Trust by facsimile or other similar
electronic mechanism.
Section 8. OWNERSHIP OF TRUST PROPERTY. The Trust Property of the
Trust and of each Series shall be held separate and apart from any assets
now or hereafter held in any capacity other than as Trustee hereunder by
the Trustees or any successor Trustees. All of the Trust Property and
legal title thereto shall at all times be considered as vested in the
Trustees on behalf of the Trust, except that the Trustees may cause legal
title to any Trust Property to be held by or in the name of the Trust, or
in the name of any person as nominee. No Shareholder shall be deemed to
have a severable ownership in any individual asset of the Trust or of any
Series or any right of partition or possession thereof, but each
Shareholder shall have, as provided in Article IV, a proportionate
undivided beneficial interest in the Trust or Series represented by
Shares.
Section 9. EFFECT OF TRUSTEES NOT SERVING. The death, resignation,
retirement, removal, incapacity, or inability or refusal to serve of the
Trustees, or any one of them, shall not operate to annul the Trust or to
revoke any existing agency created pursuant to the terms of this Trust
Instrument.
Section 10. TRUSTEES, ETC. AS SHAREHOLDERS. Subject to any
restrictions in the By-laws, any Trustee, officer, agent or independent
contractor of the Trust may acquire, own and dispose of Shares to the same
extent as any other Shareholder; the Trustees may issue and sell Shares to
and buy Shares from any such person or any firm or company in which such
person is interested, subject only to any general limitations herein.
ARTICLE III
-----------
POWERS OF THE TRUSTEES
----------------------
Section 1. POWERS. The Trustees in all instances shall act as
principals, free of the control of the Shareholders. The Trustees shall
have full power and authority to take or refrain from taking any action
and to execute any contracts and instruments that they may consider
necessary or desirable in the management of the Trust. The Trustees shall
not in any way be bound or limited by current or future laws or customs
applicable to trust investments, but shall have full power and authority
to make any investments which they, in their sole discretion, deem proper
to accomplish the purposes of the Trust. The Trustees may exercise all of
their powers without recourse to any court or other authority. Subject to
any applicable limitation herein or in the By-laws or resolutions of the
Trust, the Trustees shall have power and authority, without limitation:
<PAGE>
(a) To invest and reinvest cash and other property, and to hold
cash or other property uninvested, without in any event being bound or
limited by any current or future law or custom concerning investments by
trustees, and to sell, exchange, lend, pledge, mortgage, hypothecate,
write options on and lease any or all of the Trust Property; to invest in
obligations and securities of any kind, and without regard to whether they
may mature before the possible termination of the Trust; and without
limitation to invest all or any part of its cash and other property in
securities issued by a registered investment company or series thereof,
subject to the provisions of the 1940 Act;
(b) To operate as and carry on the business of a registered
investment company, and exercise all the powers necessary and proper to
conduct such a business;
(c) To adopt By-laws not inconsistent with this Trust Instrument
providing for the conduct of the business of the Trust and to amend and
repeal them to the extent such right is not reserved to the Shareholders;
(d) To elect and remove such officers and appoint and terminate
such agents as they deem appropriate;
(e) To employ as custodian of any assets of the Trust, subject to
any provisions herein or in the By-laws, one or more banks, trust
companies or companies that are members of a national securities exchange,
or other entities permitted by the Commission to serve as such;
(f) To retain one or more transfer agents and Shareholder
servicing agents, or both;
(g) To provide for the distribution of Shares either through a
Principal Underwriter as provided herein or by the Trust itself, or both,
or pursuant to a distribution plan of any kind;
(h) To set record dates in the manner provided for herein or in
the By-laws;
(i) To delegate such authority as they consider desirable to any
officers of the Trust and to any agent, independent contractor, manager,
investment adviser, custodian or underwriter;
(j) To sell or exchange any or all of the assets of the Trust,
subject to Article X, Section 4;
(k) To vote or give assent, or exercise any rights of ownership,
with respect to other securities or property; and to execute and deliver
powers of attorney delegating such power to other persons;
(l) To exercise powers and rights of subscription or otherwise
which in any manner arise out of ownership of securities;
(m) To hold any security or other property (i) in a form not
indicating any trust, whether in bearer, book entry, unregistered or other
negotiable form, or (ii) either in the Trust's or Trustees' own name or in
<PAGE>
the name of a custodian or a nominee or nominees, subject to safeguards
according to the usual practice of business trusts or investment
companies;
(n) To establish separate and distinct Series with separately
defined investment objectives and policies and distinct investment
purposes, and with separate Shares representing beneficial interests in
such Series, and to establish separate Classes, all in accordance with the
provisions of Article IV;
(o) To the full extent permitted by Section 3804 of the Delaware
Act, to allocate assets, liabilities and expenses of the Trust to a
particular Series and liabilities and expenses to a particular Class or to
apportion the same between or among two or more Series or Classes,
provided that any liabilities or expenses incurred by a particular Series
or Class shall be payable solely out of the assets belonging to that
Series or Class as provided for in Article IV, Section 4;
(p) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or concern
whose securities are held by the Trust; to consent to any contract, lease,
mortgage, purchase, or sale of property by such corporation or concern;
and to pay calls or subscriptions with respect to any security held in the
Trust;
(q) To compromise, arbitrate, or otherwise adjust claims in favor
of or against the Trust or any matter in controversy including, but not
limited to, claims for taxes;
(r) To make distributions of income and of capital gains to
Shareholders in the manner hereinafter provided for;
(s) To borrow money;
(t) To establish, from time to time, a minimum total investment
for Shareholders, and to require the redemption of the Shares of any
Shareholders whose investment is less than such minimum upon giving notice
to such Shareholder;
(u) To establish committees for such purposes, with such
membership, and with such responsibilities as the Trustees may consider
proper, including a committee consisting of fewer than all of the Trustees
then in office, which may act for and bind the Trustees and the Trust with
respect to the institution, prosecution, dismissal, settlement, review or
investigation of any legal action, suit or proceeding, pending or
threatened;
(v) To issue, sell, repurchase, redeem, cancel, retire, acquire,
hold, resell, reissue, dispose of and otherwise deal in Shares; to
establish terms and conditions regarding the issuance, sale, repurchase,
redemption, cancellation, retirement, acquisition, holding, resale,
reissuance, disposition of or dealing in Shares; and, subject to Articles
IV and V, to apply to any such repurchase, redemption, retirement,
cancellation or acquisition of Shares any funds or property of the Trust
<PAGE>
or of the particular Series with respect to which such Shares are issued;
and
(w) To carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary or
desirable to accomplish any purpose or to further any of the foregoing
powers, and to take every other action incidental to the foregoing
business or purposes, objects or powers.
The clauses above shall be construed as objects and powers, and the
enumeration of specific powers shall not limit in any way the general
powers of the Trustees. Any action by one or more of the Trustees in
their capacity as such hereunder shall be deemed an action on behalf of
the Trust or the applicable Series, and not an action in an individual
capacity. No one dealing with the Trustees shall be under any obligation
to make any inquiry concerning the authority of the Trustees, or to see to
the application of any payments made or property transferred to the
Trustees or upon their order. In construing this Trust Instrument, the
presumption shall be in favor of a grant of power to the Trustees.
Section 2. CERTAIN TRANSACTIONS. Except as prohibited by
applicable law, the Trustees may, on behalf of the Trust, buy any
securities from or sell any securities to, or lend any assets of the Trust
to, any Trustee or officer of the Trust or any firm of which any such
Trustee or officer is a member acting as principal, or have any such
dealings with any investment adviser, administrator, distributor or
transfer agent for the Trust or with any Interested Person of such person.
The Trust may employ any such person or entity in which such person is an
Interested Person, as broker, legal counsel, registrar, investment
adviser, administrator, distributor, transfer agent, dividend disbursing
agent, custodian or in any other capacity upon customary terms.
ARTICLE IV
----------
SERIES; CLASSES; SHARES
-----------------------
Section 1. ESTABLISHMENT OF SERIES OR CLASS. The Trust shall
consist of one or more Series. The Trustees hereby establish the Series
listed in Schedule A attached hereto and made a part hereof. Each
additional Series shall be established by the adoption of a resolution of
the Trustees. The Trustees may designate the relative rights and
preferences of the Shares of each Series. The Trustees may divide the
Shares of any Series into Classes. In such case each Class of a Series
shall represent interests in the assets of that Series and have identical
voting, dividend, liquidation and other rights and the same terms and
conditions, 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. The
Trust shall maintain separate and distinct records for each Series and
hold and account for the assets thereof separately from the other assets
of the Trust or of any other Series. A Series may issue any number of
Shares and need not issue Shares. Each Share of a Series shall represent
<PAGE>
an equal beneficial interest in the net assets of such Series. Each
holder of Shares of a Series shall be entitled to receive his pro rata
share of all distributions made with respect to such Series. Upon
redemption of his Shares, such Shareholder shall be paid solely out of the
funds and property of such Series. The Trustees may change the name of
any Series or Class.
Section 2. SHARES. The beneficial interest in the Trust shall be
divided into Shares of one or more separate and distinct Series or Classes
established by the Trustees. The number of Shares of each Series and
Class is unlimited and each Share shall have a par value of $0.001 per
Share. All Shares issued hereunder shall be fully paid and nonassessable.
Shareholders shall have no preemptive or other right to subscribe to any
additional Shares or other securities issued by the Trust. The Trustees
shall have full power and authority, in their sole discretion and without
obtaining Shareholder approval: to issue original or additional Shares at
such times and on such terms and conditions as they deem appropriate; to
issue fractional Shares and Shares held in the treasury; to establish and
to change in any manner Shares of any Series or Classes with such
preferences, terms of conversion, voting powers, rights and privileges as
the Trustees may determine (but the Trustees may not change Outstanding
Shares in a manner materially adverse to the Shareholders of such Shares);
to divide or combine the Shares of any Series or Classes into a greater or
lesser number; to classify or reclassify any unissued Shares of any Series
or Classes into one or more Series or Classes of Shares; to abolish any
one or more Series or Classes of Shares; to issue Shares to acquire other
assets (including assets subject to, and in connection with, the
assumption of liabilities) and businesses; and to take such other action
with respect to the Shares as the Trustees may deem desirable. Shares
held in the treasury shall not confer any voting rights on the Trustees
and shall not be entitled to any dividends or other distributions declared
with respect to the Shares.
Section 3. INVESTMENT IN THE TRUST. The Trustees shall accept
investments in any Series from such persons and on such terms as they may
from time to time authorize. At the Trustees' discretion, such
investments, subject to applicable law, may be in the form of cash or
securities in which that Series is authorized to invest, valued as
provided in Article V, Section 3. Investments in a Series shall be
credited to each Shareholder's account in the form of full Shares at the
Net Asset Value per Share next determined after the investment is received
or accepted as may be determined by the Trustees; provided, however, that
the Trustees may, in their sole discretion, (a) impose a sales charge upon
investments in any Series or Class, (b) issue fractional Shares, or (c)
determine the Net Asset Value per Share of the initial capital
contribution. The Trustees shall have the right to refuse to accept
investments in any Series at any time without any cause or reason therefor
whatsoever.
Section 4. ASSETS AND LIABILITIES OF SERIES. All consideration
received by the Trust for the issue or sale of Shares of a particular
Series, together with all assets in which such consideration is invested
or reinvested, all income, earnings, profits, and proceeds thereof
(including any proceeds derived from the sale, exchange or liquidation of
<PAGE>
such assets, and any funds or payments derived from any reinvestment of
such proceeds in whatever form the same may be), shall be held and
accounted for separately from the other assets of the Trust and every
other Series and are referred to as "assets belonging to" that Series.
The assets belonging to a Series shall belong only to that Series for all
purposes, and to no other Series, subject only to the rights of creditors
of that Series. Any assets, income, earnings, profits, and proceeds
thereof, funds, or payments which are not readily identifiable as
belonging to any particular Series shall be allocated by the Trustees
between and among one or more Series as the Trustees deem fair and
equitable. Each such allocation shall be conclusive and binding upon the
Shareholders of all Series for all purposes, and such assets, earnings,
income, profits or funds, or payments and proceeds thereof shall be
referred to as assets belonging to that Series. The assets belonging to a
Series shall be so recorded upon the books of the Trust, and shall be held
by the Trustees in trust for the benefit of the Shareholders of that
Series. The assets belonging to a Series shall be charged with the
liabilities of that Series and all expenses, costs, charges and reserves
attributable to that Series, except that liabilities and expenses
allocated solely to a particular Class shall be borne by that Class. Any
general liabilities, expenses, costs, charges or reserves of the Trust
which are not readily identifiable as belonging to any particular Series
or Class shall be allocated and charged by the Trustees between or among
any one or more of the Series or Classes in such manner as the Trustees
deem fair and equitable. Each such allocation shall be conclusive and
binding upon the Shareholders of all Series or Classes for all purposes.
Without limiting the foregoing, but subject to the right of the
Trustees to allocate general liabilities, expenses, costs, charges or
reserves as herein provided, the debts, liabilities, obligations and
expenses incurred, contracted for or otherwise existing with respect to a
particular Series shall be enforceable against the assets of such Series
only, and not against the assets of the Trust generally or of any other
Series. Notice of this contractual limitation on liabilities among Series
may, in the Trustees' discretion, be set forth in the certificate of trust
of the Trust (whether originally or by amendment) as filed or to be filed
in the Office of the Secretary of State of the State of Delaware pursuant
to the Delaware Act, and upon the giving of such notice in the certificate
of trust, the statutory provisions of Section 3804 of the Delaware Act
relating to limitations on liabilities among Series (and the statutory
effect under Section 3804 of setting forth such notice in the certificate
of trust) shall become applicable to the Trust and each Series. Any
person extending credit to, contracting with or having any claim against
any Series may look only to the assets of that Series to satisfy or
enforce any debt, with respect to that Series. No Shareholder or former
Shareholder of any Series shall have a claim on or any right to any assets
allocated or belonging to any other Series.
Section 5. OWNERSHIP AND TRANSFER OF SHARES. The Trust shall
maintain a register containing the names and addresses of the Shareholders
of each Series and Class thereof, the number of Shares of each Series and
Class held by such Shareholders, and a record of all Share transfers. The
register shall be conclusive as to the identity of Shareholders of record
and the number of Shares held by them from time to time. The Trustees may
<PAGE>
authorize the issuance of certificates representing Shares and adopt rules
governing their use. The Trustees may make rules governing the transfer
of Shares, whether or not represented by certificates.
Section 6. STATUS OF SHARES; LIMITATION OF SHAREHOLDER LIABILITY.
Shares shall be deemed to be personal property giving Shareholders only
the rights provided in this Trust Instrument. Every Shareholder, by
virtue of having acquired a Share, shall be held expressly to have
assented to and agreed to be bound by the terms of this Trust Instrument
and to have become a party hereto. No Shareholder shall be personally
liable for the debts, liabilities, obligations and expenses incurred by,
contracted for, or otherwise existing with respect to, the Trust or any
Series. Neither the Trust nor the Trustees shall have any power to bind
any Shareholder personally or to demand payment from any Shareholder for
anything, other than as agreed by the Shareholder. Shareholders shall
have the same limitation of personal liability as is extended to
shareholders of a private corporation for profit incorporated in the State
of Delaware. Every written obligation of the Trust or any Series shall
contain a statement to the effect that such obligation may only be
enforced against the assets of the Trust or such Series; however, the
omission of such statement shall not operate to bind or create personal
liability for any Shareholder or Trustee.
ARTICLE V
---------
DISTRIBUTIONS AND REDEMPTIONS
-----------------------------
Section 1. DISTRIBUTIONS. The Trustees may declare and pay
dividends and other distributions, including dividends on Shares of a
particular Series and other distributions from the assets belonging to
that Series. The amount and payment of dividends or distributions and
their form, whether they are in cash, Shares or other Trust Property,
shall be determined by the Trustees. Dividends and other distributions
may be paid pursuant to a standing resolution adopted once or more often
as the Trustees determine. All dividends and other distributions on
Shares of a particular Series shall be distributed pro rata to the
Shareholders of that Series in proportion to the number of Shares of that
Series they held on the record date established for such payment, except
that such dividends and distributions shall appropriately reflect expenses
allocated to a particular Class of such Series. The Trustees may adopt
and offer to Shareholders such dividend reinvestment plans, cash dividend
payout plans or similar plans as the Trustees deem appropriate.
Section 2. REDEMPTIONS. Each Shareholder of a Series shall have
the right at such times as may be permitted by the Trustees to require the
Series to redeem all or any part of his Shares at a redemption price per
Share equal to the Net Asset Value per Share at such time as the Trustees
shall have prescribed by resolution. In the absence of such resolution,
the redemption price per Share shall be the Net Asset Value next
determined after receipt by the Series of a request for redemption in
proper form less such charges as are determined by the Trustees and
described in the Trust's Registration Statement for that Series under the
<PAGE>
Securities Act of 1933. The Trustees may specify conditions, prices, and
places of redemption, and may specify binding requirements for the proper
form or forms of requests for redemption. Payment of the redemption price
may be wholly or partly in securities or other assets at the value of such
securities or assets used in such determination of Net Asset Value, or may
be in cash. Upon redemption, Shares may be reissued from time to time.
The Trustees may require Shareholders to redeem Shares for any reason
under terms set by the Trustees, including the failure of a Shareholder to
supply a personal identification number if required to do so, or to have
the minimum investment required, or to pay when due for the purchase of
Shares issued to him. To the extent permitted by law, the Trustees may
retain the proceeds of any redemption of Shares required by them for
payment of amounts due and owing by a Shareholder to the Trust or any
Series or Class. Notwithstanding the foregoing, the Trustees may postpone
payment of the redemption price and may suspend the right of the
Shareholders to require any Series or Class to redeem Shares during any
period of time when and to the extent permissible under the 1940 Act.
Section 3. DETERMINATION OF NET ASSET VALUE. The Trustees shall
cause the Net Asset Value of Shares of each Series or Class to be
determined from time to time in a manner consistent with applicable laws
and regulations. The Trustees may delegate the power and duty to
determine Net Asset Value per Share to one or more Trustees or officers of
the Trust or to a custodian, depository or other agent appointed for such
purpose. The Net Asset Value of Shares shall be determined separately for
each Series or Class at such times as may be prescribed by the Trustees
or, in the absence of action by the Trustees, as of the close of trading
on the New York Stock Exchange on each day for all or part of which such
Exchange is open for unrestricted trading.
Section 4. SUSPENSION OF RIGHT OF REDEMPTION. If, as referred to
in Section 2 of this Article, the Trustees postpone payment of the
redemption price and suspend the right of Shareholders to redeem their
Shares, such suspension shall take effect at the time the Trustees shall
specify, but not later than the close of business on the business day next
following the declaration of suspension. Thereafter Shareholders shall
have no right of redemption or payment until the Trustees declare the end
of the suspension. If the right of redemption is suspended, a Shareholder
may either withdraw his request for redemption or receive payment based on
the Net Asset Value per Share next determined after the suspension
terminates.
Section 5. REDEMPTIONS NECESSARY FOR QUALIFICATION AS REGULATED
INVESTMENT COMPANY. If the Trustees shall determine that direct or
indirect ownership of Shares of any Series has or may become concentrated
in any person to an extent which would disqualify any Series as a
regulated investment company under the Internal Revenue Code, then the
Trustees shall have the power (but not the obligation) by lot or other
means they deem equitable to (a) call for redemption by any such person of
a number, or principal amount, of Shares sufficient to maintain or bring
the direct or indirect ownership of Shares into conformity with the
requirements for such qualification and (b) refuse to transfer or issue
Shares to any person whose acquisition of Shares in question would, in the
Trustees' judgment, result in such disqualification. Any such redemption
<PAGE>
shall be effected at the redemption price and in the manner provided in
this Article. Shareholders shall upon demand disclose to the Trustees in
writing such information concerning direct and indirect ownership of
Shares as the Trustees deem necessary to comply with the requirements of
any taxing authority.
ARTICLE VI
----------
SHAREHOLDERS' VOTING POWERS AND MEETINGS
----------------------------------------
Section 1. VOTING POWERS. The Shareholders shall have power to
vote only with respect to (a) the election of Trustees as provided in
Section 2 of this Article; (b) the removal of Trustees as provided in
Article II, Section 3(d); (c) any investment advisory or management
contract as provided in Article VII, Section 1; (d) any termination of the
Trust as provided in Article X, Section 4; (e) the amendment of this Trust
Instrument to the extent and as provided in Article X, Section 8; and (f)
such additional matters relating to the Trust as may be required or
authorized by law, this Trust Instrument, or the By-laws or any
registration of the Trust with the Commission or any State, or as the
Trustees may consider desirable.
On any matter submitted to a vote of the Shareholders, all Shares
shall be voted by individual Series or Class, except (a) when required by
the 1940 Act, Shares shall be voted in the aggregate and not by individual
Series or Class, and (b) when the Trustees have determined that the matter
affects the interests of more than one Series or Class, then the
Shareholders of all such Series or Classes shall be entitled to vote
thereon. Each whole Share shall be entitled to one vote as to any matter
on which it is entitled to vote, and each fractional Share shall be
entitled to a proportionate fractional vote. There shall be no cumulative
voting in the election of Trustees. Shares may be voted in person or by
proxy or in any manner provided for in the By-laws. The By-laws may
provide that proxies may be given by any electronic or telecommunications
device or in any other manner, but if a proposal by anyone other than the
officers or Trustees is submitted to a vote of the Shareholders of any
Series or Class, or if there is a proxy contest or proxy solicitation or
proposal in opposition to any proposal by the officers or Trustees, Shares
may be voted only in person or by written proxy. Until Shares of a Series
are issued, as to that Series the Trustees may exercise all rights of
Shareholders and may take any action required or permitted to be taken by
Shareholders by law, this Trust Instrument or the By-laws.
Section 2. MEETINGS OF SHAREHOLDERS. The first Shareholders'
meeting shall be held to elect Trustees at such time and place as the
Trustees designate. Special meetings of the Shareholders of any Series or
Class may be called by the Trustees and shall be called by the Trustees
upon the written request of Shareholders owning at least ten percent of
the Outstanding Shares of such Series or Class entitled to vote.
Shareholders shall be entitled to at least fifteen days' notice of any
meeting, given as determined by the Trustees.
<PAGE>
Section 3. QUORUM; REQUIRED VOTE. One-third of the Outstanding
Shares of each Series or Class, or one-third of the Outstanding Shares of
the Trust, entitled to vote in person or by proxy shall be a quorum for
the transaction of business at a Shareholders' meeting with respect to
such Series or Class, or with respect to the entire Trust, respectively.
Any lesser number shall be sufficient for adjournments. Any adjourned
session of a Shareholders' meeting may be held within a reasonable time
without further notice. Except when a larger vote is required by law,
this Trust Instrument or the By-laws, a majority of the Outstanding Shares
voted in person or by proxy shall decide any matters to be voted upon with
respect to the entire Trust and a plurality of such Outstanding Shares
shall elect a Trustee; provided, that if this Trust Instrument or
applicable law permits or requires that Shares be voted on any matter by
individual Series or Classes, then a majority of the Outstanding Shares of
that Series or Class (or, if required by law, a Majority Shareholder Vote
of that Series or Class) voted in person or by proxy voted on the matter
shall decide that matter insofar as that Series or Class is concerned.
Shareholders may act as to the Trust or any Series or Class by the written
consent of a majority (or such greater amount as may be required by
applicable law) of the Outstanding Shares of the Trust or of such Series
or Class, as the case may be.
ARTICLE VII
-----------
CONTRACTS WITH SERVICE PROVIDERS
--------------------------------
Section 1. INVESTMENT ADVISER. Subject to a Majority Shareholder
Vote, the Trustees may enter into one or more investment advisory
contracts on behalf of the Trust or any Series, providing for investment
advisory services, statistical and research facilities and services, and
other facilities and services to be furnished to the Trust or Series on
terms and conditions acceptable to the Trustees. Any such contract may
provide for the investment adviser to effect purchases, sales or exchanges
of portfolio securities or other Trust Property on behalf of the Trustees
or may authorize any officer or agent of the Trust to effect such
purchases, sales or exchanges pursuant to recommendations of the
investment adviser. The Trustees may authorize the investment adviser to
employ one or more sub-advisers.
