<PAGE>
As filed with the Securities and Exchange Commission on December 28, 1995
1933 Act Registration No. 33-82568
1940 Act Registration No. 811-8106
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. __2__ [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. __4__ [ X ]
(Check appropriate box or boxes)
NEUBERGER & BERMAN EQUITY ASSETS
(Exact Name of the Registrant as Specified in Charter)
605 Third Avenue
New York, New York 10158-0180
(Address of Principal Executive Offices)
Registrant's Telephone Number, including area code: (212) 476-8800
Lawrence Zicklin, President
Neuberger & Berman Equity Assets
605 Third Avenue, 2nd Floor
New York, New York 10158-0180
Arthur C. Delibert, Esq.
Kirkpatrick & Lockhart LLP
South Lobby - 9th Floor
1800 M Street, N.W.
Washington, D.C. 20036-5891
(Names and Addresses of agents for service)
Approximate Date of Proposed Public Offering: As soon as
practicable after the effective date of this registration statement.
It is proposed that this filing will become effective:
__X__ immediately upon filing pursuant to paragraph (b)
_____ on __________ pursuant to paragraph (b)
_____ 60 days after filing pursuant to paragraph (a)(1)
_____ on __________ pursuant to paragraph (a)(1)
_____ 75 days after filing pursuant to paragraph (a)(2)
_____ on __________ pursuant to paragraph (a)(2)
Registrant has filed a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940.
Neuberger & Berman Equity Assets is a "master/feeder fund." This
Post-Effective Amendment No. 2 includes a signature page for the master
fund, Equity Managers Trust, and appropriate officers and trustees
thereof.
Page _______ of _______
Exhibit Index Begins on
Page _______
<PAGE>
NEUBERGER & BERMAN EQUITY ASSETS
CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 2 ON FORM N-1A
This Post-Effective Amendment consists of the following papers and
documents:
Cover Sheet
Contents of Post-Effective Amendment No. 2 on Form N-1A
Cross Reference Sheet
Neuberger & Berman Socially Responsive Trust
--------------------------------------------
Part A - Prospectus
Part B - Statement of Additional Information
Part C - Other Information
Signature Pages
Exhibits
No change is intended to be made by this Post-Effective Amendment
No. 2 to the prospectus or statement of additional information for
Neuberger & Berman Manhattan Assets, Neuberger & Berman Focus Assets,
Neuberger & Berman Guardian Assets, and Neuberger & Berman Partners
Assets.
<PAGE>
NEUBERGER & BERMAN EQUITY ASSETS
POST-EFFECTIVE AMENDMENT NO. 2 ON FORM N-1A
Cross Reference Sheet
This cross reference sheet relates to the Prospectus
and Statement of Additional Information for:
NEUBERGER & BERMAN SOCIALLY RESPONSIVE TRUST
<TABLE>
<CAPTION>
Form N-1A Item No. Caption in Part A Prospectus
------------------ ----------------------------
<S> <C> <C>
Item 1. Cover Page Front Cover Page
Item 2. Synopsis Expense Information; Summary
Item 3. Condensed Financial Performance Information
Information
Item 4. General Description of Investment Program; Description of
Registrant Investments; Special Information
Regarding Organization, Capitalization,
and Other Matters
Item 5. Management of the Fund Management and Administration; Other
Information; Back Cover Page
Item 6. Capital Stock and Other Front Cover Page; Dividends, Other
Securities Distributions, and Taxes; Special
Information Regarding Organization,
Capitalization, and Other Matters
Item 7. Purchase of Securities Shareholder Services; Share Information;
Being Offered Management and Administration
Item 8. Redemption or Repurchase Shareholder Services; Share Information
Item 9. Pending Legal Not Applicable
Proceedings
<PAGE>
Caption in Part B
Form N-1A Item No. Statement of Additional Information
------------------ ------------------------------------
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and Not Applicable
History
Item 13. Investment Objectives Investment Information; Certain Risk
and Policies Considerations
Item 14. Management of the Fund Trustees and Officers
Item 15. Control Persons and Not Applicable
Principal Holders of
Securities
Item 16. Investment Advisory and Investment Management and Administration
Other Services Services; Trustees and Officers;
Distribution Arrangements; Reports To
Shareholders; Custodian and Transfer
Agent; Independent Accountants
Item 17. Brokerage Allocation Portfolio Transactions
Item 18. Capital Stock and Other Investment Information; Additional
Securities Redemption Information; Dividends and
Other Distributions
Item 19. Purchase and Redemption Additional Exchange Information;
Additional Redemption Information;
Distribution Arrangements
Item 20. Tax Status Dividends and Other Distributions;
Additional Tax Information
Item 21. Underwriters Investment Management and Administration
Services; Distribution Arrangements
Item 22. Calculation of Performance Information
Performance Data
Item 23. Financial Statements Financial Statements
</TABLE>
<PAGE>
Part C
------
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Post-Effective Amendment
No. 2.
<PAGE>
Neuberger&Berman
EQUITY ASSETS
Neuberger & Berman SOCIALLY RESPONSIVE TRUST[Servicemark]
_________________________________________________________________
A No-Load Equity Fund
NEUBERGER&BERMAN SOCIALLY RESPONSIVE TRUST[SERVICEMARK] ("Fund") is an
equity fund that seeks long-term capital appreciation through investments
primarily in securities of companies that meet both financial and social
criteria.
The Fund was created for investors who are concerned about the
relationship between business and society and are seeking to invest their
assets in a manner consistent with their social sensibilities.
You can buy, own, and sell fund shares only through an account with
a broker-dealer, pension plan administrator, or other institution (each an
"Institution") which provides accounting, recordkeeping, and other
services to investors and which has an administrative services agreement
with Neuberger&Berman Management Incorporated ("N&B Management").
______________________________________________________________
The Fund invests all of its net investable assets in the
Neuberger&Berman Socially Responsive Portfolio ("Portfolio") of Equity
Managers Trust ("Managers Trust"), an open-end management investment
company managed by N&B Management. The Portfolio invests in securities in
accordance with an investment objective, policies, and limitations
identical to those of the Fund. The investment performance of the Fund
directly corresponds with the investment performance of the Portfolio.
This "master/feeder fund" structure is different from that of many other
investment companies which directly acquire and manage their own
portfolios of securities. For more information on this unique structure
that you should consider, see "Special Information Regarding Organization,
Capitalization, and Other Matters" on page 7.
The Portfolio seeks to achieve its objective by investing in
securities considered by N&B Management to be undervalued in relation to
recognized measures of fundamental economic values, such as earnings, cash
flow, tangible book value, and asset value. For a description of the
investment policies and techniques of the Portfolio, see "Investment
Program" and "Description of Investments."
The Fund is a no-load mutual fund, so you pay no sales commissions
or other charges when you buy or redeem shares. The Fund does not pay
"12b-1 fees" to promote or distribute its shares.
Please read this Prospectus before investing in the Fund and keep it
for future reference. It contains information about the Fund that a
prospective investor should know before investing. A Statement of
<PAGE>
Additional Information ("SAI") about the Fund and Portfolio, dated
December 28, 1995, is on file with the Securities and Exchange Commission.
The SAI is incorporated herein by reference (so it is legally considered a
part of this Prospectus). You can obtain a free copy by calling N&B
Management at 800-877-9700.
Prospectus Dated December 28, 1995
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY BANK OR OTHER DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY
THE FDIC, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT
TO INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT
INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- ii -
<PAGE>
TABLE OF CONTENTS
Page
----
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Fund and Portfolio; Risk Factors . . . . . . . . . . . . 1
The Neuberger&Berman Investment Approach . . . . . . . . . . . 2
EXPENSE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Shareholder Transaction Expenses . . . . . . . . . . . . . . 2
Annual Fund Operating Expenses . . . . . . . . . . . . . . . . 3
INVESTMENT PROGRAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Social Policy . . . . . . . . . . . . . . . . . . . . . . . . 5
Short-Term Trading; Portfolio Turnover . . . . . . . . . . . 6
Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . 6
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 7
Total Return Information . . . . . . . . . . . . . . . . . . 7
SPECIAL INFORMATION REGARDING ORGANIZATION, CAPITALIZATION, AND OTHER
MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The Portfolio . . . . . . . . . . . . . . . . . . . . . . . . 8
SHAREHOLDER SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
How to Buy Shares . . . . . . . . . . . . . . . . . . . . . . 9
How to Sell Shares . . . . . . . . . . . . . . . . . . . . . . 10
Exchanging Shares . . . . . . . . . . . . . . . . . . . . . . 11
SHARE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Share Prices and Net Asset Value . . . . . . . . . . . . . . 11
DIVIDENDS, OTHER DISTRIBUTIONS,
AND TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Distribution Options . . . . . . . . . . . . . . . . . . . . 11
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
MANAGEMENT AND ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . 13
Trustees and Officers . . . . . . . . . . . . . . . . . . . . 13
Investment Manager, Administrator, Distributor,
and Sub-Adviser . . . . . . . . . . . . . . . . . . . . 13
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . 14
DESCRIPTION OF INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . 15
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<PAGE>
OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Investment Manager, Administrator, and Distributor . . . . . . 18
Sub-Adviser . . . . . . . . . . . . . . . . . . . . . . . . . 18
Custodian and Transfer Agent . . . . . . . . . . . . . . . . . 18
Legal Counsel . . . . . . . . . . . . . . . . . . . . . . . . 18
Funds Eligible for Exchange . . . . . . . . . . . . . . . . . 18
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<PAGE>
SUMMARY
The Fund and Portfolio; Risk Factors
The Fund is a series of Neuberger&Berman Equity Assets (the "Trust")
and invests in the Portfolio which, in turn, invests in securities in
accordance with an investment objective, policies and limitations
identical to those of the Fund. This is sometimes called a master/feeder
fund structure, because the Fund "feeds" shareholders' investments into
the Portfolio, a "master" fund. The structure looks like this:
Shareholders
BUY SHARES IN
Fund
INVESTS IN
Portfolio
INVESTS IN
Stocks and Other Securities
The trustees who oversee the Fund believe that this structure may
benefit shareholders; investment in the Portfolio by investors in addition
to the Fund may enable the Portfolio to realize economies of scale that
could reduce expenses. The Portfolio seeks long-term capital appreciation
by investing primarily in securities considered by N&B Management to be
undervalued relative to the market as a whole and whose issuers meet
certain social criteria established by N&B Management ("Social Policy").
N&B management evaluates companies to determine if they meet the Social
Policy by analyzing their policies, practices, products, and services in
the following major areas of concern: the environment and workplace
diversity and employment. Companies are also evaluated to determine if
they meet other aspects of the Social Policy, such as public health, type
of products, and corporate citizenship. The Portfolio does not invest in
companies which derive a significant portion of their total annual revenue
from the following industries: nuclear power, tobacco, alcohol, gambling,
or weapons. The Portfolio will seek to dispose of a security as soon as
reasonably practicable when the issuer no longer meets the Social Policy,
even though a sale at that time might not be desirable from a purely
financial standpoint.
For more information about the organization of the Fund and the
Portfolio, including certain features of the master/feeder fund structure,
see "Special Information Regarding Organization, Capitalization, and Other
Matters." An investment in the Fund involves certain risks, depending upon
the types of investments made by the Portfolio. For more details about the
Portfolio, its investments and their risks, see "Investment Program" on
page 4, "Social Policy" on page 5, and "Description of Investments" on
page 15.
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<PAGE>
INVESTMENT STYLE. Broadly diversified, large-cap value fund.
PORTFOLIO CHARACTERISTICS. Seeks long-term capital appreciation by
investing in common stocks of companies that meet both financial and
social criteria.
MANAGEMENT. N&B Management, with the assistance of Neuberger&Berman, L.P.
("Neuberger&Berman") as sub-adviser, selects investments for the
Portfolio. N&B Management also provides administrative services to the
Portfolio and the Fund and acts as distributor of Fund shares. See
"Management and Administration" on page 13. If you want to know how to buy
and sell shares of the Fund or exchange them for shares of other
Neuberger&Berman Funds[SERVICEMARK] made available through an Institution,
see "Shareholder Services - How to Buy Shares" on page 9, "Shareholder
Services - How to Sell Shares" on page 10, "Shareholder Services -
Exchanging Shares" on page 11, and the policies of the Institution through
which you are purchasing shares.
The Neuberger&Berman Investment Approach
In general, Neuberger&Berman Socially Responsive Portfolio adheres
to a value-oriented investment approach. A value-oriented portfolio
manager buys stocks that are selling for less than their perceived market
value. These include stocks that are currently under-researched or are
temporarily out of favor on Wall Street.
Portfolio managers identify value stocks in several ways. One of
the most common identifiers is a low price-to-earnings ratio - that is,
stocks selling at multiples of earnings per share that are lower than that
of the market as a whole. Other criteria are high dividend yield, a
strong balance sheet and financial position, a recent company
restructuring with the potential to realize hidden values, strong
management, and low price-to-book value (net value of the company's
assets).
Neuberger&Berman believes that, over time, securities that are
undervalued are more likely to appreciate in price and be subject to less
risk of price decline than securities whose market prices have already
reached their perceived economic value. This approach also contemplates
selling portfolio securities when they are considered to have reached
their potential.
- 2 -
<PAGE>
EXPENSE INFORMATION
This section gives you certain information about the expenses of the
Fund and the Portfolio. See "Performance Information" for important facts
about investment performance of the Fund, after taking expenses into
account.
Shareholder Transaction Expenses
As shown by this table, you pay no transaction charges when you buy
or sell Fund shares.
Sales Charge Imposed on Purchases NONE
Sales Charge Imposed on Reinvested Dividends NONE
Deferred Sales Charges NONE
Redemption Fees NONE
Exchange Fees NONE
Annual Fund Operating Expenses
(as a percentage of average net assets)
The following table shows anticipated Total Operating Expenses for
the Fund, which are paid out of the assets of the Fund and which include
the Fund's pro rata portion of the Operating Expenses of the Portfolio.
These expenses are borne indirectly by Fund shareholders. The Fund pays
N&B Management an administration fee, based on the Fund's average daily
net asset value. The Portfolio pays N&B Management a management fee, based
on the Portfolio's average daily net assets; a pro rata portion of this
fee is borne indirectly by the Fund. Therefore, the table combines
management and administration fees. The Fund and the Portfolio also incur
other expenses for things such as accounting and legal fees, maintaining
shareholder records, and furnishing shareholder statements and Fund
reports. "Operating Expenses" exclude interest, taxes, brokerage
commissions, and extraordinary expenses. The Fund's expenses are factored
into its share prices and dividends and are not charged directly to Fund
shareholders. For more information, see "Management and Administration"
and the SAI.
Management and 12b-1 Other Expenses Total Operating
Administration Fees Fees (estimated) Expenses
0.94%* None 0.46% 1.40%*
* (Reflects N&B Management's expense reimbursement undertaking described
below)
Anticipated Total Operating Expenses for the Fund are annualized
projections based upon current administration fees for the Fund and
management fees for the Portfolio, with "Other Expenses" being estimated
amounts for the current fiscal year. The trustees of the Trust believe
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<PAGE>
that the aggregate per share expenses of the Fund and the Portfolio will
be approximately equal to the expenses the Fund would incur if its assets
were invested directly in the type of securities held by the Portfolio.
The trustees of the Trust also believe that investment in the Portfolio by
investors in addition to the Fund may enable the Fund to achieve economies
of scale which could reduce expenses. The expenses and returns of other
funds that may invest in the Portfolio may differ from those of the Fund.
The table reflects N&B Management's voluntary undertaking to
reimburse the Fund for its Operating Expenses and its pro rata share of
the Portfolio's Operating Expenses which, in the aggregate, exceed 1.40%
per annum of the Fund's average daily net assets. Absent the
reimbursement, Management and Administration Fees would be 0.95% per annum
of the Fund's average daily net assets and anticipated aggregate Fund and
Portfolio Total Operating Expenses would be 1.41% per annum of the average
daily net assets of the Fund. The Management Fee paid by the Portfolio is
0.55% of average daily net assets at current asset levels.
Example
To illustrate the effect of Operating Expenses, let's assume that
the Fund's annual return is 5% and that it had annual Total Operating
Expenses described in the table above. For every $1,000 you invested in
the Fund, you would have paid the following amounts of total expenses if
you closed your account at the end of each of the following time periods:
1 Year 3 Years
$14 $44
The assumption in this example of a 5% annual return is required by
regulations of the Securities and Exchange Commission applicable to all
mutual funds. THE INFORMATION IN THE TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OR RATES OF RETURN; ACTUAL
EXPENSES OR RETURNS MAY BE GREATER OR LESS THAN THOSE SHOWN, AND MAY
CHANGE IF EXPENSE REIMBURSEMENTS CHANGE.
INVESTMENT PROGRAM
The investment policies and limitations of the Fund and the
Portfolio are identical. The Fund invests only in the Portfolio.
Therefore, the following shows you the kinds of securities in which the
Portfolio invests. For an explanation of some types of investments, see
"Description of Investments," on page 15.
Investment policies and limitations of the Fund and Portfolio are
not fundamental unless otherwise specified in this Prospectus or the SAI.
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<PAGE>
While a non-fundamental policy or limitation may be changed by the
trustees of the Trust or of Managers Trust without shareholder approval,
the Fund intends to notify shareholders before making any material change
to such policies or limitations. Fundamental policies and limitations may
not be changed without shareholder approval.
Additional investment techniques, features, and limitations
concerning the Portfolio's investment program are described in the SAI.
The investment objective of the Fund and Portfolio is to seek
long-term capital appreciation by investing primarily in securities of
companies that meet both financial criteria and the Social Policy. This
investment objective is not fundamental. The Fund intends to notify
shareholders 30 days in advance of making any change in its investment
objective. There can be no assurance that the Fund or Portfolio will
achieve its objectives. The Fund by itself does not represent a
comprehensive investment program.
In seeking capital appreciation, the Portfolio generally follows a
value-oriented investment approach to the selection of individual
securities. Prospective investments are first subjected to detailed
financial analysis and are not studied further unless N&B Management
believes that they are currently undervalued relative to the issuer's
assets and potential earning power.
The Portfolio expects to be nearly fully invested at all times,
primarily in common stock. It may also invest in convertible securities
and preferred stock and in foreign securities and American Depositary
Receipts ("ADRs") of foreign companies that meet the Social Policy.
However, any part of the Portfolio's assets may be retained temporarily in
investment grade debt securities and other investment grade fixed income
securities of non-governmental issuers, U.S. Government and Agency
securities, repurchase agreements, money market instruments, commercial
paper, and cash and cash equivalents, when N&B Management believes that
significant adverse market, economic, political or other circumstances
require prompt action to avoid losses. In addition, because of the
master/feeder fund structure, the Fund and the Portfolio deal with large
institutional investors, and the Portfolio may hold such instruments
pending investment or payout when the Portfolio has received a large
influx of cash due to sales of Fund shares, or shares of other funds that
invest in the Portfolio, or when it anticipates a substantial redemption.
Generally, the foregoing temporary investments are selected with a concern
for the social impact of each investment. On occasion, deposits with
community banks and credit unions may be considered for investment. Under
normal conditions, at least 65% of the Portfolio's total assets are
invested in accordance with the Social Policy, and at least 65% of total
assets are invested in equity securities.
- 5 -
<PAGE>
The Portfolio may also engage in portfolio management techniques
that are not subject to the Social Policy, such as selling short
against-the-box, lending securities, and purchasing and selling put and
call options on securities or currencies, futures contracts, options on
futures contracts, and forward contracts.
Social Policy
Companies deemed acceptable from a financial standpoint are
evaluated by N&B Management using a proprietary database that
Neuberger&Berman has designed to develop and monitor information on
companies in various categories of social criteria. N&B Management seeks
to invest in issuers that show leadership in the following major areas of
social impact: environment and workplace diversity and employment. N&B
Management also evaluates investments based on companies' records in other
areas of concern: public health, type of products, and corporate
citizenship.
The Portfolio's social orientation is predicated in part on the
belief that good corporate citizenship is good business; that is, good
policies with respect to such social criteria as employment and
environmental practices may often have a positive impact on the company's
"bottom line." N&B Management recognizes, however, that many social
criteria represent goals rather than achievements and that goals are often
difficult to quantify. In each area, N&B Management seeks to elicit and
understand management's vision of the company's social role, giving weight
to enlightened, progressive policies. N&B Management attempts to assess
the objectivity of all information included in the database. However,
decisions made by N&B Management inevitably involve some level of
subjective judgment.
N&B Management seeks to invest in companies that show leadership in
addressing environmental problems effectively and in promoting progressive
workplace policies, especially as they affect women and minorities. It
seeks to identify companies committed to improving their environmental
performance by examining their policies and programs in such areas as
energy conservation, pollution reduction and control, waste management,
recycling, and careful stewardship of natural resources. In a similar
manner, N&B Management seeks to identify companies whose policies and
practices recognize the importance of human resources to corporate
productivity and the centrality of the work experience to the quality of
life of all employees. N&B Management seeks to invest in companies which
demonstrate leadership in such areas as providing and promoting equal
opportunity, investing in the training and re-training of workers,
promoting a safe working environment, providing family-oriented flexible
benefits, and involving workers in job and workflow engineering.
In making investment decisions, N&B Management takes into account a
company's record as a member of the various communities of which it is a
part and its commitment to product quality and value. Currently, the
Social Policy screens out any company which derives more than (i) 5% of
- 6 -
<PAGE>
its total annual revenue from manufacturing and selling alcohol and/or
tobacco, (ii) 5% of its total annual revenue from sales in or services
related to gambling, or (iii) 10% of its total annual revenue from the
manufacturing of weapons systems. Additionally, the Portfolio does not
invest in any company which derives its total annual revenue primarily
from non-consumer sales to the military, or which owns or operates one or
more nuclear power facilities or is a major supplier of nuclear power
services.
The information used by N&B Management in evaluating prospective
investments for conformity with the Social Policy is obtained primarily
from services that specialize in reporting information from issuers or
from agencies that oversee issuers' activities or compliance with laws and
regulations. Additionally, the information may come from public interest
groups and from N&B Management's discussions with company representatives.
Not every issuer selected by N&B Management will demonstrate
leadership in each category of the Social Policy. The social records of
most companies are written in shades of gray. For example, a company may
have a progressive record in employee relations and community affairs but
a poor one on product marketing issues. Another company may have a mixed
record within a single area. Finally, it is often difficult to distinguish
between a substantive commitment and public relations. This principle
works both ways: there are many companies with excellent records on social
issues that maintain a low profile for one reason or another. Taking these
factors into consideration, N&B Management emphasizes the overall
direction that companies take toward demonstrating leadership in the areas
of social impact, paying particular attention to progress achieved toward
these goals.
If securities held by the Portfolio no longer satisfy the Social
Policy, the Portfolio will seek to dispose of the securities as soon as
reasonably practicable, which may cause the Portfolio to sell the
securities at a time not desirable from a purely financial standpoint.
Short-Term Trading; Portfolio Turnover
Although the Portfolio does not purchase securities with the
intention of profiting from short-term trading, the Portfolio may sell
portfolio securities when N&B Management believes such action is
advisable. The estimated annual turnover rate of the Portfolio generally
will not exceed 100%.
Borrowings
The Portfolio has a fundamental policy that it may not borrow money,
except that it may (1) borrow money from banks for temporary or emergency
purposes and not for leveraging or investment and (2) enter into reverse
repurchase agreements for any purpose, so long as the aggregate amount of
borrowings and reverse repurchase agreements does not exceed one-third of
- 7 -
<PAGE>
the Portfolio's total assets (including the amount borrowed) less
liabilities (other than borrowings). The Portfolio does not expect to
borrow money. As a non-fundamental policy, the Portfolio may not purchase
portfolio securities if its outstanding borrowings, including reverse
repurchase agreements, exceed 5% of its total assets.
PERFORMANCE INFORMATION
The performance of the Fund is commonly measured as total return.
Total return is the change in value of an investment in a fund over a
particular period, assuming that all distributions have been reinvested.
Thus, total return reflects dividend income, other distributions, and
variations in share prices from the beginning to the end of a period.
