<PAGE>
As filed with the Securities and Exchange Commission on November 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. ___1___ [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 3 [ 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:
_____ immediately upon filing pursuant to paragraph (b)
_____ on __________ pursuant to paragraph (b)
_____ 60 days after filing pursuant to paragraph (a)(1)
_____ on __________ pursuant to paragraph (a)(1)
__X__ 75 days after filing pursuant to paragraph (a)(2)
_____ on __________ pursuant to paragraph (a)(2)
Registrant has filed a declaration pursuant to Rule 24f-2 under
the Investment Company Act of 1940.
<PAGE>
Neuberger & Berman Equity Assets is a "master/feeder fund." This
Post-Effective Amendment No. 1 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. 1 ON FORM N-1A
This Post-Effective Amendment consists of the following papers
and documents:
Cover Sheet
Contents of Post-Effective Amendment No. 1 on Form N-1A
Cross Reference Sheet
Neuberger & Berman Manhattan Assets, Neuberger & Berman Focus Assets,
Neuberger & Berman Guardian Assets and Neuberger & Berman Partners Assets
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. 1 to the prospectus or statement of additional information for
Neuberger & Berman Socially Responsive Trust.
<PAGE>
NEUBERGER & BERMAN EQUITY ASSETS
POST-EFFECTIVE AMENDMENT NO. 1 ON FORM N-1A
Cross Reference Sheet
This cross reference sheet relates to the Prospectus
and Statement of Additional Information for:
Neuberger & Berman Manhattan Assets
Neuberger & Berman Focus Assets
Neuberger & Berman Guardian Assets
Neuberger & Berman Partners Assets
Form N-1A Item No. Caption in Part A Prospectus
Item 1. Cover Page Front Cover Page
Item 2. Synopsis Expense Information; Summary
Item 3. Condensed Financial Performance Information
Information
Item 4. General Description Investment Program; Description of
of Registrant Investments; Special Information
Regarding Organization,
Capitalization, and Other Matters
Item 5. Management of the Management and Administration; Back
Fund Cover Page
Item 6. Capital Stock and Front Cover Page; Dividends, Other
Other Securities Distributions, and Taxes; Special
Information Regarding Organization,
Capitalization, and Other Matters
Item 7. Purchase of Shareholder Services; Share
Securities Being Information; Management and
Offered Administration
Item 8. Redemption or Shareholder Services; Share
Repurchase 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 Organization
and History
Item 13. Investment Investment Information; Certain
Objectives and Risk Considerations
Policies
Item 14. Management of the Trustees and Officers
Fund
Item 15. Control Persons and Not Applicable
Principal Holders of
Securities
Item 16. Investment Advisory Investment Management and
and Other Services Administration Services; Trustees
and Officers; Distribution
Arrangements; Reports To
Shareholders; Custodian and
Transfer Agent; Independent
Auditors
Item 17. Brokerage Allocation Portfolio Transactions
Item 18. Capital Stock and Investment Information; Additional
Other Securities Redemption Information; Dividends
and Other Distributions
Item 19. Purchase and Additional Exchange Information;
Redemption 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 Not Applicable
<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. 1.
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED NOVEMBER 28, 1995
Information contained herein is subject to completion or
amendment. A registration statement relating to these securities has been
filed with the Securities and Exchange Commission. These securities may
not be sold nor may offers to buy be accepted prior to the time the
registration statement becomes effective. This prospectus shall not
constitute an offer to sell or the solicitation of an offer to buy nor
shall there by any sale of these securities in any State in which such
offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such State.
Neuberger&Berman
EQUITY ASSETS
Neuberger&Berman FOCUS ASSETS Neuberger&Berman MANHATTAN ASSETS
Neuberger&Berman GUARDIAN ASSETS Neuberger&Berman PARTNERS ASSETS
No-Load Equity Funds
YOU CAN BUY, OWN, AND SELL FUND SHARES ONLY THROUGH AN ACCOUNT
WITH A PENSION PLAN ADMINISTRATOR, BROKER-DEALER, OR OTHER INSTITUTION
(EACH AN "INSTITUTION") WHICH PROVIDES ACCOUNTING, RECORDKEEPING, AND
OTHER SERVICES TO INVESTORS AND WHICH HAS AN ADMINISTRATIVE SERVICES
AGREEMENT WITH NEUBERGER&BERMAN MANAGEMENT INCORPORATED ("N&B
MANAGEMENT").
EACH OF THE ABOVE-NAMED FUNDS (A "FUND") INVESTS ALL OF ITS NET
INVESTABLE ASSETS IN ITS CORRESPONDING PORTFOLIO (A "PORTFOLIO") OF EQUITY
MANAGERS TRUST ("MANAGERS TRUST"), AN OPEN-END MANAGEMENT INVESTMENT
COMPANY MANAGED BY N&B MANAGEMENT. EACH PORTFOLIO INVESTS IN SECURITIES IN
ACCORDANCE WITH AN INVESTMENT OBJECTIVE, POLICIES, AND LIMITATIONS
IDENTICAL TO THOSE OF ITS CORRESPONDING FUND. THE INVESTMENT PERFORMANCE
OF EACH FUND DIRECTLY CORRESPONDS WITH THE INVESTMENT PERFORMANCE OF ITS
CORRESPONDING PORTFOLIO. THIS "MASTER/FEEDER FUND" STRUCTURE IS DIFFERENT
FROM THAT OF MANY OTHER INVESTMENT COMPANIES WHICH DIRECTLY ACQUIRE AND
MANAGE THEIR OWN PORTFOLIOS OF SECURITIES. FOR MORE INFORMATION ON THIS
UNIQUE STRUCTURE THAT YOU SHOULD CONSIDER, SEE "SUMMARY" ON PAGE 1, AND
"SPECIAL INFORMATION REGARDING ORGANIZATION, CAPITALIZATION, AND OTHER
MATTERS" ON PAGE 8.
Please read this Prospectus before investing in any of the Funds
and keep it for future reference. It contains information about the Funds
that a prospective investor should know before investing. A Statement of
Additional Information ("SAI") about the Funds and Portfolios, dated
February 11, 1996, is on file with the Securities and Exchange Commission.
The SAI is incorporated herein by reference (so it is legally considered a
part of this Prospectus). You can obtain a free copy of the SAI by calling
N&B Management at 800-877-9700.
Prospectus Dated February 11, 1996
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED BY, ANY BANK OR OTHER DEPOSITORY INSTITUTION. SHARES ARE NOT
<PAGE>
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.
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Funds and Portfolios; Risk Factors . . . . . . . . . . 1
Management . . . . . . . . . . . . . . . . . . . . . . . 2
The Neuberger&Berman Investment Approach . . . . . . . . . 2
EXPENSE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 2
Shareholder Transaction Expenses for Each Fund . . . . . . 2
Annual Fund Operating Expenses . . . . . . . . . . . . . . . 3
Example . . . . . . . . . . . . . . . . . . . . . . . . . . 4
INVESTMENT PROGRAMS . . . . . . . . . . . . . . . . . . . . . . . . . 4
Focus Portfolio . . . . . . . . . . . . . . . . . . . . . . 5
Guardian Portfolio . . . . . . . . . . . . . . . . . . . . . 5
Manhattan Portfolio . . . . . . . . . . . . . . . . . . . . 5
Partners Portfolio . . . . . . . . . . . . . . . . . . . . . 6
Short-Term Trading; Portfolio Turnover . . . . . . . . . . . 6
Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . 6
Other Investments . . . . . . . . . . . . . . . . . . . . . 7
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 7
Total Return Information . . . . . . . . . . . . . . . . . . 8
SPECIAL INFORMATION REGARDING ORGANIZATION,
CAPITALIZATION, AND OTHER MATTERS . . . . . . . . . . . . . . . . . . 8
The Funds . . . . . . . . . . . . . . . . . . . . . . . . . 8
The Portfolios . . . . . . . . . . . . . . . . . . . . . . . 9
SHAREHOLDER SERVICES . . . . . . . . . . . . . . . . . . . . . . . . 10
How to Buy Shares . . . . . . . . . . . . . . . . . . . . . 10
How to Sell Shares . . . . . . . . . . . . . . . . . . . . . 11
Exchanging Shares . . . . . . . . . . . . . . . . . . . . . 11
SHARE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Share Prices and Net Asset Value . . . . . . . . . . . . . . 11
DIVIDENDS, OTHER DISTRIBUTIONS,
AND TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Distribution Options . . . . . . . . . . . . . . . . . . . . 12
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
MANAGEMENT AND ADMINISTRATION . . . . . . . . . . . . . . . . . . . . 13
Trustees and Officers . . . . . . . . . . . . . . . . . . . 13
Investment Manager, Administrator, Distributor,
and Sub-Adviser . . . . . . . . . . . . . . . . . . . . 13
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . 15
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<PAGE>
DESCRIPTION OF INVESTMENTS . . . . . . . . . . . . . . . . . . . . . 15
USE OF JOINT PROSPECTUS AND STATEMENT
OF ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . 17
OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Directory . . . . . . . . . . . . . . . . . . . . . . . . . 17
Funds Eligible for Exchange . . . . . . . . . . . . . . . . 18
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<PAGE>
SUMMARY
The Funds and Portfolios; Risk Factors
Each Fund is a series of Neuberger&Berman Equity Assets (the
"Trust") and invests in a corresponding Portfolio that, in turn, invests
in securities in accordance with an investment objective, policies, and
limitations that are identical to those of the Fund. This is sometimes
called a master/feeder fund structure, because each Fund "feeds"
shareholders' investments into its corresponding Portfolio, a "master"
fund.
The trustees who oversee the Funds believe that this structure
may benefit shareholders; investment in a Portfolio by investors in
addition to a Fund may enable the Portfolio to achieve economies of scale
that could reduce expenses. For more information about the organization of
the Funds and the Portfolios, including certain features of the
master/feeder fund structure, see "Special Information Regarding
Organization, Capitalization, and Other Matters" on page 8. An investment
in any Fund involves certain risks, depending upon the types of
investments made by its corresponding Portfolio. For more details about
each Portfolio, its investments and their risks, see "Investment Programs"
on page 4 and "Description of Investments" on page 15.
The following table is a summary highlighting features of the
Funds and their corresponding Portfolios. You may want to invest in a
variety of Funds to fit your particular investment needs. Of course,
there can be no assurance that a Fund will meet its investment objective.
<TABLE>
<CAPTION>
Neuberger&Berman
Equity Assets Investment Style Portfolio Characteristics
<S> <C> <C>
GUARDIAN ASSETS Broadly diversified, large-cap value A growth and income fund that invests in
fund. Relatively low portfolio turnover. stocks of established, high-quality companies
that are not well followed on Wall Street or
are temporarily out of favor.
FOCUS ASSETS Large-cap value fund, more concentrated Invests in common stocks selected from 13
portfolio than Guardian. Relatively low multi-industry sectors of the economy. To
portfolio turnover. maximize potential return, the Portfolio
normally makes at least 90% of its
investments in not more than six sectors
believed by the portfolio managers to be
undervalued.
<PAGE>
Neuberger&Berman
Equity Assets Investment Style Portfolio Characteristics
MANHATTAN ASSETS Broadly diversified, medium- to large-cap Invests in securities believed to have the
growth fund. Relatively low portfolio maximum potential for long-term capital
turnover. appreciation. Portfolio manager follows a
"growth at a reasonable price" philosophy and
searches for financially sound, growing
companies with a special competitive
advantage or a product that makes their
stocks attractive.
PARTNERS ASSETS Broadly diversified, medium- to large-cap Seeks capital growth through an approach that
value fund. Moderate portfolio turnover. is intended to increase capital with
reasonable risk. Portfolio managers look at
fundamentals, focusing particularly on cash
flow, return on capital, and asset values.
</TABLE>
Management
N&B Management, with the assistance of Neuberger&Berman, L.P.
("Neuberger&Berman") as sub-adviser, selects investments for the
Portfolios. N&B Management also provides administrative services to the
Portfolios and the Funds and acts as distributor of Fund shares. See
"Management and Administration" on page 30. If you want to know how to
buy and sell shares of the Funds 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 26, "Shareholder
Services--How to Sell Shares" on page 26, "Shareholder Services--
Exchanging Shares" on page 26, and the policies of the Institution through
which you are purchasing shares.