Section 2. PRINCIPAL UNDERWRITER. The Trustees may enter into
contracts on behalf of the Trust or any Series or Class, providing for the
distribution and sale of Shares by the other party, either directly or as
sales agent, on terms and conditions acceptable to the Trustees. The
Trustees may adopt a plan or plans of distribution with respect to Shares
of any Series or Class and enter into any related agreements, whereby the
Series or Class finances directly or indirectly any activity that is
primarily intended to result in sales of its Shares, subject to the
requirements of Section 12 of the 1940 Act, Rule 12b-1 thereunder, and
other applicable rules and regulations.
Section 3. TRANSFER AGENCY, SHAREHOLDER SERVICES, AND
ADMINISTRATION AGREEMENTS. The Trustees, on behalf of the Trust or any
<PAGE>
Series or Class, may enter into transfer agency agreements, Shareholder
service agreements, and administration and management agreements with any
party or parties on terms and conditions acceptable to the Trustees.
Section 4. CUSTODIAN. The Trustees shall at all times place and
maintain the securities and similar investments of the Trust and of each
Series in custody meeting the requirements of Section 17(f) of the 1940
Act and the rules thereunder. The Trustees, on behalf of the Trust or any
Series, may enter into an agreement with a custodian on terms and
conditions acceptable to the Trustees, providing for the custodian, among
other things, to (a) hold the securities owned by the Trust or any Series
and deliver the same upon written order or oral order confirmed in
writing, (b) to receive and receipt for any moneys due to the Trust or any
Series and deposit the same in its own banking department or elsewhere,
(c) to disburse such funds upon orders or vouchers, and (d) to employ one
or more sub-custodians.
Section 5. PARTIES TO CONTRACTS WITH SERVICE PROVIDERS. The
Trustees may enter into any contract referred to in this Article with any
entity, although one more of the Trustees or officers of the Trust may be
an officer, director, trustee, partner, shareholder, or member of such
entity, and no such contract shall be invalidated or rendered void or
voidable because of such relationship. No person having such a
relationship shall be disqualified from voting on or executing a contract
in his capacity as Trustee and/or Shareholder, or be liable merely by
reason of such relationship for any loss or expense to the Trust with
respect to such a contract or accountable for any profit realized directly
or indirectly therefrom; provided, that the contract was reasonable and
fair and not inconsistent with this Trust Instrument or the By-laws.
Any contract referred to in Sections 1 and 2 of this Article shall
be consistent with and subject to the applicable requirements of Section
15 of the 1940 Act and the rules and orders thereunder with respect to its
continuance in effect, its termination, and the method of authorization
and approval of such contract or renewal. No amendment to a contract
referred to in Section 1 of this Article shall be effective unless
assented to in a manner consistent with the requirements of Section 15 of
the 1940 Act, and the rules and orders thereunder.
ARTICLE VIII
------------
EXPENSES OF THE TRUST AND SERIES
--------------------------------
Subject to Article IV, Section 4, the Trust or a particular Series
shall pay, or shall reimburse the Trustees from the Trust estate or the
assets belonging to the particular Series, for their expenses and
disbursements, including, but not limited to, interest charges, taxes,
brokerage fees and commissions; expenses of issue, repurchase and
redemption of Shares; certain insurance premiums; applicable fees,
interest charges and expenses of third parties, including the Trust's
investment advisers, managers, administrators, distributors, custodians,
transfer agents and fund accountants; fees of pricing, interest, dividend,
<PAGE>
credit and other reporting services; costs of membership in trade
associations; telecommunications expenses; funds transmission expenses;
auditing, legal and compliance expenses; costs of forming the Trust and
its Series and maintaining its existence; costs of preparing and printing
the prospectuses of the Trust and each Series, statements of additional
information and Shareholder reports and delivering them to Shareholders;
expenses of meetings of Shareholders and proxy solicitations therefor;
costs of maintaining books and accounts; costs of reproduction, stationery
and supplies; fees and expenses of the Trustees; compensation of the
Trust's officers and employees and costs of other personnel performing
services for the Trust or any Series; costs of Trustee meetings;
Commission registration fees and related expenses; state or foreign
securities laws registration fees and related expenses; and for such
non-recurring items as may arise, including litigation to which the Trust
or a Series (or a Trustee or officer of the Trust acting as such) is a
party, and for all losses and liabilities by them incurred in
administering the Trust. The Trustees shall have a lien on the assets
belonging to the appropriate Series, or in the case of an expense
allocable to more than one Series, on the assets of each such Series,
prior to any rights or interests of the Shareholders thereto, for the
reimbursement to them of such expenses, disbursements, losses and
liabilities.
ARTICLE IX
----------
LIMITATION OF LIABILITY AND INDEMNIFICATION
-------------------------------------------
Section 1. LIMITATION OF LIABILITY. All persons contracting with
or having any claim against the Trust or a particular Series shall look
only to the assets of the Trust or such Series for payment under such
contract or claim; and neither the Trustees nor any of the Trust's
officers, employees or agents, whether past, present or future, shall be
personally liable therefor. Every written instrument or obligation on
behalf of the Trust or any Series shall contain a statement to the
foregoing effect, but the absence of such statement shall not operate to
make any Trustee or officer of the Trust liable thereunder. Provided they
have exercised reasonable care and have acted under the reasonable belief
that their actions are in the best interest of the Trust, the Trustees and
officers of the Trust shall not be responsible or liable for any act or
omission or for neglect or wrongdoing of them or any officer, agent,
employee, investment adviser or independent contractor of the Trust, but
nothing contained in this Trust Instrument or in the Delaware Act shall
protect any Trustee or officer of the Trust against liability to the Trust
or to Shareholders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office.
Section 2. INDEMNIFICATION. (a) Subject to the exceptions and
limitations contained in subsection (b) below:
(i) every person who is, or has been, a Trustee or an
officer, employee or agent of the Trust ("Covered Person")
<PAGE>
shall be indemnified by the Trust or the appropriate Series
to the fullest extent permitted by law against liability and
against all expenses reasonably incurred or paid by him in
connection with any claim, action, suit or proceeding in
which he becomes involved as a party or otherwise by virtue
of his being or having been a Covered Person and against
amounts paid or incurred by him in the settlement thereof;
(ii) as used herein, the words "claim," "action," "suit," or
"proceeding" shall apply to all claims, actions, suits or
proceedings (civil, criminal or other, including appeals),
actual or threatened, and the words "liability" and
"expenses" shall include, without limitation, attorneys'
fees, costs, judgments, amounts paid in settlement, fines,
penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered
Person:
(i) who shall have been adjudicated by a court or body
before which the proceeding was brought (A) to be liable to
the Trust 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, or (B) not to have acted in good faith in the
reasonable belief that his action was in the best interest of
the Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Covered Person did not engage in
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his
office; (A) by the court or other body approving the
settlement; (B) by at least a majority of those Trustees who
are neither Interested Persons of the Trust nor are parties
to the matter based upon a review of readily available facts
(as opposed to a full trial-type inquiry); or (C) by written
opinion of independent legal counsel based upon a review of
readily available facts (as opposed to a full trial-type
inquiry).
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not
be exclusive of or affect any other rights to which any Covered Person may
now or hereafter be entitled, and shall inure to the benefit of the heirs,
executors and administrators of a Covered Person.
(d) To the maximum extent permitted by applicable law, expenses
in connection with the preparation and presentation of a defense to any
claim, action, suit or proceeding of the character described in subsection
(a) of this Section may be paid by the Trust or applicable Series from
time to time prior to final disposition thereof upon receipt of an
undertaking by or on behalf of such Covered Person that such amount will
be paid over by him to the Trust or applicable Series if it is ultimately
<PAGE>
determined that he is not entitled to indemnification under this Section;
provided, however, that either (i) such Covered Person shall have provided
appropriate security for such undertaking, (ii) the Trust is insured
against losses arising out of any such advance payments or (iii) either a
majority of the Trustees who are neither Interested Persons of the Trust
nor parties to the matter, or independent legal counsel in a written
opinion, shall have determined, based upon a review of readily available
facts (as opposed to a full trial-type inquiry) that there is reason to
believe that such Covered Person will not be disqualified from
indemnification under this Section.
(e) Any repeal or modification of this Article IX by the
Shareholders of the Trust, or adoption or modification of any other
provision of the Trust Instrument or By-laws inconsistent with this
Article, shall be prospective only, to the extent that such repeal or
modification would, if applied retrospectively, adversely affect any
limitation on the liability of any Covered Person or indemnification
available to any Covered Person with respect to any act or omission which
occurred prior to such repeal, modification or adoption.
Section 3. INDEMNIFICATION OF SHAREHOLDERS. If any Shareholder or
former Shareholder of any Series shall be held personally liable solely by
reason of his being or having been a Shareholder and not because of his
acts or omissions or for some other reason, the Shareholder or former
Shareholder (or his 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 Trust, 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.
ARTICLE X
---------
MISCELLANEOUS
-------------
Section 1. TRUST NOT A PARTNERSHIP. This Trust Instrument creates
a trust and not a partnership. No Trustee shall have any power to bind
personally either the Trust's officers or any Shareholder.
Section 2. TRUSTEE ACTION; EXPERT ADVICE; NO BOND OR SURETY. The
exercise by the Trustees of their powers and discretion hereunder in good
faith and with reasonable care under the circumstances then prevailing
shall be binding upon everyone interested. Subject to the provisions of
Article IX, the Trustees shall not be liable for errors of judgment or
mistakes of fact or law. The Trustees may take advice of counsel or other
experts with respect to the meaning and operation of this Trust
Instrument, and subject to the provisions of Article IX, shall not be
liable for any act or omission in accordance with such advice or for
failing to follow such advice. The Trustees shall not be required to give
any bond as such, nor any surety if a bond is obtained.
<PAGE>
Section 3. RECORD DATES. The Trustees may fix in advance a date up
to ninety (90) days before the date of any Shareholders' meeting, or the
date for the payment of any dividends or other distributions, or the date
for the allotment of rights, or the date when any change or conversion or
exchange of Shares shall go into effect as a record date for the
determination of the Shareholders entitled to notice of, and to vote at,
any such meeting, or entitled to receive payment of such dividend or other
distribution, or to receive any such allotment of rights, or to exercise
such rights in respect of any such change, conversion or exchange of
Shares.
Section 4. TERMINATION OF THE TRUST. (a) This Trust shall have
perpetual existence. Subject to a Majority Shareholder Vote of the Trust
or of each Series to be affected, the Trustees may
(i) sell and convey all or substantially all of the assets
of the Trust or any affected Series to another Series or to
another entity which is an open-end investment company as
defined in the 1940 Act, or is a series thereof, for adequate
consideration, which may include the assumption of all
outstanding obligations, taxes and other liabilities, accrued
or contingent, of the Trust or any affected Series, and which
may include shares of or interests in such Series, entity, or
series thereof; or
(ii) at any time sell and convert into money all or
substantially all of the assets of the Trust or any affected
Series.
Upon making reasonable provision for the payment of all known liabilities
of the Trust or any affected Series in either (i) or (ii), by such
assumption or otherwise, the Trustees shall distribute the remaining
proceeds or assets (as the case may be) ratably among the Shareholders of
the Trust or any affected Series; however, the payment to any particular
Class of such Series may be reduced by any fees, expenses or charges
allocated to that Class.
(b) The Trustees may take any of the actions specified in
subsection (a) (i) and (ii) above without obtaining a Majority Shareholder
Vote of the Trust or any Series if a majority of the Trustees determines
that the continuation of the Trust or Series is not in the best interests
of the Trust, such Series, or their respective Shareholders as a result of
factors or events adversely affecting the ability of the Trust or such
Series to conduct its business and operations in an economically viable
manner. Such factors and events may include the inability of the Trust or
a Series to maintain its assets at an appropriate size, changes in laws or
regulations governing the Trust or the Series or affecting assets of the
type in which the Trust or Series invests, or economic developments or
trends having a significant adverse impact on the business or operations
of the Trust or such Series.
(c) Upon completion of the distribution of the remaining proceeds
or assets pursuant to subsection (a), the Trust or affected Series shall
terminate and the Trustees and the Trust shall be discharged of any and
<PAGE>
all further liabilities and duties hereunder with respect thereto and the
right, title and interest of all parties therein shall be canceled and
discharged. Upon termination of the Trust, following completion of
winding up of its business, the Trustees shall cause a certificate of
cancellation of the Trust's certificate of trust to be filed in accordance
with the Delaware Act, which certificate of cancellation may be signed by
any one Trustee.
Section 5. REORGANIZATION. Notwithstanding anything else herein,
to change the Trust's form of organization the Trustees may, without
Shareholder approval, (a) cause the Trust to merge or consolidate with or
into one or more entities, if the surviving or resulting entity is the
Trust or another open-end management investment company under the 1940
Act, or a series thereof, that will succeed to or assume the Trust's
registration under the 1940 Act, or (b) cause the Trust to incorporate
under the laws of Delaware. Any agreement of merger or consolidation or
certificate of merger may be signed by a majority of Trustees and
facsimile signatures conveyed by electronic or telecommunication means
shall be valid.
Pursuant to and in accordance with the provisions of Section 3815(f)
of the Delaware Act, an agreement of merger or consolidation approved by
the Trustees in accordance with this Section 5 may effect any amendment to
the Trust Instrument or effect the adoption of a new trust instrument of
the Trust if it is the surviving or resulting trust in the merger or
consolidation.
Section 6. TRUST INSTRUMENT. The original or a copy of this Trust
Instrument and of each amendment hereto or Trust Instrument supplemental
shall be kept at the office of the Trust where it may be inspected by any
Shareholder. Anyone dealing with the Trust may rely on a certificate by a
Trustee or an officer of the Trust as to the authenticity of the Trust
Instrument or any such amendments or supplements and as to any matters in
connection with the Trust. The masculine gender herein shall include the
feminine and neuter genders. Headings herein are for convenience only and
shall not affect the construction of this Trust Instrument. This Trust
Instrument may be executed in any number of counterparts, each of which
shall be deemed an original.
Section 7. APPLICABLE LAW. This Trust Instrument and the Trust
created hereunder are governed by and construed and administered according
to the Delaware Act and the applicable laws of the State of Delaware;
provided, however, that there shall not be applicable to the Trust, the
Trustees or this Trust Instrument (a) the provisions of Section 3540 of
Title 12 of the Delaware Code, or (b) any provisions of the laws
(statutory or common) of the State of Delaware (other than the Delaware
Act) pertaining to trusts which relate to or regulate (i) the filing with
any court or governmental body or agency of trustee accounts or schedules
of trustee fees and charges, (ii) affirmative requirements to post bonds
for trustees, officers, agents or employees of a trust, (iii) the
necessity for obtaining court or other governmental approval concerning
the acquisition, holding or disposition of real or personal property,
(iv) fees or other sums payable to trustees, officers, agents or employees
of a trust, (v) the allocation of receipts and expenditures to income or
<PAGE>
principal, (vi) restrictions or limitations on the permissible nature,
amount or concentration of trust investments or requirements relating to
the titling, storage or other manner of holding of trust assets, or (vii)
the establishment of fiduciary or other standards of responsibilities or
limitations on the acts or powers of trustees, which are inconsistent with
the limitations or liabilities or authorities and powers of the Trustees
set forth or referenced in this Trust Instrument. The Trust shall be of
the type commonly called a Delaware business trust, and, without limiting
the provisions hereof, the Trust may exercise all powers which are
ordinarily exercised by such a trust under Delaware law. The Trust
specifically reserves the right to exercise any of the powers or
privileges afforded to trusts or actions that may be engaged in by trusts
under the Delaware Act, and the absence of a specific reference herein to
any such power, privilege or action shall not imply that the Trust may not
exercise such power or privilege or take such actions.
Section 8. AMENDMENTS. The Trustees may, without any Shareholder
vote, amend or otherwise supplement this Trust Instrument by making an
amendment, a Trust Instrument supplemental hereto or an amended and
restated trust instrument; provided, that Shareholders shall have the
right to vote on any amendment (a) which would affect the voting rights of
Shareholders granted in Article VI, Section 1, (b) to this Section 8, (c)
required to be approved by Shareholders by law or by the Trust's
registration statement(s) filed with the Commission, and (d) submitted to
them by the Trustees in their discretion. Any amendment submitted to
Shareholders which the Trustees determine would affect the Shareholders of
any Series shall be authorized by vote of the Shareholders of such Series
and no vote shall be required of Shareholders of a Series not affected.
Notwithstanding anything else herein, any amendment to Article IX which
would have the effect of reducing the indemnification and other rights
provided thereby to Trustees, officers, employees, and agents of the Trust
or to Shareholders or former Shareholders, and any repeal or amendment of
this sentence shall each require the affirmative vote of the holders of
two-thirds of the Outstanding Shares of the Trust entitled to vote
thereon.
Section 9. FISCAL YEAR. The fiscal year of the Trust shall end on
a specified date as set forth in the By-Laws. The Trustees may change the
fiscal year of the Trust without Shareholder approval.
Section 10. SEVERABILITY. The provisions of this Trust Instrument
are severable. If the Trustees determine, with the advice of counsel,
that any provision hereof conflicts with the 1940 Act, the regulated
investment company provisions of the Internal Revenue Code or with other
applicable laws and regulations, the conflicting provision shall be deemed
never to have constituted a part of this Trust Instrument; provided,
however, that such determination shall not affect any of the remaining
provisions of this Trust Instrument or render invalid or improper any
action taken or omitted prior to such determination. If any provision
hereof shall be held invalid or unenforceable in any jurisdiction, such
invalidity or unenforceability shall attach only to such provision only in
such jurisdiction and shall not affect any other provision of this Trust
Instrument.
<PAGE>
IN WITNESS WHEREOF, the undersigned, being the initial
Trustees, have executed this Trust Instrument as of the date first above
written.
/s/ Claudia A. Brandon
---------------------------
Claudia A. Brandon, as
Trustee and not individually
/s/ Ellen Metzger
----------------------------
Ellen Metzger, as Trustee
and not individually
/s/ Michael J. Weiner
-----------------------------
Michael J. Weiner, as
Trustee and not individually
Address: 605 Third Avenue
New York, New York 10058
STATE OF NEW YORK ss
CITY OF NEW YORK
Before me this 11th day of May, 1993, personally appeared the
above-named Claudia A. Brandon, Ellen Metzger, and Michael J. Weiner,
known to me to be the persons who executed the foregoing instrument and
who acknowledged that they executed the same.
/s/ Loraine Olavarria
-------------------------
Notary Public
My Commission expires April 15, 1995.
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I--Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II--The Trustees . . . . . . . . . . . . . . . . . . . . . . 2
Section 1. Management of the Trust . . . . . . . . . . . . . 2
Section 2. Initial Trustees; Election and Number of
Trustees . . . . . . . . . . . . . . . . 2
Section 3. Term of Office of Trustees . . . . . . . . . . . . 3
Section 4. Vacancies; Appointment of Trustees . . . . . . . . 3
Section 5. Temporary Vacancy or Absence . . . . . . . . . . . 3
Section 6. Chairman . . . . . . . . . . . . . . . . . . . . . 3
Section 7. Action by the Trustees . . . . . . . . . . . . . . 4
Section 8. Ownership of Trust Property . . . . . . . . . . . 4
Section 9. Effect of Trustees Not Serving . . . . . . . . . . 4
Section 10. Trustees, etc. as Shareholders . . . . . . . . . . 4
ARTICLE III--Powers of the Trustees . . . . . . . . . . . . . . . . . 5
Section 1. Powers . . . . . . . . . . . . . . . . . . . . . . 5
Section 2. Certain Transactions . . . . . . . . . . . . . . . 7
ARTICLE IV--Series; Classes; Shares . . . . . . . . . . . . . . . . . 8
Section 1. Establishment of Series or Class . . . . . . . . . 8
Section 2. Shares . . . . . . . . . . . . . . . . . . . . . . 8
Section 3. Investment in the Trust . . . . . . . . . . . . . 9
Section 4. Assets and Liabilities of Series . . . . . . . . . 9
Section 5. Ownership and Transfer of Shares . . . . . . . . . 10
Section 6. Status of Shares; Limitation of
Shareholder Liability . . . . . . . . . . 10
ARTICLE V--Distributions and Redemptions . . . . . . . . . . . . . . 11
Section 1. Distributions . . . . . . . . . . . . . . . . . . 11
Section 2. Redemptions . . . . . . . . . . . . . . . . . . . 11
Section 3. Determination of Net Asset Value . . . . . . . . . 12
Section 4. Suspension of Right of Redemption . . . . . . . . 12
Section 5. Redemptions Necessary for Qualification as
Regulated Investment Company . . . . . . 12
ARTICLE VI--Shareholders' Voting Powers and Meetings . . . . . . . . 13
Section 1. Voting Powers . . . . . . . . . . . . . . . . . . 13
Section 2. Meetings of Shareholders . . . . . . . . . . . . . 13
Section 3. Quorum; Required Vote . . . . . . . . . . . . . . 14
ARTICLE VII--Contracts With Service Providers . . . . . . . . . . . . 14
Section 1. Investment Adviser . . . . . . . . . . . . . . . . 14
Section 2. Principal Underwriter . . . . . . . . . . . . . . 14
<PAGE>
Section 3. Transfer Agency, Shareholder Services, and
Administration Agreements . . . . . . . . 15
Section 4. Custodian . . . . . . . . . . . . . . . . . . . . 15
Section 5. Parties to Contracts with Service
Providers . . . . . . . . . . . . . . . . 15
ARTICLE VIII--Expenses of the Trust and Series . . . . . . . . . . . 16
ARTICLE IX--Limitation of Liability and Indemnification . . . . . . . 16
Section 1. Limitation of Liability . . . . . . . . . . . . . 16
Section 2. Indemnification . . . . . . . . . . . . . . . . . 17
Section 3. Indemnification of Shareholders . . . . . . . . . 18
ARTICLE X--Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 19
Section 1. Trust Not a Partnership . . . . . . . . . . . . . 19
Section 2. Trustee Action; Expert Advice; No Bond or
Surety . . . . . . . . . . . . . . . . . 19
Section 3. Record Dates . . . . . . . . . . . . . . . . . . . 19
Section 4. Termination of the Trust . . . . . . . . . . . . . 19
Section 5. Reorganization . . . . . . . . . . . . . . . . . . 20
Section 6. Trust Instrument . . . . . . . . . . . . . . . . . 21
Section 7. Applicable Law . . . . . . . . . . . . . . . . . . 21
Section 8. Amendments . . . . . . . . . . . . . . . . . . . . 22
Section 9. Fiscal Year . . . . . . . . . . . . . . . . . . . 22
Section 10. Severability . . . . . . . . . . . . . . . . . . . 22
<PAGE>
<PAGE>
NEUBERGER & BERMAN INCOME TRUST
SCHEDULE A
INITIAL SERIES
--------------
Neuberger & Berman Limited Maturity Bond Trust
Neuberger & Berman Ultra Short Bond Trust
DATED: December 20, 1995
<PAGE>
<PAGE>
NEUBERGER & BERMAN INCOME TRUST
BY-LAWS
May 12, 1993
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
PRINCIPAL OFFICE AND SEAL . . . . . . . . . . . . . . . . . . 1
Section 1. Principal Office . . . . . . . . . . . . . . 1
Section 2. Seal . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
MEETINGS OF TRUSTEES . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Action by Trustees . . . . . . . . . . . . . 1
Section 2. Compensation of Trustees . . . . . . . . . . 1
ARTICLE III
COMMITTEES . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Establishment . . . . . . . . . . . . . . . 1
Section 2. Proceedings; Quorum; Action . . . . . . . . 2
Section 3. Executive Committee . . . . . . . . . . . . 2
Section 4. Nominating Committee . . . . . . . . . . . . 2
Section 5. Audit Committee . . . . . . . . . . . . . . 2
Section 6. Compensation of Committee Members . . . . . 2
ARTICLE IV
OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1. General . . . . . . . . . . . . . . . . . . 2
Section 2. Election, Tenure and Qualifications
of Officers . . . . . . . . . . . . . . . . . 2
Section 3. Vacancies and Newly Created Offices . . . . 3
Section 4. Removal and Resignation . . . . . . . . . . 3
Section 5. Chairman . . . . . . . . . . . . . . . . . . 3
Section 6. President . . . . . . . . . . . . . . . . . 3
Section 7. Vice President(s) . . . . . . . . . . . . . 3
Section 8. Treasurer and Assistant Treasurer(s) . . . . 4
Section 9. Secretary and Assistant Secretaries . . . . 4
Section 10. Compensation of Officers . . . . . . . . . . 4
Section 11. Surety Bond . . . . . . . . . . . . . . . . 4
ARTICLE V
MEETINGS OF SHAREHOLDERS . . . . . . . . . . . . . . . . . . . 5
Section 1. No Annual Meetings . . . . . . . . . . . . . 5
Section 2. Special Meetings . . . . . . . . . . . . . . 5
Section 3. Notice of Meetings; Waiver . . . . . . . . . 5
Section 4. Adjourned Meetings . . . . . . . . . . . . . 6
Section 5. Validity of Proxies . . . . . . . . . . . . 6
Section 6. Record Date . . . . . . . . . . . . . . . . 7
Section 7. Action Without a Meeting . . . . . . . . . . 7
ARTICLE VI
SHARES OF BENEFICIAL INTEREST . . . . . . . . . . . . . . . . 7
Section 1. No Share Certificates . . . . . . . . . . . 7
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<PAGE>
Section 2. Transfer of Shares . . . . . . . . . . . . . 7
ARTICLE VII
FISCAL YEAR AND ACCOUNTANT . . . . . . . . . . . . . . . . . . 7
Section 1. Fiscal Year . . . . . . . . . . . . . . . . 7
Section 2. Accountant . . . . . . . . . . . . . . . . . 7
ARTICLE VIII
AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 1. General . . . . . . . . . . . . . . . . . . 8
Section 2. By Shareholders Only . . . . . . . . . . . . 8
ARTICLE IX
NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE X
CONFLICT OF INTEREST PROCEDURES . . . . . . . . . . . . . . . 9
Section 1. Monitoring and Reporting Conflicts . . . . . 9
Section 2. Annual Report . . . . . . . . . . . . . . . 9
Section 3. Resolution of Conflicts . . . . . . . . . . 9
Section 4. Annual Review . . . . . . . . . . . . . . . 9
- ii -
<PAGE>
BY-LAWS
OF
NEUBERGER & BERMAN INCOME TRUST
These By-laws of Neuberger & Berman Income Trust (the "Trust"), a
Delaware business trust, are subject to the Trust Instrument of the Trust
dated as of May 6, 1993, as from time to time amended, supplemented or
restated (the "Trust Instrument"). Capitalized terms used herein have the
same meanings as in the Trust Instrument.