An average annual total return is a hypothetical rate of return
that, if achieved annually, would result in the same cumulative total
return as was actually achieved for the period. This smooths out
variations in performance. Past results do not, of course, guarantee
future performance. Share prices may vary, and your shares when redeemed
may be worth more or less than your original purchase price.
Total Return Information
You can obtain current performance information about the Fund by
calling N&B Management at 800-877-9700.
SPECIAL INFORMATION REGARDING ORGANIZATION,
CAPITALIZATION, AND OTHER MATTERS
The Fund
The Fund is a separate series of Neuberger&Berman Equity Assets
("Trust"), a Delaware business trust organized pursuant to a Trust
Instrument dated October 18, 1993. The Trust is registered under the
Investment Company Act of 1940 (the "1940 Act") as a diversified, open-end
management investment company, commonly known as a mutual fund. The Trust
has five separate series. The Fund invests all of its net investable
assets in the Portfolio, receiving a beneficial interest in the Portfolio.
The trustees of the Trust may establish additional series or classes of
shares, without the approval of shareholders. The assets of a series
belong only to that series, and the liabilities of a series are borne
solely by that series and no other.
DESCRIPTION OF SHARES. The Fund is authorized to issue an unlimited
number of shares of beneficial interest (par value $0.001 per share).
Shares of the Fund represent equal proportionate interests in the assets
of 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 right to
subscribe to any additional shares.
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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 corporations. To guard against the
risk that Delaware law might not be applied in other states, the Trust
Instrument requires that every written obligation of the Trust or the Fund
contain a statement that such obligation may be enforced only against the
assets of the Trust or Fund and provides for indemnification out of Trust
or Fund property of any shareholder nevertheless held personally liable
for Trust or Fund obligations, respectively.
The Portfolio
The Portfolio is a separate 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 six separate portfolios. The assets
of the Portfolio belong only to the Portfolio, and the liabilities of the
Portfolio are borne solely by the Portfolio and no other.
FUND'S INVESTMENT 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, in turn invests in securities; the Fund thus
acquires an indirect interest in those securities. Historically, N&B
Management, which is the administrator of the Fund and investment manager
of the Portfolio, has sponsored, with Neuberger&Berman, traditionally
structured funds since 1950. However, it has operated 12 master funds and
20 feeder funds since August 1993 and now operates 21 master funds and 30
feeder funds. This "master/feeder fund" structure is depicted in the
"Summary" on page 1.
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. Neuberger&Berman Socially
Responsive Fund, a mutual fund that is a series of Neuberger & Berman
Equity Funds ("N&B Equity Funds"), invests all of its net investable
assets in the Portfolio. Neuberger&Berman NYCDC Socially Responsive
Trust, a mutual fund that is a series of Neuberger&Berman Equity Trust
("N&B Equity Trust") invests all of its net investable assets in the
Portfolio. The shares of Neuberger&Berman Socially Responsive Fund (but
not of Neuberger&Berman NYCDC Socially Responsive Trust) are available for
purchase by members of the general public. The Portfolio may also permit
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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. The Fund does not sell its shares directly to
members of the general public. Other investors in the Portfolio (including
Neuberger&Berman Socially Responsive Fund) that might sell shares to
members of the general public 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 N&B Equity
Funds) might charge a sales commission. Therefore, Fund shareholders may
have different returns than shareholders in another investment company
that invests exclusively in the Portfolio. Information regarding any fund
that may invest in the Portfolio in the future will be available from N&B
Management by calling 800-877-9700.
The trustees of the Trust believe that investment in the Portfolio
by the series of N&B Equity Funds or N&B Equity Trust, or other potential
investors in addition to the Fund may enable the Portfolio to realize
economies of scale that could reduce operating expenses, thereby producing
higher returns and benefitting all shareholders. However, the Fund's
investment in the Portfolio may be affected by the actions of other large
investors in the Portfolio, if any. For example, if a large investor in
the Portfolio (other than the Fund) redeemed its interest in the
Portfolio, the Portfolio's remaining investors (including the Fund) might,
as a result, experience higher pro rata operating expenses, thereby
producing lower returns.
The Fund may withdraw its entire investment from the Portfolio at
any time, if the trustees of the Trust determine that it is in the best
interests of the Fund and its shareholders to do so. The Fund might
withdraw, for example, if there were other investors in the Portfolio with
power to, and who did by a vote of all investors (including the Fund),
change the investment objective, policies, or limitations of the Portfolio
in a manner not acceptable to the trustees of the Trust. A withdrawal
could result in a distribution in kind of portfolio securities (as opposed
to a cash distribution) by the Portfolio to the Fund. That distribution
could result in a less diversified portfolio of investments for the Fund
and could affect adversely the liquidity of the Fund's investment
portfolio. If the Fund decided to convert those securities to cash, it
usually would incur brokerage fees or other transaction costs. If the Fund
withdrew its investment from the Portfolio, the trustees would consider
what action might be taken, including the investment of all of the Fund's
net investable assets in another pooled investment entity having
substantially the same investment objective as the Fund or the retention
by the Fund of its own investment manager to manage its assets in
accordance with its investment objective, policies, and limitations. The
inability of the Fund to find a suitable replacement could have a
significant impact on shareholders.
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<PAGE>
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 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.
SHAREHOLDER SERVICES
How to Buy Shares
You can buy and own Fund shares only through an account with an
Institution which provides accounting, recordkeeping, and other services
to investors and which has an administrative services agreement with N&B
Management. N&B Management and the Fund do not recommend, endorse, or
receive payments from any Institution. N&B Management compensates
Institutions for services they provide under an administrative services
agreement. N&B Management does not provide investment advice to any
Institution or its clients or make decisions regarding their investments.
Each Institution will establish its own procedures for the purchase
of Fund shares in its account, including minimum initial and additional
investments for shares of the Fund and the acceptable method of payment
for shares. Shares are purchased at the next price calculated on a day the
New York Stock Exchange ("NYSE") is open, after a purchase order is
received and accepted by an Institution. Prices for Fund shares are
usually calculated as of 4 p.m. Eastern time. Your Institution may be
closed on days when the NYSE is open. As a result, the prices for Fund
shares may be significantly affected on days when you have no access to
your Institution. The Fund will not issue a certificate for your shares.
Other Information:
-- An Institution must pay for shares it purchases in U.S.
dollars.
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-- The Fund has the right to suspend the offering of its shares
for a period of time. The Fund also has the right to accept
or reject a purchase order in its sole discretion including
certain purchase orders using an exchange of shares. See
"Shareholder Services - Exchanging Shares."
How to Sell Shares
You can sell (redeem) all or some of your Fund shares only through
an account with an Institution. Each Institution will establish its own
procedures for the sale of Fund shares. Shares are sold at the next price
calculated on a day the NYSE is open, after a sales order is received and
accepted by an Institution. Prices for Fund shares are usually calculated
as of 4 p.m. Eastern time. Your Institution may be closed on days when the
NYSE is open. As a result, prices for the Fund shares may be
significantly affected on days when you have no access to your
Institution.
The Fund has reserved the right, if conditions exist which make cash
payments undesirable, to honor any request for a redemption by making
payments in securities valued in the same way as they would be valued for
purposes of computing the Fund's net asset value per share. If payment is
made in securities, an Institution may incur brokerage expenses or other
transaction costs in converting those securities into cash and will be
subject to fluctuation in the market prices of those securities until they
are sold.
Other Information:
-- Redemption proceeds will be paid to Institutions as agreed
with the Fund, but in any case within three calendar days
(under unusual circumstances the Fund may take longer, as
permitted by law).
-- The Fund may suspend redemptions or postpone payments on days
when the NYSE is closed (besides weekends and holidays), when
trading on the NYSE is restricted, or as permitted by the
Securities and Exchange Commission.
Exchanging Shares
Through an account with an Institution, you may be able to exchange
shares of the Fund for shares of another Neuberger&Berman
Fund.[SERVICEMARK] Each Institution will establish its own exchange policy
and procedures for its accounts. Shares are exchanged at the next price
calculated on a day the NYSE is open, after an exchange order is received
and accepted by an Institution.
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<PAGE>
-- Shares can be exchanged only between accounts registered in
the same name, address, and taxpayer ID number of the
Institution.
-- An exchange can be made only into a fund whose shares are
eligible for sale in the state where the Institution is
located.
-- An exchange may have tax consequences.
-- The Fund may refuse any exchange orders from any Institution
if for any reason they are not deemed to be in the best
interests of the Fund and its shareholders.
-- The Fund may impose other restrictions on the exchange
privilege, or modify or terminate the privilege, but will try
to give each Institution advance notice whenever it can
reasonably do so.
SHARE INFORMATION
Share Prices and Net Asset Value
The Fund's shares are bought or sold at a price that is the Fund's
net asset value ("NAV") per share. The NAVs for the Fund and the Portfolio
are calculated by subtracting liabilities from total assets (in the case
of the Portfolio, the market value of the securities the Portfolio holds
plus cash and other assets; in the case of the Fund, its percentage
interest in the Portfolio, multiplied by the Portfolio's NAV, plus any
other assets). The Fund's per share NAV is calculated by dividing its NAV
by the number of Fund shares outstanding and rounding the result to the
nearest full cent. The Fund and the Portfolio calculate their NAVs as of
the close of regular trading on the NYSE, usually 4 p.m. Eastern time on
each day the NYSE is open. The Portfolio values securities (including
options) listed on the NYSE, the American Stock Exchange, or other
national securities exchanges or quoted on Nasdaq, and other securities
for which market quotations are readily available, at the last sale price
on the day the securities are being valued. If there is no sale of such a
security on that day, that security is valued at the mean between its
closing bid and asked prices. The Portfolio values all other securities
and assets, including restricted securities, by a method that the trustees
of Managers Trust believe accurately reflects fair value.
DIVIDENDS, OTHER DISTRIBUTIONS,
AND TAXES
The Fund distributes substantially all of its share of any net
investment income (net of the Fund's expenses), net realized capital
gains, and net realized gains from foreign currency transactions earned or
realized by the Portfolio, normally in December.
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Distribution Options
REINVESTMENT IN SHARES. All dividends and other distributions paid on
shares of the Fund are automatically reinvested in additional shares of
the Fund, unless an Institution elects to receive them in cash. Dividends
and other distribution of capital gains are reinvested at the Fund's per
share NAV, usually as of the date the dividend or other distribution is
payable.
DISTRIBUTIONS IN CASH. An Institution may elect to receive dividends in
cash, with other distributions being reinvested in additional Fund shares,
or to receive all dividends and other distributions in cash.
Taxes
The Fund intends to qualify for treatment as a regulated investment
company under the Internal Revenue Code of 1986, as amended ("Code"), so
that it will be relieved of federal income tax on that part of its taxable
income and realized gains that it distributes to an Institution.
An investment has certain tax consequences, depending on the type of
account in which you invest. If you have an account under a qualified
retirement plan or an individual retirement account, taxes are deferred.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax
and may also be subject to state and local income taxes. Distributions are
taxable when they are paid, whether in cash or by reinvestment in
additional Fund shares, except that distributions declared in December and
paid in the following January are taxable as if they were paid on December
31 of the year in which the distributions were declared.
For federal income tax purposes, dividends and distributions of net
short-term capital gain and net gains from certain foreign currency
transactions are taxed as ordinary income. Distributions of net capital
gain (the excess of net long-term capital gain over net short-term capital
loss) when designated as such, are generally taxed as long-term capital
gain, no matter how long you have owned your shares. Distribution of net
capital gain may include gains from the sale of portfolio securities that
appreciated in value before you bought your shares. Every January, the
Fund will send each Institution a statement showing the amount of
distributions paid in the previous year.
TAXES ON REDEMPTIONS. Capital gains realized on redemptions of Fund
Shares, including redemptions in connection with exchanges to other
Neuberger&Berman Funds,[SERVICEMARK] are subject to tax. A capital gain
(or loss) is the difference between the amount paid for shares (including
the value of any dividends and other distributions that were reinvested)
and the amount received when shares are sold.
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<PAGE>
When an Institution sells shares it will receive a confirmation
statement showing the number of shares sold and the price. Every January,
Institutions will also receive a consolidated transaction statement for
the previous year.
Each Institution will annually send investors in its accounts
statements showing distribution and transaction information for the
previous year.
The foregoing is only a summary of some of the important tax
considerations affecting the Fund and its shareholders. See the SAI for
additional tax information. There may be other federal, state, local or
foreign tax considerations applicable to a particular investor. Therefore,
investors should consult their tax advisers.
MANAGEMENT AND ADMINISTRATION
Trustees and Officers
The trustees of the Trust and the trustees of Managers Trust, who
are currently the same individuals, have oversight responsibility for the
operations of the Fund and the Portfolio, respectively. The SAI contains
general background information about each trustee and officer of the Trust
and of Managers Trust. The trustees and officers of the Trust and of
Managers Trust who are officers and/or directors of N&B Management and/or
partners of Neuberger&Berman serve without compensation from the Fund or
the Portfolio. The trustees of the Trust and of Managers Trust, including
a majority of those trustees who are not "interested persons" (as defined
in the 1940 Act) of the Fund, have adopted written procedures reasonably
appropriate to deal with potential conflicts of interest between the Trust
and Managers Trust, including, if necessary, creating a separate board of
trustees of Managers Trust.
Investment Manager, Administrator, Distributor, and Sub-Adviser
N&B Management serves as the investment manager of the Portfolio, as
administrator of the Fund, and as distributor of the shares of the Fund.
N&B Management and its predecessor firms have specialized in the
management of no-load mutual funds since 1950. In addition to serving the
Portfolio, N&B Management currently serves as investment manager of other
mutual funds. Neuberger&Berman, which acts as sub-adviser for the
Portfolio and other mutual funds managed by N&B Management, also serves as
investment adviser of three investment companies. The mutual funds managed
by N&B Management and Neuberger&Berman had aggregate net assets of
approximately $11.4 billion as of September 30, 1995.
As sub-adviser, Neuberger&Berman furnishes N&B Management with
investment recommendations and research without added cost to the
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Portfolio. Neuberger&Berman has advised clients in selecting socially
responsive investments since 1990. Neuberger&Berman is a member firm of
the NYSE and other principal exchanges and acts as the Portfolio's
principal broker in the purchase and sale of its securities.
Neuberger&Berman and its affiliates, including N&B Management, manage
securities accounts that had approximately $37.6 billion of assets as of
September 30, 1995. All of the voting stock of N&B Management is owned by
individuals who are general partners of Neuberger&Berman.
Janet Prindle and Farha-Joyce Haboucha are primarily responsible for
the day-to-day management of the Portfolio. Ms. Prindle, a Vice President
of N&B Management since November 1993, has been a general partner of
Neuberger&Berman since 1985. Ms. Haboucha has been a Vice President of N&B
Management since November 1994 and an employee of Neuberger&Berman since
1986. Mmes. Prindle and Haboucha, who are Co-Directors of Socially
Responsive Investment Services at Neuberger&Berman, have been researching
and developing corporate responsibility criteria as they apply to
investments since 1989. They have been managing money using these criteria
since 1990. Ms. Prindle has been responsible for Neuberger&Berman Socially
Responsive Portfolio since its inception in March 1994.
Neuberger&Berman acts as the principal broker for the Portfolio in
the purchase and sale of portfolio securities and in the sale of covered
call options, and for those services receives brokerage commissions. In
effecting securities transactions, the Portfolio seeks to obtain the best
price and execution of orders. For more information, see the SAI.
The partners and employees of Neuberger&Berman and officers and
employees of N&B Management, together with their families, have invested
over $100 million of their own money in Neuberger&Berman
Funds.[SERVICEMARK]
To mitigate the possibility that the Portfolio will be adversely
affected by employees' personal trading, the Trust, Managers Trust, N&B
Management, and Neuberger&Berman have adopted policies that restrict
securities trading in the personal accounts of portfolio managers and
others who normally come into possession of information on portfolio
transactions.
Expenses
N&B Management provides investment management services to the
Portfolio that include, among other things, making and implementing
investment decisions and providing facilities and personnel necessary to
operate the Portfolio. N&B Management provides administrative services to
the Fund that include furnishing similar facilities and personnel for the
Fund. For such administrative services, the Fund pays N&B Management a fee
at the annual rate of 0.40% of the Fund's average daily net assets. With
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the Fund's consent, N&B Management is authorized to subcontract to third
parties some of its responsibilities under the administration agreement.
For investment management services, the Portfolio pays N&B Management a
fee at the annual rate of 0.55% of the first $250 million of the
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.
The Fund bears all expenses of its operations other than those borne
by N&B Management as administrator of the Fund and as distributor of its
shares. The Portfolio bears all expenses of its operations other than
those borne by N&B Management as investment manager of the Portfolio.
These expenses include, but are not limited to, for the Fund and
Portfolio, legal and accounting fees and compensation for trustees who are
not affiliated with N&B Management; for the Fund, transfer agent fees and
the cost of printing and sending reports and proxy materials to
shareholders; and for the Portfolio, custodial fees for securities.
N&B Management has voluntarily undertaken to reimburse the Fund for
the Fund's Operating Expenses and its pro rata share of the Portfolio's
Operating Expenses which exceed, in the aggregate, 1.40% per annum of the
Fund's average daily net assets. N&B Management may terminate this
undertaking to the Fund by giving at least 60 days' prior written notice
to the Fund. The effect of any reimbursement by N&B Management is to
reduce the Fund's expenses and thereby increase its total return.
Transfer Agent
The Fund's transfer agent is State Street Bank and Trust Company
("State Street"). State Street administers purchases, redemptions, and
transfers of Fund shares with respect to Institutions and the payment of
dividends and other distributions to Institutions. The main office of
State Street is located at 225 Franklin Street, Boston, MA 02110.
DESCRIPTION OF INVESTMENTS
In addition to common stocks and other securities referred to in
"Investment Program" herein, the Portfolio may make the following
investments, among others, individually or in combination, although it may
not necessarily buy all of the types of securities or use all of the
investment techniques that are described. For additional information on
the types of investments in which the Portfolio may invest, see the SAI.
ILLIQUID SECURITIES. The Portfolio may invest up to 10% of its net assets
in illiquid securities, which are securities that cannot be expected to be
sold within seven days at approximately the price at which they are
valued. Due to the absence of an active trading market, the Portfolio may
experience difficulty in valuing or disposing of illiquid securities. N&B
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Management determines the liquidity of the Portfolio's securities, under
supervision of the trustees of Managers Trust. Securities that are freely
tradeable in their country of origin or in their principal market are not
considered illiquid securities even if they are not registered for sale in
the U.S.
RESTRICTED SECURITIES AND RULE 144A SECURITIES. The Portfolio may invest
in restricted securities and Rule 144A securities. Restricted securities
cannot be sold to the public without registration under the Securities Act
of 1933 ("1933 Act"). Unless registered for sale, these securities can be
sold only in privately negotiated transactions or pursuant to an exemption
from registration. Restricted securities are generally considered
illiquid. Rule 144A securities, although not registered, may be resold to
qualified institutional buyers in accordance with Rule 144A under the 1933
Act. Unregistered securities may be sold abroad pursuant to Regulation S
under the 1933 Act. N&B Management, acting pursuant to guidelines
established by the trustees of Managers Trust, may determine that some
restricted securities are liquid.
FOREIGN SECURITIES. The Portfolio may invest up to 10% of the value of
its total assets in foreign securities. Foreign securities are those of
issuers organized and doing business principally outside the U.S.,
including non-U.S. governments, their agencies and instrumentalities. The
10% limitation does not apply to foreign securities that are denominated
in U.S. dollars, including ADRs. Foreign securities (including those
denominated in U.S. dollars, such as ADRs) are affected by political or
economic developments in foreign countries. Foreign companies may not be
subject to accounting standards or governmental supervision comparable to
U.S. companies, and there may be less public information about their
operations. In addition, foreign markets may be less liquid or more
volatile than U.S. markets and may offer less protection to investors.
Investments in foreign securities (including those made through ADRs) that
are not denominated in U.S. dollars may be subject to special risks, such
as governmental regulation of foreign exchange transactions and changes in
rates of exchange with the U.S. dollar, irrespective of the performance of
the underlying investment.
COVERED CALL OPTIONS. The Portfolio may try to reduce the risk of
securities price changes (hedge) or generate income by writing (selling)
covered call options against securities held in its portfolio having a
market value not exceeding 10% of its net assets and may purchase call
options in related closing transactions. The purchaser of a call option
acquires the right to buy a portfolio security at a fixed price during a
specified period. The maximum price the seller may realize on the security
during the option period is the fixed price; the seller continues to bear
the risk of a decline in the securities price, although this risk is
reduced by the premium received for the option.
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<PAGE>
The primary risks in using call options are (1) possible lack of a
liquid secondary market for options and the resulting inability to close
out options when desired; (2) the fact that the skills needed to use
options are different from those needed to select the Portfolio's
securities; (3) the fact that, although use of these instruments for
hedging purposes can reduce the risk of loss, they also can reduce the
opportunity for gain by offsetting favorable price movements in underlying
investments; and (4) the possible inability of the Portfolio to purchase
or sell a security at a time that would otherwise be favorable for it to
do so, or the possible need for the Portfolio to sell a security at a
disadvantageous time, due to its need to maintain "cover" in connection
with its use of these instruments. Options are considered "derivatives".
CONVERTIBLE SECURITIES. The Portfolio may invest up to 20% of its net
assets 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. The Portfolio does not intend to purchase any convertible
securities that are not investment grade. "Investment grade" debt
securities are those receiving one of the four highest ratings from
Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's, or another
nationally recognized statistical rating organization ("NRSRO") or, if
unrated, by any NRSRO deemed by N&B Management to be of comparable quality
to such rated securities ("Comparable Unrated Securities") under
guidelines established by the trustees of Managers Trust. Moody's deems
securities rated in its fourth highest category (Baa) to have speculative
characteristics; a change in economic factors could lead to a weakened
capacity of the issuer to make interest and principal payments.
U.S. GOVERNMENT AND AGENCY SECURITIES. The Portfolio may purchase U.S.
Government and Agency Securities. U.S. Government securities are
obligations of the U.S. Treasury backed by the full faith and credit of
the United States. U.S. Government Agency Securities are issued or
guaranteed by U.S. Government agencies or instrumentalities; by other U.S.
Government-sponsored enterprises, such as the Government National Mortgage
Association ("GNMA"), Federal National Mortgage Association ("FNMA"),
Federal Home Loan Mortgage Corporation ("FHLMC"), Student Loan Marketing
Association, and Tennessee Valley Authority; and by various federally
sponsored banks. Some U.S. Government Agency Securities are supported by
the full faith and credit of the United States, while others may be
supported by the issuer's ability to borrow from the U.S. Treasury,
subject to the Treasury's discretion in certain cases, or only by the
credit of the issuer. U.S. Government Agency Securities include U.S.
Government mortgage-backed securities. The market prices of U.S.
Government securities are not guaranteed by the Government and generally
fluctuate with changing interest rates. The value of the fixed income
securities in which the Portfolio may invest is likely to decline in times
of rising interest rates. Conversely, when rates fall, the value of the
Portfolio's fixed income investments is likely to rise.
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<PAGE>
SHORT SALES AGAINST-THE-BOX. The Portfolio may make short sales
against-the-box, in which it sells securities short only if it owns or has
the right to obtain without payment of additional consideration an equal
amount of the same type of securities sold. Short selling against-the-box
may defer recognition of gains or losses to a later tax period.
REPURCHASE AGREEMENTS/SECURITIES LOANS. In a repurchase agreement, the
Portfolio buys a security from a Federal Reserve member bank or a
securities dealer and simultaneously agrees to sell it back at a higher
price, at a specified date, usually less than a week later. The underlying
securities must fall within the Portfolio's investment policies and
limitations. The Portfolio also may lend portfolio securities to banks,
brokerage firms, or institutional investors to earn income. Costs, delays,
or losses could result if the selling party to a repurchase agreement or
the borrower of portfolio securities becomes bankrupt or otherwise
defaults. N&B Management monitors the creditworthiness of sellers and
borrowers.