The Neuberger&Berman Investment Approach
While each Portfolio has its own investment objective, policies,
and limitations, each Portfolio is managed using one of two basic
investment approaches--value and growth.
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
- 2 -
<PAGE>
the potential to realize hidden values, strong management, and low
price-to-book value (net value of the company's assets).
While a value approach concentrates on undervalued securities in
relation to their fundamental economic value, a growth approach seeks out
stocks of companies that are projected to grow at above-average rates and
may appear poised for a period of accelerated earnings.
The growth portfolio manager is willing to pay a higher share
price in the hopes that the stock's earnings momentum will carry the
stock's price higher. As a stock's price increases based on strong
earnings, the stock's original price appears low in relation to the growth
rate of its earnings. Sometimes this happens when a particular company or
industry is temporarily out of favor with the market or under-researched.
This strategy is called "growth at a reasonable price."
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.
In general, Neuberger&Berman FOCUS, Neuberger&Berman GUARDIAN,
and Neuberger&Berman PARTNERS Portfolios adhere to a value-oriented
investment approach. Neuberger&Berman MANHATTAN Portfolio places a
greater emphasis on finding securities whose measures of fundamental value
are low in relation to the growth rate of their future earnings and cash
flow, as projected by the portfolio manager, and that Portfolio is
therefore willing to invest in securities with prices that are somewhat
higher multiples of earnings.
EXPENSE INFORMATION
This section gives you certain information about the expenses of
each Fund and its corresponding Portfolio. See "Performance Information"
for important facts about the investment performance of each Fund.
Shareholder Transaction Expenses for Each Fund
As shown by this table, there are no transaction charges when you
buy or sell Fund shares.
Sales Charge Imposed on Purchases NONE
Sales Charge Imposed on Reinvested Dividends NONE
Deferred Sales Charges NONE
Redemption Fees NONE
Exchange Fees NONE
Annual Fund Operating Expenses
(as a percentage of average net assets)
- 3 -
<PAGE>
The following table shows anticipated annual Total Operating
Expenses for each 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 its
corresponding Portfolio. These expenses are borne indirectly by Fund
shareholders. Each Fund pays N&B Management an administration fee, based
on the Fund's average daily net assets. Each Portfolio pays N&B Management
a management fee, based on the Portfolio's average daily net assets; a pro
rata portion of this fee is borne indirectly by the corresponding Fund.
Therefore, the table combines management and administration fees. The
Funds and Portfolios also incur other expenses for things such as
accounting and legal fees, maintaining shareholder records and furnishing
shareholder statements and Fund reports. "Operating Expenses" exclude
interest, taxes, brokerage commissions, and extraordinary expenses. The
Funds' expenses are factored into their share prices and dividends and are
not charged directly to Fund shareholders. For more information, see
"Management and Administration" and the SAI.
Because the Funds pay a 12b-1 fee, long-term investors in Fund
shares may pay more in distribution expenses than the economic equivalent
of the maximum front-end sales charge permitted by the National
Association of Securities Dealers ("NASD").
Management and Other Total
Neuberger&Berman Administration 12b-1 Expenses Operating
Equity Assets Fees Fees (estimated) Expenses
FOCUS ASSETS 0.92% 0.25% 0.10% 1.27%
GUARDIAN ASSETS 0.86% 0.25% 0.08% 1.19%
MANHATTAN ASSETS 0.93% 0.25% 0.11% 1.29%
PARTNERS ASSETS 0.89% 0.25% 0.09% 1.23%
Anticipated Total Operating Expenses for each Fund are annualized
projections based upon current administration fees for the Fund and
management fees for its corresponding Portfolio; "Other Expenses" are
estimated amounts for the current fiscal year. The trustees of the Trust
believe that the aggregate per share expenses of each Fund and its
corresponding Portfolio will be approximately equal to the expenses the
Fund would incur if its assets were invested directly in the type of
securities held by its corresponding Portfolio. The trustees of the Trust
also believe that investment in a Portfolio by investors in addition to a
Fund may enable the Portfolio to achieve economies of scale which could
reduce expenses. The expenses and returns of other funds that may invest
in the Portfolios may differ from those of the Funds.
N&B Management has voluntary undertaken until December 31, 1997,
to reimburse each Fund for its Operating Expenses and its pro rata share
of its corresponding Portfolio's Operating Expenses which, in the
aggregate, exceed 1.50% per annum of the Fund's average daily net assets.
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<PAGE>
Example
To illustrate the effect of Operating Expenses, let's assume that
each Fund's annual return is 5% and that it had Total Operating Expenses
described in the table above. For every $1,000 you invested in each Fund,
you would have paid the following amounts of total expenses if you closed
your account at the end of each of the following time periods:
NEUBERGER&BERMAN EQUITY ASSETS 1 Year 3 Years
FOCUS ASSETS $13 $40
GUARDIAN ASSETS $12 $38
MANHATTAN ASSETS $13 $41
PARTNERS ASSETS $13 $39
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 PROGRAMS
The investment policies and limitations of each Fund and its
corresponding Portfolio are identical. Each Fund invests only in its
corresponding Portfolio. Therefore, the following shows you the kinds of
securities in which each Portfolio invests. For an explanation of some
types of investments, see "Description of Investments," on page 15.
Investment policies and limitations of the Funds and Portfolios
are not fundamental unless otherwise specified in this Prospectus or the
SAI. While a non-fundamental policy or limitation may be changed by the
trustees of the Trust or of Managers Trust without shareholder approval,
the Funds intend to notify shareholders before making any material change
to such policies or limitations. Fundamental policies may not be changed
without shareholder approval.
The investment objectives of the Funds and Portfolios are not
fundamental. The Funds have undertaken not to change their investment
objective without 30 days' prior notice to shareholders. There can be no
assurance that the Funds or Portfolios will achieve their objectives. Each
Fund, by itself, does not represent a comprehensive investment program.
Additional investment techniques, features, and limitations
concerning the Portfolios' investment programs are described in the SAI.
- 5 -
<PAGE>
Neuberger&Berman Focus Portfolio
The investment objective of Neuberger&Berman FOCUS Portfolio and
Neuberger&Berman FOCUS Assets is to seek long-term capital appreciation.
Neuberger&Berman FOCUS Portfolio invests principally in common
stocks selected from the following 13 multi-industry sectors of the
economy:
<TABLE>
<CAPTION>
<S> <C> <C>
Autos & Housing Health Care Technology
Consumer Goods & Services Heavy Industry Transportation
Defense & Aerospace Machinery & Equipment Utilities
Energy Media & Entertainment
Financial Services Retailing
</TABLE>
To maximize potential return, the Portfolio normally makes at
least 90% of its investments in not more than six sectors it identifies as
undervalued. Where a particular industry may fall within more than one
sector, N&B Management uses its judgment and experience to determine the
placement of that industry within a sector. The Portfolio uses the
value-oriented investment approach to identify stocks believed to be
undervalued, including stocks that are temporarily out of favor in the
market. The Portfolio then focuses its investments in the sectors in which
the undervalued stocks are clustered. These sectors are believed to offer
the greatest potential for capital growth. This investment approach is
different from that of most other mutual funds that emphasize sector
investment. Those funds either invest in only a single economic sector or
choose a number of sectors by analyzing general economic trends. The
sectors are more fully described in the SAI.
The Portfolio may be affected more by any single economic,
political, or regulatory development than a more diversified mutual fund.
The risk of decline in the Portfolio's asset value due to an adverse
development may be partially offset by the value-oriented investment
approach. To further reduce this risk, the Portfolio may not (1) invest
more than 50% of its total assets in any one sector, (2) as a fundamental
policy, concentrate 25% or more of its total assets in the securities of
companies having their principal business activities in any one industry,
or (3) invest more than 5% of its total assets in the securities of any
one company.
Neuberger&Berman Guardian Portfolio
The investment objective of Neuberger&Berman GUARDIAN Portfolio
and Neuberger&Berman GUARDIAN Assets is to seek capital appreciation and,
secondarily, current income.
- 6 -
<PAGE>
Neuberger&Berman GUARDIAN Portfolio invests primarily in a large
number of common stocks of long-established, high-quality companies. The
Portfolio uses the value-oriented investment approach in selecting
securities. Thus, N&B Management looks for such factors as low
price-to-earnings ratios, strong balance sheets, solid management, and
consistent earnings. The Portfolio diversifies its holdings among many
different companies and industries.
Neuberger&Berman GUARDIAN Fund, a mutual fund administered by N&B
Management that invests all of its net investable assets in
Neuberger&Berman GUARDIAN Portfolio, and its predecessor have paid their
shareholders an income dividend every quarter and a capital gain
distribution every year since the predecessor's inception in 1950. Of
course, this past record does not necessarily predict the Fund's future
practices.
Neuberger&Berman Manhattan Portfolio
The investment objective of Neuberger&Berman MANHATTAN Portfolio
and Neuberger&Berman MANHATTAN Assets is to seek capital appreciation
without regard to income.
Neuberger&Berman MANHATTAN Portfolio generally invests in
securities of medium- to large-capitalization companies believed to have
the maximum potential for long-term capital appreciation. It does not seek
to invest in securities that pay dividends or interest, and any such
income is incidental. The Portfolio expects to be almost fully invested in
common stocks, often of companies that may be temporarily out of favor in
the market.
The Portfolio's growth investment program involves greater risks
and share price volatility than programs that invest in more conservative
securities. Moreover, the Portfolio does not follow a policy of active
trading for short-term profits. Accordingly, the Portfolio may be more
appropriate for investors with a longer-range perspective. The Portfolio
uses a "growth at a reasonable price" investment approach. When N&B
Management believes that particular securities have greater potential for
long-term capital appreciation, the Portfolio may purchase such securities
at prices with relatively higher multiples to measures of economic value
(such as earnings or cash flow) than other Portfolios. In addition, the
Portfolio focuses on companies with strong balance sheets and reasonable
valuations relative to their growth rates. It also diversifies its
investments into many companies and industries.
Neuberger&Berman Partners Portfolio
The investment objective of Neuberger&Berman PARTNERS Portfolio
and Neuberger&Berman PARTNERS Assets is to seek capital growth.
Neuberger&Berman PARTNERS Portfolio invests principally in common
stocks of medium- to large-capitalization established companies, using the
- 7 -
<PAGE>
value-oriented investment approach. The Portfolio seeks capital growth
through an investment approach that is designed to increase capital with
reasonable risk. Its investment program seeks securities believed to be
undervalued based on strong fundamentals, including low price-to-earnings
ratios, consistent cash flow, and the company's track record through all
parts of the market cycle.
The Portfolio considers additional factors when selecting
securities, including ownership by a company's management of the company's
stock and the dominance of a company in its particular field.
Short-Term Trading; Portfolio Turnover
Although the Portfolios do not purchase securities with the
intention of profiting from short-term trading, each Portfolio may sell
portfolio securities when N&B Management believes that such action is
advisable. It is anticipated that the annual turnover rates of the
Portfolios generally will not exceed 100%. Turnover rates in excess of
100% may result in higher transaction costs (which are borne directly by
the Portfolio) and a possible increase in short-term capital gains (or
losses). See "Dividends, Other Distributions, and Taxes" on page 12 and
the SAI.
Borrowings
Each Portfolio has a fundamental policy that it may not borrow
money, except that it may (1) borrow money from banks for temporary or
emergency purposes and not for leveraging or investment and (2) enter into
reverse repurchase agreements for any purpose, so long as the aggregate
amount of borrowings and reverse repurchase agreements does not exceed
one-third of the Portfolio's total assets (including the amount borrowed)
less liabilities (other than borrowings). None of the Portfolios expects
to borrow money. As a non-fundamental policy, none of the Portfolios may
purchase portfolio securities if its outstanding borrowings, including
reverse repurchase agreements, exceed 5% of its total assets.
