As filed with the Securities and Exchange Commission on September 3, 1999
1933 Act Registration No. 033-64368
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. 21 [ X ]
----
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 19 [ 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 April 30, 1999 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 December 1, 1999 pursuant to paragraph (a)(2)
- ---
Neuberger Berman Equity Trust is a "master/feeder fund." This Post-Effective
Amendment No. 21 includes a signature page for the master fund, Equity Managers
Trust, and appropriate officers and trustees thereof.
<PAGE>
NEUBERGER BERMAN EQUITY TRUST
CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 21 ON FORM N-1A
This post-effective amendment consists of the following papers and
documents:
Cover Sheet
Contents of Post-Effective Amendment No. 21 on Form N-1A
Neuberger Berman Large-Cap Growth Trust
---------------------------------------
Part A - Prospectus
Part B - Statement of Additional Information
Part C - Other Information
Signature Pages
Exhibits
-2-
<PAGE>
<PAGE>
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
[PHOTO] Subject to Completion , 1999 NEUBERGER BERMAN
NEUBERGER BERMAN
LARGE-CAP GROWTH TRUST-SM-
- --------------------------------------------------------------------------------
PROSPECTUS , 1999
The Securities and Exchange Commission does not say
whether any mutual fund is a good or bad investment or
whether the information in any prospectus is accurate or
complete. It is unlawful for anyone to indicate
otherwise.
<PAGE>
CONTENTS
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<TABLE>
<C> <S>
NEUBERGER BERMAN EQUITY TRUST
PAGE 2 ...... Large-Cap Growth Trust
YOUR INVESTMENT
6 ...... Maintaining Your Account
8 ...... Share Prices
9 ...... Distributions and Taxes
11 ...... Fund Structure
</TABLE>
The "Neuberger Berman" name and logo are service
marks of Neuberger Berman, LLC. "Neuberger Berman
Management Inc." and the individual fund name in
this prospectus are either service marks or
registered trademarks of Neuberger Berman
Management Inc. -C-1999 Neuberger Berman Management
Inc.
<PAGE>
- ------------------------------------------------------------
FUND MANAGEMENT
The fund is managed by Neuberger Berman Management Inc., in conjunction with
Neuberger Berman, LLC, as sub-adviser. Together, the firms manage more than
$57.0 billion in total assets (as of June 30, 1999) and continue an asset
management history that began in 1939.
RISK INFORMATION
This prospectus discusses principal risks of investing in fund shares. These and
other risks are discussed in detail in the Statement of Additional Information
(see back cover).
THIS FUND:
- - IS DESIGNED FOR INVESTORS WITH LONG-TERM GOALS IN MIND
- - OFFERS YOU THE OPPORTUNITY TO PARTICIPATE IN FINANCIAL MARKETS THROUGH A
PROFESSIONALLY MANAGED STOCK PORTFOLIO
- - ALSO OFFERS THE OPPORTUNITY TO DIVERSIFY YOUR PORTFOLIO WITH A FUND THAT
INVESTS USING A GROWTH APPROACH
- - USES A MASTER/FEEDER STRUCTURE IN ITS PORTFOLIO; SEE PAGE 11 FOR INFORMATION
ON HOW IT WORKS
- - CARRIES CERTAIN RISKS, INCLUDING THE RISK THAT YOU COULD LOSE MONEY IF FUND
SHARES ARE WORTH LESS THAN WHAT YOU PAID
- - IS A MUTUAL FUND, NOT A BANK DEPOSIT, AND IS NOT GUARANTEED OR INSURED
1
<PAGE>
PHOTO
NEUBERGER BERMAN
LARGE-CAP GROWTH TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS
2
<PAGE>
GOAL & STRATEGY
- ------------------------------------------------------------
LARGE-CAP STOCKS
Large companies are usually well-established. They typically have a variety of
products and business lines, an experienced management team and a sound
financial base that can help them weather bad times.
Because of their size, large companies may grow at a slower rate than small
companies. But their returns have sometimes led those of smaller companies,
often with lower volatility.
GROWTH INVESTING
For growth investors, the aim is to invest in companies that are already
successful but could be even more so. Often, these stocks are in emerging or
rapidly growing industries.
While most growth stocks are known to investors, they may not yet have reached
their full potential. The growth investor looks for reasons for continued
success.
[ICON]
THE FUND SEEKS LONG-TERM GROWTH OF CAPITAL; DIVIDEND INCOME IS A
SECONDARY GOAL.
To pursue these goals, the fund invests mainly in common stocks of
large-capitalization companies. The fund seeks to reduce risk by diversifying
among many companies, sectors and industries in order to moderate the fund's
performance variability.
The managers employ a disciplined investment strategy when selecting growth
stocks. They seek to buy companies with strong earnings growth and with the
potential for upward earnings revisions priced at an attractive level relative
to its growth rate. Factors in identifying these firms may include:
- - solid balance sheets
- - earnings that have exceeded analysts' expectations
- - a strong position relative to competitors
- - a stock price that is reasonable in light of its growth rate
The managers also follow a disciplined selling strategy and may eliminate a
stock from the portfolio when the company's fundamentals deteriorate, a target
price is reached, or when it appears substantially less desirable than another
stock.
The fund has the ability to change its goal without shareholder approval,
although it does not currently intend to do so.
Large-Cap Growth Trust 3
<PAGE>
MAIN RISKS
- ------------------------------------------------------------
OTHER RISKS
Borrowing, securities lending, and derivatives could create leverage, meaning
that certain gains or losses could be amplified, increasing share price
movements. In using certain derivatives to gain stock market exposure for excess
cash holdings, the fund increases its risk of loss.
Although they may add diversification, foreign securities can be riskier,
because foreign markets tend to be more volatile and currency exchange rates
fluctuate. There may be less information available about foreign issuers than
about domestic issuers.
When the fund anticipates unusual market or other conditions, it may temporarily
depart from its goal and invest substantially in high-quality short-term
fixed-income investments. This could help the fund avoid losses but may mean
lost opportunities.
[ICON] Most of the fund's performance depends
on what happens in the stock market. The market's behavior is
unpredictable, particularly in the short term. Because of this, the
value of your investment will rise and fall, and you could lose money.
At times, large-cap stocks may lag other types of stocks in performance, which
could cause the fund to perform less well than certain other funds. While they
may be less risky than small-cap stocks, large-cap stocks may perform better or
less well over time.
Because the prices of most growth stocks are based on future expectations, these
stocks tend to be more sensitive than value stocks to bad economic news and
negative earnings surprises. While the prices of any type of stock can rise and
fall rapidly, growth stocks in particular may underperform during periods when
the market favors value stocks. The fund's performance may also suffer if
certain stocks do not perform as the portfolio manager expected. To the extent
that the managers sell stocks before they reach their market peak, the fund may
miss out on opportunities for higher performance.
Through active trading, the fund may have a high portfolio turnover rate, which
can mean higher taxable distributions and lower performance due to increased
brokerage costs.
4 Neuberger Berman
<PAGE>
INVESTOR EXPENSES
- ------------------------------------------------------------
MANAGEMENT
JENNIFER K. SILVER is a Vice President of Neuberger Berman Management and a
principal of Neuberger Berman, LLC. Currently the Director of the Growth Equity
Group, she has been co-manager of the fund since joining the firm in 1997. From
1981 to 1997, she was an analyst and a portfolio manager at another firm.
NEUBERGER BERMAN MANAGEMENT is the fund's investment manager, administrator, and
distributor. It engages Neuberger Berman, LLC as sub-adviser to provide
management and related services. For investment management services, the fund
will pay Neuberger Berman Management a fee at the annual rate of 0.550% of the
first $250 million of average net assets, 0.525% of the next $250 million,
0.500% of the next $250 million, 0.475% of the next $250 million, 0.450% of the
next $500 million, and 0.425% of average net assets in excess of $1.5 billion.
[ICON] The fund does not charge you any fees for
buying, selling, or exchanging shares, or for maintaining your
account. Your only fund cost is your share of annual operating ex-
penses. The expense example can help you compare costs among funds.
FEE TABLE
SHAREHOLDER FEES None
- -------------------------------------------------------
ANNUAL OPERATING EXPENSES (% of average net assets)*
These are deducted from fund assets, so you pay them indirectly.
<TABLE>
<S> <C> <C>
Management fees
PLUS: Distribution (12b-1) fees 0.10
Other expenses**
....
EQUALS: Total annual operating expenses
MINUS: Expense reimbursement
....
EQUALS: Net expenses 1.50
</TABLE>
* NEUBERGER BERMAN MANAGEMENT HAS AGREED TO REIMBURSE CERTAIN EXPENSES OF THE
FUND THROUGH 12/31/02, SO THAT THE TOTAL ANNUAL OPERATING EXPENSES OF THE
FUND ARE LIMITED TO 1.50% OF AVERAGE NET ASSETS. THIS ARRANGEMENT DOES NOT
COVER INTEREST, TAXES, BROKERAGE COMMISSIONS, AND EXTRAORDINARY EXPENSES. THE
FUND HAS AGREED TO REPAY NEUBERGER BERMAN MANAGEMENT FOR EXPENSES REIMBURSED
TO THE FUND PROVIDED THAT REPAYMENT DOES NOT CAUSE THE FUND'S ANNUAL
OPERATING EXPENSES TO EXCEED 1.50% OF ITS AVERAGE NET ASSETS AND THE
REPAYMENT IS MADE WITHIN THREE YEARS AFTER THE YEAR IN WHICH NEUBERGER BERMAN
MANAGEMENT INCURRED THE EXPENSE. THE TABLE INCLUDES COSTS PAID BY THE FUND
AND ITS SHARE OF MASTER PORTFOLIO COSTS. FOR MORE INFORMATION ON
MASTER/FEEDER FUNDS, SEE "FUND STRUCTURE" ON PAGE 11.
** OTHER EXPENSES ARE BASED ON ESTIMATED AMOUNTS FOR THE CURRENT FISCAL YEAR.
EXPENSE EXAMPLE
The example assumes that you invested $10,000 for the periods shown, that you
earned a hypothetical 5% total return each year, and that the fund's expenses
were those in the table above. Your costs would be the same whether you sold
your shares or continued to hold them at the end of each period. Actual
performance and expenses may be higher or lower.
<TABLE>
<CAPTION>
1 Year 3 Years
<S> <C> <C>
- --------------------------------------
Expenses
</TABLE>
Because the fund is new it does not have performance or financial highlights to
report.
Large-Cap Growth Trust 5
<PAGE>
YOUR INVESTMENT
MAINTAINING YOUR
ACCOUNT
- ------------------------------------------------------------
YOUR INVESTMENT PROVIDER
The fund shares described in this prospectus are available through investment
providers such as banks, brokerage firms, workplace retirement programs, and
financial advisers.
The fees and policies outlined in this prospectus are set by the fund and by
Neuberger Berman Management. However, most of the information you'll need for
managing your investment will come from your investment provider. This includes
information on how to buy and sell shares, investor services, and additional
policies.
In exchange for the services it offers, your investment provider may charge
fees, which are generally in addition to those described in this prospectus.
To buy or sell shares of the fund described in this prospectus, contact your
investment provider. All investments must be made in U.S. dollars, and
investment checks must be drawn on a U.S. bank. The fund does not issue
certificates for shares.
Most investment providers allow you to take advantage of the Neuberger Berman
fund exchange program, which is designed for moving money from one Neuberger
Berman fund to another through an exchange of shares. However, this privilege
can be withdrawn from any investor that we believe is trying to "time the
market" or is otherwise making exchanges that we judge to be excessive. Frequent
exchanges can interfere with fund management and affect costs and performance
for other shareholders.
6 Neuberger Berman
<PAGE>
- ------------------------------------------------------------
BUYING SHARES BEFORE
A DISTRIBUTION
The money the fund earns, either as income or as capital gains, is reflected
in its share price until the fund makes a distribution. At that time, the amount
of the distribution is deducted from the share price. The amount of the
distribution is either reinvested in additional fund shares or paid to
shareholders in cash.
Because of this, if you buy shares just before the fund makes a distribution,
you'll end up getting some of your investment back as a taxable distribution.
You can avoid this situation by waiting to invest until after the distribution
has been made.
If you're investing in a tax-advantaged account, you don't need to worry;
generally, there are no tax consequences to you in this case.
Under certain circumstances, the fund reserves the right to:
- - suspend the offering of shares
- - reject any exchange or investment order
- - change, suspend, or revoke the exchange privilege
- - satisfy an order to sell fund shares with securities rather than cash, for
certain very large orders
- - suspend or postpone the redemption of shares on days when trading on the New
York Stock Exchange is restricted, or as otherwise permitted by the SEC
The proceeds from the shares you sold are generally sent out the next business
day after your order is executed, and nearly always within three business days.
There are two cases in which proceeds may be delayed beyond this time:
- - in unusual circumstances where the law allows additional time if needed
- - if a check you wrote to buy shares hasn't cleared by the time you sell those
shares
If you think you may need to sell shares soon after buying them, you can avoid
the check clearing time (which may be up to 15 days) by investing by wire or
certified check.
DISTRIBUTION FEE -- The fund has adopted a plan under which it pays 0.10% of its
average net assets every year to support share distribution and/or shareholder
servicing. This fee increases the cost of investing in the fund. Over the long
term, it could result in higher overall costs than other types of sales charges.
Your Investment 7
<PAGE>
SHARE PRICES
- ------------------------------------------------------------
SHARE PRICE CALCULATIONS
The fund's share price is the total value of its assets minus its liabilities,
divided by the total number of shares. Because the value of the fund's
securities changes every business day, the share price usually changes as well.
When valuing portfolio securities, the fund uses market prices. However, in rare
cases, events that occur after certain markets have closed may render these
prices unreliable.
When the fund believes a market price does not reflect a security's true value,
the fund may substitute for the market price a fair-value estimate derived
through methods approved by its trustees. The fund may also use these methods to
value certain types of illiquid securities.
Because the fund does not have a sales charge, the price you pay for each share
of the fund is the fund's net asset value per share. Similarly, because the fund
does not charge any fee for selling shares, the fund pays you the full share
price when you sell shares. Remember that your investment provider may charge
fees for its services.
The fund is open for business every day the New York Stock Exchange is open. In
general, every buy or sell order you place will go through at the next share
price to be calculated after your order has been accepted; check with your
investment provider to find out by what time your order must be received in
order to be processed the same day. The fund calculates its share price as of
the end of regular trading on the Exchange on business days, usually 4:00 p.m.
eastern time. Depending on when your investment provider accepts orders, it's
possible that the fund's share price could change on days when you are unable to
buy or sell shares.
Also, because foreign markets may be open on days when U.S. markets are closed,
the value of foreign securities owned by the fund could change on days when you
can't buy or sell fund shares. The fund's share price, however, will not change
until the next time it is calculated.
8 Neuberger Berman
<PAGE>
DISTRIBUTIONS
AND TAXES
- ------------------------------------------------------------
TAXES AND YOU
The taxes you actually owe on distributions and transactions can vary with many
factors, such as your tax bracket, how long you held your shares and whether you
owe alternative minimum tax.
How can you figure out your tax liability on fund distributions and
transactions? One helpful tool is the tax statement that your investment
provider sends you every January. It details the distributions you received
during the past year and shows their tax status. A separate statement covers
your transactions.
Most importantly, consult your tax professional. Everyone's tax situation is
different, and your professional should be able to help you answer any questions
you may have.
DISTRIBUTIONS -- The fund pays out to shareholders any net income and net
capital gains. Ordinarily, the fund makes any distributions once a year in
December.
Consult your investment provider about whether your income and capital gains
distributions from the fund will be reinvested in the fund or paid to you in
cash.
HOW DISTRIBUTIONS ARE TAXED -- Except for tax-advantaged retirement accounts,
all fund distributions you receive are generally taxable to you, regardless of
whether you take them in cash or reinvest them. Fund distributions to Roth IRAs,
other individual retirement accounts and qualified retirement plans generally
are tax-free. Eventual withdrawals from a Roth IRA of those amounts also may be
tax-free, while withdrawals from other retirement accounts and plans generally
are subject to tax.
Distributions are taxable in the year you receive them. In some cases,
distributions you receive in January are taxable as if they had been paid the
previous year. Your tax statement (see sidebar) will help clarify this for you.
Income distributions and short-term capital gain distributions are generally
taxed as regular income. Distributions of other capital gains are generally
taxed as long-term capital gains. The tax treatment of capital gain
distributions depends on how long the fund held the securities it sold, not when
you bought your shares of the fund or whether you reinvested your distributions.
Your Investment 9
<PAGE>
DISTRIBUTIONS
AND TAXES CONTINUED
- -------------------------------------------------------------------
EURO AND YEAR 2000 ISSUES
Like other mutual funds, the fund could be affected by problems relating to the
conversion of European currencies into the Euro occuring in steps between now
and 7/1/02, and the ability of computer systems to recognize the year 2000.
At Neuberger Berman, we are taking steps to ensure that our own computer
systems are compliant with Euro and Year 2000 issues and to determine that the
systems used by our major service providers are also compliant. We are also
making efforts to determine whether companies in the fund's portfolio will be
affected by either issue.
At the same time, it is impossible to know whether these problems, which could
disrupt fund operations and investments if uncorrected, have been adequately
addressed until the dates in question arrive.
HOW TRANSACTIONS ARE TAXED -- When you sell fund shares, you generally realize
a gain or loss. These transactions, which include exchanges between funds,
usually have tax implications. The exception, once again, is tax-advantaged
retirement accounts.
UNCASHED CHECKS -- When you receive a check, you may want to deposit or cash it
right away, as you will not receive interest on uncashed checks.
10 Neuberger Berman
<PAGE>
FUND STRUCTURE
- ------------------------------------------------------------
The fund uses a "master/feeder" structure.
Rather than investing directly in securities, the fund is a "feeder fund,"
meaning that it invests in a corresponding "master portfolio." The master
portfolio in turn invests in securities, using the strategies described in this
prospectus. One potential benefit of this structure is lower costs, since the
expenses of the master portfolio can be shared with any other feeder funds. In
this prospectus we have used the word "fund" to mean the feeder fund and its
master portfolio.
For reasons relating to costs or a change in investment goal, among others, the
feeder fund could switch to another master portfolio or decide to manage its
assets itself. The fund is not currently contemplating such a move.
Your Investment 11
<PAGE>
- ------------------------------------------------------------
OBTAINING INFORMATION
You can obtain a shareholder report, SAI, and other information from your
investment provider, or from:
NEUBERGER BERMAN
MANAGEMENT INC.
605 Third Avenue 2nd Floor
New York, NY 10158-0180
800-877-9700
212-476-8800
Broker/Dealer and
Institutional Services:
800-366-6264
Web site:
www.nbfunds.com
Email:
[email protected]
SECURITIES AND EXCHANGE COMMISSION
Washington, DC
20549-6009
800-SEC-0330 (Public
Reference Section)
Web site:
www.sec.gov
You can request copies of documents from the SEC for the cost of a duplicating
fee, or view documents at the SEC's Public Reference Room in Washington.
NEUBERGER BERMAN LARGE-CAP GROWTH TRUST
If you'd like further details about this fund, you can request a free copy
of the following documents:
SHAREHOLDER REPORTS -- Published twice a year, the shareholder reports offer
information about the fund's recent performance, including:
- - a discussion by the portfolio managers about strategies and market conditions
- - fund performance data and financial statements
- - complete portfolio holdings
STATEMENT OF ADDITIONAL INFORMATION -- The SAI contains more comprehensive
information about this fund, including:
- - various types of securities and practices, and their risks
- - investment limitations and additional policies
- - information about the fund's management and business structure
The SAI is incorporated by reference into this prospectus, making it legally
part of the prospectus.
Investment manager:
NEUBERGER BERMAN MANAGEMENT INC.
Sub-adviser:
NEUBERGER BERMAN, LLC
[LOGO]
NEUBERGER BERMAN MANAGEMENT INC.
605 Third Avenue
New York, NY 10158-0180
[RECYCLE LOGO] NMLRR9860899 SEC file number: 811-7784
<PAGE>
- --------------------------------------------------------------------------------
NEUBERGER BERMAN LARGE-CAP GROWTH TRUST AND PORTFOLIO
STATEMENT OF ADDITIONAL INFORMATION
DATED _________, 1999
NO-LOAD MUTUAL FUND
605 THIRD AVENUE, 2ND FLOOR, NEW YORK, NY 10158-0180
TOLL-FREE 800-877-9700
- --------------------------------------------------------------------------------
Neuberger Berman Large-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 ______________. The Fund invests all of
its net investable assets in Neuberger Berman Large-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 Inc. (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 Inc. ("NB 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.
The "Neuberger Berman" name and logo are service marks of Neuberger
Berman, LLC. "Neuberger Berman Management Inc." and the fund and portfolio names
in this SAI are either service marks or registered trademarks of Neuberger
Berman Management Inc. (C)1999 Neuberger Berman Management Inc.