OTHER INFORMATION FUNDS ELIGIBLE FOR EXCHANGE
Investment Manager, Administrator, Equity Trust
and Distributor
Neuberger & Berman Focus Trust
Neuberger&Berman Management Incorporated Neuberger & Berman Genesis Trust
605 Third Avenue, 2nd Floor Neuberger & Berman Guardian Trust
New York, NY 10158-0180 Neuberger & Berman Manhattan
Trust
Sub-Adviser Neuberger & Berman Partners Trust
Neuberger&Berman, L.P. INCOME TRUST
605 Third Avenue
New York, NY 10158-3698 Neuberger & Berman Ultra Short
Bond Trust
Custodian and Transfer Agent Neuberger & Berman Limited
Maturity Bond Trust
State Street Bank and Trust Company Neuberger & Berman Government
225 Franklin Street Income Trust
Boston, MA 02110
Legal Counsel
Kirkpatrick & Lockhart LLP
1800 M Street, NW
Washington, DC 20036-5891
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_________________________________________________________________
NEUBERGER & BERMAN SOCIALLY RESPONSIVE TRUST AND PORTFOLIO
STATEMENT OF ADDITIONAL INFORMATION
DATED DECEMBER 28, 1995
A No-Load Mutual Fund
605 Third Avenue, 2nd Floor, New York, NY 10158-0180
_________________________________________________________________
Neuberger & Berman Socially Responsive Trust ("Fund"), a
series of Neuberger & Berman Equity Assets ("Trust"), is a no-load mutual
fund that offers shares pursuant to a Prospectus dated December 28, 1995.
The Fund invests all of its net investable assets in Neuberger & Berman
Socially Responsive Portfolio ("Portfolio").
An investor can buy, own, and sell Fund shares only
through an account with a broker-dealer, pension plan administrator, or
other institution (each an "Institution") that provides accounting,
recordkeeping, and other services to investors and that has an
administrative services agreement with Neuberger & Berman Management
Incorporated ("N&B Management").
The Fund's Prospectus provides basic information that an
investor should know before investing. A copy of the Prospectus may be
obtained, without charge, from Neuberger & Berman Management Incorporated,
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.
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Table of Contents
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Page
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INVESTMENT INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 1
Investment Policies and Limitations . . . . . . . . . . . . 1
Janet Prindle, Portfolio Manager of the Portfolio . . . . . 5
Background Information on Socially Responsive Investing . . 5
The Socially Responsive Database . . . . . . . . . . . . . . 6
Implementation of Social Policy . . . . . . . . . . . . . . 8
Additional Investment Information . . . . . . . . . . . . . 8
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 22
Total Return Computations . . . . . . . . . . . . . . . . . 22
Comparative Information . . . . . . . . . . . . . . . . . . 23
Other Performance Information . . . . . . . . . . . . . . . 24
CERTAIN RISK CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . 24
TRUSTEES AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . 25
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES . . . . . . . . . . 31
Investment Manager and Administrator . . . . . . . . . . . . 31
Sub-Adviser . . . . . . . . . . . . . . . . . . . . . . . . 34
Investment Companies Managed . . . . . . . . . . . . . . . . 35
Management and Control of N&B Management . . . . . . . . . . 37
DISTRIBUTION ARRANGEMENTS . . . . . . . . . . . . . . . . . . . . . . 38
ADDITIONAL EXCHANGE INFORMATION . . . . . . . . . . . . . . . . . . . 38
ADDITIONAL REDEMPTION INFORMATION . . . . . . . . . . . . . . . . . . 41
DIVIDENDS AND OTHER DISTRIBUTIONS . . . . . . . . . . . . . . . . . . 42
ADDITIONAL TAX INFORMATION . . . . . . . . . . . . . . . . . . . . . 42
Taxation of the Fund . . . . . . . . . . . . . . . . . . . . 42
Taxation of the Portfolio . . . . . . . . . . . . . . . . . 43
PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . 46
Portfolio Turnover . . . . . . . . . . . . . . . . . . . . . 51
REPORTS TO SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . 51
CUSTODIAN AND TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . 51
INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . 51
LEGAL COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
REGISTRATION STATEMENT . . . . . . . . . . . . . . . . . . . . . . . 52
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . 52
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Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
RATINGS OF CORPORATE BONDS AND COMMERCIAL PAPER . . . . . . 53
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
THE ART OF INVESTMENT: A CONVERSATION WITH ROY NEUBERGER . . 56
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INVESTMENT INFORMATION
The Fund is a separate series of the Trust, a Delaware
business trust that is registered with the Securities and Exchange
Commission ("SEC") as an open-end management investment company. The Fund
seeks its investment objective by investing all of its net investable
assets in the Portfolio, which is a series of Equity Managers Trust ("Man-
agers Trust") that has an investment objective identical to, and a name
similar to, that of the Fund. The Portfolio, in turn, invests in accord-
ance 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 Neuberger & Berman Management
Incorporated ("N&B Management") are together referred to below as the
"Trusts.")
The following information supplements the discussion in
the Prospectus of the investment objective, policies, and limitations of
the Fund and the Portfolio. The investment objective and, unless
otherwise specified, the investment policies and limitations of the Fund
and Portfolio are not fundamental. Although any investment policy or
limitation that is not fundamental may be changed by the trustees of the
Trust ("Fund Trustees") or of Managers Trust ("Portfolio Trustees")
without shareholder approval, the Fund intends to notify its shareholders
before changing its investment objective or implementing any material
change in any non-fundamental policy or limitation. The fundamental
investment policies and limitations of 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. This vote is required by the Investment
Company Act of 1940 ("1940 Act") and is referred to in this SAI as a "1940
Act majority vote." Whenever 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 thereon 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 in an
open-end management investment company having substan-
tially 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
and the Portfolio are identical. Therefore, although the following dis-
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cusses the investment policies and limitations of the Portfolio, it
applies equally to the Fund.
Except for the limitation on borrowing and the limitation
on ownership of portfolio securities by officers and trustees, any
investment policy or limitation that involves a maximum percentage of
securities or assets will not be considered to be violated unless the
percentage limitation is exceeded immediately after, and because of, a
transaction by 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)
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through the purchase of a portion of an issue of debt securities or (ii)
by engaging in repurchase agreements.
6. Real Estate. The Portfolio may not purchase real
estate unless acquired as a result of the ownership of securities or
instruments, but this restriction shall not prohibit the Portfolio from
purchasing securities issued by entities or investment vehicles that own
or deal in real estate or interests therein or instruments secured by real
estate or interests therein.
7. Senior Securities. The Portfolio may not issue
senior securities, except as permitted under the 1940 Act.
8. Underwriting. The Portfolio may not underwrite
securities of other issuers, except to the extent that the Portfolio, in
disposing of portfolio securities, may be deemed to be an underwriter
within the meaning of the Securities Act of 1933 ("1933 Act").
The following non-fundamental investment policies and
limitations apply to the Portfolio:
1. Borrowing. The Portfolio may not purchase secu-
rities if outstanding borrowings, including any reverse repurchase agree-
ments, 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. Investments in Other Investment Companies. The
Portfolio may not purchase securities of other investment companies,
except to the extent permitted by the 1940 Act and in the open market at
no more than customary brokerage commission rates. This limitation does
not apply to securities received or acquired as dividends, through offers
of exchange, or as a result of a reorganization, consolidation, or merger.
4. 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.
5. Short Sales. The Portfolio may not sell
securities short unless it owns, or has the right to obtain without
payment of additional consideration, securities equivalent in kind and
amount to the securities sold. Transactions in forward contracts, futures
contracts and options shall not constitute selling securities short.
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6. Ownership of Portfolio Securities by Officers and
Trustees. The Portfolio may not purchase or retain the securities of any
issuer if, to the knowledge of N&B Management, those officers and trustees
of Managers Trust and officers and directors of N&B Management who each
owns individually more than 1/2 of 1% of the outstanding securities of
such issuer, together own more than 5% of such securities.
7. Unseasoned Issuers. The Portfolio may not
purchase the securities of any issuer (other than securities issued or
guaranteed by domestic or foreign governments or political subdivisions
thereof) if, as a result, more than 5% of the Portfolio's total assets
would be invested in the securities of business enterprises that,
including predecessors, have a record of less than three years of
continuous operation.
8. Illiquid Securities. The Portfolio may not
purchase any security if, as a result, more than 10% of its net assets
would be invested in illiquid securities. Illiquid securities include
securities that cannot be sold within seven days in the ordinary course of
business for approximately the amount at which the Portfolio has valued
the securities, such as repurchase agreements maturing in more than seven
days.
9. Foreign Securities. The Portfolio may not invest
more than 10% of the value of its total assets in securities of foreign
issuers, provided that this limitation shall not apply to foreign
securities denominated in U.S. dollars, including American Depositary
Receipts ("ADRs").
10. Oil and Gas Programs. The Portfolio may not
invest in participations or other direct interests in oil, gas, or other
mineral leases or exploration or development programs, but the Portfolio
may purchase securities of companies that own interests in any of the
foregoing.
11. Real Estate. The Portfolio may not invest in real
estate limited partnerships.
12. Warrants. The Portfolio does not intend to
invest in warrants (but may hold warrants obtained in units or attached to
securities).
Janet Prindle, Portfolio Manager of the Portfolio
-------------------------------------------------
How does Janet Prindle manage the Portfolio? "We select
securities through a two phase detection process. The first is financial.
We analyze a universe of companies according to N&B Management's value-
oriented philosophy, looking for stocks which are undervalued for any
number of reasons. We focus on financial fundamentals including balance
sheet ratios and cash flow analysis, and we meet with company management
in an effort to understand how those unrecognized values might be realized
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in the market. The second part of the process is social screening. Our
social research is based on the same kind of philosophy that governs our
financial approach: we believe that first-hand knowledge and experience
are our most important tools. Utilizing a proprietary database, we do
careful, in-depth tracking and we analyze a large number of companies on
some eighty issues in six broad social categories. We use a wide variety
of sources to determine company practices and policies in these areas, and
we analyze performance in light of our knowledge of the issues and of the
best practices in each industry. We understand that, for many issues and
in many industries, absolute standards are elusive and often
counterproductive. Thus, in addition to quantitative measurements, we
place value on such indicators as management commitment, progress,
direction, and industry leadership."
Background Information on Socially Responsive Investing
-------------------------------------------------------
In an era when many people are concerned about the
relationship between business and society, socially responsive investing
("SRI") is a mechanism for assuring that investors' social values are
reflected in their investment decisions. As such, SRI is a direct
descendent of the successful effort begun in the early 1970's to encourage
companies to divest their South African operations and subscribe to the
Sullivan Principles. Today, a growing number of individuals and
institutions are applying similar strategies to a broad range of problems.
Although there are many strategies available to the
socially responsive investor, including proxy activism, below-market loans
to community projects, and venture capital, the SRI strategies used by the
Portfolio generally fall into two categories:
Avoidance Investing. Most socially responsive investors
seek to avoid holding securities of companies whose products or policies
are seen as being at odds with the social good. The most common
exclusions historically have involved tobacco companies and weapons
manufacturers.
Leadership Investing. A growing number of investors
actively look for companies with progressive programs that are exemplary
or companies which make it their business to try to solve some of the
problems of today's society.
The marriage of social and financial objectives would not
have surprised Adam Smith who was, first and foremost, a moral
philosopher. THE WEALTH OF NATIONS is firmly rooted in the Enlightenment
conviction that the purpose of capital is the social good and the related
belief that idle capital is both wasteful and unethical. But, what very
likely would have surprised Smith is the sheer complexity of the social
issues we face today and the diversity of our attitudes toward the social
good. War and peace, race and gender, the distribution of wealth, and the
conservation of natural resources -- the social agenda is long and
compelling. It is also something about which reasonable people differ.
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What should society's priorities be? What can and should be done about
them? And what is the role of business in addressing them? Since
corporations are on the front lines of so many key issues in today's
world, a growing number of investors feel that a corporation's role cannot
be ignored. This is true of some of the most important issues of the day
such as equal opportunity and the environment.
The Socially Responsive Database
--------------------------------
Neuberger & Berman, L.P. ("Neuberger & Berman"), the
Portfolio's sub-adviser, maintains a proprietary database of information
about the social impact of the companies it follows. N&B Management uses
the database to evaluate social issues after it deems a stock acceptable
from a financial standpoint for acquisition by the Portfolio. More and
more frequently, however, N&B Management is finding that, by monitoring
social issues, it gains insight into the financial well-being of a company
because of a convergence of social and financial criteria on a company's
bottom line. This is especially evident in the areas of product quality
and marketing, workforce diversity, and the environment. The aim of the
database is to be as accurate, comprehensive, and flexible as possible,
given that much of the information concerning corporate responsibility
comes from subjective sources. Information for the database is gathered
by Neuberger & Berman in many categories and then analyzed by N&B
Management in the following six categories of corporate responsibility:
Workplace Diversity and Employment. N&B Management looks
for companies that show leadership in areas such as employee training and
promotion policies and benefits, such as flextime, generous profit
sharing, and parental leave. N&B Management looks for active programs to
promote women and minorities and takes into account their representation
among the officers and members of an issuer's board of directors. As a
basis for exclusion, N&B Management looks for Equal Employment Opportunity
Act infractions and Occupational Safety and Health Act violations;
examines each case in terms of severity, frequency, and time elapsed since
the incident; and considers actions taken by the company since the
violation. N&B Management also monitors companies' progress and attitudes
toward these issues.
Environment. A company's impact on the environment
depends largely on the industry. Therefore, N&B Management examines a
company's environmental record vis-a-vis those of its peers in the
industry. All companies operating in an industry with inherently high
environmental risks are likely to have had problems in such areas as toxic
chemical emissions, federal and state fines, and Superfund sites. For
these companies, N&B Management examines their problems in terms of
severity, frequency, and elapsed time. N&B Management then balances the
record against whatever leadership the company may have demonstrated in
terms of environmental policies, procedures, and practices. N&B
Management defines an environmental leadership company as one that puts
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into place strong affirmative programs to minimize emissions, promote
safety, reduce waste at the source, insure energy conservation, protect
natural resources, and incorporate recycling into its processes and
products. N&B Management looks for the commitment and active involvement
of senior management in all these areas. Several major manufacturers
which still produce substantial amounts of pollution are among the leaders
in developing outstanding waste source reduction and remediation programs.
Product. N&B Management considers company announcements,
press reports, and public interest publications relating to the health,
safety, quality, labeling, advertising, and promotion of both consumer and
industrial products. N&B Management takes note of companies with a strong
commitment to quality and with marketing practices which are ethical and
consumer-friendly. N&B Management pays particular attention to companies
whose products and services promote progressive solutions to social
problems.
Public Health. N&B Management measures the participation
of companies in such industries and markets as alcohol, tobacco, gambling
and nuclear power. N&B Management also considers the impact of products
and marketing activities related to those products on nutritional and
other health concerns, both domestically and in foreign markets.
Weapons. N&B Management keeps track of domestic military
sales and, whenever possible, foreign military sales and categorizes them
as nuclear weapons related, other weapons related, and non-weapon military
supplies, such as micro-chip manufacturers and companies that make
uniforms for military personnel.
Corporate Citizenship. N&B Management gathers
information about a company's participation in community affairs, its
policies with respect to charitable contributions, and its support of
education and the arts. N&B Management looks for companies with a focus,
dealing with issues not just by making financial contributions, but also
by asking the questions: What can we do to help? What do we have to
offer? Volunteerism, high-school mentoring programs, scholarships and
grants, and in-kind donations to specific groups are just a few ways that
companies have responded to these questions.
Implementation of Social Policy
-------------------------------
Companies deemed acceptable by N&B Management from a
financial standpoint are analyzed using Neuberger & Berman's database.
The companies are then evaluated by the portfolio managers to determine if
the companies' policies, practices, products, and services withstand
scrutiny in the following major areas of concern: the environment and
workplace diversity and employment. Companies are then further evaluated
to determine their track record in issues and areas of concern such as
public health, weapons, product, and corporate citizenship.
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The issues and areas of concern that are tracked lend
themselves to objective analysis in varying degrees. Few, however, can be
resolved entirely on the basis of scientifically demonstrable facts.
Moreover, a substantial amount of important information comes from sources
that do not purport to be disinterested. Thus, the quality and usefulness
of the information in the database depend upon Neuberger & Berman's
ability to tap a wide variety of sources and on the experience and
judgement of the people at N&B Management who interpret the information.
In applying the information in the database to stock
selection for the Portfolio, N&B Management considers several factors.
N&B Management examines the severity and frequency of various infractions,
as well as the time elapsed since their occurrence. N&B Management also
takes into account any remedial action which has been taken by the company
relating to these infractions. N&B Management notes any quality
innovations made by the company in its effort to create positive change
and looks at the company's overall social trend.
Additional Investment Information
---------------------------------
The Portfolio may make the following investments, among
others. It may not buy all of the types of securities or use all of the
investment techniques that are described.
Repurchase Agreements. Repurchase agreements are
agreements under which 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. The Portfolio may not
enter into a repurchase agreement with a maturity of more than seven days
if, as a result, more than 10% of the value of its net assets would then
be invested in such repurchase agreements and other illiquid securities.
The Portfolio may enter into a repurchase agreement only if (1) the
underlying securities are of the 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 value of the repurchase agreement, and
(3) payment for the underlying securities is made only upon satisfactory
evidence that the securities are being held for the Portfolio's account by
its custodian or a bank acting as the Portfolio's agent.
Securities Loans. In order to realize income, the
Portfolio may lend portfolio securities with a value not exceeding 33-1/3%
of its total assets to banks, brokerage firms, or institutional investors
judged creditworthy by N&B Management. Borrowers are required
continuously to secure their obligations to return securities on loan from
the Portfolio by depositing collateral in a form determined to be
satisfactory by the Portfolio Trustees. The collateral, which must be
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marked to market daily, must be equal to at least 100% of the market value
of the loaned securities, which will also be marked to market daily. N&B
Management believes the risk of loss on these transactions is slight
because, if a borrower were to default for any reason, the collateral
should satisfy the obligation. However, as with other extensions of
secured credit, loans of portfolio securities involve some risk of loss of
rights in the collateral should the borrower fail financially.
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 or, if they are unregistered, may be sold only in a
privately negotiated transaction or pursuant to an exemption from
registration. In recognition of the increased size and liquidity of the
institutional market for unregistered securities and the importance of
institutional investors in the formation of capital, the SEC has adopted
Rule 144A under the 1933 Act. Rule 144A is designed further to facilitate
efficient trading among institutional investors by permitting the sale of
certain unregistered securities to qualified institutional buyers. To the
extent privately placed securities held by the Portfolio qualify under
Rule 144A, and an institutional market develops for those securities, the
Portfolio likely will be able to dispose of the securities without regis-
tering them under the 1933 Act. To the extent that institutional buyers
become, for a time, uninterested in purchasing these securities, investing
in Rule 144A securities could increase the level of the Portfolio's
illiquidity. N&B Management, acting under guidelines established by the
Portfolio Trustees, may determine that certain securities qualified for
trading under Rule 144A are liquid. Foreign securities that can be freely
sold in the markets in which they are principally traded are not
considered to be restricted. Regulation S under the 1933 Act permits the
sale abroad of securities that are not registered for sale in the United
States.
Where registration is required, the Portfolio may be
obligated to pay all or part of the registration expenses, and a
considerable period may elapse between the decision to sell and the time
the Portfolio may be permitted to sell a security under an effective
registration statement. If, during such a period, adverse market
conditions were to develop, the Portfolio might obtain a less favorable
price than prevailed when it decided to sell. To the extent privately
placed securities, including Rule 144A securities, are illiquid, purchases
thereof will be subject to the Portfolio's 10% limit on investments in
illiquid securities. Restricted securities for which no market exists are
priced at fair value as determined in accordance with procedures approved
and periodically reviewed by the Portfolio Trustees.
Reverse Repurchase Agreements. In a reverse repurchase
agreement, the Portfolio sells portfolio securities subject to its
agreement to repurchase the securities at a later date for a fixed price
reflecting a market rate of interest; these agreements are considered
borrowings for purposes of the Portfolio's investment policies and
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limitations concerning borrowings. While a reverse repurchase agreement
is outstanding, the Portfolio will maintain with its custodian in a
segregated account cash, U.S. Government or Agency Securities, or other
liquid, high-grade debt securities, marked to market daily, in an amount
at least equal to the Portfolio's obligations under the agreement. There
is a risk that the contra-party to a reverse repurchase agreement will be
unable or unwilling to complete the transaction as scheduled, which may
result in losses to the Portfolio.
Foreign Securities. The Portfolio may invest in U.S.
dollar-denominated securities issued by foreign issuers (including banks,
governments, and quasi-governmental organizations) and foreign branches of
U.S. banks, including negotiable certificates of deposit ("CDs"), bankers'
acceptances and commercial paper. These investments are subject to the
Portfolio's quality standards. While investments in foreign securities
are intended to reduce risk by providing further diversification, such
investments involve sovereign and other risks, in addition to the credit
and market risks normally associated with domestic securities. These
additional risks include the possibility of adverse political and economic
developments (including political instability) 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 standards or the application of
standards that are different or less stringent than those applied in the
United States.
The Portfolio also may invest in equity, debt, or other
income-producing securities that are denominated in or indexed to foreign
currencies, including (1) common and preferred stocks, (2) CDs, commercial
paper, fixed time deposits, and bankers' acceptances issued by foreign
banks, (3) obligations of other corporations, and (4) obligations of
foreign governments or their subdivisions, agencies, and instrumentali-
ties, international agencies, and supranational entities. Investing in
foreign currency denominated securities includes the special risks asso-
ciated with investing in non-U.S. issuers described in the preceding
paragraph and the additional risks of (1) adverse changes in foreign
exchange rates, (2) nationalization, expropriation, or confiscatory taxa-
tion, (3) adverse changes in investment or exchange control regulations
(which could prevent cash from being brought back to the United States),
and (4) expropriation or nationalization of foreign portfolio companies.
Additionally, dividends and interest payable on foreign securities may be
subject to foreign taxes, including taxes withheld from those payments.
Commissions on foreign securities exchanges are often at fixed rates and
are generally higher than negotiated commissions on U.S. exchanges,
although the Portfolio endeavors to achieve the most favorable net results
on portfolio transactions. The Portfolio may invest only in securities of
issuers in countries whose governments are considered stable by N&B
Management.
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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.
Prices of foreign securities and exchange rates for
foreign currencies may be affected by the interest rates prevailing in
other countries. Interest rates in other countries are often affected by
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. Individual foreign economies may
differ favorably or unfavorably from the U.S. economy in such respects as
growth of gross national product, rate of inflation, capital reinvestment,
resource self-sufficiency, and balance of payments position.
Foreign markets also have different clearance and
settlement procedures, and, in certain markets, there have been times when
settlements have been unable to keep pace with the volume of securities
transactions, making it difficult to conduct such transactions. Such
delays in settlement could result in temporary periods when a portion of
the assets of the Portfolio are uninvested and no return is earned
thereon. The inability of the Portfolio to make intended security
purchases due to settlement problems could cause the Portfolio to miss
attractive investment opportunities. Inability to dispose of portfolio
securities due to settlement problems could result in losses to the
Portfolio due to subsequent declines in value of the portfolio securities,
or, if the Portfolio has entered into a contract to sell the securities,
could result in possible liability to the purchaser.
In order to limit the risk inherent in investing in for-
eign currency denominated securities, the Portfolio may not purchase any
such security if, after such purchase, more than 10% of its total assets
(taken at market value) would be invested in foreign currency denominated
securities. Within that limitation, however, the Portfolio is not
restricted in the amount it may invest in securities denominated in any
one foreign currency.
Futures 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 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 expected 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
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<PAGE>
maintain a defensive position without having to sell portfolio securities.
The Portfolio does not engage in transactions in futures or options on
futures for speculation. The Portfolio views investment in (i) interest
rate and securities index futures and options thereon as a maturity
management device and/or a device to reduce risk 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 securities denominated in foreign
currencies that are held or intended to be acquired by the Portfolio.