ARTICLE I
---------
PRINCIPAL OFFICE AND SEAL
-------------------------
Section 1. PRINCIPAL OFFICE. The principal office of the Trust shall be
located in New York, New York, or such other location as the Trustees
determine. The Trust may establish and maintain other offices and places
of business as the Trustees determine.
Section 2. SEAL. The Trustees may adopt a seal for the Trust in such
form and with such inscription as the Trustees determine. Any Trustee or
officer of the Trust shall have authority to affix the seal to any
document.
ARTICLE II
----------
MEETINGS OF TRUSTEES
--------------------
Section 1. ACTION BY TRUSTEES. Trustees may take actions at meetings
held at such places and times as the Trustees may determine, or without
meetings, all as provided in Article II, Section 7, of the Trust
Instrument.
Section 2. COMPENSATION OF TRUSTEES. Each Trustee who is neither an
employee of an investment adviser of the Trust or any Series nor an
employee of an entity affiliated with the investment adviser may receive
such compensation from the Trust for services and reimbursement for
expenses as the Trustees may determine.
ARTICLE III
-----------
COMMITTEES
-----------
Section 1. ESTABLISHMENT. The Trustees may designate one or more
committees of the Trustees, which shall include an Executive Committee, a
Nominating Committee, and an Audit Committee (collectively, the
<PAGE>
"Established Committees"). The Trustees shall determine the number of
members of each committee and its powers and shall appoint its members and
its chair. Each committee member shall serve at the pleasure of the
Trustees. The Trustees may abolish any committee, other than the
Established Committees, at any time. Each committee shall maintain
records of its meetings and report its actions to the Trustees. The
Trustees may rescind any action of any committee, but such rescission
shall not have retroactive effect. The Trustees may delegate to any
committee any of its powers, subject to the limitations of applicable law.
Section 2. PROCEEDINGS; QUORUM; ACTION. Each committee may adopt such
rules governing its proceedings, quorum and manner of acting as it shall
deem proper and desirable. In the absence of such rules, a majority of
any committee shall constitute a quorum, and a committee shall act by the
vote of a majority of a quorum.
Section 3. EXECUTIVE COMMITTEE. The Executive Committee shall have all
the powers of the Trustees when the Trustees are not in session. The
Chairman shall be a member and the chair of the Executive Committee. A
majority of the members of the Executive Committee shall be trustees who
are not "interested persons" of the Trust, as defined in the 1940 Act
("Disinterested Trustees").
Section 4. NOMINATING COMMITTEE. The Nominating Committee shall nominate
individuals to serve as Trustees (including Disinterested Trustees), as
members of committees, and as officers of the Trust. The members of the
Committee shall be Disinterested Trustees.
Section 5. AUDIT COMMITTEE. The Audit Committee shall review and
evaluate the audit function, including recommending the selection of
independent certified public accountants for each Series. The members of
the Committee shall be Disinterested Trustees.
Section 6. COMPENSATION OF COMMITTEE MEMBERS. Each committee member who
is a Disinterested Trustee may receive such compensation from the Trust
for services and reimbursement for expenses as the Trustees may determine.
ARTICLE IV
----------
OFFICERS
--------
Section 1. GENERAL. The officers of the Trust shall be a Chairman, a
President, one or more Vice Presidents, a Treasurer, and a Secretary, and
may include one or more Assistant Treasurers or Assistant Secretaries and
such other officers ("Other Officers") as the Trustees may determine.
Section 2. ELECTION, TENURE AND QUALIFICATIONS OF OFFICERS. The Trustees
shall elect the officers of the Trust, except those appointed as provided
in Section 9 of this Article. Each officer elected by the Trustees shall
hold office until his or her successor shall have been elected and
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<PAGE>
qualified or until his or her earlier death, inability to serve, or
resignation. Any person may hold one or more offices, except that the
Chairman and the Secretary may not be the same individual. A person who
holds more than one office in the Trust may not act in more than one
capacity to execute, acknowledge, or verify an instrument required by law
to be executed, acknowledged, or verified by more than one officer. No
officer other than the Chairman need be a Trustee or Shareholder.
Section 3. VACANCIES AND NEWLY CREATED OFFICES. Whenever a vacancy shall
occur in any office or if any new office is created, the Trustees may fill
such vacancy or new office.
Section 4. REMOVAL AND RESIGNATION. Officers serve at the pleasure of
the Trustees and may be removed at any time with or without cause. The
Trustees may delegate this power to the Chairman or President with respect
to any Other Officer. Such removal shall be without prejudice to the
contract rights, if any, of the person so removed. Any officer may resign
from office at any time by delivering a written resignation to the
Trustees, Chairman, or the President. Unless otherwise specified therein,
such resignation shall take effect upon delivery.
Section 5. CHAIRMAN. The Chairman shall be the chief executive officer
of the Trust. Subject to the direction of the Trustees, the Chairman
shall have general charge, supervision and control over the Trust's
business affairs and shall be responsible for the management thereof and
the execution of policies established by the Trustees. The Chairman shall
preside at any Shareholders' meetings and at all meetings of the Trustees
and shall in general exercise the powers and perform the duties of the
Chairman of the Trustees. Except as the Trustees may otherwise order, the
Chairman shall have the power to grant, issue, execute or sign such powers
of attorney, proxies, agreements or other documents. The Chairman also
shall have the power to employ attorneys, accountants and other advisers
and agents for the Trust. The Chairman shall exercise such other powers
and perform such other duties as the Trustees may assign to the Chairman.
Section 6. PRESIDENT. The President shall have such powers and perform
such duties as the Trustees or the Chairman may determine. At the request
or in the absence or disability of the Chairman, the President shall
perform all the duties of the President and, when so acting, shall have
all the powers of the President.
Section 7. VICE PRESIDENT(S). The Vice President(s) shall have such
powers and perform such duties as the Trustees or the Chairman may
determine. At the request or in the absence or disability of the
President, the Vice President (or, if there are two or more Vice
Presidents, then the senior of the Vice Presidents present and able to
act) shall perform all the duties of the President and, when so acting,
shall have all the powers of the President. The Trustees may designate a
Vice President as the principal financial officer of the Trust or to serve
one or more other functions. If a Vice President is designated as
principal financial officer of the Trust, he or she shall have general
charge of the finances and books of the Trust and shall report to the
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<PAGE>
Trustees annually regarding the financial condition of each Series as soon
as possible after the close of such Series's fiscal year. The Trustees
also may designate one of the Vice Presidents as Executive Vice President.
Section 8. TREASURER AND ASSISTANT TREASURER(S). The Treasurer may be
designated as the principal financial officer or as the principal
accounting officer of the Trust. If designated as principal financial
officer, the Treasurer shall have general charge of the finances and books
of the Trust, and shall report to the Trustees annually regarding the
financial condition of each Series as soon as possible after the close of
such Series' fiscal year. The Treasurer shall be responsible for the
delivery of all funds and securities of the Trust to such company as the
Trustees shall retain as Custodian. The Treasurer shall furnish such
reports concerning the financial condition of the Trust as the Trustees
may request. The Treasurer shall perform all acts incidental to the
office of Treasurer, subject to the Trustees' supervision, and shall
perform such additional duties as the Trustees may designate.
Any Assistant Treasurer may perform such duties of the Treasurer as
the Trustees or the Treasurer may assign, and, in the absence of the
Treasurer, may perform all the duties of the Treasurer.
Section 9. SECRETARY AND ASSISTANT SECRETARIES. The Secretary shall
record all votes and proceedings of the meetings of Trustees and
Shareholders in books to be kept for that purpose. The Secretary shall be
responsible for giving and serving notices of the Trust. The Secretary
shall have custody of any seal of the Trust and shall be responsible for
the records of the Trust, including the Share register and such other
books and documents as may be required by the Trustees or by law. The
Secretary shall perform all acts incidental to the office of Secretary,
subject to the supervision of the Trustees, and shall perform such
additional duties as the Trustees may designate.
Any Assistant Secretary may perform such duties of the Secretary as
the Trustees or the Secretary may assign, and, in the absence of the
Secretary, may perform all the duties of the Secretary.
Section 10. COMPENSATION OF OFFICERS. Each officer may receive such
compensation from the Trust for services and reimbursement for expenses as
the Trustees may determine.
Section 11. SURETY BOND. The Trustees may require any officer or agent
of the Trust to execute a bond (including, without limitation, any bond
required by the 1940 Act and the rules and regulations of the Securities
and Exchange Commission ("Commission")) to the Trust in such sum and with
such surety or sureties as the Trustees may determine, conditioned upon
the faithful performance of his or her duties to the Trust, including
responsibility for negligence and for the accounting of any of the Trust's
property, funds or securities that may come into his or her hands.
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<PAGE>
ARTICLE V
---------
MEETINGS OF SHAREHOLDERS
------------------------
Section 1. NO ANNUAL MEETINGS. There shall be no annual Shareholders'
meetings, unless required by law.
Section 2. SPECIAL MEETINGS. The Secretary shall call a special meeting
of Shareholders of any Series or Class whenever ordered by the Trustees.
The Secretary also shall call a special meeting of Shareholders of
any Series or Class upon the written request of Shareholders owning at
least ten percent of the Outstanding Shares of such Series or Class
entitled to vote at such meeting; provided, that (1) such request shall
state the purposes of such meeting and the matters proposed to be acted
on, and (2) the Shareholders requesting such meeting shall have paid to
the Trust the reasonably estimated cost of preparing and mailing the
notice thereof, which the Secretary shall determine and specify to such
Shareholders. If the Secretary fails for more than thirty days to call a
special meeting when required to do so, the Trustees or the Shareholders
requesting such a meeting may, in the name of the Secretary, call the
meeting by giving the required notice. The Secretary shall not call a
special meeting upon the request of Shareholders of any Series or Class to
consider any matter that is substantially the same as a matter voted upon
at any special meeting of Shareholders of such Series or Class held during
the preceding twelve months, unless requested by the holders of a majority
of the Outstanding Shares of such Series or Class entitled to be voted at
such meeting.
A special meeting of Shareholders of any Series or Class shall be
held at such time and place as is determined by the Trustees and stated in
the notice of that meeting.
Section 3. NOTICE OF MEETINGS; WAIVER. The Secretary shall call a
special meeting of Shareholders by giving written notice of the place,
date, time, and purposes of that meeting at least fifteen days before the
date of such meeting. The Secretary may deliver or mail, postage prepaid,
the written notice of any meeting to each Shareholder entitled to vote at
such meeting. If mailed, notice shall be deemed to be given when
deposited in the United States mail directed to the Shareholder at his or
her address as it appears on the records of the Trust.
Section 4. ADJOURNED MEETINGS. A Shareholders' meeting may be adjourned
one or more times for any reason, including the failure of a quorum to
attend the meeting. No notice of adjournment of a meeting to another time
or place need be given to Shareholders if such time and place are
announced at the meeting at which the adjournment is taken or reasonable
notice is given to persons present at the meeting, and if the adjourned
meeting is held within a reasonable time after the date set for the
original meeting. Any business that might have been transacted at the
original meeting may be transacted at any adjourned meeting. If after the
- 5 -
<PAGE>
adjournment a new record date is fixed for the adjourned meeting, the
Secretary shall give notice of the adjourned meeting to Shareholders of
record entitled to vote at such meeting. Any irregularities in the notice
of any meeting or the nonreceipt of any such notice by any of the
Shareholders shall not invalidate any action otherwise properly taken at
any such meeting.
Section 5. VALIDITY OF PROXIES. Subject to the provisions of the Trust
Instrument, Shareholders entitled to vote may vote either in person or by
proxy; provided, that either (1) the Shareholder or his or her duly
authorized attorney has signed and dated a written instrument authorizing
such proxy to act, or (2) the Trustees adopt by resolution an electronic,
telephonic, computerized or other alternative to execution of a written
instrument authorizing the proxy to act, but if a proposal by anyone other
than the officers or Trustees is submitted to a vote of the Shareholders
of any Series or Class, or if there is a proxy contest or proxy
solicitation or proposal in opposition to any proposal by the officers or
Trustees, Shares may be voted only in person or by written proxy. Unless
the proxy provides otherwise, it shall not be valid for more than eleven
months before the date of the meeting. All proxies shall be delivered to
the Secretary or other person responsible for recording the proceedings
before being voted. A proxy with respect to Shares held in the name of
two or more persons shall be valid if executed by one of them unless at or
prior to exercise of such proxy the Trust receives a specific written
notice to the contrary from any one of them. Unless otherwise
specifically limited by their terms, proxies shall entitle the Shareholder
to vote at any adjournment of a Shareholders' meeting. A proxy purporting
to be executed by or on behalf of a Shareholder shall be deemed valid
unless challenged at or prior to its exercise, and the burden of proving
invalidity shall rest on the challenger. At every meeting of
Shareholders, unless the voting is conducted by inspectors, the chairman
of the meeting shall decide all questions concerning the qualifications of
voters, the validity of proxies, and the acceptance or rejection of votes.
Subject to the provisions of the Delaware Business Trust Act, the Trust
Instrument, or these By-laws, the General Corporation Law of the State of
Delaware relating to proxies, and judicial interpretations thereunder
shall govern all matters concerning the giving, voting or validity of
proxies, as if the Trust were a Delaware corporation and the Shareholders
were shareholders of a Delaware corporation.
Section 6. RECORD DATE. The Trustees may fix in advance a date up to
ninety days before the date of any Shareholders' meeting as a record date
for the determination of the Shareholders entitled to notice of, and to
vote at, any such meeting. The Shareholders of record entitled to vote at
a Shareholders' meeting shall be deemed the Shareholders of record at any
meeting reconvened after one or more adjournments, unless the Trustees
have fixed a new record date. If the Shareholders' meeting is adjourned
for more than sixty days after the original date, the Trustees shall
establish a new record date.
Section 7. ACTION WITHOUT A MEETING. Shareholders may take any action
without a meeting if a majority (or such greater amount as may be required
- 6 -
<PAGE>
by law) of the Outstanding Shares entitled to vote on the matter consent
to the action in writing and such written consents are filed with the
records of Shareholders' meetings. Such written consent shall be treated
for all purposes as a vote at a meeting of the Shareholders.
ARTICLE VI
----------
SHARES OF BENEFICIAL INTEREST
-----------------------------
SECTION 1. NO SHARE CERTIFICATES. Neither the Trust nor any Series or
Class shall issue certificates certifying the ownership of Shares, unless
the Trustees may otherwise specifically authorize such certificates.
Section 2. TRANSFER OF SHARES. Shares shall be transferable only by a
transfer recorded on the books of the Trust by the Shareholder of record
in person or by his or her duly authorized attorney or legal
representative. Shares may be freely transferred and the Trustees may,
from time to time, adopt rules and regulations regarding the method of
transfer of such Shares.
ARTICLE VII
------------
FISCAL YEAR AND ACCOUNTANT
--------------------------
Section 1. FISCAL YEAR. The fiscal year of the Trust shall end on
October 31.
Section 2. ACCOUNTANT. The Trust shall employ independent certified
public accountants as its Accountant to examine the accounts of the Trust
and to sign and certify financial statements filed by the Trust. The
Accountant's certificates and reports shall be addressed both to the
Trustees and to the Shareholders. A majority of the Disinterested
Trustees shall select the Accountant at any meeting held within ninety
days before or after the beginning of the fiscal year of the Trust, acting
upon the recommendation of the Audit Committee. The Trust shall submit
the selection for ratification or rejection at the next succeeding
Shareholders' meeting, if such a meeting is to be held within the Trust's
fiscal year. If the selection is rejected at that meeting, the Accountant
shall be selected by majority vote of the Trust's outstanding voting
securities, either at the meeting at which the rejection occurred or at a
subsequent meeting of Shareholders called for the purpose of selecting an
Accountant. The employment of the Accountant shall be conditioned upon
the right of the Trust to terminate such employment without any penalty by
vote of a Majority Shareholder Vote at any Shareholders' meeting called
for that purpose.
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<PAGE>
ARTICLE VIII
------------
AMENDMENTS
----------
Section 1. GENERAL. Except as provided in Section 2 of this Article,
these By-laws may be amended by the Trustees, or by the affirmative vote
of a majority of the Outstanding Shares entitled to vote at any meeting.
Section 2. BY SHAREHOLDERS ONLY. After the issue of any Shares, this
Article may only be amended by the affirmative vote of the holders of the
lesser of (a) at least two-thirds of the Outstanding Shares present and
entitled to vote at any meeting, or (b) at least fifty percent of the
Outstanding Shares.
ARTICLE IX
----------
NET ASSET VALUE
---------------
The term "Net Asset Value" of any Series shall mean that amount by
which the assets belonging to that Series exceed its liabilities, all as
determined by or under the direction of the Trustees. Net Asset Value per
Share shall be determined separately for each Series and shall be
determined on such days and at such times as the Trustees may determine.
The Trustees shall make such determination with respect to securities for
which market quotations are readily available, at the market value of such
securities, and with respect to other securities and assets, at the fair
value as determined in good faith by the Trustees; provided, however, that
the Trustees, without Shareholder approval, may alter the method of
appraising portfolio securities insofar as permitted under the 1940 Act
and the rules, regulations and interpretations thereof promulgated or
issued by the SEC or insofar as permitted by any order of the SEC
applicable to the Series. The Trustees may delegate any of their powers
and duties under this Article X with respect to appraisal of assets and
liabilities. At any time the Trustees may cause the Net Asset Value per
Share last determined to be determined again in a similar manner and may
fix the time when such redetermined values shall become effective.
ARTICLE X
---------
CONFLICT OF INTEREST PROCEDURES
-------------------------------
Section 1. MONITORING AND REPORTING CONFLICTS. The trustees of Income
Managers Trust and the Trust (collectively, the "Trusts") are the same
individuals. Set forth in this Article are procedures established to
address potential conflicts of interest that may arise between the Trusts.
On an ongoing basis, the investment adviser ("Manager") of Income Managers
Trust shall be responsible for monitoring the Trusts for the existence of
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<PAGE>
any material conflicts of interest between the Trusts. The Manager shall
be responsible for reporting any potential or existing conflicts to
trustees of the Trusts as they may develop.
Section 2. ANNUAL REPORT. The Manager shall report to the trustees of
the Trusts annually regarding its monitoring of the Trusts for conflicts
of interest.
Section 3. RESOLUTION OF CONFLICTS. If a potential conflict of interest
arises, the Trustees shall take such action as is reasonably appropriate
to deal with the conflict, up to and including recommending a change in
the trustees and implementing such recommendation, consistent with
applicable law.
Section 4. ANNUAL REVIEW. The Trustees, including a majority of the
Disinterested Trustees, shall determine no less frequently than annually
that the operating structure is in the best interest of Shareholders. The
Trustees shall consider, among other things, whether the expenses incurred
by the Trust are approximately the same or less than the expenses that the
Trust would incur if it invested directly in the type of securities being
held by Income Managers Trust. The Trustees, including a majority of the
Disinterested Trustees, shall review no less frequently than annually
these procedures for their continuing appropriateness.
- 9 -
<PAGE>
<PAGE>
DISTRIBUTION AGREEMENT
This Agreement is made as of July 12, 1993, between Neuberger
& Berman Income Trust, a Delaware business trust ("Trust"), and Neuberger
& Berman Management Incorporated, a New York corporation (the
"Distributor").
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as an open-end, diversified management
investment company and has established several separate series of shares
("Series"), with each Series having its own assets and investment
policies; and
WHEREAS, the Trust desires to retain the Distributor to furnish
distribution services to each Series listed in Schedule A attached hereto,
and to such other Series of the Trust hereinafter established as agreed to
from time to time by the parties, evidenced by an addendum to Schedule A
(hereinafter "Series" shall refer to each Series which is subject to this
Agreement and all agreements and actions described herein to be made or
taken by a Series shall be made or taken by the Trust on behalf of the
Series), and the Distributor is willing to furnish such services,
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties agree as follows:
1. The Trust hereby appoints the Distributor as agent to
sell the shares of beneficial interest of each Series (the "Shares") and
the Distributor hereby accepts such appointment. All sales by the
Distributor shall be expressly subject to acceptance by the Trust, acting
on behalf of the Series.
2. (a) The Distributor agrees that (i) all Shares sold by
the Distributor shall be sold at the net asset value ("NAV") thereof as
described in Section 3 hereof, and (ii) the Series shall receive 100% of
such NAV.
(b) The Distributor may enter into agreements, in form
and substance satisfactory to the Trust, with dealers selected by the
Distributor, providing for the sale to such dealers and resale by such
dealers of Shares at their NAV.
3. The Trust agrees to supply to the Distributor, promptly
after the time or times at which NAV is determined, on each day on which
the New York Stock Exchange is open for business and on such other days as
the Board of Trustees of the Trust ("Trustees") may from time to time
determine (each such day being hereinafter called a "business day"), a
statement of the NAV of each Series having been determined in the manner
set forth in the then-current Prospectus and Statement of Additional
Information ("SAI") of each Series. Each determination of NAV shall take
effect as of such time or times on each business day as set forth in the
then-current Prospectus of each Series and shall prevail until the time as
of which the next determination is made.
<PAGE>
4. Upon receipt by the Trust at its principal place of
business of a written order from the Distributor, together with delivery
instructions, the Trust shall, if it elects to accept such order, as
promptly as practicable, cause the Shares purchased by such order to be
delivered in such amounts and in such names as the Distributor shall
specify, against payment therefor in such manner as may be acceptable to
the Trust. The Trust may, in its discretion, refuse to accept any order
for the purchase of Shares that the Distributor may tender to it.