<PAGE>
TABLE OF CONTENTS
INVESTMENT INFORMATION.........................................................1
Investment Policies and Limitations......................................1
Investment Insight.......................................................3
Additional Investment Information........................................4
PERFORMANCE INFORMATION.......................................................19
Total Return Computations...............................................19
Comparative Information.................................................19
Other Performance Information...........................................20
CERTAIN RISK CONSIDERATIONS...................................................21
TRUSTEES AND OFFICERS.........................................................21
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES.............................26
Investment Manager and Administrator....................................26
Management and Administration Fees......................................27
Sub-Adviser.............................................................28
Investment Companies Managed............................................28
Management and Control of NB Management.................................31
DISTRIBUTION ARRANGEMENTS.....................................................32
Rule 12b-1 Plan.........................................................32
ADDITIONAL PURCHASE INFORMATION...............................................33
Share Prices and Net Asset Value........................................33
ADDITIONAL EXCHANGE INFORMATION...............................................34
ADDITIONAL REDEMPTION INFORMATION.............................................37
Suspension of Redemptions...............................................37
Redemptions in Kind.....................................................38
DIVIDENDS AND OTHER DISTRIBUTIONS.............................................38
i
<PAGE>
PAGE
ADDITIONAL TAX INFORMATION....................................................38
Taxation of the Fund....................................................38
Taxation of the Portfolio...............................................39
Taxation of the Fund's Shareholders.....................................42
PORTFOLIO TRANSACTIONS........................................................42
Portfolio Turnover......................................................45
REPORTS TO SHAREHOLDERS.......................................................45
ORGANIZATION, CAPITALIZATION AND OTHER MATTERS................................45
CUSTODIAN AND TRANSFER AGENT..................................................47
INDEPENDENT AUDITORS..........................................................48
LEGAL COUNSEL.................................................................48
APPENDIX A...................................................................A-1
RATINGS OF CORPORATE BONDS AND COMMERCIAL PAPER........................A-1
APPENDIX B...................................................................B-1
ii
<PAGE>
INVESTMENT INFORMATION
The Fund is a separate operating series of the Trust, a Delaware
business trust that is registered with the Securities and Exchange Commission
("SEC") as a diversified open-end management investment company. The Fund seeks
its investment objective by investing all of its net investable assets in the
Portfolio, a series of Equity Managers Trust ("Managers Trust") that has an
investment objective identical to that of the Fund. The Portfolio, in turn,
invests in securities in accordance with an investment objective, policies, and
limitations identical to those of the Fund. (The Trust and Managers Trust, which
is an open-end management investment company managed by NB Management, are
together referred to below as the "Trusts.")
The following information supplements the discussion in the
Prospectus of the investment objective, policies, and limitations of the Fund
and Portfolio. The investment objective and, unless otherwise specified, the
investment policies and limitations of the Fund and Portfolio are not
fundamental. Any investment objective, policy or limitation that is not
fundamental may be changed by the trustees of the Trust ("Fund Trustees") or of
Managers Trust ("Portfolio Trustees") without shareholder approval. The
fundamental investment policies and limitations of the Fund or the Portfolio may
not be changed without the approval of the lesser of:
(1) 67% of the total units of beneficial interest ("shares") of
the Fund or Portfolio represented at a meeting at which more than 50% of the
outstanding Fund or Portfolio shares are represented; or
(2) a majority of the outstanding shares of the Fund or Portfolio.
These percentages are required by the Investment Company Act of 1940
("1940 Act") and are referred to in this SAI as a "1940 Act majority vote."
Whenever the Fund is called upon to vote on a change in a fundamental investment
policy or limitation of the Portfolio, the Fund casts its votes in proportion to
the votes of its shareholders at a meeting thereof called for that purpose.
INVESTMENT POLICIES AND LIMITATIONS
The Fund has the following fundamental investment policy, to enable
it to invest in the Portfolio:
Notwithstanding any other investment policy of the Fund, the Fund
may invest all of its investable assets (cash, securities, and
receivables relating to securities) in an open-end management
investment company having substantially the same investment
objective, policies, and limitations as the Fund.
All other fundamental investment policies and limitations and the
non-fundamental investment policies and limitations of the Fund are identical to
1
<PAGE>
those of the Portfolio. Therefore, although the following discusses the
investment policies and limitations of the Portfolio, it applies equally to the
Fund.
Except for the limitation on borrowing, any investment policy or
limitation that involves a maximum percentage of securities or assets will not
be considered to be violated unless the percentage limitation is exceeded
immediately after, and because of, a transaction by the Portfolio.
The Portfolio's fundamental investment policies and limitations are
as follows:
1. BORROWING. The Portfolio may not borrow money, except that
the Portfolio may (i) borrow money from banks for temporary or emergency
purposes and not for leveraging or investment and (ii) enter into reverse
repurchase agreements for any purpose; provided that (i) and (ii) in combination
do not exceed 33-1/3% of the value of its total assets (including the amount
borrowed) less liabilities (other than borrowings). If at any time borrowings
exceed 33-1/3% of the value of the Portfolio's total assets, the Portfolio will
reduce its borrowings within three days (excluding Sundays and holidays) to the
extent necessary to comply with the 33-1/3% limitation.
2. COMMODITIES. The Portfolio may not purchase physical
commodities or contracts thereon, unless acquired as a result of the ownership
of securities or instruments, but this restriction shall not prohibit the
Portfolio from purchasing futures contracts or options (including options on
futures contracts, but excluding options or futures contracts on physical
commodities) or from investing in securities of any kind.
3. DIVERSIFICATION. The Portfolio may not, with respect to 75%
of the value of its total assets, purchase the securities of any issuer (other
than securities issued or guaranteed by the U.S. Government or any of its
agencies or instrumentalities) if, as a result, (i) more than 5% of the value of
the Portfolio's total assets would be invested in the securities of that issuer
or (ii) the Portfolio would hold more than 10% of the outstanding voting
securities of that issuer.
4. INDUSTRY CONCENTRATION. The Portfolio may not purchase any
security if, as a result, 25% or more of its total assets (taken at current
value) would be invested in the securities of issuers having their principal
business activities in the same industry. This limitation does not apply to
securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities.
5. LENDING. The Portfolio may not lend any security or make any
other loan if, as a result, more than 33-1/3% of its total assets (taken at
current value) would be lent to other parties, except, in accordance with its
investment objective, policies, and limitations, (i) through the purchase of a
portion of an issue of debt securities or (ii) by engaging in repurchase
agreements.
6. REAL ESTATE. The Portfolio may not purchase real estate
unless acquired as a result of the ownership of securities or instruments, but
this restriction shall not prohibit the Portfolio from purchasing securities
issued by entities or investment vehicles that own or deal in real estate or
interests therein or instruments secured by real estate or interests therein.
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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
20% of the value of its total assets in securities of foreign issuers, provided
that this limitation shall not apply to foreign securities denominated in U.S.
dollars, including American Depositary Receipts ("ADRs").
5. ILLIQUID SECURITIES. The Portfolio may not purchase any
security if, as a result, more than 15% of its net assets would be invested in
illiquid securities. Illiquid securities include securities that cannot be sold
within seven days in the ordinary course of business for approximately the
amount at which the Portfolio has valued the securities, such as repurchase
agreements maturing in more than seven days.
Although the Portfolio does not have policies limiting its
investment in warrants, the Portfolio does not currently intend to invest in
warrants unless acquired in units or attached to securities.
TEMPORARY DEFENSIVE POSITION. For temporary defensive purposes, the
Portfolio may invest up to 100% of its total assets in cash and cash
equivalents, U.S. Government and Agency Securities, commercial paper and certain
other money market instruments, as well as repurchase agreements collateralized
by the foregoing.
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INVESTMENT INSIGHT
Neuberger Berman's commitment to its asset management approach is
reflected in the more than $125 million the organization's principals, employees
and their families invested in the Neuberger Berman mutual funds.
Neuberger Berman LARGE-CAP GROWTH Trust seeks long-term growth of
capital by primarily investing in common stocks of large-capitalization
companies with solid fundamentals.
[TO BE ADDED].
RISK MANAGEMENT
In seeking to reduce risk on the buy side, the managers look for
reasonably priced stocks, diversify investments across an array of industries,
and avoid making large sector bets. On the sell side, stocks are sold when they
reach their price target, do not perform as expected, or are considered less
attractive than other opportunities.
ADDITIONAL INVESTMENT INFORMATION
The Portfolio may make the following investments, among others,
although it may not buy all of the types of securities or use all of the
investment techniques that are described.
ILLIQUID SECURITIES. Illiquid securities are securities that cannot
be expected to be sold within seven days at approximately the price at which
they are valued. These may include unregistered or other restricted securities
and repurchase agreements maturing in greater than seven days. Illiquid
securities may also include commercial paper under section 4(2) of the 1933 Act,
as amended, and Rule 144A securities (restricted securities that may be traded
freely among qualified institutional buyers pursuant to an exemption from the
registration requirements of the securities laws); these securities are
considered illiquid unless NB Management, acting pursuant to guidelines
established by the trustees of Managers Trust, determines they are liquid.
Generally, foreign securities freely tradable in their principal market are not
considered restricted or illiquid. Illiquid securities may be difficult for the
Portfolio to value or dispose of due to the absence of an active trading market.
The sale of some illiquid securities by the Portfolio may be subject to legal
restrictions which could be costly to the Portfolio.
POLICIES AND LIMITATIONS. The Portfolio may invest up to 15% of
its net assets in illiquid securities.
REPURCHASE AGREEMENTS. In a repurchase agreement, the Portfolio
purchases securities from a bank that is a member of the Federal Reserve System
or from a securities dealer that agrees to repurchase the securities from the
Portfolio at a higher price on a designated future date. Repurchase agreements
generally are for a short period of time, usually less than a week. Costs,
delays, or losses could result if the selling party to a repurchase agreement
becomes bankrupt or otherwise defaults. NB Management monitors the
creditworthiness of sellers.
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POLICIES AND LIMITATIONS. Repurchase agreements with a maturity of
more than seven days are considered to be illiquid securities. The Portfolio may
not enter into a repurchase agreement with a maturity of more than seven days
if, as a result, more than 15% of the value of its net assets would then be
invested in such repurchase agreements and other illiquid securities. The
Portfolio may enter into a repurchase agreement only if (1) the underlying
securities are of a type that the Portfolio's investment policies and
limitations would allow it to purchase directly, (2) the market value of the
underlying securities, including accrued interest, at all times equals or
exceeds the repurchase price, and (3) payment for the underlying securities is
made only upon satisfactory evidence that the securities are being held for the
Portfolio's account by its custodian or a bank acting as the Portfolio's agent.
SECURITIES LOANS. The Portfolio may lend securities to banks,
brokerage firms, and other institutional investors judged creditworthy by NB
Management, provided that cash or equivalent collateral, equal to at least 100%
of the market value of the loaned securities, is continuously maintained by the
borrower with the Portfolio. The Portfolio may invest the cash collateral and
earn income, or it may receive an agreed upon amount of interest income from a
borrower who has delivered equivalent collateral. During the time securities are
on loan, the borrower will pay the Portfolio an amount equivalent to any
dividends or interest paid on such securities. These loans are subject to
termination at the option of the Portfolio or the borrower. The Portfolio may
pay reasonable administrative and custodial fees in connection with a loan and
may pay a negotiated portion of the interest earned on the cash or equivalent
collateral to the borrower or placing broker. The Portfolio does not have the
right to vote securities on loan, but would terminate the loan and regain the
right to vote if that were considered important with respect to the investment.
NB Management believes the risk of loss on these transactions is slight because,
if a borrower were to default for any reason, the collateral should satisfy the
obligation. However, as with other extensions of secured credit, loans of
portfolio securities involve some risk of loss of rights in the collateral
should the borrower fail financially.
POLICIES AND LIMITATIONS. The Portfolio may lend portfolio
securities with a value not exceeding 33-1/3% of its total assets to banks,
brokerage firms, or other institutional investors judged creditworthy by NB
Management. Borrowers are required continuously to secure their obligations to
return securities on loan from the Portfolio by depositing collateral in a form
determined to be satisfactory by the Portfolio Trustees. The collateral, which
must be marked to market daily, must be equal to at least 100% of the market
value of the loaned securities, which will also be marked to market daily.
RESTRICTED SECURITIES AND RULE 144A SECURITIES. The Portfolio may
invest in restricted securities, which are securities that may not be sold to
the public without an effective registration statement under the 1933 Act.
Before they are registered, such securities may be sold only in a privately
negotiated transaction or pursuant to an exemption from registration. In
recognition of the increased size and liquidity of the institutional market for
unregistered securities and the importance of institutional investors in the
formation of capital, the SEC has adopted Rule 144A under the 1933 Act. Rule
144A is designed to facilitate efficient trading among institutional investors
by permitting the sale of certain unregistered securities to qualified
institutional buyers. To the extent privately placed securities held by the
Portfolio qualify under Rule 144A and an institutional market develops for those
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securities, the Portfolio likely will be able to dispose of the securities
without registering them under the 1933 Act. To the extent that institutional
buyers become, for a time, uninterested in purchasing these securities,
investing in Rule 144A securities could increase the level of the Portfolio's
illiquidity. NB Management, acting under guidelines established by the Portfolio
Trustees, may determine that certain securities qualified for trading under Rule
144A are liquid. Regulation S under the 1933 Act permits the sale abroad of
securities that are not registered for sale in the United States.
Where registration is required, the Portfolio may be obligated to
pay all or part of the registration expenses, and a considerable period may
elapse between the decision to sell and the time the Portfolio may be permitted
to sell a security under an effective registration statement. If, during such a
period, adverse market conditions were to develop, the Portfolio might obtain a
less favorable price than prevailed when it decided to sell. Restricted
securities for which no market exists are priced by a method that the Portfolio
Trustees believe accurately reflects fair value.
POLICIES AND LIMITATIONS. To the extent restricted securities,
including Rule 144A securities, are illiquid, purchases thereof will be subject
to the Portfolio's 15% limit on investments in illiquid securities.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement,
the Portfolio sells portfolio securities subject to its agreement to repurchase
the securities at a later date for a fixed price reflecting a market rate of
interest. There is a risk that the counter-party to a reverse repurchase
agreement will be unable or unwilling to complete the transaction as scheduled,
which may result in losses to the Portfolio.
POLICIES AND LIMITATIONS. Reverse repurchase agreements are
considered borrowings for purposes of the Portfolio's investment policies and
limitations concerning borrowings. While a reverse repurchase agreement is
outstanding, the Portfolio will deposit in a segregated account with its
custodian cash or appropriate liquid securities, marked to market daily, in an
amount at least equal to the Portfolio's obligations under the agreement.
FOREIGN SECURITIES. The Portfolio may invest in U.S.
dollar-denominated securities of foreign issuers (including banks, governments,
and quasi-governmental organizations) and foreign branches of U.S. banks,
including negotiable certificates of deposit ("CDs"), bankers' acceptances and
commercial paper. While investments in foreign securities are intended to reduce
risk by providing further diversification, such investments involve sovereign
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
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paper, fixed time deposits, and bankers' acceptances issued by foreign banks,
(3) obligations of other corporations, and (4) obligations of foreign
governments and their subdivisions, agencies, and instrumentalities,
international agencies, and supranational entities. Investing in foreign
currency denominated securities involves the special risks associated with
investing in non-U.S. issuers, as described in the preceding paragraph, and the
additional risks of (1) adverse changes in foreign exchange rates, and (2)
adverse changes in investment or exchange control regulations (which could
prevent cash from being brought back to the United States). Additionally,
dividends and interest payable on foreign securities (and gains realized on
disposition thereof) may be subject to foreign taxes, including taxes withheld
from those payments. Commissions on foreign securities exchanges are often at
fixed rates and are generally higher than negotiated commissions on U.S.
exchanges, although the Portfolio endeavors to achieve the most favorable net
results on portfolio transactions.
Foreign securities often trade with less frequency and in less
volume than domestic securities and therefore may exhibit greater price
volatility. Additional costs associated with an investment in foreign securities
may include higher custodial fees than apply to domestic custody arrangements
and transaction costs of foreign currency conversions.
Foreign markets also have different clearance and settlement
procedures. In certain markets, there have been times when settlements have been
unable to keep pace with the volume of securities transactions, making it
difficult to conduct such transactions. Delays in settlement could result in
temporary periods when a portion of the assets of the Portfolio are uninvested
and no return is earned thereon. The inability of the Portfolio to make intended
security purchases due to settlement problems could cause the Portfolio to miss
attractive investment opportunities. Inability to dispose of portfolio
securities due to settlement problems could result in losses to the Portfolio
due to subsequent declines in value of the securities or, if the Portfolio has
entered into a contract to sell the securities, could result in possible
liability to the purchaser.
Interest rates prevailing in other countries may affect the prices
of foreign securities and exchange rates for foreign currencies. Local factors,
including the strength of the local economy, the demand for borrowing, the
government's fiscal and monetary policies, and the international balance of
payments, often affect interest rates in other countries. Individual foreign
economies may differ favorably or unfavorably from the U.S. economy in such
respects as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency, and balance of payments position.
The Portfolio may invest in ADRs, EDRs, GDRs, and IDRs. ADRs (sponsored or
unsponsored) are receipts typically issued by a U.S. bank or trust company
evidencing its ownership of the underlying foreign securities. Most ADRs are
denominated in U.S. dollars and are traded on a U.S. stock exchange. Issuers of
the securities underlying sponsored ADRs, but not unsponsored ADRs, are
contractually obligated to disclose material information in the United States.
Therefore, the market value of unsponsored ADRs may not reflect the effect of
such information. EDRs and IDRs are receipts typically issued by a European bank
or trust company evidencing its ownership of the underlying foreign securities.
GDRs are receipts issued by either a U.S. or non-U.S. banking institution
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evidencing its ownership of the underlying foreign securities and are often
denominated in U.S. dollars.
POLICIES AND LIMITATIONS. In order to limit the risks inherent in
investing in foreign currency denominated securities, the Portfolio may not
purchase any such security if, as a result, more than 20% of its total assets
(taken at market value) would be invested in foreign currency denominated
securities. Within that limitation, however, the Portfolio is not restricted in
the amount it may invest in securities denominated in any one foreign currency.
Investments in securities of foreign issuers are subject to the
Portfolio's quality standards. The Portfolio may invest only in securities of
issuers in countries whose governments are considered stable by NB Management.
FUTURES, OPTIONS ON FUTURES, OPTIONS ON SECURITIES AND INDICES,
FORWARD CONTRACTS, AND OPTIONS ON FOREIGN
CURRENCIES (COLLECTIVELY, "HEDGING INSTRUMENTS")
FUTURES CONTRACTS AND OPTIONS THEREON. The Portfolio may purchase
and sell interest rate futures contracts, stock and bond index futures
contracts, and foreign currency futures contracts and may purchase and sell
options thereon in an attempt to hedge against changes in the prices of
securities or, in the case of foreign currency futures and options thereon, to
hedge against changes in prevailing currency exchange rates. Because the futures
markets may be more liquid than the cash markets, the use of futures contracts
permits the Portfolio to enhance portfolio liquidity and maintain a defensive
position without having to sell portfolio securities. The Portfolio views
investment in (i) interest rate and securities index futures and options thereon
as a maturity management device and/or a device to reduce risk or preserve total
return in an adverse environment for the hedged securities, and (ii) foreign
currency futures and options thereon as a means of establishing more definitely
the effective return on, or the purchase price of, securities denominated in
foreign currencies that are held or intended to be acquired by the Portfolio.
The Portfolio may purchase and sell stock index futures contracts,
and may purchase and sell options thereon. For purposes of managing cash flow,
the managers may use such futures and options to increase the Portfolio's
exposure to the performance of a recognized securities index, such as the S&P
"500" Index.
A "sale" of a futures contract (or a "short" futures position)
entails the assumption of a contractual obligation to deliver the securities or
currency underlying the contract at a specified price at a specified future
time. A "purchase" of a futures contract (or a "long" futures position) entails
the assumption of a contractual obligation to acquire the securities or currency
underlying the contract at a specified price at a specified future time. Certain
futures, including stock and bond index futures, are settled on a net cash
payment basis rather than by the sale and delivery of the securities underlying
the futures.
U.S. futures contracts (except certain currency futures) are traded
on exchanges that have been designated as "contract markets" by the CFTC;
futures transactions must be executed through a futures commission merchant that
is a member of the relevant contract market. In both U.S. and foreign markets,
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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 its open futures positions. The
Portfolio also must make margin deposits with respect to options on futures that
it has written (but not with respect to options on futures that it has
purchased). If the futures commission merchant holding the margin deposit goes
bankrupt, the Portfolio could suffer a delay in recovering its funds and could
ultimately suffer a loss.