Futures contracts and options thereon are traded only on national futures
exchanges.
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.
"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 daily
net asset value ("NAV"), the Portfolio marks to market the current value
of its open futures positions. The Portfolio also must make margin
deposits with respect to options on futures that it has written. 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.
U.S. futures contracts (except certain currency futures)
are traded on exchanges that have been designated as "contract markets" by
the Commodity Futures Trading Commission ("CFTC"), an agency of the U.S.
Government; futures transactions must be executed through a futures
commission merchant that is a member of the relevant contract market. The
exchange's affiliated clearing organization guarantees performance of the
contracts between the clearing members of the exchange.
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<PAGE>
Although futures contracts by their terms may require the
actual delivery or acquisition of the underlying securities or currency,
in most cases the contractual obligation is extinguished by being offset
before the expiration of the contract, without the parties having to make
or take delivery of the assets. A futures position is offset by buying
(to offset an earlier sale) or selling (to offset an earlier purchase) an
identical futures contract calling for delivery in the same month.
Although the Portfolio believes that the use of futures
contracts will benefit it, if N&B Management's judgment about the general
direction of the markets is incorrect, the Portfolio's overall return
would be lower than if it had not entered into any such contracts.
Moreover, the spread between values in the cash and futures markets is
subject to distortion due to differences in the character of those
markets. Because of the possibility of distortion, even a correct
forecast of general market trends by N&B Management may not result in a
successful transaction.
An option on a futures contract gives the purchaser the
right, in return for the premium paid, to assume a position in the
contract (a long position if the option is a call and a short position if
the option is a put) at a specified exercise price at any time during the
option exercise period. The writer of the option is required upon
exercise to assume a short futures position (if the option is a call) or a
long futures position (if the option is a put). Upon exercise of the
option, the assumption of offsetting futures positions by the writer and
holder of the option is accompanied by delivery of the accumulated cash
balance in the writer's futures margin account. That balance represents
the amount by which the market price of the futures contract at exercise
exceeds, in the case of a call, or is less than, in the case of a put, the
exercise price of the option.
The prices of futures contracts are volatile and are
influenced by, among other things, actual and anticipated changes in
interest 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 the
securities being hedged can be only approximate. Decisions regarding
whether, when, and how to hedge involve skill and judgment. Even a well-
conceived hedge may be unsuccessful to some degree because of unexpected
market behavior or interest rate trends or lack of correlation between the
futures markets and the securities markets. Because of the low margin
deposits required, futures trading involves an extremely high degree of
leverage; as a result, a relatively small price movement in a futures
contract may result in immediate and substantial loss, or gain, to the
investor. Losses that may arise from certain futures transactions are
potentially unlimited.
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<PAGE>
Most U.S. futures exchanges limit the amount of fluctua-
tion in the price of a futures contract or option thereon during a single
trading day; once the daily limit has been reached, no trades thereof may
be made on that day at a price beyond that limit. The daily limit only
governs price movements during a particular trading day, however; it thus
does not limit potential losses, because the limit may prevent the
liquidation of unfavorable positions. Prices can move to the daily limit
for several consecutive trading days with little or no trading, thereby
preventing liquidation of futures and options positions and subjecting
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.
Put and Call Options. The Portfolio may write or
purchase put and call options on securities. Generally, the purpose of
writing and purchasing these options is to reduce the effect of price
fluctuations of securities held by the Portfolio on the Portfolio's and
the Fund's NAVs. The Portfolio may also write covered call options to
earn premium income.
The obligation under any option terminates upon
expiration of the option or, at an earlier time, when the writer offsets
the option by entering into a "closing purchase transaction" to purchase
an option of the same series. If an option is purchased by the Portfolio
and is never exercised, the Portfolio will lose the entire amount of the
premium paid.
The Portfolio will receive a premium for writing a put
option, which obligates the Portfolio to acquire a certain security at a
certain price at any time until a certain date if the purchaser of the
option decides to sell such security. The Portfolio may be obligated to
purchase the underlying security at more than its current value.
When the Portfolio purchases a put option, it pays a
premium to the writer for the right to sell a security to the writer for a
specified amount at any time until a certain date. The Portfolio would
purchase a put option in order to protect itself against a decline in the
market value of a security it owns.
When the Portfolio writes a call option, it is obligated
to sell a security to a purchaser at a specified price at any time the
purchaser requests until a certain date, and receives a premium for
writing the call option. The Portfolio intends to write only "covered"
call options on securities it owns. So long as the obligation of the call
option continues, the Portfolio may be assigned an exercise notice,
requiring it to deliver the underlying security against payment of the
exercise price. The Portfolio may be obligated to deliver securities
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<PAGE>
underlying a call option at less than the market price, thereby giving up
any additional gain on the security.
When the Portfolio purchases a call option, it pays a
premium for the right to purchase a security from the writer at a
specified price until a specified date. The Portfolio would purchase a
call option in order to protect against an increase in the price of
securities it intends to purchase or to offset a previously written call
option.
Portfolio securities on which call and put options may be
written and purchased by the Portfolio are purchased solely on the basis
of investment considerations consistent with the Portfolio's investment
objective. The writing of covered call options is a conservative
investment technique that is believed to involve relatively little risk
(in contrast to the writing of "naked" or uncovered call options, which
the Portfolio will not do), but is capable of enhancing the Portfolio's
total return. When writing a covered call option, the Portfolio, in
return for the premium, gives up the opportunity for profit from a price
increase in the underlying security above the exercise price, but
conversely retains the risk of loss should the price of the security
decline. When writing a put option, the Portfolio, in return for the
premium, takes the risk that it must purchase the underlying security at
the exercise price, which may be higher than the current market price of
the security. If a call or put option that the Portfolio has written
expires unexercised, the Portfolio will realize a gain in the amount of
the premium; however, in the case of a call option, that gain may be
offset by a decline in the market value of the underlying security during
the option period. If the call option is exercised, the Portfolio will
realize a gain or loss from the sale of the underlying security.
Options are traded both on national securities exchanges
and in the over-the-counter ("OTC") market. Exchange-traded options in
the 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 its counter-
party with no clearing organization guarantee. Thus, when the Portfolio
sells (or purchases) an OTC option, it generally will be able to "close
out" the option prior to its expiration only by entering into a closing
transaction with the dealer to whom (or from whom) the Portfolio
originally sold (or purchased) the option. There can be no assurance that
the Portfolio would be able to liquidate an OTC option at any time prior
to expiration. Unless the Portfolio is able to effect a closing purchase
transaction in a covered OTC call option it has written, it will not be
able to liquidate securities used as cover until the option expires or is
exercised or until different cover is substituted. In the event of the
counter-party's insolvency, the Portfolio may be unable to liquidate its
options position and the associated cover. N&B Management monitors the
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<PAGE>
creditworthiness of dealers with which the Portfolio may engage in OTC
options transactions, and limits the Portfolio's counter-parties in such
transactions to dealers with a net worth of at least $20 million as
reported in their latest financial statements.
The assets used as cover for OTC options written by the
Portfolio will be considered illiquid unless the OTC options are sold to
qualified dealers who agree that the Portfolio may repurchase any OTC
option it writes at a maximum price to be calculated by a formula set
forth in the option agreement. The cover for an OTC call option written
subject to this procedure will be considered illiquid only to the extent
that the maximum repurchase price under the formula exceeds the intrinsic
value of the option.
The premium received (or paid) by the Portfolio when it
writes (or purchases) an option is the amount at which the option is
currently traded on the applicable exchange, less (or plus) a commission.
The premium may reflect, among other things, the current market price of
the underlying security, the relationship of the exercise price to the
market price, the historical price volatility of the underlying security,
the length of the option period, the general supply of and demand for
credit, and the general interest rate environment. The premium received
by the Portfolio for writing 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, which is the sales
price on the option's last reported trade on that day before the time the
Portfolio's NAV is computed or, in the absence of any trades thereof on
that day, the mean between the closing bid and ask prices.
Closing transactions are effected in order to realize a
profit on an outstanding option, to prevent an underlying security from
being called, or to permit the sale or the put of the underlying security.
Furthermore, effecting a closing transaction permits the Portfolio to
write another call option on the underlying security with a different
exercise price or expiration date or both. If the Portfolio desires to
sell a particular security on which it has written a call option, it will
seek to effect a closing transaction prior to, or concurrently with, the
sale of the security. There is, of course, no assurance that the
Portfolio will be able to effect closing transactions at favorable prices.
If the Portfolio cannot enter into such a transaction, it may be required
to hold a security that it might otherwise have sold (or purchase a
security that it would not have otherwise bought), in which case it would
continue to be at market risk on the security.
The Portfolio will realize a profit or loss from a
closing purchase transaction if the cost of the transaction is less or
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<PAGE>
more than the premium received from writing the call or put option.
However, because increases in the market price of a call option generally
reflect increases in the market price of the underlying security, any loss
resulting from the repurchase of a call option is likely to be offset in
whole or in part by appreciation of the underlying security owned by the
Portfolio.
The Portfolio pays brokerage commissions in connection
with purchasing or writing options, including those used to close out
existing positions. These brokerage commissions normally are higher than
those applicable to purchases and sales of portfolio securities.
Options normally have expiration dates between three and
nine months from the date written. The exercise price of an option may be
below, equal to, or above the market value of the underlying security at
the time the option is written. From time to time, the Portfolio may
purchase an underlying security for delivery in accordance with an
exercise notice of a call option assigned to it, rather than delivering
the security from its portfolio. In those cases, additional brokerage
commissions are incurred.
Forward Foreign Currency Contracts. The Portfolio may
enter into contracts for the purchase or sale of a specific currency at a
future date at a fixed price ("forward contracts") in amounts not
exceeding 5% of its net assets. The Portfolio enters into forward
contracts in an attempt to hedge against expected changes in prevailing
currency exchange rates. The Portfolio does not engage in transactions in
forward contracts for speculation; it views investments in forward
contracts as a means of establishing more definitely the effective return
on securities denominated in foreign currencies that are held or intended
to be acquired by it. Forward contract transactions include forward sales
or purchases of foreign currencies for the purpose of 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.
N&B Management believes that the use of foreign currency
hedging techniques, including "cross-hedges," can help protect against
declines in the U.S. dollar value of income available for distribution and
declines in the Portfolio's NAV resulting from adverse changes in currency
exchange rates. For example, the return available from securities denomi-
nated in a particular foreign currency would diminish if the value of the
U.S. dollar increased against that currency. Such a decline could be
partially or completely offset by an increase in value of a cross-hedge
involving a forward contract to sell a different foreign currency, where
the contract is available on terms more advantageous to the Portfolio than
a contract to sell the currency in which the securities being hedged are
denominated. N&B Management believes that hedges and cross-hedges can,
therefore, provide significant protection of NAV in the event of a general
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<PAGE>
rise in the U.S. dollar against foreign currencies. However, a hedge or
cross-hedge cannot protect against exchange rate risks perfectly, and if
N&B Management is incorrect in its judgment of future exchange rate
relationships, the Portfolio could be in a less advantageous position than
if such a hedge had not been established. In addition, because forward
contracts are not traded on an exchange, the assets used to cover such
contracts may be illiquid.
Options on Foreign Currencies. The Portfolio may write
and purchase covered call and put options on foreign currencies, in
amounts not exceeding 5% of its net assets. The Portfolio would engage in
such transactions to protect against declines in the U.S. dollar value of
portfolio securities or increases in the U.S. dollar cost of securities to
be acquired or to protect the U.S. dollar equivalent of dividends,
interest, or other payments on those securities. As with other types of
options, however, writing an option on foreign currency constitutes only a
partial hedge, up to the amount of the premium received, and the Portfolio
could be required to purchase or sell foreign currencies at
disadvantageous exchange rates, thereby incurring losses. The risks of
currency options are similar to the risks of other options, discussed
herein. Certain options on foreign currencies are traded on the OTC
market and involve liquidity and credit risks that may not be present in
the case of exchange-traded currency options.
GENERAL CONSIDERATIONS INVOLVING FUTURES, OPTIONS ON FUTURES, OPTIONS ON
SECURITIES AND INDICES, FORWARD CONTRACTS, AND OPTIONS ON FOREIGN
CURRENCIES (COLLECTIVELY, "HEDGING INSTRUMENTS")
To the extent the Portfolio sells or purchases futures
contracts, and/or writes options thereon or options on foreign currencies
that are traded on an exchange regulated by the CFTC other than for bona
fide hedging purposes (as defined by the CFTC), the aggregate initial
margin and premiums on those positions (excluding the amount by which
options are "in-the-money") may not exceed 5% of the Portfolio's net
assets.
In addition, pursuant to state securities laws, (1) the
aggregate premiums paid by the Portfolio on all options (both exchange-
traded and OTC) held by it at any time may not exceed 20% of its net
assets, and (2) the aggregate margin deposits required on all exchange-
traded futures contracts and related options held by the Portfolio at any
time may not exceed 5% of its total assets. Also, pursuant to an
undertaking to a state securities law administrator, the Portfolio will
not purchase puts, calls, straddles, spreads, or any combination thereof
if, by reason of such purchase the value of its aggregate investment in
such instruments will exceed 5% of its total assets.
Risks Involved in Using Hedging Instruments. The primary
risks in using Hedging Instruments are (1) imperfect correlation or no
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<PAGE>
correlation between changes in market value of the securities held or to
be acquired by the Portfolio and changes in market value of Hedging
Instruments; (2) possible lack of a liquid secondary market for Hedging
Instruments and the resulting inability to close out Hedging Instruments
when desired; (3) the fact that the skills needed to use Hedging Instru-
ments are different from those needed to select the Portfolio's
securities; (4) the fact that, although use of Hedging Instruments for
hedging purposes can reduce the risk of loss, they also can reduce the
opportunity for gain, or even result in losses, by offsetting favorable
price movements in hedged investments; and (5) the possible inability of
the Portfolio to purchase or sell a portfolio security at a time that
would otherwise be favorable for it to do so, or the possible need for the
Portfolio to sell a portfolio security at a disadvantageous time, due to
its need to maintain "cover" or to segregate securities in connection with
its use of Hedging Instruments. N&B Management intends to reduce the risk
of imperfect correlation by investing only in Hedging Instruments whose
behavior is expected to resemble that of the Portfolio's underlying
securities. N&B Management intends to reduce the risk that the Portfolio
will be unable to close out Hedging Instruments by entering into such
transactions only if N&B Management believes there will be an active and
liquid secondary market. Hedging Instruments used by the Portfolio are
generally considered "derivatives." 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 requirements of the Internal Revenue Code of 1986, as amended
("Code") for qualification as a regulated investment company ("RIC"). See
"Additional Tax Information."
Cover for Hedging Instruments. 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 cash, U.S. Government or Agency Securities, or other liquid,
high-grade debt securities in the prescribed amount. Securities held in a
segregated account cannot be sold while the futures, option, or forward
strategy 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, option, or forward position; this inability may result in a loss
to the Portfolio.
Fixed Income Securities. While the emphasis of the
Portfolio's investment program is on common stocks and other equity
securities (including preferred stocks and securities convertible into or
exchangeable for common stocks), it may also invest in money market in-
struments, U.S. Government or Agency Securities, and other fixed income
securities. The Portfolio may invest in corporate bonds and debentures
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<PAGE>
receiving one of the four highest ratings from Standard & Poor's ("S&P"),
Moody's Investors Service, Inc. ("Moody's"), or any other nationally
recognized statistical rating organization ("NRSRO"), or, if not rated by
any NRSRO, deemed comparable by N&B Management to such rated securities
("Comparable Unrated Securities"). The ratings of an NRSRO represent its
opinion as to the quality of securities it undertakes to rate. Ratings
are not absolute standards of quality; consequently, securities with the
same maturity, coupon, and rating may have different yields. The Port-
folio relies primarily on 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 general market liquidity ("market
risk"). Lower-rated securities are more likely to react to developments
affecting market and credit risk than are more highly rated securities,
which react primarily to movements in the general level of interest rates.
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 not be eligible for purchase by the Portfolio. In such a case, N&B
Management will engage in an orderly disposition of the downgraded
securities.
Commercial Paper. Commercial paper is a short-term debt
security issued by a corporation or bank, among others, for purposes such
as financing current operations. The Portfolio may invest only in
commercial paper receiving the highest rating from S&P (A-1) or Moody's
(P-1), or deemed by N&B Management to be of equivalent quality.
The Portfolio may invest in commercial paper that cannot
be resold to the public without an effective registration statement under
the 1933 Act. While restricted commercial paper normally is deemed
illiquid, N&B Management may in certain cases determine that such paper is
liquid, pursuant to guidelines established by the Portfolio Trustees.
Zero Coupon Securities. The Portfolio may invest up to
5% of its net assets in zero coupon securities, which are debt obligations
that do not entitle the holder to any periodic payment of interest prior
to maturity or that specify a future date when the securities begin to pay
current interest. Zero coupon securities are issued and traded at a
discount from their face amount or par value. This discount varies
depending on prevailing interest rates, the time remaining until cash
payments begin, the liquidity of the security, and the perceived credit
quality of the issuer.
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<PAGE>
The discount on zero coupon securities ("original issue
discount") is taken into account by the Portfolio prior to the receipt of
any actual payments. Because the Fund must distribute substantially all
of its income (including its pro rata share of the Portfolio's original
issue discount) to its shareholders each year for income and excise tax
purposes (see "Additional Tax Information -- Taxation of the Fund"), 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.
The market prices of zero coupon securities generally are
more volatile than the prices of securities that pay interest periodi-
cally. Zero coupon securities are likely to respond to changes in
interest rates to a greater degree than other types of debt securities
having similar maturities and credit quality.
Convertible Securities. The Portfolio may invest in
convertible securities. A convertible security entitles the holder to
receive interest paid or accrued on debt or the dividend paid on preferred
stock until the convertible security matures or is redeemed, converted or
exchanged. Before conversion, such securities ordinarily provide a stream
of income with generally higher yields than common stocks of the same or
similar issuers, but lower than the yield on non-convertible debt.
Convertible securities are usually subordinated to comparable-tier non-
convertible securities but rank senior to common stock in a corporation's
capital structure. The value of a convertible security is a function of
(1) its yield in comparison to the yields of other securities of
comparable maturity and quality that do not have a conversion privilege
and (2) its worth if converted into the underlying common stock.
Convertible securities are typically issued by smaller
capitalization companies whose stock prices may be volatile. The price of
a convertible security often reflects variations in the price of the
underlying common stock in a way that non-convertible debt does not. 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 objective.
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, although preferred shareholders may have certain
rights if dividends are not paid. Shareholders may suffer a loss of value
if dividends are not paid and generally have no legal recourse against the
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<PAGE>
issuer. The market prices of preferred stocks are generally more
sensitive to changes in the issuer's creditworthiness than are the prices
of debt securities.
PERFORMANCE INFORMATION
The Fund's performance figures are based on historical
earnings and are not intended to indicate future performance. The share
price and total return of the Fund will vary, and an investment in the
Fund, when redeemed, may be worth more or less than an investor's original
cost.
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:
n
P(1+T) = ERV
Average annual total return smooths out year-to-year
variations and, in that respect, differs from actual year-to-year results.
Had N&B Management not waived certain fees, total return
would have been lower.
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
- 22 -
<PAGE>
Report magazines, The Wall Street Journal, New York
Times, Kiplingers Personal Finance, and Barron's News-
paper, 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, Dow Jones Industrial Average ("DJIA"), Wilshire
1750, Nasdaq Composite Index, Value Line Index, U.S.
Department of Labor Consumer Price Index ("Consumer Price
Index"), College Board Survey of Colleges Annual
Increases of College Costs, 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 $27
million to $880 million, with an average of $302 million.
The S&P 400 Index measures mid-sized companies with an
average market capitalization of $1.2 billion. Each
assumes reinvestment of distributions and is calculated
without regard to tax consequences or the costs of
investing. The Portfolio may invest in different types
of securities from those included in some of the above
indices.
The Fund may also be compared to various socially
responsive indices, including The Domini Social Index and those developed
by the quantitative department of Prudential Securities, such as that
department's Large and Mid-Cap portfolio indices for various breakdowns
("Sin" Stock Free, Cigarette-Stock Free, S&P Composite, etc.).
Evaluations of the Fund's performance, its total return
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. This information, for example, may include the
Portfolio's portfolio diversification by asset type or by the social
characteristics of companies owned. Information used in Advertisements
may include statements or illustrations relating to the appropriateness of
- 23 -
<PAGE>
types of securities and/or mutual funds that may be employed to meet
specific financial goals, such as (1) funding retirement, (2) paying for
children's education, and (3) financially supporting aging parents.
Information 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.)
From time to time the investment philosophy of N&B Man-
agement's founder, Roy R. Neuberger, may be included in the Fund's
Advertisements. This philosophy is described in further detail in "The
Art of Investing: A Conversation with Roy Neuberger," attached as Appendix
B to this SAI.
CERTAIN RISK CONSIDERATIONS
Although the Portfolio seeks to reduce risk by investing
in a diversified portfolio, diversification does not eliminate all risk.
There can, of course, be no assurance that the Portfolio will achieve its
investment objective, and an investment in the Fund involves certain risks
that are described in the sections entitled "Investment Program" and
"Description of Investments" in the Prospectus and "Investment
Information" in this SAI.
TRUSTEES AND OFFICERS
The following table sets forth information concerning the
trustees and officers of the Trusts, including their addresses and
principal business experience during the past five years. Some persons
named as trustees and officers also serve in similar capacities for other
funds, and (where applicable) their corresponding portfolios, administered
or managed by N&B Management and Neuberger & Berman.
- 24 -
<PAGE>
<TABLE>
<CAPTION>
Positions Held
Name, Age and Address(1) With the Trusts Principal Occupation(s)(2)
------------------------ --------------- --------------------------
<S> <C> <C>
Faith Colish (60) Trustee of each Trust Attorney at Law, Faith Colish, A
63 Wall Street Professional Corporation.
24th Floor
New York, NY 10005
Donald M. Cox (73) Trustee of each Trust Retired. Formerly Senior Vice President
435 East 52nd Street and Director of Exxon Corporation; Director
New York, NY 10022 of Emigrant Savings Bank.
Stanley Egener* (61) Chairman of the Board, Partner of Neuberger & Berman; President
Chief Executive Officer, and Director of N&B Management; Chairman of
and Trustee of each Trust the Board, Chief Executive Officer, and
Trustee of eight other mutual funds for
which N&B Management acts as investment
manager or administrator.
Alan R. Gruber (68) Trustee of each Trust Chairman and Chief Executive Officer of
Orion Capital Corporation Orion Capital Corporation (property and
600 Fifth Avenue casualty insurance); Director of Trenwick
24th Floor Group, Inc. (property and casualty
New York, NY 10020 reinsurance); Chairman of the Board and
Director of Guaranty National Corporation
(property and casualty insurance); formerly
Director of Ketema, Inc. (diversified
manufacturer).
Howard A. Mileaf (57) Trustee of each Trust Vice President and Special Counsel to
Wheeling Pittsburgh Corporation Wheeling Pittsburgh Corporation (holding
110 East 59th Street company) since 1992; formerly Vice
New York, NY 10022 President and General Counsel of Keene
Corporation (manufacturer of industrial
products); Director of Kevlin Corporation
(manufacturer of microwave and other
products).
Edward I. O'Brien* (67) Trustee of each Trust Until 1993, President of the Securities
12 Woods Lane Industry Association ("SIA") (securities
Scarsdale, NY 10583 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.
- 25 -
<PAGE>
Positions Held
Name, Age and Address(1) With the Trusts Principal Occupation(s)(2)
------------------------ --------------- --------------------------
<S> <C> <C>
John T. Patterson, Jr. (67) Trustee of each Trust President of SOBRO (South Bronx Overall
90 Riverside Drive Economic Development Corporation).
Apartment 1B
New York, NY 10024
John P. Rosenthal (63) Trustee of each Trust Senior Vice President of Burnham Securities
Burnham Securities Inc. Inc. (a registered broker-dealer) since
Burnham Asset Management Corp. 1991; formerly Partner of Silberberg,
1325 Avenue of the Americas Rosenthal & Co. (member of National
17th Floor Association of Securities Dealers, Inc.);
New York, NY 10019 Director, Cancer Treatment Holdings, Inc.