Other Investments
For temporary defensive purposes, each Portfolio may invest up to
100% of its total assets in cash and cash equivalents, U.S. Government and
Agency Securities, commercial paper and certain other money market
instruments, as well as repurchase agreements collateralized by the
foregoing.
PERFORMANCE INFORMATION
The performance of the Funds 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
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<PAGE>
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 for the period as if performance had been constant over the entire
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.
The Funds commenced operations in ______ 1996 and thus have no
past performance. However, four mutual funds that are series of
Neuberger&Berman Equity Funds ("N&B Equity Funds"), each of which has a
name similar to a Fund and the same investment objective, policies, and
limitations as that Fund ("Sister Fund"), also invest in the four
Portfolios described herein. Each Sister Fund had a predecessor. The
following table shows the average annual total returns for the period
ended August 31, 1995 (the most recent fiscal year-end of the Sister
Funds) of a 1-year, 5-year, and 10-year investment in each Sister Fund and
its predecessor. The Sister Funds have a different fee structure than the
Funds and do not pay 12b-1 fees. Had these fees been reflected, the total
returns shown in the table would have been lower. The table also shows a
comparison with the S&P 500 Index for each Sister Fund and its
predecessor. The S&P 500 Index is the Standard & Poor's 500 Composite
Stock Price Index, an unmanaged index generally considered to be
representative of overall stock market activity. Please note that indices
do not take into account any fees and expenses of investing in the
individual securities they track, and that individuals cannot invest
directly in any index.
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<PAGE>
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS
ENDED AUGUST 31, 1995
Since Inception
1 Year 5 Years 10 Years Inception Date
FOCUS 27.47% 18.52% 14.77% 11.97% 10/19/55
GUARDIAN 24.06% 20.14% 15.66% 13.10% 6/1/50
MANHATTAN 26.00% 17.10% 15.01% 17.69% 3/1/79*
PARTNERS 21.53% 16.05% 14.43% 17.70% 1/20/75*
S&P 500 21.42% 15.13% 15.17% N/A N/A
*The dates when N&B Management became investment adviser to the
predecessors of the Sister Funds.
Prior to November 1991, the investment policies of the
predecessor of Neuberger&Berman FOCUS Assets' Sister Fund required that a
substantial percentage of its assets be invested in the energy field;
accordingly, performance results prior to that time do not necessarily
reflect the level of performance that might have been achieved had the
Fund's current policies been in effect during that period.
The Funds commenced operations in ________ 1996. The following
table lets you take a closer look at how each Sister Fund and its
predecessor performed year by year, in terms of an annual per share total
return for each calendar year (ending December 31). The total returns
shown in the table would have been lower had they reflected the higher
fees of the Funds, as compared to those of the Sister Funds. Please note
that the above chart reflects information for periods ended on the Sister
Funds' last fiscal year-end (that is, as of August 31, 1995).
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<PAGE>
<TABLE>
<CAPTION>
TOTAL RETURN FOR CALENDAR YEARS ENDED DECEMBER 31
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FOCUS 4.8% 22.4% 10.1% 0.6% 16.5% 29.8% (5.9%) 24.7% 21.1% 16.3% 0.9%
GUARDIAN 7.3% 25.0% 11.9% (1.0%) 28.0% 21.5% (4.7%) 34.3% 19.0% 14.5% 0.6%
MANHATTAN 7.1% 37.1% 16.8% 0.4% 18.3% 29.1% (8.1%) 30.9% 17.8% 10.0% (3.6%)
PARTNERS 8.0% 29.9% 17.3% 4.3% 15.5% 22.8% (5.1%) 22.4% 17.5% 16.5% (1.9%)
S&P 500 6.2% 31.6% 18.6% 5.2% 16.5% 31.6% (3.1%) 30.3% 7.6% 10.0% 1.4%
</TABLE>
TOTAL RETURN INFORMATION. You can obtain current performance information
about each Fund by calling N&B Management at 800-877-9700.
SPECIAL INFORMATION REGARDING ORGANIZATION,
CAPITALIZATION, AND OTHER MATTERS
The Funds
Each Fund is a separate series of the Trust, a Delaware business
trust organized pursuant to a Trust Instrument dated as of 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. Each
Fund described herein commenced operations in ________, 1996. Each Fund
invests all of its net investable assets in its corresponding Portfolio,
in each case receiving a beneficial interest in that Portfolio. The
trustees of the Trust may establish additional series or classes of
shares, without the approval of shareholders. The assets of each series
belong only to that series, and the liabilities of each series are borne
solely by that series and no other.
DESCRIPTION OF SHARES. Each Fund is authorized to issue an unlimited
number of shares of beneficial interest (par value $0.001 per share).
Shares of each Fund represent equal proportionate interests in the assets
of that Fund only and have identical voting, dividend, redemption,
liquidation, and other rights. All shares issued are fully paid and
non-assessable, and shareholders have no preemptive or other right to
subscribe to any additional shares.
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<PAGE>
SHAREHOLDER MEETINGS. The trustees of the Trust do not intend to hold
annual meetings of shareholders of the Funds. The trustees will call
special meetings of shareholders of a Fund only if required under the 1940
Act or in their discretion or upon the written request of holders of 10%
or more of the outstanding shares of that Fund entitled to vote.
CERTAIN PROVISIONS OF TRUST INSTRUMENT. Under Delaware law, the
shareholders of a Fund will not be personally liable for the obligations
of any Fund; a shareholder is entitled to the same limitation of personal
liability extended to shareholders of corporations. To guard against the
risk that Delaware law might not be applied in other states, the Trust
Instrument requires that every written obligation of the Trust or a Fund
contain a statement that such obligation may be enforced only against the
assets of the Trust or the Fund and provides for indemnification out of
the Trust or Fund property of any shareholder nevertheless held personally
liable for Trust or Fund obligations, respectively.
The Portfolios
Each Portfolio is a separate series of Managers Trust, a New York
common law trust organized as of December 1, 1992. Managers Trust is
registered under the 1940 Act as a diversified, open-end management
investment company. Managers Trust has six separate Portfolios. The assets
of each Portfolio belong only to that Portfolio, and the liabilities of
each Portfolio are borne solely by that Portfolio and no other.
FUNDS' INVESTMENTS IN PORTFOLIOS. Each Fund is a "feeder fund" that seeks
to achieve its investment objective by investing all of its net investable
assets in its corresponding Portfolio, which is a "master fund." The
Portfolio, which has the same investment objective, policies, and
limitations as the Fund, in turn invests in securities; its corresponding
Fund thus acquires an indirect interest in those securities. Historically,
N&B Management, which is the administrator of each Fund and the investment
manager of each Portfolio, has sponsored, with Neuberger&Berman,
traditionally structured mutual funds since 1950. However, it has
operated 12 master funds and 20 feeder funds since August 1993 and now
operates 21 master funds and 34 feeder funds.
Each Fund's investment in its corresponding Portfolio is in the
form of a non-transferable beneficial interest. Members of the general
public may not purchase a direct interest in a Portfolio. The four Sister
Funds that are series of N&B Equity Funds and four series of
Neuberger&Berman Equity Trust ("N&B Equity Trust") invest all of their
respective net investable assets in the four Portfolios described herein.
The shares of each series of N&B Equity Funds (but not of N&B Equity
Trust) are available for purchase by members of the general public. Each
Portfolio may also permit other investment companies and/or other
institutional investors to invest in the Portfolio. All investors will
invest in a Portfolio on the same terms and conditions as a Fund and will
pay a proportionate share of the Portfolio's expenses. The Trust does not
sell its shares directly to members of the general public. Other investors
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<PAGE>
in a Portfolio (including the series of N&B Equity Funds) that might sell
shares to members of the general public are not required to sell their
shares at the same public offering price as a Fund, could have a different
administration fee and expenses than a Fund, and (except N&B 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 a 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 a Portfolio
by a series of N&B Equity Funds or N&B Equity Trust or other potential
investors in addition to a Fund may enable the Portfolio to realize
economies of scale that could reduce its operating expenses, thereby
producing higher returns and benefitting all shareholders. However, a
Fund's investment in its corresponding Portfolio may be affected by the
actions of other large investors in the Portfolio, if any. For example, if
a large investor in a Portfolio (other than a Fund) redeemed its interest
in the Portfolio, the Portfolio's remaining investors (including the Fund)
might, as a result, experience higher pro rata operating expenses, thereby
producing lower returns.
Each Fund may withdraw its entire investment from its
corresponding Portfolio at any time, if the trustees of the Trust
determine that it is in the best interests of the Fund and its
shareholders to do so. A Fund might withdraw, for example, if there were
other investors in a Portfolio with power to, and who did by a vote of all
investors (including the Fund), change the investment objective, policies,
or limitations of the Portfolio in a manner not acceptable to the trustees
of the Trust. A withdrawal could result in a distribution in kind of
securities (as opposed to a cash distribution) by the Portfolio. That
distribution could result in a less diversified portfolio of investments
for the Fund and could affect adversely the liquidity of the Fund's
investment portfolio. If the Fund decided to convert those securities to
cash, it usually would incur brokerage fees or other transaction costs. If
a Fund withdrew its investment from a Portfolio, the trustees would
consider what action might be taken, including the investment of all of
the Fund's net investable assets in another pooled investment entity
having substantially the same investment objective as the Fund or the
retention by the Fund of its own investment manager to manage its assets
in accordance with its investment objective, policies, and limitations.
The inability of the Fund to find a suitable replacement could have a
significant impact on shareholders.
INVESTOR MEETINGS AND VOTING. Each Portfolio normally will not hold
meetings of investors except as required by the 1940 Act. Each investor in
a Portfolio will be entitled to vote in proportion to its relative
beneficial interest in the Portfolio. On most issues subjected to a vote
of investors, a Fund will solicit proxies from its shareholders and will
vote its interest in the Portfolio in proportion to the votes cast by the
Fund's shareholders. If there are other investors in a Portfolio, there
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<PAGE>
can be no assurance that any issue that receives a majority of the votes
cast by Fund shareholders will receive a majority of votes cast by all
Portfolio investors; indeed, if other investors hold a majority interest
in a Portfolio, they could have voting control of the Portfolio.
CERTAIN PROVISIONS. Each investor in a Portfolio, including a Fund, will
be liable for all obligations of the Portfolio, but not of the other
Portfolios. However, the risk of an investor in a Portfolio incurring
financial loss on account of such liability would be limited to
circumstances in which the Portfolio had inadequate insurance and was
unable to meet its obligations out of its assets. Upon liquidation of a
Portfolio, investors would be entitled to share pro rata in the net assets
of the Portfolio available for distribution to investors.
SHAREHOLDER SERVICES
How to Buy Shares
YOU CAN BUY AND OWN FUND SHARES ONLY THROUGH AN ACCOUNT WITH AN
INSTITUTION WHICH PROVIDES ACCOUNTING, RECORDKEEPING, AND OTHER SERVICES
TO INVESTORS AND WHICH HAS AN ADMINISTRATIVE SERVICES AGREEMENT WITH N&B
MANAGEMENT. N&B Management and the Funds do not recommend, endorse, or
receive payments from any Institution. N&B Management compensates
Institutions for services they provide under an administrative services
agreement and/or dealer agreement. N&B Management does not provide
investment advice to any Institution or its clients or make decisions
regarding their investments.
Each Institution will establish its own procedures for the
purchase of Fund shares in its account, including minimum initial and
additional investments for shares of each Fund and the acceptable methods
of payment for shares. Shares are purchased at the next price calculated
on a day the New York Stock Exchange ("NYSE") is open, after a purchase
order is received and accepted by an Institution. Prices for Fund shares
are usually calculated as of 4 p.m. Eastern time. Your Institution may be
closed on days when the NYSE is open. As a result, prices for Fund shares
may be significantly affected on days when you have no access to your
Institution. The Funds will not issue a certificate for your shares.
Other Information:
. An Institution must pay for shares it purchases in U.S.
dollars.
. Each Fund has the right to suspend the offering of its
shares for a period of time. Each Fund also has the right
to accept or reject a purchase order in its sole
discretion, including certain purchase orders using an
exchange of shares. See "Shareholder Services--
Exchanging Shares."