An option on a futures contract gives the purchaser the right, in
return for the premium paid, to assume a position in the contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the option exercise period. The
writer of the option is required upon exercise to assume a short futures
position (if the option is a call) or a long futures position (if the option is
a put). Upon exercise of the option, the accumulated cash balance in the
writer's futures margin account is delivered to the holder of the option. That
balance represents the amount by which the market price of the futures contract
at exercise exceeds, in the case of a call, or is less than, in the case of a
put, the exercise price of the option. Options on futures have characteristics
and risks similar to those of securities options, as discussed herein.
Although the Portfolio believes that the use of futures contracts
will benefit it, if NB Management's judgment about the general direction of the
markets or about interest rate or currency exchange rate trends is incorrect,
the Portfolio's overall return would be lower than if it had not entered into
any such contracts. The prices of futures contracts are volatile and are
influenced by, among other things, actual and anticipated changes in interest or
currency exchange rates, which in turn are affected by fiscal and monetary
policies and by national and international political and economic events. At
best, the correlation between changes in prices of futures contracts and of
securities being hedged can be only approximate due to differences between the
futures and securities markets or differences between the securities or
currencies underlying the Portfolio's futures position and the securities held
by or to be purchased for the Portfolio. The currency futures market may be
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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
fact, it may increase the risk of loss, because prices can move to the daily
limit for several consecutive trading days with little or no trading, thereby
preventing liquidation of unfavorable futures and options positions and
subjecting traders to substantial losses. If this were to happen with respect to
a position held by the Portfolio, it could (depending on the size of the
position) have an adverse impact on the NAV of the Portfolio.
POLICIES AND LIMITATIONS. The Portfolio may purchase and sell stock
index futures contracts, and may purchase and sell options thereon. For purposes
of managing cash flow, the managers may use such futures and options to increase
the Portfolio's exposure to the performance of a recognized securities index,
such as the S&P "500" Index.
The Portfolio may also purchase and sell futures contracts and may
purchase and sell options thereon in an attempt to hedge against changes in the
prices of securities or, in the case of foreign currency futures and options
thereon, to hedge against prevailing currency exchange rates. The Portfolio does
not engage in transactions in futures and options on futures for speculation.
CALL OPTIONS ON SECURITIES. The Portfolio may write covered call
options and may purchase call options on securities. It may also write covered
call options and may purchase call options in related closing transactions. The
purpose of writing call options is to hedge (i.e., to reduce, at least in part,
the effect of price fluctuations of securities held by the Portfolio on the
Portfolio's and the Fund's net asset values ("NAVs")) or to earn premium income.
Portfolio securities on which call options may be written and purchased by the
Portfolio are purchased solely on the basis of investment considerations
consistent with the Portfolio's investment objective.
When the Portfolio writes a call option, it is obligated to sell a
security to a purchaser at a specified price at any time until a certain date if
the purchaser decides to exercise the option. The Portfolio receives a premium
for writing the call option. So long as the obligation of the call option
continues, the Portfolio may be assigned an exercise notice, requiring it to
deliver the underlying security against payment of the exercise price. The
Portfolio may be obligated to deliver securities underlying an option at less
than the market price.
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The writing of covered call options is a conservative investment
technique that is believed to involve relatively little risk but is capable of
enhancing the Portfolio's total return. When writing a covered call option, the
Portfolio, in return for the premium, gives up the opportunity for profit from a
price increase in the underlying security above the exercise price, but
conversely retains the risk of loss should the price of the security decline.
If a call option that the Portfolio has written expires unexercised,
the Portfolio will realize a gain in the amount of the premium; however, that
gain may be offset by a decline in the market value of the underlying security
during the option period. If the call option is exercised, the Portfolio will
realize a gain or loss from the sale of the underlying security.
When the Portfolio purchases a call option, it pays a premium for
the right to purchase a security from the writer at a specified price until a
specified date.
POLICIES AND LIMITATIONS. The Portfolio may write covered call
options and may purchase call options on securities. It may also write covered
call options and may purchase call options in related closing transactions. The
Portfolio writes only "covered" call options on securities it owns (in contrast
to the writing of "naked" or uncovered call options, which the Portfolio will
not do). The Portfolio would purchase a call option to offset a previously
written call option or to protect against an increase in the price of the
securities it intends to purchase.
PUT OPTIONS ON SECURITIES. The Portfolio may write and purchase put
options on securities. The Portfolio will receive a premium for writing a put
option, which obligates the Portfolio to acquire a security at a certain price
at any time until a certain date if the purchaser decides to exercise the
option. The Portfolio may be obligated to purchase the underlying security at
more than its current value.
When the Portfolio purchases a put option, it pays a premium to the
writer for the right to sell a security to the writer for a specified amount at
any time until a certain date. The Portfolio would purchase a put option in
order to protect itself against a decline in the market value of a security it
owns.
Portfolio securities on which put options may be written and
purchased by the Portfolio are purchased solely on the basis of investment
considerations consistent with the Portfolio's investment objective. When
writing a put option, the Portfolio, in return for the premium, takes the risk
that it must purchase the underlying security at a price that may be higher than
the current market price of the security. If a put option that the Portfolio has
written expires unexercised, the Portfolio will realize a gain in the amount of
the premium.
POLICIES AND LIMITATIONS. The Portfolio generally writes and
purchases put options on securities for hedging purposes (I.E., to reduce, at
least in part, the effect of price fluctuations of securities held by the
Portfolio on the Portfolio's and its corresponding Fund's NAVs).
GENERAL INFORMATION ABOUT SECURITIES OPTIONS. The exercise price of
an option may be below, equal to, or above the market value of the underlying
security at the time the option is written. Options normally have expiration
dates between three and nine months from the date written. American-style
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options are exercisable at any time prior to their expiration date. The
obligation under any option written by the Portfolio terminates upon expiration
of the option or, at an earlier time, when the Portfolio offsets the option by
entering into a "closing purchase transaction" to purchase an option of the same
series. If an option is purchased by the Portfolio and is never exercised or
closed out, the Portfolio will lose the entire amount of the premium paid.
Options are traded both on U.S. national securities exchanges and in
the over-the-counter ("OTC") market. Exchange-traded options in the United
States are issued by a clearing organization affiliated with the exchange on
which the option is listed; the clearing organization in effect guarantees
completion of every exchange-traded option. In contrast, OTC options are
contracts between the Portfolio and a counter-party, with no clearing
organization guarantee. Thus, when the Portfolio writes an OTC option, it
generally will be able to "close out" the option prior to its expiration only by
entering into a closing purchase transaction with the dealer to whom the
Portfolio originally sold the option. There can be no assurance that the
Portfolio would be able to liquidate an OTC option at any time prior to
expiration. Unless the Portfolio is able to effect a closing purchase
transaction in a covered OTC call option it has written, it will not be able to
liquidate securities used as cover until the option expires or is exercised or
until different cover is substituted. In the event of the counter-party's
insolvency, the Portfolio may be unable to liquidate its options position and
the associated cover. NB Management monitors the creditworthiness of dealers
with which the Portfolio may engage in OTC options transactions.
The premium received (or paid) by the Portfolio when it writes (or
purchases) an option is the amount at which the option is currently traded on
the applicable market. The premium may reflect, among other things, the current
market price of the underlying security, the relationship of the exercise price
to the market price, the historical price volatility of the underlying security,
the length of the option period, the general supply of and demand for credit,
and the interest rate environment. The premium received by the Portfolio for
writing an option is recorded as a liability on the Portfolio's statement of
assets and liabilities. This liability is adjusted daily to the option's current
market value.
Closing transactions are effected in order to realize a profit (or
minimize a loss) on an outstanding option, to prevent an underlying security
from being called, or to permit the sale or the put of the underlying security.
There is, of course, no assurance that the Portfolio will be able to effect
closing transactions at favorable prices. If the Portfolio cannot enter into
such a transaction, it may be required to hold a security that it might
otherwise have sold, in which case it would continue to be at market risk on the
security.
The Portfolio will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more than the premium
received from writing the call option. Because increases in the market price of
a call option generally reflect increases in the market price of the underlying
security, any loss resulting from the repurchase of a call option is likely to
be offset, in whole or in part, by appreciation of the underlying security owned
by the Portfolio; however, the Portfolio could be in a less advantageous
position than if it had not written the call option.
12
<PAGE>
The Portfolio pays brokerage commissions or spreads in connection
with purchasing or writing options, including those used to close out existing
positions.
The hours of trading for options may not conform to the hours during
which the underlying securities are traded. To the extent that the options
markets close before the markets for the underlying securities, significant
price and rate movements can take place in the underlying markets that cannot be
reflected in the options markets.
POLICIES AND LIMITATIONS. The Portfolio may use American-style
options. The assets used as cover (or held in a segregated account) for OTC
options written by the Portfolio will be considered illiquid unless the OTC
options are sold to qualified dealers who agree that the Portfolio may
repurchase any OTC option it writes at a maximum price to be calculated by a
formula set forth in the option agreement. The cover for an OTC call option
written subject to this procedure will be considered illiquid only to the extent
that the maximum repurchase price under the formula exceeds the intrinsic value
of the option.
PUT AND CALL OPTIONS ON SECURITIES INDICES. For purposes of managing
cash flow, the Portfolio may purchase put and call options on securities indices
to increase the Portfolio's exposure to the performance of a recognized
securities index, such as the S&P "500" Index. Unlike a securities option, which
gives the holder the right to purchase or sell a specified security at a
specified price, an option on a securities index gives the holder the right to
receive a cash "exercise settlement amount" equal to (1) the difference between
the exercise price of the option and the value of the underlying securities
index on the exercise date (2) multiplied by a fixed "index multiplier." A
securities index fluctuates with changes in the market values of the securities
included in the index. Options on stock indices are currently traded on the
Chicago Board Options Exchange, the New York Stock Exchange ("NYSE"), the
American Stock Exchange, and other U.S. and foreign exchanges.
The effectiveness of hedging through the purchase of securities
index options will depend upon the extent to which price movements in the
securities being hedged correlate with price movements in the selected
securities index. Perfect correlation is not possible because the securities
held or to be acquired by the Portfolio will not exactly match the composition
of the securities indices on which options are available.
Securities index options have characteristics and risks similar to
those of securities options, as discussed herein.
POLICIES AND LIMITATIONS. For purposes of managing cash flow, the
Portfolio may purchase put and call options on securities indices to increase
the Portfolio's exposure to the performance of a recognized securities index,
such as the S&P "500" Index. All securities index options purchased by the
Portfolio will be listed and traded on an exchange.
FOREIGN CURRENCY TRANSACTIONS. The Portfolio may enter into
contracts for the purchase or sale of a specific currency at a future date
(usually less than one year from the date of the contract) at a fixed price
("forward contracts"). The Portfolio also may engage in foreign currency
13
<PAGE>
exchange transactions on a spot (I.E., cash) basis at the spot rate prevailing
in the foreign currency exchange market.
The Portfolio enters into forward contracts in an attempt to hedge
against changes in prevailing currency exchange rates. The Portfolio does not
engage in transactions in forward contracts for speculation; it views
investments in forward contracts as a means of establishing more definitely the
effective return on, or the purchase price of, securities denominated in foreign
currencies. Forward contract transactions include forward sales or purchases of
foreign currencies for the purpose of protecting the U.S. dollar value of
securities held or to be acquired by the Portfolio or protecting the U.S. dollar
equivalent of dividends, interest, or other payments on those securities.
Forward contracts are traded in the interbank market directly
between dealers (usually large commercial banks) and their customers. A forward
contract generally has no deposit requirement, and no commissions are charged at
any stage for trades; foreign exchange dealers realize a profit based on the
difference (the spread) between the prices at which they are buying and selling
various currencies.
At the consummation of a forward contract to sell currency, the
Portfolio may either make delivery of the foreign currency or terminate its
contractual obligation to deliver by purchasing an offsetting contract. If the
Portfolio chooses to make delivery of the foreign currency, it may be required
to obtain such currency through the sale of portfolio securities denominated in
such currency or through conversion of other assets of the Portfolio into such
currency. If the Portfolio engages in an offsetting transaction, it will incur a
gain or a loss to the extent that there has been a change in forward contract
prices. Closing purchase transactions with respect to forward contracts are
usually made with the currency dealer who is a party to the original forward
contract.
NB Management believes that the use of foreign currency hedging
techniques, including "proxy-hedges," can provide significant protection of NAV
in the event of a general rise in the U.S. dollar against foreign currencies.
For example, the return available from securities denominated in a particular
foreign currency would diminish if the value of the U.S. dollar increased
against that currency. Such a decline could be partially or completely offset by
an increase in value of a hedge involving a forward contract to sell that
foreign currency or a proxy-hedge involving a forward contract to sell a
different foreign currency whose behavior is expected to resemble the currency
in which the securities being hedged are denominated but which is available on
more advantageous terms.
However, a hedge or proxy-hedge cannot protect against exchange rate
risks perfectly, and if NB Management is incorrect in its judgment of future
exchange rate relationships, the Portfolio could be in a less advantageous
position than if such a hedge had not been established. If the Portfolio uses
proxy-hedging, it may experience losses on both the currency in which it has
invested and the currency used for hedging if the two currencies do not vary
with the expected degree of correlation. Using forward contracts to protect the
value of the Portfolio's securities against a decline in the value of a currency
does not eliminate fluctuations in the prices of underlying securities. Because
forward contracts are not traded on an exchange, the assets used to cover such
14
<PAGE>
contracts may be illiquid. The Portfolio may experience delays in the settlement
of its foreign currency transactions.
POLICIES AND LIMITATIONS. The Portfolio may enter into forward
contracts for the purpose of hedging and not for speculation.
OPTIONS ON FOREIGN CURRENCIES. The Portfolio may write and purchase
covered call and put options on foreign currencies. Currency options have
characteristics and risks similar to those of securities options, as discussed
herein. Certain options on foreign currencies are traded on the OTC market and
involve liquidity and credit risks that may not be present in the case of
exchange-traded currency options.
POLICIES AND LIMITATIONS. The Portfolio would use options on foreign
currencies to protect against declines in the U.S. dollar value of portfolio
securities or increases in the U.S. dollar cost of securities to be acquired or
to protect the U.S. dollar equivalent of dividends, interest, or other payments
on those securities.
REGULATORY LIMITATIONS ON USING HEDGING INSTRUMENTS. To the extent
the Portfolio sells or purchases futures contracts or writes options thereon or
options on foreign currencies that are traded on an exchange regulated by the
CFTC other than for BONA FIDE hedging purposes (as defined by the CFTC), the
aggregate initial margin and premiums on those positions (excluding the amount
by which options are "in-the-money") may not exceed 5% of the Portfolio's net
assets.
COVER FOR HEDGING INSTRUMENTS. Securities held in a segregated
account cannot be sold while the futures, options or forward strategy covered by
those securities is outstanding, unless they are replaced with other suitable
assets. As a result, segregation of a large percentage of the Portfolio's assets
could impede portfolio management or the Portfolio's ability to meet current
obligations. The Portfolio may be unable promptly to dispose of assets which
cover, or are segregated with respect to, an illiquid futures, options or
forward position; this inability may result in a loss to the Portfolio.
POLICIES AND LIMITATIONS. The Portfolio will comply with SEC
guidelines regarding "cover" for Hedging Instruments and, if the guidelines so
require, set aside in a segregated account with its custodian the prescribed
amount of cash or appropriate liquid securities.
GENERAL RISKS OF HEDGING INSTRUMENTS. The primary risks in using
Hedging Instruments are (1) imperfect correlation or no correlation between
changes in market value of the securities or currencies held or to be acquired
by the Portfolio and the prices of Hedging Instruments; (2) possible lack of a
liquid secondary market for Hedging Instruments and the resulting inability to
close out Hedging Instruments when desired; (3) the fact that the skills needed
to use Hedging Instruments are different from those needed to select the
Portfolio's securities; (4) the fact that, although use of Hedging Instruments
for hedging purposes can reduce the risk of loss, they also can reduce the
opportunity for gain, or even result in losses, by offsetting favorable price
movements in hedged investments; and (5) the possible inability of the Portfolio
to purchase or sell a portfolio security at a time that would otherwise be
favorable for it to do so, or the possible need for the Portfolio to sell a
15
<PAGE>
portfolio security at a disadvantageous time, due to its need to maintain cover
or to segregate securities in connection with its use of Hedging Instruments.
There can be no assurance that the Portfolio's use of Hedging Instruments will
be successful.
The Portfolio's use of Hedging Instruments may be limited by the
provisions of the Internal Revenue Code of 1986, as amended ("Code"), with which
it must comply if the Fund is to continue to qualify as a regulated investment
company ("RIC"). See "Additional Tax Information." Hedging Instruments may not
be available with respect to some currencies, especially those of so-called
emerging market countries.
POLICIES AND LIMITATIONS. NB Management intends to reduce the risk
of imperfect correlation by investing only in Hedging Instruments whose behavior
is expected to resemble or offset that of the Portfolio's underlying securities
or currency. NB Management intends to reduce the risk that the Portfolio will be
unable to close out Hedging Instruments by entering into such transactions only
if NB Management believes there will be an active and liquid secondary market.
FIXED INCOME SECURITIES. While the emphasis of the Portfolio's
investment program is on common stocks and other equity securities, it may also
invest in money market instruments, U.S. Government and Agency Securities, and
other fixed income securities. The Portfolio may invest in investment grade
corporate bonds and debentures and in corporate debt securities rated below
investment grade.
U.S. Government Securities are obligations of the U.S. Treasury
backed by the full faith and credit of the United States. U.S. Government Agency
Securities are issued or guaranteed by U.S. Government agencies or by
instrumentalities of the U.S. Government, such as the Government National
Mortgage Association, Fannie Mae (also known as Federal National Mortgage
Association), Freddie Mac (also known as Federal Home Loan Mortgage
Corporation), Student Loan Marketing Association (commonly known as "Sallie
Mae"), and the Tennessee Valley Authority. Some U.S. Government Agency
Securities are supported by the full faith and credit of the United States,
while others may by supported by the issuer's ability to borrow from the U.S.
Treasury, subject to the Treasury's discretion in certain cases, or only by the
credit of the issuer. U.S. Government Agency Securities include U.S. Government
Agency mortgage-backed securities. The market prices of U.S. Government and
Agency Securities are not guaranteed by the Government.
Investment grade debt securities are those receiving one of the four
highest ratings from Standard & Poor's ("S&P"), Moody's Investors Service, Inc.
("Moody's"), or another nationally recognized statistical rating organization
("NRSRO") or, if unrated by any NRSRO, deemed by NB Management to be comparable
to such rated securities ("Comparable Unrated Securities"). Securities rated by
Moody's in its fourth highest rating category (Baa) or Comparable Unrated
Securities may be deemed to have speculative characteristics.
The ratings of an NRSRO represent its opinion as to the quality of
securities it undertakes to rate. Ratings are not absolute standards of quality;
consequently, securities with the same maturity, coupon, and rating may have
different yields. Although the Portfolio may rely on the ratings of any NRSRO,
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<PAGE>
the Portfolio primarily refers to ratings assigned by S&P and Moody's, which are
described in Appendix A to this SAI.
Fixed income securities are subject to the risk of an issuer's
inability to meet principal and interest payments on its obligations ("credit
risk") and are subject to price volatility due to such factors as interest rate
sensitivity, market perception of the creditworthiness of the issuer, and market
liquidity ("market risk"). The value of the fixed income securities in which the
Portfolio may invest is likely to decline in times of rising market interest
rates. Conversely, when rates fall, the value of the Portfolio's fixed income
investments is likely to rise. Foreign debt securities are subject to risks
similar to those of other foreign securities.
Lower-rated securities are more likely to react to developments
affecting market and credit risk than are more highly rated securities, which
react primarily to movements in the general level of interest rates. Debt
securities in the lowest rating categories may involve a substantial risk of
default or may be in default. Changes in economic conditions or developments
regarding the individual issuer are more likely to cause price volatility and
weaken the capacity of the issuer of such securities to make principal and
interest payments than is the case for higher-grade debt securities. An economic
downturn affecting the issuer may result in an increased incidence of default.
The market for lower-rated securities may be thinner and less active than for
higher-rated securities. Pricing of thinly traded securities requires greater
judgment than pricing of securities for which market transactions are regularly
reported. NB Management will invest in lower-rated securities only when it
concludes that the anticipated return on such an investment to the Portfolio
warrants exposure to the additional level of risk.
POLICIES AND LIMITATIONS. The Portfolio normally may invest up to
35% of its total assets in debt securities. The Portfolio may invest up to 15%
of its net assets in corporate debt securities rated below investment grade or
Comparable Unrated Securities. Subsequent to its purchase by the Portfolio, an
issue of debt securities may cease to be rated or its rating may be reduced, so
that the securities would no longer be eligible for purchase by the Portfolio.