Cornelius T. Ryan (64) Trustee of each Trust General Partner of Oxford Partners and
Oxford Bioscience Partners Oxford Bioscience Partners (venture capital
315 Post Road West partnerships) and President of Oxford
Westport, CT 06880 Venture Corporation; Director of Capital
Cash Management Trust (money market fund)
and Prime Cash Fund.
Gustave H. Shubert (66) Trustee of each Trust Senior Fellow/Corporate Advisor and
13838 Sunset Boulevard Advisory Trustee of Rand (a non-profit
Pacific Palisades, CA 90272 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* (59) President and Trustee of Partner of Neuberger & Berman; Director of
each Trust N&B Management; President and/or Trustee of
five other mutual funds for which N&B
Management acts as investment manager or
administrator.
- 26 -
<PAGE>
Positions Held
Name, Age and Address(1) With the Trusts Principal Occupation(s)(2)
------------------------ --------------- --------------------------
<S> <C> <C>
Daniel J. Sullivan (55) Vice President of each Senior Vice President of N&B Management
Trust since 1992; prior thereto, Vice President
of N&B Management; Vice President of eight
other mutual funds for which N&B Management
acts as investment manager or
administrator.
Michael J. Weiner (48) Vice President and Senior Vice President and Treasurer of N&B
Principal Financial Management since 1992; prior thereto, Vice
Officer of each Trust President and Treasurer of N&B Management
and Treasurer of certain mutual funds for
which N&B Management acted as investment
adviser; Vice President and Principal
Financial Officer of eight other mutual
funds for which N&B Management acts as
investment manager or administrator.
Claudia A. Brandon (38) Secretary of each Trust Vice President of N&B Management; Secretary
of eight other mutual funds for which N&B
Management acts as investment manager or
administrator.
Richard Russell (48) Treasurer and Principal Vice President of N&B Management since
Accounting Officer of 1993; prior thereto, Assistant Vice
each Trust President of N&B Management; Treasurer and
Principal Accounting Officer of eight other
mutual funds for which N&B Management acts
as investment manager or administrator.
Stacy Cooper-Shugrue (32) Assistant Secretary of Assistant Vice President of N&B Management
each Trust since 1993; employee of N&B Management
since August 1989; Assistant Secretary of
eight other mutual funds for which N&B
Management acts as investment manager or
administrator.
C. Carl Randolph (57) Assistant Secretary of Partner of Neuberger & Berman since 1992;
each Trust employee thereof since 1971; Assistant
Secretary of eight other mutual funds for
which N&B Management acts as investment
manager or administrator.
</TABLE>
- 27 -
<PAGE>
___________________
(1) Unless otherwise indicated, the business address of each listed
person is 605 Third Avenue, New York, New York 10158.
(2) Except as otherwise indicated, each individual has held the
positions shown for at least the last five years.
* Indicates an "interested person" of each Trust within the meaning
of the 1940 Act. Messrs. Egener and Zicklin are interested persons by
virtue of the fact that they are officers and/or directors of N&B
Management and partners of Neuberger & Berman. Mr. O'Brien is an
interested person by virtue of the fact that he is a director of Legg
Mason, Inc., a wholly owned subsidiary of which, from time to time, serves
as a broker or dealer to the Portfolio and other funds for which N&B
Management serves as investment manager.
The Trust's Trust Instrument and Managers Trust's
Declaration of Trust each provides that it will indemnify its trustees and
officers against liabilities and expenses reasonably incurred in
connection with litigation in which they may be involved because of their
offices with the Trust, unless it is adjudicated that they engaged in bad
faith, willful misfeasance, gross negligence, or reckless disregard of the
duties involved in the conduct of their offices. In the case of
settlement, such indemnification will not be provided unless it has been
determined (by a 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.
For the fiscal year ended August 31, 1995, the Fund and
Portfolio paid fees and expenses of $13,318 to those Fund and Portfolio
Trustees who were not affiliated with N&B Management or Neuberger &
Berman.
The following table sets forth information concerning the
compensation of the trustees and officers of the Trust. None of the
Neuberger & Berman Funds(SERVICEMARK) has any retirement plan for its
trustees or officers.
- 28 -
<PAGE>
<TABLE>
<CAPTION>
TABLE OF COMPENSATION
FOR FISCAL YEAR ENDED 8/31/95
-----------------------------
Total Compensation from the
Aggregate Neuberger & Berman Fund Complex
Name and Position with Compensation Paid
the Trust from the Trust to Trustees
---------------------- -------------- -----------------------------
<S> <C> <C>
Faith Colish $0 $39,000
Trustee (5 other investment companies)
Donald M. Cox $0 $31,000
Trustee (3 other investment companies)
Stanley Egener $0 $0
Chairman of the Board, Chief Executive (9 other investment companies)
Officer, and Trustee
Alan R. Gruber $0 $31,000
Trustee (3 other investment companies)
Howard A. Mileaf $0 $36,500
Trustee (4 other investment companies)
Edward I. O'Brien $0 $31,500
Trustee (3 other investment companies)
John T. Patterson, Jr. $0 $34,500
Trustee (4 other investment companies)
John P. Rosenthal $0 $33,000
Trustee (4 other investment companies)
Cornelius T. Ryan $0 $33,500
Trustee (3 other investment companies)
Gustave H. Shubert $0 $30,000
Trustee (3 other investment companies)
Lawrence Zicklin $0 $0
President and Trustee (5 other investment companies)
</TABLE>
- 29 -
<PAGE>
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
Investment Manager and Administrator
------------------------------------
Because all of the Fund's net investable assets are
invested in the Portfolio, the Fund does not need an investment manager.
N&B Management serves as the Portfolio's investment manager pursuant to a
management agreement with Managers Trust, dated as of August 2, 1993
("Management Agreement"). The Management Agreement was approved by the
holders of the interests in the Portfolio on March 9, 1994. The
Management Agreement was approved with respect to the Portfolio by the
Portfolio Trustees, including a majority of the Portfolio Trustees who
were not "interested persons" of N&B Management or Managers Trust
("Independent Portfolio Trustees"), on October 20, 1993, and the Portfolio
became subject to it on March 14, 1994.
The Management Agreement provides, in substance, that N&B
Management will make and implement investment decisions for the Portfolio
in its discretion and will continuously develop an investment program for
the Portfolio's assets. The Management Agreement permits N&B Management
to effect securities transactions on behalf of the Portfolio through
associated persons of N&B Management. The Management Agreement also
specifically permits N&B Management to compensate, through higher
commissions, brokers and dealers who provide investment research and
analysis to the Portfolio, although N&B Management has no current plans to
do so.
N&B Management provides to the Portfolio, without
separate cost, office space, equipment, and facilities and the personnel
necessary to perform executive, administrative, and clerical functions.
N&B Management pays all salaries, expenses, and fees of the officers,
trustees, and employees of Managers Trust who are officers, directors, or
employees of N&B Management. Two directors of N&B Management (who also
are partners of Neuberger & Berman), one of whom also serves as an officer
of N&B Management, presently serve as trustees and officers of the Trusts.
See "Trustees and Officers." The Portfolio pays N&B Management a
management fee based on the Portfolio's average daily net assets, as
described in the Prospectus.
N&B Management provides similar facilities, services and
personnel, as well as shareholder accounting, recordkeeping, and other
shareholder services, to the Fund pursuant to an administration agreement
dated November 1, 1994 ("Administration Agreement"). The Fund was
authorized to become subject to the Administration Agreement by vote of
the Fund Trustees on October 20, 1993, and became subject to it on
November 1, 1994. For such administrative services, the Fund pays N&B
Management a fee based on the Fund's average daily net assets, as
described in the Prospectus. N&B Management enters into administrative
- 30 -
<PAGE>
services agreements with Institutions, pursuant to which it compensates
such Institutions for accounting, recordkeeping and other services that
they provide to investors who purchase shares of the Fund.
The Management Agreement continues for a period of two
years after the date the Portfolio became subject thereto. The Management
Agreement 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 Independent Portfolio Trustees, cast in person at a meeting called for
the purpose of voting on such approval, and (2) by the vote of a majority
of the Portfolio Trustees or by a 1940 Act majority vote of the
outstanding shares of the Portfolio. The Administration Agreement
continues for a period of two years after the date the Fund became subject
thereto. The Administration Agreement is renewable from year to year with
respect to the Fund, so long as its continuance is approved at least
annually (1) by the vote of a majority of the Fund Trustees who are not
"interested persons" of N&B Management or the Trust ("Independent Fund
Trustees"), cast in person at a meeting called for the purpose of voting
on such approval, and (2) by the vote of a majority of the Fund Trustees
or by a 1940 Act majority vote of the outstanding shares in the Fund.
The Management Agreement is terminable, without penalty,
with respect to the Portfolio on 60 days' written notice either by
Managers Trust or by N&B Management. The Administration Agreement is
terminable, without penalty, with respect to the Fund on 60 days' written
notice either by N&B Management or by the Trust if authorized by the Fund
Trustees, including a majority of the Independent Fund Trustees. Each
Agreement terminates automatically if it is assigned.
In addition to the voluntary expense reimbursements
described in the Prospectus under "Management and Administration --
Expenses," N&B Management has agreed in the Management Agreement to
reimburse the Fund's expenses, as follows. If, in any fiscal year, the
Fund's Aggregate Operating Expenses (as defined below) exceed the most
restrictive expense limitation imposed under the securities laws of the
states in which the Fund's shares are qualified for sale ("State Expense
Limitation"), then N&B Management will pay the Fund the amount of that
excess, less the amount of any reduction of the administration fee payable
by the Fund under a similar State Expense Limitation contained in the
Administration Agreement. N&B Management will have no obligation to pay
the Fund, however, for any expenses that exceed the pro rata portion of
the management fees attributable to the Fund's interest in its
corresponding Portfolio. At the date of this SAI, the most restrictive
State Expense Limitation to which the Fund expects to be subject is 2 1/2%
of the first $30 million of average net assets, 2% of the next $70 million
of average net assets, and 1-1/2% of average net assets over $100 million.
- 31 -
<PAGE>
For purposes of the State Expense Limitation, the term
"Aggregate Operating Expenses" means the Fund's operating expenses plus
its pro rata portion of the Portfolio's operating expenses (including any
fees or expense reimbursements payable to N&B Management and any
compensation payable thereto pursuant to (1) the Administration Agreement
or (2) any other agreement or arrangement with Managers Trust in regard to
the Portfolio; but excluding (with respect to both the Fund and the
Portfolio) interest, taxes, brokerage commissions, litigation and
indemnification expenses, and other extraordinary expenses not incurred in
the ordinary course of business).
Sub-Adviser
-----------
N&B Management retains Neuberger & Berman, 605 Third
Avenue, New York, NY 10158-3698, as sub-adviser with respect to the
Portfolio pursuant to a sub-advisory agreement dated August 2, 1993 ("Sub-
Advisory Agreement"). The Sub-Advisory Agreement was approved with
respect to the Portfolio by the Portfolio Trustees, including a majority
of the Independent Portfolio Trustees, on October 20, 1993 and was
approved by the holders of the interests in the Portfolios on March 9,
1994.
The Sub-Advisory Agreement provides in substance that
Neuberger & Berman will furnish to N&B Management, upon reasonable
request, the same type of investment recommendations and research that
Neuberger & Berman, from time to time, provides to its partners and
employees for use in managing client accounts. In this manner, N&B
Management expects to have available to it, in addition to research from
other professional sources, the capability of the research staff of
Neuberger & Berman. This staff consists of approximately fourteen
investment analysts, each of whom specializes in studying one or more
industries, under the supervision of the Director of Research, who is also
available for consultation with N&B Management. The Sub-Advisory
Agreement provides that N&B Management will pay for the services rendered
by Neuberger & Berman based on the direct and indirect costs to Neuberger
& Berman in connection with those services. Neuberger & Berman also
serves as sub-adviser for all of the other mutual funds managed by N&B
Management.
The Sub-Advisory Agreement continues with respect to the
Portfolio for a period of two years after the date the Portfolio became
subject thereto, 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, by a 1940 Act majority
vote of the outstanding Portfolio shares, by N&B Management, or by
Neuberger & Berman on not less than 30 nor more than 60 days' written
notice. The Sub-Advisory Agreement also terminates automatically with
- 32 -
<PAGE>
respect to the Portfolio if it is assigned or if the Management Agreement
terminates with respect to the Portfolio.
Most money managers that come to the Neuberger & Berman
organization have at least fifteen years experience. Neuberger & Berman
and N&B Management employ experienced professionals that work in a
competitive environment.
Investment Companies Managed
----------------------------
N&B Management currently serves as investment manager of
the following investment companies. As of September 30, 1995, these
companies, along with three investment companies advised by Neuberger &
Berman, had aggregate net assets of approximately $11.4 billion, as shown
in the following list:
Approximate
Net Assets at
Name September 30, 1995
---- ------------------
Neuberger & Berman Cash Reserves Portfolio . . . . . . . . . $377,608,619
(investment portfolio for Neuberger & Berman Cash Reserves)
Neuberger & Berman Government Income Portfolio . . . . . . . $12,053,656
(investment portfolio for Neuberger & Berman Government Income Fund
and Neuberger & Berman Government Income Trust)
Neuberger & Berman Government Money Portfolio . . . . . . . . $346,898,132
(investment portfolio for Neuberger & Berman Government Money Fund)
Neuberger & Berman Limited Maturity Bond Portfolio . . . . . $309,540,451
(investment portfolio for Neuberger & Berman Limited Maturity Bond
Fund and Neuberger & Berman Limited Maturity Bond Trust)
Neuberger & Berman Municipal Money Portfolio . . . . . . . . $149,657,613
(investment portfolio for Neuberger & Berman Municipal Money Fund)
Neuberger & Berman Municipal Securities Portfolio . . . . . . $44,568,635
(investment portfolio for Neuberger & Berman Municipal Securities
Trust)
Neuberger & Berman New York Insured Intermediate
Portfolio . . . . . . . . . . . . . . . . . . . . . . $10,679,324
(investment portfolio for Neuberger & Berman New York Insured
Intermediate Fund)
- 33 -
<PAGE>
Approximate
Net Assets at
Name September 30, 1995
---- ------------------
Neuberger & Berman Ultra Short Bond Portfolio . . . . . . . . $102,903,312
(investment portfolio for Neuberger & Berman Ultra Short Bond Fund
and Neuberger & Berman Ultra Short Bond Trust)
Neuberger & Berman Focus Portfolio . . . . . . . . . . . . $1,031,915,664
(investment portfolio for Neuberger & Berman Focus Fund and Neuberger
& Berman Focus Trust)
Neuberger & Berman Genesis Portfolio . . . . . . . . . . . . $145,188,783
(investment portfolio for Neuberger & Berman Genesis Fund and
Neuberger & Berman Genesis Trust)
Neuberger & Berman Guardian Portfolio . . . . . . . . . . $4,943,764,830
(investment portfolio for Neuberger & Berman Guardian Fund and
Neuberger & Berman Guardian Trust)
Neuberger & Berman International Portfolio . . . . . . . . . $29,990,616
(investment portfolio for Neuberger & Berman International Fund)
Neuberger & Berman Manhattan Portfolio . . . . . . . . . . . $670,916,038
(investment portfolio for Neuberger & Berman Manhattan Fund and
Neuberger & Berman Manhattan Trust)
Neuberger & Berman Partners Portfolio . . . . . . . . . . . $1,664,460,688
(investment portfolio for Neuberger & Berman Partners Fund and
Neuberger & Berman Partners Trust)
- 34 -
<PAGE>
Approximate
Net Assets at
Name September 30, 1995
---- ------------------
Neuberger & Berman Socially Responsive
Portfolio . . . . . . . . . . . . . . . . . . . . . . $102,675,093
(investment portfolio for Neuberger & Berman Socially Responsive
Fund, Neuberger & Berman Socially Responsive Trust, and Neuberger &
Berman NYCDC Socially Responsive Trust)
Neuberger & Berman Advisers Managers
Trust (six series) . . . . . . . . . . . . . . . . . $1,257,506,124
In addition, Neuberger & Berman serves as investment
adviser to three investment companies, Plan Investment Fund, Inc., AHA
Investment Fund, Inc., and AHA Full Maturity, with assets of $85,110,472,
$110,683,193, and $23,891,472, respectively, at September 30, 1995.
The investment decisions concerning the Portfolio and the
other funds and portfolios managed by N&B Management (collectively, "Other
N&B Funds") have been and will continue to be made independently of one
another. In terms of their investment objectives, most of the Other N&B
Funds differ from the Portfolio. Even where the investment objectives are
similar, however, the methods used by the Other N&B Funds and the
Portfolio to achieve their objectives may differ.
There may be occasions when the Portfolio and one or more
of the Other N&B Funds or other accounts managed by Neuberger & Berman are
contemporaneously engaged in purchasing or selling the same securities
from or to third parties. When this occurs, the transactions are averaged
as to price and allocated as to amounts in accordance with a formula
considered to be equitable to the funds involved. Although in some cases
this arrangement may have a detrimental effect on the price or volume of
the securities as to the Portfolio, in other cases it is believed that the
Portfolio's ability to participate in volume transactions may produce
better executions for it. In any case, it is the judgment of the
Portfolio Trustees that the desirability of the Portfolio's having its
advisory arrangements with N&B Management outweighs any disadvantages that
may result from contemporaneous transactions. The investment results
achieved by all of the funds managed by N&B Management have varied from
one another in the past and are likely to vary in the future.
Management and Control of N&B Management
----------------------------------------
The directors and officers of N&B Management, all of whom
have offices at the same address as N&B Management, are Richard A. Cantor,
- 35 -
<PAGE>
Chairman of the Board and director; Stanley Egener, President and
director; Theresa A. Havell, Vice President and director; Irwin Lainoff,
director; Marvin C. Schwartz, director; Lawrence Zicklin, director; Daniel
J. Sullivan, Senior Vice President; Michael J. Weiner, Senior Vice
President and Treasurer; Claudia A. Brandon, Vice President; William
Cunningham, Vice President; Clara Del Villar, Vice President; Mark R.
Goldstein, Vice President; Farha-Joyce Haboucha, Vice President; Michael
M. Kassen, Vice President; Michael Lamberti, Vice President; Josephine P.
Mahaney, Vice President; Lawrence Marx III, Vice President; Ellen Metzger,
Vice President and Secretary; Janet W. Prindle, Vice President; Felix
Rovelli, Vice President; Richard Russell, Vice President; Kent C. Simons,
Vice President; Frederick B. Soule, Vice President; Judith M. Vale, Vice
President; Thomas Wolfe, Vice President; Andrea Trachtenberg, Vice
President of Marketing; Patrick T. Byrne, Assistant Vice President; Robert
Conti, Assistant Vice President; Stacy Cooper-Shugrue, Assistant Vice
President; Robert Cresci, Assistant Vice President; Barbara DiGiorgio,
Assistant Vice President; Roberta D'Orio, Assistant Vice President; Robert
I. Gendelman, Assistant Vice President; Leslie Holliday-Soto, Assistant
Vice President; Carmen G. Martinez, Assistant Vice President; Paul
Metzger, Assistant Vice President; Susan Switzer, Assistant Vice
President; Susan Walsh, Assistant Vice President; and Celeste Wischerth,
Assistant Vice President. Messrs. Cantor, Egener, Lainoff, Schwartz,
Zicklin, Goldstein, Kassen, Marx, and Simons and Mmes. Havell and Prindle
are general partners of Neuberger & Berman.
Messrs. Egener and Zicklin are trustees and officers, and Messrs.
Sullivan, Weiner, and Russell and Mmes. Brandon and Cooper-Shugrue are
officers, of each Trust. C. Carl Randolph, a general partner of Neuberger
& Berman, also is an officer of each Trust.
All of the outstanding voting stock in N&B Management is owned by
persons who are also general partners of Neuberger & Berman.
DISTRIBUTION ARRANGEMENTS
N&B Management serves as the distributor ("Distributor")
in connection with the offering of 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 either 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.
- 36 -
<PAGE>
The Distributor or one of its affiliates may, from time
to time, deem it desirable to offer to the Fund's shareholders, through
use of its shareholder list, the shares of other mutual funds for which
the Distributor acts as distributor or other products or services. Any
such use of the Fund's shareholder lists, however, will be made subject to
terms and conditions, if any, approved by a majority of the Independent
Fund Trustees. These lists will not be used to offer the Fund's
shareholders any investment products or services other than those managed
or distributed by N&B Management or Neuberger & Berman.
From time to time, N&B Management may enter into
arrangements pursuant to which it compensates a registered broker-dealer
or other third party for services in connection with the distribution of
Fund shares.
The Trust, on behalf of the Fund, and the Distributor are
parties to a Distribution Agreement that continues until November 1, 1996.
The Distribution Agreement may be renewed annually if specifically
approved by (1) the vote of a majority of the Fund Trustees or a 1940 Act
majority vote of the Fund's outstanding shares and (2) the vote of a
majority of the Independent Fund Trustees, cast in person at a meeting
called for the purpose of voting on such approval. The Distribution
Agreement may be terminated by either party and will automatically
terminate on its assignment, in the same manner as the Management
Agreement.
ADDITIONAL EXCHANGE INFORMATION
As more fully set forth in the section of the Prospectus
entitled "Exchanging Shares," an Institution may exchange shares of the
Fund for shares of one or more of the Other N&B Funds that are briefly
described below.
- 37 -
<PAGE>
EQUITY FUNDS
------------
<TABLE>
<CAPTION>
<S> <C>
Neuberger & Berman Seeks capital appreciation through investments primarily in
Genesis Trust common stocks of companies with small market capitalization,
up to $750 million. The fund uses a value-oriented approach
to the selection of individual securities.
Neuberger & Berman Seeks capital appreciation through investments generally in
Guardian Trust a large number of common stocks of long-established, high-
quality companies that N&B Management believes are well-
managed. The fund uses a value-oriented approach to the
selection of individual securities. Current income is a
secondary objective. The Sister Fund and its predecessor
have paid its shareholders an income dividend every quarter,
and a capital gain distribution every year, since its
inception in 1950, although there can be no assurance that
it will be able to continue to do so.
Neuberger & Berman Seeks capital appreciation, without regard to income,
Manhattan Trust through investments principally in securities that N&B
Management believes offer a potential for increasing the
fund's total NAV. The fund's policy of investing in
securities believed to have a maximum potential for growth
means that its assets generally will be subject to greater
risk than may be involved in investing in securities that do
not have those growth characteristics.
Neuberger & Berman Seeks capital growth through an investment approach that is
Partners Trust designed to increase capital with reasonable risk. Its
investment program seeks securities believed to be
undervalued based on strong fundamentals such as low price-
to-earnings ratios, consistent cash flow and support from
asset values. It is a growth fund which uses the value
oriented investment approach.
Neuberger & Berman Seeks long-term capital appreciation through investments
Focus Trust primarily in common stocks selected from 13 economic
sectors. N&B Management identifies and focuses the fund's
investments in a limited number of these sectors by using a
value-oriented approach to select individual securities.
Through this approach, 90% or more of the fund's investments
are normally focused in not more than six sectors.
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Neuberger & Berman Socially Seeks long-term capital appreciation by investing primarily
Responsive Trust in securities of companies that meet both financial and
social criteria.
INCOME FUNDS
------------
<S> <C>
Neuberger & Berman Seeks a higher total return than is available from money market
Ultra Short Bond Trust funds, with minimal risk to principal and liquidity. Through its
corresponding portfolio, the fund invests in high-quality money
market instruments and short-term debt securities.
Neuberger & Berman Seeks the highest current income consistent with low risk to
Limited Maturity Bond Trust principal and liquidity and, secondarily, total return. Through
its corresponding portfolio, the fund invests in short- to inter-
mediate-term debt securities of at least investment grade.