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<PAGE>
How to Sell Shares
You can sell (redeem) all or some of your Fund shares only
through an account with an Institution. Each Institution will establish
its own procedures for the sale of Fund shares. 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 Fund shares
may be significantly affected on days when you have no access to your
Institution.
Each Fund has reserved the right, if conditions exist which make
cash payments undesirable, to honor any request for a redemption by making
payments in securities valued in the same way as they would be valued for
purposes of computing that Fund's net asset value per share. If payment is
made in securities, an Institution 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 each Fund, but in any case within three
calendar days (under unusual circumstances a Fund may
take longer, as permitted by law).
. Each Fund may suspend redemptions or postpone payments on
days when the NYSE is closed (besides weekends and
holidays), when trading on the NYSE is restricted, or as
permitted by the Securities and Exchange Commission.
Exchanging Shares
Through an account with an Institution, you may be able to
exchange shares of a Fund for shares of another Neuberger&Berman
Fund(SERVICEMARK). Each Institution will establish its own exchange policy
and procedures for its accounts. An Institution may exchange shares of any
Fund for shares of the other Funds described in this Prospectus. 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.
. 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.
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<PAGE>
. An exchange may have tax consequences.
. Each Fund may refuse any exchange orders from any
Institution if for any reason they are not deemed to be
in the best interests of the Fund and its shareholders.
. Each Fund may impose other restrictions on the exchange
privilege, or modify or terminate the privilege, but will
try to give each Institution advance notice whenever it
can reasonably do so.
SHARE INFORMATION
Share Prices and Net Asset Value
Each Fund's shares are bought or sold at a price that is the
Fund's net asset value ("NAV") per share. The NAVs for each Fund and its
corresponding Portfolio are calculated by subtracting liabilities from
total assets (in the case of a Portfolio, the market value of the
securities the Portfolio holds plus cash and other assets; in the case of
a Fund, its percentage interest in its corresponding Portfolio, multiplied
by the Portfolio's NAV, plus any other assets). Each Fund's per share NAV
is calculated by dividing its NAV by the number of Fund shares outstanding
and rounding the result to the nearest full cent. Each Fund and its
corresponding Portfolio calculate their NAVs as of the close of regular
trading on the NYSE, usually 4 p.m. Eastern time, on each day the NYSE is
open. Each Portfolio values securities (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 Portfolios value 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
Each 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 its corresponding Portfolio, normally in December. Investors
who are considering the purchase of Fund shares in December should take
this into account because of the tax consequences of such distributions.
In addition, Neuberger&Berman GUARDIAN Assets distributes substantially
all of its share of Neuberger & Berman GUARDIAN Portfolio's net investment
income, if any, at the end of each calendar quarter.
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<PAGE>
Distribution Options
REINVESTMENT IN SHARES. All dividends and other distributions paid on
shares of a Fund are automatically reinvested in additional shares of that
Fund, unless an Institution elects to receive them in cash. Dividends and
other distributions are reinvested at the Fund's per share NAV, usually as
of the date the dividend or other distribution is payable.
DISTRIBUTIONS IN CASH. An Institution may elect to receive dividends in
cash, with other distributions being reinvested in additional Fund shares,
or to receive all dividends and other distributions in cash.
Taxes
Each Fund intends to continue to qualify for treatment as a
regulated investment company for federal income tax purposes so that it
will be relieved of federal income tax on that part of its taxable income
and realized gains that it distributes to its shareholders.
An investment has certain tax consequences, depending on the type
of account in which you invest. IF YOU HAVE AN ACCOUNT UNDER A QUALIFIED
RETIREMENT PLAN OR AN INDIVIDUAL RETIREMENT ACCOUNT, TAXES ARE DEFERRED.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax
and may also be subject to state and local income taxes. Distributions are
taxable when they are paid, whether in cash or by reinvestment in
additional Fund shares, except that distributions declared in December to
shareholders of record on a date in that month and paid in the following
January are taxable as if they were paid on December 31 of the year in
which the distributions were declared.
For federal income tax purposes, 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. Distributions of net
capital gain may include gains from the sale of portfolio securities that
appreciated in value before you bought your shares. Every January, each
Fund will send each Institution that is a shareholder therein a statement
showing the amount of distributions paid in the previous year.
TAXES ON REDEMPTIONS. Capital gains realized on redemptions of Fund
shares, including redemptions in connection with exchanges to other Funds,
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.
When an Institution sells shares, it will receive a confirmation
statement showing the number of shares sold and the price. Every January,
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<PAGE>
Institutions will also receive a consolidated transaction statement for
the previous year.
Each Institution annually will send investors in its accounts
statements showing distribution and transaction information for the
previous year.
The foregoing is only a summary of some of the important tax
considerations affecting each Fund and its shareholders. See the SAI for
additional tax information. There may be other federal, state, local, or
foreign tax considerations applicable to a particular investor. Therefore,
investors should consult their tax advisers.
MANAGEMENT AND ADMINISTRATION
Trustees and Officers
The trustees of the Trust and the trustees of Managers Trust, who
are currently the same individuals, have oversight responsibility for the
operations of each Fund and each Portfolio, respectively. The SAI contains
general background information about each trustee and officer of the Trust
and of Managers Trust. The trustees and officers of the Trust and of
Managers Trust who are officers and/or directors of N&B Management and/or
partners of Neuberger&Berman serve without compensation from the Funds or
the Portfolios. The trustees of the Trust and of Managers Trust, including
a majority of those trustees who are not "interested persons" (as defined
in the 1940 Act) of any Fund, have adopted written procedures reasonably
appropriate to deal with potential conflicts of interest between the Trust
and Managers Trust, including, if necessary, creating a separate board of
trustees of Managers Trust.
Investment Manager, Administrator, Distributor, and Sub-Adviser
N&B Management serves as the investment manager of each
Portfolio, as administrator of each Fund, and as distributor of the shares
of each Fund. N&B Management and its predecessor firms have specialized in
the management of no-load mutual funds since 1950. In addition to serving
the four Portfolios, N&B Management currently serves as investment manager
of other mutual funds. Neuberger&Berman, which acts as sub-adviser for the
Portfolios and other mutual funds managed by N&B Management, also serves
as investment adviser of three other 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
Portfolios. Neuberger&Berman is a member firm of the NYSE and other
principal exchanges and acts as the Portfolios' principal broker in the
purchase and sale of their securities. Neuberger&Berman and its
affiliates, including N&B Management, manage securities accounts that had
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<PAGE>
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.
The following is information about the individuals who are
primarily responsible for day-to-day management of the Portfolios:
Neuberger&Berman FOCUS Portfolio and Neuberger&Berman GUARDIAN
Portfolio--Kent C. Simons and Lawrence Marx III. Mr. Simons and Mr. Marx
are Vice Presidents of N&B Management and general partners of
Neuberger&Berman. Mr. Simons has had responsibility for Neuberger&Berman
FOCUS Portfolio and Neuberger & Berman FOCUS Assets' Sister Fund's
predecessor since 1988 and for Neuberger&Berman GUARDIAN Portfolio and
Neuberger & Berman GUARDIAN Assets' Sister Fund's predecessor since 1983.
Mr. Marx has had those responsibilities since 1988.
Neuberger&Berman MANHATTAN Portfolio--Mark R. Goldstein and Susan
Switzer. Mr. Goldstein is a Vice President of N&B Management and a general
partner of Neuberger&Berman. Previously he was a securities analyst and
portfolio manager with that firm. He has had responsibility for
Neuberger&Berman MANHATTAN Portfolio and Neuberger & Berman MANHATTAN
Assets' Sister Fund's predecessor since June 1992. Ms. Switzer has been an
Assistant Vice President of N&B Management since March 1995 and a
portfolio manager of Neuberger&Berman since January 1995. Ms. Switzer was
a research analyst and assistant portfolio manager for another money
management firm from 1989 to 1994.
Neuberger&Berman PARTNERS Portfolio--Michael M. Kassen and Robert
I. Gendelman. Mr. Kassen is a Vice President of N&B Management and a
general partner of Neuberger&Berman. He has had responsibility for
Neuberger&Berman PARTNERS Portfolio and Neuberger&Berman PARTNERS Assets'
Sister Fund's predecessor since June 1990. Mr. Kassen was an employee of
N&B Management from 1990 to December 1992. Mr. Gendelman is a senior
portfolio manager for Neuberger&Berman and an Assistant Vice President of
N&B Management. Mr. Gendelman has had responsibility for Neuberger&Berman
PARTNERS Portfolio since October 1994. He was a portfolio manager for
another fund manager from 1992 to 1993 and was managing partner of an
investment partnership from 1988 to 1992.
Neuberger&Berman acts as the principal broker for the Portfolios
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, each 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).
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<PAGE>
To mitigate the possibility that a Portfolio will be adversely
affected by personal trading of employees, 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 each
Portfolio that include, among other things, making and implementing
investment decisions and providing facilities and personnel necessary to
operate the Portfolio. N&B Management provides administrative services to
each Fund that include furnishing similar facilities and personnel for the
Fund and performing accounting, recordkeeping, and other services for
Institutions and their accounts. For such administrative services, each
Fund pays N&B Management a fee at the annual rate of 0.40% of that Fund's
average daily net assets. With a Fund's consent, N&B Management may
subcontract to third parties, including Institutions, some of its
responsibilities to that Fund under the administration agreement and may
compensate third parties that provide such services. For investment
management services, each Portfolio pays N&B Management a fee at the
annual rate of 0.55% of the first $250 million of that Portfolio's average
daily net assets, 0.525% of the next $250 million, 0.50% of the next $250
million, 0.475% of the next $250 million, 0.45% of the next $500 million,
and 0.425% of average daily net assets in excess of $1.5 billion.
N&B Management acts as agent in arranging for the sale of Fund
shares without commission and bears advertising and promotion expenses.
The trustees of the Trust have adopted a plan pursuant to Rule 12b-1 under
the 1940 Act ("Plan"). The Plan provides that, as compensation for its
ongoing services to investors in the Funds, its activities and expenses
related to the sale and distribution of Fund shares, and other services
provided to the Funds, N&B Management receives from each Fund a fee at the
annual rate of 0.25% of that Fund's average daily net assets. N&B
Management pays this amount to Institutions that distribute Fund shares
and provide services to the Funds and their shareholders. Those
Institutions may use the payments for, among other purposes, compensating
employees engaged in sales and/or shareholder servicing. The amount of
fees paid by a Fund during any year may be more or less than the cost of
distribution and other services provided to the Fund. NASD rules limit the
amount of annual distribution fees that may be paid by a mutual fund and
impose a ceiling on the cumulative distribution fees paid. The Trust's
Plan complies with those rules.
See "Expense Information -- Annual Fund Operating Expenses" for
anticipated fees for the current fiscal year.
Each Fund bears all expenses of its operations other than those
borne by N&B Management as administrator of the Fund and as distributor of
its shares. Each Portfolio bears all expenses of its operations other than
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those borne by N&B Management as investment manager of the Portfolio.
These expenses include, but are not limited to, for the Funds and
Portfolios, legal and accounting fees and compensation for trustees who
are not affiliated with N&B Management; for the Funds, transfer agent
fees, and the cost of printing and sending reports and proxy materials to
shareholders; and for the Portfolios, custodial fees for securities.
N&B Management has voluntarily undertaken until December 31,
1997, to reimburse each Fund for its Operating Expenses and its pro rata
share of its corresponding Portfolio's Operating Expenses which, in the
aggregate, exceed 1.50% per annum of the Fund's average daily net assets.
The effect of reimbursement by N&B Management is to reduce a Fund's
expenses and thereby increase its total return.
Transfer Agent
The Funds' transfer agent is State Street Bank and Trust Company
("State Street"). State Street administers purchases, redemptions, and
transfers of Fund shares with respect to Institutions and the payment of
dividends and other distributions to Institutions. The main office of
State Street is located at 225 Franklin Street, Boston, MA 02110. All
correspondence should be addressed to the Neuberger&Berman Funds,
Institutional Services, 605 Third Avenue, 2nd Floor, New York, NY 10158.