In such a case, the Portfolio will engage in an orderly disposition of the
downgraded securities to the extent necessary to ensure that the Portfolio's
holdings of securities rated below investment grade and Comparable Unrated
Securities will not exceed 15% of its net assets.
COMMERCIAL PAPER. Commercial paper is a short-term debt security
issued by a corporation or bank, usually for purposes such as financing current
operations. The Portfolio may invest in commercial paper that cannot be resold
to the public without an effective registration statement under the 1933 Act.
While restricted commercial paper normally is deemed illiquid, NB Management may
in certain cases determine that such paper is liquid, pursuant to guidelines
established by the Portfolio Trustees.
POLICIES AND LIMITATIONS. The Portfolio may invest in commercial
paper only if it has received the highest rating from S&P (A-1) or Moody's (P-1)
or deemed by NB Management to be of comparable quality.
ZERO COUPON SECURITIES. The Portfolio may invest in zero coupon
securities, which are debt obligations that do not entitle the holder to any
periodic payment of interest prior to maturity or that specify a future date
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<PAGE>
when the securities begin to pay current interest. Zero coupon securities are
issued and traded at a discount from their face amount or par value. This
discount varies depending on prevailing interest rates, the time remaining until
cash payments begin, the liquidity of the security, and the perceived credit
quality of the issuer.
The discount on zero coupon securities ("original issue discount") must be
taken into income ratably by the Portfolio prior to the receipt of any actual
payments. Because the Fund must distribute substantially all of its net income
(including its share of the Portfolio's accrued original issue discount) to its
shareholders each year for income and excise tax purposes, the Portfolio may
have to dispose of portfolio securities under disadvantageous circumstances to
generate cash, or may be required to borrow, to satisfy the Fund's distribution
requirements. See "Additional Tax Information."
The market prices of zero coupon securities generally are more
volatile than the prices of securities that pay interest periodically. Zero
coupon securities are likely to respond to changes in interest rates to a
greater degree than other types of debt securities having a similar maturity and
credit quality.
CONVERTIBLE SECURITIES. The Portfolio may invest in convertible
securities. A convertible security is a bond, debenture, note, preferred stock,
or other security that may be converted into or exchanged for a prescribed
amount of common stock of the same or a different issuer within a particular
period of time at a specified price or formula. Convertible securities generally
have features of both common stocks and debt securities. A convertible security
entitles the holder to receive the interest paid or accrued on debt or the
dividend paid on preferred stock until the convertible security matures or is
redeemed, converted or exchanged. Before conversion, such securities ordinarily
provide a stream of income with generally higher yields than common stocks of
the same or similar issuers, but lower than the yield on non-convertible debt.
Convertible securities are usually subordinated to comparable-tier
non-convertible securities but rank senior to common stock in a corporation's
capital structure. The value of a convertible security is a function of (1) its
yield in comparison to the yields of other securities of comparable maturity and
quality that do not have a conversion privilege and (2) its worth if converted
into the underlying common stock.
The price of a convertible security often reflects variations in the
price of the underlying common stock in a way that non-convertible debt may not.
Convertible securities are typically issued by smaller capitalization companies
whose stock prices may be volatile. A convertible security may be subject to
redemption at the option of the issuer at a price established in the security's
governing instrument. If a convertible security held by the Portfolio is called
for redemption, the Portfolio will be required to convert it into the underlying
common stock, sell it to a third party or permit the issuer to redeem the
security. Any of these actions could have an adverse effect on the Portfolio's
and the Fund's ability to achieve their investment objectives.
POLICIES AND LIMITATIONS. Convertible debt securities are subject to
the Portfolio's investment policies and limitations concerning fixed income
securities.
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<PAGE>
PREFERRED STOCK. The Portfolio may invest in preferred stock. Unlike
interest payments on debt securities, dividends on preferred stock are generally
payable at the discretion of the issuer's board of directors. Preferred
shareholders may have certain rights if dividends are not paid but generally
have no legal recourse against the issuer. Shareholders may suffer a loss of
value if dividends are not paid. The market prices of preferred stocks are
generally more sensitive to changes in the issuer's creditworthiness than are
the prices of debt securities.
SWAP AGREEMENTS The portfolio may enter into swap agreements to
manage or gain exposure to particular types of investments (including equity
securities or indices of equity securities in which the Portfolio otherwise
could not invest efficiently). In a swap agreement, one party agrees to make
regular payments equal to a floating rate on a specified amount in exchange for
payments equal to a fixed rate, or a different floating rate, on the same amount
for a specific period.
Swap agreements may involve leverage and may be highly volatile;
depending on how they are used, they may have a considerable impact on the
Portfolio's performance. The risks of swap agreements depend upon the other
party's creditworthiness and ability to perform, as well as the Portfolio's
ability to terminate its swap agreements or reduce its exposure through
offsetting transactions. Swap agreements may be illiquid. The swap market is
relatively new and largely unregulated.
POLICIES AND LIMITATIONS. In accordance with SEC staff requirements,
the Portfolio will segregate cash or appropriate liquid securities in an amount
equal to its obligations under swap agreements; when an agreement provides for
netting of the payments by the two parties, the Portfolio will segregate only
the amount of its net obligation, if any.
OTHER INVESTMENT COMPANIES. The Portfolio at times may invest in
instruments structured as investment companies to gain exposure to the
performance of a recognized securities index, such as the S&P "500" Index. As a
shareholder in an investment company, the Portfolio would bear its pro rata
share of that investment company's expenses. Investment in other funds may
involve the payment of substantial premiums above the value of such issuer's
portfolio securities. The Portfolio does not intend to invest in such funds
unless, in the judgment of NB Management, the potential benefits of such
investment justify the payment of any applicable premium or sales charge.
POLICIES AND LIMITATIONS. The Portfolio's investment in such
securities is limited to (i) 3% of the total voting stock of any one investment
company, (ii) 5% of the Portfolio's total assets with respect to any one
investment company and (iii) 10% of the Portfolio's total assets in the
aggregate.
PERFORMANCE INFORMATION
The Fund's performance figures are based on historical results and
are not intended to indicate future performance. The share price and total
return of the Fund will vary, and an investment in the Fund, when redeemed, may
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be worth more or less than an investor's original cost. As of the date of this
SAI, the Fund was new and had no performance history.
TOTAL RETURN COMPUTATIONS
The Fund may advertise certain total return information. An average
annual compounded rate of return ("T") may be computed by using the redeemable
value at the end of a specified period ("ERV") of a hypothetical initial
investment of $1,000 ("P") over a period of time ("n") according to the formula:
P(1+T)n = ERV
Average annual total return smoothes out year-to-year variations in
performance and, in that respect, differs from actual year-to-year results.
COMPARATIVE INFORMATION
From time to time the Fund's performance may be compared with:
(1) data (that may be expressed as rankings or ratings) published by
independent services or publications (including newspapers, newsletters,
and financial periodicals) that monitor the performance of mutual funds,
such as Lipper Analytical Services, Inc., C.D.A. Investment Technologies,
Inc., Wiesenberger Investment Companies Service, Investment Company Data
Inc., Morningstar, Inc., Micropal Incorporated, and quarterly mutual fund
rankings by Money, Fortune, Forbes, Business Week, Personal Investor, and
U.S. News & World Report magazines, The Wall Street Journal, The New York
Times, Kiplinger's Personal Finance, and Barron's Newspaper, or
(2) recognized stock and other indices, such as the S&P "500"
Composite Stock Price Index ("S&P 500 Index"), S&P Small Cap 600 Index
("S&P 600 Index"), S&P Mid Cap 400 Index ("S&P 400 Index"), Russell 2000
Stock Index, Russell Midcap Value Index, Dow Jones Industrial Average
("DJIA"), Wilshire 1750 Index, Nasdaq Composite Index, Montgomery
Securities Growth Stock Index, Value Line Index, U.S. Department of Labor
Consumer Price Index ("Consumer Price Index"), College Board Annual Survey
of Colleges, Kanon Bloch's Family Performance Index, the Barra Growth
Index, the Barra Value Index and various other domestic, international,
and global indices. The S&P 500 Index is a broad index of common stock
prices, while the DJIA represents a narrower segment of industrial
companies. The S&P 600 Index includes stocks that range in market value
from $35 million to $6.1 billion, with an average of $572 million. The S&P
400 Index measures mid-sized companies that have an average market
capitalization of $2.1 billion. Each assumes reinvestment of distributions
and is calculated without regard to tax consequences or the costs of
investing. The Portfolio may invest in different types of securities from
those included in some of the above indices.
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Evaluations of the Fund's performance, its total returns, and
comparisons may be used in advertisements and in information furnished to
current and prospective shareholders (collectively, "Advertisements"). The Fund
may also be compared to individual asset classes such as common stocks,
small-cap stocks, or Treasury bonds, based on information supplied by Ibbotson
and Sinquefield.
OTHER PERFORMANCE INFORMATION
From time to time, information about the Portfolio's portfolio
allocation and holdings as of a particular date may be included in
Advertisements for the Fund. This information may include the Portfolio's
portfolio diversification by asset type. Information used in Advertisements may
include statements or illustrations relating to the appropriateness of types of
securities and/or mutual funds that may be employed to meet specific financial
goals, such as (1) funding retirement, (2) paying for children's education, and
(3) financially supporting aging parents.
NB Management believes that many of its common stock funds may be
attractive investment vehicles for conservative investors who are interested in
long-term appreciation from stock investments, but who have a moderate tolerance
for risk. Such investors may include, for example, individuals (1) planning for
or facing retirement, (2) receiving or expecting to receive lump-sum
distributions from individual retirement accounts ("IRAs"), self-employed
individual retirement plans ("Keogh plans"), or other retirement plans, (3)
anticipating rollovers of CDs or IRAs, Keogh plans, or other retirement plans,
and (4) receiving a significant amount of money as a result of inheritance, sale
of a business, or termination of employment.
Investors who may find the Fund to be an attractive investment
vehicle also include parents saving to meet college costs for their children.
For instance, the cost of a college education is rapidly approaching the cost of
the average family home. Estimates of total four-year costs (tuition, room and
board, books and other expenses) for students starting college in various years
may be included in Advertisements, based on the College Board Annual Survey of
Colleges.
Information relating to inflation and its effects on the dollar also
may be included in Advertisements. For example, after ten years, the purchasing
power of $25,000 would shrink to $16,621, $14,968, $13,465, and $12,100,
respectively, if the annual rates of inflation during that period were 4%, 5%,
6%, and 7%, respectively. (To calculate the purchasing power, the value at the
end of each year is reduced by the inflation rate for the ten-year period.)
Information regarding the effects of automatic investing at market
highs and/or lows, and investing early versus late for retirement plans also may
be included in Advertisements, if appropriate.
CERTAIN RISK CONSIDERATIONS
Although the Portfolio seeks to reduce risk by investing in a
diversified portfolio of securities, diversification does not eliminate all
risk. There can, of course, be no assurance the Portfolio will achieve its
investment objective.
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TRUSTEES AND OFFICERS
The following table sets forth information concerning the trustees
and officers of the Trusts, including their addresses and principal business
experience during the past five years. Some persons named as trustees and
officers also serve in similar capacities for other funds and their
corresponding portfolios administered or managed by NB Management and Neuberger
Berman, LLC ("Neuberger Berman").
<TABLE>
<CAPTION>
Name, Age, and Positions Held
ADDRESS(1) WITH THE TRUSTS PRINCIPAL OCCUPATION(S)(2)
<S> <C> <C>
Faith Colish (63) Trustee of each Trust Attorney at Law, Faith Colish,
63 Wall Street A Professional Corporation.
24th Floor
New York, NY 10005
Stanley Egener* (65) Chairman of the Board, Principal of Neuberger Berman;
Chief Executive Officer, President and Director of NB
and Trustee of each Trust Management; Chairman of the
Board, Chief Executive Officer
and Trustee of ten other mutual
funds for which NB Management
acts as investment manager or
administrator.
Howard A. Mileaf (62) Trustee of each Trust Vice President and Special
WHX Corporation Counsel to WHX Corporation
110 East 59th Street (holding company) since 1992;
30th Floor Director of Kevlin Corporation
New York, NY 10022 (manufacturer of microwave and
other products).
Edward I. O'Brien* (70) Trustee of each Trust Until 1993, President of the
12 Woods Lane Securities Industry Association
Scarsdale, NY 10583 ("SIA") (securities industry's
representative in government
relations and regulatory
matters at the federal and
state levels); until
November 1993, employee of the
SIA; Director of Legg Mason, Inc.
John T. Patterson, Jr. (70) Trustee of each Trust Retired. Formerly, President of
7082 Siena Court SOBRO (South Bronx Overall
Boca Raton, FL 33433 Economic Development Corporation).
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<PAGE>
Name, Age, and Positions Held
ADDRESS(1) WITH THE TRUSTS PRINCIPAL OCCUPATION(S)(2)
John P. Rosenthal (66) Trustee of each Trust Senior Vice President of
Burnham Securities Inc. Burnham Securities Inc. (a
Burnham Asset Management registered broker-dealer) since
Corp. 1991; Director, Cancer
1325 Avenue of the Americas Treatment Holdings, Inc.
17th Floor
New York, NY 10019
Cornelius T. Ryan (67) Trustee of each Trust General Partner of Oxford
Oxford Bioscience Partners Partners and Oxford Bioscience
315 Post Road West Partners (venture capital
Westport, CT 06880 partnerships) and President of
Oxford Venture Corporation;
Director of Capital Cash
Management Trust (money market
fund) and Prime Cash Fund.
Gustave H. Shubert (70) Trustee of each Trust Senior Fellow/Corporate Advisor
13838 Sunset Boulevard and Advisory Trustee of Rand (a
Pacific Palisades, CA 90272 non-profit public interest
research institution) since
1989; Honorary Member of the
Board of Overseers of the
Institute for Civil Justice,
the Policy Advisory Committee
of the Clinical Scholars Program
at the University of California,
the American Association for the
Advancement of Science, the
Counsel on Foreign Relations, and
the Institute for Strategic
Studies (London); advisor to the
Program Evaluation and
Methodology Division of the
U.S. General Accounting Office;
formerly Senior Vice President
and Trustee of Rand.
Lawrence Zicklin* (62) President and Principal of Neuberger Berman;
Trustee of each Trust Director of NB Management;
President and/or Trustee of
seven other mutual funds for
which NB Management acts as
investment manager or
administrator.
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<PAGE>
Name, Age, and Positions Held
ADDRESS(1) WITH THE TRUSTS PRINCIPAL OCCUPATION(S)(2)
Daniel J. Sullivan (59) Vice President of Senior Vice President of NB
each Trust Management since 1992; Vice
President of ten other
mutual funds for which NB
Management acts as investment
manager or administrator.
Michael J. Weiner (52) Vice President and Senior Vice President of NB
Principal Financial Management since 1992;
Officer of each Trust Principal of Neuberger Berman
since 1998; Treasurer of NB
Management from 1992 to 1996;
Vice President and Principal
Financial Officer of ten other
mutual funds for which NB
Management acts as investment
manager or administrator.
Claudia A. Brandon (42) Secretary of each Trust Director, Corporate
Secretarial, of Neuberger
Berman since 1999; formerly
Vice President of NB Management;
Secretary of ten other mutual
funds for which NB Management
acts as investment manager or
administrator.
Richard Russell (52) Treasurer and Vice President of NB Management
Principal Accounting since 1993; Treasurer and
Officer of each Trust Principal Accounting Officer of
ten other mutual funds for
which NB Management acts as
investment manager or
administrator.
Stacy Cooper-Shugrue (36) Assistant Secretary Assistant Director, Corporate
of each Trust Secretarial, of Neuberger
Berman since 1999; formerly
Assistant Vice President of
NB Management; Assistant
Secretary of ten other mutual
funds for which NB Management
acts as investment manager or
administrator.
24
<PAGE>
Name, Age, and Positions Held
ADDRESS(1) WITH THE TRUSTS PRINCIPAL OCCUPATION(S)(2)
C. Carl Randolph (61) Assistant Secretary Principal of Neuberger Berman
of each Trust since 1992; Assistant Secretary
of ten other mutual funds
for which NB Management acts
as investment manager or
administrator.
Barbara DiGiorgio (40) Assistant Treasurer Assistant Vice President of NB
of each Trust Management since 1993; Assistant
Treasurer since 1996 of ten other
mutual funds for which NB
Management acts as investment
manager or administrator.
Celeste Wischerth (38) Assistant Treasurer Assistant Vice President of NB
of each Trust Management since 1994; prior
thereto, employee of NB
Management; Assistant
Treasurer since 1996 of ten other
mutual funds for which NB
Management acts as investment
manager or administrator.
- --------------------
</TABLE>
(1) Unless otherwise indicated, the business address of each listed person is
605 Third Avenue, New York, New York 10158.
(2) Except as otherwise indicated, each individual has held the positions shown
for at least the last five years.
* Indicates a trustee who is an "interested person" of the Trust within the
meaning of the 1940 Act. Messrs. Egener and Zicklin are interested persons by
virtue of the fact that they are officers and/or directors of NB Management and
principals of Neuberger Berman. Mr. O'Brien is an interested person by virtue of
the fact that he is a director of Legg Mason, Inc., a wholly owned subsidiary of
which, from time to time, serves as a broker or dealer to the Portfolio and
other funds for which NB Management serves as investment manager.
The Trust's Trust Instrument and Managers Trust's Declaration of
Trust provide that each such Trust will indemnify its trustees and officers
against liabilities and expenses reasonably incurred in connection with
litigation in which they may be involved because of their offices with the
Trust, unless it is adjudicated that they (a) engaged in bad faith, willful
misfeasance, gross negligence, or reckless disregard of the duties involved in
the conduct of their offices, or (b) did not act in good faith in the reasonable
belief that their action was in the best interest of the Trust. In the case of
25
<PAGE>
settlement, such indemnification will not be provided unless it has been
determined (by a court or other body approving the settlement or other
disposition, by a majority of disinterested trustees based upon a review of
readily available facts, or in a written opinion of independent counsel) that
such officers or trustees have not engaged in willful misfeasance, bad faith,
gross negligence, or reckless disregard of their duties.
The following table sets forth information concerning the
compensation of the trustees of the Trust. None of the Neuberger Berman Funds
has any retirement plan for its trustees.
TABLE OF COMPENSATION
FOR FISCAL YEAR ENDED 8/31/99
Aggregate Total Compensation from
Compensation Investment Companies in the
NAME AND POSITION WITH THE FROM THE TRUST Neuberger Berman
TRUST FUND COMPLEX PAID TO TRUSTEES
Faith Colish $ 18,281 $ _______
Trustee (5 other investment
companies)
Stanley Egener $ 0 $ _______
Chairman of the Board, (9 other investment
Chief Executive Officer, companies)
and Trustee
Howard A. Mileaf $ 18,474 $ _______
Trustee (4 other investment
companies)
Edward I. O'Brien $ 19,799 $ _______
Trustee (3 other investment
companies)
John T. Patterson, Jr. $ 19,993 $ _______
Trustee (4 other investment
companies)
John P. Rosenthal $ 17,056 $ _______
Trustee (4 other investment
companies)
Cornelius T. Ryan $ 18,667 $ _______
Trustee (3 other investment
companies)
Gustave H. Shubert $ 18,474 $ _______
Trustee (3 other investment
companies)
26
<PAGE>
Aggregate Total Compensation from
Compensation Investment Companies in the
NAME AND POSITION WITH THE FROM THE TRUST Neuberger Berman
TRUST FUND COMPLEX PAID TO TRUSTEES
Lawrence Zicklin $ 0 $ _______
President and Trustee (5 other investment
companies)
At __________, 1999, the trustees and officers of the Trusts, as a group, owned
beneficially or of record less than 1% of the outstanding shares of the Fund.
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
INVESTMENT MANAGER AND ADMINISTRATOR
Because all of the Fund's net investable assets are invested in the
Portfolio, the Fund does not need an investment manager. NB Management serves as
the Portfolio's investment manager pursuant to a management agreement with
Managers Trust, dated as of August 2, 1993 ("Management Agreement"). The
Management Agreement was approved by the holders of the interests in the
Portfolio on ___________, 1999.
The Management Agreement provides, in substance, that NB Management
will make and implement investment decisions for the Portfolio in its discretion
and will continuously develop an investment program for the Portfolio's assets.
The Management Agreement permits NB Management to effect securities transactions
on behalf of the Portfolio through associated persons of NB Management. The
Management Agreement also specifically permits NB Management to compensate,
through higher commissions, brokers and dealers who provide investment research
and analysis to the Portfolio, although NB Management has no current plans to
pay a material amount of such compensation.
NB Management provides to the Portfolio, without separate cost,
office space, equipment, and facilities and the personnel necessary to perform
executive, administrative, and clerical functions. NB Management pays all
salaries, expenses, and fees of the officers, trustees, and employees of
Managers Trust who are officers, directors, or employees of NB Management. Two
directors of NB Management (who also are principals of Neuberger Berman), one of
whom also serves as an officer of NB Management, presently serve as trustees and
officers of the Trusts. See "Trustees and Officers." The Portfolio pays NB
Management a management fee based on the Portfolio's average daily net assets,
as described below.
