As filed with the Securities and Exchange Commission on August 5, 1998
1933 Act Registration No. 33-64368
1940 Act Registration No. 811-7784
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. [ 14 ] [ X ]
---- ----
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
---
Amendment No. [ 12 ] [ X ]
---- ---
(Check appropriate box or boxes)
NEUBERGER & BERMAN EQUITY TRUST
-------------------------------
(Exact Name of the Registrant as Specified in Charter)
605 Third Avenue, 2nd Floor
New York, New York 10158-0180
(Address of Principal Executive Offices)
Registrant's Telephone Number, including area code: (212) 476-8800
Lawrence Zicklin, President
Neuberger & Berman Equity Trust
605 Third Avenue, 2nd Floor
New York, New York 10158-0180
Arthur C. Delibert, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
2nd Floor
Washington, D.C. 20036-1800
(Names and Addresses of agents for service)
Approximate Date of Proposed Public Offering: Continuous
It is proposed that this filing will become effective:
___ immediately upon filing pursuant to paragraph (b)
___ on ________________ pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a)(1)
___ on _______________, pursuant to paragraph (a)(1)
X 75 days after filing pursuant to paragraph (a)(2)
- ---
___ on _______________, pursuant to paragraph (a)(2)
Neuberger & Berman Equity Trust is a "master/feeder fund." This
Post-Effective Amendment No. 13 includes a signature page for the master fund,
Equity Managers Trust, and appropriate officers and trustees thereof.
Page _______ of _______
Exhibit Index Begins on
Page _______
<PAGE>
NEUBERGER & BERMAN EQUITY TRUST
CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 14 ON FORM N-1A
This post-effective amendment consists of the following papers and
documents:
Cover Sheet
Contents of Post-Effective Amendment No. 14 on Form N-1A
Cross Reference Sheets
Neuberger & Berman Small Cap Growth Trust
- -----------------------------------------
Part A - Prospectus
Part B - Statement of Additional Information
Part C - Other Information
Signature Pages
Exhibits
No change is intended to be made by this Post-Effective Amendment No. 14
to the prospectuses or statements of additional information for Neuberger &
Berman Focus Trust, Neuberger & Berman Genesis Trust, Neuberger & Berman
Guardian Trust, Neuberger & Berman International Trust, Neuberger & Berman
Manhattan Trust, Neuberger & Berman Partners Trust, or Neuberger & Berman
Socially Responsive Trust.
-2-
<PAGE>
NEUBERGER & BERMAN EQUITY TRUST
POST-EFFECTIVE AMENDMENT NO. 14 ON FORM N-1A
Cross Reference Sheet
Prospectus and Statement of Additional Information for
Neuberger & Berman Small Cap Growth 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 Information Performance Information
Item 4. General Description of Registrant Investment Program; Description of Investments; Special
Information Regarding Organization, Capitalization, and
Other Matters
Item 5. Management of the Fund Management and Administration; Other Information; Back
Cover Page
Item 6. Capital Stock and Other Securities Front Cover Page; Dividends, Other Distributions, and
Taxes; Special Information Regarding Organization,
Capitalization, and Other Matters
Item 7. Purchase of Securities Being Offered Shareholder Services; Share Prices 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
Form N-1A Item No. Statement of Additional Information
------------------ -----------------------------------
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History Not Applicable
Item 13. Investment Objectives and Policies Investment Information; Certain 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 Administration Services;
Services Trustees And Officers; Distribution Arrangements;
Reports To Shareholders; Custodian And Transfer Agent;
Independent Auditors
Item 17. Brokerage Allocation Portfolio Transactions
-3-
<PAGE>
Item 18. Capital Stock and Other Securities Investment Information; Additional Redemption
Information; Dividends and Other Distributions
Item 19. Purchase, Redemption Distribution Arrangements; Additional Redemption
Information
Caption in Part B
Form N-1A Item No. Statement of Additional 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 Data Performance Information
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 No.
14.
-4-
<PAGE>
PROSPECTUS
- -----------------------------------------
October 19, 1998
NEUBERGER&BERMAN
EQUITY TRUST-Registered Trademark-
Neuberger&Berman
SMALL CAP GROWTH TRUST
No Sales Charges
No Redemption Fees
No 12b - 1 Fees
<PAGE>
Neuberger&Berman
EQUITY TRUST
No-Load Equity Fund
- ----------------------------------------------------------------------
Neuberger&Berman Small Cap Growth Trust
YOU CAN BUY, OWN AND SELL FUND SHARES ONLY THROUGH AN ACCOUNT WITH AN
ADMINISTRATOR, BROKER-DEALER, OR OTHER INSTITUTION THAT PROVIDES ACCOUNTING,
RECORDKEEPING, AND/OR OTHER SERVICeS TO INVESTORS AND THAT HAS AN ADMINISTRATIVE
SERVICES AGREEMENT WITH NEUBERGER&BERMAN MANAGEMENT INCORPORATED ("N&B
MANAGEMENT") AND/oR AN AGREEMENT WITH N&B MANAGEMENT TO MAKE FUND SHARES
AVAILABLE TO ITS CLIENTS (EACH AN "INSTITUTION").
- ----------------------------------------------------------------------
The above-named fund (the "Fund") invests all of its net investable assets
in Neuberger&Berman Small Cap Growth Portfolio (the "Portfolio"), a series of
Equity Managers Trust ("Managers Trust"). Managers Trust is an open-end
management investment company managed by N&B Management. The Portfolio invests
in securities in accordance with an investment objective, policies, and
limitations identical to those of the Fund. The investment performance of the
Fund directly corresponds with the investment performance of the 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 structure that you should consider, see "Summary"
on page 5, and "Information Regarding Organization, Capitalization, and Other
Matters" on page 25.
Please read this Prospectus before investing in the Fund and keep it for
future reference. It contains information about the Fund that a prospective
investor should know before investing. A Statement of Additional Information
("SAI") about the Fund and Portfolio, dated October 19, 1998, is on file with
the Securities and Exchange Commission ("SEC"). 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.
THE SEC MAINTAINS A WEBSITE (HTTP://WWW.SEC.GOV) THAT CONTAINS THE SAI,
MATERIAL INCORPORATED BY REFERENCe, AND OTHER INFORMATION REGARDING THE FUND AND
PORTFOLIO.
PROSPECTUS DATED October 19, 1998
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.
2
<PAGE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
[RED HERRING] INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR
AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD
NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
STATE.
3
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY......................................................................1
The Fund and Portfolio; Risk Factors.......................................1
EXPENSE INFORMATION..........................................................3
Shareholder Transaction Expenses for The Fund..............................3
Annual Fund Operating Expenses.............................................3
INVESTMENT PROGRAM...........................................................5
Neuberger&Berman Small Cap Growth Portfolio................................5
Special Considerations of Small Cap Company Stocks.........................6
Short-Term Trading; Portfolio Turnover.....................................6
Borrowings.................................................................6
Other Investments..........................................................7
PERFORMANCE INFORMATION......................................................7
TOTAL RETURN INFORMATION.....................................................7
SHAREHOLDER SERVICES.........................................................8
How to Buy Shares..........................................................8
Other Information..........................................................8
How to Sell Shares.........................................................9
Other Information..........................................................9
Exchanging Shares..........................................................9
SHARE PRICES AND NET ASSET VALUE............................................11
DIVIDENDS, OTHER DISTRIBUTIONS, AND TAXES...................................12
Distribution Options......................................................12
Taxes.....................................................................12
MANAGEMENT AND ADMINISTRATION...............................................14
Trustees and Officers.....................................................14
Investment Manager, Administrator, Distributor, and Sub-Adviser...........14
Expenses..................................................................15
Transfer Agent............................................................15
INFORMATION REGARDING ORGANIZATION, CAPITALIZATION, AND OTHER MATTER........16
The Fund..................................................................16
The Portfolio.............................................................16
DESCRIPTION OF INVESTMENTS..................................................18
DIRECTORY...................................................................21
FUNDS ELIGIBLE FOR EXCHANGE.................................................22
i
<PAGE>
SUMMARY
The Fund and Portfolio; Risk Factors
------------------------------------
The Fund is a series of Neuberger&Berman Equity Trust (the "Trust") and
invests in the Portfolio which, 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 the Fund "feeds" shareholders' investments into the Portfolio, a
"master" fund. The structure looks like this:
--------------------------
SHAREHOLDERS
--------------------------
BUY SHARES IN
--------------------------
THE FUND
--------------------------
INVESTS IN
--------------------------
THE PORTFOLIO
--------------------------
INVESTS IN
--------------------------
STOCKS & OTHER SECURITIES
--------------------------
The trustees who oversee the Fund believe that this structure may benefit
shareholders; investment in the Portfolio by investors in addition to the Fund
may enable the Portfolio to achieve economies of scale that could reduce
expenses. For more information about the organization of the Fund and the
Portfolio, including certain features of the master/feeder fund structure, see
"Information Regarding Organization, Capitalization, and Other Matters" on page
16. An investment in the Fund involves certain risks, depending upon the types
of investments made by the Portfolio. For more details about the Portfolio, its
investments and their risks, see "Investment Program" on page 5 and "Description
of Investments" on page 19.
The following table is a summary highlighting features of the Fund and the
Portfolio. You may want to combine your investment in the Fund with investments
in other Neuberger&Berman Funds to fit your particular investment needs. Of
course, there can be no assurance that the Fund will meet its investment
objective.
<PAGE>
NEUBERGER&BERMAN INVESTMENT PORTFOLIO
EQUITY TRUST STYLE CHARACTERISTICS
- --------------------------------------------------------------------------------
SMALL CAP .. Broadly diversified, Invests primarily in equity securities
GROWTH TRUST small cap growth. of small-sized domestic companies
(up to $2.7 billion in market
capitalization at time of investment).
Portfolio managers seek stocks of
companies that are projected to grow
at above-average rates and that appear
to the managers poised for a period of
accelerated earnings.
Management
- ----------------------------------------------------------------------
N&B Management, with the assistance of Neuberger&Berman, LLC
("Neuberger&Berman") as sub-adviser, selects investments for the Portfolio. N&B
Management also provides administrative services to the Portfolio and the Fund
and acts as distributor of Fund shares. See "Management and Administration" on
page 13. If you want to know how to buy and sell shares of the Fund or exchange
them for shares of other Neuberger & Berman Funds(R) made available through an
Institution, see "Shareholder Services--How to Buy Shares" on page 8,
"Shareholder Services--How to Sell Shares" on page 9, and "Shareholder
Services--Exchange Shares" on page 9 ,and the policies of the Institution
through which you are purchasing shares.
The Neuberger&Berman Investment Approach
- ----------------------------------------------------------------------
The Portfolio is managed using a growth-oriented investment approach. In
contrast to a value approach, which concentrates on securities that are
undervalued in relation to their fundamental economic values, a growth approach
seeks stocks of companies that N&B Management projects will grow at
above-average rates and faster than others expect. While a growth portfolio
manager may be willing to pay a higher multiple of earnings per share than a
value manager, the multiple tends to be reasonable relative to the manager's
expectation of the company's earnings growth rate.
2
<PAGE>
EXPENSE INFORMATION
This section gives you certain information about the expenses of the Fund
and the Portfolio. See "Performance Information" for important facts about the
investment performance of the Fund, after taking expenses into account.
Shareholder Transaction Expenses for The Fund
---------------------------------------------
As shown by this table, the Fund imposes 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 anticipated annual operating expenses for the
Fund which are paid out of the assets of the Fund and which include the Fund's
pro rata portion of the operating expenses of the Portfolio ("Total Operating
Expenses"). "Total Operating Expenses" exclude interest, taxes, brokerage
commissions, and extraordinary expenses.
The Fund pays N&B Management an administration fee based on the Fund's
average daily net assets. The 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 Fund. "Management and Administration Fees" in the
following table are based upon current administration fees for the Fund and
current management fees for the Portfolio and the current expense reimbursement
undertaking. For more information, see "Management and Administration" and the
SAI.
3
<PAGE>
The Fund and Portfolio incur other expenses for things such as accounting
and legal fees, transfer agency fees, custodial fees, printing and furnishing
shareholder statements and Fund reports and compensating trustees who are not
affiliated with N&B Management ("Other Expenses"). Other Expenses in the
following table are estimated amounts for the current fiscal year and assume
average daily net assets of $25 million. There can be no assurance that the Fund
will achieve that asset level. All expenses are factored into the Fund's share
price and dividends and are not charged directly to Fund shareholders.
NEUBERGER&BERMAN MANAGEMENT AND 12B-1 OTHER TOTAL
EQUITY TRUST ADMINISTRATION FEES EXPENSES OPERATING
FEES EXPENSES*
- --------------------------------------------------------------------------------
SMALL CAP GROWTH TRUST 1.25% None 0.50% 1.75%
*Reflects N&B Management's expense reimbursement undertaking described below.
As set forth in "Expenses" on page 24, N&B Management has voluntarily
undertaken to reimburse the Fund if its Total Operating Expenses exceed certain
limits. Absent the reimbursement, Management and Administration Fees and Total
Operating Expenses would be 1.20% and 2.45%, respectively, of the Fund's average
daily net assets.
For more information, see "Expenses" on page 15.
Example
- ----------------------------------------------------------------------
To illustrate the effect of Total Operating Expenses, let's assume that
the 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 the Fund, 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
EQUITY TRUST 1 YEAR 3 YEARS
- --------------------------------------------------------------------------------
SMALL CAP GROWTH TRUST $18 $55
The assumption in this example of a 5% annual return is required by
regulations of the SEC applicable to all mutual funds. The information in the
previous tables 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.
4
<PAGE>
INVESTMENT PROGRAM
The investment policies and limitations of the Fund are identical to those
of the Portfolio. The Fund invests only in the Portfolio. Therefore, the
following shows you the kinds of securities in which the Portfolio invests. For
an explanation of some types of investments, see "Description of Investments" on
page 19.
Investment policies and limitations of the Fund and Portfolio are not
fundamental unless otherwise specified in this Prospectus or the SAI.
Fundamental policies may not be changed without shareholder approval. A
non-fundamental policy or limitation may be changed by the trustees of the Trust
or of Managers Trust without shareholder approval.
The investment objectives of the Fund and Portfolio are not fundamental.
There can be no assurance that the Fund or Portfolio will achieve their
objectives. The Fund, by itself, does not represent a comprehensive investment
program.
Additional investment techniques, features, and limitations concerning the
Portfolio's investment programs are described in the SAI.
Neuberger&Berman Small Cap Growth Portfolio
-------------------------------------------
The investment objective of Neuberger&Berman Small Cap Growth Portfolio
and Neuberger&Berman Small Cap Growth Fund is to seek capital growth. The
Portfolio is a diversified investment fund that pursues its investment objective
by investing primarily in a portfolio of equity securities of small-sized
domestic companies. The Portfolio intends to invest at least 80% of its total
assets in common stocks or warrants of small companies that the manager believes
present attractive opportunities for capital growth and, under normal market
conditions, will invest at least 65% of its total assets in such securities. The
Portfolio considers a "small" company to be one that has a market
capitalization, measured at the time the Portfolio purchases a security of that
company, within the range of capitalizations of companies represented in the
Russell 2000 Index. (As of January 31, 1998, the Russell 2000 Index included
companies with the market capitalizations between $23.7 million and $2.7
billion.)
Companies whose capitalizations no longer fall within the range of
capitalizations of companies in the Russell 2000 Index after purchase continue
to be considered small companies for purposes of the Portfolio's policy of
investing at least 65% of its assets in small companies. In addition, the
Portfolio has the flexibility to invest in companies with market capitalizations
of any size when the 65% policy is met. As a result of these policies, the
average market capitalization of the issuers whose securities are held by the
Portfolio at any particular time may exceed the maximum market capitalization
included in the Russell 2000 Index, particularly at times when the market values
of small company stocks are rising. The Portfolio will invest primarily in
companies whose securities are traded on domestic stock exchanges or in the
over-the-counter market, but may invest up to 20% of its assets in foreign
securities. Foreign securities are not included within the Portfolio's 65%
policy of investing in the common stocks of small-cap companies described above.
5
<PAGE>
The Portfolio uses a growth-oriented investment approach. When N&B
Management believes that particular securities have greater potential for
long-term capital appreciation, the Portfolio may purchase such securities at
prices with relatively higher multiples to measures of economic value (such as
earnings or cash flow) than securities likely to be purchased using a
value-oriented approach. In selecting stocks, N&B Management considers, among
other factors, a company's financial strength, competitive position, projected
future earnings, management strength and experience, reasonable valuation and
other investment criteria. The Portfolio also diversifies its investments among
companies and industries. Small-cap companies in which the Portfolio may invest
may still be in the developmental stage. They may also be older companies that
appear to be entering a new stage of growth progress owing to factors such as
management changes or development of new technology, products or markets. Other
small-cap companies in which the Portfolio invests may be companies providing
products or services with a high volume growth rate. The Portfolio's investments
will be made on the basis of their equity characteristics and securities ratings
generally will not be a factor in the selection process.
The Portfolio may also invest in securities of emerging growth companies,
which can be either small-or medium-sized companies that have passed their
start-up phase and that show positive earnings momentum and prospects of
achieving significant profit and gain in a relatively short period of time.
Emerging growth companies generally stand to benefit from new products or
services, technological developments, changes in management or other factors.
The Portfolio's growth investment program involves greater risks and share
price volatility than programs that invest in more undervalued securities.
Moreover, the Portfolio does not follow a policy of active trading for
short-term profits. Accordingly, the Portfolio may be more appropriate for
investors with a longer-range perspective.
Special Considerations of Small Cap Company Stocks
--------------------------------------------------
Investments in small-cap company stocks may present greater opportunities
for capital appreciation than investments in stocks of large-capitalization
companies ("large-cap companies"). However, small-cap company stocks may have
higher risk and volatility. These stocks generally are not as broadly traded as
large-cap company stocks, and their prices thus may fluctuate more widely and
abruptly. Any such movements in stocks held by the Portfolio would be reflected
in the Fund's net asset value. Small-cap company stocks also are less researched
than large-cap company stocks and are often overlooked in the market.
Accordingly, the Fund is designed for investors who are able to bear the risks
and fluctuations associated with investment in smaller companies.
Short-Term Trading; Portfolio Turnover
--------------------------------------
Although the Portfolio does not purchase securities with the intention of
profiting from short-term trading, the Portfolio may sell portfolio securities
when N&B Management believes that such action is advisable. It is anticipated
that the annual turnover rate of Neuberger&Berman Small Cap Growth Portfolio may
exceed 100% in some fiscal years. Turnover rates in excess of 100% generally
result in higher transaction costs (which are borne directly by the Portfolio
and indirectly by the Fund) and a possible increase in realized short-term
capital gains or losses. See "Dividends, Other Distributions, and Taxes" on page
11 and the SAI.
Borrowings
----------
The Portfolio has a fundamental policy that it may not borrow money,
except that it may (1) borrow money from banks for temporary or emergency
6
<PAGE>
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).
The Portfolio does not expect to borrow money or to enter into reverse
repurchase agreements. As a non-fundamental policy, the Portfolio may not
purchase portfolio securities if its outstanding borrowings, including reverse
repurchase agreements, exceed 5% of its total assets.
Other Investments
-----------------
For temporary defensive purposes, the Portfolio may invest up to 100% of
its total assets in cash and cash equivalents, U.S. Government and Agency
Securities, commercial paper and certain other money market instruments, as well
as repurchase agreements collateralized by the foregoing.
PERFORMANCE INFORMATION
The performance of the Fund is commonly measured as 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 dividends, other distributions, and 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 evens out year-to-year variations in
actual performance. Past result 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.
TOTAL RETURN INFORMATION
As of the date of this prospectus, the Fund was new and had no performance
history. You can obtain current performance information about the Fund by
calling N&B Management at 800-877-9700.
7
<PAGE>
SHAREHOLDER SERVICES
How to Buy Shares
-----------------
You can buy and own Fund shares only through an account with an
Institution. N&B Management and the Fund 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, including minimum initial and additional investments for shares of
the 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.
Investors should consult their Institution to determine the time by which it
must receive an order so that Fund shares can be purchased at that day's price.
The Fund's share price is calculated as of the close of regular trading on the
NYSE, usually 4 p.m. Eastern time. An Institution may be closed on days when the
NYSE is open. As a result, the Fund's share price may be significantly affected
on days when an investor has no access to that Institution to buy shares.
Other Information:
o An Institution must pay for shares it purchases on its clients' behalf
in U.S. dollars.
o The Fund has the right to suspend the offering of its shares for a period
of time. The Fund also has the right to accept or reject a purchase order
in its sole discretion, including certain purchase orders using an
exchange of shares. See "Shareholder Services--Exchanging Shares."
o The Fund does not issue certificates for shares.
o Some Institutions may charge their clients a fee in connection with
purchases of shares of the Fund.
8
<PAGE>
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 and the payment of redemption proceeds. 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. Investors should consult their
Institution to determine the time by which it must receive an order so that Fund
shares can be sold at that day's price. The Fund's share price is calculated as
of the close of regular trading on the NYSE, usually 4 p.m. Eastern time. An
Institution may be closed on days when the NYSE is open. As a result, the Fund's
share price may be significantly affected on days when an investor has no access
to that Institution to sell shares.