DESCRIPTION OF INVESTMENTS
In addition to common stocks and other securities referred to in
"Investment Programs" herein, each Portfolio may make the following
investments, among others, individually or in combination, although it may
not necessarily buy all of the types of securities or use all of the
investment techniques that are described. For additional information on
the following investments and on other types of investments which the
Portfolios may make, see the SAI.
ILLIQUID SECURITIES. Each Portfolio may invest up to 10% of its net
assets in illiquid securities, which are securities that cannot be
expected to be sold within seven days at approximately the price at which
they are valued. Due to the absence of an active trading market, a
Portfolio may experience difficulty in valuing or disposing of illiquid
securities. N&B Management determines the liquidity of the Portfolios'
securities, under 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. Each Portfolio may invest
in restricted securities and Rule 144A securities. Restricted securities
cannot be sold to the public without registration under the Securities Act
of 1933 ("1933 Act"). Unless registered for sale, these securities can be
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<PAGE>
sold only in privately negotiated transactions or pursuant to an exemption
from registration. Restricted securities are generally considered
illiquid. Rule 144A securities, although not registered, may be resold to
qualified institutional buyers in accordance with Rule 144A under the 1933
Act. Unregistered securities may also be sold abroad pursuant to
Regulation S under the 1933 Act. N&B Management, acting pursuant to
guidelines established by the trustees of Managers Trust, may determine
that some restricted securities are liquid.
FOREIGN SECURITIES. Each 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 American Depositary Receipts ("ADRs"). Foreign
securities (including those denominated in U.S. dollars and 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 that
are not denominated in U.S. dollars (including those made through ADRs)
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. Each 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 security's price, although this risk is
reduced by the premium received for the option.
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 a 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 a Portfolio to
sell a security at a time that would otherwise be favorable for it to do
so, or the possible need for a Portfolio to sell a security at a
disadvantageous time, due to its need to maintain "cover" in connection
with its use of these instruments. Options are considered "derivatives."
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<PAGE>
SHORT SALES AGAINST-THE-BOX. Each 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, a
Portfolio buys a security from a Federal Reserve member bank or a
securities dealer and simultaneously agrees to sell it back at a higher
price, at a specified date, usually less than a week later. The underlying
securities must fall within the Portfolio's investment policies and
limitations. Each Portfolio also may lend portfolio securities to banks,
brokerage firms, or institutional investors to earn income. Costs, delays,
or losses could result if the selling party to a repurchase agreement or
the borrower of portfolio securities becomes bankrupt or otherwise
defaults. N&B Management monitors the creditworthiness of sellers and
borrowers.
OTHER INVESTMENTS. Although each Portfolio invests primarily in common
stocks, when market conditions warrant it may invest in preferred stocks,
securities convertible into or exchangeable for common stocks, U.S.
Government and Agency Securities, investment grade debt securities, or
money market instruments, or may retain assets in cash or cash
equivalents.
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, Federal National Mortgage
Association, Federal Home Loan Mortgage Corporation, Student Loan
Marketing Association, and Tennessee Valley Authority; and by various
federally chartered or sponsored banks. Some U.S. Government Agency
Securities are supported by the full faith and credit of the United
States, while others may be supported by the issuer's ability to borrow
from the U.S. Treasury, subject to the Treasury's discretion in certain
cases, or only by the credit of the issuer. U.S. Government Agency
Securities include U.S. Government mortgage-backed securities. The market
prices of U.S. Government securities are not guaranteed by the Government
and generally fluctuate with changing interest rates.
"Investment grade" debt securities are those receiving one of the
four highest ratings from Moody's Investors Service, Inc. ("Moody's"),
Standard & Poor's ("S&P"), or another nationally recognized statistical
rating organization ("NRSRO") or, if unrated by any NRSRO, deemed
comparable by N&B Management to such rated securities ("Comparable Unrated
Securities") under guidelines established by the trustees of Managers
Trust. The value of fixed income securities in which a Portfolio may
invest is likely to decline in times of rising interest rates.
Conversely, when rates fall, the value of a Portfolio's fixed income
investments is likely to rise.
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<PAGE>
Neuberger&Berman PARTNERS Portfolio may invest up to 15% of its
net assets in debt securities rated below investment grade or Comparable
Unrated Securities. Such securities, as well as those rated by Moody's in
its fourth highest category (Baa) or Comparable Unrated Securities, may be
considered predominantly speculative, although, as debt securities, they
generally have priority over equity securities of the same issuer and are
generally better secured. Debt securities in the lowest rating categories
may involve a substantial risk of default or may be in default. Changes in
economic conditions or developments regarding the individual issuer are
more likely to cause price volatility and weaken the capacity of the
issuer of such securities to make principal and interest payments than is
the case for higher grade debt securities. An economic downturn affecting
the issuer may result in an increased incidence of default. The market for
lower-rated securities may be thinner and less active than for higher-
rated securities. Neuberger&Berman PARTNERS Portfolio will invest in such
securities only when N&B Management concludes that the anticipated return
to the Portfolio on such an investment warrants exposure to the additional
level of risk. A further description of Moody's and S&P's ratings in
included in the Appendix to the SAI.
USE OF JOINT PROSPECTUS AND STATEMENT
OF ADDITIONAL INFORMATION
Each Fund and its corresponding Portfolio acknowledges that it is
solely responsible for all information or lack of information about that
Fund and Portfolio in this Prospectus or in the SAI, and no other Fund or
Portfolio is responsible therefor. The trustees of the Trust and of
Managers Trust have considered this factor in approving each Fund's use of
a single combined Prospectus and combined SAI.
OTHER INFORMATION
Directory
Investment Manager, Administrator,
and Distributor
Neuberger&Berman Management Incorporated
605 Third Avenue, 2nd Floor
New York, NY 10158-0180
Sub-Adviser
Neuberger&Berman, L.P.
605 Third Avenue
New York, NY 10158-3698
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<PAGE>
Custodian and Transfer Agent
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Address correspondence to:
Neuberger&Berman Funds
Institutional Services
605 Third Avenue
2nd Floor
New York, NY 10158-0180
800-877-9700
Legal Counsel
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, NW
Washington, DC 20036-5891
Funds Eligible for Exchange
Equity Assets
Neuberger&Berman Focus Assets
Neuberger&Berman Guardian Assets
Neuberger&Berman Manhattan Assets
Neuberger&Berman Partners Assets
Neuberger&Berman, Neuberger & Berman Management Inc., and the above named
Funds are service marks of Neuberger&Berman Management Inc.
(COPYRIGHT)1995 Neuberger&Berman Management Inc.
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<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY STATEMENT OF ADDITIONAL INFORMATION
DATED NOVEMBER 28, 1995
Information contained herein is subject to completion or
amendment. A registration statement relating to these securities has been
filed with the Securities and Exchange Commission. These securities may
not be sold nor may any offers to buy be accepted prior to the time the
registration statement becomes effective. This Statement of Additional
Information does not constitute a prospectus.
_________________________________________________________________
NEUBERGER & BERMAN EQUITY ASSETS AND PORTFOLIOS
STATEMENT OF ADDITIONAL INFORMATION
DATED FEBRUARY 11, 1996
Neuberger & Berman Neuberger & Berman Focus Assets (and
Manhattan Assets (and Neuberger & Berman Focus Portfolio)
Neuberger & Berman
Manhattan Portfolio)
Neuberger & Berman Guardian Neuberger & Berman Partners Assets (and
Assets (and Neuberger & Neuberger & Berman Partners Portfolio)
Berman Guardian Portfolio)
No-Load Mutual Funds
605 Third Avenue, 2nd Floor, New York, NY 10158-0180
Toll-Free 800-877-9700
_________________________________________________________________
Neuberger & Berman MANHATTAN Assets, Neuberger & Berman
FOCUS Assets, Neuberger & Berman GUARDIAN Assets, and Neuberger & Berman
PARTNERS Assets (each a "Fund") are no-load mutual funds that offer shares
pursuant to a Prospectus dated February 11, 1996. The above-named Funds
invest all of their net investable assets in Neuberger & Berman MANHATTAN
Portfolio, Neuberger & Berman FOCUS Portfolio, Neuberger & Berman GUARDIAN
Portfolio, and Neuberger & Berman PARTNERS Portfolio (each a "Portfolio"),
respectively.
AN INVESTOR CAN BUY, OWN, AND SELL FUND SHARES ONLY
THROUGH AN ACCOUNT WITH A BROKER-DEALER, PENSION PLAN ADMINISTRATOR, OR
OTHER INSTITUTION (EACH AN "INSTITUTION") THAT PROVIDES ACCOUNTING,
RECORDKEEPING, AND OTHER SERVICES TO INVESTORS AND THAT HAS AN
ADMINISTRATIVE SERVICES AGREEMENT WITH NEUBERGER & BERMAN MANAGEMENT
INCORPORATED ("N&B MANAGEMENT").
The Funds' Prospectus provides basic information that an
investor should know before investing. A copy of the Prospectus may be
obtained, without charge, from Neuberger & Berman Management Incorporated,
<PAGE>
Institutional Services, 605 Third Avenue, 2nd Floor, New York, NY 10158-
0180, or by calling 800-877-9700.
This Statement of Additional Information ("SAI") is not a
prospectus and should be read in conjunction with the Prospectus.
No person has been authorized to give any information or
to make any representations not contained in the Prospectus or in this SAI
in connection with the offering made by the Prospectus, and, if given or
made, such information or representations must not be relied upon as
having been authorized by a Fund or its distributor. The Prospectus and
this SAI do not constitute an offering by a Fund or its distributor in any
jurisdiction in which such offering may not lawfully be made.
- 2 -
<PAGE>
TABLE OF CONTENTS
Page
INVESTMENT INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 1
Investment Policies and Limitations . . . . . . . . . . . . 1
Mark R. Goldstein, Portfolio Manager of Neuberger &
Berman MANHATTAN Portfolio . . . . . . . . . . . . . . . . . 5
Kent C. Simons and Lawrence Marx III, Portfolio Managers
of Neuberger & Berman FOCUS and Neuberger & Berman
GUARDIAN Portfolios . . . . . . . . . . . . . . . . . . . . 6
Michael M. Kassen and Robert I. Gendelman, Portfolio
Managers of Neuberger & Berman PARTNERS Portfolio . . . . . 7
Additional Investment Information . . . . . . . . . . . . . 8
Neuberger & Berman FOCUS Portfolio - Description of
Economic Sectors. . . . . . . . . . . . . . . . . . . . . . 18
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 22
Total Return Computations . . . . . . . . . . . . . . . . . 22
Comparative Information . . . . . . . . . . . . . . . . . . 23
Other Performance Information . . . . . . . . . . . . . . . 24
CERTAIN RISK CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . 25
TRUSTEES AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . 25
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES . . . . . . . . . . 32
Investment Manager and Administrator . . . . . . . . . . . . 32
Sub-Adviser . . . . . . . . . . . . . . . . . . . . . . . . 34
Investment Companies Managed . . . . . . . . . . . . . . . . 35
Management and Control of N&B Management . . . . . . . . . . 38
DISTRIBUTION ARRANGEMENTS . . . . . . . . . . . . . . . . . . . . . . 39
Distributor . . . . . . . . . . . . . . . . . . . . . . . . 39
Rule 12b-1 Plan . . . . . . . . . . . . . . . . . . . . . . 40
ADDITIONAL EXCHANGE INFORMATION . . . . . . . . . . . . . . . . . . . 40
ADDITIONAL REDEMPTION INFORMATION . . . . . . . . . . . . . . . . . . 41
DIVIDENDS AND OTHER DISTRIBUTIONS . . . . . . . . . . . . . . . . . . 41
ADDITIONAL TAX INFORMATION . . . . . . . . . . . . . . . . . . . . . 42
Taxation of the Funds . . . . . . . . . . . . . . . . . . . 42
Taxation of the Portfolios . . . . . . . . . . . . . . . . . 43
Taxation of the Funds' Shareholders . . . . . . . . . . . . 46
PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . 46
Portfolio Turnover . . . . . . . . . . . . . . . . . . . . . 53
REPORTS TO SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . 53
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<PAGE>
Page
ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
CUSTODIAN AND TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . 53
INDEPENDENT AUDITORS/ACCOUNTANTS . . . . . . . . . . . . . . . . . . 54
LEGAL COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
REGISTRATION STATEMENT . . . . . . . . . . . . . . . . . . . . . . . 54
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
RATINGS OF CORPORATE BONDS AND COMMERCIAL PAPER . . . . . . 55
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
THE ART OF INVESTMENT: A CONVERSATION WITH ROY NEUBERGER . 58
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<PAGE>
INVESTMENT INFORMATION
Each Fund is a separate series of Neuberger & Berman
Equity Assets ("Trust"), a Delaware business trust that is registered with
the Securities and Exchange Commission ("SEC") as an open-end management
investment company. Each Fund seeks its investment objective by investing
all of its net investable assets in a Portfolio of Equity Managers Trust
("Managers Trust") that has an investment objective identical to, and a
name similar to, that of the Fund. Each Portfolio, in turn, invests in
accordance with an investment objective, policies, and limitations
identical to those of its corresponding Fund. (The Trust and Managers
Trust, which is an open-end management investment company managed by N&B
Management, are together referred to below as the "Trusts.") Prior to
January 1, 1995, the name of Neuberger & Berman FOCUS Portfolio was
Neuberger & Berman Selected Sectors Portfolio.