Neuberger & Berman Government Income Seeks a high level of current income and total return, consistent
Trust with safety of principal. At least 65% of the corresponding
portfolio's investments are in U.S. Government securities that
are issued or guaranteed as to principal and interest by the U.S.
Government or its agencies, including U.S. Government mortgage-
backed securities; at least 25% of its investments are in mort-
gage-backed and asset-backed securities.
</TABLE>
The Fund and any of the Other N&B Funds may terminate or
modify its exchange privilege in the future.
Fund shareholders who are considering exchanging shares
into any of the funds listed above should note that (1) the Income Funds
are series of a Delaware business trust (named "Neuberger & Berman Income
Trust") that is registered with the SEC as an open-end management
investment company, (2) the Equity Funds are series of a Delaware business
trust (named "Neuberger & Berman Equity Trust") that is registered with
the SEC as an open-end management investment company, (3) each series of
Neuberger & Berman Income Trust invests all its net investable assets in a
portfolio of Income Managers Trust, an open-end management investment
company that is managed by N&B Management and (4) like the Fund, each
series of Neuberger & Berman Equity Trust invests all its net investable
assets in a portfolio of Managers Trust. Each such portfolio has an
investment objective identical to that of its corresponding fund and
invests in accordance with investment policies and limitations identical
to those of that fund.
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<PAGE>
Before effecting an exchange, Fund shareholders must
obtain and should review a currently effective prospectus of the fund into
which the exchange is to be made. In this regard, it should be noted that
the Income Funds share a prospectus and the Equity Funds share a
prospectus. An exchange is treated as a sale for federal income tax
purposes and, depending on the circumstances, a short- or long-term
capital gain or loss may be realized.
ADDITIONAL REDEMPTION INFORMATION
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
(other than weekend and holiday closings), (2) when trading on the NYSE is
restricted, (3) when an emergency exists as a result of which it is not
reasonably practicable for the 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; provided that applicable SEC rules and regulations shall
govern whether the conditions prescribed in (2) or (3) exist. If the
right of redemption is suspended, shareholders may withdraw their offers
of redemption, or they will receive payment at the NAV per share in effect
at the close of business on the first day the NYSE is open ("Business
Day") after termination of the suspension.
Redemptions in Kind
-------------------
The Fund reserves the right, under certain conditions, to
honor any request for redemption by making payment in whole or in part in
securities valued as described under "Share Information -- Share Prices
and Net Asset Value" in the Prospectus. If payment is made in securities,
a shareholder generally will incur brokerage expenses in converting those
securities into cash and will be subject to fluctuations in the market
price of those securities until they are sold. The Fund does not redeem
in kind under normal circumstances, but would do so when the Fund Trustees
determine that it is in the best interests of the Fund's shareholders as a
whole. Redemptions in kind will be made with readily marketable
securities to the extent possible.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Fund distributes to its shareholders amounts equal to
substantially all of its proportionate share of any net investment income
(after deducting expenses incurred directly by the Fund), net capital
gains (both long-term and short-term), and net gains from foreign currency
transactions earned or realized by the Portfolio. The Fund calculates its
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<PAGE>
net investment income and NAV per share as of the close of regular trading
on the NYSE on each Business Day (usually 4:00 p.m. Eastern time).
The Portfolio's net investment income consists of all
income accrued on portfolio assets less accrued expenses, but does not
include realized gains and losses. Net investment income and realized
gains and losses are reflected in the Portfolio's NAV (and, hence, the
Fund's NAV) until they are distributed. Dividends from net investment
income and distributions of realized net capital and foreign currency
gains, if any, normally are paid once annually, in December.
Dividends and/or other distributions are automatically
reinvested in additional shares of the Fund, unless and until the
Institution elects to receive them in cash ("cash election"). To the
extent dividends and other distributions are subject to federal, state, or
local income taxation, they are taxable to the shareholders whether
received in cash or reinvested in Fund shares. A cash election remains in
effect until the Institution notifies State Street Bank and Trust Company
in writing to discontinue the election.
ADDITIONAL TAX INFORMATION
Taxation of the Fund
--------------------
In order to qualify for treatment as a RIC under the
Code, the Fund must distribute to its shareholders for each taxable year
at least 90% of its investment company taxable income (consisting
generally of net investment income, net short-term capital gain, and net
gains from certain foreign currency transactions) ("Distribution
Requirement") and must meet several additional requirements. These
requirements include the following: (1) the Fund must derive at least 90%
of its gross income each taxable year from dividends, interest, payments
with respect to securities loans, and gains from the sale or other
disposition of securities or foreign currencies, or other income (includ-
ing gains from Hedging Instruments) derived with respect to its business
of investing in securities or those currencies ("Income Requirement");
(2) the Fund must derive less than 30% of its gross income each taxable
year from the sale or other disposition of securities, or any of the
following, that were held for less than three months -- Hedging
Instruments (other than those on foreign currencies), or foreign
currencies (or Hedging Instruments thereon) that are not directly related
to the Fund's principal business of investing in securities (or options
and futures with respect thereto) ("Short-Short Limitation"); and (3) at
the close of each quarter of the Fund's taxable year, (i) at least 50% of
the value of its total assets must be represented by cash and cash items,
U.S. Government securities, and other securities limited, in respect of
any one issuer, to an amount that does not exceed 5% of the value of the
Fund's total assets and does not represent more than 10% of the issuer's
- 41 -
<PAGE>
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) of any one issuer.
Certain funds that invest in portfolios managed by N&B
Management, including funds that invest in other portfolios of Managers
Trust, have received a ruling from the Internal Revenue Service
("Service") that each such fund, as an investor in a corresponding
portfolio of Managers Trust, will be deemed to own a proportionate share
of the portfolio's assets and income for purposes of determining whether
the fund satisfies all the requirements described above to qualify as a
RIC. Although this ruling may not be relied on as precedent by the Fund,
N&B Management believes that the reasoning thereof and, hence, its
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 conse-
quences to the Fund of distributions to it from the Portfolio, investments
by the Portfolio in certain securities, and hedging transactions engaged
in by the Portfolio.
Taxation of the Portfolio
-------------------------
Certain portfolios managed by N&B Management, including
the other portfolios of Managers Trust, have received a ruling from the
Service to the effect that, among other things, each such portfolio will
be treated as a separate partnership for federal income tax purposes and
will not be a "publicly traded partnership." Although this ruling may not
be relied on as precedent by the Portfolio, N&B Management believes the
reasoning thereof and, hence, its conclusion apply to the Portfolio as
well. As a result, the Portfolio is subject to federal income tax;
instead, each investor in the Portfolio, such as the Fund, is required to
take into account in determining its federal income tax liability its
share of the Portfolio's income, gains, losses, deductions, and credits,
without regard to whether it has received any cash distributions from the
Portfolio. The Portfolio also is not subject to Delaware or New York
income or franchise tax.
Because the Fund is deemed to own a proportionate share
of the Portfolio's assets and income for purposes of determining whether
the Fund satisfies the requirements as a RIC, the Portfolio intends to
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<PAGE>
continue to conduct its operations so that the Fund will be able to
continue to satisfy all those requirements.
Distributions to the Fund from the Portfolio (whether
pursuant to a partial or complete withdrawal or otherwise) will not result
in the Fund's recognition of any gain or loss for federal income tax
purposes, except that (1) gain will be recognized to the extent any cash
that is distributed exceeds the Fund's basis for its interest in the
Portfolio before the distribution, (2) income or gain will be recognized
if the distribution is in liquidation of the Fund's entire interest in the
Portfolio and includes a disproportionate share of any unrealized
receivables held by the Portfolio, and (3) loss will be recognized if a
liquidation distribution consists solely of cash and/or unrealized
receivables. The Fund's basis for its interest in the Portfolio generally
equals the amount of cash and the basis of any property the Fund invests
in the Portfolio, increased by the Fund's share of the Portfolio's net
income and gains and decreased by (1) the amount of cash and the basis of
any property the Portfolio distributes to the Fund and (2) the Fund's
share of the Portfolio's losses.
Dividends and interest received by the Portfolio may be
subject to income, withholding, or other taxes imposed by foreign
countries and U.S. possessions that would reduce the yield on its
securities. Tax 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 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 a portion of any "excess distribution" received on
the stock or of any gain on disposition of the stock (collectively, "PFIC
income"), plus interest thereon, even if the Fund distributes the PFIC
income as a taxable dividend to the Plan. The balance of the PFIC income
will be included in the Fund's investment company taxable income and,
accordingly, will not be taxable to it to the extent that income is
distributed to the Plan.
If the Portfolio invests in a PFIC and elects to treat
the PFIC as a "qualified electing fund," 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 pro rata share of the
Portfolio's pro rata share of the qualified electing fund's annual
ordinary earnings and net capital gain (the excess of net long-term
- 43 -
<PAGE>
capital gain over net short-term capital loss) -- which most likely would
have to be distributed by the Fund to satisfy the Distribution Requirement
and to avoid imposition of the Excise Tax -- even if those earnings and
gain were not received by the Portfolio. In most instances it will be
very difficult, if not impossible, to make this election because of
certain requirements thereof.
Pursuant to proposed regulations, open-end RICs, such as
the Fund, would be entitled to elect to mark to market their stock in
certain PFICs. Marking to market, in this context, means recognizing as
gain for each taxable year the excess, as of the end of that year, of the
fair market value of each such PFIC's stock over the adjusted basis in
that stock (including mark to market gain for each prior year for which an
election was in effect).
The Portfolio's use of hedging strategies, such as
writing (selling) and purchasing options and futures contracts and
entering into forward contracts, involves complex rules that will
determine for income tax purposes the character and timing of recognition
of the gains and losses the Portfolio realizes in connection therewith.
Income from foreign currencies (except certain gains therefrom that may be
excluded by future regulations), and income from transactions in 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. However, income from
the disposition by the Portfolio of Hedging Instruments (other than those
on foreign currencies) will be subject to the Short-Short Limitation for
the Fund if they are held for less than three months. Income from the
disposition of foreign currencies, and Hedging Instruments on foreign
currencies, that are not directly related to the Portfolio's principal
business of investing in securities (or options and futures with respect
thereto) also will be subject to the Short-Short Limitation for the Fund
if they are held for less than three months.
If the Portfolio satisfies certain requirements, any
increase in value of a position that is part of a "designated hedge" will
be offset by any decrease in value (whether realized or not) of the
offsetting hedging position during the period of the hedge for purposes of
determining whether the Fund satisfies the Short-Short Limitation. Thus,
only the net gain (if any) from the designated hedge will be included in
gross income for purposes of that limitation. The Portfolio will consider
whether it should seek to qualify for this treatment for its hedging
transactions. To the extent the Portfolio does not so qualify, it may be
forced to defer the closing out of certain Hedging Instruments beyond the
time when it otherwise would be advantageous to do so, in order for the
Fund to continue to qualify as a RIC.
- 44 -
<PAGE>
Exchange-traded futures contracts and listed options
thereon ("Section 1256 contracts") are required to be marked to market
(that is, treated as having been sold at market value) at the end of the
Portfolio's taxable year. Sixty percent of any gain or loss recognized as
a result of these "deemed sales," and 60% of any net realized gain or loss
from any actual sales, of Section 1256 contracts are treated as long-term
capital gain or loss; the remainder is treated as short-term capital gain
or loss.
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
account the OID that accrues on the securities during the taxable year,
even if it receives no corresponding payment on the securities during the
year. Because 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 to avoid
imposition of the Excise Tax, the Fund may be required in a particular
year to distribute as a dividend an amount that is greater than its
proportionate share of the total amount of cash the Portfolio actually
receives. Those distributions will be made from the Fund's (or its
proportionate 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. In addition, any such gains may be realized on the disposition of
securities held for less than three months. Because of the Short-Short
Limitation, any such gains would reduce the Portfolio's ability to sell
other securities, or certain Hedging Instruments, held for less than three
months that it might wish to sell in the ordinary course of its portfolio
management.
PORTFOLIO TRANSACTIONS
Neuberger & Berman acts as the Portfolio's principal
broker in the purchase and sale of its portfolio securities and in connec-
tion with the purchase and sale of options on its securities.
Transactions in portfolio securities for which Neuberger & Berman serves
as broker will be effected in accordance with Rule 17e-1 under the 1940
Act.
During the period from March 14, 1994 (commencement of
operations) through August 31, 1994, and the fiscal year ended August 31,
1995, the Portfolio paid brokerage commissions of $46,374 and $138,378,
respectively, of which $46,050 and $95,964, respectively, were paid to
Neuberger & Berman. Transactions in which that Portfolio used Neuberger &
Berman as broker comprised 72.32% of the aggregate dollar amount of
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<PAGE>
transactions involving the payment of commissions, and 69.35% of the
aggregate brokerage commissions paid by the Portfolio, during the fiscal
year ended August 31, 1995. 93.17% of the $42,414 paid to other brokers
by that Portfolio during that fiscal year (representing commissions on
transactions involving approximately $17,590,257) was directed to those
brokers because of research services they provided. During the fiscal
year ended August 31, 1995, the Portfolio acquired securities of the
following of its Regular B/Ds: none; at that date, that Portfolio held the
securities of its Regular B/Ds with an aggregate value as follows: none.
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. Among the conditions of
the order, securities loans made by the Portfolio to Neuberger & Berman
must be fully secured by cash collateral. Under the order, the portion of
the income on cash collateral which may be shared with Neuberger & Berman
is determined with 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 relend them to others, Neuberger & Berman
is required to pay the Portfolio, on a quarterly basis, certain "excess
earnings" that Neuberger & Berman otherwise has derived from the relending
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 the Portfolio's expenses exceed its income in any
securities loan transaction with Neuberger & Berman, Neuberger & Berman
must reimburse the Portfolio for such loss.
During the fiscal year ended August 31, 1995, and the
period March 14, 1994 (commencement of operations) to August 31, 1994, the
Portfolio earned no interest income from the collateralization of
securities loans.
The Portfolio may also lend securities to unaffiliated
entities, including brokers or dealers, banks and other recognized
institutional borrowers of securities, provided that cash or equivalent
collateral, equal to at least 100% of the market value of the securities
loaned, is continuously maintained by the borrower with the Portfolio.
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. 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. These loans are subject to
termination at the option of the Portfolio or the borrower. The Portfolio
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<PAGE>
may pay reasonable administrative and custodial fees in connection with a
loan and may pay a negotiated portion of the interest earned on the cash
or equivalent collateral to the borrower or placing broker. The Portfolio
does not have the right to vote securities on loan, but would terminate
the loan and regain the right to vote if that were considered important
with respect to the investment.
A committee of Independent Portfolio Trustees from time
to time reviews, among other things, information relating to securities
loans by the Portfolio.
In effecting securities transactions, the Portfolio gen-
erally seeks to obtain the best price and execution of orders. Commission
rates, being a component of price, are considered along with other
relevant factors. The Portfolio plans to continue to use Neuberger &
Berman as its principal broker where, in the judgment of N&B Management
(the Portfolio's investment manager and an affiliate of the broker), that
firm is able to obtain a price and execution at least as favorable as
other qualified brokers. To the Portfolio's knowledge, however, 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. The Portfolio Trustees have expressly authorized Neuberger
& Berman to retain such compensation, and Neuberger & Berman complies 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 to be paid to Neuberger & Berman must, in N&B Management's
judgment, be (1) at least as favorable as those charged by other brokers
having comparable execution capability and (2) at least as favorable as
commissions contemporaneously charged by Neuberger & Berman on comparable
transactions for its most favored unaffiliated customers, except for
accounts for which Neuberger & Berman acts as a clearing broker for
another brokerage firm and customers of Neuberger & Berman considered by a
majority of the Independent Portfolio Trustees not to be comparable to the
Portfolio. The Portfolio does not deem it practicable and in its best
interest to solicit competitive bids for commissions on each transaction
effected by Neuberger & Berman. However, consideration regularly is given
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<PAGE>
to information concerning the prevailing level of commissions charged by
other brokers on comparable transactions during comparable periods of
time. The 1940 Act generally prohibits Neuberger & Berman from acting as
principal in the purchase or sale of securities for the Portfolio's
account, 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.
The Portfolio expects that it will continue to execute a
portion of its transactions through brokers other than Neuberger & Berman.
In selecting those brokers, N&B Management considers the quality and
reliability of brokerage services, including execution capability,
performance, and financial responsibility, and may consider research and
other investment information provided by, and sale of Fund shares effected
through, those brokers.
To ensure that accounts of all investment clients,
including the Portfolio, are treated fairly in the event that transaction
instructions for more than one investment account regarding the same
security are received by Neuberger & Berman at or about the same time,
Neuberger & Berman may combine transaction 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 transaction order
actually placed by the account bears to the aggregate size of transaction
orders simultaneously made by the other accounts, subject to de minimis
exceptions, with all participating accounts paying or receiving the same
price.
A committee comprised of officers of N&B Management and
partners of Neuberger & Berman who are portfolio managers of the Portfolio
and/or Other N&B Funds (collectively, "N&B Funds") and some of Neuberger &
Berman's managed accounts ("Managed Accounts") evaluates semi-annually the
nature and quality of the brokerage and research services provided by
other brokers. Based on this evaluation, the committee establishes a list
and projected rankings of preferred brokers for use in determining the
relative amounts of commissions to be allocated to those brokers.
Ordinarily, the brokers on the list effect a large portion of the
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<PAGE>
brokerage transactions for the N&B Funds and the Managed Accounts that are
not effected by Neuberger & Berman. However, in any semi-annual period,
brokers not on the list may be used, and the relative amounts of brokerage
commissions paid to the brokers on the list may vary substantially from
the projected rankings. These variations reflect the following factors,
among others: (1) brokers not on the list or ranking below other brokers
on the list may be selected for particular transactions because they
provide better price and/or execution, which is the primary consideration
in allocating brokerage; (2) adjustments may be required because of
periodic changes in the execution or research capabilities of particular
brokers, or in the execution or research needs of the N&B Funds and/or the
Managed Accounts; and (3) the aggregate amount of brokerage commissions
generated by transactions for the N&B Funds and the Managed Accounts may
change substantially from one semi-annual period to the next.
The commissions charged by a broker other than Neuberger
& Berman may be higher than the amount another firm might charge if N&B
Management determines in good faith that the amount of those commissions
is reasonable in relation to the value of the brokerage and research
services provided by the broker. N&B Management believes that those
research services benefit the Portfolio by supplementing the research
otherwise available to N&B Management. That research may be used by N&B
Management in servicing Other N&B Funds and, in some cases, by Neuberger &
Berman in servicing the Managed Accounts. On the other hand, research
received by N&B Management from brokers effecting portfolio transactions
on behalf of the Other N&B Funds and by Neuberger & Berman from brokers
effecting portfolio transactions on behalf of the Managed Accounts may be
used for the Portfolio's benefit.
Janet Prindle, a Vice President of N&B Management and a
partner of Neuberger & Berman, is the person primarily responsible for
making decisions as to specific action to be taken with respect to the
investment portfolio of the Portfolio. She has full authority to take
action with respect to portfolio transactions and may or may not consult
with other personnel of N&B Management prior to taking such action. If
Ms. Prindle is unavailable to perform her responsibilities, Farha-Joyce
Haboucha, who is a Vice President of N&B Management, will assume
responsibility for the Portfolio.
Portfolio Turnover
------------------
The portfolio turnover rate is the lesser of the cost of
the securities purchased or the value of the securities sold, excluding
all securities, including options, whose maturity or expiration date at
the time of acquisition was one year or less, divided by the average
monthly value of such securities owned during the year.
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REPORTS TO SHAREHOLDERS
Shareholders of the Fund receive unaudited semi-annual
financial statements and audited year-end financial statements certified
by the independent accountants for the Fund and Portfolio. The Fund's
statements show the investments owned by the Portfolio and the market
values thereof and provide other information about the Fund and its
operations, including the Fund's beneficial interest in the Portfolio.
CUSTODIAN AND TRANSFER AGENT
The Fund and Portfolio have each selected Street Bank and
Trust Company ("State Street"), 225 Franklin Street, Boston, MA 02110 as
custodian for its securities and cash. All correspondence should be
mailed to Neuberger & Berman Funds, Institutional Services, 605 Third
Avenue, 2nd Floor, New York, NY 10158-0180. State Street also serves as
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.
INDEPENDENT ACCOUNTANTS
The Fund and Portfolio have selected Coopers & Lybrand
L.L.P., One Post Office Square, Boston, MA 02109, as the independent
accountants who will audit their financial statements.
LEGAL COUNSEL
The Fund and Portfolio have selected Kirkpatrick &
Lockhart LLP, 1800 M Street, N.W., Washington, D.C. 20036, as their legal
counsel.
REGISTRATION STATEMENT
This SAI and the Prospectus do not contain all the infor-
mation included in the Trust's registration statement filed with the SEC
under the 1933 Act with respect to the securities offered by the
Prospectus. Certain portions of the registration statement have been
omitted pursuant to SEC rules and regulations. The registration
statement, including the exhibits filed therewith, may be examined at the
SEC's offices in Washington, D.C.
Statements contained in this SAI and in the Prospectus as
to the contents of any contract or other document referred to are not
necessarily complete, and in each instance reference is made to the copy
of the contract or other document filed as an exhibit to the registration
- 50 -
<PAGE>
statement, each such statement being qualified in all respects by such
reference.
FINANCIAL STATEMENTS
Unaudited financial statements for the Fund for the
fiscal year ended August 31, 1995, appear on the following pages.
- 51 -
<PAGE>
NEUBERGER&BERMAN SOCIALLY RESPONSIVE TRUST
STATEMENT OF ASSETS AND LIABILITIES
AS OF AUGUST 31, 1995
(Unaudited)
ASSETS:
Cash $100,000
Deferred organization costs (Note 1) 120,000
--------
Total assets 220,000
--------
LIABILITIES:
Accrued organization costs (Note 1) 120,000
--------
NET ASSETS $100,000
========
Shares Outstanding ($.001 par value:
unlimited shares of beneficial interest
authorized) 10,000
========
Net Asset Value, offering and redemption
price per share ($100,000 divided by
10,000 shares outstanding) $ 10.00
========
The accompanying notes are an integral part of this statement.
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
NOTE 1 - Significant Accounting Policies:
(a) General: Neuberger&Berman Equity Assets (the "Trust") is
a diversified, open-end management investment company
registered under the Investment Company Act of 1940 (the
"1940 Act"), as amended. The Trust was established as a
Delaware business trust organized pursuant to a Trust
instrument dated October 18, 1993. Neuberger&Berman
Socially Responsive Trust (the "Fund") is a separate
series of the Trust. The Fund will invest all of its
investable assets in a corresponding Portfolio of Equity
Managers Trust which is registered under the 1940 Act as
a diversified, open-end management investment company.
The Trust has had no operations relating to its Fund
other than organizational matters and the issuance and
sale of initial shares to Neuberger&Berman Management
Incorporated ("Management") on October 26, 1994.
(b) Organizational Expenses: Costs incurred by the Trust in
connection with its organization and the initial offering
of its shares have been deferred and will be amortized on
<PAGE>
a straight-line basis from the date upon which the Trust
will commence its investment activities, over a period of
five years. In the event that any of the initial shares
of the Fund are redeemed during the amortization period,
the redemption proceeds will be reduced by any
unamortized organization and registration expenses in the
same proportion as the number of shares being redeemed
bears to the number of initial shares outstanding at the
time of such redemptions. The accrued organization
expenses are payable to Management, the administrator and
distributor of the shares of the Fund.
(c) Federal Income Taxes: The Fund intends to comply with
the requirements of the Internal Revenue Code of 1986, as
amended, and intends to qualify as a regulated investment
company and to make requisite distributions of income to
its shareholders that will be sufficient to relieve if
from substantially all federal income taxes.
- 2 -
<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.
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 qual-
ity. 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 issue.
Aa - Bonds rated Aa are judged to be of high quality by
all standards. Together with the Aaa group, they comprise what are
generally known as "high grade bonds." They are rated lower than the best
bonds because margins of protection may not be as large as in Aaa-rated
securities, fluctuation of protective elements may be of greater
amplitude, or there may be other elements present that make the long-term
risks appear somewhat larger than in Aaa-rated securities.