Other Information:
o Redemption proceeds will be paid to Institutions as agreed with N&B
Management, but in any case within three business days (under unusual
circumstances the Fund may take longer, as permitted by law). An
Institution may not follow the same procedures for payment of redemption
proceeds to its clients.
o The Fund may suspend redemptions or postpone payments on days when the
NYSE is closed, when trading on the NYSE is restricted, or as permitted by
the SEC.
o Some Institutions may charge their clients a fee in connection with
redemptions of shares of the Fund.
Exchanging Shares
-----------------
Through an account with an Institution, you may be able to exchange shares
of the Fund for shares in another Neuberger&Berman Fund. Each Institution will
establish its own exchange policy and procedures. Shares are exchanged at the
next price calculated on a day the NYSE is open, after an exchange order is
received and accepted by an Institution.
Other Information:
o Shares can be exchanged ONLY between accounts registered in the same
name, address, and taxpayer ID number of the Institution.
o An exchange order can be made only into a Neuberger&Berman Fund whose
shares are eligible for sale in the state where the Institution is
located.
o An exchange may have tax consequences.
o The Fund may refuse any exchange orders from any Institution, if, for
any reason, they are deemed not to be in the best interests of the Fund
and its shareholders.
o Each Neuberger&Berman 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.
9
<PAGE>
SHARE PRICES AND NET ASSET VALUE
The Fund's shares are bought or sold at a price that is the Fund's net
asset value ("NAV") per share. The NAVs for the Fund and the Portfolio are
calculated by subtracting liabilities from total assets (in the case of the
Portfolio, the market value of the securities the Portfolio holds plus cash and
other assets; in the case of the Fund, its percentage interest in the Portfolio,
multiplied by the Portfolio's NAV, plus any other assets). The Fund's per share
NAV is calculated by dividing its NAV by the number of Fund shares outstanding
and rounding the result to the nearest full cent. The Fund and the Portfolio
calculate their NAVs as of the close of regular trading on the NYSE, usually 4
p.m. Eastern time, on each day the NYSE is open.
The Portfolio values securities (including options) listed on the NYSE,
the American Stock Exchange, or other national securities exchanges or quoted on
Nasdaq, and other securities for which market quotations are readily available,
at the last sale price on the day the securities are being valued. If there is
no reported sale of such a security on that day, the security is valued at the
mean between its closing bid and asked prices on that day. The Portfolio values
all other securities and assets, including restricted securities, by a method
that the trustees of Managers Trust believe accurately reflects fair value.
If N&B Management believes that the price of a security obtained under the
Portfolio's valuation procedures (as described above) does not represent the
amount that the Portfolio reasonably expects to receive on a current sale of the
security, the Portfolio will value the security based on a method that the
trustees of Managers Trust believe accurately reflects fair value.
10
<PAGE>
DIVIDENDS, OTHER DISTRIBUTIONS, AND TAXES
The Fund distributes, normally in December, substantially all of its share
of any net investment income (net of the Fund's expenses), any net capital gains
from investment transactions, and any net gains from foreign currency
transactions earned or realized by the Portfolio.
Distribution Options
--------------------
REINVESTMENT IN SHARES. All dividends and other distributions paid on
shares of the Fund are automatically reinvested in additional shares of the
Fund, unless an Institution elects to receive them in cash. Dividends and other
distributions are reinvested at the Fund's per share NAV, usually as of the date
the dividend or other 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
-----
An investment has certain tax consequences, depending on the type of
account through which the investment is made. FOR 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 generally also are 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. Investors who buy Fund shares just before the Fund deducts a dividend
or other distribution from its NAV will pay the full price for the shares and
then receive a portion of the price back in the form of a taxable distribution.
Investors who are considering the purchase of Fund shares near the end of a
calendar year should take this into account.
For federal income tax purposes, dividends and distributions of net
short-term capital gain and net gains from certain foreign currency transactions
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 an
investor has owned Fund shares. Distributions of net capital gain may include
gains from the sale of portfolio securities that appreciated in value before an
investor bought Fund shares. Under the Taxpayer Relief Act of 1997, different
maximum tax rates apply to the Fund's distributions of net capital gain
depending on the Portfolio's holding period.
Every January, the Fund will send each Institution that is a shareholder
therein a statement showing the amount of distributions paid in cash or
reinvested in Fund shares for the previous year. Each Institution will also
receive information showing (1) the portion, if any, of those distributions that
generally is not subject to state and local income taxes in certain states and
(2) capital gain distributions broken down in a manner that will enable
investors or their tax advisers to determine the appropriate rate of capital
gains tax on such distributions.
11
<PAGE>
TAXES ON REDEMPTIONS. Capital gains realized on redemptions of Fund shares
including redemptions in connection with exchanges to other Neuberger & Berman
Funds, are subject to tax. A capital gain or loss generally is the difference
between the amount paid for shares (including the amount of any dividends and
other distributions that were reinvested) and the amount received when shares
are sold. Capital gain on shares held for more than one year will be long-term
capital gain, in which event it will be subject to federal income tax at the
capital gains rate applicable to an investor's holding period and tax bracket.
When an Institution sells Fund shares, it will receive a confirmation
statement showing the number of shares sold and the price.
OTHER. Every January, Institutions will receive a consolidated transaction
statement for the previous year. Each Institution is required annually to send
each investor in its account a statement showing the investor's distribution and
transaction information for the previous year.
The Fund intends to qualify for treatment as a regulated investment
company for federal income tax purposes so that it will not have to pay federal
income tax on that part of its taxable income and realized gains that it
distributes to its shareholders.
The foregoing is only a summary of some of the important income tax
considerations affecting the 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.
12
<PAGE>
MANAGEMENT AND ADMINISTRATION
Trustees and Officers
---------------------
The trustees of the Trust and the trustees of Managers Trust have
oversight responsibility for the operations of the Fund and 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 principals of Neuberger&Berman serve without compensation from the Fund
or the Portfolio. All trustees of Managers Trust also serve as trustees of the
Trust.
Investment Manager, Administrator, Distributor, and Sub-Adviser
---------------------------------------------------------------
N&B Management serves as the investment manager of the Portfolio, as
administrator of the Fund, and as distributor of the shares of the 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 Portfolio, N&B
Management currently serves as investment manager of other mutual funds.
Neuberger&Berman acts as sub-adviser for the Portfolio and other mutual funds
managed by N&B Management. The mutual funds managed by N&B Management and
Neuberger&Berman had aggregate net assets of approximately $24 billion as of
6/30/98.
As sub-adviser, Neuberger&Berman furnishes N&B Management with investment
recommendations and research without added cost to the Portfolio. N&B Management
compensates Neuberger&Berman for its costs in connection with those services.
Neuberger&Berman is a member firm of the NYSE and other principal exchanges and
may act as the Portfolio's broker in the purchase and sale of their securities.
Neuberger&Berman and its affiliates, including N&B Management, manage securities
accounts that had approximately $59 billion of assets as of 6/30/98. All of the
voting stock of N&B Management is owned by individuals who are principals of
Neuberger&Berman.
Jennifer K. Silver and _________ are co-managers of the Portfolio. Ms.
Silver is Director of the Neuberger&Berman Growth Equity Group, and she is a
Vice President of N&B Management. Ms. Silver is a principal of Neuberger&Berman.
Previously, Ms. Silver was a portfolio manager for several large mutual funds
managed by a prominent investment adviser.
The principals 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.
To mitigate the possibility that the 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.
YEAR 2000. Like other financial and business organizations, the Fund and
Portfolio could be adversely affected if computer systems they rely on do not
properly process date-related information and data involving the years 2000 and
after. N&B Management and Neuberger&Berman are taking steps that they believe
are reasonable to address this problem in their own computer systems and to
obtain assurances that comparable steps are being taken by the Fund's and
Portfolio's other major service providers. N&B Management also attempts to
13
<PAGE>
evaluate the potential impact of this problem on the issuers of investment
securities that the Portfolio purchase. At this time, however, there can be no
assurance that these steps will be sufficient to avoid any adverse impact on the
Fund and Portfolio.
14
<PAGE>
Expenses
--------
N&B Management provides investment management services to the Portfolio
that include, among other things, making and implementing investment decisions
and providing facilities and personnel necessary to operate the Portfolio. For
investment management services, the Portfolio pays N&B Management a fee at the
annual rate of 0.85% of the first $250 million of that Portfolio's average daily
net assets, 0.80% of the next $250 million, 0.75% of the next $250 million,
0.70% of the next $250 million, and 0.65% of average daily net assets in excess
of $1.0 billion.
N&B Management provides administrative services to the Fund that include
furnishing facilities and personnel for the Fund and performing accounting,
record-keeping, and other services. For such administrative services, the Fund
pays N&B Management a fee at the annual rate of 0.40% of that Fund's average
daily net assets. With the Fund's consent, N&B Management may subcontract to
Institutions some of its responsibilities to the Fund under the administration
agreement and may compensate each Institution that provides such services at an
annual rate of up to 0.25% of the average net asset value of Fund shares held
through that Institution.
The 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.
The Portfolio bears all expenses of its operations other than those borne by N&B
Management as investment manager of the Portfolio. These expenses include the
"Other Expenses" described on page 8.
N&B Management has voluntarily undertaken to reimburse Neuberger&Berman
Small Cap Growth Trust for its Total Operating Expenses which exceed 1.75 % per
annum of the Fund's average daily net assets. The Fund has in turn agreed to
repay N&B Management through December 31, 2000, for the excess Total Operating
Expenses that N&B Management reimbursed to the Fund through December 31, 1999,
so long as the Fund's Total Operating Expenses during that period do not exceed
the above expense limitation. N&B Management may terminate its undertaking by
giving at least sixty days' prior written notice to the Fund. The effect of
reimbursement by N&B Management is to reduce the Fund's expenses and thereby
increase its total return.
Transfer Agent
--------------
The Fund's 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 addressed to
Neuberger&Berman Funds, Institutional Services, 605 Third
Avenue, 2nd Floor, New York, NY 10158-0180.
15
<PAGE>
INFORMATION REGARDING ORGANIZATION, CAPITALIZATION, AND OTHER MATTERS
The Fund
--------
The Fund is a separate operating series of the Trust, a Delaware business
trust organized pursuant to a Trust Instrument dated as of 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 eight separate operating series. Each series invests
all of its net investable assets in its corresponding portfolio of Managers
Trust, 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. The Fund is authorized to issue an unlimited number
of shares of beneficial interest (par value $0.001 per share). Shares of the
Fund represent equal proportionate interests in the assets of 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 rights to subscribe to any additional shares.
SHAREHOLDER MEETINGS. The trustees of the Trust do not intend to hold
annual meetings of shareholders of the Fund. The trustees will call special
meetings of shareholders of the Fund only if required under the 1940 Act or in
their discretion or upon the written request of holders of 10% or more of the
outstanding shares of the Fund entitled to vote.
CERTAIN PROVISIONS OF TRUST INSTRUMENT. Under Delaware law, the
shareholders of the Fund will not be personally liable for the obligations of
the Fund; a shareholder is entitled to the same limitation of personal liability
extended to shareholders of a corporation. To guard against the risk that
Delaware law might not be applied in other states, the Trust Instrument requires
that every written obligation of the Trust or the Fund contain a statement that
such obligation may be enforced only against the assets of the Trust or Fund and
provides for indemnification out of Trust or Fund property of any shareholder
nevertheless held personally liable for Trust or Fund obligations, respectively.
OTHER. Because Fund shares can be bought, owned and sold only through an
account with an Institution, a client of an Institution may be unable to
purchase additional shares and/or may be required to redeem shares (and possibly
incur a tax liability) if the client no longer has a relationship with the
Institution or if the Institution no longer has a contract with N&B Management
to perform services. Depending on the policies of the Institutions involved, an
investor may be able to transfer an account from one Institution to another.
The Portfolio
-------------
The Portfolio is a separate operating series of Managers Trust, a New York
common law trust organized as of December 1, 1992. Managers Trust is registered
under the 1940 Act as a diversified, open-end management investment company.
Managers Trust has seven separate portfolios. The assets of each portfolio
belong only to that portfolio, and the liabilities of each portfolio are borne
solely by that portfolio and no other.
16
<PAGE>
FUND'S INVESTMENT IN PORTFOLIO. The Fund is a "feeder fund" that seeks to
achieve its investment objective by investing all of its net investable assets
in the Portfolio, which is a "master fund." The Portfolio, which has the same
investment objective, policies, and limitations as the Fund, in turn invests in
securities; the Fund thus acquires an indirect interest in those securities. The
Fund's investment in the Portfolio is in the form of a non-transferable
beneficial interest. Members of the general public may not purchase a direct
interest in the Portfolio.
The Portfolio may also permit other investment companies and/or other
institutional investors to invest in the Portfolio. All investors will invest in
the Portfolio on the same terms and conditions as the Fund and will pay a
proportionate share of the Portfolio's expenses. Other investors in the
Portfolio are not required to sell their shares at the same public offering
price as the Fund, could have a different administration fee and expenses than
the Fund, and might charge a sales commission. Therefore, Fund shareholders may
have different returns than shareholders in another investment company that
invests exclusively in the Portfolio. There is currently no such other
investment company that offers its shares directly to members of the general
public. Information regarding any fund that invests in the Portfolio is
available from N&B Management by calling 800-877-9700.
The trustees of the Trust believe that investment in the Portfolio by
other potential investors in addition to the Fund may enable the Portfolio to
realize economies of scale that could reduce its operating expenses, thereby
producing higher returns and benefitting all shareholders. However, the Fund's
investment in the Portfolio may be affected by the actions of other large
investors in the Portfolio, if any. For example, if a large investor in the
Portfolio (other than the Fund) redeemed its interest in the Portfolio, the
Portfolio's remaining investors (including the Fund) might, as a result,
experience higher pro rata operating expenses, thereby producing lower returns.
The Fund may withdraw its entire investment from the Portfolio at any
time, if the trustees of the Trust determine that it is in the best interests of
the Fund and its shareholders to do so. The Fund might withdraw, for example, if
there were other investors in the Portfolio with power to, and who did by a vote
of all investors (including the Fund), change the investment objective,
policies, or limitations of the Portfolio in a manner not acceptable to the
trustees of the Trust. A withdrawal could result in a distribution in kind of
portfolio securities (as opposed to a cash distribution) by the Portfolio to the
Fund. That distribution could result in a less diversified portfolio of
investments for the Fund and could affect adversely the liquidity of the Fund's
investment portfolio. If the Fund decided to convert those securities to cash,
it usually would incur brokerage fees or other transaction costs. If the Fund
withdrew its investment from the Portfolio, the trustees of the Trust would
consider what actions might be taken, including the investment of all of the
Fund's net investable assets in another pooled investment entity having
substantially the same investment objective as the Fund or the retention by the
Fund of its own investment manager to manage its assets in accordance with its
investment objective, policies, and limitations. The inability of the Fund to
find a suitable replacement could have a significant impact on shareholders.
INVESTOR MEETINGS AND VOTING. The Portfolio normally will not hold
meetings of investors except as required by the 1940 Act. Each investor in the
Portfolio will be entitled to vote in proportion to its relative beneficial
interest in the Portfolio. On most issues subjected to a vote of investors, the
Fund will solicit proxies from its shareholders and will vote its interest in
the Portfolio in proportion to the votes cast by the Fund's shareholders. If
there are other investors in the Portfolio, there can be no assurance that any
issue that receives a majority of the votes cast by Fund shareholders will
receive a majority of votes cast by all Portfolio investors; indeed, if other
investors hold a majority interest in the Portfolio, they could have voting
control of the Portfolio.
17
<PAGE>
CERTAIN PROVISIONS. Each investor in the Portfolio, including the Fund,
will be liable for all obligations of the Portfolio. However, the risk of an
investor in the Portfolio incurring financial loss beyond the amount of its
investment on account of such liability would be limited to circumstances in
which the Portfolio had inadequate insurance and was unable to meet its
obligations out of its assets. Upon liquidation of the Portfolio, investors
would be entitled to share pro rata in the net assets of the Portfolio available
for distribution to investors.
18
<PAGE>
DESCRIPTION OF INVESTMENTS
In addition to common stocks and other securities referred to in
"Investment Programs" herein, the Portfolio 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 and on
other types of investments which the Portfolio may make, see the SAI.
ILLIQUID, RESTRICTED AND RULE 144A SECURITIES. The Portfolio may invest up
to 15% 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. These may include unregistered or other restricted
securities and repurchase agreements maturing in greater than seven days.
Illiquid securities may also include commercial paper under section 4(2) of the
Securities Act of 1933, as amended, and Rule 144A securities (restricted
securities that may be traded freely among qualified institutional buyers
pursuant to an exemption from the registration requirements of the securities
laws); these securities are considered illiquid unless N&B Management, acting
pursuant to guidelines established by the trustees of Managers Trust, determines
they are liquid. Generally, foreign securities freely tradable in their
principal market are not considered restricted or illiquid. Illiquid securities
may be difficult for the Portfolio to value or dispose of due to the absence of
an active trading market. The sale of some illiquid securities by the Portfolio
may be subject to legal restrictions which could be costly to the Portfolio.
FOREIGN SECURITIES. Foreign securities are those of issuers organized
and doing business principally outside the United States, including non-U.S.
governments, their agencies, and instrumentalities. The Portfolio may invest
up to 20% of the value of its total assets in foreign securities. The 20%
limitation does not apply to foreign securities that are denominated in U.S.
dollars, including American Depositary Receipts (ADRs). The Portfolio may
invest in European Depositary Receipts (EDRs), Global Depositary Receipts
(GDRs) and International Depositary Receipts (IDRs). ADRs (sponsored or
unsponsored) are receipts typically issued by a U.S. bank or trust company
evidencing its ownership of the underlying foreign securities. Most ADRs are
denominated in U.S. dollars and are traded on a U.S. stock exchange. Issuers
of the securities underlying sponsored ADRs, but not unsponsored ADRs, are
contractually obligated to disclose material information in the United
States. Therefore, the market value of unsponsored ADRs may not reflect the
effect of such information. EDRs and IDRs are receipts typically issued by a
European bank or trust company evidencing its ownership of the underlying
foreign securities. GDRs are receipts issued by either a U.S. or non-U.S.
banking institution evidencing its ownership of the underlying foreign
securities and are often denominated in U.S. dollars.
Factors affecting investments in foreign securities include, but are not
limited to, varying custody, brokerage and settlement practices, which may cause
delays and expose the Portfolio to the creditworthiness of a foreign broker;
difficulty in pricing some foreign securities; less public information about
issuers of securities; less governmental regulation and supervision of issuance
and trading of securities; the unavailability of financial information or the
difficulty of interpreting financial information prepared under foreign
accounting standards; less liquidity and more volatility in foreign securities
markets; the possibility of expropriation, nationalization, or confiscatory
taxation; the imposition of foreign withholding and other taxes; potentially
adverse local political, economic, social, or diplomatic developments;
limitations on the movement of funds or other assets of the Portfolio between
different countries; difficulties in invoking legal process and enforcing
contractual obligations abroad; and the difficulty of assessing economic trends
in foreign countries. Investment in foreign securities also may involve higher
brokerage and custodial expenses than investment in domestic securities.
19
<PAGE>
In addition, investing in foreign securities may involve other risks which
are not ordinarily associated with investing in domestic securities. These risks
include changes in currency exchange rates and currency exchange control
regulations (or other foreign or U.S. laws or restrictions applicable to such
investments) and devaluations of foreign currencies. Some foreign currencies may
be volatile. A decline in the exchange rate between the U.S. dollar and another
currency will reduce the value of portfolio securities denominated in that
currency irrespective of the performance of the underlying investment. In
addition, the Portfolio generally will incur costs in connection with conversion
between various currencies. Investments in depositary receipts (whether or not
denominated in U.S. dollars) may be subject to exchange controls and changes in
rates of exchange with the U.S. dollar because the underlying security is
usually denominated in foreign currency. All of the foregoing risks may be
intensified in emerging industrialized and less developed countries.
COVERED CALL OPTIONS. The Portfolio may try to reduce the risk of
securities price changes (hedge) or generate income by writing (selling) covered
call options against portfolio securities and may purchase call options in
related closing transactions. When the Portfolio writes a covered call option
against a security, the Portfolio is obligated to sell that security to the
purchaser of the option at a fixed price at any time during a specified period
if the purchaser decides to exercise the option. The maximum price the Portfolio
may realize on the security during the option period is the fixed price; the
Portfolio continues to bear the risk of a decline in the security's price,
although this risk is reduced, at least in part, by the premium received for
writing the option.
REPURCHASE AGREEMENTS/SECURITIES LOANS. In a repurchase agreement, the
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. The Portfolio
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.
OTHER INVESTMENTS. Although the Portfolio invests primarily in common
stocks, when market conditions warrant it may invest in preferred stocks,
securities convertible into or exchangeable for common stocks, U.S. Government
and Agency Securities, investment grade debt securities, or money market
instruments, or may retain assets in cash or cash equivalents.
"Investment grade" debt securities are those receiving one of the four
highest ratings from Moody's Investors Service, Inc. ("Moody's"), Standard &
Poor's ("S&P"), or another nationally recognized statistical rating organization
("NRSRO") or, if unrated by any NRSRO, deemed comparable by N&B Management to
such rated securities ("Comparable Unrated Securities"). Securities rated by
Moody's in its fourth highest category (Baa) or Comparable Unrated Securities
may be deemed to have speculative characteristics. The value of the fixed income
securities in which the Portfolio may invest is likely to decline in times of
rising market interest rates. Conversely, when rates fall, the value of the
Portfolio's fixed income investments is likely to rise.