5. (a) All sales literature and advertisements used by
the Distributor in connection with sales of Shares shall be subject to
approval by the Trust. The Trust authorizes the Distributor, in
connection with the sale or arranging for the sale of Shares of any
Series, to provide only such information and to make only such statements
or representations as are contained in the Series's then-current
Prospectus and SAI or in such financial and other statements furnished to
the Distributor pursuant to the next paragraph or as may properly be
included in sales literature or advertisements in accordance with the
provisions of the Securities Act of 1933 (the "1933 Act"), the 1940 Act
and applicable rules of self-regulatory organizations. Neither the Trust
nor any Series shall be responsible in any way for any information
provided or statements or representations made by the Distributor or its
representatives or agents other than the information, statements and
representations described in the preceding sentence.
(b) Each Series shall keep the Distributor fully
informed with regard to its affairs, shall furnish the Distributor with a
certified copy of all of its financial statements and a signed copy of
each report prepared for it by its independent auditors, and shall
cooperate fully in the efforts of the Distributor to negotiate and sell
Shares of such Series and in the Distributor's performance of all its
duties under this Agreement.
6. The Distributor, as agent of each Series and for the
account and risk of each Series, is authorized, subject to the direction
of the Trust, to redeem outstanding Shares of such Series when properly
tendered by shareholders pursuant to the redemption right granted to such
Series's shareholders by the Trust Instrument of the Trust, as from time
to time in effect, at a redemption price equal to the NAV per Share of
such Series next determined after proper tender and acceptance. The Trust
has delivered to the Distributor a copy of the Trust's Trust Instrument as
currently in effect and agrees to deliver to the Distributor any
amendments thereto promptly upon filing thereof with the Office of the
Secretary of State of the State of Delaware.
7. The Distributor shall assume and pay or reimburse each
Series for the following expenses of such Series: (i) costs of preparing,
printing and distributing reports, prospectuses and SAIs used by such
Series in connection with the sale or offering of its Shares and all
advertising and sales literature relating to such Series printed at the
instruction of the Distributor; and (ii) counsel fees and expenses in
connection with the foregoing. The Distributor shall also pay all its own
costs and expenses connected with the sale of Shares.
<PAGE>
8. Each Series shall maintain a currently effective
Registration Statement on Form N-1A with respect to such Series and shall
file with the Securities and Exchange Commission (the "SEC") such reports
and other documents as may be required under the 1933 Act and the 1940 Act
or by the rules and regulations of the SEC thereunder.
Each Series represents and warrants that the Registration
Statement, post-effective amendments, Prospectus and SAI (excluding
statements relating to the Distributor and the services it provides that
are based upon written information furnished by the Distributor expressly
for inclusion therein) of such Series shall not contain any untrue
statement of material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading, and that all statements or information furnished to the
Distributor, pursuant to Section 5(b) hereof, shall be true and correct in
all material respects.
9. (a) This Agreement shall become effective on the date
hereof and shall remain in full force and effect until July 12, 1995, and
may be continued from year to year thereafter; provided, that such
continuance shall be specifically approved each year by the Trustees or by
a majority of the outstanding voting securities of the Series, and in
either case, also by a majority of the Trustees who are not interested
persons of the Trust or the Distributor ("Disinterested Trustees"). This
Agreement may be amended as to any Series with the approval of the
Trustees or of a majority of the outstanding voting securities of such
Series; provided, that in either case, such amendment also shall be
approved by a majority of the Disinterested Trustees.
(b) Either party may terminate this Agreement without
the payment of any penalty, upon not more than sixty days' nor less than
thirty days' written notice delivered personally or mailed by registered
mail, postage prepaid, to the other party; provided, that in the case of
termination by any Series, such action shall have been authorized (i) by
resolution of the Trustees, or (ii) by vote of a majority of the
outstanding voting securities of such Series, or (iii) by written consent
of a majority of the Disinterested Trustees.
(c) This Agreement shall automatically terminate if it
is assigned by the Distributor.
(d) Any question of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise derived
from a term or provision of the 1940 Act shall be resolved by reference to
such term or provision of the 1940 Act and to interpretation thereof, if
any, by the United States courts or, in the absence of any controlling
decision of any such court, by rules, regulations or orders of the SEC
validly issued pursuant to the 1940 Act. Specifically, the terms
"interested persons," "assignment" and "vote of a majority of the
outstanding voting securities," as used in this Agreement, shall have the
meanings assigned to them by Section 2(a) of the 1940 Act. In addition,
when the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is modified, interpreted or relaxed by a rule,
regulation or order of the SEC, whether of special or of general
<PAGE>
application, such provision shall be deemed to incorporate the effect of
such rule, regulation or order. The Trust and the Distributor may from
time to time agree on such provisions interpreting or clarifying the
provisions of this Agreement as, in their joint opinion, are consistent
with the general tenor of this Agreement and with the specific provisions
of this Section 9(d). Any such interpretations or clarifications shall be
in writing signed by the parties and annexed hereto, but no such
interpretation or clarification shall be effective if in contravention of
any applicable federal or state law or regulations, and no such
interpretation or clarification shall be deemed to be an amendment of this
Agreement.
No term or provision of this Agreement shall be
construed to require the Distributor to provide distribution services to
any series of the Trust other than the Series, or to require any Series to
pay any compensation or expenses that are properly allocable, in a manner
approved by the Trustees, to a series of the Trust other than such Series.
(e) This Agreement is made and to be principally
performed in the State of New York, and except insofar as the 1940 Act or
other federal laws and regulations may be controlling, this Agreement
shall be governed by, and construed and enforced in accordance with, the
internal laws of the State of New York.
(f) This Agreement is made by the Trust solely with
respect to the Series, and the obligations created hereby are not binding
on any other series of the Trust, but bind only assets belonging to the
Series.
10. The Distributor or one of its affiliates may from time
to time deem it desirable to offer to the list of shareholders of each
Series the shares of other mutual funds for which it acts as Distributor,
including other series of the Trust or other products or services;
however, any such use of the list of shareholders of any Series shall be
made subject to such terms and conditions, if any, as shall be approved by
a majority of the Disinterested Trustees.
11. The Distributor shall look only to the assets of a
Series for the performance of this Agreement by the Trust on behalf of
such Series, and neither the Trustees nor any of the Trust's officers,
employees or agents, whether past, present or future, shall be personally
liable therefor.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be duly executed by their duly authorized officers and under
their respective seals.
NEUBERGER & BERMAN
INCOME TRUST
Attest: By: /s/ Daniel J. Sullivan
-----------------------
/s/ Claudia A. Brandon Title: ____________________
--------------------------
Secretary
NEUBERGER & BERMAN
MANAGEMENT INCORPORATED
Attest: By: /s/ Stanley Egener
-----------------------
/s/ Ellen Metzger Title: President
------------------------ --------------------
Secretary
<PAGE>
<PAGE>
DISTRIBUTION AGREEMENT
SCHEDULE A
The Series of Neuberger & Berman Income Trust currently subject to
this Agreement are as follows:
Neuberger & Berman Limited Maturity Bond Trust
Neuberger & Berman Ultra Short Bond Trust
DATED: December 20, 1995
<PAGE>
<PAGE>
CUSTODIAN CONTRACT
Between
NEUBERGER & BERMAN INCOME TRUST
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to be Held
By It . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian in the
United States . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Holding Securities . . . . . . . . . . . . . . . . . . . . 2
2.2 Delivery of Securities . . . . . . . . . . . . . . . . . . 2
2.3 Registration of Securities . . . . . . . . . . . . . . . . 5
2.4 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Availability of Federal Funds . . . . . . . . . . . . . . 5
2.6 Collection of Income . . . . . . . . . . . . . . . . . . . 6
2.7 Payment of Fund Monies . . . . . . . . . . . . . . . . . . 6
2.8 Liability for Payment in Advance of Receipt of
Securities Purchased . . . . . . . . . . . . . . . . . . . 8
2.9 Appointment of Agents . . . . . . . . . . . . . . . . . . 8
2.10 Deposit of Fund Assets in Securities System . . . . . . . 8
2.11 Fund Assets Held in the Custodian's Direct Paper
System . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.12 Segregated Account . . . . . . . . . . . . . . . . . . . . 10
2.13 Ownership Certificates for Tax Purposes . . . . . . . . . 11
2.14 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.15 Communications Relating to Portfolio Securities . . . . . 11
3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States . . . . . . . . . . . 12
3.1 Appointment of Foreign Sub-Custodians . . . . . . . . . . 12
3.2 Assets to be Held . . . . . . . . . . . . . . . . . . . . 12
3.3 Foreign Securities Depositories . . . . . . . . . . . . . 12
3.4 Agreements with Foreign Banking Institutions . . . . . . . 12
3.5 Access of Independent Accountants of the Fund . . . . . . 13
3.6 Reports by Custodian . . . . . . . . . . . . . . . . . . . 13
3.7 Transactions in Foreign Custody Account . . . . . . . . . 13
3.8 Liability of Foreign Sub-Custodians . . . . . . . . . . . 14
3.9 Liability of Custodian . . . . . . . . . . . . . . . . . . 14
3.10 Reimbursement for Advances . . . . . . . . . . . . . . . . 15
3.11 Monitoring Responsibilities . . . . . . . . . . . . . . . 16
3.12 Branches of U.S. Banks . . . . . . . . . . . . . . . . . . 16
3.13 Foreign Exchange Transactions . . . . . . . . . . . . . . 17
3.13 Tax Law . . . . . . . . . . . . . . . . . . . . . . . . . 17
4. Payments for Sales or Repurchase or Redemptions
of Shares of the Fund . . . . . . . . . . . . . . . . . . . . . 18
5. Proper Instructions . . . . . . . . . . . . . . . . . . . . . . 19
6. Actions Permitted Without Express Authority . . . . . . . . . . 19
7. Evidence of Authority . . . . . . . . . . . . . . . . . . . . . 20
<PAGE>
8. Duties of Custodian With Respect to the Books of Account
and Calculation of Net Asset Value and Net Income . . . . . . . 20
9. Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10. Opinion of Fund's Independent Accountants . . . . . . . . . . . 21
11. Reports to Fund by Independent Public Accountants . . . . . . . 21
12. Compensation of Custodian . . . . . . . . . . . . . . . . . . . 21
13. Responsibility of Custodian . . . . . . . . . . . . . . . . . . 22
14. Effective Period, Termination and Amendment . . . . . . . . . . 23
15. Successor Custodian . . . . . . . . . . . . . . . . . . . . . . 24
16. Interpretive and Additional Provisions . . . . . . . . . . . . . 24
17. Additional Funds . . . . . . . . . . . . . . . . . . . . . . . . 25
18. Massachusetts Law to Apply . . . . . . . . . . . . . . . . . . . 25
19. Limitation of Trustee, Officer and Shareholder Liability . . . . 25
20. No Liability of Other Portfolios . . . . . . . . . . . . . . . . 26
21. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . 26
22. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
23. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 26
24. Prior Contracts . . . . . . . . . . . . . . . . . . . . . . . . 26
25. Shareholder Communications Election . . . . . . . . . . . . . . 26
<PAGE>
CUSTODIAN CONTRACT
This Contract between Neuberger & Berman Income Trust, a business
trust organized and existing under the laws of Delaware, having its
principal place of business at 605 Third Avenue, New York, New York 10158
hereinafter called the "Fund", and State Street Bank and Trust Company, a
Massachusetts trust company, having its principal place of business at 225
Franklin Street, Boston, Massachusetts, 02110, hereinafter called the
"Custodian",
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund intends to initially offer shares in three series,
Neuberger & Berman Limited Maturity Bond Trust, Neuberger & Berman
Government Income Trust, and Neuberger & Berman Ultra Short Bond Trust
(such series together with all other series subsequently established by
the Fund and made subject to this Contract in accordance with paragraph
17, being herein referred to as the "Portfolio(s)");
NOW THEREFORE, in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT
The Fund hereby employs the Custodian as the custodian of the assets
of each Portfolio, including securities which the Fund, on behalf of the
applicable Portfolio desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the
United States ("foreign securities") pursuant to the provisions of the
Trust Instrument. The Fund on behalf of each Portfolio agrees to deliver
to the Custodian all securities and cash of the Portfolios, and all
payments of income, payments of principal or capital distributions
received by it with respect to all securities owned by the Portfolio(s)
from time to time, and the cash consideration received by it for such new
or treasury shares of beneficial interest of the Fund representing
interests in the Portfolios, ("Shares") as may be issued or sold from time
to time. The Custodian shall not be responsible for any property of a
Portfolio held or received by the Portfolio and not delivered to the
Custodian.
Upon receipt of "Proper Instructions" (within the meaning of
Article 5), the Custodian shall on behalf of the applicable Portfolio(s)
from time to time employ one or more sub-custodians, located in the United
States but only in accordance with an applicable vote by the Board of
Trustees of the Fund on behalf of the applicable Portfolio(s), and
provided that the Custodian shall have no more or less responsibility or
liability to the Fund on account of any actions or omissions of any
<PAGE>
sub-custodian so employed than any such sub-custodian has to the
Custodian. The Custodian may employ as sub-custodian for the Fund's
foreign securities on behalf of the applicable Portfolio(s) the foreign
banking institutions and foreign securities depositories designated in
Schedule A hereto but only in accordance with the provisions of Article 3.
2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD BY
THE CUSTODIAN IN THE UNITED STATES
2.1 HOLDING SECURITIES. The Custodian shall hold and physically
segregate for the account of each Portfolio all non-cash property,
to be held by it in the United States including all domestic
securities owned by such Portfolio, other than (a) securities which
are maintained pursuant to Section 2.10 in a clearing agency which
acts as a securities depository or in a book-entry system authorized
by the U.S. Department of the Treasury, collectively referred to
herein as "Securities System" and (b) commercial paper of an issuer
for which State Street Bank and Trust Company acts as issuing and
paying agent ("Direct Paper") which is deposited and/or maintained
in the Direct Paper System of the Custodian pursuant to
Section 2.11.
2.2 DELIVERY OF SECURITIES. The Custodian shall release and deliver
domestic securities owned by a Portfolio held by the Custodian or in
a Securities System account of the Custodian or in the Custodian's
Direct Paper book entry system account ("Direct Paper System
Account") only upon receipt of Proper Instructions from the Fund on
behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, and only in the
following cases:
1) Upon sale of such securities for the account of the Portfolio
and receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the
Portfolio;
3) In the case of a sale effected through a Securities System,
in accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other
similar offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the
name of the Portfolio or into the name of any nominee or
- 2 -
<PAGE>
nominees of the Custodian or into the name or nominee name of
any agent appointed pursuant to Section 2.9 or into the name
or nominee name of any sub-custodian appointed pursuant to
Article 1; or for exchange for a different number of bonds,
certificates or other evidence representing the same
aggregate face amount or number of units; PROVIDED that, in
any such case, the new securities are to be delivered to the
Custodian;
7) Upon the sale of such securities for the account of the
Portfolio, to the broker or its clearing agent, against a
receipt, for examination in accordance with "street delivery"
custom; provided that in any such case, the Custodian shall
have no responsibility or liability for any loss arising from
the delivery of such securities prior to receiving payment
for such securities except as may arise from the Custodian's
own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion
contained in such securities, or pursuant to any deposit
agreement; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the
Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided
that, in any such case, the new securities and cash, if any,
are to be delivered to the Custodian;
10) For delivery in connection with any loans of securities made
by the Portfolio, BUT ONLY against receipt of adequate
collateral as agreed upon from time to time by the Custodian
and the Fund on behalf of the Portfolio, which may be in the
form of cash or obligations issued by the United States
government, its agencies or instrumentalities, except that in
connection with any loans for which collateral is to be
credited to the Custodian's account in the book-entry system
authorized by the U.S. Department of the Treasury, the
Custodian will not be held liable or responsible for the
delivery of securities owned by the Portfolio prior to the
receipt of such collateral;
11) For delivery as security in connection with any borrowings by
the Fund on behalf of the Portfolio requiring a pledge of
assets by the Fund on behalf of the Portfolio, BUT ONLY
against receipt of amounts borrowed;
- 3 -
<PAGE>
12) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian and a broker-dealer registered under the Securities
Exchange Act of 1934 (the "Exchange Act") and a member of The
National Association of Securities Dealers, Inc. ("NASD"),
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities
exchange, or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions by the Portfolio of the Fund;
13) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian, and a Futures Commission Merchant registered under
the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any
Contract Market, or any similar organization or
organizations, regarding account deposits in connection with
transactions by the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent
("Transfer Agent") for a Portfolio, for delivery to such
Transfer Agent or to the holders of shares in connection with
distributions in kind, as may be described from time to time
in the currently effective prospectus and statement of
additional information of the Fund, related to the Portfolio
("Prospectus"), in satisfaction of requests by holders of
Shares for repurchase or redemption; and
15) For any other proper corporate purpose, BUT ONLY upon receipt
of, in addition to Proper Instructions from the Fund on
behalf of the applicable Portfolio, a certified copy of a
resolution of the Board of Trustees or of the Executive
Committee signed by an officer of the Fund and certified by
the Secretary or an Assistant Secretary, specifying the
securities of the Portfolio to be delivered, setting forth
the purpose for which such delivery is to be made, declaring
such purpose to be a proper corporate purpose, and naming the
person or persons to whom delivery of such securities shall
be made.
2.3 REGISTRATION OF SECURITIES. Domestic securities held by the
Custodian (other than bearer securities) shall be registered in the
name of the Portfolio or in the name of any nominee of the Fund on
behalf of the Portfolio or of any nominee of the Custodian which
nominee shall be assigned exclusively to the Portfolio, UNLESS the
Fund has authorized in writing the appointment of a nominee to be
used in common with other registered investment companies having the
same investment adviser as the Portfolio, or in the name or nominee
name of any agent appointed pursuant to Section 2.9 or in the name
or nominee name of any sub-custodian appointed pursuant to Article
1. All securities accepted by the Custodian on behalf of the
- 4 -
<PAGE>
Portfolio under the terms of this Contract shall be in "street name"
or other good delivery form. If, however, the Fund directs the
Custodian to maintain securities in "street name", the Custodian
shall utilize its best efforts only to timely collect income due the
Fund on such securities and to notify the Fund on a best efforts
basis only of relevant corporate actions including, without
limitation, pendency of calls, maturities, tender or exchange
offers.
2.4 BANK ACCOUNTS. The Custodian shall open and maintain a separate
bank account or accounts in the United States in the name of each
Portfolio of the Fund which shall contain only property held by the
Custodian as custodian for that Portfolio, subject only to draft or
order by the Custodian acting pursuant to the terms of this
Contract, and shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for the account
of the Portfolio, other than cash maintained by the Portfolio in a
bank account established and used in accordance with Rule 17f-3
under the Investment Company Act of 1940. Funds held by the
Custodian for a Portfolio may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or in such
other banks or trust companies as it may in its discretion deem
necessary or desirable; PROVIDED, however, that every such bank or
trust company shall be qualified to act as a custodian under the
Investment Company Act of 1940 and that each such bank or trust
company and the funds to be deposited with each such bank or trust
company shall on behalf of each applicable Portfolio be approved by
vote of a majority of the Board of Trustees of the Fund. Such funds
shall be deposited by the Custodian in its capacity as Custodian and
shall be withdrawable by the Custodian only in that capacity.
2.5 AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement between the
Fund on behalf of each applicable Portfolio and the Custodian, the
Custodian shall, upon the receipt of Proper Instructions from the
Fund on behalf of a Portfolio, make federal funds available to such
Portfolio as of specified times agreed upon from time to time by the
Fund and the Custodian in the amount of checks received in payment
for Shares of such Portfolio which are deposited into the
Portfolio's account.
2.6 COLLECTION OF INCOME. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other
payments with respect to registered domestic securities held
hereunder to which each Portfolio shall be entitled either by law or
pursuant to custom in the securities business, and shall collect on
a timely basis all income and other payments with respect to bearer
domestic securities if, on the date of payment by the issuer, such
securities are held by the Custodian or its agent and shall credit
such income, as collected, to such Portfolio's custodian account.
Without limiting the generality of the foregoing, the Custodian
shall detach and present for payment all coupons and other income
items requiring presentation as and when they become due and shall
- 5 -
<PAGE>
collect interest when due on securities held hereunder. Collection
of income due each Portfolio on securities loaned pursuant to the
provisions of Section 2.2 (10) shall be the responsibility of the
Custodian so long as the securities are registered and remain in the
name of the Fund, the Custodian, or its nominee, or in the
Depository Trust Company account of the Custodian, but otherwise
shall be the responsibility of the Fund and the Custodian will have
no duty or responsibility in connection therewith, other than to
provide the Fund with such information or data as may be necessary
to assist the Fund in arranging for the timely delivery to the
Custodian of the income to which the Portfolio is properly entitled.
2.7 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions from
the Fund on behalf of the applicable Portfolio, which may be
continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out monies of a Portfolio in the following cases
only:
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of
the Portfolio but only (a) against the delivery of such
securities or evidence of title to such options, futures
contracts or options on futures contracts to the Custodian
(or any bank, banking firm or trust company doing business in
the United States or abroad which is qualified under the
Investment Company Act of 1940, as amended, to act as a
custodian and has been designated by the Custodian as its
agent for this purpose) registered in the name of the
Portfolio or in the name of a nominee of the Custodian
referred to in Section 2.3 hereof or in proper form for
transfer; (b) in the case of a purchase effected through a
Securities System, in accordance with the conditions set
forth in Section 2.10 hereof; (c) in the case of a purchase
involving the Direct Paper System, in accordance with the
conditions set forth in Section 2.11; (d) in the case of
repurchase agreements entered into between the Fund on behalf
of the Portfolio and the Custodian, or another bank, or a
broker-dealer which is a member of NASD, (i) against delivery
of the securities either in certificate form or through an
entry crediting the Custodian's account at the Federal
Reserve Bank with such securities or (ii) against delivery
of the receipt evidencing purchase by the Portfolio of
securities owned by the Custodian along with written evidence
of the agreement by the Custodian to repurchase such
securities from the Portfolio or (e) for transfer to a time
deposit account of the Fund in any bank, whether domestic or
foreign; such transfer may be effected prior to receipt of a
confirmation from a broker and/or the applicable bank
pursuant to Proper Instructions from the Fund as defined in
Article 5;
- 6 -
<PAGE>
2) In connection with conversion, exchange or surrender of
securities owned by the Portfolio as set forth in Section 2.2
hereof;
3) For the redemption or repurchase of Shares issued by the
Portfolio as set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following
payments for the account of the Portfolio: interest, taxes,
management, accounting, transfer agent and legal fees, and
operating expenses of the Fund whether or not such expenses
are to be in whole or part capitalized or treated as deferred
expenses;
5) For the payment of any dividends on Shares of the Portfolio
declared pursuant to the governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, BUT ONLY upon receipt of, in
addition to Proper Instructions from the Fund on behalf of
the Portfolio, a certified copy of a resolution of the Board
of Trustees or of the Executive Committee of the Fund signed
by an officer of the Fund and certified by its Secretary or
an Assistant Secretary, specifying the amount of such
payment, setting forth the purpose for which such payment is
to be made, declaring such purpose to be a proper purpose,
and naming the person or persons to whom such payment is to
be made.
2.8 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED.
Except as specifically stated otherwise in this Contract, in any and
every case where payment for purchase of domestic securities for the
account of a Portfolio is made by the Custodian in advance of
receipt of the securities purchased in the absence of specific
written instructions from the Fund on behalf of such Portfolio to so
pay in advance, the Custodian shall be absolutely liable to the Fund
for such securities to the same extent as if the securities had been
received by the Custodian.
2.9 APPOINTMENT OF AGENTS. The Custodian may at any time or times in
its discretion appoint (and may at any time remove) any other bank
or trust company which is itself qualified under the Investment
Company Act of 1940, as amended, and its rules or regulations to act
as a custodian, as its agent to carry out such of the provisions of
this Article 2 as the Custodian may from time to time direct;
PROVIDED, however, that the appointment of any agent shall not
relieve the Custodian of its responsibilities or liabilities
hereunder.