The following information supplements the discussion in
the Prospectus of the investment objective, policies, and limitations of
each Fund and Portfolio. The investment objective and, unless otherwise
specified, the investment policies and limitations of each Fund and
Portfolio are not fundamental. However, although any investment policy or
limitation that is not fundamental may be changed by the trustees of the
Trust ("Fund Trustees") or of Managers Trust ("Portfolio Trustees")
without shareholder approval, each Fund intends to notify its shareholders
before changing its investment objective or implementing any material
change in any non-fundamental policy or limitation. The fundamental
investment policies and limitations of a Fund or a Portfolio may not be
changed without the approval of the lesser of (1) 67% of the total units
of beneficial interest ("shares") of the Fund or Portfolio represented at
a meeting at which more than 50% of the outstanding Fund or Portfolio
shares are represented or (2) a majority of the outstanding shares of the
Fund or Portfolio. This vote is required by the Investment Company Act of
1940 ("1940 Act") and is referred to in this SAI as a "1940 Act majority
vote." Whenever a Fund is called upon to vote on a change in a
fundamental investment policy or limitation of its corresponding
Portfolio, the Fund casts its votes thereon in proportion to the votes of
its shareholders at a meeting thereof called for that purpose.
Investment Policies and Limitations
Each Fund has the following fundamental investment
policy, to enable it to invest in its corresponding Portfolio:
Notwithstanding any other investment policy of the Fund,
the Fund may invest all of its net investable assets
(cash, securities, and receivables relating to securi-
ties) in an open-end management investment company having
substantially the same investment objective, policies,
and limitations as the Fund.
All other fundamental investment policies and limitations
and the non-fundamental investment policies and limitations of each Fund
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<PAGE>
and its corresponding Portfolio are identical. Therefore, although the
following discusses the investment policies and limitations of the
Portfolios, it applies equally to their corresponding Funds.
Except for the limitation on borrowing and the limitation
on ownership of portfolio securities by officers and trustees, any
investment policy or limitation that involves a maximum percentage of
securities or assets will not be considered to be violated unless the
percentage limitation is exceeded immediately after, and because of, a
transaction by a Portfolio.
The Portfolios' fundamental investment policies and
limitations are as follows:
1. Borrowing. No Portfolio may borrow money, except
that a Portfolio may (i) borrow money from banks for temporary or
emergency purposes and not for leveraging or investment and (ii) enter
into reverse repurchase agreements 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 a Portfolio's
total assets, that Portfolio will reduce its borrowings within three days
(excluding Sundays and holidays) to the extent necessary to comply with
the 33-1/3% limitation.
2. Commodities. No Portfolio may purchase physical
commodities or contracts thereon, unless acquired as a result of the
ownership of securities or instruments, but this restriction shall not
prohibit a Portfolio from purchasing futures contracts or options
(including options on futures contracts, but excluding options or futures
contracts on physical commodities) or from investing in securities of any
kind.
3. Diversification. No Portfolio may, with respect
to 75% of the value of its total assets, purchase the securities of any
issuer (other than securities issued or guaranteed by the U.S. Government
or any of its agencies or instrumentalities) 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. No Portfolio may
purchase any security if, as a result, 25% or more of its total assets
(taken at current value) would be invested in the securities of issuers
having their principal business activities in the same industry. This
limitation does not apply to securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities.
5. Lending. No Portfolio may lend any security or
make any other loan if, as a result, more than 33-1/3% of its total assets
(taken at current value) would be lent to other parties, except, in
accordance with its investment objective, policies, and limitations, (i)
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<PAGE>
through the purchase of a portion of an issue of debt securities or (ii)
by engaging in repurchase agreements.
6. Real Estate. No Portfolio may purchase real
estate unless acquired as a result of the ownership of securities or
instruments, but this restriction shall not prohibit a Portfolio from
purchasing securities issued by entities or investment vehicles that own
or deal in real estate or interests therein or instruments secured by real
estate or interests therein.
7. Senior Securities. No Portfolio may issue senior
securities, except as permitted under the 1940 Act.
8. Underwriting. No Portfolio may underwrite
securities of other issuers, except to the extent that a Portfolio, in
disposing of portfolio securities, may be deemed to be an underwriter
within the meaning of the Securities Act of 1933 ("1933 Act").
The following non-fundamental investment policies and
limitations apply to all Portfolios:
1. Borrowing. No Portfolio may purchase securities
if outstanding borrowings, including any reverse repurchase agreements,
exceed 5% of its total assets.
2. Lending. Except for the purchase of debt
securities and engaging in repurchase agreements, no Portfolio may make
any loans other than securities loans.
3. Investments in Other Investment Companies. No
Portfolio may purchase securities of other investment companies, except to
the extent permitted by the 1940 Act and in the open market at no more
than customary brokerage commission rates. This limitation does not apply
to securities received or acquired as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
4. Margin Transactions. No Portfolio may purchase
securities on margin from brokers or other lenders, except that a
Portfolio may obtain such short-term credits as are necessary for the
clearance of securities transactions. Margin payments in connection with
transactions in futures contracts and options on futures contracts shall
not constitute the purchase of securities on margin and shall not be
deemed to violate the foregoing limitation.
5. Short Sales. No Portfolio may sell securities
short unless it owns, or has the right to obtain without payment of
additional consideration, securities equivalent in kind and amount to the
securities sold. Transactions in forward contracts, futures contracts and
options shall not constitute selling securities short.
6. Ownership of Portfolio Securities by Officers and
Trustees. No Portfolio may purchase or retain the securities of any
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<PAGE>
issuer if, to the knowledge of N&B Management, those officers and trustees
of the Trusts 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. No Portfolio may purchase
the securities of any issuer (other than securities issued or guaranteed
by domestic or foreign governments or political subdivisions thereof) if,
as a result, more than 5% of the Portfolio's total assets would be
invested in the securities of business enterprises that, including
predecessors, have a record of less than three years of continuous
operation.
8. Puts, Calls, Straddles, or Spreads. No Portfolio
may invest in puts, calls, straddles, spreads, or any combination thereof,
except that each Portfolio may (i) write (sell) covered call options
against portfolio securities having a market value not exceeding 10% of
its net assets and (ii) purchase call options in related closing transac-
tions. The Portfolios do not construe the foregoing limitation to pre-
clude them from purchasing or writing options on futures contracts or from
purchasing securities with rights to put the securities to the issuer or a
guarantor.
9. Illiquid Securities. No Portfolio may purchase
any security if, as a result, more than 10% of its net assets would be in-
vested 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.
10. Foreign Securities. No Portfolio may 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").
11. Oil and Gas Programs. No Portfolio may invest in
participations or other direct interests in oil, gas, or other mineral
leases or exploration or development programs, but each Portfolio may
purchase securities of companies that own interests in any of the
foregoing.
12. Real Estate. No Portfolio may purchase or sell real
property (including interests in real estate limited partnerships, but
excluding readily marketable interests in real estate investment trusts
and readily marketable securities of companies that invest in real
estate); provided that no Portfolio may purchase any security if, as a
result, more than 10% of its total assets would be invested in securities
of real estate investment trusts.
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<PAGE>
In addition to the foregoing non-fundamental investment
policies and limitations, which apply to each Portfolio, the following
non-fundamental investment policies and limitations apply to the indicated
Portfolios:
13. Investments in Any One Issuer (Neuberger & Berman
FOCUS and Neuberger & Berman GUARDIAN Portfolios). Neither of these Port-
folios may purchase the securities of any one issuer (other than
securities issued or guaranteed by the U.S. Government or any of its
agencies or instrumentalities) if, as a result, more than 5% of the
Portfolio's total assets would be invested in the securities of that
issuer.
14. Warrants (Neuberger & Berman FOCUS and Neuberger
& Berman GUARDIAN Portfolios). Neither of these Portfolios may invest
more than 5% of its net assets in warrants, including warrants that are
not listed on the New York Stock Exchange ("NYSE") or American Stock
Exchange ("AmEx"), or more than 2% of its net assets in such unlisted
warrants. For purposes of this limitation, warrants are valued at the
lower of cost or market value and warrants acquired by a Portfolio in
units or attached to securities may be deemed to be without value.
15. Pledging (Neuberger & Berman GUARDIAN Portfolio).
The Portfolio may not pledge or hypothecate any of its assets, except that
the Portfolio may pledge or hypothecate up to 5% of its total assets in
connection with its entry into any agreement or arrangement pursuant to
which a bank furnishes a letter of credit to collateralize a capital
commitment made by the Portfolio to a mutual insurance company of which
the Portfolio is a member.
16. Sector Concentration (Neuberger & Berman FOCUS
Portfolio). This Portfolio may not invest more than 50% of its total
assets in any one economic sector.
Each Portfolio, as an operating policy, does not intend
to invest in futures contracts and options thereon during the coming year.
MARK R. GOLDSTEIN, PORTFOLIO MANAGER OF NEUBERGER & BERMAN MANHATTAN
PORTFOLIO
Neuberger & Berman MANHATTAN Portfolio's objective is
capital appreciation, without regard to income. "The Portfolio differs
from the other Portfolios in its willingness to invest in stocks with
price/earnings ratios or price-to-cash-flow ratios that are reasonable
relative to a company's growth prospects and that of the general market,"
says Mark Goldstein, its portfolio manager. Mr. Goldstein has
consistently followed this approach as a portfolio manager at N&B
Management. He looks for stocks of financially sound companies with a
special market capability, a competitive advantage or a product that makes
them particularly attractive over the long term, but likes to purchase
them at a reasonable price relative to their growth rates. Mr. Goldstein
calls this approach "GARP" -- growth at a reasonable price. "An investor
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shouldn't try to beat the market by trading funds like stocks. The
hardest thing to do -- but the best thing to do -- is to put in some money
when the market is down and keep it there. That's how one really builds
wealth over the long term -- a mutual fund is a great long-term
investment."
"We view value both on a relative and an absolute basis,
so we may buy stocks with somewhat above-market historical growth rates,"
Mr. Goldstein explains. "We also tend to stay more fully invested when we
think the market is attractive for quality growth companies. But we will
get out of stocks and into cash when we think there are no reasonable
values available."
KENT C. SIMONS AND LAWRENCE MARX III, PORTFOLIO MANAGERS OF NEUBERGER &
BERMAN FOCUS AND NEUBERGER & BERMAN GUARDIAN PORTFOLIOS
These Portfolios are managed by two veterans of N&B Man-
agement who have consistently followed their value-oriented philosophy
over many years: Kent Simons and Larry Marx.