U.S. Government Securities are obligations of the U.S. Treasury backed
by the full faith and credit of the United States. U.S. Government Agency
Securities are issued or guaranteed by U.S. Government agencies or by
instrumentalities of the U.S. Government, such as the Government National
20
<PAGE>
Mortgage Association, Fannie Mae (formerly, Federal National Mortgage
Association), Freddie Mac (formerly, Federal Home Loan Mortgage Corporation),
Student Loan Marketing Association (commonly known as "Sallie Mae"), and
Tennessee Valley Authority. 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
Agency mortgage-backed securities. The market prices of U.S. Government and
Agency Securities are not guaranteed by the U.S. Government.
21
<PAGE>
DIRECTORY
INVESTMENT MANAGER, ADMINISTRATOR, AND DISTRIBUTOR Neuberger&Berman Management
Incorporated 605 Third Avenue 2nd Floor
New York, NY 10158-0180
800-877-9700
SUB-ADVISER
Neuberger&Berman, LLC
605 Third Avenue
New York, NY 10158-3698
CUSTODIAN AND TRANSFER
AGENT
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
ADDRESS CORRESPONDENCE TO:
Neuberger&Berman Funds
Boston Service Center
P.O. Box 8403
Boston, MA 02266-8403
LEGAL COUNSEL Kirkpatrick & Lockhart LLP 1800 Massachusetts Avenue, NW 2nd Floor
Washington, DC 20036-1800
22
<PAGE>
FUNDS ELIGIBLE FOR EXCHANGE
EQUITY TRUSTS
Neuberger&Berman Focus Trust
Neuberger&Berman Guardian Trust
Neuberger&Berman Manhattan Trust
Neuberger&Berman Partners Trust
Neuberger&Berman Socially Responsive Trust
INCOME TRUST
Neuberger&Berman Limited Maturity Bond Trust
Neuberger&Berman, Neuberger&Berman Management Inc., and the above-named Funds
are registered trademarks or service marks of Neuberger&Berman, LLC or
Neuberger&Berman Management Inc. -C- 1998 Neuberger&Berman Management
Incorporated.
NEUBERGER&BERMAN MANAGEMENT INC.-Registered Trademark-
605 THIRD AVENUE 2ND FLOOR
NEW YORK, NY 10158-0180
SHAREHOLDER SERVICES
800.877.9700
www.nbfunds.com
23
<PAGE>
This wrapper is not part of the Prospectus.
[LOGO] PRINTED ON RECYCLED PAPER NBEP00030398
24
<PAGE>
- --------------------------------------------------------------------------------
NEUBERGER & BERMAN SMALL CAP GROWTH TRUST AND PORTFOLIO
STATEMENT OF ADDITIONAL INFORMATION
DATED OCTOBER 19, 1998
No-Load Mutual Fund
605 Third Avenue, 2nd Floor, New York, NY 10158-0180
Toll-Free 800-877-9700
- --------------------------------------------------------------------------------
Neuberger & Berman SMALL CAP GROWTH Trust ("Fund"), a series of
Neuberger & Berman Equity Trust ("Trust"), is a no-load mutual fund that offers
shares pursuant to a Prospectus dated October 19, 1998. The Fund invests all of
its net investable assets in Neuberger & Berman SMALL CAP GROWTH Portfolio
("Portfolio").
AN INVESTOR CAN BUY, OWN, AND SELL FUND SHARES ONLY THROUGH AN
ACCOUNT WITH AN ADMINISTRATOR, BROKEr-DEALER, OR OTHER INSTITUTION THAT PROVIDES
ACCOUNTING, RECORDKEEPING, AnD OTHER SERVICES TO INVESTORS AND THAT HAS AN
ADMINISTRATIVE SERVICES AGREEmENT WITH NEUBERGER & BERMAN MANAGEMENT
INCORPORATED (EACH AN "INSTITUTION").
The Fund's Prospectus provides basic information that an investor
should know before investing. A copy of the Prospectus may be obtained, without
charge, from Neuberger & Berman Management Incorporated ("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 the Fund or its distributor. The Prospectus and this SAI do not constitute an
offering by the Fund or its distributor in any jurisdiction in which such
offering may not lawfully be made.
[RED HERRING] INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR
AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD
NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS STATEMENT OF ADDITIONAL INFORMATION DOES NOT CONSTITUTE
A PROSPECTUS.
<PAGE>
TABLE OF CONTENTS
Page
----
INVESTMENT INFORMATION.......................................................1
Investment Policies and Limitations....................................1
Additional Investment Information......................................4
PERFORMANCE INFORMATION.....................................................18
Total Return Computations.............................................18
Comparative Information...............................................19
Other Performance Information.........................................20
CERTAIN RISK CONSIDERATIONS.................................................20
TRUSTEES AND OFFICERS.......................................................21
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES...........................27
Investment Manager and Administrator..................................27
Sub-Adviser...........................................................28
Investment Companies Managed..........................................29
Management and Control of N&B Management..............................32
DISTRIBUTION ARRANGEMENTS...................................................33
ADDITIONAL REDEMPTION INFORMATION...........................................34
Suspension of Redemptions.............................................34
Redemptions in Kind...................................................34
DIVIDENDS AND OTHER DISTRIBUTIONS...........................................35
ADDITIONAL TAX INFORMATION..................................................35
Taxation of the Fund..................................................35
Taxation of the Portfolio.............................................36
Taxation of the Fund's Shareholders...................................39
PORTFOLIO TRANSACTIONS......................................................39
Portfolio Turnover....................................................43
REPORTS TO SHAREHOLDERS.....................................................43
<PAGE>
Page
----
CUSTODIAN AND TRANSFER AGENT................................................43
INDEPENDENT AUDITORS........................................................43
LEGAL COUNSEL...............................................................44
REGISTRATION STATEMENT......................................................44
Appendix A..................................................................45
RATINGS OF CORPORATE BONDS AND COMMERCIAL PAPER.......................45
ii
<PAGE>
INVESTMENT INFORMATION
The Fund is a separate operating series of the Trust, a Delaware
business trust that is registered with the Securities and Exchange Commission
("SEC") as an open-end management investment company. The Fund seeks its
investment objective by investing all of its net investable assets in the
Portfolio, a series of Equity Managers Trust ("Managers Trust") that has an
investment objective identical to that of the Fund. The Portfolio, in turn,
invests in securities in accordance with an investment objective, policies, and
limitations identical to those of the Fund. (The Trust and Managers Trust, which
is an open-end management investment company managed by 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 the Fund
and Portfolio. The investment objective and, unless otherwise specified, the
investment policies and limitations of the Fund and Portfolio are not
fundamental. Any investment objective, policy or limitation that is not
fundamental may be changed by the trustees of the Trust ("Fund Trustees") or of
Managers Trust ("Portfolio Trustees") without shareholder approval. The
fundamental investment policies and limitations of the Fund or the Portfolio may
not be changed without the approval of the lesser of (1) 67% of the total units
of beneficial interest ("shares") of the Fund or Portfolio represented at a
meeting at which more than 50% of the outstanding Fund or Portfolio shares are
represented or (2) a majority of the outstanding shares of the Fund or
Portfolio. These percentages are required by the Investment Company Act of 1940
("1940 Act") and are referred to in this SAI as a "1940 Act majority vote."
Whenever the Fund is called upon to vote on a change in a fundamental investment
policy or limitation of the Portfolio, the Fund casts its votes in proportion to
the votes of its shareholders at a meeting thereof called for that purpose.
INVESTMENT POLICIES AND LIMITATIONS
The Fund has the following fundamental investment policy, to enable
it to invest in the Portfolio:
Notwithstanding any other investment policy of the Fund, the Fund may
invest all of its net investable assets (cash, securities, and receivables
relating to securities) in an open-end management investment company
having substantially the same investment objective, policies, and
limitations as the Fund.
All other fundamental investment policies and limitations and the
non-fundamental investment policies and limitations of the Fund are identical to
those of the Portfolio. Therefore, although the following discusses the
investment policies and limitations of the Portfolio, it applies equally to the
Fund.
1
<PAGE>
Except for the limitation on borrowing, any investment policy or
limitation that involves a maximum percentage of securities or assets will not
be considered to be violated unless the percentage limitation is exceeded
immediately after, and because of, a transaction by the Portfolio.
The Portfolio's fundamental investment policies and limitations are
as follows:
1. BORROWING. The Portfolio may not borrow money, except that the
Portfolio may (i) borrow money from banks for temporary or emergency purposes
and not for leveraging or investment and (ii) enter into reverse repurchase
agreements for any purpose; provided that (i) and (ii) in combination do not
exceed 33-1/3% of the value of its total assets (including the amount borrowed)
less liabilities (other than borrowings). If at any time borrowings exceed
33-1/3% of the value of the Portfolio's total assets, the Portfolio will reduce
its borrowings within three days (excluding Sundays and holidays) to the extent
necessary to comply with the 33-1/3% limitation.
2. COMMODITIES. The Portfolio may not purchase physical commodities
or contracts thereon, unless acquired as a result of the ownership of securities
or instruments, but this restriction shall not prohibit the Portfolio from
purchasing futures contracts or options (including options on futures contracts,
but excluding options or futures contracts on physical commodities) or from
investing in securities of any kind.
3. DIVERSIFICATION. The Portfolio may not, with respect to 75% of
the value of its total assets, purchase the securities of any issuer (other than
securities issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, (i) more than 5% of the value of the
Portfolio's total assets would be invested in the securities of that issuer or
(ii) the Portfolio would hold more than 10% of the outstanding voting securities
of that issuer.
4. INDUSTRY CONCENTRATION. The Portfolio may not purchase any
security if, as a result, 25% or more of its total assets (taken at current
value) would be invested in the securities of issuers having their principal
business activities in the same industry. This limitation does not apply to
securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities.
5. LENDING. The Portfolio may not lend any security or make any
other loan if, as a result, more than 33-1/3% of its total assets (taken at
current value) would be lent to other parties, except, in accordance with its
2
<PAGE>
investment objective, policies, and limitations, (i) through the purchase of a
portion of an issue of debt securities or (ii) by engaging in repurchase
agreements.
6. REAL ESTATE. The Portfolio may not purchase real estate unless
acquired as a result of the ownership of securities or instruments, but this
restriction shall not prohibit the Portfolio from purchasing securities issued
by entities or investment vehicles that own or deal in real estate or interests
therein or instruments secured by real estate or interests therein.
7. SENIOR SECURITIES. The Portfolio may not issue senior securities,
except as permitted under the 1940 Act.
8. UNDERWRITING. The Portfolio may not underwrite securities of
other issuers, except to the extent that the Portfolio, in disposing of
portfolio securities, may be deemed to be an underwriter within the meaning of
the Securities Act of 1933 ("1933 Act").
For purposes of the limitation on commodities, the Portfolio does
not consider foreign currencies or forward contracts to be physical commodities.
The Portfolio's non-fundamental investment policies and limitations
are as follows:
1. BORROWING. The Portfolio may not purchase securities if
outstanding borrowings, including any reverse repurchase agreements, exceed
5% of its total assets.
2. LENDING. Except for the purchase of debt securities and engaging
in repurchase agreements, the Portfolio may not make any loans other than
securities loans.
3. MARGIN TRANSACTIONS. The Portfolio may not purchase securities on
margin from brokers or other lenders, except that the Portfolio may obtain such
short-term credits as are necessary for the clearance of securities
transactions. Margin payments in connection with transactions in futures
contracts and options on futures contracts shall not constitute the purchase of
securities on margin and shall not be deemed to violate the foregoing
limitation.
4. FOREIGN SECURITIES. The Portfolio may not invest more than 10% of
the value of its total assets in securities of foreign issuers, provided that
this limitation shall not apply to foreign securities denominated in U.S.
dollars, including American Depositary Receipts ("ADRs").
3
<PAGE>
5. ILLIQUID SECURITIES. The Portfolio may not purchase any security
if, as a result, more than 15% of its net assets would be invested in illiquid
securities. Illiquid securities include securities that cannot be sold within
seven days in the ordinary course of business for approximately the amount at
which the Portfolio has valued the securities, such as repurchase agreements
maturing in more than seven days.
ADDITIONAL INVESTMENT INFORMATION
The Portfolio may make the following investments, among others,
although it may not buy all of the types of securities or use all of the
investment techniques that are described.
REPURCHASE AGREEMENTS. In a repurchase agreement, the Portfolio
purchases securities from a bank that is a member of the Federal Reserve System
or from a securities dealer that agrees to repurchase the securities from the
Portfolio at a higher price on a designated future date. Repurchase agreements
generally are for a short period of time, usually less than a week. Repurchase
agreements with a maturity of more than seven days are considered to be illiquid
securities. The Portfolio may not enter into a repurchase agreement with a
maturity of more than seven days if, as a result, more than 15% of the value of
its net assets would then be invested in such repurchase agreements and other
illiquid securities. The Portfolio may enter into a repurchase agreement only if
(1) the underlying securities are of a type that the Portfolio's investment
policies and limitations would allow it to purchase directly, (2) the market
value of the underlying securities, including accrued interest, at all times
equals or exceeds the repurchase price, and (3) payment for the underlying
securities is made only upon satisfactory evidence that the securities are being
held for the Portfolio's account by its custodian or a bank acting as the
Portfolio's agent.
SECURITIES LOANS. In order to realize income, the Portfolio may lend
portfolio securities with a value not exceeding 33-1/3% of its total assets to
banks, brokerage firms, or other institutional investors judged creditworthy by
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 secured credit,
loans of portfolio securities involve some risk of loss of rights in the
collateral should the borrower fail financially.
4
<PAGE>
RESTRICTED SECURITIES AND RULE 144A SECURITIES. The Portfolio may
invest in restricted securities, which are securities that may not be sold to
the public without an effective registration statement under the 1933 Act.
Before they are registered, such securities may be sold only in a privately
negotiated transaction or pursuant to an exemption from registration. In
recognition of the increased size and liquidity of the institutional market for
unregistered securities and the importance of institutional investors in the
formation of capital, the SEC has adopted Rule 144A under the 1933 Act. Rule
144A is designed to facilitate efficient trading among institutional investors
by permitting the sale of certain unregistered securities to qualified
institutional buyers. To the extent privately placed securities held by the
Portfolio qualify under Rule 144A and an institutional market develops for those
securities, the Portfolio likely will be able to dispose of the securities
without registering them under the 1933 Act. To the extent that institutional
buyers become, for a time, uninterested in purchasing these securities,
investing in Rule 144A securities could increase the level of the Portfolio's
illiquidity. 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 are freely tradable in their
principal market 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, the Portfolio may be obligated to
pay all or part of the registration expenses, and a considerable period may
elapse between the decision to sell and the time the Portfolio may be permitted
to sell a security under an effective registration statement. If, during such a
period, adverse market conditions were to develop, the Portfolio might obtain a
less favorable price than prevailed when it decided to sell. To the extent
restricted securities, including Rule 144A securities, are illiquid, purchases
thereof will be subject to the Portfolio's 15% limit on investments in illiquid
securities. Restricted securities for which no market exists are priced by a
method that the Portfolio Trustees believe accurately reflects fair value.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement,
the Portfolio sells portfolio securities subject to its agreement to repurchase
the securities at a later date for a fixed price reflecting a market rate of
interest; these agreements are considered borrowings for purposes of the
Portfolio's investment policies and limitations concerning borrowings. While a
reverse repurchase agreement is outstanding, the Portfolio will deposit in a
segregated account with its custodian cash or appropriate liquid securities,
marked to market daily, in an amount at least equal to the Portfolio's
5
<PAGE>
obligations under the agreement. There is a risk that the counter-party to a
reverse repurchase agreement will be unable or unwilling to complete the
transaction as scheduled, which may result in losses to the Portfolio.
FOREIGN SECURITIES. The Portfolio may invest in U.S.
dollar-denominated securities of foreign issuers (including banks, governments,
and quasi-governmental organizations) and foreign branches of U.S. banks,
including negotiable certificates of deposit ("CDs"), bankers' acceptances and
commercial paper. These investments are subject to the Portfolio's quality
standards. While investments in foreign securities are intended to reduce risk
by providing further diversification, such investments involve sovereign and
other risks, in addition to the credit and market risks normally associated with
domestic securities. These additional risks include the possibility of adverse
political and economic developments (including political instability,
nationalization, expropriation, or confiscatory taxation) and the potentially
adverse effects of unavailability of public information regarding issuers, less
governmental supervision and regulation of financial markets, reduced liquidity
of certain financial markets, and the lack of uniform accounting, auditing, and
financial reporting standards or the application of standards that are different
or less stringent than those applied in the United States.
The Portfolio also may invest in equity, debt, or other
income-producing securities that are denominated in or indexed to foreign
currencies, including (1) common and preferred stocks, (2) CDs, commercial
paper, fixed time deposits, and bankers' acceptances issued by foreign banks,
(3) obligations of other corporations, and (4) obligations of foreign
governments and their subdivisions, agencies, and instrumentalities,
international agencies, and supranational entities. Investing in foreign
currency denominated securities involves the special risks associated with
investing in non-U.S. issuers, as described in the preceding paragraph, and the
additional risks of (1) adverse changes in foreign exchange rates, and (2)
adverse changes in investment or exchange control regulations (which could
prevent cash from being brought back to the United States). Additionally,
dividends and interest payable on foreign securities may be subject to foreign
taxes, including taxes withheld from those payments. Commissions on foreign
securities exchanges are often at fixed rates and are generally higher than
negotiated commissions on U.S. exchanges, although the Portfolio endeavors to
achieve the most favorable net results on portfolio transactions. The Portfolio
may invest only in securities of issuers in countries whose governments are
considered stable by N&B Management.
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.
6
<PAGE>
Foreign markets also have different clearance and settlement
procedures. In certain markets, there have been times when settlements have been
unable to keep pace with the volume of securities transactions, making it
difficult to conduct such transactions. Delays in settlement could result in
temporary periods when a portion of the assets of the Portfolio are uninvested
and no return is earned thereon. The inability of the Portfolio to make intended
security purchases due to settlement problems could cause the Portfolio to miss
attractive investment opportunities. Inability to dispose of portfolio
securities due to settlement problems could result in losses to the Portfolio
due to subsequent declines in value of the securities or, if the Portfolio has
entered into a contract to sell the securities, could result in possible
liability to the purchaser.
Interest rates prevailing in other countries may affect the prices
of foreign securities and exchange rates for foreign currencies. Local factors,
including the strength of the local economy, the demand for borrowing, the
government's fiscal and monetary policies, and the international balance of
payments, often affect interest rates in other countries. Individual foreign
economies may differ favorably or unfavorably from the U.S. economy in such
respects as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency, and balance of payments position.
In order to limit the risks inherent in investing in foreign
currency denominated securities, the Portfolio may not purchase any such
security if, as a result, more than 10% of its total assets (taken at market
value) would be invested in foreign currency denominated securities. Within that
limitation, however, the Portfolio is not restricted in the amount it may invest
in securities denominated in any one foreign currency.
FUTURES, OPTIONS ON FUTURES, OPTIONS ON SECURITIES AND INDICES,
FORWARD CONTRACTS, AND OPTIONS ON FOREIGN
CURRENCIES (COLLECTIVELY, "FINANCIAL INSTRUMENTS")
FUTURES CONTRACTS AND OPTIONS THEREON. The Portfolio may purchase
and sell interest rate futures contracts, stock and bond index futures
contracts, and foreign currency futures contracts and may purchase and sell
options thereon in an attempt to hedge against changes in the prices of
securities or, in the case of foreign currency futures and options thereon, to
hedge against changes in prevailing currency exchange rates. Because the futures
markets may be more liquid than the cash markets, the use of futures contracts
permits the Portfolio to enhance portfolio liquidity and maintain a defensive
position without having to sell portfolio securities. The Portfolio does not
engage in transactions in futures or options on futures for speculation. The
Portfolio views investment in (i) interest rate and securities index futures and
options thereon as a maturity management device and/or a device to reduce risk
7
<PAGE>
or preserve total return in an adverse environment for the hedged securities,
and (ii) foreign currency futures and options thereon as a means of establishing
more definitely the effective return on, or the purchase price of, securities
denominated in foreign currencies that are held or intended to be acquired by
the Portfolio.
A "sale" of a futures contract (or a "short" futures position)
entails the assumption of a contractual obligation to deliver the securities or
currency underlying the contract at a specified price at a specified future
time. A "purchase" of a futures contract (or a "long" futures position) entails
the assumption of a contractual obligation to acquire the securities or currency
underlying the contract at a specified price at a specified future time. Certain
futures, including stock and bond index futures, are settled on a net cash
payment basis rather than by the sale and delivery of the securities underlying
the futures.
U.S. futures contracts (except certain currency futures) are traded
on exchanges that have been designated as "contract markets" by the CFTC;
futures transactions must be executed through a futures commission merchant that
is a member of the relevant contract market. In both U.S. and foreign markets,
an exchange's affiliated clearing organization guarantees performance of the
contracts between the clearing members of the exchange.
Although futures contracts by their terms may require the actual
delivery or acquisition of the underlying securities or currency, in most cases
the contractual obligation is extinguished by being offset before the expiration
of the contract. A futures position is offset by buying (to offset an earlier
sale) or selling (to offset an earlier purchase) an identical futures contract
calling for delivery in the same month. This may result in a profit or loss.