NB Management provides facilities, services, and personnel, 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"). The Fund was authorized to become
subject to the Administration Agreement by vote of the Fund Trustees on
27
<PAGE>
____________, 1999, and became subject to it on ____________, 1999. For such
administrative services, the Fund pays NB Management a fee based on the Fund's
average daily net assets, as described below. NB 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.
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. NB 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, NB 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.
MANAGEMENT AND ADMINISTRATION FEES
For investment management services, the Portfolio pays NB Management
a fee at the annual rate of 0.55% of the first $250 million of that Portfolio's
average daily net assets, 0.525% of the next $250 million, 0.50% of the next
$250 million, 0.475% of the next $250 million, 0.45% of the next $500 million,
and 0.425% of average daily net assets in excess of $1.5 billion.
NB Management provides administrative services to the Fund that
includes furnishing facilities and personnel for the Fund and performing
accounting, recordkeeping, and other services. For such administrative services,
the Fund pays NB Management a fee at the annual rate of 0.40% of the Fund's
average daily net assets, plus certain out-of-pocket expenses for technology
used for shareholder servicing and shareholder communications subject to the
prior approval of an annual budget by the Trust's Board of Trustees, including a
majority of those Trustees who are not interested persons of the Trust or of NB
Management, and periodic reports to the Board of Trustees on actual expenses.
With the Fund's consent NB Management may subcontract 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 0.35% of the average net asset value of Fund shares held through that
Institution. (A portion of this payment may be derived from the Rule 12b-1 fee
paid to NB Management by the Fund; see "Rule 12b-1 Plan," below.)
NB Management has contractually undertaken to reimburse the Fund for
its total operating expenses (excluding interest, taxes, brokerage commissions
and extraordinary expenses) which exceed, in the aggregate, 1.50% per annum of
the Fund's average daily net assets. This undertaking lasts until December 31,
2002. The Fund has contractually undertaken to reimburse NB Management, until
December 31, 2005, for the excess expenses paid by NB Management, provided the
reimbursements do not cause the Fund's total operating expenses (exclusive of
taxes, interest, brokerage commissions, and extraordinary expenses) to exceed an
annual rate of 1.50% of average net assets and the reimbursements are made
within three years after the year in which NB Management incurred the expense.
The Management Agreement continues until August 2, 2000. The
Management Agreement is renewable thereafter from year to year with respect to
the Portfolio, so long as its continuance is approved at least annually (1) by
the vote of a majority of the Portfolio Trustees who are not "interested
persons" of NB Management or Managers Trust ("Independent Portfolio Trustees"),
cast in person at a meeting called for the purpose of voting on such approval,
and (2) by the vote of a majority of the Portfolio Trustees or by a 1940 Act
28
<PAGE>
majority vote of the outstanding interests in the Portfolio. The Administration
Agreement continues until August 2, 2000. The Administration Agreement is
renewable from year to year with respect to the Fund, so long as its continuance
is approved at least annually (1) by the vote of a majority of the Fund Trustees
who are not "interested persons" of NB Management or the Trust ("Independent
Fund Trustees"), cast in person at a meeting called for the purpose of voting on
such approval, and (2) by the vote of a majority of the Fund Trustees or by a
1940 Act majority vote of the outstanding shares in the Fund.
The Management Agreement is terminable, without penalty, with
respect to the Portfolio on 60 days' written notice either by Managers Trust or
by NB Management. The Administration Agreement is terminable, without penalty,
with respect to the Fund on 60 days' written notice either by NB Management or
by the Trust. Each Agreement terminates automatically if it is assigned.
SUB-ADVISER
NB Management retains Neuberger Berman, 605 Third Avenue, New York,
NY 10158-3698, as sub-adviser with respect to the Portfolio pursuant to a
sub-advisory agreement dated August 2, 1993 ("Sub-Advisory Agreement"). The
Portfolio was authorized to become subject to the Sub-Advisory Agreement on
____________, 1999 and became subject to it on ____________, 1999. The
Sub-Advisory Agreement was approved by the holders of the interests in the
Portfolio on ___________, 1999.
The Sub-Advisory Agreement provides in substance that Neuberger
Berman will furnish to NB Management, upon reasonable request, the same type of
investment recommendations and research that Neuberger Berman, from time to
time, provides to its principals and employees for use in managing client
accounts. In this manner, NB Management expects to have available to it, in
addition to research from other professional sources, the capability of the
research staff of Neuberger Berman. This staff consists of numerous investment
analysts, each of whom specializes in studying one or more industries, under the
supervision of the Director of Research, who is also available for consultation
with NB Management. The Sub-Advisory Agreement provides that NB Management will
pay for the services rendered by Neuberger Berman based on the direct and
indirect costs to Neuberger Berman in connection with those services. Neuberger
Berman also serves as sub-adviser for all of the other mutual funds managed by
NB Management.
The Sub-Advisory Agreement continues until August 2, 2000 and is
renewable from year to year, subject to approval of its continuance in the same
manner as the Management Agreement. The Sub-Advisory Agreement is subject to
termination, without penalty, with respect to the Portfolio by the Portfolio
Trustees or a 1940 Act majority vote of the outstanding interests in the
Portfolio, by NB Management, or by Neuberger Berman on not less than 30 nor more
than 60 days' written notice. The Sub-Advisory Agreement also terminates
automatically with respect to the Portfolio if it is assigned or if the
Management Agreement terminates with respect to the Portfolio.
29
<PAGE>
Most money managers that come to the Neuberger Berman organization
have at least fifteen years experience. Neuberger Berman and NB Management
employ experienced professionals that work in a competitive environment.
INVESTMENT COMPANIES MANAGED
As of __________, 1999, the investment companies managed by NB
Management had aggregate net assets of approximately $____ billion. NB
Management currently serves as investment manager of the following investment
companies:
Approximate Net
Assets at
NAME __________, 1999
----
Neuberger Berman Cash Reserves Portfolio $
(investment portfolio for
Neuberger Berman Cash Reserves)
Neuberger Berman Government Money $
Portfolio
(investment portfolio for
Neuberger Berman Government
Money Fund)
Neuberger Berman High Yield Bond Portfolio $
(investment portfolio for
Neuberger Berman High Yield Bond
Fund)
Neuberger Berman Limited Maturity Bond $
Portfolio
(investment portfolio for
Neuberger Berman Limited
Maturity Bond Fund and Neuberger
Berman Limited Maturity Bond
Trust)
Neuberger Berman Municipal Securities $
Portfolio
(investment portfolio for
Neuberger Berman Municipal
Securities Trust)
Neuberger Berman Municipal Money $
Portfolio
(investment portfolio for
Neuberger Berman Municipal Money
Fund)
Neuberger Berman Focus Portfolio $
(investment portfolio for Neuberger
Berman Focus Fund, Neuberger Berman
Focus Trust, and Neuberger Berman
Focus Assets)
30
<PAGE>
Approximate Net
Assets at
NAME __________, 1999
----
Neuberger Berman Genesis Portfolio $
(investment portfolio for
Neuberger Berman Genesis Fund,
Neuberger Berman Genesis Trust
and Neuberger Berman Genesis
Assets)
Neuberger Berman Guardian Portfolio $
(investment portfolio for
Neuberger Berman Guardian Fund,
Neuberger Berman Guardian Trust
and Neuberger Berman Guardian
Assets)
Neuberger Berman International Portfolio $
(investment portfolio for
Neuberger Berman International
Fund and Neuberger Berman
International Trust)
Neuberger Berman Manhattan Portfolio $
(investment portfolio for
Neuberger Berman Manhattan Fund,
Neuberger Berman Manhattan Trust
and Neuberger Berman Manhattan
Assets)
Neuberger Berman Millennium Portfolio $
(investment portfolio for
Neuberger Berman Millennium Fund
and Neuberger Berman Millennium
Trust)
Neuberger Berman Partners Portfolio $
(investment portfolio for
Neuberger Berman Partners Fund,
Neuberger Berman Partners Trust
and Neuberger Berman Partners
Assets)
Neuberger Berman Regency Portfolio $
(investment portfolio for
Neuberger Berman Regency Fund
and Neuberger Berman Regency
Trust)
31
<PAGE>
Approximate Net
Assets at
NAME __________, 1999
----
Neuberger Berman Socially Responsive $
Portfolio
(investment portfolio for
Neuberger Berman Socially
Responsive Fund, Neuberger
Berman Socially Responsive
Trust, Neuberger Berman NYCDC
Socially Responsive Trust and
Neuberger Berman Socially
Responsive Assets)
Advisers Managers Trust $
(eight series)
The investment decisions concerning the Portfolio and the other
mutual funds managed by NB Management (collectively, "Other NB Funds") have been
and will continue to be made independently of one another. In terms of their
investment objectives, most of the Other NB Funds differ from the Portfolio.
Even where the investment objectives are similar, however, the methods used by
the Other NB Funds and the Portfolio to achieve their objectives may differ. The
investment results achieved by all of the mutual funds managed by NB Management
have varied from one another in the past and are likely to vary in the future.
There may be occasions when the Portfolio and one or more of the
Other NB Funds or other accounts managed by Neuberger Berman are
contemporaneously engaged in purchasing or selling the same securities from or
to third parties. When this occurs, the transactions are averaged as to price
and allocated, in terms of amount, in accordance with a formula considered to be
equitable to the funds involved. Although in some cases this arrangement may
have a detrimental effect on the price or volume of the securities as to the
Portfolio, in other cases it is believed that the Portfolio's ability to
participate in volume transactions may produce better executions for it. In any
case, it is the judgment of the Portfolio Trustees that the desirability of the
Portfolio's having its advisory arrangements with NB Management outweighs any
disadvantages that may result from contemporaneous transactions.
The Portfolio is subject to certain limitations imposed on all
advisory clients of Neuberger Berman (including the Portfolio, the Other NB
Funds, and other managed accounts) and personnel of Neuberger Berman and its
affiliates. These include, for example, limits that may be imposed in certain
industries or by certain companies, and policies of Neuberger Berman that limit
the aggregate purchases, by all accounts under management, of the outstanding
shares of public companies.
32
<PAGE>
MANAGEMENT AND CONTROL OF NB MANAGEMENT
The directors and officers of NB Management, all of whom have
offices at the same address as NB Management, are Richard A. Cantor, Chairman of
the Board and director; Stanley Egener, President and director; Theodore P.
Giuliano, Vice President and director; Michael M. Kassen, Vice President and
director; Irwin Lainoff, director; Lawrence Zicklin, director; Daniel J.
Sullivan, Senior Vice President; Peter E. Sundman, Senior Vice President; Andrea
Trachtenberg, Senior Vice President; Michael J. Weiner, Senior Vice President;
Patrick T. Byrne, Vice President; Valerie Chang, Vice President; Brooke A. Cobb,
Vice President; Robert W. D'Alelio, Vice President; Clara Del Villar, Vice
President; Robert S. Franklin, Vice President; Brian J. Gaffney, Vice President;
Joseph G. Galli, Vice President; Robert I. Gendelman, Vice President; Michael F.
Kassen, Vice President; Josephine P. Mahaney, Vice President; Michael F. Malouf,
Vice President; S. Basu Mullick, Vice President; Janet W. Prindle, Vice
President; Kevin L. Risen, Vice President; Richard Russell, Vice President;
Jennifer K. Silver, Vice President; Kent C. Simons, Vice President; Frederic B.
Soule, Vice President; Judith M. Vale, Vice President; Susan Walsh, Vice
President; Catherine Waterworth, Vice President; Allan R. White III, Vice
President; Robert Conti, Treasurer; Ramesh Babu, Assistant Vice President;
Barbara DiGiorgio, Assistant Vice President; Robert L. Ladd, Assistant Vice
President; Carmen G. Martinez, Assistant Vice President; Joseph S. Quirk,
Assistant Vice President; Ingrid Saukaitis, Assistant Vice President; Benjamin
Segal, Assistant Vice President; Josephine Velez, Assistant Vice President;
Celeste Wischerth, Assistant Vice President; and Ellen Metzger, Secretary.
Messrs. Cantor, D'Alelio, Egener, Gendelman, Giuliano, Kassen, Lainoff, Risen,
Simons, Sundman, Weiner, White and Zicklin and Mmes. Prindle, Silver and Vale
are principals of Neuberger Berman.
Messrs. Egener and Zicklin are trustees and officers and Messrs.
Russell, Sullivan and Weiner and Mmes. DiGiorgio and Wischerth are officers of
the Trusts.
Neuberger Berman and NB Management are wholly owned subsidiaries of
Neuberger Berman Inc, a publicly owned holding company owned primarily by the
principals of Neuberger Berman.
DISTRIBUTION ARRANGEMENTS
NB Management serves as the distributor ("Distributor") in
connection with the offering of the Fund's shares on a no-load basis 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.
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 and Services Agreement dated _____________. The Distribution
Agreement was approved by the Fund Trustees, including a majority of the
33
<PAGE>
Independent Fund Trustees and a majority of those Independent Fund Trustees who
have no direct or indirect financial interest in the Distribution and
Shareholder Services Agreement or the Trust's plan pursuant to Rule 12b-1 under
the 1940 Act ("Plan") ("Rule 12b-1 Trustees"), on April 28, 1999. The
Distribution Agreement continues until August 2, 2000. The Distribution
Agreement may be renewed annually if specifically approved by (1) the vote of a
majority of the Fund Trustees or a 1940 Act majority vote of the Fund's
outstanding shares and (2) the vote of a majority of the Independent Fund
Trustees, cast in person at a meeting called for the purpose of voting on such
approval. The Distribution Agreement may be terminated by either party and will
terminate automatically on its assignment, in the same manner as the Management
Agreement.
RULE 12B-1 PLAN
The Fund Trustees adopted the Plan with respect to the Fund on April
28, 1999. The Plan provides that the Fund will compensate NB Management for
administrative and other services provided to the Fund, its activities and
expenses related to the sale and distribution of Fund shares, and/or ongoing
services to investors in the Fund. Under the Plan, NB Management receives from
the Fund a fee at the annual rate of 0.10% of the Fund's average daily net
assets. NB Management may pay up to the full amount of this fee to Institutions
that make available Fund shares and/or provide services to the Fund and its
shareholders. The fee paid to an Institution is based on the level of such
services provided. Institutions may use the payments for, among other purposes,
compensating employees engaged in sales and/or shareholder servicing. The amount
of fees paid by the Fund during any year may be more or less than the cost of
distribution and other services provided to the Fund and its investors. NASD
rules limit the amount of annual distribution and service fees that may be paid
by a mutual fund and impose a ceiling on the cumulative distribution fees paid.
The Trust's plan complies with these rules.
The Plan requires that NB Management provide the Fund Trustees for
their review a quarterly written report identifying the amounts expended by the
Fund and the purposes for which such expenditures were made.
Prior to approving the Plan, the Fund Trustees considered various
factors relating to the implementation of the Plan and determined that there is
a reasonable likelihood that the Plan will benefit the Fund and its
shareholders. The Fund Trustees noted that the purpose of the master/feeder fund
structure is to permit access to a variety of markets. To the extent the Plan
allows the Fund to penetrate markets to which it would not otherwise have
access, the Plan may result in additional sales of Fund shares; this, in turn,
may enable the Fund to achieve economies of scale that could reduce expenses. In
addition, certain on-going shareholder services may be provided more effectively
by Institutions with which shareholders have an existing relationship.
The Plan continues until August 2, 2000. The Plan is renewable
thereafter from year to year, so long as its continuance is approved at least
annually (1) by the vote of a majority of the Fund Trustees and (2) by a vote of
the majority of the Rule 12b-1 Trustees, cast in person at a meeting called for
the purpose of voting on such approval. The Plan may not be amended to increase
materially the amount of fees paid by the Fund thereunder unless such amendment
34
<PAGE>
is approved by a 1940 Act majority vote of the outstanding shares of the Fund
and by the Fund Trustees in the manner described above. The Plan is terminable
at any time by a vote of a majority of the Rule 12b-1 Trustees or by a 1940 Act
majority vote of the outstanding shares in the Fund.
ADDITIONAL PURCHASE INFORMATION
SHARE PRICES AND NET ASSET VALUE
The Fund's shares are bought or sold at a price that is the Fund's
NAV per share. The NAVs for the Fund and the Portfolio are calculated by
subtracting total liabilities from total assets (in the case of the Portfolio,
the market value of the securities the Portfolio holds plus cash and other
assets; in the case of the Fund, its percentage interest in the Portfolio,
multiplied by the Portfolio's NAV, plus any other assets). The Fund's per share
NAV is calculated by dividing its NAV by the number of Fund shares outstanding
and rounding the result to the nearest full cent. The Fund and the Portfolio
calculate their NAVs as of the close of regular trading on the NYSE, usually 4
p.m. Eastern time, on each day the NYSE is open.
The Portfolio values securities (including options) listed on the
NYSE, the American Stock Exchange or other national securities exchanges or
quoted on The Nasdaq Stock Market, and other securities for which market
quotations are readily available, at the last reported sale price on the day the
securities are being valued. If there is no reported sale of such a security on
that day, the security is valued at the mean between its closing bid and asked
prices on that day. The Portfolio values all other securities and assets,
including restricted securities, by a method that the trustees of the Trust
believe accurately reflects fair value.
If NB Management believes that the price of a security obtained
under the Portfolio's valuation procedures (as described above) does not
represent the amount that the Portfolio reasonably expects to receive on a
current sale of the security, the Portfolio will value the security based on a
method that the trustees of the Managers Trust believe accurately reflects fair
value.
ADDITIONAL EXCHANGE INFORMATION
As more fully set forth in the section of the Prospectus entitled
"Maintaining Your Account," shareholders may redeem at least $1,000 worth of a
Fund's shares and invest the proceeds in shares of one or more of the other
series of the Trust or the Income and Municipal Funds that are briefly described
below, provided that the minimum investment requirements of the other fund(s)
are met.
35
<PAGE>
EQUITY FUNDS
Neuberger Berman Focus Fund Invests principally in common stocks selected
from 13 multi-industry sectors of the economy.
To maximize potential return, the Portfolio
normally makes at least 90% of its investments
in not more than six sectors of the economy
believed by the portfolio managers to be
undervalued.
Neuberger Berman Genesis Invests primarily in stocks of companies with
Fund small market capitalizations (up to $1.5
billion at the time of the Portfolio's
investment). Portfolio managers seek to buy
the stocks of strong companies with a history
of solid performance and a proven management
team, which are selling at attractive prices.
Neuberger Berman Guardian A growth and income fund that invests
Fund primarily in stocks of established, high-
quality companies that are not well followed
on Wall Street or are temporarily out of
favor.
Neuberger Berman Seeks long-term capital appreciation by
International Fund investing primarily in foreign stocks of any
capitalization, both in developed economies
and in emerging markets. Portfolio manager
seeks undervalued companies in countries with
strong potential for growth.
Neuberger Berman Manhattan Invests in securities believed to have the
Fund maximum potential for long-term capital
appreciation. Portfolio managers seek stocks
of companies that are projected to grow at
above-average rates and that appear to the
managers poised for a period of accelerated
earnings.
Neuberger Berman Millennium Seeks long-term growth of capital by investing
Fund primarily in common stocks of small-
capitalization companies, which it defines as
those with a total market value of no more
than $1.5 billion at the time of initial
investment. The portfolio co-managers take a
growth approach to stock selection, looking
for new companies that are in the
developmental stage as well as older companies
that appear poised to grow because of new
products, markets or management. Factors in
identifying these firms may include financial
strength, a strong position relative to
competitors and a stock price that is
reasonable relative to its growth rate.
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<PAGE>
Neuberger Berman Seeks capital growth through an approach that
Partners Fund is intended to increase capital with
reasonable risk. Portfolio managers look at
fundamentals, focusing particularly on cash
flow, return on capital, and asset values.
Neuberger Berman Seeks long-term growth of capital by investing
Regency Fund primarily in common stocks of mid-
capitalization companies which the manager
believes have solid fundamentals.
Neuberger Berman Seeks long-term capital appreciation by
Socially Responsive Fund investing in common stocks of companies that
meet both financial and social criteria.
INCOME FUNDS
Neuberger Berman A U.S. Government money market fund seeking
Government Money Fund maximum safety and liquidity and the highest
available current income. The corresponding
portfolio invests only in U.S. Treasury
obligations and other money market
instruments backed by the full faith and
credit of the United States. It seeks to
maintain a constant purchase and redemption
price of $1.00.
Neuberger Berman A money market fund seeking the highest
Cash Reserves current income consistent with safety and
liquidity. The corresponding portfolio invests
in high-quality money market instruments. It
seeks to maintain a constant purchase and
redemption price of $1.00.