A - Bonds rated A possess many favorable investment
attributes and are considered to be as upper medium grade obligations.
Factors giving security to principal and interest are considered adequate,
- 1 -
<PAGE>
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.
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 category.
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 - This designation denotes satisfactory capacity for
timely payment. However, the relative degree of safety is not as high as
for issues designated A-1.
Moody's commercial paper ratings:
Issuers rated Prime-1 (or related supporting
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.
Issuers rated Prime-2 (or related supporting
institutions), also known as P-2, have a strong capacity for repayment of
- 2 -
<PAGE>
short-term promissory obligations. This will normally be evidenced by
many of the characteristics cited above, but to a lesser degree. Earnings
trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may
be more affected by external conditions. Ample alternate liquidity is
maintained.
- 3 -
<PAGE>
Appendix B
THE ART OF INVESTMENT: A CONVERSATION WITH ROY NEUBERGER
- 4 -
<PAGE>
The Art of Investing:
A Conversation with Roy Neuberger
"I firmly believe that if you want to
manage your own money, you must be a
student of the market. If you are
unwilling or unable to do that, find
someone else to manage your money for
you."
NEUBERGER & BERMAN
<PAGE>
[THIS PAGE IS BLANK - IT IS AN INSIDE PAGE OF THIS BROCHURE]
<PAGE>
[PICTURE OF ROY NEUBERGER]
During my more than sixty-five
years of buying and selling securities,
I've been asked many questions about my
approach to investing. On the pages
that follow are a variety of my
thoughts, ideas and investment
principles which have served me well
over the years. If you gain useful
knowledge in the pursuit of profit as
well as enjoyment from these comments,
I shall be more than content.
\s\ Roy R. Neuberger
- 1 -
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
YOU'VE BEEN ABLE TO CONDENSE SOME OF THE
CHARACTERISTICS OF SUCCESSFUL INVESTING INTO
FIVE "RULES." WHAT ARE THEY?
Rule #1: Be flexible. My philosophy has
necessarily changed from time to time because
of events and because of mistakes. My views
change as economic, political, and
technological changes occur both on and
sometimes off our planet. It is imperative
that you be willing to change your thoughts to
meet new conditions.
Rule #2: Take your temperament into account.
Recognize whether you are by nature very
speculative or just the opposite - fearful,
timid of taking risks. But in any event --
Diversify your investments, Rule #3: Be broad-gauged. Diversify your
make sure that some of your investments, make sure that some of your
principal is kept safe, and principal is kept safe, and try to increase
try to increase your income your income as well as your capital.
as well as your capital.
[PICTURE OF ROY NEUBERGER]
Rule #4: Always remember there are many ways to
skin a cat! Ben Graham and David Dodd did it by
understanding basic values. Warren Buffet
invested his portfolio in a handful of long-
term holdings, while staying involved with the
companies' managements. Peter Lynch chose to
understand, first-hand, the products of many
hundreds of the companies he invested in.
George Soros showed his genius as a hedge fund
investor who could decipher world currency
trends. Each has been successful in his own
way. But to be successful, remember to
- 2 -
<PAGE>
Rule #5: Be skeptical. To repeat a few well-
worn useful phrases:
A. Dig for yourself.
B. Be from Missouri.
C. If it sounds too good to be true, it
probably is.
IN YOUR 65 YEARS OF INVESTING ARE THERE ANY
GENERAL PATTERNS YOU'VE OBSERVED AS TO HOW THE
MARKET BEHAVES?
Every decade that I've been involved with Wall
Street has a nuance of its own, an economic and
social climate that influences investors. But
generally, bull markets tend to be longer than
bear markets, and stock prices tend to go up
more slowly and erratically than they go down.
Bear markets tend to be shorter and of greater
intensity. The market rarely rises or declines
concurrently with business cycles longer than
six months.
AS A LEGENDARY "VALUE INVESTOR," HOW DO YOU
DEFINE VALUE INVESTING?
Value investing means finding the best values -
- either absolute or relative. Absolute means
a stock has a low market price relative to its
own fundamentals. Relative value means the
price is attractive relative to the market as a
whole.
COULD YOU DESCRIBE A STOCK WITH "GOOD VALUE"?
A classic example is a company that has a low
price to earnings ratio, a low price to book
ratio, free cash flow, a strong balance sheet,
undervalued corporate assets, unrecognized
earnings turnaround and is selling at a
discount to private market value.
These characteristics usually lead to companies
that are under-researched and have a high
degree of inside ownership and entrepreneurial
management.
- 3 -
<PAGE>
One of my colleagues at Neuberger & Berman says
he finds his value stocks either "under a
cloud" or "under a rock." "Under a cloud"
stocks are those Wall Street in general doesn't
like, because an entire industry is out of
favor and even the good stocks are being
dropped. "Under a rock" stocks are those Wall
Street is ignoring, so you have to uncover them
on your own.
ARE THERE OTHER KEY CRITERIA YOU USE TO JUDGE
STOCKS?
I'm more interested in longer-term trends in
earnings than short-term trends. Earnings
gains should be the product of long-term
strategies, superior management, taking
advantage of business opportunities and so on.
If these factors are in their proper place,
short-term earnings should not be of major
concern. Dividends are an important extra
because, if they're stable, they help support
the price of the stock.
WHAT ABOUT SELLING STOCKS?
Most individual investors should invest for the
long term but not mindlessly. A sell
discipline, often neglected by investors, is
vitally important.
"One should fall in love One should fall in love with ideas, with
with ideas, with people or people, or with idealism. But in my book, the
with idealism. But in my last thing to fall in love with is a particular
book, the last thing to security. It is after all just a sheet of paper
fall in love with is a indicating a part ownership in a corporation
particular security." and its use is purely mercenary. If you must
love a security, stay in love with it until it
gets overvalued; then let somebody else fall in
love.
[PICTURE OF ROY NEUBERGER]
- 4 -
<PAGE>
ANY OTHER ADVICE FOR INVESTORS?
I firmly believe that if you want to manage
your own money, you must be a student of the
market. If you're unwilling or unable to do
that, find someone else to manage your money
for you. Two options are a well-managed no-
load mutual fund or, if you have enough assets
for separate account management, a money
manager you trust with a good record.
HOW WOULD YOU DESCRIBE YOUR PERSONAL INVESTING
STYLE?
Every stock I buy is bought to be sold. The
market is a daily event, and I continually
review my holdings looking for selling
opportunities. I take a profit occasionally on
something that has gone up in price over what
was expected and simultaneously take losses
whenever misjudgment seems evident. This
creates a reservoir of buying power that can be
used to make fresh judgments on what are the
best values in the market at that time. My
active investing style has worked well for me
over the years, but for most investors I
recommend a longer-term approach.
I tend not to worry very must about the day to
day swings of the market, which are very hard
to comprehend. Instead, I try to be rather
clever in diagnosing values and trying to win
70 to 80 percent of the time.
YOU BEGAN INVESTING IN 1929. WHAT WAS YOUR
EXPERIENCE WITH THE "GREAT CRASH"?
- 5 -
<PAGE>
The only money I managed in the Panic of 1929
was my own. My portfolio was down about 12
percent, and I had an uneasy feeling about the
market and conditions in general. Those were
the days of 10 percent margin. I studied the
lists carefully for a stock that was overvalued
in my opinion and which I could sell short as a
hedge. I came across RCA at about $100 per
share. It had recently split 5 for 1 and
appeared overvalued. There were no dividends,
little income, a low net worth and a weak
financial position. I sold RCA short in the
amount equal to the dollar value of my long
portfolio. It proved to be a timely and
profitable move.
HOW DID THE CRASH OF 1929 AFFECT YOUR INVESTING
STYLE?
I am prematurely bearish when the market goes
up for a long time and everybody is happy
because they are richer. I am very bullish
when the market has gone down perceptibly and I
feel it has discounted any troubles we are
going to have.
HOW IMPORTANT ARE PSYCHOLOGICAL FACTORS TO
MARKET BEHAVIOR?
There are many factors in addition to economic
statistics or security analysis in a buy or
sell decision. I believe psychology plays an
important role in the Market. Some people
follow the crowd in hopes they'll be swept
along in the right direction, but if the crowd
is late in acting, this can be a bad move.
I like to be contrary. When things look bad, I
become optimistic. When everything looks rosy,
and the crowd is optimistic, I like to be a
seller. Sometimes I'm too early, but I
generally profit.
AS A RENOWNED ART COLLECTOR, DO YOU FIND
SIMILARITIES BETWEEN SELECTING STOCKS AND
SELECTING WORKS OF ART?
- 6 -
<PAGE>
Both are an art, although picking stocks is a
minor art compared with painting, sculpture or
"When things look bad, I literature. I started buying art in the 30s,
become optimistic. When and in the 40s it was a daily, almost hourly
everything looks rosy, and occurrence. My inclination to buy the works of
the crowd is optimistic, I living artists comes from Van Gogh, who sold
like to be a seller." only one painting during his lifetime. He died
in poverty, only then to become a legend and
have his work sold for millions of dollars.
[PICTURE OF ROY NEUBERGER]
There are more variables to consider now in
both buying art and picking stocks. In the
modern stock markets, the heavy use of futures
and options has changed the nature of the
investment world. In past times, the stock
market was much less complicated, as was the
art world.
Artists rose and fell on their own merits
without a lot of publicity and attention. As
more and more dealers are involved with
artists, the price of their work becomes
inflated. So I almost always buy works of
unknown, relatively undiscovered artists,
which, I suppose is similar to value investing.
But the big difference in my view of art and
stocks is that I buy a stock to sell it and
make money. I never bought paintings or
sculptures for investment in my life. The
objective is to enjoy their beauty.
- 7 -
<PAGE>
WHAT DO YOU CONSIDER THE BUSINESS MILESTONES IN
YOUR LIFE?
Being a founder of Neuberger & Berman and
creating one of the first no-load mutual funds.
I started on Wall Street in 1929, and during
the depression I managed my own money and that
of my clientele. We all prospered, but I
wanted to have my own firm. In 1939 I became a
founder of Neuberger & Berman, and for about 10
years we managed money for individuals with
substantial financial assets. But I also
wanted to offer the smaller investor the
benefits of professional money management, so
in 1950 I created the Guardian Mutual Fund (now
known as the Neuberger & Berman Guardian Fund).
The Fund was kind of an innovation in its time
because it didn't charge a sales commission. I
thought the public was being overcharged for
mutual funds, so I wanted to create a fund that
would be offered directly to the public without
a sales charge. Now of course the "no-load"
fund business is a huge industry. I managed
the Fund myself for over 28 years.
[PICTURE OF ROY NEUBERGER]
YOU'RE IN YOUR NINETIES AND STILL YOU GO INTO
THE OFFICE EVERY DAY TO MANAGE YOUR
INVESTMENTS. WHY?
I like the fun of being nimble in the stock
market, and I'm addicted to the market's
fascinations.
WHAT CLOSING WORDS OF ADVICE DO YOU HAVE ABOUT
INVESTING?
Realize that there are opportunities at all
times for the adventuresome investor. And stay
in good physical condition. It's a strange
thing. You do not dissipate your energies by
using them. Exercise your body and your brain
every day, and you'll do better in investments
and in life.
- 8 -
<PAGE>
ROY NEUBERGER: A BRIEF BIOGRAPHY
Roy Neuberger is a founder of the investment
management firm Neuberger & Berman, and a
renowned value investor. He is also a
recognized collector of contemporary American
art, much of which he has given away to museums
and colleges across the country.
During the 1920s, Roy studied art in
Paris. When he realized he didn't possess the
talent to become an artist, he decided to
collect art, and to support this passion, Roy
turned to investing -- a pursuit for which his
talents have proven more than adequate.
A TALENT FOR INVESTING
Roy began his investment career by joining
a brokerage firm in 1929, seven months before
the "Great Crash." Just weeks before "Black
Monday," he shorted the stock of RCA, thinking
it was overvalued. He profited from the
falling market and gained a reputation for
market prescience and stock selection that has
lasted his entire career.
NEUBERGER & BERMAN'S FOUNDING
Roy's investing acumen attracted many
people who wished to have him manage their
money. In 1939, at the age of 36, after
purchasing a seat on the New York Stock
Exchange, Roy founded Neuberger & Berman to
provide money management services to people who
lacked the time, interest or expertise to
manage their own assets.
- 9 -
<PAGE>
NEUBERGER & BERMAN -- OVER FIVE DECADES OF
GROWTH
Neuberger & Berman has grown through the
years and now manages approximately $30 billion
of equity and fixed income assets, both
domestic and international, for individuals,
institutions, and its family of no-load mutual
funds. Today, as when the firm was founded,
Neuberger & Berman follows a value approach to
investing, designed to enable clients to
advance in good markets and minimize losses
when conditions are less favorable.
For more complete information about the
Neuberger & Berman Guardian Fund,
including fees and expenses, call
Neuberger & Berman Management at 800-877-
9700 for a free prospectus. Please read
it carefully, before you invest or send
money.
- 10 -
<PAGE>
Neuberger & Berman Management
Inc.[SERVICE MARK]
605 Third Avenue, 2nd
Floor
New York, NY 10158-
0006
Shareholder Services
(800) 877-9700
[COPYRIGHT
SYMBOL]1995 Neuberger
& Berman
PRINTED ON RECYCLED PAPER
WITH SOY BASED INKS
</TABLE>
- 11 -
<PAGE>
NEUBERGER & BERMAN EQUITY ASSETS
POST-EFFECTIVE AMENDMENT NO. 2 ON FORM N-1A
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
------- ---------------------------------
(a) Financial Statements:
Unaudited financial statements for Neuberger
& Berman Socially Responsive Trust appear in
Part B.
(b) Exhibits:
Exhibit
Number Description
------- -----------
(1) (a) Certificate of Trust. Incorporated by Reference
to Post-Effective Amendment No. 1 to
Registrant's Registration Statement, File Nos.
33-82568 and 811-8106, EDGAR Accession No.
000089-8432-95-000393.
(b) Trust Instrument of Neuberger & Berman Equity
Assets. Incorporated by Reference to Post-
Effective Amendment No. 1 to Registrant's
Registration Statement, File Nos. 33-82568 and
811-8106, EDGAR Accession No. 000089-8432-95-
000393.
(c) Schedule A - Current Series of Neuberger &
Berman Equity Assets. Incorporated by Reference
to Post-Effective Amendment No. 1 to
Registrant's Registration Statement, File Nos.
33-82568 and 811-8106, EDGAR Accession No.
000089-8432-95-000393.
(2) By-Laws of Neuberger & Berman Equity Assets.
Incorporated by Reference to Post-Effective
Amendment No. 1 to Registrant's Registration
Statement, File Nos. 33-82568 and 811-8106,
EDGAR Accession No. 000089-8432-95-000393.
(3) Voting Trust Agreement. None.
(4) (a) Specimen Share Certificate for Neuberger &
Berman Socially Responsive Trust. Incorporated
C-1
<PAGE>
by Reference to Pre-Effective Amendment No. 2 to
Registrant's Registration Statement, File Nos.
33-82568 and 811-8106.
(b) Specimen Share Certificate for Neuberger &
Berman Focus Assets. To be Filed by Amendment.
(c) Specimen Share Certificate for Neuberger &
Berman Guardian Assets. To be Filed by
Amendment.
(d) Specimen Share Certificate for Neuberger &
Berman Manhattan Assets. To be Filed by
Amendment.
(e) Specimen Share Certificate for Neuberger &
Berman Partners Assets. To be Filed by
Amendment.
(5) (a) (i) Management Agreement Between Equity
Managers Trust and Neuberger & Berman
Management Incorporated. Incorporated
by Reference to Post-Effective Amendment
No. 70 to Registration Statement of
Neuberger & Berman Equity Funds, File
Nos. 2-11357 and 811-582, EDGAR
Accession No. 0000898432-95-000314.
(ii) Schedule A - Series of Neuberger &
Berman Equity Managers Trust Currently
Subject to the Management Agreement.
Incorporated by Reference to Post-
Effective Amendment No. 70 to
Registration Statement of Neuberger &
Berman Equity Funds, File Nos. 2-11357
and 811-582, EDGAR Accession No.
0000898432-95-000314.
(iii) Schedule B - Schedule of Compensation
Under the Management Agreement.
Incorporated by Reference to Post-
Effective Amendment No. 70 to
Registration Statement of Neuberger &
Berman Equity Funds, File Nos. 2-11357
and 811-582, EDGAR Accession No.
0000898432-95-000314.
(b) (i) Sub-Advisory Agreement Between Neuberger
& Berman Management Incorporated and
Neuberger & Berman with Respect to
Equity Managers Trust. Incorporated by
Reference to Post-Effective Amendment
C-2
<PAGE>
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. 70 to Registration Statement of
Neuberger & Berman Equity Funds, File
Nos. 2-11357 and 811-582, EDGAR
Accession No. 0000898432-95-000314.
(6) (a) (i) Distribution Agreement Between Neuberger
& Berman Equity Assets and Neuberger &
Berman Management Incorporated with
Respect to Neuberger & Berman Socially
Responsive Trust. Incorporated by
Reference to Post-Effective Amendment
No. 1 to Registrant's Registration
Statement, File Nos. 33-82568 and 811-
8106, EDGAR Accession No. 0000898432-95-
000393.
(ii) Schedule A - Series of Neuberger &
Berman Equity Assets Currently Subject
to the Distribution Agreement.
Incorporated by Reference to Post-
Effective Amendment No. 1 to
Registrant's Registration Statement,
File Nos. 33-82568 and 811-8106, EDGAR
Accession No. 0000898432-95-000393.
(b) (i) Form of Distribution Agreement between
Neuberger & Berman Equity Assets and
Neuberger & Berman Management
Incorporated with Respect to Other
Series. To be Filed by Amendment.
(ii) Schedule A - Series of Neuberger &
Berman Equity Assets Currently Subject
to Distribution Agreement. To be Filed
by Amendment.
(7) Bonus, Profit Sharing or Pension Plans. None.
(8) (a) Custodian Contract Between Neuberger &
Berman Equity Assets and State Street
Bank and Trust Company. Incorporated by
Reference to Pre-Effective Amendment No.
1 to Registrant's Registration
C-3
<PAGE>
Statement, File Nos. 33-82568 and 811-
8106.
(b) Schedule A - Approved Foreign Banking
Institutions and Securities Depositories
Under the Custodian Contract.
Incorporated by Reference to Pre-
Effective Amendment No. 1 to
Registrant's Registration Statement,
File Nos. 33-82568 and 811-8106.
(9) (a) (i) Transfer Agency Agreement Between
Neuberger & Berman Equity Assets and
State Street Bank and Trust Company.
Incorporated by Reference to Pre-
Effective Amendment No. 2 to
Registrant's Registration Statement,
File Nos. 33-82568 and 811-8106.
(ii) Schedule A - Series of Neuberger &
Berman Equity Assets Currently Subject
to the Transfer Agency Agreement. To be
Filed by Amendment.
(b) (i) Administration Agreement Between
Neuberger & Berman Equity Assets and
Neuberger & Berman Management
Incorporated. To be Filed by Amendment.
(ii) Schedule A - Series of Neuberger &
Berman Equity Assets Currently Subject
to the Administration Agreement. To be
Filed by Amendment.
(iii) Schedule B - Schedule of Compensation
Under the Administration Agreement. To
be Filed by Amendment.
(10) Opinion and Consent of Kirkpatrick & Lockhart
LLP on Securities Matters. To be Filed by
Amendment.
(11) Opinions, Appraisals, Rulings and Consents.
None.
(12) Financial Statements Omitted from Prospectus.
None.
(13) Letter of Investment Intent. None.
(14) Prototype Retirement Plan. None.
C-4
<PAGE>
(15) Plan Pursuant to Rule 12b-1. None.
(16) Schedule of Computation of Performance
Quotations. None.
(17) Financial Data Schedule. Filed herewith.
(18) Plan Pursuant to Rule 18f-3. None.
Item 25. Persons Controlled By or Under Common Control with
Registrant.
No person is controlled by or under common control with the
Registrant.
Item 26. Number of Holders of Securities.
The following information is given as of November 30, 1995:
Number of
Title of Class Record Holders
-------------- --------------
Shares of beneficial
interest, $0.001 par value, of:
Neuberger & Berman Focus Assets 0
Neuberger & Berman Guardian Assets 0
Neuberger & Berman Manhattan Assets 0
Neuberger & Berman Partners Assets 0
Neuberger & Berman Socially Responsive Trust 1
Item 27. Indemnification.
A Delaware business trust may provide in its governing instrument for
indemnification of its officers and trustees from and against any and all
claims and demands whatsoever. Article IX, Section 2 of the Trust
Instrument provides that the Registrant shall indemnify any present or
former trustee, officer, employee or agent of the Registrant ("Covered
Person") to the fullest extent permitted by law against liability and all
expenses reasonably incurred or paid by him or her in connection with any
claim, action, suit or proceeding ("Action") in which he or she becomes
involved as a party or otherwise by virtue of his or her being or having
been a Covered Person and against amounts paid or incurred by him or her
in settlement thereof. Indemnification will not be provided to a person
adjudged by a court or other body to be liable to the Registrant or its
shareholders by reason of "willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
his or her 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
C-5
<PAGE>
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 Agreement between Equity Managers Trust
("Managers Trust") and Neuberger & Berman Management Inc. ("N&B
Management") provides that neither N&B Management nor any director,
officer or employee of N&B Management performing services for the series
of Managers Trust at the direction or request of N&B Management in
connection with N&B Management's discharge of its obligations under the
Agreement shall be liable for any error of judgment or mistake of law or
for any loss suffered by a series in connection with any matter to which
the Agreement relates; provided, that nothing in the Agreement shall be
construed (i) to protect N&B Management against any liability to Managers
Trust or any series thereof or its interest holders to which N&B
Management would otherwise be subject by reason of willful misfeasance,
bad faith, or gross negligence in the performance of N&B Management's
duties, or by reason of N&B Management's reckless disregard of its
obligations and duties under the Agreement, or (ii) to protect any
director, officer or employee of N&B Management who is or was a trustee or
officer of Managers Trust against any liability to Managers Trust or any
series thereof or its interest holders to which such person would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
such person's office with Managers Trust.
Section 1 of the Sub-Advisory Agreement between N&B Management and
Neuberger & Berman, L.P. ("Neuberger & Berman")with respect to Managers
Trust provides that in the absence of willful misfeasance, bad faith or
gross negligence in the performance of its duties, or of reckless
disregard of its duties and obligations under the Agreement, Neuberger &
Berman will not be subject to liability for any act or omission or any
loss suffered by any series of Managers Trust or its interest holders in
connection with the matters to which the Agreement relates.
C-6
<PAGE>
Section 8 of the Administration Agreement between the Registrant and
N&B Management provides that N&B Management shall look only to the assets
of each Series for performance of the Agreement by the Registrant on
behalf of such Series, and neither the Shareholders of the Registrant, its
Trustees nor any of the Registrant's officers, employees or agents,
whether past, present or future shall be personally liable therefor.
Section 9 of the Agreement provides that each Series shall indemnify N&B
Management and hold it harmless from and against any and all losses,
damages and expenses, including reasonable attorneys' fees and expenses,
incurred by N&B Management that result from: (i) any claim, action, suit
or proceeding in connection with N&B Management's entry into or
performance of the Agreement with respect to such Series; or (ii) any
action taken or omission to act committed by N&B Management in the
performance of its obligations under the Agreement with respect to such
Series; or (iii) any action of N&B Management upon instructions believed
in good faith by it to have been executed by a duly authorized officer or
representative of the Registrant with respect to such Series; provided,
that N&B Management shall not be entitled to such indemnification in
respect of actions or omissions constituting negligence or misconduct on
the part of N&B Management, or its employees, agents or contractors.