"Margin" with respect to a futures contract is the amount of assets
that must be deposited by the Portfolio with, or for the benefit of, a futures
commission merchant in order to initiate and maintain the Portfolio's futures
positions. The margin deposit made by the Portfolio when it enters into a
futures contract ("initial margin") is intended to assure its performance of the
contract. If the price of the futures contract changes -- increases in the case
of a short (sale) position or decreases in the case of a long (purchase)
position -- so that the unrealized loss on the contract causes the margin
deposit not to satisfy margin requirements, the Portfolio will be required to
make an additional margin deposit ("variation margin"). However, if favorable
price changes in the futures contract cause the margin deposit to exceed the
required margin, the excess will be paid to the Portfolio. In computing its NAV,
the Portfolio marks to market the value of their open futures positions. The
Portfolio also must make margin deposits with respect to options on futures that
8
<PAGE>
it has written (but not with respect to options on futures that it has
purchased). If the futures commission merchant holding the margin deposit goes
bankrupt, the Portfolio could suffer a delay in recovering its funds and could
ultimately suffer a loss.
An option on a futures contract gives the purchaser the right, in
return for the premium paid, to assume a position in the contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the option exercise period. The
writer of the option is required upon exercise to assume a short futures
position (if the option is a call) or a long futures position (if the option is
a put). Upon exercise of the option, the accumulated cash balance in the
writer's futures margin account is delivered to the holder of the option. That
balance represents the amount by which the market price of the futures contract
at exercise exceeds, in the case of a call, or is less than, in the case of a
put, the exercise price of the option. Options on futures have characteristics
and risks similar to those of securities options, as discussed herein.
Although the Portfolio believes that the use of futures contracts
will benefit it, if N&B Management's judgment about the general direction of the
markets or about interest rate or currency exchange rate trends is incorrect,
the Portfolio's overall return would be lower than if it had not entered into
any such contracts. The prices of futures contracts are volatile and are
influenced by, among other things, actual and anticipated changes in interest or
currency exchange rates, which in turn are affected by fiscal and monetary
policies and by national and international political and economic events. At
best, the correlation between changes in prices of futures contracts and of
securities being hedged can be only approximate due to differences between the
futures and securities markets or differences between the securities or
currencies underlying the Portfolio's futures position and the securities held
by or to be purchased for the Portfolio. The currency futures market may be
dominated by short-term traders seeking to profit from changes in exchange
rates. This would reduce the value of such contracts used for hedging purposes
over a short-term period. Such distortions are generally minor and would
diminish as the contract approaches maturity.
Because of the low margin deposits required, futures trading
involves an extremely high degree of leverage; as a result, a relatively small
price movement in a futures contract may result in immediate and substantial
loss, or gain, to the investor. Losses that may arise from certain futures
transactions are potentially unlimited.
Most U.S. futures exchanges limit the amount of fluctuation in the
price of a futures contract or option thereon during a single trading day; once
the daily limit has been reached, no trades may be made on that day at a price
beyond that limit. The daily limit governs only price movements during a
particular trading day, however; it thus does not limit potential losses. In
9
<PAGE>
fact, it may increase the risk of loss, because prices can move to the daily
limit for several consecutive trading days with little or no trading, thereby
preventing liquidation of unfavorable futures and options positions and
subjecting traders to substantial losses. If this were to happen with respect to
a position held by the Portfolio, it could (depending on the size of the
position) have an adverse impact on the Portfolio's NAV.
CALL OPTIONS ON SECURITIES. The Portfolio may write covered call
options and may purchase call options on securities. The purpose of writing call
options is to hedge (I.E., to reduce, at least in part, the effect of price
fluctuations of securities held by the Portfolio on the Portfolio's and the
Fund's NAVs) or to earn premium income. Portfolio securities on which call
options may be written and purchased by the Portfolio are purchased solely on
the basis of investment considerations consistent with the Portfolio's
investment objective.
When the Portfolio writes a call option, it is obligated to sell a
security to a purchaser at a specified price at any time until a certain date if
the purchaser decides to exercise the option. The Portfolio receives a premium
for writing the call option. So long as the obligation of the call option
continues, the Portfolio may be assigned an exercise notice, requiring it to
deliver the underlying security against payment of the exercise price. The
Portfolio may be obligated to deliver securities underlying an option at less
than the market price.
The Portfolio writes only "covered" call options on securities it
owns. 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.
If a call option that the Portfolio has written expires unexercised,
the Portfolio will realize a gain in the amount of the premium; however, that
gain may be offset by a decline in the market value of the underlying security
during the option period. If the call option is exercised, the Portfolio will
realize a gain or loss from the sale of the underlying security.
When the Portfolio purchases a call option, it pays a premium for
the right to purchase a security from the writer at a specified price until a
specified date. The Portfolio would purchase a call option to offset a
10
<PAGE>
previously written call option. The Portfolio also may purchase a call option to
protect against an increase in the price of securities it intends to purchase.
PUT OPTIONS ON SECURITIES. The Portfolio may write and purchase put
options on securities. Generally, the purpose of writing and purchasing these
options is to hedge (I.E., to reduce, at least in part, the effect of price
fluctuations of securities held by the Portfolio on the Portfolio's and the
Fund's NAVs).
The Portfolio will receive a premium for writing a put option, which
obligates the Portfolio to acquire a security at a certain price at any time
until a certain date if the purchaser decides to exercise the option. The
Portfolio may be obligated to purchase the underlying security at more than its
current value.
When the Portfolio purchases a put option, it pays a premium to the
writer for the right to sell a security to the writer for a specified amount at
any time until a certain date. The Portfolio might purchase a put option in
order to protect itself against a decline in the market value of a security it
owns.
Portfolio securities on which put options may be written and
purchased by the Portfolio are purchased solely on the basis of investment
considerations consistent with the Portfolio's investment objective. When
writing a put option, the Portfolio, in return for the premium, takes the risk
that it must purchase the underlying security at a price that may be higher than
the current market price of the security. If a put option that the Portfolio has
written expires unexercised, the Portfolio will realize a gain in the amount of
the premium.
GENERAL INFORMATION ABOUT SECURITIES OPTIONS. The exercise price of
an option may be below, equal to, or above the market value of the underlying
security at the time the option is written. Options normally have expiration
dates between three and nine months from the date written. American-style
options are exercisable at any time prior to their expiration date. The
obligation under any option written by the Portfolio terminates upon expiration
of the option or, at an earlier time, when the Portfolio offsets the option by
entering into a "closing purchase transaction" to purchase an option of the same
series. If an option is purchased by the Portfolio and is never exercised or
closed out, the Portfolio will lose the entire amount of the premium paid.
Options are traded both on U.S. national securities exchanges and in
the over-the-counter ("OTC") market. Exchange-traded options are issued by a
clearing organization affiliated with the exchange on which the option is
listed; the clearing organization in effect guarantees completion of every
exchange-traded option. In contrast, OTC options are contracts between the
Portfolio and a counter-party, with no clearing organization guarantee. Thus,
11
<PAGE>
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.
The assets used as cover (or held in a segregated account) for OTC
options written by the Portfolio will be considered illiquid unless the OTC
options are sold to qualified dealers who agree that the Portfolio may
repurchase any OTC option it writes at a maximum price to be calculated by a
formula set forth in the option agreement. The cover for an OTC call option
written subject to this procedure will be considered illiquid only to the extent
that the maximum repurchase price under the formula exceeds the intrinsic value
of the option.
The premium received (or paid) by the Portfolio when it writes (or
purchases) an option is the amount at which the option is currently traded on
the applicable market. The premium may reflect, among other things, the current
market price of the underlying security, the relationship of the exercise price
to the market price, the historical price volatility of the underlying security,
the length of the option period, the general supply of and demand for credit,
and the interest rate environment. The premium received by the Portfolio for
writing an option is recorded as a liability on the Portfolio's statement of
assets and liabilities. This liability is adjusted daily to the option's current
market value.
Closing transactions are effected in order to realize a profit (or
minimize a loss) on an outstanding option, to prevent an underlying security
from being called, or to permit the sale or the put of the underlying security.
Furthermore, effecting a closing transaction permits the Portfolio to write
another call option on the underlying security with a different exercise price
or expiration date or both. There is, of course, no assurance that the 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.
12
<PAGE>
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. Because increases in the market
price of a call option generally reflect increases in the market price of the
underlying security, any loss resulting from the repurchase of a call option is
likely to be offset, in whole or in part, by appreciation of the underlying
security owned by the Portfolio; however, the Portfolio could be in a less
advantageous position than if it had not written the call option.
The Portfolio pays brokerage commissions or spreads in connection
with purchasing or writing options, including those used to close out existing
positions. 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.
The hours of trading for options may not conform to the hours during
which the underlying securities are traded. To the extent that the options
markets close before the markets for the underlying securities, significant
price and rate movements can take place in the underlying markets that cannot be
reflected in the options markets.
FOREIGN CURRENCY TRANSACTIONS. The Portfolio may enter into
contracts for the purchase or sale of a specific currency at a future date
(usually less than one year from the date of the contract) at a fixed price
("forward contracts"). The Portfolio enters into forward contracts in an attempt
to hedge against changes in prevailing currency exchange rates. The Portfolio
does not engage in transactions in forward contracts for speculation; it views
investments in forward contracts as a means of establishing more definitely the
effective return on, or the purchase price of, securities denominated in foreign
currencies. Forward contract transactions include forward sales or purchases of
foreign currencies for the purpose of protecting the U.S. dollar value of
securities held or to be acquired by the Portfolio or protecting the U.S. dollar
equivalent of dividends, interest, or other payments on those securities.
Forward contracts are traded in the interbank market directly
between dealers (usually large commercial banks) and their customers. A forward
contract generally has no deposit requirement, and no commissions are charged at
any stage for trades; foreign exchange dealers realize a profit based on the
difference (the spread) between the prices at which they are buying and selling
various currencies.
At the consummation of a forward contract to sell currency, the
Portfolio may either make delivery of the foreign currency or terminate its
contractual obligation to deliver by purchasing an offsetting contract. If the
Portfolio chooses to make delivery of the foreign currency, it may be required
to obtain such currency through the sale of portfolio securities denominated in
13
<PAGE>
such currency or through conversion of other assets of the Portfolio into such
currency. If the Portfolio engages in an offsetting transaction, it will incur a
gain or a loss to the extent that there has been a change in forward contract
prices. Closing purchase transactions with respect to forward contracts are
usually made with the currency dealer who is a party to the original forward
contract.
N&B Management believes that the use of foreign currency hedging
techniques, including "proxy-hedges," can provide significant protection of NAV
in the event of a general rise in the U.S. dollar against foreign currencies.
For example, the return available from securities denominated in a particular
foreign currency would diminish if the value of the U.S. dollar increased
against that currency. Such a decline could be partially or completely offset by
an increase in value of a hedge involving a forward contract to sell that
foreign currency or a proxy-hedge involving a forward contract to sell a
different foreign currency whose behavior is expected to resemble the currency
in which the securities being hedged are denominated but which is available on
more advantageous terms.
However, a hedge or proxy-hedge cannot protect against exchange rate
risks perfectly, and if 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 had not been established. If the Portfolio uses
proxy-hedging, it may experience losses on both the currency in which it has
invested and the currency used for hedging if the two currencies do not vary
with the expected degree of correlation. Using forward contracts to protect the
value of the Portfolio's securities against a decline in the value of a currency
does not eliminate fluctuations in the prices of underlying securities. Because
forward contracts are not traded on an exchange, the assets used to cover such
contracts may be illiquid. The Portfolio may experience delays in the settlement
of its foreign currency transactions.
OPTIONS ON FOREIGN CURRENCIES. The 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 U.S. dollar equivalent of dividends, interest, or
other payments on those securities. Currency options have characteristics and
risks similar to those of securities options, as discussed herein. Certain
options on foreign currencies are traded on the OTC market and involve liquidity
and credit risks that may not be present in the case of exchange-traded currency
options.
14
<PAGE>
REGULATORY LIMITATIONS ON USING FINANCIAL INSTRUMENTS. To the extent
the Portfolio sells or purchases futures contracts or writes options thereon or
options on foreign currencies that are traded on an exchange regulated by the
CFTC other than for BONA FIDE hedging purposes (as defined by the CFTC), the
aggregate initial margin and premiums on those positions (excluding the amount
by which options are "in-the-money") may not exceed 5% of the Portfolio's net
assets.
COVER FOR FINANCIAL INSTRUMENTS. The Portfolio will comply with SEC
guidelines regarding "cover" for Financial Instruments and, if the guidelines so
require, set aside in a segregated account with its custodian the prescribed
amount of cash or appropriate liquid securities. Securities held in a segregated
account cannot be sold while the futures, options or forward strategy covered by
those securities is outstanding, unless they are replaced with other suitable
assets. As a result, segregation of a large percentage of the Portfolio's assets
could impede portfolio management or the Portfolio's ability to meet current
obligations. The Portfolio may be unable promptly to dispose of assets which
cover, or are segregated with respect to, an illiquid futures, options, or
forward position; this inability may result in a loss to the Portfolio.
GENERAL RISKS OF FINANCIAL INSTRUMENTS. The primary risks in using
Financial Instruments are (1) imperfect correlation or no correlation between
changes in market value of the securities or currencies held or to be acquired
by the Portfolio and the prices of Financial Instruments; (2) possible lack of a
liquid secondary market for Financial Instruments and the resulting inability to
close out Financial Instruments when desired; (3) the fact that the skills
needed to use Financial Instruments are different from those needed to select
the 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 the Portfolio
to purchase or sell a portfolio security at a time that would otherwise be
favorable for it to do so, or the possible need for the Portfolio to sell a
portfolio security at a disadvantageous time, due to its need to maintain cover
or to segregate securities in connection with its use of Financial Instruments.
N&B Management intends to reduce the risk of imperfect correlation by investing
only in Financial Instruments whose behavior is expected to resemble or offset
that of the Portfolio's underlying securities or currency. N&B Management
intends to reduce the risk that the Portfolio will be unable to close out
Financial Instruments by entering into such transactions only if N&B Management
believes there will be an active and liquid secondary market. There can be no
assurance that the Portfolio's use of Financial Instruments will be successful.
15
<PAGE>
The Portfolio's use of Financial Instruments may be limited by the
provisions of the Internal Revenue Code of 1986, as amended ("Code"), with which
it must comply if the Fund is to continue to qualify as a RIC. See "Additional
Tax Information." Hedging instruments may not be available with respect to some
currencies, especially those of so-called emerging market countries.
FIXED INCOME SECURITIES. While the emphasis of the Portfolio's
investment program is on common stocks and other equity securities, it may also
invest in money market instruments, U.S. Government and Agency Securities, and
other fixed income securities. The Portfolio may invest in corporate bonds and
debentures receiving one of the four highest ratings from Standard & Poor's
("S&P"), Moody's Investors Service, Inc. ("Moody's"), or any other nationally
recognized statistical rating organization ("NRSRO") or, if not rated by any
NRSRO, deemed comparable by N&B Management to such rated securities ("Comparable
Unrated Securities").
The ratings of an NRSRO represent its opinion as to the quality of
securities it undertakes to rate. Ratings are not absolute standards of quality;
consequently, securities with the same maturity, coupon, and rating may have
different yields. Although the Portfolio may rely on the ratings of any NRSRO,
the Portfolio primarily refers to ratings assigned by S&P and Moody's, which are
described in Appendix A to this SAI.
Fixed income securities are subject to the risk of an issuer's
inability to meet principal and interest payments on its obligations ("credit
risk") and are subject to price volatility due to such factors as interest rate
sensitivity, market perception of the creditworthiness of the issuer, and market
liquidity ("market risk"). 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.
Subsequent to its purchase by the Portfolio, an issue of debt
securities may cease to be rated or its rating may be reduced, so that the
securities would no longer be eligible for purchase by the Portfolio. In such a
case, the Portfolio will engage in an orderly disposition of the downgraded
securities.
COMMERCIAL PAPER. Commercial paper is a short-term debt security
issued by a corporation or bank, usually for purposes such as financing current
operations. The Portfolio may invest only in commercial paper receiving the
highest rating from S&P (A-1) or Moody's (P-1) or deemed by N&B Management to be
of comparable quality.
16
<PAGE>
The Portfolio may invest in commercial paper that cannot be resold
to the public without an effective registration statement under the 1933 Act.
While restricted commercial paper normally is deemed illiquid, N&B Management
may in certain cases determine that such paper is liquid, pursuant to guidelines
established by the Portfolio Trustees.
ZERO COUPON SECURITIES. The Portfolio may invest in zero coupon
securities, which are debt obligations that do not entitle the holder to any
periodic payment of interest prior to maturity or that specify a future date
when the securities begin to pay current interest. Zero coupon securities are
issued and traded at a discount from their face amount or par value. This
discount varies depending on prevailing interest rates, the time remaining until
cash payments begin, the liquidity of the security, and the perceived credit
quality of the issuer.
The discount on zero coupon securities ("original issue discount")
must be taken into income ratably by the Portfolio prior to the receipt of any
actual payments. Because the Fund must distribute substantially all of its net
income (including its share of the Portfolio's accrued original issue discount)
to its shareholders each year for income and excise tax purposes, the Portfolio
may have to dispose of portfolio securities under disadvantageous circumstances
to generate cash, or may be required to borrow, to satisfy the Fund's
distribution requirements. See "Additional Tax Information."
The market prices of zero coupon securities generally are more
volatile than the prices of securities that pay interest periodically. Zero
coupon securities are likely to respond to changes in interest rates to a
greater degree than other types of debt securities having a similar maturity and
credit quality.
CONVERTIBLE SECURITIES. The Portfolio may invest in convertible
securities. A convertible security entitles the holder to receive the interest
paid or accrued on debt or the dividend paid on preferred stock until the
convertible security matures or is redeemed, converted or exchanged. Before
conversion, such securities ordinarily provide a stream of income with generally
higher yields than common stocks of the same or similar issuers, but lower than
the yield on non-convertible debt. Convertible securities are usually
subordinated to comparable-tier non-convertible securities but rank senior to
common stock in a corporation's capital structure. The value of a convertible
security is a function of (1) its yield in comparison to the yields of other
securities of comparable maturity and quality that do not have a conversion
privilege and (2) its worth if converted into the underlying common stock.
Convertible debt securities are subject to the Portfolio's investment policies
and limitations concerning fixed income securities.
17
<PAGE>
The price of a convertible security often reflects variations in the
price of the underlying common stock in a way that non-convertible debt may not.
Convertible securities are typically issued by smaller capitalization companies
whose stock prices may be volatile. A convertible security may be subject to
redemption at the option of the issuer at a price established in the security's
governing instrument. If a convertible security held by the Portfolio is called
for redemption, the Portfolio will be required to convert it into the underlying
common stock, sell it to a third party or permit the issuer to redeem the
security. Any of these actions could have an adverse effect on the Portfolio's
and the Fund's ability to achieve their investment objectives.
PREFERRED STOCK. The Portfolio may invest in preferred stock. Unlike
interest payments on debt securities, dividends on preferred stock are generally
payable at the discretion of the issuer's board of directors. Preferred
shareholders may have certain rights if dividends are not paid but generally
have no legal recourse against the issuer. Shareholders may suffer a loss of
value if dividends are not paid. The market prices of preferred stocks are
generally more sensitive to changes in the issuer's creditworthiness than are
the prices of debt securities.
PERFORMANCE INFORMATION
The Fund's performance figures are based on historical results and
are not intended to indicate future performance. The share price and total
return of the Fund will vary, and an investment in the Fund, when redeemed, may
be worth more or less than an investor's original cost. As of the date of this
SAI, the Fund was new and had no performance history.
TOTAL RETURN COMPUTATIONS
The Fund may advertise certain total return information. An average
annual compounded rate of return ("T") may be computed by using the redeemable
value at the end of a specified period ("ERV") of a hypothetical initial
investment of $1,000 ("P") over a period of time ("n") according to the formula:
P(1+T)[SUPERSCRIPT]n = ERV
Average annual total return smoothes out year-to-year variations in
performance and, in that respect, differs from actual year-to-year results.
N&B Management may from time to time reimburse the Fund for a
portion of its expenses. Such action has the effect of increasing total return.
Actual reimbursements are described in the Prospectus and in "Investment
Management and Administration Services" below.
18
<PAGE>
COMPARATIVE INFORMATION
From time to time the Fund's performance may be compared with:
(1) data (that may be expressed as rankings or ratings) published by
independent services or publications (including newspapers, newsletters,
and financial periodicals) that monitor the performance of mutual funds,
such as Lipper Analytical Services, Inc., C.D.A. Investment Technologies,
Inc., Wiesenberger Investment Companies Service, Investment Company Data
Inc., Morningstar, Inc., Micropal Incorporated, and quarterly mutual fund
rankings by Money, Fortune, Forbes, Business Week, Personal Investor, and
U.S. News & World Report magazines, The Wall Street Journal, The New York
Times, Kiplinger's Personal Finance, and Barron's Newspaper, or
(2) recognized stock and other indices, such as the S&P "500"
Composite Stock Price Index ("S&P 500 Index"), S&P Small Cap 600 Index
("S&P 600 Index"), S&P Mid Cap 400 Index ("S&P 400 Index"), Russell 2000
Stock Index, Russell Midcap Growth Index, Dow Jones Industrial Average
("DJIA"), Wilshire 1750 Index, Nasdaq Composite Index, Montgomery
Securities Growth Stock Index, Value Line Index, U.S. Department of Labor
Consumer Price Index ("Consumer Price Index"), College Board Annual Survey
of Colleges, Kanon Bloch's Family Performance Index, the Barra Growth
Index, the Barra Value Index and various other domestic, international,
and global indices. The S&P 500 Index is a broad index of common stock
prices, while the DJIA represents a narrower segment of industrial
companies. The S&P 600 Index includes stocks that range in market value
from $39 million to $2.7 billion, with an average of $616 million. The S&P
400 Index measures mid-sized companies that have an average market
capitalization of $2.2 billion. Each assumes reinvestment of distributions
and is calculated without regard to tax consequences or the costs of
investing. The Portfolio may invest in different types of securities from
those included in some of the above indices.