Neuberger & Berman FOCUS Portfolio's investment objective
is long-term capital appreciation. Like the other Portfolios that use a
value-oriented investment approach, it seeks to buy undervalued securities
that offer opportunities for growth, but then focuses its assets in those
sectors where undervalued stocks are clustered. "We begin by looking for
stocks that are selling for less than we think they're worth, a 'bottom-up
approach'" says Mr. Simons. "More often than not, such stocks are in a
few economic sectors that are out of favor and are undervalued as a group.
I think 90% of cheap stocks deserve to be cheap. My job is to find the
10% that don't."
"We don't pick sectors for Neuberger & Berman FOCUS
Portfolio based on our perception of how the economy is going to do. Nor
do we engage in making economic or currency predictions. We look for
stocks with either low relative or low absolute valuations," explains Mr.
Marx. "Often, these stocks will be found in a particular sector, but we
didn't start out being bullish on that sector. It's just where we
happened to find the values. We find that if one company comes under a
cloud, it tends to happen to its whole industry. If an investment manager
rotated the sectors in a portfolio by buying sectors when they are
undervalued and selling them when they become fully valued, the manager
would be able to achieve above-average performance."
Neuberger & Berman GUARDIAN Portfolio subscribes to the
same stock-picking philosophy followed since 1950, when Roy R. Neuberger
founded the predecessor of Neuberger & Berman GUARDIAN Fund, which, like
Neuberger & Berman GUARDIAN Assets, invests all its net investable assets
in Neuberger & Berman GUARDIAN Portfolio.
It's no great trick for a mutual fund to make money when
the market is rising. The tide that lifts stock values will carry most
funds along. The true test of management is its ability to make money
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even when the market is flat or declining. By that measure, Neuberger &
Berman GUARDIAN Fund and its predecessor have served shareholders well and
have paid a dividend every quarter and a capital gain distribution every
year since 1950. Of course, there can be no assurance that this trend
will continue.
Both Mr. Simons and Mr. Marx place a high premium on
being knowledgeable about the companies whose stocks they buy for
Neuberger & Berman GUARDIAN Portfolio. That knowledge is important,
because sometimes it takes courage to buy stocks that the rest of the
market has forsaken. Says Mr. Marx, "We're usually early in and early
out. We'd rather buy an undervalued stock because we expect it to become
fairly valued than buy one fairly valued and hope it becomes overvalued.
We like a stock 'under a rock' or with a cloud over it; you are not going
to get great companies at great valuations when the market perception is
great."
"People who switch around a lot are not going to benefit
from our approach. They're following the market -- we're looking at
fundamentals."
MICHAEL M. KASSEN AND ROBERT I. GENDELMAN, PORTFOLIO MANAGERS OF NEUBERGER
& BERMAN PARTNERS PORTFOLIO
"Neuberger & Berman PARTNERS Portfolio's objective is
capital growth," say its portfolio managers Michael Kassen and Robert
Gendelman. "We want to make money in good markets and not give up those
gains during rough times."
"Our investors seek consistent performance and have a
moderate risk tolerance. They do know, however, that stock investments
can provide the long-term upside potential essential to meeting their
long-term investment goals, particularly a comfortable retirement and
planning for a college education."
"We look for stocks that are undervalued in the market-
place either in relation to strong current fundamentals, such as low
price-to-earnings ratios, consistent cash flow, and support from asset
values, or in relation to the growth of their future earnings, as
projected by N&B Management. If the market goes down, those stocks we
elect to hold, historically, go down less."
The co-portfolio managers monitor stocks of medium- to
large-sized companies that often are not closely scrutinized by other
investors. The managers research these companies in order to determine if
they will produce a new product, become an acquisition target, or undergo
a financial restructuring.
What else catches Mr. Kassen's and Mr. Gendelman's eyes?
"We like managements that own their own stock. These companies usually
seek to build shareholder wealth by buying back shares or making
acquisitions that have a swift and positive impact on the bottom line."
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To increase the upside potential, the managers zero in on
companies that dominate their industries or their specialized niches.
Their reasoning? "Market leaders tend to earn higher levels of profits."
Neuberger & Berman PARTNERS Portfolio invests in a wide
array of stocks, and no single stock makes up more than a small fraction
of the Portfolio's total assets. Of course, the Portfolio's holdings are
subject to change.
Additional Investment Information
Some or all of the Portfolios, as indicated below, may
make the following investments, among others, although they may not buy
all of the types of securities, or use all of the investment techniques,
that are described.
Repurchase Agreements (All Portfolios). Repurchase
agreements are agreements under which a Portfolio purchases securities
from a bank that is a member of the Federal Reserve System or from a
securities dealer that agrees to repurchase the securities from the
Portfolio at a higher price on a designated future date. Repurchase
agreements generally are for a short period of time, usually less than a
week. No Portfolio may enter into a repurchase agreement with a maturity
of more than seven days if, as a result, more than 10% of the value of its
net assets would then be invested in such repurchase agreements and other
illiquid securities. A 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 the custodian or a bank acting as the Portfolio's
agent.
Securities Loans (All Portfolios). In order to realize
income, each Portfolio may lend portfolio securities with a value not
exceeding 33-1/3% of its total assets to banks, brokerage firms, or
institutional investors judged creditworthy by N&B Management. Borrowers
are required continuously to secure their obligations to return securities
on loan from the Portfolio by depositing collateral, which must be marked
to market daily, in a form determined to be satisfactory by the Portfolio
Trustees and equal to at least 100% of the market value of the loaned
securities, which will also be marked to market daily. N&B Management be-
lieves 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 (All
Portfolios). Each Portfolio may invest in restricted securities, which
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are securities that may not be sold to the public without an effective
registration statement under the 1933 Act or, if they are unregistered,
may be sold only in a privately negotiated transaction or pursuant to an
exemption from registration. In recognition of the increased size and
liquidity of the institutional market for unregistered securities and the
importance of institutional investors in the formation of capital, the SEC
has adopted Rule 144A under the 1933 Act. Rule 144A is designed further
to facilitate efficient trading among institutional investors by
permitting the sale of certain unregistered securities to qualified
institutional buyers. To the extent privately placed securities held by a
Portfolio qualify under Rule 144A, and an institutional market develops
for those securities, the Portfolio likely will be able to dispose of the
securities without registering them under the 1933 Act. To the extent
that institutional buyers become, for a time, uninterested in purchasing
these securities, investing in Rule 144A securities could increase the
level of a Portfolio's illiquidity. N&B Management, acting under guide-
lines established by the Portfolio Trustees, may determine that certain
securities qualified for trading under Rule 144A are liquid.
Where registration is required, a Portfolio may be
obligated to pay all or part of the registration expenses, and a
considerable period may elapse between the decision to sell and the time
the Portfolio may be permitted to sell a security under an effective
registration statement. If, during such a period, adverse market
conditions were to develop, the Portfolio might obtain a less favorable
price than prevailed when it decided to sell. To the extent privately
placed securities, including Rule 144A securities, are illiquid, purchases
thereof will be subject to each Portfolio's 10% limit on investments in
illiquid securities. Restricted securities for which no market exists are
priced at fair value as determined in accordance with procedures approved
and periodically reviewed by the Portfolio Trustees.
Reverse Repurchase Agreements (All Portfolios). A
reverse repurchase agreement involves a Portfolio's sale of portfolio
securities subject to its agreement to repurchase the securities at a
later date for a fixed price reflecting a market rate of interest; these
agreements are considered borrowings for purposes of the Portfolios'
investment policies and limitations concerning borrowings. While a
reverse repurchase agreement is outstanding, a Portfolio will maintain
with its custodian in a segregated account cash, U.S. Government or Agency
Securities, or other liquid, high-grade debt securities, marked to market
daily, in an amount at least equal to the Portfolio's obligations under
the agreement. There is a risk that the contra-party to a reverse
repurchase agreement will be unable or unwilling to complete the
transaction as scheduled, which may result in losses to the Portfolio.
Foreign Securities (All Portfolios). Each 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 depo-
sit ("CDs"), bankers' acceptances and commercial paper. These investments
are subject to each Portfolio's quality standards. While investments in
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<PAGE>
foreign securities are intended to reduce risk by providing further diver-
sification, 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.
Each Portfolio also may invest in equity, debt, or other
income-producing securities (of issuers in countries whose governments are
considered stable by N&B Management) that are denominated in or indexed to
foreign currencies, including (1) 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,
and there are generally higher commission rates on foreign portfolio
transactions.
Foreign securities often trade with less frequency and in
less volume than domestic securities and therefore may exhibit greater
price volatility. Additional costs associated with an investment in
foreign securities may include higher custodial fees than apply to
domestic custody arrangements, and transaction costs of foreign currency
conversions.
In order to limit the risk inherent in investing in
foreign currency denominated securities, a 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, no Portfolio is restricted
in the amount it may invest in securities denominated in any one foreign
currency.
Covered Call Options (All Portfolios). Each Portfolio
may write or purchase covered call options on securities it owns valued at
up to 10% of its net assets. Generally, the purpose of writing and
purchasing these options is to reduce the effect of price fluctuations of
securities held by the Portfolio on the Portfolio's and its corresponding
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<PAGE>
Fund's net asset values ("NAVs"). Portfolio securities on which call
options may be written and purchased by a Portfolio are purchased solely
on the basis of investment considerations consistent with the Portfolio's
investment objective.
When a 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. So long as the obligation of the call option
continues, the Portfolio may be assigned an exercise notice, requiring it
to deliver the underlying security against payment of the exercise price.
The Portfolio may be obligated to deliver securities underlying an option
at less than the market price, thereby giving up any additional gain on
the security.
Each Portfolio writes only "covered" call options on
securities it owns. The writing of covered call options is a conservative
investment technique that is believed to involve relatively little risk
(in contrast to the writing of "naked" or uncovered call options, which
the Portfolios will not do), but is capable of enhancing the Portfolios'
total return. When writing a covered call option, a Portfolio, in return
for the premium, gives up the opportunity for profit from a price increase
in the underlying security above the exercise price, but conversely
retains the risk of loss should the price of the security decline.
If a call option that a Portfolio has written expires
unexercised, the Portfolio will realize a gain in the amount of the
premium; however, that gain may be offset by a decline in the market value
of the underlying security during the option period. If the call option
is exercised, the Portfolio will realize a gain or loss from the sale of
the underlying security.
When a 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. A Portfolio would purchase a call
option to offset a previously written call option.
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.
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
writes an OTC option, it generally will be able to "close out" the option
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<PAGE>
prior to its expiration only by entering into a closing purchase
transaction with the dealer to whom the Portfolio originally sold the
option. There can be no assurance that the Portfolio would be able to
liquidate an OTC option at any time prior to expiration. Unless a
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, a Portfolio may be unable to liquidate its options position
and the associated cover. N&B Management monitors the creditworthiness of
dealers with which a Portfolio may engage in OTC options transactions, and
limits the Portfolios' 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 a
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.
If any Portfolio desires to sell a security on which it has written a call
option, it will seek to effect a closing transaction prior to, or
concurrently with, the sale of the security. There is, of course, no
assurance that a Portfolio will be able to effect closing transactions at
favorable prices. If a Portfolio cannot enter into such a transaction, it
may be required to hold a security that it might otherwise have sold, in
which case it would continue to be at market risk on the security.
A Portfolio will realize a profit or loss from a closing
purchase transaction if the cost of the transaction is less or more than
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<PAGE>
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.
Each Portfolio pays the 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.
Forward Foreign Currency Contracts (All Portfolios).
Each 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 Portfolios enter into
Forward Contracts in an attempt to hedge against expected changes in
prevailing currency exchange rates. The Portfolios do not engage in
transactions in Forward Contracts for speculation; they view investments
in Forward Contracts as a means of establishing more definitely the effec-
tive return on securities denominated in foreign currencies that are held
or intended to be acquired by them. Forward Contract transactions include
forward sales or purchases of foreign currencies for the purpose of pro-
tecting the U.S. dollar value of securities held or to be acquired by a
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 a 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 a 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
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, a Portfolio could be in a less advantageous position than
if such a hedge had not been established. In addition, because Forward
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Contracts are not traded on an exchange, the assets used to cover such
contracts may be illiquid.