Section 10 of the Agreement provides that N&B Management shall indemnify
each Series and hold it harmless from and against any and all losses,
damages and expenses, including reasonable attorneys' fees and expenses,
incurred by such Series which result from: (i) N&B Management's failure
to comply with the terms of the Agreement with respect to such Series; or
(ii) N&B Management's lack of good faith in performing its obligations
under the Agreement with respect to such Series; or (iii) the negligence
or misconduct of N&B Management, or its employees, agents or contractors
in connection with the Agreement with respect to such Series. A Series
shall not be entitled to such indemnification in respect of actions or
omissions constituting negligence or misconduct on the part of that Series
or its employees, agents or contractors other than N&B Management, unless
such negligence or misconduct results from or is accompanied by negligence
or misconduct on the part of N&B Management, any affiliated person of N&B
Management, or any affiliated person of an affiliated person of N&B
Management.
Section 11 of the Distribution Agreement between the Registrant and
N&B Management provides that N&B Management shall look only to the assets
of a Series for the Registrant's performance of the Agreement by the
Registrant on behalf of such Series, and neither the Shareholders, the
Trustees nor any of the Registrant's officers, employees or agents,
whether past, present or future, shall be personally liable therefor.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 ("1933 Act") may be permitted to trustees, officers
and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the 1933 Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
C-7
<PAGE>
liabilities (other than the payment by the Registrant of expenses incurred
or paid by a trustee, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is asserted by
such trustee, officer or controlling person, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed
in the 1933 Act and will be governed by the final adjudication of such
issue.
Item 28. Business and Other Connections of Adviser and
Sub-Adviser.
There is set forth below information as to any other business,
profession, vocation or employment of a substantial nature in which each
director or officer of N&B Management and each partner of Neuberger &
Berman is, or at any time during the past two years has been, engaged for
his or her own account or in the capacity of director, officer, employee,
partner or trustee.
Claudia A. Brandon Secretary, Neuberger & Berman Advisers
Vice President, Management Trust (Delaware business
N&B Management trust); Secretary, Advisers Managers
Trust; Secretary, Neuberger & Berman
Advisers Management Trust
(Massachusetts business trust) (1);
Secretary, Neuberger & Berman Income
Funds; Secretary, Neuberger & Berman
Income Trust; Secretary, Neuberger &
Berman Equity Funds; Secretary,
Neuberger & Berman Equity Trust;
Secretary, Income Managers Trust;
Secretary, Equity Managers Trust;
Secretary, Global Managers Trust;
Secretary, Neuberger & Berman Equity
Assets.
C-8
<PAGE>
Stacy Cooper-Shugrue Assistant Secretary, Neuberger & Berman
Assistant Vice President, Advisers Management Trust (Delaware
N&B Management business trust); Assistant Secretary,
Advisers Managers Trust; Assistant
Secretary, Neuberger & Berman Advisers
Management Trust (Massachusetts
business trust) (1); Assistant
Secretary, Neuberger & Berman Income
Funds; Assistant Secretary, Neuberger &
Berman Income Trust; Assistant
Secretary, Neuberger & Berman Equity
Funds; Assistant Secretary, Neuberger &
Berman Equity Trust; Assistant
Secretary, Income Managers Trust;
Assistant Secretary, Equity Managers
Trust; Assistant Secretary, Global
Managers Trust; Assistant Secretary,
Neuberger & Berman Equity Assets.
Robert Cresci Assistant Portfolio Manager, BNP-N&B
Assistant Vice President, Global Asset Management L.P. (joint
N&B Management venture of Neuberger & Berman and
Banque Nationale de Paris) (2);
Assistant Portfolio Manager, Vontobel
(Swiss bank) (3).
Stanley Egener Chairman of the Board and Trustee,
President and Director, Neuberger & Berman Advisers Management
N&B Management; General Trust (Delaware business trust);
Partner, Neuberger & Berman Chairman of the Board and Trustee,
Advisers Managers Trust; Chairman of
the Board and Trustee, Neuberger &
Berman Advisers Management Trust
(Massachusetts business trust) (1);
Chairman of the Board and Trustee,
Neuberger & Berman Income Funds;
Chairman of the Board and Trustee,
Neuberger & Berman Income Trust;
Chairman of the Board and Trustee,
Neuberger & Berman Equity Funds;
Chairman of the Board and Trustee,
Neuberger & Berman Equity Trust;
Chairman of the Board and Trustee,
Income Managers Trust; Chairman of the
Board and Trustee, Equity Managers
Trust; Chairman of the Board and
Trustee, Global Managers Trust;
Chairman of the Board and Trustee,
Neuberger & Berman Equity Assets.
C-9
<PAGE>
Robert I. Gendelman Senior Portfolio Manager, Harpel
Assistant Vice President, Advisors (4).
N&B Management
Theodore P. Giuliano Executive Vice President and Trustee,
Vice President, N&B Neuberger & Berman Income Funds (6);
Management (5); General Executive Vice President and Trustee,
Partner, Neuberger & Berman Neuberger & Berman Income Trust (6);
Executive Vice President and Trustee,
Income Managers Trust (6).
Theresa A. Havell President and Trustee, Neuberger &
Vice President and Director, Berman Income Funds; President and
N&B Management; General Trustee, Neuberger & Berman Income
Partner, Neuberger & Berman Trust; President and Trustee, Income
Managers Trust
C. Carl Randolph Assistant Secretary, Neuberger & Berman
General Partner, Neuberger & Advisers Management Trust (Delaware
Berman business trust); Assistant Secretary,
Advisers Managers Trust; Assistant
Secretary, Neuberger & Berman Advisers
Management Trust (Massachusetts
business trust) (1); Assistant
Secretary, Neuberger & Berman Income
Funds; Assistant Secretary, Neuberger &
Berman Income Trust; Assistant
Secretary, Neuberger & Berman Equity
Funds; Assistant Secretary, Neuberger &
Berman Equity Trust; Assistant
Secretary, Income Managers Trust;
Assistant Secretary, Equity Managers
Trust; Assistant Secretary, Global
Managers Trust; Assistant Secretary,
Neuberger & Berman Equity Assets.
Felix Rovelli Senior Vice President-Senior Equity
Vice President, N&B Portfolio Manager, BNP-N&B Global Asset
Management Management L.P. (joint venture of
Neuberger & Berman and Banque Nationale
de Paris) (2); Portfolio Manager,
Vontobel (Swiss bank) (7).
C-10
<PAGE>
Richard Russell Treasurer, Neuberger & Berman Advisers
Vice President, N&B Management Trust (Delaware business
Management trust); Treasurer, Advisers Managers
Trust; Treasurer, Neuberger & Berman
Advisers Management Trust
(Massachusetts business trust) (1);
Treasurer, Neuberger & Berman Income
Funds; Treasurer, Neuberger & Berman
Income Trust; Treasurer, Neuberger &
Berman Equity Funds; Treasurer,
Neuberger & Berman Equity Trust;
Treasurer, Income Managers Trust;
Treasurer, Equity Managers Trust;
Treasurer, Global Managers Trust;
Treasurer, Neuberger & Berman Equity
Assets.
Daniel J. Sullivan Vice President, Neuberger & Berman
Senior Vice President, Advisers Management Trust (Delaware
N&B Management business trust); Vice President,
Advisers Managers Trust; Vice
President, Neuberger & Berman Advisers
Management Trust (Massachusetts
business trust) (1); Vice President,
Neuberger & Berman Income Funds; Vice
President, Neuberger & Berman Income
Trust; Vice President, Neuberger &
Berman Equity Funds; Vice President,
Neuberger & Berman Equity Trust; Vice
President, Income Managers Trust; Vice
President, Equity Managers Trust; Vice
President, Global Managers Trust; Vice
President, Neuberger & Berman Equity
Assets.
Susan Switzer Portfolio Manager, Mitchell Hutchins
Assistant Vice President, Asset Management Inc., 1285 Avenue of
N&B Management the Americas, New York, New York 10019
(8).
C-11
<PAGE>
Michael J. Weiner Vice President, Neuberger & Berman
Senior Vice President and Advisers Management Trust (Delaware
Treasurer, N&B Management business trust); Vice President,
Advisers Managers Trust; Vice
President, Neuberger & Berman Advisers
Management Trust (Massachusetts
business trust) (1); Vice President,
Neuberger & Berman Income Funds; Vice
President, Neuberger & Berman Income
Trust; Vice President, Neuberger &
Berman Equity Funds; Vice President,
Neuberger & Berman Equity Trust; Vice
President, Income Managers Trust; Vice
President, Equity Managers Trust; Vice
President, Global Managers Trust; Vice
President, Neuberger & Berman Equity
Assets.
Lawrence Zicklin President and Trustee, Neuberger &
Director, N&B Management; Berman Advisers Management Trust
General Partner, Neuberger & (Delaware business trust); President
Berman and Trustee, Advisers Managers Trust;
President and Trustee, Neuberger &
Berman Advisers Management Trust
(Massachusetts business trust) (1);
President and Trustee, Neuberger &
Berman Equity Funds; President and
Trustee, Neuberger & Berman Equity
Trust; President and Trustee, Equity
Managers Trust; President, Global
Managers Trust; President and Trustee,
Neuberger & Berman Equity Assets
The principal address of N&B Management, Neuberger & Berman, BNP-N&B
Global Asset Management L.P. and of each of the investment companies named
above, is 605 Third Avenue, New York, New York 10158. Other addresses to
be provided by amendment.
_________________________
(1) Until April 30, 1995.
(2) Until October 31, 1995.
(3) Until May 1994.
(4) Until 1993.
(5) Until November 4, 1994.
(6) Until June 22, 1994.
(7) Until April 1994.
(8) Until 1994.
C-12
<PAGE>
Item 29. Principal Underwriters.
(a) N&B Management, the principal underwriter distributing
securities of the Registrant, is also the principal underwriter and
distributor for each of the following investment companies:
Neuberger & Berman Advisers Management Trust
Neuberger & Berman Equity Funds
Neuberger & Berman Equity Trust
Neuberger & Berman Income Funds
Neuberger & Berman Income Trust
N&B Management Incorporated 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.
C-13
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
---- ---------------------- ---------------------
<S> <C> <C>
Claudia A. Brandon Vice President Secretary
Patrick T. Byrne Assistant Vice President None
Richard A. Cantor Chairman of the Board and None
Director
Robert Conti Assistant Vice President None
Stacy Cooper-Shugrue Assistant Vice President Assistant Secretary
Robert Cresci Assistant Vice President None
William Cunningham Vice President None
Barbara DiGiorgio Assistant Vice President None
Roberta D'Orio Assistant Vice President None
Stanley Egener President and Director Chairman of the Board
of Trustees
(Chief Executive
Officer)
Robert I. Gendelman Assistant Vice President None
Mark R. Goldstein Vice President None
Farha-Joyce Haboucha Vice President None
Theresa A. Havell Vice President and Director None
Leslie Holliday-Soto Assistant Vice President None
Michael M. Kassen Vice President None
Irwin Lainoff Director None
Michael Lamberti Vice President None
Josephine Mahaney Vice President None
Carmen G. Martinez Assistant Vice President None
C-14
<PAGE>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
---- ---------------------- ---------------------
Lawrence Marx III Vice President None
Ellen Metzger Vice President and Secretary None
Paul Metzger Assistant Vice President None
Janet W. Prindle Vice President None
Felix Rovelli Vice President None
Richard Russell Vice President Treasurer (Principal
Accounting Officer)
Marvin C. Schwartz Director None
Kent C. Simons Vice President None
Frederick B. Soule Vice President None
Susan Switzer Assistant Vice President None
Daniel J. Sullivan Senior Vice President Vice President
Andrea Trachtenberg Vice President of Marketing None
Judith M. Vale Vice President None
Clara Del Villar Vice President None
Susan Walsh Assistant Vice President None
Michael J. Weiner Senior Vice President and Vice President
Treasurer (Principal Financial
Officer)
Celeste Wischerth Assistant Vice President None
Thomas Wolfe Vice President None
Lawrence Zicklin Director Trustee and President
</TABLE>
(c) No commissions or other compensation were received
directly or indirectly from the Registrant by any principal underwriter
who was not an affiliated person of the Registrant.
C-15
<PAGE>
Item 30. Location of Accounts and Records.
All accounts, books and other documents required to be
maintained by Section 31(a) of the 1940 act, as amended, and the rules
promulgated thereunder with respect to the Registrant are maintained at
the offices of State Street Bank and Trust Company, 225 Franklin Street,
Boston, Massachusetts 02110, except for the Registrant's Trust Instrument
and By-Laws, minutes of meetings of the Registrant's Trustees and
shareholders and the Registrant's policies and contracts, which are
maintained at the offices of the Registrant, 605 Third Avenue, New York,
New York 10158.
Item 31. Management Services
Other than as set forth in Parts A and B of this Post-
Effective Amendment, the Registrant is not a party to any management-
related service contract.
Item 32. Undertakings
Registrant hereby undertakes to file a Post-Effective
Amendment to its Registration Statement, containing financial statements
with respect to Neuberger & Berman Socially Responsive Trust, which need
not be certified, within four to six months from the date of the Fund's
commencement of operations.
C-16
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant, NEUBERGER & BERMAN
EQUITY ASSETS certifies that it meets all of the requirements for
effectiveness of this Post-Effective Amendment No. 2 to its Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Post-Effective Amendment to its Registration Statement to
be signed on its behalf by the undersigned, thereto duly authorized, in
the City and State of New York on the 28th day of December, 1995.
NEUBERGER & BERMAN EQUITY ASSETS
By: /s/ Lawrence Zicklin
-------------------------
Lawrence Zicklin
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 2 has been signed below by the following
persons in the capacities and on the date indicated.
Signature Title Date
---------- ----- ----
/s/ Faith Colish Trustee December 28, 1995
--------------------------
Faith Colish
/s/ Donald M. Cox Trustee December 28, 1995
--------------------------
Donald M. Cox
/s/ Stanley Egener Chairman of the December 28, 1995
-------------------------- Board and Trustee
Stanley Egener (Chief Executive
Officer)
/s/ Howard A. Mileaf Trustee December 28, 1995
--------------------------
Howard A. Mileaf
/s/ Edward I. O'Brien Trustee December 28, 1995
--------------------------
Edward I. O'Brien
/s/ John T. Patterson, Jr. Trustee December 28, 1995
--------------------------
John T. Patterson, Jr.
<PAGE>
Signature Title Date
---------- ----- ----
/s/ John P. Rosenthal Trustee December 28, 1995
--------------------------
John P. Rosenthal
/s/ Cornelius T. Ryan Trustee December 28, 1995
--------------------------
Cornelius T. Ryan
/s/ Gustave H. Shubert Trustee December 28, 1995
--------------------------
Gustave H. Shubert
/s/ Alan R. Gruber Trustee December 28, 1995
--------------------------
Alan R. Gruber
/s/ Lawrence Zicklin President and December 28, 1995
-------------------------- Trustee
Lawrence Zicklin
/s/ Michael J. Weiner Vice President December 28, 1995
-------------------------- (Principal
Michael J. Weiner Financial Officer)
/s/ Richard Russell Treasurer December 28, 1995
-------------------------- (Principal
Richard Russell Accounting
Officer)
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, EQUITY MANAGERS TRUST certifies that
it meets all of the requirements for effectiveness of the Post-Effective
Amendment No. 2 to the Registration Statement pursuant to Rule 485(b)
under the Securities Act of 1933 and has duly caused this Post-Effective
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City and State of New York on
the 28th day of December, 1995.
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. 2 has been signed below by the following
persons in the capacities and on the date indicated.
Signature Title Date
--------- ----- ----
/s/ Faith Colish Trustee December 28, 1995
---------------------
Faith Colish
/s/ Donald M. Cox Trustee December 28, 1995
---------------------
Donald M. Cox
/s/ Stanley Egener Chairman of the December 28, 1995
--------------------- Board and Trustee
Stanley Egener (Chief Executive
Officer)
/s/ Howard A. Mileaf Trustee December 28, 1995
---------------------
Howard A. Mileaf
/s/ Edward I. O'Brien Trustee December 28, 1995
----------------------
Edward I. O'Brien
/s/ John T. Patterson, Jr. Trustee December 28, 1995
----------------------
John T. Patterson, Jr.
<PAGE>
Signature Title Date
--------- ----- ----
/s/ John P. Rosenthal Trustee December 28, 1995
----------------------
John P. Rosenthal
/s/ Cornelius T. Ryan Trustee December 28, 1995
----------------------
Cornelius T. Ryan
/s/ Gustave H. Shubert Trustee December 28, 1995
----------------------
Gustave H. Shubert
/s/ Alan R. Gruber Trustee December 28, 1995
----------------------
Alan R. Gruber
/s/ Lawrence Zicklin President and December 28, 1995
---------------------- Trustee
Lawrence Zicklin
/s/ Michael J. Weiner Vice President December 28, 1995
---------------------- (Principal Financial
Michael J. Weiner Officer)
/s/ Richard Russell Treasurer (Principal December 28, 1995
---------------------- Accounting Officer)
Richard Russell
<PAGE>
<TABLE>
<CAPTION>
NEUBERGER & BERMAN EQUITY ASSETS
POST-EFFECTIVE AMENDMENT NO. 2 ON FORM N-1A
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Description Page
------- ------------------------------------------------------------------- ------------
<S> <C> <C>
(1) (a) Certificate of Trust. Incorporated by Reference to Post- N.A.
Effective Amendment No. 1 to Registrant's Registration
Statement, File Nos. 33-82568 and 811-8106, EDGAR Accession
No. 000089-8432-95-000393.
(b) Trust Instrument of Neuberger & Berman Equity Assets. N.A.
Incorporated by Reference to Post-Effective Amendment No. 1
to Registrant's Registration Statement, File Nos. 33-82568
and 811-8106, EDGAR Accession No. 000089-8432-95-000393.
(c) Schedule A - Current Series of Neuberger & Berman Equity N.A.
Assets. Incorporated by Reference to Post-Effective
Amendment No. 1 to Registrant's Registration Statement,
File Nos. 33-82568 and 811-8106, EDGAR Accession No.
000089-8432-95-000393.
(2) By-Laws of Neuberger & Berman Equity Assets. Incorporated N.A.
by Reference to Post-Effective Amendment No. 1 to
Registrant's Registration Statement, File Nos. 33-82568 and
811-8106, Edgar Accession No. 000089-8432-95-000393.
(3) Voting Trust Agreement. None. N.A.
(4) (a) Specimen Share Certificate for Neuberger & Berman Socially N.A.
Responsive Trust. Incorporated by Reference to Pre-
Effective Amendment No. 2 to Registrant's Registration
Statement, File Nos. 33-82568 and 811-8106.
(b) Specimen Share Certificate for Neuberger & Berman Focus N.A.
Assets. To be Filed by Amendment.
(c) Specimen Share Certificate for Neuberger & Berman Guardian N.A.
Assets. To be Filed by Amendment.
(d) Specimen Share Certificate for Neuberger & Berman Manhattan N.A.
Assets. To be Filed by Amendment.
(e) Specimen Share Certificate for Neuberger & Berman Partners N.A.
Assets. To be Filed by Amendment.
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
------- ------------------------------------------------------------------- ------------
(5) (a) (i) Management Agreement Between Equity Managers Trust N.A.
and Neuberger & Berman Management Incorporated.
Incorporated by Reference to Post-Effective
Amendment No. 70 to Registration Statement of
Neuberger & Berman Equity Funds, File Nos. 2-11357
and 811-582, EDGAR Accession No. 0000898432-95-
000314.
(ii) Schedule A - Series of Neuberger & Berman Equity N.A.
Managers Trust Currently Subject to the Management
Agreement. Incorporated by Reference to Post-
Effective Amendment No. 70 to Registration
Statement of Neuberger & Berman Equity Funds, File
Nos. 2-11357 and 811-582, EDGAR Accession No.
0000898432-95-000314.
(iii) Schedule B - Schedule of Compensation Under the N.A.
Management Agreement. Incorporated by Reference
to Post-Effective Amendment No. 70 to Registration
Statement of Neuberger & Berman Equity Funds, File
Nos. 2-11357 and 811-582, EDGAR Accession No.
0000898432-95-000314.
(b) (i) Sub-Advisory Agreement Between Neuberger & Berman N.A.
Management Incorporated and Neuberger & Berman
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 N.A.
Amendment No. 70 to Registration Statement of
Equity Managers Trust, File Nos. 2-11357 and 811-
582, EDGAR Accession No. 0000898432-95-000314.
(6) (a) (i) Distribution Agreement Between Neuberger & Berman N.A.
Equity Assets and Neuberger & Berman Management
Incorporated with respect to Neuberger & Berman
Socially Responsive Trust. Incorporated by
Reference to Post-Effective Amendment No. 1 to
Registrant's Registration Statement, File Nos. 33-
82568 and 811-8106, EDGAR Accession No.
0000898432-95-000393.
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
------- ------------------------------------------------------------------- ------------
(ii) Schedule A - Series of Neuberger & Berman Equity N.A.
Assets Currently Subject to the Distribution
Agreement. Incorporated by Reference to Post-
Effective Amendment No. 1 to Registrant's
Registration Statement, File Nos. 33-82568 and
811-8106, EDGAR Accession No. 0000898432-95-
000393.
(b) (i) Form of Distribution Agreement between Neuberger & N.A.
Berman Equity Assets and Neuberger & Berman
Management Incorporated with Respect to Other
Series. To be Filed by Amendment.
(ii) Schedule A - Series of Neuberger & Berman Equity N.A.
Assets Currently Subject to Distribution
Agreement. To be Filed by Amendment.
(7) Bonus, Profit Sharing or Pension Plans. None. N.A.
(8) (a) Custodian Contract Between Neuberger & Berman Equity Assets N.A.
and State Street Bank and Trust Company. Incorporated by
Reference to Pre-Effective Amendment No. 1 to Registrant's
Registration Statement, File Nos. 33-82568 and 811-8106.
(b) Schedule A - Approved Foreign Banking Institutions and N.A.
Securities Depositories Under the Custodian Contract.
Incorporated by Reference to Pre-Effective Amendment No. 1
to Registrant's Registration Statement, File Nos. 33-82568
and 811-8106.
(9) (a) (i) Transfer Agency Agreement Between Neuberger & N.A.
Berman Equity Assets and State Street Bank and
Trust Company. Incorporated by Reference to Pre-
Effective Amendment No. 2 to Registrant's
Registration Statement, File Nos. 33-82568 and
811-8106.
(ii) Schedule A - Series of Neuberger & Berman Equity N.A.
Assets Currently Subject to the Transfer Agency
Agreement. To be Filed by Amendment.
(b) (i) Administration Agreement Between Neuberger & N.A.
Berman Equity Assets and Neuberger & Berman
Management Incorporated. To be Filed by
Amendment.
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
------- ------------------------------------------------------------------- ------------
(ii) Schedule A - Series of Neuberger & Berman Equity N.A.
Assets Currently Subject to the Administration
Agreement. To be Filed by Amendment.
(iii) Schedule B - Schedule of Compensation Under the N.A.
Administration Agreement. To be Filed by
Amendment.
(10) Opinion and Consent of Kirkpatrick & Lockhart LLP on Securities N.A.
Matters. To be Filed by Amendment.
(11) Opinions, Appraisals, Rulings and Consents. None. N.A.
(12) Financial Statements Omitted from Prospectus. None. N.A.
(13) Letter of Investment Intent. None. N.A.
(14) Prototype Retirement Plan. None. N.A.
(15) Plan Pursuant to Rule 12b-1. None. N.A.
(16) Schedule of Computation of Performance Quotations. None. N.A.
(17) Financial Data Schedule. Filed herewith. N.A.
(18) Plan Pursuant to Rule 18f-3. None. N.A.
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information of
Neuberger&Berman Socially Responsive Trust.
</LEGEND>
<CIK> 0000914228
<NAME> NEUBERGER&BERMAN EQUITY ASSETS
<SERIES>
<NUMBER> 01
<NAME> NEUBERGER&BERMAN SOCIALLY RESPONSIVE TRUST
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-END> AUG-31-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 120,000
<OTHER-ITEMS-ASSETS> 100,000
<TOTAL-ASSETS> 220,000
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 120,000
<TOTAL-LIABILITIES> 120,000
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 100,000
<SHARES-COMMON-STOCK> 10,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 100,000
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10,000
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 100,000
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 100,000
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.00
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