Evaluations of the Fund's performance, its total returns, and
comparisons may be used in advertisements and in information furnished to
current and prospective shareholders (collectively, "Advertisements"). The Fund
may also be compared to individual asset classes such as common stocks,
small-cap stocks, or Treasury bonds, based on information supplied by Ibbotson
and Sinquefield.
19
<PAGE>
OTHER PERFORMANCE INFORMATION
From time to time, information about the Portfolio's portfolio
allocation and holdings as of a particular date may be included in
Advertisements for the Fund. This information may include the Portfolio's
portfolio diversification by asset type. Information used in Advertisements may
include statements or illustrations relating to the appropriateness of types of
securities and/or mutual funds that may be employed to meet specific financial
goals, such as (1) funding retirement, (2) paying for children's education, and
(3) financially supporting aging parents.
N&B Management believes that many of its common stock funds may be
attractive investment vehicles for conservative investors who are interested in
long-term appreciation from stock investments, but who have a moderate tolerance
for risk. Such investors may include, for example, individuals (1) planning for
or facing retirement, (2) receiving or expecting to receive lump-sum
distributions from individual retirement accounts ("IRAs"), self-employed
individual retirement plans ("Keogh plans"), or other retirement plans, (3)
anticipating rollovers of CDs or IRAs, Keogh plans, or other retirement plans,
and (4) receiving a significant amount of money as a result of inheritance, sale
of a business, or termination of employment.
Investors who may find the Fund to be an attractive investment
vehicle also include parents saving to meet college costs for their children.
For instance, the cost of a college education is rapidly approaching the cost of
the average family home. Estimates of total four-year costs (tuition, room and
board, books and other expenses) for students starting college in various years
may be included in Advertisements, based on the College Board Annual Survey of
Colleges.
Information relating to inflation and its effects on the dollar also
may be included in Advertisements. For example, after ten years, the purchasing
power of $25,000 would shrink to $16,621, $14,968, $13,465, and $12,100,
respectively, if the annual rates of inflation during that period were 4%, 5%,
6%, and 7%, respectively. (To calculate the purchasing power, the value at the
end of each year is reduced by the inflation rate for the ten-year period.)
CERTAIN RISK CONSIDERATIONS
Although the Portfolio seeks to reduce risk by investing in a
diversified portfolio of securities, diversification does not eliminate all
risk. There can, of course, be no assurance the Portfolio will achieve its
investment objective.
20
<PAGE>
TRUSTEES AND OFFICERS
The following table sets forth information concerning the trustees
and officers of the Trusts, including their addresses and principal business
experience during the past five years. Some persons named as trustees and
officers also serve in similar capacities for other funds and their
corresponding portfolios administered or managed by N&B Management and Neuberger
& Berman, LLC ("Neuberger & Berman").
<TABLE>
<CAPTION>
Name, Age, and Positions Held
Address(1) With the Trusts Principal Occupation(s)(2)
---------- --------------- --------------------------
<S> <C> <C>
Faith Colish (63) Trustee of each Trust Attorney at Law, Faith Colish, A Professional
63 Wall Street Corporation.
24th Floor
New York, NY 10005
Stanley Egener* (64) Chairman of the Board, Chief Principal of Neuberger & Berman; President and
Executive Officer, and Trustee of Director of N&B Management; Chairman of the Board,
each Trust Chief Executive Officer and Trustee of eight other
mutual funds for which N&B Management acts as
investment manager or administrator.
Howard A. Mileaf (61) Trustee of each Trust Vice President and Special Counsel to WHX Corporation
WHX Corporation (holding company) since 1992; Director of Kevlin
110 East 59th Street Corporation (manufacturer of microwave and other
30th Floor products).
New York, NY 10022
Edward I. O'Brien* (70) Trustee of each Trust Until 1993, President of the Securities Industry
12 Woods Lane Association ("SIA") (securities industry's
Scarsdale, NY 10583 representative in government relations and regulatory
matters at the federal and state levels); until
November 1993, employee of the SIA; Director of Legg
Mason, Inc.
John T. Patterson, Jr. (70) Trustee of each Trust Retired. Formerly, President of SOBRO (South Bronx
183 Ledge Drive Overall Economic Development Corporation).
Torrington, CT 06790
21
<PAGE>
Name, Age, and Positions Held
Address(1) With the Trusts Principal Occupation(s)(2)
---------- --------------- --------------------------
John P. Rosenthal (65) Trustee of each Trust Senior Vice President of Burnham Securities Inc. (a
Burnham Securities Inc. registered broker-dealer) since 1991; Director,
Burnham Asset Management Corp. Cancer Treatment Holdings, Inc.
1325 Avenue of the Americas
17th Floor
New York, NY 10019
Cornelius T. Ryan (67) Trustee of each Trust General Partner of Oxford Partners and Oxford
Oxford Bioscience Partners Bioscience Partners (venture capital partnerships)
315 Post Road West and President of Oxford Venture Corporation; Director
Westport, CT 06880 of Capital Cash Management Trust (money market fund)
and Prime Cash Fund.
Gustave H. Shubert (69) Trustee of each Trust Senior Fellow/Corporate Advisor and Advisory Trustee
13838 Sunset Boulevard of Rand (a non-profit public interest research
Pacific Palisades, CA 90272 institution) since 1989; Honorary Member of the Board
of Overseers of the Institute for Civil Justice, the
Policy Advisory Committee of the Clinical Scholars
Program at the University of California, the American
Association for the Advancement of Science, the
Counsel on Foreign Relations, and the Institute for
Strategic Studies (London); advisor to the Program
Evaluation and Methodology Division of the U.S.
General Accounting Office; formerly Senior Vice
President and Trustee of Rand.
22
<PAGE>
Name, Age, and Positions Held
Address(1) With the Trusts Principal Occupation(s)(2)
---------- --------------- --------------------------
Lawrence Zicklin* (62) President and Trustee of each Trust Principal of Neuberger & Berman; Director of N&B
Management; President and/or Trustee of five other
mutual funds for which N&B Management acts as
investment manager or administrator.
Daniel J. Sullivan (58) Vice President of each Trust Senior Vice President of N&B Management since 1992;
Vice President of eight other mutual funds for which
N&B Management acts as investment manager or
administrator.
Michael J. Weiner (51) Vice President and Principal Senior Vice President of N&B Management since 1992;
Financial Officer of each Trust Treasurer of N&B Management from 1992 to 1996; Vice
President and Principal Financial Officer of eight
other mutual funds for which N&B Management acts as
investment manager or administrator.
Claudia A. Brandon (42) Secretary of each Trust Vice President of N&B Management; Secretary of eight
other mutual funds for which N&B Management acts as
investment manager or administrator.
Richard Russell (51) Treasurer and Principal Accounting Vice President of N&B Management since 1993; prior
Officer of each Trust thereto, Assistant Vice President of N&B Management;
Treasurer and Principal Accounting Officer of eight
other mutual funds for which N&B Management acts as
investment manager or administrator.
23
<PAGE>
Name, Age, and Positions Held
Address(1) With the Trusts Principal Occupation(s)(2)
---------- --------------- --------------------------
Stacy Cooper-Shugrue (35) Assistant Secretary of each Trust Assistant Vice President of N&B 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 (61) Assistant Secretary of each Trust Principal of Neuberger & Berman since 1992; Assistant
Secretary of eight other mutual funds for which N&B
Management acts as investment manager or
administrator.
Barbara DiGiorgio (39) Assistant Assistant Vice President of N&B Management since
Treasurer of each Trust 1993; prior thereto, employee of N&B Management;
Assistant Treasurer since 1996 of eight other mutual
funds for which N&B Management acts as investment
manager or administrator.
Celeste Wischerth (37) Assistant Assistant Vice President of N&B Management since
Treasurer of each Trust 1994; prior thereto, employee of N&B Management;
Assistant Treasurer since 1996 of eight other mutual
funds for which N&B Management acts as investment
manager or administrator.
</TABLE>
24
<PAGE>
- --------------------
(1) Unless otherwise indicated, the business address of each listed person is
605 Third Avenue, New York, New York 10158.
(2) Except as otherwise indicated, each individual has held the positions shown
for at least the last five years.
* Indicates a trustee who is an "interested person" of each Trust within the
meaning of the 1940 Act. Messrs. Egener and Zicklin are interested persons by
virtue of the fact that they are officers and/or directors of N&B Management and
principals of Neuberger & Berman. Mr. O'Brien is an interested person by virtue
of the fact that he is a director of Legg Mason, Inc., a wholly owned subsidiary
of which, from time to time, serves as a broker or dealer to the Portfolio and
other funds for which N&B Management serves as investment manager.
The Trust's Trust Instrument and Managers Trust's Declaration of
Trust provide that each such Trust will indemnify its trustees and officers
against liabilities and expenses reasonably incurred in connection with
litigation in which they may be involved because of their offices with the
Trust, unless it is adjudicated that they (a) engaged in bad faith, willful
misfeasance, gross negligence, or reckless disregard of the duties involved in
the conduct of their offices, or (b) did not act in good faith in the reasonable
belief that their action was in the best interest of the Trust. In the case of
settlement, such indemnification will not be provided unless it has been
determined (by a court or other body approving the settlement or other
disposition, by a majority of disinterested trustees based upon a review of
readily available facts, or in a written opinion of independent counsel) that
such officers or trustees have not engaged in willful misfeasance, bad faith,
gross negligence, or reckless disregard of their duties.
The following table sets forth information concerning the
compensation of the trustees of the Trust. None of the Neuberger & Berman
Funds(R) has any retirement plan for its trustees.
TABLE OF COMPENSATION
FOR FISCAL YEAR ENDED 8/31/98
-----------------------------
Aggregate Total Compensation
Compensation from Investment
Name and Position from the Companies in the
With the Trust Trust Neuberger & Berman
- ----------------- ------------ Fund Complex Paid
to Trustees
-------------------
Faith Colish $ _____ $ ______
Trustee (5 other investment
companies)
Donald M. Cox* $ ______ $ ______
Trustee (3 other investment
companies)
25
<PAGE>
TABLE OF COMPENSATION
FOR FISCAL YEAR ENDED 8/31/98
-----------------------------
Aggregate Total Compensation
Compensation from Investment
Name and Position from the Companies in the
With the Trust Trust Neuberger & Berman
- ----------------- ------------ Fund Complex Paid
to Trustees
-------------------
Stanley Egener $ 0 $ 0
Chairman of the Board, (9 other investment
Chief Executive companies)
Officer, and Trustee
Alan R. Gruber, Trustee, and the $ ______ $ ______
Estate of Alan R. Gruber (3 other investment
companies)
Howard A. Mileaf $ ______ $ ______
Trustee (4 other investment
companies)
Edward I. O'Brien $ _______ $ _______
Trustee (3 other investment
companies)
John T. Patterson, Jr. $ _______ $ _______
Trustee (4 other investment
companies)
John P. Rosenthal $ _______ $ _______
Trustee (4 other investment
companies)
Cornelius T. Ryan $ _______ $ ______
Trustee (3 other investment
companies)
Gustave H. Shubert $ ______ $ _______
Trustee (3 other investment
companies)
Lawrence Zicklin $ 0 $ 0
President and Trustee (5 other investment
companies)
*Retired 12/31/97.
26
<PAGE>
At ____________, 1998, the trustees and officers of the Trusts, as a
group, owned beneficially or of record less than 1% of the outstanding shares of
the Fund.
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
INVESTMENT MANAGER AND ADMINISTRATOR
Because all of the Fund's net investable assets are invested in the
Portfolio, the Fund does not need an investment manager. N&B Management serves
as the Portfolio's investment manager pursuant to a management agreement with
Managers Trust, dated as of August 2, 1993 ("Management Agreement"). The
Management Agreement was approved by the holders of the interests in the
Portfolio on ___________, 1998.
The Management Agreement provides, in substance, that N&B Management
will make and implement investment decisions for the Portfolio in its discretion
and will continuously develop an investment program for the Portfolio's assets.
The Management Agreement permits N&B Management to effect securities
transactions on behalf of the 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 Portfolio, although N&B Management has
no current plans to pay a material amount of such compensation.
N&B Management provides to the 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
directors of N&B Management (who also are principals of Neuberger & Berman), one
of whom also serves as an officer of N&B Management, 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 facilities, services and personnel, as well
as accounting, recordkeeping, and other services, to the Fund pursuant to an
administration agreement with the Trust, dated August 3, 1993, as amended on
August 2, 1996 ("Administration Agreement"). For such administrative services,
the Fund pays 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
Institutions for accounting, recordkeeping and other services that they provide
in connection with investments in the Fund.
27
<PAGE>
Institutions may be subject to federal or state laws that limit
their ability to provide certain administrative or distribution-related
services. For example, the Glass-Steagall Act is generally interpreted to
prohibit most banks from underwriting mutual fund shares. N&B Management intends
to contract with Institutions for only those services they may legally provide.
If, due to a change in the laws governing Institutions or in the interpretation
of any such law, an Institution is prohibited from performing some or all of the
above-described services, N&B Management may be required to find alternative
means of providing those services. Any such change is not expected to impact the
Fund or its shareholders adversely.
The Fund's investment objective, policies and limitations are the
same as those of another mutual fund that is a series of Neuberger&Berman Equity
Funds and that has a name similar to the Fund's and also invests in the
Portfolio ("Sister Fund"). N&B Management has voluntarily undertaken to
reimburse the Fund for its Total Operating Expenses (as defined in the
Prospectus) so that the Fund's expense ratio per annum will not exceed the
expense ratio of its Sister Fund by more than 0.10% of the Fund's average daily
net assets. This undertaking can be terminated by N&B Management by giving the
Fund at least 60 days' prior written notice.
The Management Agreement continues with respect to the Portfolio
until August 2, 2000. The Management Agreement is renewable thereafter from year
to year with respect to the Portfolio, so long as its continuance is approved at
least annually (1) by the vote of a majority of the Portfolio Trustees who are
not "interested persons" of N&B Management or Managers Trust ("Independent
Portfolio Trustees"), cast in person at a meeting called for the purpose of
voting on such approval, and (2) by the vote of a majority of the Portfolio
Trustees or by a 1940 Act majority vote of the outstanding interests in the
Portfolio. The Administration Agreement continues with respect to the Fund until
August 2, 2000. The Administration Agreement is renewable thereafter from year
to year with respect to the Fund, so long as its continuance is approved at
least annually (1) by the vote of a majority of the Fund Trustees who are not
"interested persons" of 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 the 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 the Fund on 60 days' written notice either by N&B Management or
by the Trust. Each Agreement terminates automatically if it is assigned.
SUB-ADVISER
N&B Management retains Neuberger & Berman, 605 Third Avenue, New
York, NY 10158-3698, as sub-adviser with respect to the Portfolio pursuant to a
sub-advisory agreement dated August 2, 1993 ("Sub-Advisory Agreement"). The
Sub-Advisory Agreement was approved by the holders of the interests in the
Portfolio on _________, 1998.
28
<PAGE>
The Sub-Advisory Agreement provides in substance that Neuberger &
Berman will furnish to N&B Management, upon reasonable request, the same type of
investment recommendations and research that Neuberger & Berman, from time to
time, provides to its principals and employees for use in managing client
accounts. In this manner, 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 numerous investment
analysts, each of whom specializes in studying one or more industries, under the
supervision of the Director of Research, who is also available for consultation
with 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 sub-adviser for all of the other mutual funds
managed by N&B Management.
The Sub-Advisory Agreement continues with respect to the Portfolio
until August 2, 2000 and is renewable from year to year, subject to approval of
its continuance in the same manner as the Management Agreement. The Sub-Advisory
Agreement is subject to termination, without penalty, with respect to the
Portfolio by the Portfolio Trustees or a 1940 Act majority vote of the
outstanding interests in the Portfolio, by 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 the
Portfolio if it is assigned or if the Management Agreement terminates with
respect to the Portfolio.
Most money managers that come to the Neuberger & Berman organization
have at least fifteen years experience. Neuberger & Berman and N&B Management
employ experienced professionals that work in a competitive environment.
INVESTMENT COMpANIES MANAGED
As of _________________, the investment companies managed by N&B
Management had aggregate net assets of approximately $_____ billion. N&B
Management currently serves as investment manager of the following investment
companies:
Name Approximate Net
---- Assets at
------------,
1998
----
Neuberger & Berman Cash Reserves $ ___________
Portfolio
(investment portfolio for
Neuberger & Berman Cash Reserves)
29
<PAGE>
Name Approximate Net
---- Assets at
------------,
1998
----
Neuberger & Berman Government Money $ ___________
Portfolio
(investment portfolio for
Neuberger & Berman Government
Money Fund)
Neuberger & Berman Limited Maturity $ ___________
Bond Portfolio
(investment portfolio for
Neuberger & Berman Limited
Maturity Bond Fund and Neuberger
& Berman Limited Maturity Bond
Trust)
Neuberger & Berman Municipal Money $ ___________
Portfolio
(investment portfolio for
Neuberger & Berman Municipal
Money Fund)
Neuberger & Berman Municipal $ ___________
Securities Portfolio
(investment portfolio for
Neuberger & Berman Municipal
Securities Trust)
Neuberger & Berman High Yield Bond $ ___________
Portfolio
(investment portfolio for
Neuberger & Berman High Yield
Bond Fund)
Neuberger & Berman Focus Portfolio $ ___________
(investment portfolio for Neuberger &
Berman Focus Fund, Neuberger & Berman
Focus Trust, and Neuberger & Berman
Focus Assets)
Neuberger & Berman Genesis Portfolio $ ___________
(investment portfolio for
Neuberger & Berman Genesis Fund,
Neuberger & Berman Genesis Trust
and Neuberger & Berman Genesis
Assets)
30
<PAGE>
Name Approximate Net
---- Assets at
------------,
1998
----
Neuberger & Berman Guardian Portfolio $ ___________
(investment portfolio for
Neuberger & Berman Guardian
Fund, Neuberger & Berman
Guardian Trust and Neuberger &
Berman Guardian Assets)
Neuberger & Berman International $ ____________
Portfolio
(investment portfolio for
Neuberger & Berman International
Fund and Neuberger & Berman
International Trust)
Neuberger & Berman Manhattan Portfolio $ ____________
(investment portfolio for
Neuberger & Berman Manhattan
Fund, Neuberger & Berman
Manhattan Trust and Neuberger &
Berman Manhattan Assets)
Neuberger & Berman Partners Portfolio $ ____________
(investment portfolio for
Neuberger & Berman Partners
Fund,
Neuberger & Berman Partners
Trust and Neuberger & Berman
Partners Assets)
31
<PAGE>
Name Approximate Net
---- Assets at
------------,
1998
----
Neuberger & Berman Socially Responsive $ ____________
Portfolio
(investment portfolio for
Neuberger & Berman Socially
Responsive Fund, Neuberger &
Berman Socially Responsive Trust
and Neuberger & Berman NYCDC
Socially Responsive Trust)
Advisers Managers Trust $ ____________
(seven series)
The investment decisions concerning the Portfolio and the other
mutual funds managed by 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
Portfolio. Even where the investment objectives are similar, however, the
methods used by the Other N&B Funds and the Portfolio to achieve their
objectives may differ. The investment results achieved by all of the mutual
funds managed by N&B Management have varied from one another in the past and are
likely to vary in the future.
There may be occasions when the Portfolio and one or more of the
Other 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, in terms of amount, in accordance with a formula considered to be
equitable to the funds involved. Although in some cases this arrangement may
have a detrimental effect on the price or volume of the securities as to the
Portfolio, in other cases it is believed that the Portfolio's ability to
participate in volume transactions may produce better executions for it. In any
case, it is the judgment of the Portfolio Trustees that the desirability of the
Portfolio's having its advisory arrangements with N&B Management outweighs any
disadvantages that may result from contemporaneous transactions.
The Portfolio is subject to certain limitations imposed on all
advisory clients of Neuberger & Berman (including the Portfolio, the Other N&B
Funds, and other managed accounts) and personnel of Neuberger & Berman and its
affiliates. These include, for example, limits that may be imposed in certain
industries or by certain companies, and policies of Neuberger & Berman that
limit the aggregate purchases, by all accounts under management, of the
outstanding shares of public companies.
MANAGEMENT AND CONTRoL OF 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;
32
<PAGE>
Theodore P. Giuliano, Vice President and director; Michael M. Kassen, Vice
President and director; Irwin Lainoff, director; Lawrence Zicklin, director;
Daniel J. Sullivan, Senior Vice President; Peter E. Sundman, Senior Vice
President; Michael J. Weiner, Senior Vice President; Claudia A. Brandon, Vice
President; Patrick T. Byrne, Vice President; Brooke A. Cobb, Vice President;
Robert W. D'Alelio, Vice President; Roberta D'Orio, Vice President; Clara Del
Villar, Vice President; Brian J. Gaffney, Vice President; Joseph G. Galli,
Vice President; Robert I. Gendelman, Vice President; Josephine P. Mahaney,
Vice President; Ellen Metzger, Vice President and Secretary; Paul Metzger,
Vice President; Janet W. Prindle, Vice President; Kevin L. Risen, Vice
President; Richard Russell, Vice President; Jennifer K. Silver, Vice
President; Kent C. Simons, Vice President; Frederic B. Soule, Vice President;
Judith M. Vale, Vice President; Susan Walsh, Vice President; Thomas G. Wolfe,
Vice President; Andrea Trachtenberg, Vice President of Marketing; Robert
Conti, Treasurer; Ramesh Babu, Assistant Vice President; Valerie Chang,
Assistant Vice President; Stacy Cooper-Shugrue, Assistant Vice President;
Barbara DiGiorgio, Assistant Vice President; Michael J. Hanratty, Assistant
Vice President; Leslie Holliday-Soto, Assistant Vice President; Robert L.