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2.10 DEPOSIT OF FUND ASSETS IN SECURITIES SYSTEMS. The Custodian may
deposit and/or maintain securities owned by a Portfolio in a
clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of 1934,
which acts as a securities depository, or in the book-entry system
authorized by the U.S. Department of the Treasury and certain
federal agencies, collectively referred to herein as "Securities
System" in accordance with applicable Federal Reserve Board and
Securities and Exchange Commission rules and regulations, if any,
and subject to the following provisions:
1) The Custodian may keep securities of the Portfolio in a
Securities System provided that such securities are
represented in an account ("Account") of the Custodian in the
Securities System which shall not include any assets of the
Custodian other than assets held as a fiduciary, custodian or
otherwise for customers;
2) The records of the Custodian with respect to securities of
the Portfolio which are maintained in a Securities System
shall identify by book-entry those securities belonging to
the Portfolio;
3) The Custodian shall pay for securities purchased for the
account of the Portfolio upon (i) receipt of advice from the
Securities System that such securities have been transferred
to the Account, and (ii) the making of an entry on the
records of the Custodian to reflect such payment and transfer
for the account of the Portfolio. The Custodian shall
transfer securities sold for the account of the Portfolio
upon (i) receipt of advice from the Securities System that
payment for such securities has been transferred to the
Account, and (ii) the making of an entry on the records of
the Custodian to reflect such transfer and payment for the
account of the Portfolio. Copies of all advices from the
Securities System of transfers of securities for the account
of the Portfolio shall identify the Portfolio, be maintained
for the Portfolio by the Custodian and be provided to the
Fund at its request. Upon request, the Custodian shall
furnish the Fund on behalf of the Portfolio confirmation of
each transfer to or from the account of the Portfolio in the
form of a written advice or notice and shall furnish to the
Fund on behalf of the Portfolio copies of daily transaction
sheets reflecting each day's transactions in the Securities
System for the account of the Portfolio;
4) The Custodian shall provide the Fund for the Portfolio with
any report obtained by the Custodian (or by any agent
appointed by the Custodian pursuant to Section 2.9) on the
Securities System's accounting system, internal accounting
control and procedures for safeguarding securities deposited
in the Securities System;
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5) The Custodian shall have received from the Fund on behalf of
the Portfolio the certificate required by Article 14 hereof;
6) Anything to the contrary in this Contract notwithstanding,
the Custodian shall be liable to the Fund for the benefit of
the Portfolio for any loss or damage to the Portfolio
resulting from use of the Securities System by reason of any
negligence, misfeasance or misconduct of the Custodian or any
of its agents or of any of its or their employees or from
failure of the Custodian or any such agent to enforce
effectively such rights as it may have against the Securities
System; at the election of the Fund, it shall be entitled to
be subrogated to the rights of the Custodian with respect to
any claim against the Securities System or any other person
which the Custodian may have as a consequence of any such
loss or damage if and to the extent that the Portfolio has
not been made whole for any such loss or damage.
2.11 FUND ASSETS HELD IN THE CUSTODIAN'S DIRECT PAPER SYSTEM. The
Custodian may deposit and/or maintain securities owned by a
Portfolio in the Direct Paper System of the Custodian subject to the
following provisions:
1) No transaction relating to securities in the Direct Paper
System will be effected in the absence of Proper Instructions
from the Fund on behalf of the Portfolio;
2) The Custodian may keep securities of the Portfolio in the
Direct Paper System only if such securities are represented
in an account ("Account") of the Custodian in the Direct
Paper System which shall not include any assets of the
Custodian other than assets held as a fiduciary, custodian or
otherwise for customers;
3) The records of the Custodian with respect to securities of
the Portfolio which are maintained in the Direct Paper System
shall identify by book-entry those securities belonging to
the Portfolio;
4) The Custodian shall pay for securities purchased for the
account of the Portfolio upon the making of an entry on the
records of the Custodian to reflect such payment and transfer
of securities to the account of the Portfolio. The Custodian
shall transfer securities sold for the account of the
Portfolio upon the making of an entry on the records of the
Custodian to reflect such transfer and receipt of payment for
the account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf of the
Portfolio confirmation of each transfer to or from the
account of the Portfolio, in the form of a written advice or
notice, of Direct Paper on the next business day following
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such transfer and shall furnish to the Fund on behalf of the
Portfolio copies of daily transaction sheets reflecting each
day's transaction in the Securities System for the account of
the Portfolio;
6) The Custodian shall provide the Fund on behalf of the
Portfolio with any report on the Custodian's system of
internal accounting control as the Fund may reasonably
request from time to time.
2.12 SEGREGATED ACCOUNT. The Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Portfolio
establish and maintain a segregated account or accounts for and on
behalf of each such Portfolio, into which account or accounts may be
transferred cash and/or securities, including securities maintained
in an account by the Custodian pursuant to Section 2.10 hereof, (i)
in accordance with the provisions of any agreement among the Fund on
behalf of the Portfolio, the Custodian and a broker-dealer
registered under the Exchange Act and a member of the NASD (or any
futures commission merchant registered under the Commodity Exchange
Act), relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange (or
the Commodity Futures Trading Commission or any registered contract
market), or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the
Portfolio, (ii) for purposes of segregating cash or government
securities in connection with options purchased, sold or written by
the Portfolio or commodity futures contracts or options thereon
purchased or sold by the Portfolio, (iii) for the purposes of
compliance by the Portfolio with the procedures required by
Investment Company Act Release No. 10666, or any subsequent release
or releases of the Securities and Exchange Commission relating to
the maintenance of segregated accounts by registered investment
companies and (iv) for other proper corporate purposes, BUT ONLY, in
the case of clause (iv), upon receipt of, in addition to Proper
Instructions from the Fund on behalf of the applicable Portfolio, a
certified copy of a resolution of the Board of Trustees or of the
Executive Committee signed by an officer of the Fund and certified
by the Secretary or an Assistant Secretary, setting forth the
purpose or purposes of such segregated account and declaring such
purposes to be proper corporate purposes.
2.13 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian shall
execute ownership and other certificates and affidavits for all
federal and state tax purposes in connection with receipt of income
or other payments with respect to domestic securities of each
Portfolio held by it and in connection with transfers of securities.
2.14 PROXIES. The Custodian shall, with respect to the domestic
securities held hereunder, cause to be promptly executed by the
registered holder of such securities, if the securities are
registered otherwise than in the name of the Portfolio or a nominee
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of the Portfolio, all proxies, without indication of the manner in
which such proxies are to be voted, and shall promptly deliver to
the Portfolio such proxies, all proxy soliciting materials and all
notices relating to such securities.
2.15 COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES. Subject to the
provisions of Section 2.3, the Custodian shall transmit promptly to
the Fund for each Portfolio all written information (including,
without limitation, pendency of calls and maturities of domestic
securities and expirations of rights in connection therewith and
notices of exercise of call and put options written by the Fund on
behalf of the Portfolio and the maturity of futures contracts
purchased or sold by the Portfolio) received by the Custodian from
issuers of the securities being held for the Portfolio. With
respect to tender or exchange offers, the Custodian shall transmit
promptly to the Portfolio all written information received by the
Custodian from issuers of the securities whose tender or exchange is
sought and from the party (or his agents) making the tender or
exchange offer. If the Portfolio desires to take action with
respect to any tender offer, exchange offer or any other similar
transaction, the Portfolio shall when reasonably possible notify the
Custodian at least three business days prior to the date on which
the Custodian is to take such action.
3. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD
OUTSIDE OF THE UNITED STATES
3.1 APPOINTMENT OF FOREIGN SUB-CUSTODIANS. The Fund hereby authorizes
and instructs the Custodian to employ as sub-custodians for each
Portfolio's securities and other assets maintained outside the
United States the foreign banking institutions and foreign
securities depositories designated on Schedule A hereto ("foreign
sub-custodians"). Upon receipt of "Proper Instructions", as defined
in Section 5 of this Contract, together with a certified resolution
of the Fund's Board of Trustees, the Custodian and the Fund may
agree to amend Schedule A hereto from time to time to designate
additional foreign banking institutions and foreign securities
depositories to act as sub-custodian. Upon receipt of Proper
Instructions, the Fund may instruct the Custodian to cease the
employment of any one or more such sub-custodians for maintaining
custody of a Portfolio's assets.
3.2 ASSETS TO BE HELD. The Custodian shall limit the securities and
other assets maintained in the custody of the foreign sub-custodians
to: (a) "foreign securities", as defined in paragraph (c)(1) of
Rule 17f-5 under the Investment Company Act of 1940, and (b) cash
and cash equivalents in such amounts as the Custodian or the Fund
may determine to be reasonably necessary to effect a Portfolio's
foreign securities transactions. The Custodian shall identify on
its books as belonging to each Portfolio, the foreign securities of
the Portfolio held by each foreign sub-custodian.
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3.3 FOREIGN SECURITIES DEPOSITORIES. Except as may otherwise be agreed
upon in writing by the Custodian and the Fund, assets of each
Portfolio shall be maintained in foreign securities depositories
only through arrangements implemented by the foreign banking
institutions serving as sub-custodians pursuant to the terms hereof.
Where possible, such arrangements shall include entry into
agreements containing the provisions set forth in Section 3.4
hereof.
3.4 AGREEMENTS WITH FOREIGN BANKING INSTITUTIONS. Each agreement with a
foreign banking institution shall be substantially in the form set
forth in Exhibit 1 hereto and shall provide that: (a) the assets of
each Portfolio will not be subject to any right, charge, security
interest, lien or claim of any kind in favor of the foreign banking
institution or its creditors or agent, except a claim of payment for
their safe custody or administration; (b) beneficial ownership for
the assets of each Portfolio will be freely transferable without the
payment of money or value other than for custody or administration;
(c) adequate records will be maintained identifying the assets as
belonging to each applicable Portfolio; (d) officers of or auditors
employed by, or other representatives of the Custodian, including to
the extent permitted under applicable law the independent public
accountants for the Fund, will be given access to the books and
records of the foreign banking institution relating to its actions
under its agreement with the Custodian; and (e) assets of each
Portfolio held by the foreign sub-custodian will be subject only to
the instructions of the Custodian or its agents.
3.5 ACCESS OF INDEPENDENT ACCOUNTANTS OF THE FUND. Upon request of the
Fund, the Custodian will use its best efforts to arrange for the
independent accountants of the Fund to be afforded access to the
books and records of any foreign banking institution employed as a
foreign sub-custodian insofar as such books and records relate to
the performance of such foreign banking institution under its
agreement with the Custodian.
3.6 REPORTS BY CUSTODIAN. The Custodian will supply to the Fund from
time to time, as mutually agreed upon, statements in respect of the
securities and other assets of each Portfolio held by foreign
sub-custodians, including but not limited to an identification of
entities having possession of each Portfolio's securities and other
assets and advices or notifications of any transfers of securities
to or from each custodial account maintained by a foreign banking
institution for the Custodian on behalf of each applicable Portfolio
indicating, as to securities acquired for a Portfolio, the identity
of the entity having physical possession of such securities.
3.7 TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT. (a) Except as otherwise
provided in paragraph (b) of this Section 3.7, the provision of
Sections 2.2 and 2.7 of this Contract shall apply, MUTATIS MUTANDIS
to the foreign securities of the Fund held outside the United States
by foreign sub-custodians.
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(b) Notwithstanding any provision of this Contract to the contrary,
settlement and payment for securities received for the account of
each applicable Portfolio and delivery of securities maintained for
the account of each applicable Portfolio may be effected in
accordance with the customary established securities trading or
securities processing practices and procedures in the jurisdiction
or market in which the transaction occurs, including, without
limitation, delivering securities to the purchaser thereof or to a
dealer therefor (or an agent for such purchaser or dealer) against a
receipt with the expectation of receiving later payment for such
securities from such purchaser or dealer.
(c) Securities maintained in the custody of a foreign sub-custodian
may be maintained in the name of such entity's nominee to the same
extent as set forth in Section 2.3 of this Contract, and the Fund
agrees to hold any such nominee harmless from any liability as a
holder of record of such securities.
3.8 LIABILITY OF FOREIGN SUB-CUSTODIANS. Each agreement pursuant to
which the Custodian employs a foreign banking institution as a
foreign sub-custodian shall require the institution to exercise
reasonable care in the performance of its duties and to indemnify,
and hold harmless, the Custodian and the Fund from and against any
loss, damage, cost, expense, liability or claim arising out of or in
connection with the institution's performance of such obligations.
At the election of the Fund, it shall be entitled to be subrogated
to the rights of the Custodian with respect to any claims against a
foreign banking institution as a consequence of any such loss,
damage, cost, expense, liability or claim if and to the extent that
the Fund has not been made whole for any such loss, damage, cost,
expense, liability or claim.
3.9 LIABILITY OF CUSTODIAN. The Custodian shall be liable for the acts
or omissions of a foreign banking institution to the same extent as
set forth with respect to sub-custodians generally in this Contract
and, regardless of whether assets are maintained in the custody of a
foreign banking institution, a foreign securities depository or a
branch of a U.S. bank as contemplated by paragraph 3.12 hereof, the
Custodian shall not be liable for any loss, damage, cost, expense,
liability or claim resulting from nationalization, expropriation,
currency restrictions, or acts of war or terrorism or any loss where
the sub-custodian has otherwise exercised reasonable care.
Notwithstanding the foregoing provisions of this paragraph 3.9, in
delegating custody duties to State Street London Ltd., the Custodian
shall not be relieved of any responsibility to the Fund for any loss
due to such delegation, except such loss as may result from (a)
political risk (including, but not limited to, exchange control
restrictions, confiscation, expropriation, nationalization,
insurrection, civil strife or armed hostilities) or (b) other losses
(excluding a bankruptcy or insolvency of State Street London Ltd.
not caused by political risk) due to Acts of God, nuclear incident
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or the like, in each case under circumstances where the Custodian
and State Street London Ltd. have exercised reasonable care.
3.10 REIMBURSEMENT FOR ADVANCES. If the Fund requires the Custodian to
advance cash or securities for any purpose for the benefit of a
Portfolio including the purchase or sale of foreign exchange or of
contracts for foreign exchange ("Advance"), or in the event that the
Custodian or its nominee shall incur or be assessed any taxes,
charges, expenses, assessments, claims or liabilities in connection
with the performance of this Contract, except such as may arise from
its or its nominee's own negligent action, negligent failure to act
or willful misconduct ("Liability") then in such event property
equal in value to not more than 125% of such Advance and accrued
interest on the Advance or the anticipated amount of such Liability,
held at any time for the account of the appropriate Portfolio by the
Custodian or sub-custodian may be held as security for such
Liability or for such Advance and accrued interest on the Advance.
The Custodian shall designate the security or securities
constituting security for an Advance or Liability (the "Designated
Securities") by notice in writing to the Fund (which may be sent by
tested telefax or telex). In the event the value of the Designated
Securities shall decline to less than 110% of the amount of such
Advance and accrued interest on the Advance or the anticipated
amount of such Liability, then the Custodian may designate in the
same manner an additional security for such obligation ("Additional
Securities"), but the aggregate value of the Designated Securities
and Additional Securities shall not be in excess of 125% of the
amount of such Advance and the accrued interest on the Advance or
the anticipated amount of such Liability. At the request of the
Fund, on behalf of a Portfolio, the Custodian shall agree to
substitution of a security or securities which have a value equal to
the value of the Designated or Additional Securities which the Fund
desires be released from their status as security, and such release
from status as security shall be effective upon the Custodian and
the Fund agreeing in writing as to the identity of the substituted
security or securities, which shall thereupon become Designated
Securities.
Notwithstanding the above, the Custodian shall, at the request of
the Fund, on behalf of a Portfolio, immediately release from their
status as security any or all of the Designated Securities or
Additional Securities upon the Custodian's receipt from such of
Portfolio cash or cash equivalents in an amount equal to 100% of the
value of the Designated Securities or Additional Securities that the
Fund desires to be released from their status as security pursuant
to this Section. The applicable Portfolio shall reimburse or
indemnify the Custodian in respect of a Liability and shall pay any
Advances upon demand; provided, however, that the Custodian first
notified the Fund on behalf of the Portfolio of such demand for
repayment, reimbursement or indemnification. If, upon notification,
the Portfolio shall fail to pay such Advance or interest when due or
shall fail to reimburse or indemnify the Custodian promptly in
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respect of a Liability, the Custodian shall be entitled to dispose
of the Designated Securities and Additional Securities to the extent
necessary to obtain repayment, reimbursement or indemnification.
Interest, dividends and other distributions paid or received on the
Designated Securities and Additional Securities, other than payments
of principal or payments upon retirement, redemption or repurchase,
shall remain the property of the Portfolio, and shall not be subject
to this Section. To the extent that the disposition of the
Portfolio's property, designated as security for such Advance or
Liability, results in an amount less than necessary to obtain
repayment, reimbursement or indemnification, the Portfolio shall
continue to be liable to the Custodian for the differences between
the proceeds of the disposition of the Portfolio's property,
designated as security for such Advance or Liability, and the amount
of the repayment, reimbursement or indemnification due to the
Custodian and the Custodian shall have the right to designate in the
same manner described above an additional security for such
obligation which shall constitute Additional Securities hereunder.
3.11 MONITORING RESPONSIBILITIES. The Custodian shall furnish annually
to the Fund, during the month of June, information concerning the
foreign sub-custodians employed by the Custodian. Such information
shall be similar in kind and scope to that furnished to the Fund in
connection with the initial approval of this Contract. In addition,
the Custodian will promptly inform the Fund in the event that the
Custodian learns of a material adverse change in the financial
condition of a foreign sub-custodian or any material loss of the
assets of the Fund or in the case of any foreign sub-custodian not
the subject of an exemptive order from the Securities and Exchange
Commission is notified by such foreign sub-custodian that there
appears to be a substantial likelihood that its shareholders' equity
will decline below $200 million (U.S. dollars or the equivalent
thereof) or that its shareholders' equity has declined below $200
million (in each case computed in accordance with generally accepted
U.S. accounting principles).
3.12 BRANCHES OF U.S. BANKS. (a) Except as otherwise set forth in this
Contract, the provisions hereof shall not apply where the custody of
a Portfolio's assets are maintained in a foreign branch of a banking
institution which is a "bank" as defined by Section 2(a)(5) of the
Investment Company Act of 1940 meeting the qualification set forth
in Section 26(a) of said Act. The appointment of any such branch as
a sub-custodian shall be governed by paragraph 1 of this Contract.
(b) Cash held for each Portfolio of the Fund in the United Kingdom
shall be maintained in an interest bearing account established for
the Fund with the Custodian's London branch, which account shall be
subject to the direction of the Custodian, State Street London Ltd.
or both.
3.13 FOREIGN EXCHANGE TRANSACTIONS. (a) Upon receipt of Proper
Instructions, the Custodian shall settle foreign exchange contracts
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or options to purchase and sell foreign currencies for spot and
future delivery on behalf of and for the account of a Portfolio with
such brokers, banks or trust companies other than the Custodian
("Currency Brokers") as the Fund may determine and direct pursuant
to Proper Instructions or as the Custodian may select ("Transactions
Other Than As Principal").
(b). The Custodian shall not be obligated to enter into foreign
exchange transactions as principal ("Transactions As Principal").
However, if the Custodian has made available to the Fund its
services as a principal in foreign exchange transactions and subject
to any separate agreement between the parties relating to such
transactions, the Custodian shall enter into foreign exchange
contracts or options to purchase and sell foreign currencies for
spot and future delivery on behalf of and for the account of a
Portfolio, with the Custodian as principal.
(c) If, in a Transaction Other Than As Principal, a Currency
Broker is selected by the Fund, on behalf of a Portfolio, the
Custodian shall have no duty with respect to the selection of the
Currency Broker, or, so long as the Custodian acts in accordance
with Proper Instructions, for the failure of such Currency Broker to
comply with the terms of any contract or option. If, in a
Transaction Other Than As Principal, the Currency Broker is selected
by the Custodian or if the Custodian enters into a Transaction As
Principal, the Custodian shall be responsible for the selection of
the Currency Broker and the failure of such Currency Broker to
comply with the terms of nay contract or option.
(d) In Transactions Other Than As Principal and Transactions As
Principal, the Custodian shall be responsible for any transfer of
cash, the transmission of instructions to and from a Currency
Broker, if any, the safekeeping of all certificates and other
documents and agreements evidencing or relating to such foreign
exchange transactions and the maintenance of proper records as set
forth in Section 9 of this Contract.
3.14 TAX LAW. Except to the extent that imposition of any tax liability
arises from State Street's failure to perform in accordance with the
terms of this Section 3.14 or from the failure of any sub-custodian
to perform in accordance with the terms of the applicable subcustody
agreement, State Street shall have no responsibility or liability
for any obligations now or hereafter imposed on each Portfolio by
the tax law of the domicile of each Portfolio or of any jurisdiction
in which each Portfolio is invested or any political subdivision
thereof. It shall be the responsibility of State Street to use due
care to perform such steps as are required to collect any tax
refund, to ascertain the appropriate rate of tax withholding and to
provide such information and documents as may be required to enable
each Portfolio to receive appropriate tax treatment under applicable
tax laws and any applicable treaty provisions. Unless otherwise
informed by each Portfolio, State Street, in performance of its
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duties under this Section, shall be entitled to apply categorical
treatment of each Portfolio according to the nationality of each
Portfolio, the particulars of its organization and other relevant
details that shall be supplied by each Portfolio. State Street
shall be entitled to rely on any information supplied by each
Portfolio. State Street may engage reasonable professional advisors
disclosed to each Portfolio by State Street, which may include
attorneys, accountants or financial institutions in the regular
business of investment administration and may rely upon advice
received therefrom. It shall be the duty of each Portfolio to
inform State Street of any change in the organization, domicile or
other relevant fact concerning tax treatment of each Portfolio and
further to inform State Street if each Portfolio is or becomes the
beneficiary of any special ruling or treatment not applicable to the
general nationality and category of entity of which each Portfolio
is a part under general laws and treaty provisions.
4. PAYMENTS FOR SALES OR REPURCHASES OR REDEMPTIONS OF SHARES OF THE
FUND
The Custodian shall receive from the distributor for the Shares or
from the Transfer Agent of the Fund and deposit into the account of the
appropriate Portfolio such payments as are received for Shares of that
Portfolio issued or sold from time to time by the Fund. The Custodian
will provide timely notification to the Fund on behalf of each such
Portfolio and the Transfer Agent of any receipt by it of payments for
Shares of such Portfolio.
From such funds as may be available for the purpose but subject to
the limitations of the Trust Instrument and any applicable votes of the
Board of Trustees of the Fund pursuant thereto, the Custodian shall, upon
receipt of instructions from the Transfer Agent, make funds available for
payment to holders of Shares who have delivered to the Transfer Agent a
request for redemption or repurchase of their Shares. In connection with
the redemption or repurchase of Shares of a Portfolio, the Custodian is
authorized upon receipt of instructions from the Transfer Agent to wire
funds to or through a commercial bank designated by the redeeming
shareholders. In connection with the redemption or repurchase of Shares
of the Fund, the Custodian shall honor checks drawn on the Custodian by a
holder of Shares, which checks have been furnished by the Fund to the
holder of Shares, when presented to the Custodian in accordance with such
procedures and controls as are mutually agreed upon from time to time
between the Fund and the Custodian.
5. PROPER INSTRUCTIONS
Proper Instructions as used throughout this Contract means a writing
signed or initialled by two or more person or persons as the Board of
Trustees shall have from time to time authorized. Each such writing shall
set forth the specific transaction or type of transaction involved,
including a specific statement of the purpose for which such action is
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requested. Oral instructions will be considered Proper Instructions if
the Custodian reasonably believes them to have been given by a person
authorized to give such instructions with respect to the transaction
involved. The Fund shall cause all oral instructions to be confirmed in
writing. Upon receipt of a certificate of the Secretary or an Assistant
Secretary as to the authorization by the Board of Trustees of the Fund
accompanied by a detailed description of procedures approved by the Board
of Trustees, Proper Instructions may include communications effected
directly between electro-mechanical or electronic devices provided that
the Fund and the Custodian are satisfied that such procedures afford
adequate safeguards for the Portfolios' assets. For purposes of this
Section, Proper Instructions shall include instructions received by the
Custodian pursuant to any three - party agreement which requires a
segregated asset account in accordance with Section 2.12.
6. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
The Custodian may in its discretion, without express authority from
the Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Contract, PROVIDED that all such payments
shall be accounted for to the Fund on behalf of the
Portfolio;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Portfolio, checks,
drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property
of the Portfolio except as otherwise directed by the Board of
Trustees of the Fund.