Neuberger Berman Seeks the highest current income consistent
Limited Maturity Bond Fund with low risk to principal and liquidity and,
secondarily, total return. The corresponding
portfolio invests in debt securities,
primarily investment grade; maximum 10%
below investment grade, but no lower than
B.*/ Maximum average duration of four years.
Neuberger Berman Seeks high current income and, secondarily,
High Yield Bond Fund capital growth, by investing primarily in
lower-rated debt securities; also invests in
investment grade income-producing and
non-income-producing debt and equity
securities.
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MUNICIPAL FUNDS
Neuberger Berman A money market fund seeking the maximum
Municipal Money Fund current income exempt from federal income tax,
consistent with safety and liquidity. The
corresponding portfolio invests in
high-quality, short-term municipal
securities. It seeks to maintain a constant
purchase and redemption price of $1.00.
Neuberger Berman Municipal Seeks high current tax-exempt income with low
Securities Trust risk to principal, limited price fluctuation,
and liquidity and, secondarily, total
return. The corresponding portfolio invests
in investment grade municipal securities.
Maximum average duration of 10 years.
- --------------------
*/ As rated by Moody's or S&P or, if unrated by either of those
entities, determined by NB Management to be of comparable quality.
The Fund described herein, and any of the Neuberger Berman Funds
described above, may terminate or modify its exchange privilege in the future.
Before effecting an exchange, Fund shareholders must obtain and
should review a currently effective prospectus of the fund into which the
exchange is to be made. The Neuberger Berman Income and Municipal Funds share a
prospectus. An exchange is treated as a sale for federal income tax purposes
and, depending on the circumstances, a capital gain or loss may be realized.
There can be no assurance that Neuberger Berman Government Money
Fund, Neuberger Berman Cash Reserves, or Neuberger Berman Municipal Money Fund,
each of which is a money market fund that seeks to maintain a constant purchase
and redemption price of $1.00, will be able to maintain that price. An
investment in any of the above-referenced funds, as in any other mutual fund, is
neither insured nor guaranteed by the U.S. Government.
ADDITIONAL REDEMPTION INFORMATION
SUSPENSION OF REDEMPTIONS
The right to redeem the Fund's shares may be suspended or payment of
the redemption price postponed (1) when the NYSE is closed, (2) when trading on
the NYSE is restricted, (3) when an emergency exists as a result of which it is
not reasonably practicable for the Portfolio to dispose of securities it owns or
fairly to determine the value of its net assets, or (4) for such other period as
the SEC may by order permit for the protection of the Fund's shareholders.
Applicable SEC rules and regulations shall govern whether the conditions
prescribed in (2) or (3) exist. If the right of redemption is suspended,
shareholders may withdraw their offers of redemption, or they will receive
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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 in "Share Prices and Net Asset Value" above. 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 Fund Trustees determined that it was in the best interests of the Fund's
shareholders as a whole.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Fund distributes to its shareholders substantially all of its
share of any net investment income, (after deducting expenses incurred directly
by the Fund), any net realized capital gains, and any net realized gains from
foreign currency transactions earned or realized by the Portfolio. The
Portfolio's net investment income consists of all income accrued on portfolio
assets less accrued expenses, but does not include capital and foreign currency
gains and losses. Net investment income and realized gains and losses are
reflected in the Portfolio's NAV (and, hence, the Fund's NAV) until they are
distributed. The Fund calculates its net investment income and NAV per share as
of the close of regular trading on the NYSE on each Business Day (usually 4:00
p.m. Eastern time).
Dividends from net investment income and distributions of net
realized capital and foreign currency gains, if any, normally are paid once
annually, in December.
Dividends and other distributions are automatically reinvested in
additional shares of the Fund, unless the 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. If it is determined,
however, that the U.S. Postal Service cannot properly deliver Fund mailings to
the shareholder for 180 days, the Fund will terminate the shareholder's cash
election.
ADDITIONAL TAX INFORMATION
TAXATION OF THE FUND
To qualify for treatment as a RIC under the Code, the Fund must
distribute to its shareholders for each taxable year at least 90% of its
investment company taxable income (consisting generally of net investment
income, net short-term capital gain, and net gains from certain foreign currency
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transactions) ("Distribution Requirement") and must meet several additional
requirements. These requirements include the following: (1) the Fund must derive
at least 90% of its gross income each taxable year from dividends, interest,
payments with respect to securities loans, and gains from the sale or other
disposition of securities or foreign currencies, or other income (including
gains from Hedging Instruments) derived with respect to its business of
investing in securities or those currencies ("Income Requirement"); and (2) at
the close of each quarter of the Fund's taxable year, (i) at least 50% of the
value of its total assets must be represented by cash and cash items, U.S.
Government securities, securities of other RICs, and other securities limited,
in respect of any one issuer, to an amount that does not exceed 5% of the value
of the Fund's total assets and that does not represent more than 10% of the
issuer's outstanding voting securities, and (ii) not more than 25% of the value
of its total assets may be invested in securities (other than U.S. Government
securities or securities of other RICs) of any one issuer. If the Fund failed to
qualify as a RIC for any taxable year, it would be taxed on the full amount of
its taxable income for that year without being able to deduct the distributions
it makes to its shareholders and the shareholders would treat all those
distributions, including distributions of net capital gain (the excess of net
long-term capital gain over net short-term capital loss), as dividends (that is,
ordinary income) to the extent of the Fund's earnings and profits.
Certain funds that invest in portfolios managed by NB Management,
including the Neuberger Berman Large-Cap Growth Fund, a series of Neuberger
Berman Equity Funds that invests in the same Portfolio as the Fund ("Sister
Fund"), have received rulings from the Internal Revenue Service ("Service") that
each such fund, as an investor in its corresponding portfolio, will be deemed to
own a proportionate share of the portfolio's assets and income for purposes of
determining whether the fund satisfies all the requirements described above to
qualify as a RIC. Although these rulings may not be relied on as precedent by
the Fund, NB Management believes that the reasoning thereof and, hence, their
conclusion apply to the Fund as well.
The Fund will be subject to a nondeductible 4% excise tax ("Excise
Tax") to the extent it fails to distribute by the end of any calendar year
substantially all of its ordinary income for that year and capital gain net
income for the one-year period ended on October 31 of that year, plus certain
other amounts.
See the next section for a discussion of the tax consequences to the
Fund of distributions to it from the Portfolio, investments by the Portfolio in
certain securities, and hedging transactions engaged in by the Portfolio.
TAXATION OF THE PORTFOLIO
Certain investment portfolios managed by NB Management have received
rulings from the Service to the effect that, among other things, each portfolio
will be treated as a separate partnership for federal income tax purposes and
will not be a "publicly traded partnership." Although these rulings may not be
relied upon as precedent by the Portfolio, NB Management believes the reasoning
thereof and hence, their conclusion apply to the Portfolio as well. As a result,
the Portfolio is not subject to federal income tax; instead, each investor in
the Portfolio, such as the Fund, is required to take into account in determining
its federal income tax liability its share of the Portfolio's income, gains,
losses, deductions, and credits, without regard to whether it has received any
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cash distributions from the Portfolio. The Portfolio also is not subject to
Delaware or New York income or franchise tax.
Because the Fund is deemed to own a proportionate share of the
Portfolio's assets and income for purposes of determining whether the Fund
satisfies the requirements to qualify as a RIC, the Portfolio intends to
continue to conduct its operations so that the Fund will be able to continue to
satisfy all those requirements.
Distributions to the Fund from the Portfolio (whether pursuant to a
partial or complete withdrawal or otherwise) will not result in the Fund's
recognition of any gain or loss for federal income tax purposes, except that (1)
gain will be recognized to the extent any cash that is distributed exceeds the
Fund's basis for its interest in the Portfolio before the distribution, (2)
income or gain will be recognized if the distribution is in liquidation of the
Fund's entire interest in the Portfolio and includes a disproportionate share of
any unrealized receivables held by the Portfolio, and (3) loss will be
recognized if a liquidation distribution consists solely of cash and/or
unrealized receivables. The Fund's basis for its interest in the Portfolio
generally equals the amount of cash the Fund invests in the Portfolio, increased
by the Fund's share of the Portfolio's net income and capital gains and
decreased by (1) the amount of cash and the basis of any property the Portfolio
distributes to the Fund and (2) the Fund's share of the Portfolio's losses.
Dividends and interest received by the Portfolio, and gains realized
by the Portfolio, may be subject to income, withholding, or other taxes imposed
by foreign countries and U.S. possessions ("foreign taxes") that would reduce
the yield and/or total return on its securities. Tax treaties between certain
countries and the United States may reduce or eliminate these foreign taxes,
however, and many foreign countries do not impose taxes on capital gains in
respect of investments by foreign investors.
The Portfolio may invest in the stock of "passive foreign investment
companies" ("PFICs"). A PFIC is a foreign corporation -- other than a
"controlled foreign corporation" (I.E., a foreign corporation in which, on any
day during its taxable year, more than 50% of the total voting power of all
voting stock therein or the total value of all stock therein is owned, directly,
indirectly, or constructively, by "U.S. shareholders," defined as U.S. persons
that individually own, directly, indirectly, or constructively, at least 10% of
that voting power) as to which the Portfolio is a U.S. shareholder -- that, in
general, meets either of the following tests: (1) at least 75% of its gross
income is passive or (2) an average of at least 50% of its assets produce, or
are held for the production of, passive income. Under certain circumstances, if
the Portfolio holds stock of a PFIC, the Fund (indirectly through its interest
in the Portfolio) will be subject to federal income tax on its share of a
portion of any "excess distribution" received by the Portfolio on the stock or
of any gain on the Portfolio's disposition of the stock (collectively, "PFIC
income"), plus interest thereon, even if the Fund distributes its share of the
PFIC income as a taxable dividend to its shareholders. The balance of the Fund's
share of the PFIC income will be included in its investment company taxable
income and, accordingly, will not be taxable to it to the extent that income is
distributed to its shareholders.
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If the Portfolio invests in a PFIC and elects to treat the PFIC as a
"qualified electing fund" ("QEF"), then in lieu of the Fund's incurring the
foregoing tax and interest obligation, the Fund would be required to include in
income each year its share of the Portfolio's pro rata share of the QEF's annual
ordinary earnings and net capital gain (the excess of net long-term capital gain
over net short-term capital loss) -- which the Fund most likely would have to
distribute to satisfy the Distribution Requirement and avoid imposition of the
Excise Tax -- even if the Portfolio did not receive those earnings and gain from
the QEF. In most instances it will be very difficult, if not impossible, to make
this election because of certain requirements thereof.
A holder of stock in any PFIC may elect to include in ordinary
income each taxable year the excess, if any, of the fair market value of the
stock over the adjusted basis therein as of the end of that year. Pursuant to
the election, a deduction (as an ordinary, not capital, loss) also would be
allowed for the excess, if any, of the holder's adjusted basis in PFIC stock
over the fair market value thereof as of the taxable year-end, but only to the
extent of any net mark-to-market gains with respect to that stock included in
income for prior taxable years. The adjusted basis in each PFIC's stock subject
to the election would be adjusted to reflect the amounts of income included and
deductions taken thereunder (and under regulations proposed in 1992 that
provided a similar election with respect to the stock of certain PFICs).
The Portfolio's use of hedging strategies, such as writing (selling)
and purchasing options and entering into forward contracts, involves complex
rules that will determine for income tax purposes the amount, character and
timing of recognition of the gains and losses the Portfolio realizes in
connection therewith. Gains from the disposition of foreign currencies (except
certain gains that may be excluded by future regulations), and gains from
Hedging Instruments derived by the Portfolio with respect to its business of
investing in securities or foreign currencies, will qualify as permissible
income for the Fund under the Income Requirement.
Exchange-traded futures contracts, certain forward contracts and
listed options thereon subject to Section 1256 of the Code ("Section 1256
contracts") are required to be marked to market (that is, treated as having been
sold at market value) for federal income tax purposes at the end of the
Portfolio's taxable year. Sixty percent of any net gain or loss recognized as a
result of these "deemed sales," and 60% of any net realized gain or loss from
any actual sales, of Section 1256 contracts are treated as long-term capital
gain or loss; the remainder is treated as short-term capital gain or loss.
Section 1256 contracts also may be marked-to-market for purposes of the Excise
Tax. These rules may operate to increase the amount that a Fund must distribute
to satisfy the Distribution Requirement, which will be taxable to the
shareholders as ordinary income, and to increase the net capital gain recognized
by the Fund, without in either case increasing the cash available to the Fund. A
Fund may elect to exclude certain transactions from the operation of section
1256, although doing so may have the effect of increasing the relative
proportion of net short-term capital gain (taxable as ordinary income) and/or
increasing the amount of dividends that must be distributed to meet the
Distribution Requirement and avoid imposition of the Excise Tax.
If the Fund has an "appreciated financial position" -- generally, an
interest (including an interest through an option, futures or forward contract,
or short sale) with respect to any stock, debt instrument (other than "straight
debt"), or partnership interest the fair market value of which exceeds its
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adjusted basis -- and enters into a "constructive sale" of the same or
substantially similar property, the Fund will be treated as having made an
actual sale thereof, with the result that gain will be recognized at that time.
A constructive sale generally consists of a short sale, an offsetting notional
principal contract, or a futures or forward contract entered into by the Fund or
a related person with respect to the same or substantially similar property. In
addition, if the appreciated financial position is itself a short sale or such a
contract, acquisition of the underlying property or substantially similar
property will be deemed a constructive sale. The foregoing will not apply,
however, to any transaction during any taxable year that otherwise would be
treated as a constructive sale if the transaction is closed within 30 days after
the end of that year and the Fund holds the appreciated financial position
unhedged for 60 days after that closing (I.E., at no time during that 60-day
period is the Fund's risk of loss regarding that position reduced by reason of
certain specified transactions with respect to substantially similar or related
property, such as having an option to sell, being contractually obligated to
sell, making a short sale, or granting an option to buy substantially identical
stock or securities).
The Portfolio may acquire zero coupon securities or other securities
issued with original issue discount ("OID"). As a holder of those securities,
the Portfolio (and, through it, the Fund) must take into income the OID that
accrues on the securities during the taxable year, even if it receives no
corresponding payment on them during the year. Because the Fund annually must
distribute substantially all of its investment company taxable income (including
its share of the Portfolio's accrued OID) to satisfy the Distribution
Requirement and avoid imposition of the Excise Tax, the Fund may be required in
a particular year to distribute as a dividend an amount that is greater than its
share of the total amount of cash the Portfolio actually receives. Those
distributions will be made from the Fund's (or its share of the Portfolio's)
cash assets or, if necessary, from the proceeds of sales of the Portfolio's
securities. The Portfolio may realize capital gains or losses from those sales,
which would increase or decrease the Fund's investment company taxable income
and/or net capital gain.
TAXATION OF THE FUND'S SHAREHOLDERS
If Fund shares are sold at a loss after being held for six months or
less, the loss will be treated as long-term, instead of short-term, capital loss
to the extent of any capital gain distributions received on those shares.
PORTFOLIO TRANSACTIONS
Neuberger Berman acts as principal broker for the Portfolio in the
purchase and sale of its portfolio securities (other than certain securities
traded on the OTC market) and in connection with the writing of covered call
options on its securities.
Portfolio securities are, from time to time, loaned by the Portfolio
to Neuberger Berman in accordance with the terms and conditions of an order
issued by the SEC. The order exempts such transactions from provisions of the
1940 Act that would otherwise prohibit such transactions, subject to certain
conditions. In accordance with the order, securities loans made by the Portfolio
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to Neuberger Berman are fully secured by cash collateral. The portion of the
income on the cash collateral which may be shared with Neuberger Berman is to be
determined by reference to concurrent arrangements between Neuberger Berman and
non-affiliated lenders with which it engages in similar transactions. In
addition, where Neuberger Berman borrows securities from the Portfolio in order
to re-lend them to other Neuberger Berman Portfolios, Neuberger Berman may be
required to pay the Portfolio, on a quarterly basis, certain of the earnings
that Neuberger Berman otherwise has derived from the re-lending of the borrowed
securities. When Neuberger Berman desires to borrow a security that the
Portfolio has indicated a willingness to lend, Neuberger Berman must borrow such
security from the Portfolio, rather than from an unaffiliated lender, unless the
unaffiliated lender is willing to lend such security on more favorable terms (as
specified in the order) than the Portfolio. If, in any month, the Portfolio's
expenses exceed its income in any securities loan transaction with Neuberger
Berman, Neuberger Berman must reimburse the Portfolio for such loss.
A committee of Independent Portfolio Trustees from time to time
reviews, among other things, information relating to securities loans by the
Portfolio.
In effecting securities transactions, the Portfolio generally seeks
to obtain the best price and execution of orders. Commission rates, being a
component of price, are considered along with other relevant factors. The
Portfolio plans to continue to use Neuberger Berman as its principal broker
where, in the judgment of NB Management, that firm is able to obtain a price and
execution at least as favorable as other qualified brokers. To the Portfolio's
knowledge, no affiliate of the Portfolio receives give-ups or reciprocal
business in connection with its securities transactions.
The use of Neuberger Berman as a broker for the Portfolio is subject
to the requirements of Section 11(a) of the Securities Exchange Act of 1934.
Section 11(a) prohibits members of national securities exchanges from retaining
compensation for executing exchange transactions for accounts which they or
their affiliates manage, except where they have the authorization of the persons
authorized to transact business for the account and comply with certain annual
reporting requirements. Managers Trust and NB Management have expressly
authorized Neuberger Berman to retain such compensation, and Neuberger Berman
has agreed to comply with the reporting requirements of Section 11(a).
Under the 1940 Act, commissions paid by the Portfolio to Neuberger
Berman in connection with a purchase or sale of securities on a securities
exchange may not exceed the usual and customary broker's commission.
Accordingly, it is the Portfolio's policy that the commissions paid to Neuberger
Berman must, in NB Management's judgment, be (1) at least as favorable as those
charged by other brokers having comparable execution capability and (2) at least
as favorable as commissions contemporaneously charged by Neuberger Berman on
comparable transactions for its most favored unaffiliated customers, except for
accounts for which Neuberger Berman acts as a clearing broker for another
brokerage firm and customers of Neuberger Berman considered by a majority of the
Independent Portfolio Trustees not to be comparable to the Portfolio. The
Portfolio does not deem it practicable and in its best interests to solicit
competitive bids for commissions on each transaction effected by Neuberger
Berman. However, consideration regularly is given to information concerning the
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prevailing level of commissions charged by other brokers on comparable
transactions during comparable periods of time. The 1940 Act generally prohibits
Neuberger Berman from acting as principal in the purchase of portfolio
securities from, or the sale of portfolio securities to, the Portfolio unless an
appropriate exemption is available.
A committee of Independent Portfolio Trustees from time to time
reviews, among other things, information relating to the commissions charged by
Neuberger Berman to the Portfolio and to its other customers and information
concerning the prevailing level of commissions charged by other brokers having
comparable execution capability. In addition, the procedures pursuant to which
Neuberger Berman effects brokerage transactions for the Portfolio must be
reviewed and approved no less often than annually by a majority of the
Independent Portfolio Trustees.
To ensure that accounts of all investment clients, including the
Portfolio, are treated fairly in the event that Neuberger Berman receives
transaction instructions regarding a security for more than one investment
account at or about the same time, Neuberger Berman may combine orders placed on
behalf of clients, including advisory accounts in which affiliated persons have
an investment interest, for the purpose of negotiating brokerage commissions or
obtaining a more favorable price. Where appropriate, securities purchased or
sold may be allocated, in terms of amount, to a client according to the
proportion that the size of the order placed by that account bears to the
aggregate size of orders contemporaneously placed by the other accounts, subject
to de minimis exceptions. All participating accounts will pay or receive the
same price.
The Portfolio expects that it will execute a portion of its
transactions through brokers other than Neuberger Berman. In selecting those
brokers, NB Management considers the quality and reliability of brokerage
services, including execution capability, performance, and financial
responsibility, and may consider research and other investment information
provided by, and sale of Fund shares effected through, those brokers.
A committee comprised of officers of NB Management and principals of
Neuberger Berman who are portfolio managers of the Portfolio and Other NB Funds
(collectively, "NB Funds") and some of Neuberger Berman's managed accounts
("Managed Accounts") evaluates semi-annually the nature and quality of the
brokerage and research services provided by other brokers. Based on this
evaluation, the committee establishes a list and projected rankings of preferred
brokers for use in determining the relative amounts of commissions to be
allocated to those brokers. Ordinarily, the brokers on the list effect a large
portion of the brokerage transactions for the NB Funds and the Managed Accounts
that are not effected by Neuberger Berman. However, in any semi-annual period,
brokers not on the list may be used, and the relative amounts of brokerage
commissions paid to the brokers on the list may vary substantially from the
projected rankings. These variations reflect the following factors, among
others: (1) brokers not on the list or ranking below other brokers on the list
may be selected for particular transactions because they provide better price
and/or execution, which is the primary consideration in allocating brokerage;
(2) adjustments may be required because of periodic changes in the execution
capabilities of or research provided by particular brokers or in the execution
or research needs of the NB Funds and/or the Managed Accounts; and (3) the
aggregate amount of brokerage commissions generated by transactions for the NB
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Funds and the Managed Accounts may change substantially from one semi-annual
period to the next.