Ladd, Assistant Vice President; Carmen G. Martinez, Assistant Vice President;
Joseph S. Quirk, Assistant Vice President; Ingrid Saukaitis, Assistant Vice
President; Josephine Velez, Assistant Vice President; Celeste Wischerth,
Assistant Vice President; and Loraine Olavarria, Assistant Secretary.
Messrs. Cantor, Egener, Gendelman, Giuliano, Kassen, Lainoff, Risen, Simons,
Sundman and Zicklin and Mmes. Prindle, Silver and Vale are principals of
Neuberger & Berman.
Messrs. Egener and Zicklin are trustees and officers, and Messrs.
Russell, Sullivan and Weiner and Mmes. Brandon, Cooper-Shugrue, DiGiorgio, and
Wischerth are officers, of each Trust. C. Carl Randolph, a principal 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 principals of Neuberger & Berman.
DISTRIBUTION ARRANGEMENTS
N&B Management serves as the distributor ("Distributor") in
connection with the offering of the Fund's shares on a no-load basis to
Institutions. In connection with the sale of its shares, the Fund has authorized
the Distributor to give only the information, and to make only the statements
and representations, contained in the Prospectus and this SAI or that properly
may be included in sales literature and advertisements in accordance with the
1933 Act, the 1940 Act, and applicable rules of self-regulatory organizations.
33
<PAGE>
Sales may be made only by the Prospectus, which may be delivered personally,
through the mails, or by electronic means. The Distributor is the Fund's
"principal underwriter" within the meaning of the 1940 Act and, as such, acts as
agent in arranging for the sale of the Fund's shares to Institutions without
sales commission or other compensation and bears all advertising and promotion
expenses incurred in the sale of the Fund's shares.
The Trust, on behalf of the Fund, and the Distributor are parties to
a Distribution Agreement that continues until August 2, 1999. The Distribution
Agreement may be renewed annually if specifically approved by (1) the vote of a
majority of the Fund Trustees or a 1940 Act majority vote of the Fund's
outstanding shares and (2) the vote of a majority of the Independent Fund
Trustees, cast in person at a meeting called for the purpose of voting on such
approval. The Distribution Agreement may be terminated by either party and will
terminate automatically on its assignment, in the same manner as the Management
Agreement.
ADDITIONAL REDEMPTION INFORMATION
SUSPENSION OF REDEMPTIONS
The right to redeem the Fund's shares may be suspended or payment of
the redemption price postponed (1) when the NYSE is closed, (2) when trading on
the NYSE is restricted, (3) when an emergency exists as a result of which it is
not reasonably practicable for the Portfolio to dispose of securities it owns or
fairly to determine the value of its net assets, or (4) for such other period as
the SEC may by order permit for the protection of the Fund's shareholders.
Applicable SEC rules and regulations shall govern whether the conditions
prescribed in (2) or (3) exist. If the right of redemption is suspended,
shareholders may withdraw their offers of redemption, or they will receive
payment at the NAV per share in effect at the close of business on the first day
the NYSE is open ("Business Day") after termination of the suspension.
REDEMPTIONS IN KIND
The Fund reserves the right, under certain conditions, to honor any
request for redemption (or a combination of requests from the same shareholder
in any 90-day period) exceeding $250,000 or 1% of the net assets of the Fund,
whichever is less, by making payment in whole or in part in securities valued as
described under "Share Prices and Net Asset Value" in the Prospectus. 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. The Fund does not redeem in kind under normal circumstances, but would do
so when the Trustees determined that it was in the best interests of the Fund's
shareholders as a whole.
34
<PAGE>
DIVIDENDS AND OTHER DISTRIBUTIONS
The Fund distributes to its shareholders substantially all of its
share of any net investment income (after deducting expenses incurred directly
by the Fund), any net realized capital gains, and any net realized gains from
foreign currency transactions earned or realized by the Portfolio.
The Portfolio's net investment income consists of all income accrued
on portfolio assets less accrued expenses, but does not include capital and
foreign currency gains and losses. Net investment income and realized gains and
losses are reflected in the Portfolio's NAV (and, hence, the Fund's NAV) until
they are distributed. The Fund calculates its net investment income and NAV per
share as of the close of regular trading on the NYSE on each Business Day
(usually 4:00 p.m. Eastern time).
The Fund generally distributes substantially all of its share of the
Portfolio's net investment income, (after deducting expenses incurred directly
by the Fund), if any, near the end of each other calendar quarter. Distributions
of net realized capital and foreign currency gains, if any, normally are paid
once annually, in December.
Dividends and other distributions are automatically reinvested in
additional shares of the Fund, unless the 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 the Fund remains in effect until the Institution
notifies the Fund in writing to discontinue the election.
ADDITIONAL TAX INFORMATION
TAXATION Of THE FUND
In order to qualify for treatment as a RIC under the Code, the Fund
must distribute to its shareholders for each taxable year at least 90% of its
investment company taxable income (consisting generally of net investment
income, net short-term capital gain, and net gains from certain foreign currency
transactions) ("Distribution Requirement") and must meet several additional
requirements. These requirements include the following: (1) the Fund must derive
at least 90% of its gross income each taxable year from dividends, interest,
payments with respect to securities loans, and gains from the sale or other
disposition of securities or foreign currencies, or other income (including
gains from Hedging Instruments) derived with respect to its business of
35
<PAGE>
investing in securities or those currencies ("Income Requirement"); and (2) at
the close of each quarter of the Fund's taxable year, (i) at least 50% of the
value of its total assets must be represented by cash and cash items, U.S.
Government securities, securities of other RICs, and other securities limited,
in respect of any one issuer, to an amount that does not exceed 5% of the value
of the Fund's total assets and that does not represent more than 10% of the
issuer's outstanding voting securities, and (ii) not more than 25% of the value
of its total assets may be invested in securities (other than U.S. Government
securities or securities of other RICs) of any one issuer.
Certain funds that invest in portfolios managed by N&B Management
have received rulings from the Internal Revenue Service ("Service") that each
such fund, as an investor in its corresponding portfolio, will be deemed to own
a proportionate share of the portfolio's assets and income for purposes of
determining whether the fund satisfies all the requirements described above to
qualify as a RIC. Although these rulings may not be relied on as precedent by
the Fund, N&B Management believes that the reasoning thereof and, hence, their
conclusion apply to the Fund as well.
The Fund will be subject to a nondeductible 4% excise tax ("Excise
Tax") to the extent it fails to distribute by the end of any calendar year
substantially all of its ordinary income for that year and capital gain net
income for the one-year period ended on October 31 of that year, plus certain
other amounts.
See the next section for a discussion of the tax consequences to the
Fund of distributions to it from the Portfolio, investments by the Portfolio in
certain securities, and hedging transactions engaged in by the Portfolio.
TAXATION OF THE PORTFOLIO
Certain portfolios managed by N&B Management have received rulings
from the Service to the effect that, among other things, each such portfolio
will be treated as a separate partnership for federal income tax purposes and
will not be a "publicly traded partnership." As a result, the portfolio is not
subject to federal income tax; instead, each investor in the portfolio (such as
its corresponding fund) is required to take into account in determining its
federal income tax liability its share of the portfolio's income, gains, losses,
deductions, and credits, without regard to whether it has received any cash
distributions from the portfolio. The portfolios also are not subject to
Delaware or New York income or franchise tax. Although these rulings may not be
relied on as precedent by the Portfolio and the Fund, N&B Management believes
the reasoning thereof and, hence, their conclusion apply to the Portfolio and
the Fund as well.
Because the Fund is deemed to own a proportionate share of the
Portfolio's assets and income for purposes of determining whether the Fund
satisfies the requirements to qualify as a RIC, the Portfolio intends to
36
<PAGE>
continue to conduct its operations so that the Fund will be able to continue to
satisfy all those requirements.
Distributions to the Fund from the Portfolio (whether pursuant to a
partial or complete withdrawal or otherwise) will not result in the Fund's
recognition of any gain or loss for federal income tax purposes, except that (1)
gain will be recognized to the extent any cash that is distributed exceeds the
Fund's basis for its interest in the Portfolio before the distribution, (2)
income or gain will be recognized if the distribution is in liquidation of the
Fund's entire interest in the Portfolio and includes a disproportionate share of
any unrealized receivables held by the Portfolio, and (3) loss will be
recognized if a liquidation distribution consists solely of cash and/or
unrealized receivables. The Fund's basis for its interest in the Portfolio
generally equals the amount of cash the Fund invests in the Portfolio, increased
by the Fund's share of the Portfolio's net income and capital gains and
decreased by (1) the amount of cash and the basis of any property the Portfolio
distributes to the Fund and (2) the Fund's share of the Portfolio's losses.
Dividends and interest received by the Portfolio, and gains realized
by the Portfolio, may be subject to income, withholding, or other taxes imposed
by foreign countries and U.S. possessions that would reduce the yield and/or
total return on its securities. Tax treaties between certain countries and the
United States may reduce or eliminate these foreign taxes, however, and many
foreign countries do not impose taxes on capital gains in respect of investments
by foreign investors.
The Portfolio may invest in the stock of "passive foreign investment
companies" ("PFICs"). A PFIC is a foreign corporation -- other than a
"controlled foreign corporation" (I.E., a foreign corporation in which, on any
day during its taxable year, more than 50% of the total voting power of all
voting stock therein or the total value of all stock therein is owned, directly,
indirectly, or constructively, by "U.S. shareholders," defined as U.S. persons
that individually own, directly, indirectly, or constructively, at least 10% of
that voting power) as to which the Portfolio is a U.S. shareholder (effective
for the taxable year beginning September 1, 1998) -- that, in general, meets
either of the following tests: (1) at least 75% of its gross income is passive
or (2) an average of at least 50% of its assets produce, or are held for the
production of, passive income. Under certain circumstances, if the Portfolio
holds stock of a PFIC, the Fund (indirectly through its interest in the
Portfolio) will be subject to federal income tax on its share of a portion of
any "excess distribution" received by the Portfolio on the stock or of any gain
on the Portfolio's disposition of the stock (collectively, "PFIC income"), plus
interest thereon, even if the Fund distributes its share of the PFIC income as a
37
<PAGE>
taxable dividend to its shareholders. The balance of the Fund's share of the
PFIC income will be included in its investment company taxable income and,
accordingly, will not be taxable to it to the extent that income is distributed
to its shareholders.
If the Portfolio invests in a PFIC and elects to treat the PFIC as a
"qualified electing fund" ("QEF"), then in lieu of the Fund's incurring the
foregoing tax and interest obligation, the Fund would be required to include in
income each year its share of the Portfolio's pro rata share of the QEF's annual
ordinary earnings and net capital gain (the excess of net long-term capital gain
over net short-term capital loss) -- which most likely would have to be
distributed by the Fund to satisfy the Distribution Requirement and avoid
imposition of the Excise Tax -- even if those earnings and gain were not
received by the Portfolio from the QEF. In most instances it will be very
difficult, if not impossible, to make this election because of certain
requirements thereof.
Effective for taxable years beginning after 1997, a holder of stock
in any PFIC may elect to include in ordinary income each taxable year the
excess, if any, of the fair market value of the stock over the adjusted basis
therein as of the end of that year. Pursuant to the election, a deduction (as an
ordinary, not capital, loss) also would be allowed for the excess, if any, of
the holder's adjusted basis in PFIC stock over the fair market value thereof as
of the taxable year-end, but only to the extent of any net mark-to-market gains
with respect to that stock included in income for prior taxable years. The
adjusted basis in each PFIC's stock subject to the election would be adjusted to
reflect the amounts of income included and deductions taken thereunder. Proposed
regulations would provide a similar election with respect to the stock of
certain PFICs.
The Portfolio's use of hedging strategies, such as writing (selling)
and purchasing options and entering into forward contracts, involves complex
rules that will determine for income tax purposes the amount, character and
timing of recognition of the gains and losses the Portfolio realizes in
connection therewith. Gains from the disposition of foreign currencies (except
certain gains that may be excluded by future regulations), and gains from
Hedging Instruments derived by the Portfolio with respect to its business of
investing in securities or foreign currencies, will qualify as permissible
income for the Fund under the Income Requirement.
Exchange-traded futures contracts, certain forward contracts and
listed options thereon ("Section 1256 contracts") are required to be marked to
market (that is, treated as having been sold at market value) for federal income
tax purposes at the end of the Portfolio's taxable year. Sixty percent of any
net gain or loss recognized as a result of these "deemed sales," and 60% of any
net realized gain or loss from any actual sales, of Section 1256 contracts are
treated as long-term capital gain or loss; the remainder is treated as
38
<PAGE>
short-term capital gain or loss. As of the date of this SAI, it is not entirely
clear whether that 60% portion will qualify for the reduced maximum tax rates on
net capital gain enacted by the Tax Act -- 20% (10% for taxpayers in the 15%
marginal tax bracket) for gain recognized on capital assets held for more than
18 months -- instead of the 28% rate in effect before that legislation, which
now applies to gain recognized on capital assets held for more than one year but
not more than 18 months. However, proposed technical corrections legislation
would clarify that the 20% rate applies.
The Portfolio may acquire zero coupon securities or other securities
issued with original issue discount ("OID"). As a holder of those securities,
the Portfolio (and, through it, the Fund) must take into income the OID that
accrues on the securities during the taxable year, even if it receives no
corresponding payment on the securities during the year. Because the Fund
annually must distribute substantially all of its investment company taxable
income (including its share of the Portfolio's accrued OID) to satisfy the
Distribution Requirement and avoid imposition of the Excise Tax, the Fund may be
required in a particular year to distribute as a dividend an amount that is
greater than its share of the total amount of cash the Portfolio actually
receives. Those distributions will be made from the Fund's (or its share of the
Portfolio's) cash assets or, if necessary, from the proceeds of sales of the
Portfolio's securities. The Portfolio may realize capital gains or losses from
those sales, which would increase or decrease the Fund's investment company
taxable income and/or net capital gain.
TAXATION OF THE FUND'S SHAREHOLDERS
If Fund shares are sold at a loss after being held for six months or
less, the loss will be treated as long-term, instead of short-term, capital loss
to the extent of any capital gain distributions received on those shares.
PORTFOLIO TRANSACTIONS
Neuberger & Berman acts as principal broker for the Portfolio in the
purchase and sale of its portfolio securities and in connection with the writing
of covered call options on its securities.
Portfolio securities may, from time to time, be loaned by the
Portfolio to Neuberger & Berman in accordance with the terms and conditions of
an order issued by the SEC. The order exempts such transactions from provisions
of the 1940 Act that would otherwise prohibit such transactions, subject to
certain conditions. In accordance with the order, securities loans made by the
Portfolio to Neuberger & Berman are fully secured by cash collateral. The
portion of the income on the cash collateral which may be shared with Neuberger
& Berman is to be determined by reference to concurrent arrangements between
39
<PAGE>
Neuberger & Berman and non-affiliated lenders with which it engages in similar
transactions. In addition, where Neuberger & Berman borrows securities from the
Portfolio in order to re-lend them to others, Neuberger & Berman may be required
to pay the Portfolio, on a quarterly basis, certain of the earnings that
Neuberger & Berman otherwise has derived from the re-lending of the borrowed
securities. When Neuberger & Berman desires to borrow a security that the
Portfolio has indicated a willingness to lend, Neuberger & Berman must borrow
such security from the Portfolio, rather than from an unaffiliated lender,
unless the unaffiliated lender is willing to lend such security on more
favorable terms (as specified in the order) than the Portfolio. If, in any
month, the Portfolio's expenses exceed its income in any securities loan
transaction with Neuberger & Berman, Neuberger & Berman must reimburse the
Portfolio for such loss. The Portfolio has no current intention of loaning
securities to Neuberger & Berman.
The Portfolio may also lend securities to unaffiliated entities,
including banks, brokerage firms, and other institutional investors judged
creditworthy by N&B Management, provided that cash or equivalent collateral,
equal to at least 100% of the market value of the loaned securities, is
continuously maintained by the borrower with the Portfolio. The Portfolio may
invest the cash collateral and earn income, or it may receive an agreed upon
amount of interest income from a borrower who has delivered equivalent
collateral. During the time securities are on loan, the borrower will pay the
Portfolio an amount equivalent to any dividends or interest paid on such
securities. These loans are subject to termination at the option of the
Portfolio or the borrower. The Portfolio may pay reasonable administrative and
custodial fees in connection with a loan and may pay a negotiated portion of the
interest earned on the cash or equivalent collateral to the borrower or placing
broker. The Portfolio does not have the right to vote securities on loan, but
would terminate the loan and regain the right to vote if that were considered
important with respect to the investment.
A committee of Independent Portfolio Trustees from time to time
reviews, among other things, information relating to securities loans by the
Portfolio.
In effecting securities transactions, the Portfolio generally seeks
to obtain the best price and execution of orders. Commission rates, being a
component of price, are considered along with other relevant factors. The
Portfolio plans to continue to use Neuberger & Berman as its principal broker
where, in the judgment of N&B Management, that firm is able to obtain a price
and execution at least as favorable as other qualified brokers. To the
Portfolio's knowledge, no affiliate of the Portfolio receives give-ups or
reciprocal business in connection with its securities transactions.
40
<PAGE>
The use of Neuberger & Berman as a broker for the Portfolio is
subject to the requirements of Section 11(a) of the Securities Exchange Act of
1934. Section 11(a) prohibits members of national securities exchanges from
retaining compensation for executing exchange transactions for accounts which
they or their affiliates manage, except where they have the authorization of the
persons authorized to transact business for the account and comply with certain
annual reporting requirements. Managers Trust and N&B Management have expressly
authorized Neuberger & Berman to retain such compensation, and Neuberger &
Berman has agreed to comply with the reporting requirements of Section 11(a).
Under the 1940 Act, commissions paid by the Portfolio to Neuberger &
Berman in connection with a purchase or sale of securities on a securities
exchange may not exceed the usual and customary broker's commission.
Accordingly, it is the Portfolio's policy that the commissions paid to Neuberger
& Berman must, in N&B Management's judgment, be (1) at least as favorable as
those charged by other brokers having comparable execution capability and (2) at
least as favorable as commissions contemporaneously charged by Neuberger &
Berman on comparable transactions for its most favored unaffiliated customers,
except for accounts for which Neuberger & Berman acts as a clearing broker for
another brokerage firm and customers of Neuberger & Berman considered by a
majority of the Independent Portfolio Trustees not to be comparable to the
Portfolio. The Portfolio does not deem it practicable and in its best interests
to solicit competitive bids for commissions on each transaction effected by
Neuberger & Berman. However, consideration regularly is given to information
concerning the prevailing level of commissions charged by other brokers on
comparable transactions during comparable periods of time. The 1940 Act
generally prohibits Neuberger & Berman from acting as principal in the purchase
of portfolio securities from, or the sale of portfolio securities to, the
Portfolio unless an appropriate exemption is available.
A committee of Independent Portfolio Trustees from time to time
reviews, among other things, information relating to the commissions charged by
Neuberger & Berman to the Portfolio and to its other customers and information
concerning the prevailing level of commissions charged by other brokers having
comparable execution capability. In addition, the procedures pursuant to which
Neuberger & Berman effects brokerage transactions for the Portfolio must be
reviewed and approved no less often than annually by a majority of the
Independent Portfolio Trustees.
To ensure that accounts of all investment clients, including the
Portfolio, are treated fairly in the event that Neuberger & Berman receives
transaction instructions regarding a security for more than one investment
account at or about the same time, Neuberger & Berman may combine orders placed
on behalf of clients, including advisory accounts in which affiliated persons
have an investment interest, for the purpose of negotiating brokerage
commissions or obtaining a more favorable price. Where appropriate, securities
41
<PAGE>
purchased or sold may be allocated, in terms of amount, to a client according to
the proportion that the size of the order placed by that account bears to the
aggregate size of orders contemporaneously placed by the other accounts, subject
to de minimis exceptions. All participating accounts will pay or receive the
same price.
The Portfolio expects that it will execute a portion of its
transactions through brokers other than Neuberger & Berman. In selecting those
brokers, N&B Management considers the quality and reliability of brokerage
services, including execution capability, performance, and financial
responsibility, and may consider research and other investment information
provided by, and sale of Fund shares effected through, those brokers.