7. EVIDENCE OF AUTHORITY
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper
believed by it to be genuine and to have been properly executed by or on
behalf of the Fund. The Custodian may receive and accept a certified copy
of a vote of the Board of Trustees of the Fund as conclusive evidence (a)
of the authority of any person to act in accordance with such vote or (b)
of any determination or of any action by the Board of Trustees pursuant to
the Trust Instrument as described in such vote, and such vote may be
considered as in full force and effect until receipt by the Custodian of
written notice to the contrary.
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<PAGE>
8. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT AND
CALCULATION OF NET ASSET VALUE AND NET INCOME
If, and to the extent requested by the Fund, the Custodian shall
cooperate with and supply necessary information to the entity or entities
appointed by the Board of Trustees of the Fund to keep the books of
account of each Portfolio and/or compute the net asset value per share of
the outstanding shares of each Portfolio or, if directed in writing to do
so by the Fund on behalf of the Portfolio, shall itself keep such books of
account and/or compute such net asset value per share. If so directed,
the Custodian shall also calculate daily the net income of the Portfolio
as described in the Fund's currently effective prospectus related to such
Portfolio and shall advise the Fund and the Transfer Agent daily of the
total amounts of such net income and, if instructed in writing by an
officer of the Fund to do so, shall advise the Transfer Agent periodically
of the division of such net income among its various components. The
calculations of the net asset value per share and the daily income of each
Portfolio shall be made at the time or times described from time to time
in the Fund's currently effective prospectus related to such Portfolio.
9. RECORDS
The Custodian shall with respect to each Portfolio create and
maintain all records relating to its activities and obligations under this
Contract in such manner as will meet the obligations of the Fund under the
Investment Company Act of 1940, with particular attention to Section 31
thereof and Rules 31a-1 and 31a-2 thereunder. All such records shall be
the property of the Fund and shall at all times during the regular
business hours of the Custodian be open for inspection by duly authorized
officers, employees or agents of the Fund and employees and agents of the
Securities and Exchange Commission. The Custodian shall, at the Fund's
request, supply the Fund with a tabulation of securities owned by each
Portfolio and held by the Custodian and shall, when requested to do so by
the Fund and for such compensation as shall be agreed upon between the
Fund and the Custodian, include certificate numbers in such tabulations.
10. OPINION OF FUND'S INDEPENDENT ACCOUNTANT
The Custodian shall take all reasonable action, as the Fund on
behalf of each applicable Portfolio may from time to time request, to
obtain from year to year favorable opinions from the Fund's independent
accountants with respect to its activities hereunder in connection with
the preparation of the Fund's Form N-1A, and Form N-SAR or other annual
reports to the Securities and Exchange Commission and with respect to any
other requirements of such Commission.
- 19 -
<PAGE>
11. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS
The Custodian shall provide the Fund, on behalf of each Portfolio at
such times as the Fund may reasonably require, with reports by independent
public accountants on the accounting system, internal accounting control
and procedures for safeguarding securities, futures contracts and options
on futures contracts, including securities deposited and/or maintained in
a Securities System, relating to the services provided by the Custodian
under this Contract; such reports, shall be of sufficient scope and in
sufficient detail, as may reasonably be required by the Fund to provide
reasonable assurance that any material inadequacies would be disclosed by
such examination, and, if there are no such inadequacies, the reports
shall so state.
12. COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time
between the Fund on behalf of each applicable Portfolio and the Custodian.
13. RESPONSIBILITY OF CUSTODIAN
So long as and to the extent that it is in the exercise of
reasonable care, the Custodian shall not be responsible for the title,
validity or genuineness of any property or evidence of title thereto
received by it or delivered by it pursuant to this Contract and shall be
held harmless in acting upon any notice, request, consent, certificate or
other instrument reasonably believed by it to be genuine and to be signed
by the proper party or parties, including any futures commission merchant
acting pursuant to the terms of a three-party futures or options
agreement. The Custodian shall be held to the exercise of reasonable care
in carrying out the provisions of this Contract, but shall be kept
indemnified by and shall be without liability to the Fund for any action
taken or omitted by it in good faith without negligence. It shall be
entitled to rely on and may act upon advice of counsel (who may be
counsel for the Fund) on all matters, and shall be without liability for
any action reasonably taken or omitted pursuant to such advice.
As a condition to the indemnification provided for in this
Section 13, if in any case the indemnifying party is asked to indemnify
and hold the indemnified party harmless, the indemnified party shall fully
and promptly advise the indemnifying party of all pertinent facts
concerning the situation in question, and shall use all reasonable care to
identify, and promptly notify the indemnifying party of, any situation
which presents or appears likely to present the probability of such a
claim for indemnification against the indemnifying party. The indemni-
fying party shall be entitled, at its own expense, to participate in the
investigation and to be consulted as to the defense of any such claim, and
in such event, the indemnified party shall keep the indemnifying party
fully and currently informed of all developments relating to such investi-
- 20 -
<PAGE>
gation or defense. At any time, the indemnifying party shall be entitled
at its own expense to conduct the defense of any such claim, provided that
the indemnifying party: (a) reasonably demonstrates to the other party
its ability to pay the full amount of potential liability in connection
with such claim and (b) first admits in writing to the other party that
such claim is one in respect of which the indemnifying party is obligated
to indemnify the other party hereunder. Upon satisfaction of the
foregoing conditions, the indemnifying party shall take over complete
defense of the claim, and the indemnified party shall initiate no further
legal or other expenses for which it shall seek indemnification. The
indemnified party shall in no case confess any claim or make any
compromise in any case in which the indemnifying party may be asked to
indemnify the indemnified party, except with the indemnifying party's
prior written consent.
If the Fund on behalf of a Portfolio requires the Custodian to take
any action with respect to securities, which action involves the payment
of money or which action may, in the opinion of the Custodian, result in
the Custodian or its nominee assigned to the Fund or the Portfolio being
liable for the payment of money or incurring liability of some other form,
the Fund on behalf of the Portfolio, as a prerequisite to requiring the
Custodian to take such action, shall provide indemnity to the Custodian in
an amount and form satisfactory to it.
14. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT
This Contract shall become effective as of its execution, shall
continue in full force and effect with respect to each Portfolio until
terminated as hereinafter provided, may be amended at any time by mutual
agreement of the parties hereto and may be terminated by either party by
an instrument in writing delivered or mailed, postage prepaid to the other
party, such termination to take effect not sooner than thirty (30) days
after the date of such delivery or mailing; PROVIDED, however that the
Custodian shall not with respect to a Portfolio act under Section 2.10
hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board of Trustees of the
Fund has approved the use of a particular Securities System by such
Portfolio as required by Rule 17f-4 under the Investment Company Act of
1940, as amended and that the Custodian shall not with respect to a
Portfolio act under Section 2.11 hereof in the absence of receipt of an
initial certificate of the Secretary or an Assistant Secretary that the
Board of Trustees has approved the initial use of the Direct Paper System
by such Portfolio and the receipt of an annual certificate of the
Secretary or an Assistant Secretary that the Board of Trustees has
reviewed the use by such Portfolio of the Direct Paper System; PROVIDED
FURTHER, however, that the Fund shall not amend or terminate this Contract
in contravention of any applicable federal or state regulations, or any
provision of the Trust Instrument, and further provided, that the Fund on
behalf of one or more of the Portfolios may at any time by action of its
Board of Trustees (i) substitute another bank or trust company for the
Custodian by giving notice as described above to the Custodian, or (ii)
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<PAGE>
immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the
Currency or upon the happening of a like event at the direction of an
appropriate regulatory agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund on behalf of each
applicable Portfolio shall pay to the Custodian such compensation as may
be due as of the date of such termination and shall likewise reimburse the
Custodian for its costs, expenses and disbursements. Termination of the
Contract with respect to one Portfolio (but less than all of the
Portfolios) will not constitute termination of the Contract, and the terms
of the Contract continue to apply to the other Portfolios.
15. SUCCESSOR CUSTODIAN
If a successor custodian for the Fund, of one or more of the
Portfolios shall be appointed by the Board of Trustees of the Fund, the
Custodian shall, upon termination, deliver to such successor custodian at
the office of the Custodian, duly endorsed and in the form for transfer,
all securities of each applicable Portfolio then held by it hereunder and
shall transfer to an account of the successor custodian all of the
securities of each such Portfolio held in a Securities System.
If no such successor custodian shall be appointed, the Custodian
shall, in like manner, upon receipt of a certified copy of a vote of the
Board of Trustees of the Fund, deliver at the office of the Custodian and
transfer such securities, funds and other properties in accordance with
such vote.
In the event that no written order designating a successor custodian
or certified copy of a vote of the Board of Trustees shall have been
delivered to the Custodian on or before the date when such termination
shall become effective, then the Custodian shall have the right to deliver
to a bank or trust company, which is a "bank" as defined in the Investment
Company Act of 1940, doing business in Boston, Massachusetts, of its own
selection, having an aggregate capital, surplus, and undivided profits,
as shown by its last published report, of not less than $25,000,000, all
securities, funds and other properties held by the Custodian on behalf of
each applicable Portfolio and all instruments held by the Custodian
relative thereto and all other property held by it under this Contract on
behalf of each applicable Portfolio and to transfer to an account of such
successor custodian all of the securities of each such Portfolio held in
any Securities System. Thereafter, such bank or trust company shall be
the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in
the possession of the Custodian after the date of termination hereof owing
to failure of the Fund to procure the certified copy of the vote referred
to or of the Board of Trustees to appoint a successor custodian, the
Custodian shall be entitled to fair compensation for its services during
such period as the Custodian retains possession of such securities, funds
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<PAGE>
and other properties and the provisions of this Contract relating to the
duties and obligations of the Custodian shall remain in full force and
effect.
16. INTERPRETIVE AND ADDITIONAL PROVISIONS
In connection with the operation of this Contract, the Custodian and
the Fund on behalf of each of the Portfolios, may from time to time agree
on such provisions interpretive of or in addition to the provisions of
this Contract as may in their joint opinion be consistent with the general
tenor of this Contract. Any such interpretive or additional provisions
shall be in a writing signed by both parties and shall be annexed hereto,
PROVIDED that no such interpretive or additional provisions shall
contravene any applicable federal or state regulations or any provision of
the Trust Instrument of the Fund. No interpretive or additional
provisions made as provided in the preceding sentence shall be deemed to
be an amendment of this Contract.
17. ADDITIONAL FUNDS
In the event that the Fund establishes one or more series of Shares
in addition to Neuberger & Berman Limited Maturity Bond Trust, Neuberger &
Berman Government Income Trust, and Neuberger & Berman Ultra Short Bond
Trust with respect to which it desires to have the Custodian render
services as custodian under the terms hereof, it shall so notify the
Custodian in writing, and if the Custodian agrees in writing to provide
such services, such series of Shares shall become a Portfolio hereunder.
18. MASSACHUSETTS LAW TO APPLY
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of The Commonwealth of
Massachusetts.
19. LIMITATION OF TRUSTEE, OFFICER AND SHAREHOLDER LIABILITY
It is expressly agreed that the obligations of the Fund and each
Portfolio hereunder shall not be binding upon any of the Trustees,
officers, agents or employees of the Fund or upon the shareholders of any
Portfolio personally, but shall only bind the assets and property of the
Fund, as provided in its Trust Instrument. The execution and delivery of
this Contract have been authorized by the Trustees of the Fund, and this
Contract has been executed and delivered by an authorized officer of the
Fund acting as such; neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made
by any of them individually or to impose any liability on any of them
personally, but shall bind only the assets and property of the Fund, as
provided in its Trust Instrument.
- 23 -
<PAGE>
20. NO LIABILITY OF OTHER PORTFOLIOS
Notwithstanding any other provision of this Contract, the parties
agree that the assets and liabilities of each Portfolio are separate and
distinct from the assets and liabilities of each other Portfolio and that
no Portfolio shall be liable or shall be charged for any debt, obligation
or liability of any other Portfolio, whether arising under this Contract
or otherwise.
21. CONFIDENTIALITY
The Custodian agrees that all books, records, information and data
pertaining to the business of the Fund which are exchanged or received
pursuant to the negotiation or carrying out of this Contract shall remain
confidential, shall not be voluntarily disclosed to any other person,
except as may be required by law, and shall not be used by the Custodian
for any purpose not directly related to the business of the Fund, except
with the Fund's written consent.
22. ASSIGNMENT
Neither the Fund nor the Custodian shall have the right to assign
any of its rights or obligations under this Contract without the prior
written consent of the other party.
23. SEVERABILITY
If any provision of this Contract is held to be unenforceable as a
matter of law, the other terms and provisions hereof shall not be affected
thereby and shall remain in full force and effect.
24. PRIOR CONTRACTS
This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Fund on behalf of each of the Portfolios, or
any predecessor(s) thereto, and the Custodian relating to the custody of
the Fund's assets.
25. SHAREHOLDER COMMUNICATIONS ELECTION
Securities and Exchange Commission Rule 14b-2 requires banks which
hold securities for the account of customers to respond to requests by
issuers of securities for the names, addresses and holdings of beneficial
owners of securities of that issuer held by the bank unless the beneficial
owner has expressly objected to disclosure of this information. In order
to comply with the rule, the Custodian needs the Fund to indicate whether
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<PAGE>
it authorizes the Custodian to provide the Fund's name, address, and share
position to requesting companies whose securities the Fund owns. If the
Fund tells the Custodian "no", the Custodian will not provide this
information to requesting companies. If the Fund tells the Custodian
"yes" or does not check either "yes" or "no" below, the Custodian is
required by the rule to treat the Fund as consenting to disclosure of this
information for all securities owned by the Fund or any funds or accounts
established by the Fund. For the Fund's protection, the Rule prohibits
the requesting company from using the Fund's name and address for any
purpose other than corporate communications. Please indicate below
whether the Fund consents or objects by checking one of the alternatives
below.
YES [ ] The Custodian is authorized to release the Fund's name,
address, and share positions.
NO [X ] The Custodian is not authorized to release the Fund's
name, address, and share positions.
IN WITNESS WHEREOF, each of the parties has caused this instrument
to be executed in its name and behalf by its duly authorized representa-
tive and its seal to be hereunder affixed as of the 2nd day of July, 1993.
ATTEST NEUBERGER & BERMAN INCOME TRUST
/s/ Claudia A. Brandon By: /s/ Stanley Egener
------------------------- ----------------------------
CEO
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ E. Solomon By: /s/ Ronald E. Logue
------------------------- -------------------------------
Executive Vice President
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<PAGE>
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
between
NEUBERGER & BERMAN INCOME TRUST
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
1. Terms of Appointment; Duties of the Bank . . . . . . . . . . 1
2. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . 4
3. Representations and Warranties of the Bank . . . . . . . . . 4
4. Representations and Warranties of the Fund . . . . . . . . . 5
5. Data Access and Proprietary Information . . . . . . . . . . 5
6. Indemnification . . . . . . . . . . . . . . . . . . . . . . 7
7. Covenants of the Fund and the Bank . . . . . . . . . . . . . 8
8. Termination of Agreement . . . . . . . . . . . . . . . . . . 9
9. Additional Funds . . . . . . . . . . . . . . . . . . . . . . 10
10. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 10
11. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 10
12. Massachusetts Law to Apply . . . . . . . . . . . . . . . . . 10
13. Force Majeure . . . . . . . . . . . . . . . . . . . . . . . 11
14. Consequential Damages . . . . . . . . . . . . . . . . . . . 11
15. Merger of Agreement . . . . . . . . . . . . . . . . . . . . 11
16. Limitations of Liability of the Trustees and Shareholders,
Officers, Employees and Agent . . . . . . . . . . . . . . . 11
17. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 11
18. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 11
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
-------------------------------------
AGREEMENT made as of the 1st day of July, 1993, by and between NEUBERGER &
BERMAN INCOME TRUST, a Delaware business trust, having its principal
office and place of business at 605 Third Avenue, New York, New York 10158
(the "Fund"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts
trust company having its principal office and place of business at 225
Franklin Street, Boston, Massachusetts 02110 (the "Bank").
WHEREAS, the Fund is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund intends to initially offer shares in three series,
Neuberger & Berman Limited Maturity Bond Trust, Neuberger & Berman
Government Income Trust, and Neuberger & Berman Ultra Short Bond Trust
(each such series, together with all other series subsequently established
by the Fund and made subject to this Agreement in accordance with Article
9, being herein referred to as a "Portfolio", and collectively as the
"Portfolios");
WHEREAS, the Fund on behalf of the Portfolios desires to appoint the Bank
as its transfer agent, dividend disbursing agent, custodian of certain
retirement plans and agent in connection with certain other activities,
and the Bank desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. Terms of Appointment; Duties of the Bank
1.1 Subject to the terms and conditions set forth in this Agreement,
the Fund, on behalf of the Portfolios, hereby employs and
appoints the Bank to act as, and the Bank agrees to act as its
transfer agent for the Fund's authorized and issued shares of
beneficial interest of the Fund representing interests in each of
the respective Portfolios ("Shares"), dividend disbursing agent,
custodian of certain retirement plans and agent in connection
with any accumulation, open-account or similar plans provided to
the shareholders of each of the respective Portfolios of the Fund
("Shareholders") and set out in the currently effective
prospectus and statement of additional information ("prospectus")
of the Fund on behalf of the applicable Portfolio, including
without limitation any periodic investment plan or periodic
withdrawal program.
1.2 The Bank agrees that it will perform the following services:
(a) In accordance with procedures established from time to
time by agreement between the Fund on behalf of each of
<PAGE>
the Portfolios, as applicable and the Bank, the Bank
shall:
(i) Receive for acceptance, orders for the purchase
of Shares, and promptly deliver payment and
appropriate documentation thereof to the
Custodian of the Fund authorized pursuant to the
Trust Instrument of the Fund (the "Custodian");
(ii) Pursuant to purchase orders, issue the
appropriate number of Shares and hold such Shares
in the appropriate Shareholder account;
(iii) Receive for acceptance redemption requests and
redemption directions and deliver the appropriate
documentation thereof to the Custodian;
(iv) At the appropriate time as and when it receives
monies paid to it by the Custodian with respect
to any redemption, pay over or cause to be paid
over in the appropriate manner such monies as
instructed by the redeeming Shareholders;
(v) Effect transfers of Shares by the registered
owners thereof upon receipt of appropriate
instructions;
(vi) Prepare and transmit (or credit the appropriate
shareholder account) payments for dividends and
distributions declared by the Fund on behalf of
the applicable Portfolio;
(vii) Issue replacement certificates for those
certificates alleged to have been lost, stolen or
destroyed upon receipt by the Bank of
indemnification satisfactory to the Bank and
protecting the Bank and the Fund, and the Bank at
its option, may issue replacement certificates in
place of mutilated stock certificates upon
presentation thereof and without such indemnity;
(viii) Maintain records of account for and advise the
Fund and its Shareholders as to the foregoing;
and
(ix) Record the issuance of shares of the Fund and
maintain pursuant to SEC Rule 17Ad-10(e) a record
of the total number of shares of the Fund which
are authorized, based upon data provided to it by
the Fund, and issued and outstanding. The Bank
shall also provide the Fund on a regular basis
with the total number of shares which are
- 2 -
<PAGE>
authorized and issued and outstanding and shall
have no obligation, when recording the issuance
of shares, to monitor the issuance of such Shares
or to take cognizance of any laws relating to the
issue or sale of such Shares, which functions
shall be the sole responsibility of the Fund.
(b) In addition to and neither in lieu nor in contravention
of the services set forth in the above paragraph (a), the
Bank shall: (i) perform the customary services of a
transfer agent, dividend disbursing agent, custodian of
certain retirement plans and, as relevant, agent in
connection with accumulation, open-account or similar
plans (including without limitation any periodic invest-
ment plan or periodic withdrawal program), including but
not limited to: maintaining all Shareholder accounts,
preparing Shareholder meeting lists, mailing proxies,
receiving and tabulating proxies, mailing Shareholder
reports and prospectuses to current Shareholders,
withholding taxes on U.S. resident and non-resident alien
accounts, preparing and filing U.S. Treasury Department
Forms 1099 and other appropriate forms required with
respect to dividends and distributions by federal
authorities for all Shareholders, preparing and mailing
confirmation forms and statements of account to
Shareholders for all purchases and redemptions of Shares
and other confirmable transactions in Shareholder
accounts, preparing and mailing activity statements for
Shareholders, and providing Shareholder account
information and (ii) provide a system which will enable
the Fund to monitor the total number of Shares sold in
each State.
(c) In addition, the Fund shall (i) identify to the Bank in
writing those transactions and assets to be treated as
exempt from blue sky reporting for each State and (ii)
verify the establishment of transactions for each State
on the system prior to activation and thereafter monitor
the daily activity for each State. The responsibility of
the Bank for the Fund's blue sky State registration
status is solely limited to the initial establishment
of transactions subject to blue sky compliance by the
Fund and the reporting of such transactions to the Fund
as provided above.
(d) Procedures as to who shall provide certain of these
services in Section 1 may be established from time to
time by agreement between the Fund on behalf of each
Portfolio and the Bank per the attached service
responsibility schedule. The Bank may at times perform
only a portion of these services and the Fund or its
agent may perform these services on the Fund's behalf.
- 3 -
<PAGE>
(e) The Bank shall provide additional services on behalf of
the Fund (i.e., escheatment services) which may be agreed
upon in writing between the Fund and the Bank.
2. Fees and Expenses
2.1 For the performance by the Bank pursuant to this Agreement, the
Fund, on behalf of each Portfolio agrees to pay the Bank an
annual maintenance fee for each Shareholder account as set out in
the initial fee schedule attached hereto. Such fees and
out-of-pocket expenses and advances identified under Section 2.2
below may be changed from time to time subject to mutual written
agreement between the Fund and the Bank.
2.2 In addition to the fee paid under Section 2.1 above, the Fund, on
behalf of the applicable Portfolio, agrees to reimburse the Bank
for out-of-pocket expenses, including but not limited to
confirmation production, postage, forms, telephone, microfilm,
microfiche, tabulating proxies, records storage, or advances
incurred by the Bank for the items set out in the fee schedule
attached hereto. In addition, any other expenses incurred by the
Bank at the request or with the consent of the Fund, will be
reimbursed by the Fund on behalf of the applicable Portfolio.
2.3 The Fund, on behalf of the applicable Portfolio, agrees to pay
all fees and reimbursable expenses within five days following the
mailing of the respective billing notice. Postage for mailing of
dividends, proxies, Fund reports and other mailings to all
Shareholder accounts shall be advanced to the Bank by the Fund at
least seven (7) days prior to the mailing date of such materials.
3. Representations and Warranties of the Bank
The Bank represents and warrants to the Fund that:
3.1 It is a trust company duly organized and existing and in good
standing under the laws of the Commonwealth of Massachusetts.
3.2 It is duly qualified to carry on its business in the Commonwealth
of Massachusetts.
3.3 It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform this Agreement.
3.4 All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement.
3.5 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
4. Representations and Warranties of the Fund
- 4 -
<PAGE>
The Fund represents and warrants to the Bank that:
4.1 It is a business trust duly organized and existing and in good
standing under the laws of Delaware.
4.2 It is empowered under applicable laws and by its Trust Instrument
and By-Laws to enter into and perform this Agreement.
4.3 All corporate proceedings required by said Trust Instrument and
By-Laws have been taken to authorize it to enter into and perform
this Agreement.
4.4 It is an open-end management investment company registered under
the Investment Company Act of 1940, as amended.
4.5 A registration statement under the Securities Act of 1933, as
amended on behalf of each of the Portfolios is currently
effective and will remain effective, and appropriate state
securities law filings have been made and will continue to be
made, with respect to all Shares of the Fund being offered for
sale.