The commissions paid to a broker other than Neuberger Berman may be
higher than the amount another firm might charge if NB Management determines in
good faith that the amount of those commissions is reasonable in relation to the
value of the brokerage and research services provided by the broker. NB
Management believes that those research services benefit the Portfolio by
supplementing the information otherwise available to NB Management. That
research may be used by NB Management in servicing Other NB Funds and, in some
cases, by Neuberger Berman in servicing the Managed Accounts. On the other hand,
research received by NB Management from brokers effecting portfolio transactions
on behalf of the Other NB Funds and by Neuberger Berman from brokers effecting
portfolio transactions on behalf of the Managed Accounts may be used for the
Portfolio's benefit.
Jennifer K. Silver and [insert name of co-manager], each of whom is
a Vice President of NB Management, are the persons primarily responsible for
making decisions as to specific action to be taken with respect to the
investment portfolio of the Portfolio. Each of them has full authority to take
action with respect to portfolio transactions and may or may not consult with
other personnel of NB Management prior to taking such action. Ms.
Silver is a principal of Neuberger Berman, LLC.
PORTFOLIO TURNOVER
The Portfolio's portfolio turnover rate is calculated by dividing
(1) the lesser of the cost of the securities purchased or the proceeds from the
securities sold by the Portfolio during the fiscal year (other than securities,
including options, whose maturity or expiration date at the time of acquisition
was one year or less) by (2) the month-end average of the value of such
securities owned by the Portfolio during the fiscal year.
REPORTS TO SHAREHOLDERS
Shareholders of the Fund receive unaudited semi-annual financial
statements, as well as year-end financial statements audited by the independent
auditors for the Fund and Portfolio. The Fund's statements show the investments
owned by the Portfolio and the market values thereof and provide other
information about the Fund and its operations, including the Fund's beneficial
interest in the Portfolio.
ORGANIZATION, CAPITALIZATION AND OTHER MATTERS
THE FUND
The Fund is a separate operating series of the Trust, a Delaware
business trust organized pursuant to a Trust Instrument dated as of December 23,
1992. The Trust is registered under the 1940 Act as a diversified, open-end
management investment company, commonly known as a mutual fund. The Trust has
ten separate operating series. The Fund invests all of its net investable assets
in the Portfolio, receiving a beneficial interest in the Portfolio. The trustees
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of the Trust may establish additional series or classes of shares without the
approval of shareholders. The assets of each series belong only to that series,
and the liabilities of each series are borne solely by that series and no other.
Prior to November 9, 1998, the name of the Trust was "Neuberger &
Berman Equity Trust."
DESCRIPTION OF SHARES. The Fund is authorized to issue an unlimited
number of shares of beneficial interest (par value $0.001 per share). Shares of
the Fund represent equal proportionate interests in the assets of the Fund only
and have identical voting, dividend, redemption, liquidation, and other rights.
All shares issued are fully paid and non-assessable, and shareholders have no
preemptive or other rights to subscribe to any additional shares.
SHAREHOLDER MEETINGS. The trustees of the Trust do not intend to
hold annual meetings of shareholders of the Fund. The trustees will call special
meetings of shareholders of the Fund only if required under the 1940 Act or in
their discretion or upon the written request of holders of 10% or more of the
outstanding shares of the Fund entitled to vote.
CERTAIN PROVISIONS OF TRUST INSTRUMENT. Under Delaware law, the
shareholders of the Fund will not be personally liable for the obligations of
the Fund; a shareholder is entitled to the same limitation of personal liability
extended to shareholders of a corporation. To guard against the risk that
Delaware law might not be applied in other states, the Trust Instrument requires
that every written obligation of the Trust or the Fund contain a statement that
such obligation may be enforced only against the assets of the Trust or Fund and
provides for indemnification out of Trust or Fund property of any shareholder
nevertheless held personally liable for Trust or Fund obligations, respectively.
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 NB
Management to perform services. Depending on the policies of the Institution
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 eight separate Portfolios. The assets of each
Portfolio belong only to that Portfolio, and the liabilities of each Portfolio
are borne solely by that Portfolio and no other.
FUND'S INVESTMENTS IN THE PORTFOLIO. The Fund is a "feeder fund"
that seeks to achieve its investment objective by investing all of its net
investable assets in the Portfolio, which is a "master fund." The Portfolio,
which has the same investment objective, policies, and limitations as the Fund,
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in turn invests in securities; the Fund thus acquires an indirect interest in
those securities.
The Fund's investment in the Portfolio is in the form of a
non-transferable beneficial interest. Members of the general public may not
purchase a direct interest in the Portfolio. Series of three other investment
companies, Neuberger Berman Equity Funds ("Equity Funds"), Neuberger Berman
Equity Assets ("Equity Assets") and Neuberger Berman Equity Series ("Equity
Series"), invest all of their respective net assets in corresponding Portfolios
of Managers Trust. The shares of the series of Equity Funds are available for
purchase by members of the general public. Equity Assets and Equity Series do
not sell their shares directly to members of the general public.
The Portfolio may also permit other investment companies and/or
other institutional investors to invest in the Portfolio. All investors will
invest in the Portfolio on the same terms and conditions as the Fund and will
pay a proportionate share of the Portfolio's expenses. Other investors in the
Portfolio (including the series of Equity Funds and Equity Assets) are not
required to sell their shares at the same public offering price as the Fund,
could have a different administration fee and expenses than the Fund, and
(except Equity Funds and Equity Assets) might charge a sales commission.
Therefore, Fund shareholders may have different returns than shareholders in
another investment company that invests exclusively in the Portfolio.
Information regarding any fund that invests in the Portfolio is available from
NB Management by calling 800-877-9700.
The trustees of the Trust believe that investment in the Portfolio
by a series of Equity Funds or Equity Assets or by other potential investors in
addition to the Fund may enable the Portfolio to realize economies of scale that
could reduce its operating expenses, thereby producing higher returns and
benefiting all shareholders. However, the Fund's investment in the Portfolio may
be affected by the actions of other large investors in the Portfolio, if any.
For example, if a large investor in the Portfolio (other than the Fund) redeemed
its interest in the Portfolio, the Portfolio's remaining investors (including
the Fund) might, as a result, experience higher pro rata operating expenses,
thereby producing lower returns.
The Fund may withdraw its entire investment from the Portfolio at
any time, if the trustees of the Trust determine that it is in the best
interests of the Fund and its shareholders to do so. The Fund might withdraw,
for example, if there were other investors in the Portfolio with power to, and
who did by a vote of all investors (including the Fund), change the investment
objective, policies, or limitations of the Portfolio in a manner not acceptable
to the trustees of the Trust. A withdrawal could result in a distribution in
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
48
<PAGE>
with its investment objective, policies, and limitations. The inability of the
Fund to find a suitable replacement could have a significant impact on
shareholders.
INVESTOR MEETINGS AND VOTING. The Portfolio normally will not hold
meetings of investors except as required by the 1940 Act. Each investor in the
Portfolio will be entitled to vote in proportion to its relative beneficial
interest in the Portfolio. On most issues subjected to a vote of investors, the
Fund will solicit proxies from its shareholders and will vote its interest in
the Portfolio in proportion to the votes cast by the Fund's shareholders. If
there are other investors in the Portfolio, there can be no assurance that any
issue that receives a majority of the votes cast by Fund shareholders will
receive a majority of votes cast by all Portfolio investors; indeed, if other
investors hold a majority interest in the Portfolio, they could have voting
control of the Portfolio.
CERTAIN PROVISIONS. Each investor in the Portfolio, including the
Fund, will be liable for all obligations of the Portfolio. However, the risk of
an investor in the Portfolio incurring financial loss beyond the amount of its
investment on account of such liability would be limited to circumstances in
which the Portfolio had inadequate insurance and was unable to meet its
obligations out of its assets. Upon liquidation of the Portfolio, investors
would be entitled to share pro rata in the net assets of the Portfolio available
for distribution to investors.
CUSTODIAN AND TRANSFER AGENT
The Fund and Portfolio have selected State Street Bank and Trust
Company ("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 [name of independent
accountants] as the independent accountants who will audit their financial
statements.
LEGAL COUNSEL
The Fund and Portfolio have selected Kirkpatrick & Lockhart LLP,
1800 Massachusetts Avenue, N.W., 2nd Floor, Washington, D.C. 20036-1800, as
their legal counsel.
REGISTRATION STATEMENT
This SAI and the Prospectus do not contain all the information
included in the Trust's registration statement filed with the SEC under the 1933
Act with respect to the securities offered by the Prospectus. The registration
statement, including the exhibits filed therewith, may be examined at the SEC's
offices in Washington, D.C. The SEC maintains a Website (http://www.sec.gov)
49
<PAGE>
that contains this SAI, material incorporated by reference, and other
information regarding the Fund and Portfolio.
Statements contained in this SAI and in the Prospectus as to the
contents of any contract or other document referred to are not necessarily
complete. In each instance where reference is made to the copy of any contract
or other document filed as an exhibit to the registration statement, each such
statement is qualified in all respects by such reference.
50
<PAGE>
Appendix A
RATINGS OF CORPORATE BONDS AND COMMERCIAL PAPER
S&P CORPORATE BOND RATINGS:
AAA - BONDS rated AAA have the highest rating assigned by S&P. Capacity
to pay interest and repay principal is extremely strong.
AA - BONDS rated AA have a very strong capacity to pay interest and
repay principal and differ from the higher rated issues only in small degree.
A - Bonds RATED A have a strong capacity to pay interest and repay
principal, although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher rated
categories.
BBB - BONDS rated BBB are regarded as having an adequate capacity to
pay principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in higher rated categories.
BB, B, CCC, CC, C - Bonds RATED BB, B, CCC, CC, and C are regarded, on
balance, as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB indicates
the lowest degree of speculation and C the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
CI - The rating CI is RESERVED for income bonds on which no interest is
being paid.
D - Bonds rated D are In default, and payment of interest and/or
repayment of principal is in arrears.
PLUS (+) OR MINUS (-) - The ratings ABOVE may be modified by the
addition of a plus or minus sign to show relative standing within the major
categories.
MOODY'S CORPORATE BOND RATINGS:
AAA - Bonds rated AAA are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or an exceptionally stable
margin, and principal is secure. Although the various protective elements are
likely to change, the changes that can be visualized are most unlikely to impair
the fundamentally strong position of the issuer.
<PAGE>
AA - Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
"high-grade bonds." They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa-rated securities, fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present that make the long-term risks appear somewhat larger than in Aaa-rated
securities.
A - Bonds rated A possess many favorable investment attributes and are
to be considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present that
suggest a susceptibility to impairment sometime in the future.
BAA - Bonds which are rated Baa are considered as medium-grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present, but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. These bonds lack outstanding
investment characteristics and in fact have speculative characteristics as well.
BA - Bonds rated Ba ARE judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds rated B GENERALLY lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
CAA - Bonds rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
CA - Bonds rated Ca represent obligations that are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C - Bonds rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
MODIFIERS--Moody's may apply numerical modifiers 1, 2, and 3 in each generic
rating classification described above. The modifier 1 indicates that the
security ranks in the higher end of its generic rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the issuer
ranks in the lower end of its generic rating.
S&P commercial PAPER ratings:
A-1 - This highest Category indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted with a plus sign (+).
A-2
<PAGE>
Moody's COMMERCIAL paper ratings
Issuers rated PRIME-1 (or related supporting institutions), also known
as P-1, have a superior capacity for repayment of short-term promissory
obligations. Prime-1 repayment capacity will normally be evidenced by the
following characteristics:
- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structures with moderate reliance on
debt and ample asset protection.
- Broad margins in earnings coverage of fixed financial charges and
high internal cash generation.
- Well-established access to a range of financial markets and
assured sources of alternate liquidity.
A-3
<PAGE>
NEUBERGER BERMAN EQUITY TRUST
POST-EFFECTIVE AMENDMENT NO. 21 ON FORM N-1A
PART C
OTHER INFORMATION
Item 23. Financial Statements and Exhibits
- ------- ---------------------------------
(a) Financial Statements. None.
(b) Exhibits:
<TABLE>
<CAPTION>
Number Description
------- -----------
<S> <C> <C>
(a) (1) Certificate of Trust. Incorporated by Reference to Post-Effective
Amendment No. 8 to Registrant's Registration Statement, File
Nos. 33-64368 and 811-7784, EDGAR Accession No. 0000898432-95-000427.
(2) Restated Certificate of Trust. Incorporated by Reference
to Post-Effective Amendment No. 18 to Registrant's Registration
Statement, File Nos. 33-64368 and 811-7784, EDGAR Accession No.
0000898432-98-000838.
(3) Trust Instrument of Neuberger Berman Equity Trust. Incorporated by
Reference to Post-Effective Amendment No. 8 to Registrant's
Registration Statement, File Nos. 33-64368 and 811-7784, EDGAR
Accession No. 0000898432-95-000427.
(4) Schedule A - Current Series of Neuberger Berman Equity Trust.
Incorporated by Reference to Post-Effective Amendment No. 19 to
Registrant's Registration Statement, File Nos. 33-64368 and
811-7784, EDGAR Accession No. 0000898432-99-000158.
(b) By-laws of Neuberger Berman Equity Trust. Incorporated by Reference to
Post-Effective Amendment No. 8 to Registrant's Registration Statement, File
Nos. 33-64368 and 811-7784, EDGAR Accession No. 0000898432-95-000427.
(c) (1) Trust Instrument of Neuberger Berman Equity Trust, Articles IV, V,
and VI. Incorporated by Reference to Post-Effective Amendment No. 8
to Registrant's Registration Statement, File Nos. 33-64368 and
811-7784, EDGAR Accession No. 0000898432-95-000427.
(2) By-laws of Neuberger Berman Equity Trust, Articles V, VI, and VIII.
Incorporated by Reference to Post-Effective Amendment No. 8 to
Registrant's Registration Statement, File Nos. 33-64368 and 811-7784,
EDGAR Accession No. 0000898432-95-000427.
(d) (1) (i) Management Agreement Between Equity Managers Trust and
Neuberger Berman Management Inc.. 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. 0000898432-95-000314.
<PAGE>
Number Description
------- -----------
(ii) Schedule A - Series of Equity Managers Trust Currently
Subject to the Management Agreement. Incorporated by
Reference to Post-Effective Amendment No. 20 to Registrant's
Registration Statement, File Nos. 33-64368 and 811-07784,
EDGAR Accession No. 0000898432-99-000546.
(iii) Schedule B - Schedule of Compensation Under the
Management Agreement. Incorporated by Reference
to Post-Effective Amendment No. 20 to
Registrant's Registration Statement, File Nos.
33-64368 and 811-07784, EDGAR Accession No.
0000898432-99-000546.
(2) (i) Sub-Advisory Agreement Between Neuberger Berman Management
Inc. and Neuberger Berman, LLC with Respect to Equity
Managers Trust. Incorporated by Reference to Post-Effective
Amendment No. 70 to Registration Statement of Neuberger
Berman Equity Funds, File Nos. 2-11357 and 811-582, EDGAR
Accession No. 0000898432-95-000314.
(ii) Schedule A - Series of Equity Managers Trust Currently
Subject to the Sub-Advisory Agreement. Incorporated by
Reference to Post-Effective Amendment No. 20 to Registrant's
Registration Statement, File Nos. 33-64368 and 811-07784,
EDGAR Accession No. 0000898432-99-000546.
(iii) Substitution Agreement Among Neuberger Berman
Management Inc., Equity Managers Trust, Neuberger
Berman, L.P., and Neuberger Berman, LLC.
Incorporated by Reference to Post-Effective
Amendment No. 7 to Registration Statement of
Equity Managers Trust, File No. 811-7910, EDGAR
Accession No. 0000898432-96-000557.
(3) (i) Management Agreement Between Global Managers Trust and
Neuberger Berman Management Inc.. 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.
-2-
<PAGE>
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.
(4) (i) Sub-Advisory Agreement Between Neuberger Berman Management
Inc. and Neuberger Berman, LLC with Respect to Global
Managers Trust. Incorporated by Reference to Post-Effective
Amendment No. 74 to 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.
0000898432-95-000426.
(iii) Substitution Agreement among Neuberger Berman Management
Inc., Global Managers Trust, Neuberger Berman, L.P. and
Neuberger Berman, LLC. Incorporated by Reference to the
substantially similar agreement filed in Post-Effective
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).
(e) (1) Distribution Agreement Between Neuberger Berman Equity Trust and Neuberger Berman
Management Inc.. 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.
(2) Schedule A - Series of Neuberger Berman Equity Trust Currently Subject to the
Distribution Agreement. Incorporated by Reference to Post-Effective Amendment
No. 19 to Registrant's Registration Statement, File Nos. 33-64368 and
811-7784, EDGAR Accession No. 0000898432-99-000158.
(f) Bonus, Profit Sharing or Pension Plans. None.
-3-
<PAGE>
Number Description
------- -----------
(g) (1) Custodian Contract Between Neuberger Berman Equity Trust and State
Street Bank and Trust Company. Incorporated by Reference to
Post-Effective Amendment No. 8 to Registrant's Registration
Statement, File Nos. 33-64368 and 811-7784, EDGAR Accession
No. 0000898432-95-000427.
(2) Schedule of Compensation under the Custodian Contract. Incorporated
by Reference to Post-Effective Amendment No. 10 to Registrant's
Registration Statement, File Nos. 33-64368 and 811-7784, EDGAR
Accession No. 0000898432-96-000532.
(h) (1) (i) 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. 8 to Registrant's
Registration Statement, File Nos. 33-64368 and 811-7784, EDGAR
Accession No. 0000898432-95-000427.
(ii) 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 Amendment No. 8
to Registrant's Registration Statement, File Nos. 33-64368 and
811-7784, EDGAR Accession No. 0000898432-95-000427.
(iii) Schedule of Compensation under the Transfer Agency and Service
Agreement. Incorporated by Reference to Post-Effective
Amendment No. 10 to Registrant's Registration Statement, File Nos.
33-64368 and 811-7784, EDGAR Accession No. 0000898432-96-000532.
(iv) 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.
(2) (i) Administration Agreement Between Neuberger Berman Equity Trust and
Neuberger Berman Management Inc.. 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. 19 to Registrant's Registration
Statement, File Nos. 33-64368 and 811-7784, EDGAR Accession No.
0000898432-99-000158.
-4-
<PAGE>
Number Description
------- -----------
(iii) Schedule B - Schedule of Compensation Under the
Administration Agreement. Incorporated by Reference to
Post-Effective Amendment No. 8 to Registrant's Registration
Statement, File Nos. 33-64368 and 811-7784, EDGAR Accession No.
0000898432-95-000427.
(i) Opinion and Consent of Kirkpatrick & Lockhart LLP on Securities Matters
with Respect to Neuberger Berman Large-Cap Growth Trust. To be filed by
amendment.
(j) Consent of Independent Auditors. None.
(k) Financial Statements Omitted from Prospectus. None.
(l) Letter of Investment Intent. None.
(m) Plan Pursuant to Rule 12b-1. To be filed by amendment.
(n) Plan Pursuant to Rule 18f-3. None.
</TABLE>
-5-
<PAGE>
Item 24. Persons Controlled by or under Common Control with Registrant
- ------- -------------------------------------------------------------
No person is controlled by or under common control with the
Registrant. (Registrant is organized in a master/feeder structure and
technically may be considered to control the master fund in which it invests,
Equity Managers Trust.)
Item 25. Indemnification.