A committee comprised of officers of N&B Management and principals
of Neuberger & Berman who are portfolio managers of the Portfolio and Other N&B
Funds (collectively, "N&B Funds") and some of Neuberger & Berman's managed
accounts ("Managed Accounts") evaluates semi-annually the nature and quality of
the brokerage and research services provided by other brokers. Based on this
evaluation, the committee establishes a list and projected rankings of preferred
brokers for use in determining the relative amounts of commissions to be
allocated to those brokers. Ordinarily, the brokers on the list effect a large
portion of the brokerage transactions for the N&B Funds and the Managed Accounts
that are not effected by Neuberger & Berman. However, in any semi-annual period,
brokers not on the list may be used, and the relative amounts of brokerage
commissions paid to the brokers on the list may vary substantially from the
projected rankings. These variations reflect the following factors, among
others: (1) brokers not on the list or ranking below other brokers on the list
may be selected for particular transactions because they provide better price
and/or execution, which is the primary consideration in allocating brokerage;
(2) adjustments may be required because of periodic changes in the execution
capabilities of or research provided by particular brokers or in the execution
or research needs of the N&B Funds and/or the Managed Accounts; and (3) the
aggregate amount of brokerage commissions generated by transactions for the N&B
Funds and the Managed Accounts may change substantially from one semi-annual
period to the next.
The commissions paid to a broker other than Neuberger & Berman may
be higher than the amount another firm might charge if N&B Management determines
in good faith that the amount of those commissions is reasonable in relation to
the value of the brokerage and research services provided by the broker. N&B
Management believes that those research services benefit the Portfolio by
supplementing the information otherwise available to N&B Management. That
research may be used by N&B Management in servicing Other N&B Funds and, in some
42
<PAGE>
cases, by Neuberger & Berman in servicing the Managed Accounts. On the other
hand, research received by N&B Management from brokers effecting portfolio
transactions on behalf of the Other N&B Funds and by Neuberger & Berman from
brokers effecting portfolio transactions on behalf of the Managed Accounts may
be used for the Portfolio's benefit.
______________ is primarily responsible for making decisions as to
specific action to be taken with respect to the investment portfolio of the
Portfolio. ____________ has full authority to take action with respect to
portfolio transactions and may or may not consult with other personnel of N&B
Management prior to taking such action.
PORTFOLIO TURNOVER
The Portfolio's portfolio turnover rate is calculated by dividing
(1) the lesser of the cost of the securities purchased or the proceeds from the
securities sold by the Portfolio during the fiscal year (other than securities,
including options, whose maturity or expiration date at the time of acquisition
was one year or less) by (2) the month-end average of the value of such
securities owned by the Portfolio during the fiscal year.
REPORTS TO SHAREHOLDERS
Shareholders of the Fund receive unaudited semi-annual financial
statements, as well as year-end financial statements audited by the independent
auditors for the Fund and Portfolio. The Fund's statements show the investments
owned by the Portfolio and the market values thereof and provide other
information about the Fund and its operations, including the Fund's beneficial
interest in the Portfolio.
CUSTODIAN AND TRANSFER AGENT
The Fund and Portfolio have selected State Street Bank and Trust
Company ("State Street"), 225 Franklin Street, Boston, MA 02110, as custodian
for their respective securities and cash. State Street also serves as the 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. All correspondence should be mailed to Neuberger
& Berman Funds, Institutional Services, 605 Third Avenue, 2nd Floor, New York,
NY 10158-0180. In addition, State Street serves as transfer agent for the
Portfolio.
INDEPENDENT AUDITORS
The Fund and Portfolio have selected Ernst & Young LLP, 200
Clarendon Street, Boston, MA 02116, as the independent auditors who will audit
their financial statements.
43
<PAGE>
LEGAL COUNSEL
The Fund and Portfolio have selected Kirkpatrick & Lockhart LLP,
1800 Massachusetts Avenue, N.W., 2nd Floor, Washington, D.C. 20036-1800, as
their legal counsel.
REGISTRATION STATEMENT
This SAI and the Prospectus do not contain all the information
included in the Trust's registration statement filed with the SEC under the 1933
Act with respect to the securities offered by the Prospectus. The registration
statement, including the exhibits filed therewith, may be examined at the SEC's
offices in Washington, D.C.
Statements contained in this SAI and in the Prospectus as to the
contents of any contract or other document referred to are not necessarily
complete. In each instance where reference is made to the copy of any contract
or other document filed as an exhibit to the registration statement, each such
statement is qualified in all respects by such reference.
44
<PAGE>
Appendix A
RATINGS OF CORPORATE BONDS AND COMMERCIAL PAPER
S&P CORPORATE BOND RATINGS:
AAA - Bonds rated AAA have the highest rating assigned by S&P.
Capacity to pay interest and repay principal is extremely strong.
AA - Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the higher rated issues only in small degree.
A - Bonds rated A have a strong capacity to pay interest and repay
principal, although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher rated
categories.
BBB - Bonds rated BBB are regarded as having an adequate capacity to
pay principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in higher rated categories.
BB, B, CCC, CC, C - Bonds rated BB, B, CCC, CC, and C are regarded,
on balance, as predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation and C the highest degree of
speculation. While such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
CI - The rating CI is reserved for income bonds on which no interest
is being paid.
D - Bonds rated D are in default, and payment of interest and/or
repayment of principal is in arrears.
PLUS (+) OR MINUS (-) - The ratings above may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
45
<PAGE>
MOODY'S CORPORATE BOND RATINGS:
Aaa - Bonds rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or an exceptionally
stable margin, and principal is secure. Although the various protective elements
are likely to change, the changes that can be visualized are most unlikely to
impair the fundamentally strong position of the issuer.
Aa - Bonds rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally known
as "high-grade bonds." They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa-rated securities, fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present that make the long-term risks appear somewhat larger than in Aaa-rated
securities.
A - Bonds rated A possess many favorable investment attributes and
are to be considered as upper-medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
that suggest a susceptibility to impairment sometime in the future.
Baa - Bonds which are rated Baa are considered as medium-grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present, but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. These bonds lack outstanding
investment characteristics and in fact have speculative characteristics as well.
Ba - Bonds rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa - Bonds rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca - Bonds rated Ca represent obligations that are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
46
<PAGE>
C - Bonds rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
MODIFIERS--Moody's may apply numerical modifiers 1, 2, and 3 in each generic
rating classification described above. The modifier 1 indicates that the
security ranks in the higher end of its generic rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the issuer
ranks in the lower end of its generic rating.
S&P COMMERCIAL PAPER RATINGS:
A-1 - This highest category indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted with a plus sign (+).
MOODY'S COMMERCIAL PAPER RATINGS
Issuers rated PRIME-1 (or related supporting institutions), also
known as P-1, have a superior capacity for repayment of short-term promissory
obligations. PRIME-1 repayment capacity will normally be evidenced by the
following characteristics:
- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structures with moderate reliance on
debt and ample asset protection.
- Broad margins in earnings coverage of fixed financial charges and
high internal cash generation.
- Well-established access to a range of financial markets and
assured sources of alternate liquidity.
47
<PAGE>
NEUBERGER & BERMAN EQUITY TRUST
POST-EFFECTIVE AMENDMENT NO. 14 ON FORM N-1A
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
- ------- ---------------------------------
(a) Financial Statements: None.
<TABLE>
<CAPTION>
(b) Exhibits:
Exhibit
Number Description
------ -----------
<S> <C> <C>
(1) (a) Certificate of Trust. Incorporated by Reference to Post-Effective
No. 8 to Registrant's Registration Statement, File Nos. 33-64368
and 811-7784, Edgar Accession No. 0000898432-95-000427.
(b) Trust Instrument of Neuberger & Berman Equity Trust. Incorporated
by Reference to Post-Effective No. 8 to Registrant's Registration
Statement, File Nos. 33-64368 and 811-7784, Edgar Accession
No. 0000898432-95-000427.
(c) Schedule A - Current Series of Neuberger & Berman Equity Trust.
Incorporated by reference to Post-Effective Amendment No. 12
to Registrant's Registration Statement, File Nos. 33-64368 and
811-7784, Edgar Accession No. 0000898432-97-000398.
(2) By-laws of Neuberger & Berman Equity Trust. Incorporated by Reference to
Post-Effective No. 8 to Registrant's Registration Statement, File
Nos. 33-64368 and 811-7784, Edgar Accession No. 0000898432-95-000427.
(3) Voting Trust Agreement. None.
(4) (a) Trust Instrument of Neuberger & Berman Equity Trust, Articles IV,
V, and VI. Incorporated by Reference to Post-Effective No. 8 to
Registrant's Registration Statement, File Nos. 33-64368 and
811-7784, Edgar Accession No. 0000898432-95-000427.
(b) By-laws of Neuberger & Berman Equity Trust, Articles V, VI, and
VIII. Incorporated by Reference to Post-Effective No. 8 to
Registrant's Registration Statement, File Nos. 33-64368 and
811-7784, Edgar Accession No. 0000898432-95-000427.
(5) (a) (i) Management Agreement Between Equity Managers Trust and
Neuberger & Berman Management Incorporated. Incorporated
by Reference to Post-Effective Amendment No. 70 to
Registration Statement of Neuberger & Berman Equity Funds,
File Nos. 2-11357 and 811-582, Edgar Accession No.
0000898432-000314.
-5-
<PAGE>
Exhibit
Number Description
------ -----------
(ii) Schedule A - Series of Equity Managers Trust Currently
Subject to the Management Agreement. Incorporated by
Reference to Post-Effective Amendment No. 70 to
Registration Statement of Neuberger & Berman Equity Funds,
File Nos. 2-11357 and 811-582, Edgar Accession No.
0000898432-000314.
(iii) Schedule B - Schedule of Compensation Under the
Management Agreement. Incorporated by Reference
to Post-Effective Amendment No. 70 to Registration
Statement of Neuberger & Berman Equity Funds,
File Nos. 2-11357 and 811-582, Edgar Accession
No. 0000898432-000314.
(b) (i) Sub-Advisory Agreement Between Neuberger & Berman
Management Incorporated and Neuberger & Berman, LLC with
Respect to Equity Managers Trust. Incorporated by
Reference to Post-Effective Amendment No. 70 to
Registration Statement of Neuberger & Berman Equity Funds,
File Nos. 2-11357 and 811-582, Edgar Accession No.
0000898432-000314.
(ii) Schedule A - Series of Equity Managers Trust Currently
Subject to the Sub-Advisory Agreement. Incorporated by
Reference to Post-Effective Amendment No. 70 to
Registration Statement of Neuberger & Berman Equity Funds,
File Nos. 2-11357 and 811-582, Edgar Accession No.
0000898432-000314.
(iii) Substitution Agreement Among Neuberger & Berman
Management Incorporated, Equity Managers Trust,
Neuberger & Berman, L.P., and Neuberger &
Berman, LLC. Incorporated by Reference to Amendment
No. 7 to Registration Statement of Equity
Managers Trust, File No. 811-7910, Edgar
Accession No. 0000898432-96-000557.
(c) (i) Management Agreement Between Global Managers
Trust and Neuberger & Berman Management
Incorporated. Incorporated by Reference to
Post-Effective Amendment No. 74 to Registration
Statement of Neuberger & Berman Equity Funds,
File Nos. 2-11357 and 811-582, Edgar Accession
No. 0000898432-95-000426.
(ii) Schedule A - Series of Global Managers Trust Currently
Subject to the Management Agreement. Incorporated by
Reference to Post-Effective Amendment No. 74 to
Registration Statement of Neuberger & Berman Equity Funds,
File Nos. 2-11357 and 811-582, Edgar Accession No.
0000898432-95-000426.
-6-
<PAGE>
Exhibit
Number Description
------ -----------
(iii) Schedule B - Schedule of Compensation Under the
Management Agreement. Incorporated by
Reference to Post-Effective Amendment
No. 74 to Registration Statement of Neuberger &
Berman Equity Funds, File Nos. 2-11357 and
811-582, Edgar Accession No. 0000898432-95-000426.
(d) (i) Sub-Advisory Agreement Between Neuberger & Berman
Management Incorporated and Neuberger & Berman,
LLC with Respect to Global Managers Trust.
Incorporated by Reference to Post-Effective Amendment
No. 74 to Registration Statement of Neuberger &
Berman Equity Funds, File Nos. 2-11357 and
811-582, Edgar Accession No. 0000898432-95-000426.
(ii) Schedule A - Series of Global Managers Trust Currently
Subject to the Sub-Advisory Agreement. Incorporated by
Reference to Post-Effective Amendment No. 74 to
Registration Statement of Neuberger & Berman Equity Funds,
File Nos. 2-11357 and 811-582, Edgar Accession No.
0000898432-000426.
(iii) Substitution Agreement among Neuberger & Berman Management
Incorporated, Global Managers Trust, Neuberger & Berman,
L.P. and Neuberger & Berman, LLC. Incorporated by
Reference to the substantially similar agreement filed in
Amendment No. 7 to the Registration Statement of Equity
Managers Trust, File No. 811-7910, Edgar Accession No.
0000898432-96-000557 (the documents differ only with
respect to the date of and the master fund party to the
subadvisory agreement under which substitution is sought
and the name of the executing master fund).
(6) (a) Distribution Agreement Between Neuberger & Berman Equity Trust and
Neuberger & Berman Management Incorporated. Incorporated by Reference to
Post-Effective Amendment No. 13 to Registrant's Registration Statement, File
Nos. 33-64368 and 811-7784, Edgar Accession No. 0000898432-97-000519.
(b) Schedule A - Series of Neuberger & Berman Equity Trust Currently Subject to the
Distribution Agreement. Incorporated by Reference to Post-Effective Amendment No.
13 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784, Edgar
Accession No. 0000898432-97-000519.
(7) Bonus, Profit Sharing or Pension Plans. None.
-7-
<PAGE>
Exhibit
Number Description
------ -----------
(8) (a) Custodian Contract Between Neuberger & Berman Equity Trust and
State Street Bank and Trust Company. Incorporated by Reference to
Post-Effective No. 8 to Registrant's Registration Statement, File
Nos. 33-64368 and 811-7784, Edgar Accession
No. 0000898432-95-000427.
(b) Schedule of Compensation under the Custodian Contract.
Incorporated by Reference to Post-Effective No. 10 to Registrant's
Registration Statement, File Nos. 33-64368 and 811-7784, Edgar
Accession No. 0000898432-96-000532.
(c) Agreement Between Neuberger & Berman Equity Trust and State
Street Bank and Trust Company Adding Neuberger & Berman
International Trust as a Portfolio Governed by the Custodian
Contract. Incorporated by reference to Post-Effective Amendment No.
12 to Registrant's Registration Statement, File Nos. 33-64368 and
811-7784, Edgar Accession No. 0000898432-97-000398.
(9) (a) (i) Transfer Agency and Service Agreement Between Neuberger & Berman
Equity Trust and State Street Bank and Trust Company. Incorporated
by Reference to Post-Effective No. 8 to Registrant's Registration
Statement, File Nos. 33-64368 and 811-7784, Edgar Accession
No. 0000898432-95-000427.
(ii) Agreement Between Neuberger & Berman Equity Trust and State
Street Bank and Trust Company Adding Neuberger & Berman NYCDC
Socially Responsive Trust as a Portfolio Governed by the Transfer
Agency Agreement. Incorporated by Reference to Post-Effective No. 8
to Registrant's Registration Statement, File Nos. 33-64368 and
811-7784, Edgar Accession No. 0000898432-95-000427.
(iii) Agreement Between Neuberger & Berman Equity Trust and State
Street Bank and Trust Company Adding Neuberger & Berman
International Trust as a Portfolio Governed by the Transfer Agency
and Service Agreement. Incorporated by reference to Post-Effective
Amendment No. 12 to Registrant's Registration Statement, File Nos.
33-64368 and 811-7784, Edgar Accession No. 0000898432-97-000398.
(iv) First Amendment to Transfer Agency and Service Agreement
between Neuberger & Berman Equity Trust and State Street Bank and
Trust Company. Incorporated by Reference to Post-Effective No. 8 to
Registrant's Registration Statement, File Nos. 33-64368 and
811-7784, Edgar Accession No. 0000898432-95-000427.
(v) Schedule of Compensation under the Transfer Agency and Service
Agreement. Incorporated by Reference to Post-Effective No. 10 to
Registrant's Registration Statement, File Nos. 33-64368 and
811-7784, Edgar Accession No. 0000898432-96-000-532.
-8-
<PAGE>
(vi) Second Amendment to Transfer Agency and Service Agreement
between Neuberger & Berman Equity Trust and State Street Bank and
Trust Company. Incorporated by reference to Post-Effective Amendment
No. 12 to Registrant's Registration Statement, File Nos. 33-64368
and 811-7784, Edgar Accession No. 0000898432-97-000398.
(b) (i) Administration Agreement Between Neuberger & Berman Equity Trust
and Neuberger & Berman Management Incorporated. Incorporated by
Reference to Post-Effective Amendment No. 13 to Registrant's
Registration Statement, File Nos. 33-64368 and 811-7784, Edgar
Accession No. 0000898432-97-000519.
(ii) Schedule A - Series of Neuberger & Berman Equity Trust Currently
Subject to the Administration Agreement. Incorporated by Reference
to Post-Effective Amendment No. 13 to Registrant's Registration
Statement, File Nos. 33-64368 and 811-7784, Edgar Accession No.
0000898432-97-000519.
(iii) Schedule B - Schedule of Compensation Under the
Administration Agreement. Incorporated by Reference to
Post-Effective No. 8 to Registrant's Registration Statement, File
Nos. 33-64368 and 811-7784, Edgar Accession No.
0000898432-95-000427.
(10) Opinion and Consent of Kirkpatrick & Lockhart LLP on Securities Matters. To
Be Filed by Amendment.
(11) Consent of Independent Auditors. None.
(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. None.
(17) Financial Data Schedule. None.
(18) Plan Pursuant to Rule 18f-3. None.
</TABLE>
Item 25. Persons Controlled by or under Common Control with Registrant
- ------- -------------------------------------------------------------
No person is controlled by or under common control with the
Registrant. (Registrant is organized in a master/feeder
structure and technically may be considered to control the
master fund in which it invests, Equity Managers Trust.)
-9-
<PAGE>
Item 26. Number of Holders of Securities.
-------------------------------
The following information is given as of June 30, 1998.
Number of
Title of Class Record Holders
-------------- --------------
Shares of beneficial
interest, $0.001 par value, of:
Neuberger & Berman Focus Trust 114
Neuberger & Berman Genesis Trust 1345
Neuberger & Berman Guardian Trust 322
Neuberger & Berman Manhattan Trust 64
Neuberger & Berman Partners Trust 285
Neuberger & Berman Small Cap Growth Trust 0
Neuberger & Berman NYCDC Socially Responsive Trust 2
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 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 are parties to the matter
based upon a review of readily available facts; or (iii) by written opinion of
independent legal counsel based upon a review of readily available facts.
Pursuant to Article IX, Section 3 of the Trust Instrument, if any
present or former shareholder of any series ("Series") of the Registrant shall
be held personally liable solely by reason of his or her being or having been a
shareholder and not because of his or her acts or omissions or for some other
reason, the present or former shareholder (or his or her heirs, executors,
administrators or other legal representatives or in the case of any entity, its
general successor) shall be entitled out of the assets belonging to the
applicable Series to be held harmless from and indemnified against all loss and
expense arising from such liability. The Registrant, on behalf of the affected
Series, shall, upon request by such shareholder, assume the defense of any claim
made against such shareholder for any act or obligation of the Series and
satisfy any judgment thereon from the assets of the Series.
Section 9 of the Management Agreements between Neuberger and Berman
Management Incorporated ("N&B Management") and Equity Managers Trust and Global
Managers Trust (Equity Managers Trust and Global Managers Trust are collectively
-10-
<PAGE>
referred to as the "Managers Trusts") provide that neither N&B Management nor
any director, officer or employee of N&B Management performing services for the
series of the Managers Trusts at the direction or request of N&B Management in
connection with N&B Management's discharge of its obligations under the
Agreements shall be liable for any error of judgment or mistake of law or for
any loss suffered by a series in connection with any matter to which the
Agreements relate; provided, that nothing in the Agreements shall be construed
(i) to protect N&B Management against any liability to the Managers Trusts or
any series thereof or their interest holders 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 Agreements, or (ii)
to protect any director, officer or employee of N&B Management who is or was a
trustee or officer of the Managers Trusts against any liability to the Managers
Trusts or any series thereof or their interest holders to which such person
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of such
person's office with the Managers Trusts.
Section 1 of the Sub-Advisory Agreements between N&B Management and
Neuberger & Berman, LLC ("Neuberger & Berman") with respect to the Managers
Trusts provides that, in the absence of willful misfeasance, bad faith or gross
negligence in the performance of its duties, or of reckless disregard of its
duties and obligations under the Agreements, Neuberger & Berman will not be
subject to any liability for any act or omission or any loss suffered by any
series of the Managers Trusts or their interest holders in connection with the
matters to which the Agreements relate.
Section 11 of the Distribution Agreement between the Registrant and N&B
Management 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.
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 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 principal of Neuberger & Berman
is, or at any time during the past two years has been, engaged for his or her
own account or in the capacity of director, officer, employee, partner or
trustee.
-11-
<PAGE>
<TABLE>
<CAPTION>
NAME BUSINESS AND OTHER CONNECTIONS
- ---- ------------------------------
<S> <C>
Claudia A. Brandon Secretary, Neuberger & Berman Advisers Management Trust;
Vice President, N&B Secretary, Advisers Managers Trust; Secretary, Neuberger & Berman
Management 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.