5. Data Access and Proprietary Information
5.1 The Fund acknowledges that the computer programs, screen formats,
report formats (except such screen formats and report formats as
may be necessary to respond to shareholder problems or
inquiries), interactive design techniques, and documentation
manuals furnished to the Fund by the Bank as part of the Fund's
ability to access certain Fund-related data ("Customer Data")
maintained by the Bank on data bases under the control and
ownership of the Bank or other third party ("Data Access
Services") constitute copyrighted, trade secret, or other
proprietary information (collectively, "Proprietary
Information") of substantial value to the Bank or other third
party. In no event shall Proprietary Information be deemed
Customer Data. The Fund agrees to treat all Proprietary
Information as proprietary to the Bank and further agrees that it
shall not divulge any Proprietary Information to any person or
organization except as may be provided hereunder. Without
limiting the foregoing, the Fund agrees for itself and its
employees and agents:
(a) to access Customer Data solely from locations as may be
designated in writing by the Bank and solely in
accordance with the Bank's applicable user documentation;
(b) to refrain from copying or duplicating in any way the
Proprietary Information;
(c) to refrain from obtaining unauthorized access to any
portion of the Proprietary Information, and if such
- 5 -
<PAGE>
access is inadvertently obtained, to inform in a timely
manner of such fact and dispose of such information in
accordance with the Bank's instructions;
(d) to honor all reasonable written requests made by the Bank
to protect at the Bank's expense the rights of the Bank
in Proprietary Information at common law, under federal
copyright law and under other federal or state law.
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Section 5. The obligations of this Section
shall survive any earlier termination of this Agreement.
5.2 If the Fund notifies the Bank that any of the Data Access
Services do not operate in material compliance with the most
recently issued user documentation for such services, the Bank
shall endeavor in a timely manner to correct such failure.
Organizations from which the Bank may obtain certain data
included in the Data Access Services are solely responsible for
the contents of such data and the Fund agrees to make no claim
against the Bank arising out of the contents of such third-party
data, including, but not limited to, the accuracy thereof. DATA
ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE
SPECIFICATIONS USED IN CONNECTION THEREWITH ARE PROVIDED ON AN AS
IS, AS AVAILABLE BASIS. THE BANK EXPRESSLY DISCLAIMS ALL
WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT
NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
5.3 If the transactions available to the Fund include the ability to
originate electronic instructions to the Bank in order to (i)
effect the transfer or movement of cash or Shares or (ii)
transmit Shareholder information or other information (such
transactions constituting a "COEFI"), then in such event the Bank
shall be entitled to rely on the validity and authenticity of
such instruction without undertaking any further inquiry as long
as such instruction is undertaken in conformity with security
procedures established by the Bank from time to time.
6. Indemnification
6.1 The Bank shall not be responsible for, and the Fund shall on
behalf of the applicable Portfolio indemnify and hold the Bank
harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising
out of or attributable to:
(a) All actions of the Bank or its agents or subcontractors
required to be taken pursuant to this Agreement, provided
that such actions are taken in good faith and without
negligence or willful misconduct.
- 6 -
<PAGE>
(b) The Fund's lack of good faith, negligence or willful
misconduct which arise out of the breach of any
representation or warranty of the Fund hereunder.
(c) The reliance on or use by the Bank or its agents or
subcontractors of information, records, documents or
services which (i) are received by the Bank or its agents
or subcontractors, and (ii) have been prepared,
maintained or performed by the Fund or any other person
or firm on behalf of the Fund including but not limited
to any previous transfer agent or registrar.
(d) The reasonable reliance on, or the carrying out by the
Bank or its agents or subcontractors of any instructions
or requests of the Fund on behalf of the applicable
Portfolio.
(e) The offer or sale of Shares in violation of any
requirement under the federal securities laws or
regulations or the securities laws or regulations of any
state that such Shares be registered in such state or in
violation of any stop order or other determination or
ruling by any federal agency or any state with respect to
the offer or sale of such Shares in such state.
6.2 The Bank shall indemnify and hold the Fund and each Portfolio
thereof harmless from and against any and all losses, damages,
costs, charges, counsel fees, payments, expenses and liability
arising out of or attributed to any action or failure or omission
to act by the Bank as a result of the Bank's lack of good faith,
negligence or willful misconduct.
6.3 At any time the Bank may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to
any matter arising in connection with the services to be
performed by the Bank under this Agreement, and the Bank and its
agents or subcontractors shall not be liable and shall be
indemnified by the Fund on behalf of the applicable Portfolio for
any action taken or omitted by it in reasonable reliance upon
such instructions or upon the opinion of such counsel. The Bank,
its agents and subcontractors shall be protected and indemnified
in acting upon any paper or document furnished by or on behalf of
the Fund, reasonably believed to be genuine and to have been
signed by the proper person or persons, or upon any instruction,
information, data, records or documents provided the Bank or its
agents or subcontractors by machine readable input, telex, CRT
data entry or other similar means authorized by the Fund, and
shall not be held to have notice of any change of authority of
any person, until receipt of written notice thereof from the
Fund. The Bank, its agents and subcontractors shall also be
protected and indemnified in recognizing stock certificates which
are reasonably believed to bear the proper manual or facsimile
- 7 -
<PAGE>
signatures of the officers of the Fund, and the proper
countersignature of any former transfer agent or former
registrar, or of a co-transfer agent or co-registrar.
6.4 In order that the indemnification provisions contained in this
Section 6 shall apply, upon the assertion of a claim for which
either party may be required to indemnify the other, the party
seeking indemnification shall promptly notify the Fund of such
assertion, and shall keep the other party advised with respect to
all developments concerning such claim. The party who may be
required to indemnify shall have the option to participate with
the party seeking indemnification in the defense of such claim or
to defend against said claim in its own name or in the name of
the other party. The party seeking indemnification shall in no
case confess any claim or make any compromise in any case in
which the other party may be required to indemnify it except with
the other party's prior written consent.
7. Covenants of the Fund and the Bank
7.1 The Fund shall on behalf of each Portfolio promptly furnish to
the Bank the following:
(a) A certified copy of the resolution of the Trustees of the
Fund authorizing the appointment of the Bank and the
execution and delivery of this Agreement.
(b) A copy of the Trust Instrument and By-Laws of the Fund
and all amendments thereto.
7.2 The Bank hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of
stock certificates, check forms and facsimile signature
imprinting devices, if any; and for the preparation or use, and
for keeping account of, such certificates, forms and devices.
7.3 The Bank shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem
advisable. To the extent required by Section 31 of the
Investment Company Act of 1940, as amended, and the Rules
thereunder, the Bank agrees that all such records prepared or
maintained by the Bank relating to the services to be performed
by the Bank hereunder are the property of the Fund and will be
preserved, maintained and made available in accordance with such
Section and Rules, and will be surrendered promptly to the Fund
on and in accordance with its request.
7.4 The Bank and the Fund agree that all books, records, information
and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying
out of this Agreement shall remain confidential, and shall not be
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<PAGE>
voluntarily disclosed to any other person, except as may be
required by law.
7.5 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, the Bank will endeavor to notify
the Fund and to secure instructions from an authorized officer of
the Fund as to such inspection. The Bank reserves the right,
however, to exhibit the Shareholder records to any person
whenever it is advised by its counsel that it may be held liable
for the failure to exhibit the Shareholder records to such
person.
7.6 Notwithstanding any other provision of this Agreement, the
parties agree that the assets and liabilities of each Portfolio
of the Fund are separate and distinct from the assets and
liabilities of each other Portfolio and that no Portfolio shall
be liable or shall be charged for any debt, obligation or
liability of any other Portfolio, whether arising under this
Agreement or otherwise.
8. Termination of Agreement
8.1 This Agreement may be terminated by either party upon one hundred
twenty (120) days written notice to the other.
8.2 Should the Fund exercise its right to terminate, all
out-of-pocket expenses associated with the movement of records
and material will be borne by the Fund on behalf of the
applicable Portfolio(s). Additionally, the Bank reserves the
right to charge for any other reasonable expenses associated with
such termination.
9. Additional Funds
In the event that the Fund establishes one or more series of
Shares in addition to Neuberger & Berman Limited Maturity Bond
Trust, Neuberger & Berman Government Income Trust, and Neuberger
& Berman Ultra Short Bond Trust with respect to which it desires
to have the Bank render services as transfer agent under the
terms hereof, it shall so notify the Bank in writing, and if the
Bank agrees in writing to provide such services, such series of
Shares shall become a Portfolio hereunder.
10. Assignment
10.1 Except as provided in Section 10.3 below, neither this Agreement
nor any rights or obligations hereunder may be assigned by either
party without the written consent of the other party.
10.2 This Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and
assigns.
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<PAGE>
10.3 The Bank may, without further consent on the part of the Fund,
subcontract for the performance hereof with (i) Boston Financial
Data Services, Inc., a Massachusetts corporation ("BFDS") which
is duly registered as a transfer agent pursuant to Section
17A(c)(l) of the Securities Exchange Act of 1934, as amended
("Section 17A(c)(1)"), (ii) a BFDS subsidiary duly registered as
a transfer agent pursuant to Section 17A(c)(l) or (iii) a BFDS
affiliate; provided, however, that the Bank shall be as fully
responsible to the Fund for the acts and omissions of any
subcontractor as it is for its own acts and omissions.
11. Amendment
This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a
resolution of the Trustees of the Fund.
12. Massachusetts Law to Apply
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the
Commonwealth of Massachusetts.
13. Force Majeure
In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God,
strikes, equipment or transmission failure or damage reasonably
beyond its control, or other causes reasonably beyond its
control, such party shall not be liable for damages to the other
for any damages resulting from such failure to perform or
otherwise from such causes.
14. Consequential Damages
Neither party to this Agreement shall be liable to the other
party for consequential damages under any provision of this
Agreement.
15. Merger of Agreement
This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to
the subject matter hereof whether oral or written.
16. Limitations of Liability of the Trustees and Shareholders,
Officers, Employees and Agent
A copy of the Trust Instrument of the Fund is on file with the
Secretary of the State Of Delaware. The parties agree that
neither the Shareholders, Trustees, officers, employees nor any
agent of the Fund shall be liable hereunder and that the parties
- 10 -
<PAGE>
to this Agreement other than the Fund shall look solely to the
Fund property for the performance of this Agreement or payment of
any claim under this Agreement.
17. Counterparts
This Agreement may be executed by the parties hereto on any
number of counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same
instrument.
18. Notices
All notices, requests, consents and other communications
hereunder (collectively "communications") shall be in writing and
shall be personally delivered or mailed, first class postage
prepaid,
(a) if to the Fund, to
Neuberger & Berman Income Trust
605 Third Avenue
New York, N.Y. 10158
Attention: Michael J. Weiner
Vice President
(b) if to the Bank, to
Boston Financial Data Services, Inc.
Two Heritage Drive
North Quincy, MA 02171
Attn: Paul Alsama
or such other address as either party shall have furnished to the
other in writing; provided that any communication may be sent by
"tested" telex or any other form of electronic transmission
capable of producing a permanent record and agreed upon by the
parties in writing.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly
authorized officers, as of the day and year first above written.
NEUBERGER & BERMAN INCOME TRUST
BY: /s/ Michael Weiner
------------------------------
Michael Weiner
ATTEST:
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<PAGE>
/s/ Claudia A. Brandon
-----------------------
Claudia A. Brandon
STATE STREET BANK AND TRUST COMPANY
BY: /s/ Ronald E. Logue
------------------------------
Ronald E. Logue
Executive Vice President
ATTEST:
/s/ [Officer]
----------------------
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<PAGE>
STATE STREET BANK & TRUST COMPANY
FUND SERVICE RESPONSIBILITIES
Service Performed Responsibility
Bank Fund
1. Receives orders for the X X
purchase of Shares. (if in writing) (if by phone)
2. Issue Shares and hold Shares X
in Shareholders accounts.
3. Receive redemption requests. X X
(if in writing) (if by phone)
4. Effect transactions 1-3 X
above directly with broker- (2 is always
dealers. BFDS)
5. Pay over monies to redeeming X
Shareholders.
6. Effect transfers of Shares. X
7. Prepare and transmit X
dividends and distributions.
8. Issue Replacement X
Certificates.
9. Reporting of abandoned X
property.
10. Maintain records of account. X
11. Maintain and keep a current X
and accurate control book
for each issue of
securities.
12. Mail proxies. X
13. Mail Shareholder reports. X
14. Mail prospectuses to current X
Shareholders.
15. Withhold taxes on U.S. X
resident and non-resident
alien accounts.
16. Prepare and file U.S. X
Treasury Department forms.
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<PAGE>
Service Performed Responsibility
Bank Fund
17. Prepare and mail account and X
confirmation statements for
Shareholders.
18. Provide Shareholder account X
information.
19. Blue Sky reporting. X
* Such services are more fully described in Section 1.2 (a), (b) and
(c) of the Agreement.
NEUBERGER & BERMAN INCOME TRUST
BY: /s/ Michael Weiner
---------------------------------
Michael Weiner
ATTEST:
/s/ Claudia A. Brandon
---------------------------
Claudia A. Brandon
STATE STREET BANK AND TRUST COMPANY
BY: /s/ Ronald E. Logue
---------------------------------
Ronald E. Logue
Executive Vice President
ATTEST:
/s/ [Officer]
------------------------
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<PAGE>
<PAGE>
FIRST AMENDMENT TO THE
TRANSFER AGENCY AND SERVICE AGREEMENT
This First Amendment dated as of March _1_, 1995 between
Neuberger & Berman Income Trust, a Delaware business trust, having its
principal office and place of business at 605 Third Avenue, 2nd Floor, New
York, NY 10158-0006 (the "Fund") and State Street Bank and Trust Company,
a Massachusetts trust company having its principal office and place of
business at 225 Franklin Street, Boston, MA 02110 (the "Bank") is made to
the Transfer Agency and Service Agreement dated as of July 1, 1993 between
the Fund and the Bank (the "Agreement").
WHEREAS, pursuant to Section 10.3 of the Agreement, the
Bank has subcontracted certain of its duties, such as the receipt of net
orders for Fund shares (the "Shares"), to Boston Financial Data Services,
Inc. ("BFDS"); and
WHEREAS, BFDS provides its services through the DST
System and certain subsystems of DST, such as DFE (collectively, "DST");
and
WHEREAS, the Bank and the Fund desire to amend the terms
and conditions of the Agreement to provide for changes related to the use
of DST by the Fund and recordkeepers performing services for the Fund on
behalf of Neuberger & Berman Management, Inc. ("NBMI"), the Fund's
Administrator.
NOW, THEREFORE, in consideration of the promises and
mutual covenants hereinafter contained, the parties agree as follows:
Article 1. Duties of the Bank
The parties hereto agree that the Agreement is amended to
add Section 1.2(f) as follows:
Net orders may be transmitted to the Bank on DST or by
facsimile or telephone. The Bank is not authorized to
receive orders transmitted on DST from any party other
than (i) NBMI and (ii) those parties set forth on
Schedule A attached hereto, which shall be updated from
time to time by the Fund (the "Designated Parties").
The Bank shall receive written approval from the Fund
prior to authorizing any additional Designated Parties to
use DST to place orders for Fund Shares. A Designated
Party shall only be authorized to use DST to (i) transmit
net orders for the purchase and redemption of Shares and
(ii) review the account of that Designated Party's
historical transactions. NBMI and the Designated Parties
are authorized to place orders for trades received before
4:00 p.m. EST on a business day the New York Stock
Exchange is open for business ("Business Day"), up to
9:30 p.m. EST that Business Day. No transactions
<PAGE>
occurring on a given Business Day are authorized to be
transmitted on DST on the next Business Day.
Article 2. Miscellaneous
(a) All other terms and conditions of the Agreement remain in
full force and effect.
(b) Terms used herein but not defined herein shall have the
meanings set forth in the Agreement.
(c) This First Amendment may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same First Amendment.
Attest: NEUBERGER & BERMAN INCOME TRUST
/s/ Stacy Cooper-Shugrue By: /s/ Daniel J. Sullivan
---------------------------- --------------------------------
Assistant Secretary Title: V.P.
Attest: STATE STREET BANK AND
TRUST COMPANY
/s/ S. Cesso /s/ Ronald E. Logue
---------------------------- By:----------------------------
S. Cesso Title: Exec. V.P.
- 2 -
<PAGE>
SCHEDULE A
DESIGNATED PARTIES
HEWITT SERVICES
STATE STREET BANK AND TRUST COMPANY
FEDERATED RETIREMENT PLAN SERVICES
THE SHAREHOLDERS SERVICES GROUP
WILLIAM M. MERCER PLAN PARTICIPANT SERVICES
- 3 -
<PAGE>
<PAGE>
ADMINISTRATION AGREEMENT
This Agreement is made as of July 12, 1993, between Neuberger
& Berman Income Trust, a Delaware business trust ("Trust"), and Neuberger
& Berman Management Incorporated, a New York corporation
("Administrator").
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as an open-end, diversified management
investment company and has established several separate series of shares
("Series"), with each Series having its own assets and investment
policies; and
WHEREAS, the Trust desires to retain the Administrator to furnish
administrative services, including shareholder accounting, recordkeeping,
and other services to shareholders, to each Series listed in Schedule A
attached hereto, and to such other Series of the Trust hereinafter
established as agreed to from time to time by the parties, evidenced by an
addendum to Schedule A (hereinafter "Series" shall refer to each Series
which is subject to this Agreement and all agreements and actions
described herein to be made or taken by a Series shall be made or taken by
the Trust on behalf of the Series), and the Administrator is willing to
furnish such services,
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties agree as follows:
1. SERVICES OF THE ADMINISTRATOR.
------------------------------
1.1 ADMINISTRATIVE SERVICES. The Administrator shall
supervise each Series's business and affairs and shall provide such
services required for effective administration of such Series as are not
provided by employees or other agents engaged by such Series; PROVIDED,
that the Administrator shall not have any obligation to provide under this
Agreement any direct or indirect services to a Series's shareholders, any
services related to the distribution of a Series's shares, or any other
services that are the subject of a separate agreement or arrangement
between a Series and the Administrator. Subject to the foregoing, in
providing administrative services hereunder, the Administrator shall:
1.1.1 OFFICE SPACE, EQUIPMENT AND FACILITIES. Furnish
without cost to each Series, or pay the cost of, such office space, office
equipment and office facilities as are adequate for the Series's needs;
1.1.2 PERSONNEL. Provide, without remuneration from or
other cost to each Series, the services of individuals competent to
perform all of the Series's executive, administrative and clerical
functions that are not performed by employees or other agents engaged by
the Series or by the Administrator acting in some other capacity pursuant
to a separate agreement or arrangement with the Series;
<PAGE>
1.1.3 AGENTS. Assist each Series in selecting and
coordinating the activities of the other agents engaged by the Series,
including the Series's shareholder servicing agent, custodian, independent
auditors and legal counsel;
1.1.4 TRUSTEES AND OFFICERS. Authorize and permit the
Administrator's directors, officers or employees who may be elected or
appointed as trustees or officers of the Trust to serve in such
capacities, without remuneration from or other cost to the Trust or any
Series;
1.1.5 BOOKS AND RECORDS. Assure that all financial,
accounting and other records required to be maintained and preserved by
each Series are maintained and preserved by it or on its behalf in
accordance with applicable laws and regulations; and
1.1.6 REPORTS AND FILINGS. Assist in the preparation
of (but not pay for) all periodic reports by each Series to shareholders
of such Series and all reports and filings required to maintain the
registration and qualification of the Series and the Series's shares, or
to meet other regulatory or tax requirements applicable to the Series,
under federal and state securities and tax laws.
1.2 SHAREHOLDER AND RELATED SERVICES. The Administrator
shall provide each of the following services as may be required by any
Series, its shareholders (each of which must be either a broker-dealer,
pension plan administrator, or other institution that provides certain
accounting, recordkeeping and other services to its accounts ("Accounts")
and which has entered into an administrative services agreement with the
Administrator (each, an "Institution"), or the Accounts, as specified;
PROVIDED, that the Administrator's obligation to furnish any service to
Accounts or Account holders of any Institution shall be dependent upon
receipt of all necessary information from that Institution:
1.2.1 PURCHASE ORDERS. Receive for acceptance, as
agent for the Series, orders from Institutions and Accounts for the
purchase of Series shares transmitted or delivered to the office of the
Administrator, note the time and date of each order when received,
promptly deliver payment for such purchases to the Series' custodian
("Custodian"), and coordinate with the Series or its designees for the
issuance of the appropriate number of shares so purchased to the
appropriate Institution or Account;
1.2.2 RECORDS. Maintain records of the number of
shares of each Series attributable to each Account (including name,
address and taxpayer identification number), record all changes to such
shares held in each Account on a daily basis, and furnish to each Series
each business day the total number of shares of such Series attributable
to all Accounts;
1.2.3 REDEMPTION REQUESTS. Receive for acceptance
requests and directions from Institutions and Accounts for the redemption
- 2 -
<PAGE>
of Series shares transmitted or delivered to the office of the
Administrator, note the time and date of each request when received,
process such requests and directions in accordance with the redemption
procedures set forth in the then current Prospectus and Statement of
Additional Information ("SAI") of the Series, and deliver the appropriate
documentation to the Custodian;
1.2.3 WIRE TRANSFERS. Coordinate and implement
bank-to-bank wire transfers in connection with Series share purchases and
redemptions by Institutions;
1.2.4 REDEMPTION PAYMENTS. Upon receipt of monies paid
to it by the Custodian with respect to any redemption of Series shares,
pay or cause such monies to be paid pursuant to instructions by the
appropriate Account or Institution.
1.2.5 EXCHANGES. Receive and execute orders from
Accounts and Institutions to exchange shares by concurrent purchases and
redemptions of shares of a Series and shares of other Series or of other
investment companies or series thereof pursuant to each Series's then
current Prospectus and SAI;
1.2.6 DIVIDENDS. Based upon information received from
a Series regarding dividends or other distributions on Series shares,
calculate the dividend or distribution attributable to each Account; if
such dividend or distribution is payable in shares or by reinvestment in
shares, calculate such shares for each Account and record same in the
share records for each Account, and if such dividend or distribution is
payable in cash, upon receipt of monies therefor from the Custodian, pay
or cause such monies to be paid to the appropriate Account or as such
Account may direct;
1.2.7 INQUIRIES. Respond to telephonic, mail, and
in-person inquiries from Institutions, Account holders, or their
representatives requesting information regarding matters such as
shareholder account or transaction status, net asset value ("NAV") of
Series shares, Series performance, Series services, plans and options,
Series investment policies, Series portfolio holdings, and Series
distributions and taxation thereof;
1.2.8 COMPLAINTS. Deal with complaints and
correspondence of Institutions and Account holders directed to or brought
to the attention of the Administrator;
1.2.9 REPORTS; PROXIES. Distribute as appropriate to
all Account holders all Series reports, dividend and distribution notices,
and proxy material relating to any meeting of Series shareholders, and
soliciting, processing and tabulating proxies for such meetings;
1.2.10 SPECIAL REPORTS. Generate or develop and
distribute special data, notices, reports, programs and literature
- 3 -
<PAGE>
required by Institutions or by Account holders generally in light of
developments, such as changes in tax laws; and
1.2.11 AGENTS. Assist any institutional servicing
agent ("Agent") engaged by the Series in the development, implementation
and maintenance of the following special programs and systems to enhance
each Series's capability to service its shareholders and Account holders
servicing capability:
(a) Training programs for personnel of such Agent;
(b) Joint programs with such Agent for the
development of systems software, shareholder information reports, and
other special reports;
(c) Automatic data exchange facilities with
shareholders and such Agent;
(d) Automated clearing house transfer procedures
between shareholders and such Agent; and
(e) Touch-tone telephone information and transaction
systems for shareholders.
2. EXPENSES OF EACH SERIES.
-----------------------
2.1 EXPENSES TO BE PAID BY THE ADMINISTRATOR. The
Administrator shall pay all salaries, expenses and fees of the officers,
trustees, or employees of the Trust who are officers, directors or
employees of the Administrator. If the Administrator pays or assumes any
expenses of the Trust or a Series not required to be paid or assumed by
the Administrator under this Agreement, the Administrator shall not be
obligated hereby to pay or assume the same or any similar expense in the
future; PROVIDED, that nothing herein contained shall be deemed to relieve
the Administrator of any obligation to the Trust or to a Series under any
separate agreement or arrangement between the parties.