- ------- ---------------
A Delaware business trust may provide in its governing instrument for
indemnification of its officers and trustees from and against any and all claims
and demands whatsoever. Article IX, Section 2 of the Trust Instrument provides
that the Registrant shall indemnify any present or former trustee, officer,
employee or agent of the Registrant ("Covered Person") to the fullest 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 ("NB Management") and Equity Managers Trust and Global
Managers Trust (Equity Managers Trust and Global Managers Trust are collectively
referred to as the "Managers Trusts") provide that neither NB Management nor any
director, officer or employee of NB Management performing services for the
series of the Managers Trusts at the direction or request of NB Management in
connection with NB Management's discharge of its obligations under the
Agreements shall be liable for any error of judgment or mistake of law or for
any loss suffered by a series in connection with any matter to which the
Agreements relate; provided, that nothing in the Agreements shall be construed
(i) to protect NB Management against any liability to the Managers Trusts or any
series thereof or their interest holders to which NB Management would otherwise
be subject by reason of willful misfeasance, bad faith, or gross negligence in
the performance of its duties, or by reason of NB Management's reckless
disregard of its obligations and duties under the Agreements, or (ii) to protect
any director, officer or employee of NB Management who is or was a trustee or
officer of the Managers Trusts against any liability to the Managers Trusts or
any series thereof or their interest holders to which such person would
otherwise be subject by reason of willful misfeasance, bad faith, gross
-6-
<PAGE>
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 NB Management and
Neuberger Berman, LLC ("Neuberger Berman") with respect to the Managers Trusts
provides that, in the absence of willful misfeasance, bad faith or gross
negligence in the performance of its duties, or of reckless disregard of its
duties and obligations under the 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 NB
Management provides that NB Management shall look only to the assets of a Series
for the Registrant's performance of the Agreement by the Registrant on behalf of
such Series, and neither the Trustees nor any of the Registrant's officers,
employees or agents, whether past, present or future, shall be personally liable
therefor.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 ("1933 Act") may be permitted to trustees, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the 1933 Act and will be governed by the final adjudication of such
issue.
Item 26. Business and Other Connections of Adviser and Sub-Adviser.
- ------- ---------------------------------------------------------
There is set forth below information as to any other business,
profession, vocation or employment of a substantial nature in which each
director or officer of NB Management and each principal of Neuberger Berman is,
or at any time during the past two years has been, engaged for his or her own
account or in the capacity of director, officer, employee, partner or trustee.
<TABLE>
<CAPTION>
NAME BUSINESS AND OTHER CONNECTIONS
- ---- ------------------------------
<S> <C>
Brooke A. Cobb
Vice President, NB Chief Investment Officer, Bainco International Investors.(1)
Management Senior Vice President and Senior Portfolio Manager, Putnam
Investments.
Robert W. D'Alelio Senior Portfolio Manager, Putnam Investments.(2)
Vice President, NB Management;
Principal, Neuberger Berman
- --------------------------------
(1) Until 1997.
-7-
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
- ---- ------------------------------
Barbara DiGiorgio, Assistant Treasurer, Neuberger Berman Advisers Management Trust;
Assistant Vice President, Assistant Treasurer, Advisers Managers Trust; Assistant
NB 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; Assistant Treasurer, Neuberger Berman Equity
Series.
Stanley Egener Chairman of the Board and Trustee, Neuberger Berman Advisers
President and Director, Management Trust; Chairman of the Board and Trustee, Advisers
NB Management; Principal, Neuberger Berman Managers Trust; Chairman of the Board and Trustee, Neuberger
Berman Income Funds; Chairman of the Board and Trustee,
Neuberger Berman Income Trust; Chairman of the Board and
Trustee, Neuberger Berman Equity Funds; Chairman of the Board
and Trustee, Neuberger Berman Equity Trust; Chairman of the
Board and Trustee, Income Managers Trust; Chairman of the Board
and Trustee, Equity Managers Trust; Chairman of the Board and
Trustee, Global Managers Trust; Chairman of the Board and
Trustee, Neuberger Berman Equity Assets; Chairman of the Board
and Trustee, Neuberger Berman Equity Series.
Theodore P. Giuliano President and Trustee, Neuberger Berman Income Funds; President
Vice President and and Trustee, Neuberger Berman Income Trust; President and
Director, NB Management; Trustee, Income Managers Trust.
Principal, Neuberger Berman
Michael F. Malouf Portfolio Manager, Dresdner RCM Global Investors.(3)
Vice President, NB Management
S. Basu Mullick Portfolio Manager, Ark Asset Management.(4)
Vice President, NB Management
C. Carl Randolph Assistant Secretary, Neuberger Berman Advisers Management Trust;
Principal, Neuberger Berman 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; Assistant Secretary, Neuberger Berman Equity
Series.
- -------------------------
(2) Until 1997.
(3) Until 1998.
(4) Until 1998.
-8-
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
- ---- ------------------------------
Richard Russell Treasurer, Neuberger Berman Advisers Management Trust; Treasurer,
Vice President, Advisers Managers Trust; Treasurer, Neuberger Berman Income
NB Management Funds; Treasurer, Neuberger Berman Income Trust; Treasurer,
Neuberger Berman Equity Funds; Treasurer, Neuberger Berman
Equity Trust; Treasurer, Income Managers Trust; Treasurer,
Equity Managers Trust; Treasurer, Global Managers Trust;
Treasurer, Neuberger Berman Equity Assets; Treasurer, Neuberger
Berman Equity Series.
Ingrid Saukaitis Project Director, Council on Economic Priorities.(5)
Assistant Vice President,
NB Management
Jennifer K. Silver Portfolio Manager and Director, Putnam Investments.(6)
Vice President, NB
Management; Principal,
Neuberger Berman
Daniel J. Sullivan Vice President, Neuberger Berman Advisers Management Trust; Vice
Senior Vice President, NB Management 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 President, Equity Managers Trust; Vice
President, Global Managers Trust; Vice President, Neuberger
Berman Equity Assets; Vice President, Neuberger Berman Equity
Series.
Michael J. Weiner Vice President, Neuberger Berman Advisers Management Trust; Vice
Senior Vice President, President, Advisers Managers Trust; Vice President, Neuberger
NB Management; Berman Income Funds; Vice President, Neuberger Berman Income
Principal, Neuberger Berman Trust; Vice President, Neuberger Berman Equity Funds; Vice
President, Neuberger Berman Equity Trust; Vice President, Income
Managers Trust; Vice President, Equity Managers Trust; Vice
President, Global Managers Trust; Vice President, Neuberger
Berman Equity Assets; Vice President, Neuberger Berman Equity
Series.
Allan R. White III Portfolio Manager, Salomon Asset Management.(7)
Vice President, NB Management;
Principal, Neuberger Berman
- --------------------------------
(5) Until 1997.
(6) Until 1997.
(7) Until 1998.
-9-
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
- ---- ------------------------------
Celeste Wischerth, Assistant Treasurer, Neuberger Berman Advisers Management Trust;
Assistant Vice President, Assistant Treasurer, Advisers Managers Trust; Assistant
NB 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; Assistant Treasurer, Neuberger Berman Equity
Series.
Lawrence Zicklin President and Trustee, Neuberger Berman Advisers Management
Director, NB 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,
Neuberger Berman Equity Assets, President and Trustee, Neuberger
Berman Equity Funds; President and Trustee, Global Managers
Trust; President and Trustee, Equity Managers Trust; President
and Trustee, Neuberger Berman Equity Series.
</TABLE>
The principal address of NB Management, Neuberger Berman, and of each
of the investment companies named above, is 605 Third Avenue, New York, New York
10158.
Item 27. Principal Underwriters.
- ------- ----------------------
(a) NB Management, the principal underwriter distributing
securities of the Registrant, is also the principal underwriter and distributor
for each of the following investment companies:
Neuberger Berman Advisers Management Trust
Neuberger Berman Equity Funds
Neuberger Berman Equity Assets
Neuberger Berman Equity Series
Neuberger Berman Income Funds
Neuberger Berman Income Trust
NB Management is also the investment manager to the master funds
in which the above-named investment companies invest.
(b) Set forth below is information concerning the directors and
officers of the Registrant's principal underwriter. The principal business
address of each of the persons listed is 605 Third Avenue, New York, New York
10158-0180, which is also the address of the Registrant's principal underwriter.
-10-
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND OFFICES WITH
NAME WITH UNDERWRITER REGISTRANT
- ---- ---------------- ----------
<S> <C> <C>
Ramesh Babu Assistant Vice President None
Patrick T. Byrne Vice President None
Richard A. Cantor Chairman of the Board None
Valerie Chang Vice President None
Brooke A. Cobb Vice President None
Robert Conti Treasurer None
Robert W. D'Alelio Vice President None
Clara Del Villar Vice President None
Barbara DiGiorgio Assistant Vice President Assistant Treasurer
Stanley Egener President and Director Chairman of the Board, Chief
Executive Officer, and Trustee
Brian 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 M. Kassen Vice President and Director None
Robert L. Ladd Vice President None
Irwin Lainoff Director None
Josephine Mahaney Vice President None
Michael F. Malouf Vice President None
Carmen G. Martinez Assistant Vice President None
Ellen Metzger Secretary None
Paul Metzger Vice President None
S. Basu Mullick Vice President None
Janet W. Prindle Vice President None
Joseph S. Quirk Assistant Vice President None
Kevin L. Risen Vice President None
Richard Russell Vice President Treasurer and Principal
Accounting Officer
Ingrid Saukaitis Assistant Vice President None
Benjamin Segal Assistant Vice President None
-11-
<PAGE>
POSITIONS AND OFFICES POSITIONS AND OFFICES WITH
NAME WITH UNDERWRITER REGISTRANT
- ---- ---------------- ----------
<S> <C> <C>
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 Senior Vice President None
Judith M. Vale Vice President None
Josephine Velez Assistant Vice President None
Susan Walsh Vice President None
Catherine Waterworth Vice President None
Michael J. Weiner Senior Vice President Vice President and Principal
Financial Officer
Allan R. White III Vice President None
Celeste Wischerth Assistant Vice President Assistant Treasurer
Lawrence Zicklin Director Trustee and President
</TABLE>
(c) No commissions or other compensation were received directly or
indirectly from the Registrant by any principal underwriter who was not an
affiliated person of the Registrant.
Item 28. Location of Accounts and Records.
- ------- --------------------------------
All accounts, books and other documents required to be
maintained by Section 31(a) of the 1940 Act, as amended, and the rules
promulgated thereunder with respect to the Registrant are maintained at the
offices of State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, except for the Registrant's Trust Instrument and By-laws,
minutes of meetings of the Registrant's Trustees and shareholders and the
Registrant's policies and contracts, which are maintained at the offices of the
Registrant, 605 Third Avenue, New York, New York 10158.
All accounts, books and other documents required to be
maintained by Section 31(a) of the 1940 Act, as amended, and the rules
promulgated thereunder with respect to Equity Managers Trust are maintained at
the offices of State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, except for 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.
-12-
<PAGE>
All accounts, books and other documents required to be
maintained by Section 31(a) of the 1940 Act, as amended, and the rules
promulgated thereunder with respect to Global Managers Trust are maintained at
the offices of State Street Cayman Trust Company, Ltd., Elizabethan Square, P.O.
Box 1984, George Town, Grand Cayman, Cayman Islands, BWI.
Item 29. Management Services
- ------- -------------------
Other than as set forth in Parts A and B of this Registration
Statement, the Registrant is not a party to any management-related service
contract.
Item 30. Undertakings
- ------- ------------
None.
-13-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, EQUITY MANAGERS TRUST has duly caused this
Post-Effective Amendment No. 21 to the Registration Statement to be signed on
its behalf by the undersigned, thereto duly authorized, in the City and State of
New York on the 2nd day of September, 1999.
EQUITY MANAGERS TRUST
By: /s/ Lawrence Zicklin
--------------------
Lawrence Zicklin
President
Pursuant to the requirements of the Securities Act of 1933, the
Post-Effective Amendment No. 21 has been signed below by the following persons
in the capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/ Faith Colish Trustee September 2, 1999
- --------------------
Faith Colish
/s/ Stanley Egener Chairman of the Board September 2, 1999
- -------------------- and Trustee (Chief
Stanley Egener Executive Officer
/s/ Howard A. Mileaf Trustee September 2, 1999
- --------------------
Howard A. Mileaf
/s/ Edward I O'Brien Trustee September 2, 1999
- --------------------
Edward I. O'Brien
<PAGE>
(signatures continued on next page)
Signature Title Date
- --------- ----- ----
/s/ John T. Patterson, Jr. Trustee September 2, 1999
- -------------------------
John T. Patterson, Jr.
/s/ John P. Rosenthal Trustee September 2, 1999
- -------------------------
John P. Rosenthal
________________________ Trustee _________________
Cornelius T. Ryan
/s/ Gustave H. Shubert Trustee September 2, 1999
- -------------------------
Gustave H. Shubert
/s/ Lawrence Zicklin President and Trustee September 2, 1999
- -------------------------
Lawrence Zicklin
/s/ Michael J. Weiner Vice President September 2, 1999
- ------------------------- (Principal Financial
Michael J. Weiner Officer)
/s/ Richard Russell
- -------------------------
Richard Russell Treasurer(Principal September 2, 1999
(Accounting Officer)
<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. 21 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 2nd day of September, 1999.
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. 21 has been signed below by the following persons
in the capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/ Faith Colish Trustee September 2, 1999
- --------------------
Faith Colish
/s/ Stanley Egener Chairman of the Board September 2, 1999
- -------------------- and Trustee (Chief
Stanley Egener Executive Officer)
/s/ Howard A. Mileaf Trustee September 2, 1999
- --------------------
Howard A. Mileaf
/s/ Edward I. O'Brien Trustee September 2, 1999
- ---------------------
Edward I. O'Brien
(signatures continued on next page)
<PAGE>
Signature Title Date
- --------- ----- ----
/s/ John T. Patterson Trustee September 2, 1999
- ---------------------
John T. Patterson, Jr.
/s/ John P. Rosenthal Trustee September 2, 1999
- ---------------------
John P. Rosenthal
_______________________ Trustee ________________
Cornelius T. Ryan
/s/Gustave H. Shubert Trustee September 2, 1999
- ---------------------
Gustave H. Shubert
/s/ Lawrence Zicklin President and Trustee September 2, 1999
- ---------------------
Lawrence Zicklin
/s/Michael J. Weiner Vice President September 2, 1999
- --------------------- (Principal
Michael J. Weiner Financial Officer)
/s/ Richard Russell Treasurer (Principal September 2, 1999
- --------------------- Accounting Officer)
Richard Russell
<PAGE>
NEUBERGER BERMAN EQUITY TRUST
POST-EFFECTIVE AMENDMENT NO. 21 ON FORM N-1A
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C> <C> <C>
(a) (1) Certificate of Trust. Incorporated by Reference to
Post-Effective Amendment No. 8 to Registrant's Registration
Statement, File Nos. 33-64368 and 811-7784,
EDGAR Accession No. 0000898432-95-000427.
(2) Restated Certificate of Trust. Incorporated by Reference to
Post-Effective Amendment No. 18 to Registrant's
Registration Statement, File Nos. 33-64368 and
811-7784, EDGAR Accession No.
0000898432-98-000838.
(3) Trust Instrument of Neuberger Berman Equity
Trust. Incorporated by Reference to
Post-Effective Amendment No. 8 to Registrant's
Registration Statement, File Nos. 33-64368 and
811-7784, EDGAR Accession No. 0000898432-95-000427.
(4) Schedule A - Current Series of Neuberger Berman
Equity Trust. Incorporated by Reference to
Post-Effective Amendment No. 19 to Registrant's
Registration Statement, File Nos. 33-64368 and
811-7784, EDGAR Accession No.
0000898432-99-000158.
(b) By-laws of Neuberger Berman Equity Trust. Incorporated by Reference
to Post-Effective Amendment No. 8 to Registrant's Registration
Statement, File Nos. 33-64368 and 811-7784, EDGAR Accession
No. 0000898432-95-000427.
(c) (1) Trust Instrument of Neuberger Berman Equity Trust, Articles
IV, V, and VI. Incorporated by Reference to Post-Effective
Amendment No. 8 to Registrant's Registration Statement, File
Nos. 33-64368 and 811-7784, EDGAR Accession No.
0000898432-95-000427.
(2) By-laws of Neuberger Berman Equity Trust, Articles V, VI, and
VIII. Incorporated by Reference to Post-Effective Amendment
No. 8 to Registrant's Registration Statement, File Nos.
33-64368 and 811-7784, EDGAR Accession No.
0000898432-95-000427.
-14-
<PAGE>
Exhibit
Number Description
------- -----------
<S> <C> <C> <C>
(d) (1) (i) Management Agreement Between Equity Managers Trust
and Neuberger Berman Management Inc.. 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. 0000898432-95-000314.
(ii) Schedule A - Series of Equity Managers Trust
Currently Subject to the Management Agreement.
Incorporated by Reference to Post-Effective
Amendment No. 20 to Registrant's Registration
Statement, File Nos. 33-64368 and 811-07784, EDGAR
Accession No. 0000898432-99-000546.
(iii) Schedule B - Schedule of Compensation Under the
Management Agreement. Incorporated by Reference to
Post-Effective Amendment No. 20 to Registrant's
Registration Statement, File Nos. 33-64368 and
811-07784, EDGAR Accession No. 0000898432-99-000546.
(2) (i) Sub-Advisory Agreement Between Neuberger Berman
Management Inc. and Neuberger Berman, LLC with
Respect to Equity Managers Trust. Incorporated by
Reference to Post-Effective Amendment No. 70 to
Registration Statement of Neuberger Berman Equity
Funds, File Nos. 2-11357 and 811-582, EDGAR
Accession No. 0000898432-95-000314.
(ii) Schedule A - Series of Equity Managers Trust
Currently Subject to the Sub-Advisory Agreement.
Incorporated by Reference to Post-Effective
Amendment No. 20 to Registrant's Registration
Statement, File Nos. 33-64368 and 811-07784, EDGAR
Accession No. 0000898432-99-000546.
-15-
<PAGE>
Exhibit
Number Description
------- -----------
<S> <C> <C> <C>
(iii) Substitution Agreement Among Neuberger
Berman Management Inc., 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.
(3) (i) Management Agreement Between Global Managers Trust
and Neuberger Berman Management Inc.. 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.
(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.
(4) (i) Sub-Advisory Agreement Between Neuberger Berman
Management Inc. and Neuberger Berman, LLC with
Respect to Global Managers Trust. Incorporated by
Reference to Post-Effective Amendment No. 74 to
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. 0000898432-95-000426.
-16-
<PAGE>
Exhibit
Number Description
------- -----------
<S> <C> <C> <C>
(iii) Substitution Agreement among Neuberger Berman
Management Inc., Global Managers Trust, Neuberger
Berman, L.P. and Neuberger Berman, LLC.
Incorporated by Reference to the substantially
similar agreement filed in Post-Effective 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).
(e) (1) Distribution Agreement Between Neuberger Berman Equity Trust and
Neuberger Berman Management Inc.. 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.
(2) Schedule A - Series of Neuberger Berman Equity Trust Currently Subject
to the Distribution Agreement. Incorporated by Reference to
Post-Effective Amendment No. 19 to Registrant's Registration
Statement, File Nos. 33-64368 and 811-7784, EDGAR Accession No.
0000898432-99-000158.
(f) Bonus, Profit Sharing or Pension Plans. None.
(g) (1) Custodian Contract Between Neuberger Berman Equity Trust and
State Street Bank and Trust Company. Incorporated by
Reference to Post-Effective Amendment No. 8 to Registrant's
Registration Statement, File Nos. 33-64368 and 811-7784,
EDGAR Accession No. 0000898432-95-000427.
(2) Schedule of Compensation under the Custodian Contract.
Incorporated by Reference to Post-Effective Amendment No. 10
to Registrant's Registration Statement, File Nos. 33-64368
and 811-7784, EDGAR Accession No. 0000898432-96-000532.
-17-
<PAGE>
Exhibit
Number Description
------- -----------
<S> <C> <C> <C>
(h) (1) (i) 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. 8
to Registrant's Registration Statement, File Nos. 33-64368
and 811-7784, EDGAR Accession No. 0000898432-95-000427.
(ii) 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 Amendment No. 8 to Registrant's Registration
Statement, File Nos. 33-64368 and 811-7784,
EDGAR Accession No. 0000898432-95-000427.
(iii) Schedule of Compensation under the Transfer Agency and
Service Agreement. Incorporated by Reference to
Post-Effective Amendment No. 10 to Registrant's Registration
Statement, File Nos. 33-64368 and 811-7784, EDGAR Accession
No. 0000898432-96-000532.
(iv) 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.
(2) (i) Administration Agreement Between Neuberger Berman Equity
Trust and Neuberger Berman Management Inc.. 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. 19
to Registrant's Registration Statement, File Nos. 33-64368
and 811-7784, EDGAR Accession No. 0000898432-99-000158.
(iii) Schedule B - Schedule of Compensation Under the Administration
Agreement. Incorporated by Reference to Post-Effective
Amendment No. 8 to Registrant's Registration Statement, File
Nos. 33-64368 and 811-7784, EDGAR Accession
No. 0000898432-95-000427.
-18-
<PAGE>
Exhibit
Number Description
------- -----------
<S> <C> <C> <C>
(i) Opinion and Consent of Kirkpatrick & Lockhart LLP on Securities
Matters with Respect to Neuberger Berman Large-Cap Growth Trust,
To be filed by amendment.
(j) Consent of Independent Auditors. None.
(k) Financial Statements Omitted from Prospectus. None.
(l) Letter of Investment Intent. None.
(m) Plan Pursuant to Rule 12b-1. To be filed by amendment.
(n) Plan Pursuant to Rule 18f-3. None.
-19-
</TABLE>