Valerie Chang,
Assistant Vice President, N&B Management Senior Securities Analyst, TIAA/CREF.(3)
Brooke A. Cobb
Vice President, N&B Chief Investment Officer, Bainco International Investors.(1)
Management Senior Vice President and Senior Portfolio Manager, Putnam
Investments.(2)
Stacy Cooper-Shugrue Assistant Secretary, Neuberger & Berman Advisers Management
Assistant Vice President, Trust; Assistant Secretary, Advisers Managers Trust; Assistant
N&B Management 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 W. D'Alelio Senior Portfolio Manager, Putnam Investments.(3)
Vice President, N&B Management
Barbara DiGiorgio, Assistant Treasurer, Neuberger & Berman Advisers Management
Assistant Vice President, Trust; Assistant Treasurer, Advisers Managers Trust; Assistant
N&B Management Treasurer, Neuberger & Berman Income Funds; Assistant Treasurer,
Neuberger & Berman Income Trust; Assistant Treasurer,
Neuberger & Berman Equity Funds; Assistant Treasurer,
Neuberger & Berman Equity Trust; Assistant Treasurer,
Income Managers Trust; Assistant Treasurer, Equity
Managers Trust; Assistant Treasurer, Global Managers
Trust; Assistant Treasurer, Neuberger & Berman Equity
Assets.
Stanley Egener Chairman of the Board and Trustee, Neuberger & Berman Advisers
President and Director, Management Trust; Chairman of the Board and Trustee, Advisers
N&B Management; Principal, Neuberger & Managers Trust; Chairman of the Board and Trustee, Neuberger &
Berman Berman Income Funds; Chairman of the Board and
- ---------------
1 Until 1997.
2 Until 1995.
3 Until 1996.
-12-
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
- ---- ------------------------------
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 President and Trustee, Neuberger & Berman Income Funds; President
Vice President and and Trustee, Neuberger & Berman Income Trust; President and
Director, N&B Management; Trustee, Income Managers Trust.
Principal, Neuberger & Berman
C. Carl Randolph Assistant Secretary, Neuberger & Berman Advisers Management
Principal, Neuberger & Berman Trust; Assistant Secretary, Advisers Managers Trust; Assistant
Secretary, Neuberger & Berman Income Funds; Assistant
Secretary, Neuberger & Berman Income Trust; Assistant
Secretary, Neuberger & Berman Equity Funds; Assistant
Secretary, Neuberger & Berman Equity Trust; Assistant
Secretary, Income Managers Trust; Assistant Secretary,
Equity Managers Trust; Assistant Secretary, Global
Managers Trust; Assistant Secretary, Neuberger & Berman
Equity Assets.
Richard Russell Treasurer, Neuberger & Berman Advisers Management Trust;
Vice President, Treasurer, Advisers Managers Trust; Treasurer, Neuberger & Berman
N&B Management 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.
Ingrid Saukaitis Project Director, Council on Economic Priorities(4)
Assistant Vice President,
N&B Management
Jennifer K. Silver Portfolio Manager and Director, Putnam Investments.(5)
Vice President, N&B
Management; Principal,
Neuberger & Berman
Daniel J. Sullivan Vice President, Neuberger & Berman Advisers Management Trust;
Senior Vice President, N&B Management Vice President, Advisers Managers Trust; Vice President,
Neuberger & Berman Income Funds; Vice President, Neuberger
& Berman Income Trust; Vice President, Neuberger & Berman
Equity Funds; Vice President, Neuberger & Berman Equity
Trust; Vice President, Income Managers Trust; Vice
- ----------------
4 Until 1997.
5 Until 1997.
-13-
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
- ---- ------------------------------
President, Equity Managers Trust; Vice President, Global
Managers Trust; Vice President, Neuberger & Berman Equity
Assets.
Michael J. Weiner Vice President, Neuberger & Berman Advisers Management Trust;
Senior Vice President, Vice President, Advisers Managers Trust; Vice President,
N&B Management 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.
Celeste Wischerth, Assistant Treasurer, Neuberger & Berman Advisers Management
Assistant Vice President, Trust; Assistant Treasurer, Advisers Managers Trust; Assistant
N&B Management Treasurer, Neuberger & Berman Income Funds; Assistant Treasurer,
Neuberger & Berman Income Trust; Assistant Treasurer,
Neuberger & Berman Equity Funds; Assistant Treasurer,
Neuberger & Berman Equity Trust; Assistant Treasurer,
Income Managers Trust; Assistant Treasurer, Equity
Managers Trust; Assistant Treasurer, Global Managers
Trust; Assistant Treasurer, Neuberger & Berman Equity
Assets.
Lawrence Zicklin President and Trustee, Neuberger & Berman Advisers Management
Director, N&B Management; Trust; President and Trustee, Advisers Managers Trust; President
Principal, Neuberger & Berman 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.
</TABLE>
The principal address of N&B Management, Neuberger & Berman, and of
each of the investment companies named above, is 605 Third Avenue, New York, New
York 10158.
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:
Neuberger & Berman Advisers Management Trust
Neuberger & Berman Equity Funds
Neuberger & Berman Equity Assets
Neuberger & Berman Income Funds
Neuberger & Berman Income Trust
N&B Management is also the investment manager to the master funds
in which the above-named investment companies invest.
-14-
<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.
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- ---- ---------------- ----------
Ramesh Babu Assistant Vice President None
Claudia A. Brandon Vice President Secretary
Patrick T. Byrne Vice President None
Richard A. Cantor Chairman of the Board None
Valerie Chang Assistant Vice President None
Brooke A. Cobb Vice President None
Robert Conti Treasurer None
Stacy Cooper-Shugrue Assistant Vice President Assistant Secretary
Robert W. D'Alelio Vice President None
Clara Del Villar Vice President None
Barbara DiGiorgio Assistant Vice President Assistant Treasurer
Roberta D'Orio Vice President None
Stanley Egener President and Director Chairman of the Board,
Chief Executive
Officer, and Trustee
Brian Gaffney Vice President None
Joseph G. Galli Assistant Vice President None
Robert I. Gendelman Vice President None
Theodore P. Giuliano Vice President and Director None
Michael J. Hanratty Assistant Vice President None
Leslie Holliday-Soto Assistant Vice President None
Michael M. Kassen Vice President and Director None
Robert L. Ladd Assistant Vice President None
Irwin Lainoff Director None
Josephine Mahaney Vice President None
Carmen G. Martinez Assistant Vice President None
Ellen Metzger Vice President and Secretary None
Paul Metzger Vice President None
Loraine Olavarria Assistant Secretary None
-15-
<PAGE>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- ---- ---------------- ---------------
Janet W. Prindle Vice President None
Joseph S. Quirk Assistant Vice President None
Kevin L. Risen Vice President None
Richard Russell Vice President Treasurer and Principal
Accounting Officer
Ingrid Saukaitis Assistant Vice President None
Jennifer K. Silver Vice President None
Kent C. Simons Vice President None
Frederick B. Soule 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
Josephine Velez Assistant Vice President None
Susan Walsh Vice President None
Michael J. Weiner Senior Vice President Vice President and
Principal Financial
Officer
Celeste Wischerth Assistant Vice President Assistant Treasurer
Thomas G. Wolfe Vice President None
Lawrence Zicklin Director Trustee and President
(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 shareholders and the
Registrant's policies and contracts, which are maintained at the offices of the
Registrant, 605 Third Avenue, New York, New York 10158.
All accounts, books and other documents required to be
maintained by Section 31(a) of the 1940 Act, as amended, and the rules
promulgated thereunder with respect to Equity Managers Trust are maintained at
the offices of State Street Bank and Trust Company, 225 Franklin Street, Boston,
-16-
<PAGE>
Massachusetts 02110, except for the Equity Managers Trust's Declaration of Trust
and By-laws, minutes of meetings of Equity Managers Trust's Trustees and
interest holders and Equity Managers Trust's policies and contracts, which are
maintained at the offices of the Equity Managers Trust, 605 Third Avenue, New
York, New York 10158.
All accounts, books and other documents required to be
maintained by Section 31(a) of the 1940 Act, as amended, and the rules
promulgated thereunder with respect to Global Managers Trust are maintained at
the offices of State Street Cayman Trust Company, Ltd., Elizabethan Square, P.O.
Box 1984, George Town, Grand Cayman, Cayman Islands, BWI.
Item 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
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, NEUBERGER & BERMAN EQUITY TRUST
has duly caused this Post-Effective Amendment No. 14 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 4th day of August, 1998.
NEUBERGER & BERMAN EQUITY TRUST
By: /s/ Lawrence Zicklin
--------------------
Lawrence Zicklin
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 14 has been signed below by the following persons
in the capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/ Faith Colish Trustee August 4, 1998
- ------------------------
Faith Colish
/s/ Stanley Egener Chairman of the Board August 4, 1998
- ------------------------ and Trustee (Chief
Stanley Egener Executive Officer
/s/ Howard A. Mileaf Trustee August 4, 1998
- ------------------------
Howard A. Mileaf
/s/ Edward I. O'Brien Trustee August 4, 1998
- ------------------------
Edward I. O'Brien
/s/ John T. Patterson, Jr. Trustee August 4, 1998
- ------------------------
John T. Patterson, Jr.
/s/ John P. Rosenthal Trustee August 4, 1998
- ------------------------
John P. Rosenthal
(signatures continued on next page)
<PAGE>
/s/ Cornelius T. Ryan Trustee August 4, 1998
- ------------------------
Cornelius T. Ryan
/s/ Gustave H. Shubert Trustee August 4, 1998
- ------------------------
Gustave H. Shubert
/s/ Lawrence Zicklin President and Trustee August 4, 1998
- ------------------------
Lawrence Zicklin
/s/ Michael J. Weiner
- ------------------------ Vice President August 4, 1998
Michael J. Weiner (Principal Financial
Officer)
/s/ Richard Russell
- ------------------------ Treasurer (Principal August 4, 1998
Richard Russell Accounting Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, EQUITY MANAGERS TRUST has duly caused the
Post-Effective Amendment No. 14 to be signed on its behalf by the undersigned,
thereto duly authorized, in the City and State of New York on the 4th day of
August, 1998.
EQUITY MANAGERS TRUST
By: /s/Lawrence Zicklin
--------------------
Lawrence Zicklin
President
Pursuant to the requirements of the Securities Act of 1933, the
Post-Effective Amendment No. 14 has been signed below by the following persons
in the capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/Faith Colish Trustee August 4, 1998
- ------------------------
Faith Colish
/s/Stanley Egener Chairman of the Board August 4, 1998
- ------------------------ and Trustee (Chief
Stanley Egener Executive Officer)
/s/Howard A. Mileaf Trustee August 4, 1998
- ------------------------
Howard A. Mileaf
/s/Edward O'Brien Trustee August 4, 1998
- ------------------------
Edward I. O'Brien
/s/John T. Patterson, Jr. Trustee August 4, 1998
- ------------------------
John T. Patterson, Jr.
/s/John P. Rosenthal Trustee August 4, 1998
- ------------------------
John P. Rosenthal
(signatures continued on next page)
<PAGE>
Signature Title Date
- --------- ----- ----
/s/Cornelius T. Ryan Trustee August 4, 1998
- ------------------------
Cornelius T. Ryan
/s/Gustave H. Shubert Trustee August 4, 1998
- ------------------------
Gustave H. Shubert
/s/Lawrence Zicklin President and Trustee August 4, 1998
- ------------------------
Lawrence Zicklin
/s/Michael J. Weiner Vice President (Principal August 4, 1998
- ------------------------
Michael J. Weiner Financial Officer)
/s/Richard Russell Treasurer (Principal August 4, 1998
- ------------------------
Richard Russell Accounting Officer)
<PAGE>
<TABLE>
<CAPTION>
NEUBERGER & BERMAN EQUITY TRUST
POST-EFFECTIVE AMENDMENT NO. 13 ON FORM N-1A
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Description Page
- ------ ----------- ----
<S> <C> <C> <C>
(1) (a) Certificate of Trust. Incorporated by Reference to N.A.
Post-Effective No. 8 to Registrant's Registration Statement, File
Nos. 33-64368 and 811-7784, Edgar Accession
No. 0000898432-95-000427.
(b) Trust Instrument of Neuberger & Berman Equity Trust. N.A.
Incorporated by Reference to Post-Effective No. 8 to Registrant's
Registration Statement, File Nos. 33-64368 and 811-7784, Edgar
Accession No. 0000898432-95-000427.
(c) Schedule A - Current Series of Neuberger & Berman Equity Trust. N.A.
Incorporated by reference to Post-Effective Amendment No. 12 to
Registrant's Registration Statement, File Nos. 33-64368 and
811-7784, Edgar Accession No. 0000898432-97-000398.
(2) By-laws of Neuberger & Berman Equity Trust. Incorporated by Reference to N.A.
Post-Effective No. 8 to Registrant's Registration Statement, File
Nos. 33-64368 and 811-7784, Edgar Accession No. 0000898432-95-000427.
(3) Voting Trust Agreement. None. N.A.
(4) (a) Trust Instrument of Neuberger & Berman Equity Trust, N.A.
Articles IV, V, and VI. Incorporated by Reference to
Post-Effective No. 8 to Registrant's Registration Statement, File
Nos. 33-64368 and 811-7784, Edgar Accession No.
0000898432-95-000427.
(b) Bylaws of Neuberger & Berman Equity Trust, Articles V, VI,
and VIII. Incorporated by Reference to Post-Effective No. 8 to
Registrant's Registration Statement, File Nos. 33-64368 and
811-7784, Edgar Accession No. 0000898432-95-000427.
(5) (a) (i) Management Agreement Between Equity Managers Trust and N.A.
Neuberger & Berman Management Incorporated.
Incorporated by Reference to Post-Effective Amendment
No. 70 to Registration Statement of Neuberger & Berman
Equity Funds, File Nos. 2-11357 and 811-582, Edgar
Accession No. 0000898432-000314.
18
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
- ------ ----------- ----
(ii) Schedule A - Series of Neuberger & Berman Equity N.A.
Managers Trust Currently Subject to the Management
Agreement. Incorporated by Reference to Post-Effective
Amendment No. 70 to Registration Statement of Neuberger
& Berman Equity Funds, File Nos. 2-11357 and 811-582,
Edgar Accession No. 0000898432-000314.
(iii) Schedule B - Schedule of Compensation Under the N.A.
Management Agreement. Incorporated by Reference to
Post-Effective Amendment No. 70 to Registration
Statement of Neuberger & Berman Equity Funds, File Nos.
2-11357 and 811-582, Edgar Accession No.
0000898432-000314.
(b) (i) Sub-Advisory Agreement Between Neuberger & Berman N.A.
Management Incorporated and Neuberger & Berman, LLC with
Respect to Equity Managers Trust. Incorporated by
Reference to Post-Effective Amendment No. 70 to
Registration Statement of Neuberger & Berman Equity
Funds, File Nos. 2-11357 and 811-582, Edgar Accession
No. 0000898432-000314.
(ii) Schedule A - Series of Neuberger & Berman Equity N.A.
Managers Trust Currently Subject to the Sub-Advisory
Agreement. Incorporated by Reference to Post-Effective
Amendment No. 70 to Registration Statement of Neuberger
& Berman Equity Funds, File Nos. 2-11357 and 811-582,
Edgar Accession No. 0000898432-000314.
(c) (i) Management Agreement Between Global Managers Trust and
Neuberger & Berman Management, Incorporated by Reference
to Post-Effective Amendment No. 74 to Registrant's N.A.
Registration Statement, File Nos. 2-11357 and 811-582,
Edgar Accession No. 0000898432-95-000426.
(ii) Schedule A - Series of Global Managers Trust Currently
Subject to the Management Agreement. Incorporated by
Reference to Post-Effective Amendment No. 74 to
Registrant's Registration Statement, File Nos. 2-11357 N.A.
and 811-582, Edgar Accession No. 0000898432-95-000426.
19
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
- ------ ----------- ----
(iii) Schedule B - Schedule of Compensation Under the
Management Agreement. Incorporated by Reference to
Post-Effective Amendment No. 74 to Registrant's N.A.
Registration Statement, File Nos. 2-11357 and 811-582,
Edgar Accession No. 0000898432-95-000426.
(d) (i) Sub-Advisory Agreement Between Neuberger & Berman
Management Incorporated and Neuberger & Berman, LLC with
Respect to Global Managers Trust. Incorporated by
Reference to Post-Effective Amendment No. 74 to N.A.
Registrant's Registration Statement, File Nos. 2-11357
and 811-582, Edgar Accession No. 0000898432-95-000426.
(ii) Schedule A - Series of Global Managers Trust Currently
Subject to the Sub-Advisory Agreement, Incorporated by
Reference to Post-Effective Amendment No. 74 to
Registrant's Registration Statement, File Nos. 2-11357 N.A.
and 811-582, Edgar Accession No. 0000898432-95-000426.
(6) (a) Distribution Agreement Between Neuberger & Berman Equity Trust and N.A.
Neuberger & Berman Management. Incorporated by Reference to
Post-Effective Amendment No. 13 to Registrant's Registration Statement,
File Nos. 33-64368 and 811-7784, Edgar Accession No. 0000898432-97-000519.
(b) Schedule A - Series of Neuberger & Berman Equity Trust Currently Subject N.A.
to the Distribution Agreement. Incorporated by Reference to
Post-Effective Amendment No. 13 to Registrant's Registration Statement,
File Nos. 33-64368 and 811-7784, Edgar Accession No. 0000898432-97-000519.
(7) Bonus, Profit Sharing or Pension Plans. None. N.A.
20
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
- ------ ----------- ----
(8) (a) Custodian Contract Between Neuberger & Berman Equity Trust and N.A.
State Street Bank and Trust Company. Incorporated by Reference
to Post-Effective No. 8 to Registrant's Registration Statement,
File Nos. 33-64368 and 811-7784, Edgar Accession
No. 0000898432-95-000427.
(b) Schedule of Compensation Under the Custodian Contract. N.A.
Incorporated by Reference to Post-Effective No. 10 to
Registrant's Registration Statement, File Nos. 33-64368 and
811-7784, Edgar Accession No. 0000898432-96-000532.
(c) Agreement Between Neuberger & Berman Equity Trust and State N.A.
Street Bank Trust Company Adding Neuberger & Berman International
Trust as a Portfolio Governed by the Custodian Contract.
Incorporated by reference to Post-Effective Amendment No. 12 to
Registrant's Registration Statement, File Nos. 33-64368 and
811-7784, Edgar Accession No. 0000898432-97-000398. N.A.
(9) (a) (i) Transfer Agency and Service Agreement Between Neuberger & Berman N.A.
Equity Trust and State Street Bank and Trust Company.
Incorporated by Reference to Post-Effective No. 8 to Registrant's
Registration Statement, File Nos. 33-64368 and 811-7784, Edgar
Accession No. 0000898432-95-000427.
(ii) Agreement Between Neuberger & Berman Equity Trust and State N.A.
Street Bank and Trust Company Adding Neuberger & Berman NYCDC
Socially Responsive Trust as a Portfolio Governed by the Transfer
Agency Agreement. Incorporated by Reference to Post-Effective
No. 8 to Registrant's Registration Statement, File Nos. 33-64368
and 811-7784, Edgar Accession No. 0000898432-95-000427.
(iii) Agreement Between Neuberger & Berman Equity Trust and State N.A.
Street Bank and Trust Company Adding Neuberger & Berman
International Trust as a Portfolio Governed by the Transfer
Agency Agreement. Incorporated by reference to Post-Effective
Amendment No. 12 to Registrant's Registration Statement, File
Nos. 33-64368 and 811-7784, Edgar Accession No.
0000898432-97-000398.
(iv) First Amendment to Transfer Agency and Service Agreement between N.A.
Equity Trust and State Street Bank and Trust Company.
Incorporated by Reference to Post-Effective No. 8 to Registrant's
Registration Statement, File Nos. 33-64368 and 811-7784, Edgar
Accession No. 0000898432-95-000427.
21
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
- ------ ----------- ----
(v) Schedule of Compensation under the Transfer Agency and Service N.A.
Agreement. Incorporated by Reference to Post-Effective No. 10 to
Registrant's Registration Statement, File Nos. 33-64368 and
811-7784, Edgar Accession No. 0000898432-96-000532.
(vi) Second Amendment to Transfer Agency and Service Agreement between N.A.
Equity Trust and State Street Bank and Trust Company.
Incorporated by reference to Post-Effective Amendment No. 12 to
Registrant's Registration Statement, File Nos. 33-64368 and
811-7784, Edgar Accession No. 0000898432-97-000398.
(b) (i) Administration Agreement Between Neuberger & Berman Equity Trust N.A.
and Neuberger & Berman Management Incorporated. Incorporated by
Reference to Post-Effective Amendment No. 13 to Registrant's
Registration Statement, File Nos. 33-64368 and 811-7784, Edgar
Accession No. 0000898432-97-000519.
(ii) Schedule A - Series of Neuberger & Berman Equity Trust Currently N.A.
Subject to the Administration Agreement. Incorporated by
Reference to Post-Effective Amendment No. 13 to Registrant's
Registration Statement, File Nos. 33-64368 and 811-7784, Edgar
Accession No. 0000898432-97-000519.
(iii) Schedule B - Schedule of Compensation Under the Administration N.A.
Agreement. Incorporated by Reference to Post-Effective No. 8 to
Registrant's Registration Statement, File Nos. 33-64368 and
811-7784, Edgar Accession No. 0000898432-95-000427.
(10) (a) Opinion and Consent of Kirkpatrick & Lockhart LLP on Securities Matters. N.A.
To Be Filed by Amendment.
(11) Consent of Independent Auditors. None. N.A.
(12) Financial Statements Omitted from Prospectus. None. N.A.
(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 of Performance Quotations. None. N.A.
(17) Financial Data Schedule. None. N.A.
(18) Plan Pursuant to Rule 18f-3. None. N.A.
22
</TABLE>