2.2 EXPENSES TO BE PAID BY THE SERIES. Each Series shall
bear all expenses of its operation, except those specifically allocated to
the Administrator under this Agreement or under any separate agreement
between such Series and the Administrator. Expenses to be borne by such
Series shall include both expenses directly attributable to the operation
of that Series and the offering of its shares, as well as the portion of
any expenses of the Trust that is properly allocable to such Series in a
manner approved by the trustees of the Trust ("Trustees"). Subject to any
separate agreement or arrangement between the Trust or a Series and the
Administrator, the expenses hereby allocated to each Series, and not to
the Administrator, include, but are not limited to:
- 4 -
<PAGE>
2.2.1 CUSTODY. All charges of depositories,
custodians, and other agents for the transfer, receipt, safekeeping, and
servicing of its cash, securities, and other property;
2.2.2 SHAREHOLDER SERVICING. All expenses of
maintaining and servicing shareholder accounts, including but not limited
to the charges of any shareholder servicing agent, dividend disbursing
agent or other agent (other than the Administrator hereunder) engaged by a
Series to service shareholder accounts;
2.2.3 SHAREHOLDER REPORTS. All expenses of preparing,
setting in type, printing and distributing reports and other
communications to shareholders of a Series;
2.2.4 PROSPECTUSES. All expenses of preparing, setting
in type, printing and mailing annual or more frequent revisions of a
Series's Prospectus and SAI and any supplements thereto and of supplying
them to shareholders of the Series and Account holders;
2.2.5 PRICING AND PORTFOLIO VALUATION. All expenses of
computing a Series's net asset value ("NAV") per share, including any
equipment or services obtained for the purpose of pricing shares or
valuing the Series's investment portfolio;
2.2.6 COMMUNICATIONS. All charges for equipment or
services used for communications between the Administrator or the Series
and any custodian, shareholder servicing agent, portfolio accounting
services agent, or other agent engaged by a Series;
2.2.7 LEGAL AND ACCOUNTING FEES. All charges for
services and expenses of a Series's legal counsel and independent
auditors;
2.2.8 TRUSTEES' FEES AND EXPENSES. All compensation of
Trustees other than those affiliated with the Administrator, all expenses
incurred in connection with such unaffiliated Trustees' services as
Trustees, and all other expenses of meetings of the Trustees or committees
thereof;
2.2.9 SHAREHOLDER MEETINGS. All expenses incidental to
holding meetings of shareholders, including the printing of notices and
proxy materials, and proxy solicitation therefor;
2.2.10 FEDERAL REGISTRATION FEES. All fees and
expenses of registering and maintaining the registration of the Trust and
each Series under the 1940 Act and the registration of each Series's
shares under the Securities Act of 1933 (the "1933 Act"), including all
fees and expenses incurred in connection with the preparation, setting in
type, printing, and filing of any Registration Statement, Prospectus and
SAI under the 1933 Act or the 1940 Act, and any amendments or supplements
that may be made from time to time;
- 5 -
<PAGE>
2.2.11 STATE REGISTRATION FEES. All fees and expenses
of qualifying and maintaining the qualification of the Trust and each
Series and of each Series's shares for sale under securities laws of
various states or jurisdictions, and of registration and qualification of
each Series under all other laws applicable to a Series or its business
activities (including registering the Series as a broker-dealer, or any
officer of the Series or any person as agent or salesman of the Series in
any state);
2.2.12 SHARE CERTIFICATES. All expenses of preparing
and transmitting a Series's share certificates, if any;
2.2.13 CONFIRMATIONS. All expenses incurred in
connection with the issue and transfer of a Series's shares, including the
expenses of confirming all share transactions;
2.2.14 BONDING AND INSURANCE. All expenses of bond,
liability, and other insurance coverage required by law or regulation or
deemed advisable by the Trustees, including, without limitation, such
bond, liability and other insurance expense that may from time to time be
allocated to the Series in a manner approved by the Trustees;
2.2.15 BROKERAGE COMMISSIONS. All brokers'
commissions and other charges incident to the purchase, sale or lending of
a Series's portfolio securities;
2.2.16 TAXES. All taxes or governmental fees payable
by or with respect to a Series to federal, state or other governmental
agencies, domestic or foreign, including stamp or other transfer taxes;
2.2.17 TRADE ASSOCIATION FEES. All fees, dues and
other expenses incurred in connection with a Series's membership in any
trade association or other investment organization;
2.2.18 NONRECURRING AND EXTRAORDINARY EXPENSES. Such
nonrecurring and extraordinary expenses as may arise, including the costs
of actions, suits, or proceedings to which the Series is a party and the
expenses a Series may incur as a result of its legal obligation to provide
indemnification to the Trust's officers, Trustees and agents;
2.2.19 ORGANIZATIONAL EXPENSES. All organizational
expenses of each Series paid or assessed by the Administrator, which such
Series shall reimburse to the Administrator at such time or times and
subject to such condition or conditions as shall be specified in the
Prospectus and SAI pursuant to which such Series makes the initial public
offering of its shares; and
2.2.20 INVESTMENT ADVISORY SERVICES. Any fees and
expenses for investment advisory services that may be incurred or
contracted for by a Series.
- 6 -
<PAGE>
3. ADMINISTRATION FEE.
------------------
3.1 FEE. As compensation for all services rendered,
facilities provided and expenses paid or assumed by the Administrator to
or for each Series under this Agreement, such Series shall pay the
Administrator an annual fee as set out in Schedule B to this Agreement.
3.2 COMPUTATION AND PAYMENT OF FEE. The administration fee
shall accrue on each calendar day, and shall be payable monthly on the
first business day of the next succeeding calendar month. The daily fee
accruals for each Series shall be computed by multiplying the fraction of
one divided by the number of days in the calendar year by the applicable
annual administration fee rate (as set forth in Schedule B hereto), and
multiplying this product by the NAV of such Series, determined in the
manner set forth in such Series's then-current Prospectus, as of the close
of business on the last preceding business day on which such Series's NAV
was determined.
3.3 STATE EXPENSE LIMITATION. If in any fiscal year a
Series's operating expenses plus such Series's pro rata portion of the
operating expenses of any portfolio of Income Managers Trust in which such
Series invests all or substantially all of its assets ("Aggregate
Operating Expenses"), which includes any fees or expense reimbursements
payable to the Administrator pursuant to this Agreement and any
compensation payable to the Administrator pursuant to (i) the Management
Agreement between such portfolio and the Administrator, or (ii) any other
agreement or arrangement with respect to such Series, but excluding
interest, taxes, brokerage commissions, litigation and indemnification
expenses, and other extraordinary expenses not incurred in the ordinary
course of such Series's business) exceed the lowest applicable percentage
expense limitation imposed under the securities law and regulations of any
state in which such Series's shares are qualified for sale (the "State
Expense Limitation"), then the administration fee payable to the
Administrator under this Agreement by such Series shall be reduced by the
amount of such excess; PROVIDED, that the Administrator shall have no
obligation hereunder to reimburse the Series for any such expenses which
exceed such administration fee.
Any reduction in the administration fee shall be made
monthly, by annualizing the Aggregate Operating Expenses of such Series
for each month as of the last day of such month. An adjustment shall be
made on or before the last day of the first month of the next succeeding
fiscal year if Aggregate Operating Expenses for such Series's fiscal year
do not exceed the State Expense Limitation or if for such fiscal year
there is no applicable State Expense Limitation.
4. OWNERSHIP OF RECORDS. All records required to be maintained
and preserved by each Series pursuant to the provisions or rules or
regulations of the Securities and Exchange Commission ("SEC") under
Section 31(a) of the 1940 Act and maintained and preserved by the
Administrator on behalf of such Series are the property of such Series and
- 7 -
<PAGE>
shall be surrendered by the Administrator promptly on request by the
Series; PROVIDED, that the Administrator may at its own expense make and
retain copies of any such records.
5. REPORTS TO ADMINISTRATOR. Each Series shall furnish or
otherwise make available to the Administrator such copies of that Series's
Prospectus, SAI, financial statements, proxy statements, reports, and
other information relating to its business and affairs as the
Administrator may, at any time or from time to time, reasonably require in
order to discharge its obligations under this Agreement.
6. REPORTS TO EACH SERIES. The Administrator shall prepare and
furnish to each Series such reports, statistical data and other
information in such form and at such intervals as such Series may
reasonably request.
7. OWNERSHIP OF SOFTWARE AND RELATED MATERIALS. All computer
programs, written procedures and similar items developed or acquired and
used by the Administrator in performing its obligations under this
Agreement shall be the property of the Administrator, and no Series will
acquire any ownership interest therein or property rights with respect
thereto.
8. CONFIDENTIALITY. The Administrator agrees, on its own behalf
and on behalf of its employees, agents and contractors, to keep
confidential any and all records maintained and other information obtained
hereunder which relates to any Series or to any of a Series's former,
current or prospective shareholders, EXCEPT that the Administrator may
deliver records or divulge information (a) when requested to do so by duly
constituted authorities after prior notification to and approval in
writing by such Series (which approval will not be unreasonably withheld
and may not be withheld by such Series where the Administrator advises
such Series that it may be exposed to civil or criminal contempt
proceedings or other penalties for failure to comply with such request) or
(b) whenever requested in writing to do so by such Series.
9. THE ADMINISTRATOR'S ACTIONS IN RELIANCE ON SERIES'
INSTRUCTIONS, LEGAL OPINIONS, ETC.; SERIES' COMPLIANCE WITH LAWS.
9.1 The Administrator may at any time apply to an officer
of the Trust for instructions, and may consult with legal counsel for a
Series or with the Administrator's own legal counsel, in respect of any
matter arising in connection with this Agreement; and the Administrator
shall not be liable for any action taken or omitted to be taken in good
faith in and with due care in accordance with such instructions or with
the advice or opinion of such legal counsel. The Administrator shall be
protected in acting upon any such instructions, advice or opinion and upon
any other paper or document delivered by a Series or such legal counsel
which the Administrator believes to be genuine and to have been signed by
the proper person or persons, and the Administrator shall not be held to
have notice of any change of status or authority of any officer or
- 8 -
<PAGE>
representative of the Trust, until receipt of written notice thereof from
the Series.
9.2 Except as otherwise provided in this Agreement or in
any separate agreement between the parties and except for the accuracy of
information furnished to each Series by the Administrator, each Series
assumes full responsibility for the preparation, contents, filing and
distribution of its Prospectus and SAI, and full responsibility for other
documents or actions required for compliance with all applicable
requirements of the 1940 Act, the Securities Exchange Act of 1934, the
1933 Act, and any other applicable laws, rules and regulations of
governmental authorities having jurisdiction over such Series.
10. SERVICES TO OTHER CLIENTS. Nothing herein contained shall
limit the freedom of the Administrator or any affiliated person of the
Administrator to render administrative or shareholder services to other
investment companies, to act as administrator to other persons, firms, or
corporations, or to engage in other business activities.
11. LIMITATION OF LIABILITY REGARDING THE TRUST. The
Administrator shall look only to the assets of each Series for performance
of this Agreement by the Trust on behalf of such Series, and neither the
Trustees of the Trust ("Trustees") nor any of the Trust's officers,
employees or agents, whether past, present or future shall be personally
liable therefor.
12. INDEMNIFICATION BY SERIES. Each Series shall indemnify the
Administrator and hold it harmless from and against any and all losses,
damages and expenses, including reasonable attorneys' fees and expenses,
incurred by the Administrator that result from: (i) any claim, action,
suit or proceeding in connection with the Administrator's entry into or
performance of this Agreement with respect to such Series; or (ii) any
action taken or omission to act committed by the Administrator in the
performance of its obligations hereunder with respect to such Series; or
(iii) any action of the Administrator upon instructions believed in good
faith by it to have been executed by a duly authorized officer or
representative of the Trust with respect to such Series; PROVIDED, that
the Administrator shall not be entitled to such indemnification in respect
of actions or omissions constituting negligence or misconduct on the part
of the Administrator or its employees, agents or contractors. Before
confessing any claim against it which may be subject to indemnification by
a Series hereunder, the Administrator shall give such Series reasonable
opportunity to defend against such claim in its own name or in the name of
the Administrator.
13. INDEMNIFICATION BY THE ADMINISTRATOR. The Administrator
shall indemnify each Series and hold it harmless from and against any and
all losses, damages and expenses, including reasonable attorneys' fees and
expenses, incurred by such Series which result from: (i) the
Administrator's failure to comply with the terms of this Agreement with
respect to such Series; or (ii) the Administrator's lack of good faith in
performing its obligations hereunder with respect to such Series; or (iii)
- 9 -
<PAGE>
the Administrator's negligence or misconduct or its employees, agents or
contractors in connection herewith with respect to such Series. A Series
shall not be entitled to such indemnification in respect of actions or
omissions constituting negligence or misconduct on the part of that Series
or its employees, agents or contractors other than the Administrator
unless such negligence or misconduct results from or is accompanied by
negligence or misconduct on the part of the Administrator, any affiliated
person of the Administrator, or any affiliated person of an affiliated
person of the Administrator. Before confessing any claim against it which
may be subject to indemnification hereunder, a Series shall give the
Administrator reasonable opportunity to defend against such claim in its
own name or in the name of the Trust on behalf of such Series.
14. EFFECT OF AGREEMENT. Nothing herein contained shall be
deemed to require the Trust or any Series to take any action contrary to
the Trust Instrument or By-laws of the Trust or any applicable law,
regulation or order to which it is subject or by which it is bound, or to
relieve or deprive the Trustees of their responsibility for and control of
the conduct of the business and affairs of the Series or Trust.
15. TERM OF AGREEMENT. The term of this Agreement shall begin on
the date first above written with respect to each Series listed in
Schedule A on the date hereof and, unless sooner terminated as hereinafter
provided, this Agreement shall remain in effect through July 12, 1995.
With respect to each Series added by execution of an Addendum to Schedule
A, the term of this Agreement shall begin on the date of such execution
and, unless sooner terminated as hereinafter provided, this Agreement
shall remain in effect to the date two years after such execution.
Thereafter, in each case this Agreement shall continue in effect with
respect to each Series from year to year, subject to the termination
provisions and all other terms and conditions hereof; PROVIDED, such
continuance with respect to a Series is approved at least annually by vote
or written consent of the Trustees, including a majority of the Trustees
who are not interested persons of either party hereto ("Disinterested
Trustees"); and PROVIDED FURTHER, that the Administrator shall not have
notified a Series in writing at least sixty days prior to the first
expiration date hereof or at least sixty days prior to any expiration date
in any year thereafter that it does not desire such continuation. The
Administrator shall furnish any Series, promptly upon its request, such
information as may reasonably be necessary to evaluate the terms of this
Agreement or any extension, renewal or amendment thereof.
16. AMENDMENT OR ASSIGNMENT OF AGREEMENT. Any amendment to this
Agreement shall be in writing signed by the parties hereto; PROVIDED, that
no such amendment shall be effective unless authorized on behalf of any
Series (i) by resolution of the Trustees, including the vote or written
consent of a majority of the Disinterested Trustees, and (ii) by vote of a
majority of the outstanding voting securities of such Series. This
Agreement shall terminate automatically and immediately in the event of
its assignment; provided, that with the consent of a Series, the
Administrator may subcontract to another person any of its
responsibilities with respect to such Series.
- 10 -
<PAGE>
17. TERMINATION OF AGREEMENT. This Agreement may be terminated
at any time by either party hereto, without the payment of any penalty,
upon at least sixty days' prior written notice to the other party;
PROVIDED, that in the case of termination by any Series, such action shall
have been authorized (i) by resolution of the Trustees, including the vote
or written consent of the Disinterested Trustees, or (ii) by vote of a
majority of the outstanding voting securities of such Series.
18. NAME OF A SERIES. Each Series hereby agrees that if the
Administrator shall at any time for any reason cease to serve as
administrator to a Series, such Series shall, if and when requested by the
Administrator, eliminate from such Series's name the name "Neuberger &
Berman" and thereafter refrain from using the name "Neuberger & Berman" or
the initials "N&B" in connection with its business or activities, and the
foregoing agreement of each Series shall survive any termination of this
Agreement and any extension or renewal thereof.
19. INTERPRETATION AND DEFINITION OF TERMS. Any question of
interpretation of any term or provision of this Agreement having a
counterpart in or otherwise derived from a term or provision of the Act
shall be resolved by reference to such term or provision of the 1940 Act
and to interpretation thereof, if any, by the United States courts or, in
the absence of any controlling decision of any such court, by rules,
regulations or orders of the SEC validly issued pursuant to the 1940 Act.
Specifically, the terms "vote of a majority of the outstanding voting
securities," "interested persons," "assignment" and "affiliated person,"
as used in this Agreement shall have the meanings assigned to them by
Section 2(a) of the 1940 Act. In addition, when the effect of a
requirement of the 1940 Act reflected in any provision of this Agreement
is modified, interpreted or relaxed by a rule, regulation or order of the
SEC, whether of special or of general application, such provision shall be
deemed to incorporate the effect of such rule, regulation or order.
20. CHOICE OF LAW. This Agreement is made and to be principally
performed in the State of New York, and except insofar as the Act or other
federal laws and regulations may be controlling, this Agreement shall be
governed by, and construed and enforced in accordance with, the internal
laws of the State of New York.
21. CAPTIONS. The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
22. EXECUTION IN COUNTERPARTS. This Agreement may be executed
simultaneously in counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
- 11 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officers thereunto duly
authorized and their respective seals to be hereunto affixed, as of the
day and year first above written.
NEUBERGER & BERMAN INCOME TRUST
Attest: By: /s/ Daniel J. Sullivan
---------------------------
/s/ Claudia A. Brandon Vice President
----------------------- ---------------------------
Secretary Title
NEUBERGER & BERMAN MANAGEMENT INCORPORATED
Attest: By: /s/ Stanley Egener
--------------------------
/s/ Ellen Metzger President
---------------------- --------------------------
Secretary Title
- 12 -
<PAGE>
<PAGE>
NEUBERGER & BERMAN INCOME TRUST
ADMINISTRATION AGREEMENT
SCHEDULE A
The Series of Neuberger & Berman Income Trust currently subject to
this Agreement are as follows:
Neuberger & Berman Limited Maturity Bond Trust
Neuberger & Berman Ultra Short Bond Trust
DATED: December 20, 1995
<PAGE>
<PAGE>
NEUBERGER & BERMAN INCOME TRUST
ADMINISTRATION AGREEMENT
SCHEDULE B
Compensation pursuant to Paragraph 3 of the Neuberger & Berman
Income Trust Administration Agreement shall be 0.50% per annum of the
average daily net assets of each Series.
Dated: July 12, 1993
<PAGE>
<PAGE>
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights" in the Prospectus and "Reports to Shareholders," "Independent
Auditors" and "Financial Statements" in the Statement of Additional
Information in Post-Effective Amendment Number 3 to the Registration
Statement (Form N-1A No. 33-62872) of Neuberger&Berman Income Trust, and
to the incorporation by reference of our reports dated December 1, 1995 on
the Neuberger&Berman Limited Maturity Bond Trust and Neuberger&Berman
Ultra Short Bond Trust, and on Neuberger&Berman Limited Maturity Bond
Portfolio and Neuberger&Berman Ultra Short Bond Portfolio, included in the
1995 Annual Report to Shareholders of Neuberger&Berman Income Trust.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Boston, Massachusetts
February 22, 1996
<PAGE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman Ultra Short Bond Trust Annual Report and is qualified in
its entirety by reference to such document.
</LEGEND>
<CIK> 0000905235
<NAME> NEUBERGER&BERMAN INCOME TRUST
<SERIES>
<NUMBER> 01
<NAME> NEUBERGER&BERMAN ULTRA SHORT BOND TRUST
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 1,738
<RECEIVABLES> 211
<ASSETS-OTHER> 31
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,980
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 240
<TOTAL-LIABILITIES> 240
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,745
<SHARES-COMMON-STOCK> 177
<SHARES-COMMON-PRIOR> 126
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (8)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3
<NET-ASSETS> 1,740
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 92
<OTHER-INCOME> 0
<EXPENSES-NET> 11
<NET-INVESTMENT-INCOME> 81
<REALIZED-GAINS-CURRENT> (1)
<APPREC-INCREASE-CURRENT> 9
<NET-CHANGE-FROM-OPS> 88
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (81)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 183
<NUMBER-OF-SHARES-REDEEMED> (140)
<SHARES-REINVESTED> 8
<NET-CHANGE-IN-ASSETS> 504
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (6)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 115
<AVERAGE-NET-ASSETS> 1,488
<PER-SHARE-NAV-BEGIN> 9.79
<PER-SHARE-NII> .53
<PER-SHARE-GAIN-APPREC> .06
<PER-SHARE-DIVIDEND> (.53)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.85
<EXPENSE-RATIO> .72
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<PAGE>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman Limited Maturity Bond Trust Annual Report and is qualified
in its entirety by reference to such document.
</LEGEND>
<CIK> 0000905235
<NAME> NEUBERGER&BERMAN INCOME TRUST
<SERIES>
<NUMBER> 02
<NAME> NEUBERGER&BERMAN LIMITED MATURITY BOND TRUST
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 11,734
<RECEIVABLES> 182
<ASSETS-OTHER> 30
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 11,946
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 31
<TOTAL-LIABILITIES> 31
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 11,842
<SHARES-COMMON-STOCK> 1,240
<SHARES-COMMON-PRIOR> 711
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (33)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 106
<NET-ASSETS> 11,915
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 604
<OTHER-INCOME> 0
<EXPENSES-NET> (67)
<NET-INVESTMENT-INCOME> 537
<REALIZED-GAINS-CURRENT> (13)
<APPREC-INCREASE-CURRENT> 181
<NET-CHANGE-FROM-OPS> 705
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (537)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 694
<NUMBER-OF-SHARES-REDEEMED> (221)
<SHARES-REINVESTED> 56
<NET-CHANGE-IN-ASSETS> (5,207)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (13)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 191
<AVERAGE-NET-ASSETS> 8,725
<PER-SHARE-NAV-BEGIN> 9.43
<PER-SHARE-NII> .58
<PER-SHARE-GAIN-APPREC> .18
<PER-SHARE-DIVIDEND> (.58)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.61
<EXPENSE-RATIO> .77
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
</FN>
<PAGE>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger& Berman Ultra Short Bond Portfolio Annual Report and is qualified
in its entirety by reference to such document.
</LEGEND>
<CIK> 0000908473
<NAME> INCOME MANAGERS TRUST
<SERIES>
<NUMBER> 05
<NAME> NEUBERGER&BERMAN ULTRA SHORT BOND PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 105,064
<INVESTMENTS-AT-VALUE> 105,251
<RECEIVABLES> 1,188
<ASSETS-OTHER> 9
<OTHER-ITEMS-ASSETS> 3
<TOTAL-ASSETS> 106,451
<PAYABLE-FOR-SECURITIES> 4,314
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 71
<TOTAL-LIABILITIES> 4,385
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 93,075
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 10,833
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,029)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 187
<NET-ASSETS> 102,066
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5,566
<OTHER-INCOME> 0
<EXPENSES-NET> (366)
<NET-INVESTMENT-INCOME> 5,200
<REALIZED-GAINS-CURRENT> (331)
<APPREC-INCREASE-CURRENT> 842
<NET-CHANGE-FROM-OPS> 5,711
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 90
<ACCUMULATED-NII-PRIOR> 5,633
<ACCUMULATED-GAINS-PRIOR> (1,698)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 229
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 366
<AVERAGE-NET-ASSETS> 91,629
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .40
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
</FN>
<PAGE>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman Limited Maturity Bond Portfolio Annual Report and is
qualified in its entirety by reference to such document.
</LEGEND>
<CIK> 0000908473
<NAME> INCOME MANAGERS TRUST
<SERIES>
<NUMBER> 06
<NAME> NEUBERGER&BERMAN LIMITED MATURITY BOND PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 315,538
<INVESTMENTS-AT-VALUE> 316,359
<RECEIVABLES> 3,483
<ASSETS-OTHER> 32
<OTHER-ITEMS-ASSETS> 4
<TOTAL-ASSETS> 319,878
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 232
<TOTAL-LIABILITIES> 232
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 280,754
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 46,022
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (7,857)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 727
<NET-ASSETS> 319,646
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 21,191
<OTHER-INCOME> 0
<EXPENSES-NET> (1,027)
<NET-INVESTMENT-INCOME> 20,164
<REALIZED-GAINS-CURRENT> (3,626)
<APPREC-INCREASE-CURRENT> 9,092
<NET-CHANGE-FROM-OPS> 25,630
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3,521
<ACCUMULATED-NII-PRIOR> 25,858
<ACCUMULATED-GAINS-PRIOR> (4,231)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 769
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,027
<AVERAGE-NET-ASSETS> 307,733
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .33
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
</FN>
<PAGE>
</TABLE>