Options on Foreign Currencies (All Portfolios). Each
Portfolio may write and purchase covered call and put options on foreign
currencies, in amounts not exceeding 5% of its net assets, for the purpose
of protecting 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 protecting 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 a Portfolio could be
required to purchase or sell foreign currencies at disadvantageous
exchange rates, thereby incurring losses. 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. The risks of currency options are similar to the risks of other
options, discussed herein. To the extent a Portfolio writes options on
foreign currencies that are traded on an exchange regulated by the
Commodity Futures Trading Commission ("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.
GENERAL CONSIDERATIONS INVOLVING OPTIONS AND FORWARD CONTRACTS
(COLLECTIVELY, "HEDGING INSTRUMENTS")
Risks Involved in Using Hedging Instruments. The primary
risks in using Hedging Instruments are (1) imperfect correlation or no
correlation between changes in market value of the securities held or to
be acquired by a Portfolio and changes in market value of Hedging
Instruments; (2) possible lack of a liquid secondary market for Hedging
Instruments and the resulting inability to close out Hedging Instruments
when desired; (3) the fact that the skills needed to use Hedging Instru-
ments are different from those needed to select a Portfolio's securities;
(4) the fact that, although use of these instruments for hedging purposes
can reduce the risk of loss, they also can reduce the opportunity for
gain, or even result in losses, by offsetting favorable price movements in
hedged investments; and (5) the possible inability of a Portfolio to
purchase or sell a portfolio security at a time that would otherwise be
favorable for it to do so, or the possible need for a Portfolio to sell a
portfolio security at a disadvantageous time, due to its need to maintain
"cover" or to segregate securities in connection with its use of Hedging
Instruments. N&B Management intends to reduce the risk of imperfect
correlation by investing only in Hedging Instruments whose behavior is
expected to resemble that of a Portfolio's underlying securities. N&B
Management intends to reduce the risk that a Portfolio will be unable to
close out Hedging Instruments by entering into such transactions only if
N&B Management believes there will be an active and liquid secondary
market. Hedging Instruments used by the Portfolios are generally
considered "derivatives." There can be no assurance that a Portfolio's
use of Hedging Instruments will be successful.
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<PAGE>
The Portfolios' use of Hedging Instruments may be limited
by the requirements of the Internal Revenue Code of 1986, as amended
("Code"), that apply to each Fund for qualification as a regulated
investment company ("RIC"). See "Additional Tax Information."
Cover for Hedging Instruments. Each Portfolio will com-
ply 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 option or forward strategy
covered by those securities is outstanding, unless they are replaced with
other suitable assets. As a result, segregation of a large percentage of
a Portfolio's assets could impede portfolio management or the Portfolio's
ability to meet current obligations. A Portfolio may be unable promptly
to dispose of assets which cover, or are segregated with respect to, an
illiquid option or forward position, which may result in a loss to the
Portfolio.
Fixed Income Securities (All Portfolios). While the
emphasis of the Portfolios' investment programs is on common stocks and
other equity securities (including preferred stocks and securities
convertible into or exchangeable for common stocks), the Portfolios may
also invest in money market instruments, U.S. Government or Agency
Securities, and other fixed income securities. Each Portfolio may invest
in corporate bonds and debentures receiving one of the four highest
ratings from Standard & Poor's ("S&P"), Moody's Investors Service, Inc.
("Moody's"), or any other nationally recognized statistical rating
organization ("NRSRO"), or, if not rated by any NRSRO, deemed comparable
by N&B Management to such rated securities ("Comparable Unrated
Securities"). In addition, Neuberger & Berman PARTNERS Portfolio may
invest up to 15% of its net assets in corporate debt securities rated
below investment grade or 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 Portfolios rely 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.
Debt securities in the lowest rating categories may involve a substantial
risk of default or may be in default. Changes in economic conditions or
developments regarding the individual issuer are more likely to cause
price volatility and weaken the capacity of the issuer of such securities
to make principal and interest payments than is the case for higher-grade
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<PAGE>
debt securities. An economic downturn affecting the issuer may result in
an increased incidence of default. The market for lower-rated securities
may be thinner and less active than for higher-rated securities. Pricing
of thinly traded securities requires greater judgment than pricing of
securities for which market transactions are regularly reported. N&B
Management will invest in such securities only when it concludes that the
anticipated return to Neuberger & Berman Partners Portfolio and its
corresponding Fund on such an investment warrants exposure to the
additional level of risk.
Subsequent to its purchase by a Portfolio, an issue of
debt securities may cease to be rated or its rating may be reduced, so
that the securities would not be eligible for purchase by the Portfolio.
In such a case, N&B Management will engage in an orderly disposition of
the downgraded securities to the extent necessary to ensure that the
Portfolio's holdings of such securities will not exceed 5% of its net
assets.
Commercial Paper (All Portfolios). Commercial paper is a
short-term debt security issued by a corporation or bank for purposes such
as financing current operations. The Portfolios 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.
Each Portfolio may invest in commercial paper that cannot
be resold to the public without an effective registration statement under
the 1933 Act. While restricted commercial paper normally is deemed
illiquid, N&B Management may in certain cases determine that such paper is
liquid, pursuant to guidelines established by the Portfolio Trustees.
Zero Coupon Securities (Neuberger & Berman PARTNERS
Portfolio). This 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.
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 Neuberger & Berman PARTNERS Assets 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 Funds"), the Portfolio may have to dispose of portfolio
securities under disadvantageous circumstances to generate cash, or may be
required to borrow, to satisfy the corresponding Fund's distribution
requirements.
- 16 -
<PAGE>
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 (All Portfolios). The Portfolios
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, convertible securities
ordinarily provide a stream of income with generally higher yields than
those of 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
capitalized 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 a 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
corresponding Fund's ability to achieve their investment objectives.
Preferred Stock (All Portfolios). The Portfolios 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 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.
Neuberger & Berman FOCUS Portfolio - Description of Economic Sectors.
Neuberger & Berman FOCUS Portfolio seeks to achieve its
investment objective by investing principally in common stocks in the
following thirteen multi-industry economic sectors, normally concentrating
at least 90% of its investments in common stocks selected from not more
than six such sectors:
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<PAGE>
(1) Autos and Housing Sector: Companies engaged in design,
production, or sale of automobiles, automobile parts, mobile homes, or
related products ("automobile industries") or design, construction,
renovation, or refurbishing of residential dwellings. The value of
securities of companies in the automobile industries is affected by, among
other things, foreign competition, the level of consumer confidence and
consumer debt, and installment loan rates. The housing construction
industry may be affected by the level of consumer confidence and consumer
debt, mortgage rates, tax laws, and the inflation outlook.
(2) Consumer Goods and Services Sector: Companies engaged in
providing consumer goods or services, including design, processing,
production, sale, or storage of packaged, canned, bottled, or frozen foods
and beverages and design, production, or sale of home furnishings,
appliances, clothing, accessories, cosmetics, or perfumes. Certain of
these companies are subject to government regulation affecting the use of
various food additives and production methods, which could affect
profitability. Also, the success of food- and fashion-related products
may be strongly affected by fads, marketing campaigns, health concerns,
and other factors affecting supply and demand.
(3) Defense and Aerospace Sector: Companies engaged in re-
search, manufacture, or sale of products or services related to the
defense or aerospace industries, including air transport; data processing
or computer-related services; communications systems; military weapons or
transportation; general aviation equipment, missiles, space launch
vehicles, or spacecraft; machinery for guidance, propulsion, or control of
flight vehicles; and airborne or ground-based equipment essential to the
test, operation, or maintenance of flight vehicles. Because these
companies rely largely on U.S. (and foreign) governmental demand for their
products and services, their financial conditions are heavily influenced
by defense spending policies.
(4) Energy Sector: Companies involved in the production,
transmission, or marketing of energy from oil, gas, or coal, as well as
nuclear, geothermal, oil shale, or solar sources of energy (but excluding
public utility companies). Also included are companies that provide
component products or services for those activities. The value of these
companies' securities varies based on the price and supply of energy fuels
and may be affected by international politics, energy conservation, the
success of exploration projects, environmental considerations, and the tax
and other regulatory policies of various governments.
(5) Financial Services Sector: Companies providing financial
services to consumers or industry, including commercial banks and savings
and loan associations, consumer and industrial finance companies,
securities brokerage companies, leasing companies, and insurance
companies. These companies are subject to extensive governmental
regulations. Their profitability may fluctuate significantly as a result
of volatile interest rates, concerns about particular banks and savings
institutions, and general economic conditions.
- 18 -
<PAGE>
(6) Health Care Sector: Companies engaged in design, manu-
facture, or sale of products or services used in connection with the
provision of health care, including pharmaceutical companies; firms that
design, manufacture, sell, or supply medical, dental, or optical products,
hardware, or services; companies involved in biotechnology, medical
diagnostic, or biochemical research and development; and companies that
operate health care facilities. Many of these companies are subject to
government regulation and potential health care reforms, which could
affect the price and availability of their products and services. Also,
products and services of these companies could quickly become obsolete.
(7) Heavy Industry Sector: Companies engaged in research,
development, manufacture, or marketing of products, processes, or services
related to the agriculture, chemicals, containers, forest products,
non-ferrous metals, steel, or pollution control industries, including
synthetic and natural materials (for example, chemicals, plastics,
fertilizers, gases, fibers, flavorings, or fragrances), paper, wood
products, steel, and cement. Certain of these companies are subject to
state and federal regulation, which could require alteration or cessation
of production of a product, payment of fines, or cleaning of a disposal
site. Furthermore, because some of the materials and processes used by
these companies involve hazardous components, there are additional risks
associated with their production, handling, and disposal. The risk of
product obsolescence also is present.
(8) Machinery and Equipment Sector: Companies engaged in the
research, development, or manufacture of products, processes, or services
relating to electrical equipment, machinery, pollution control, or
construction services, including transformers, motors, turbines, hand
tools, earth-moving equipment, and waste disposal services. The
profitability of most of these companies may fluctuate significantly in
response to capital spending and general economic conditions. As is the
case for the heavy industry sector, there are risks associated with the
production, handling, and disposal of materials and processes that involve
hazardous components and the risk of product obsolescence.
(9) Media and Entertainment Sector: Companies engaged in
design, production, or distribution of goods or services for the media
industries (including television or radio broadcasting or manufacturing,
publishing, recordings and musical instruments, motion pictures, and
photography) and the entertainment industries (including sports arenas,
amusement and theme parks, gaming casinos, sporting goods, camping and
recreational equipment, toys and games, travel-related services, hotels
and motels, and fast food and other restaurants). Many products produced
by companies in this sector -- for example, video and electronic games --
may become obsolete quickly. Additionally, companies engaged in tele-
vision and radio broadcast are subject to government regulation.
(10) Retailing Sector: Companies engaged in retail distribu-
tion of home furnishings, food products, clothing, pharmaceuticals,
leisure products, or other consumer goods, including department stores,
supermarkets, and retail chains specializing in particular items such as
- 19 -
<PAGE>
shoes, toys, or pharmaceuticals. The value of these companies' securities
fluctuates based on consumer spending patterns, which depend on inflation
and interest rates, the level of consumer debt, and seasonal shopping
habits. The success or failure of a company in this highly competitive
sector depends on its ability to predict rapidly changing consumer tastes.
(11) Technology Sector: Companies that are expected to have
or develop products, processes, or services that will provide, or will
benefit significantly from, technological advances and improvements or
future automation trends, including semiconductors, computers and
peripheral equipment, scientific instruments, computer software,
telecommunications equipment, and electronic components, instruments, and
systems. These companies are sensitive to foreign competition and import
tariffs. Also, many of their products may become obsolete quickly.
(12) Transportation Sector: Companies involved in providing
transportation of people and products, including airlines, railroads, and
trucking firms. Revenues of these companies are affected by fluctuations
in fuel prices and government regulation of fares.
(13) Utilities Sector: Companies in the public utilities
industry and companies that derive a substantial majority of their
revenues through supplying public utilities (including companies engaged
in the manufacture, production, generation, transmission, or sale of gas
and electric energy) and that provide telephone, telegraph, satellite,
microwave, and other communication facilities to the public. The gas and
electric public utilities industries are subject to various uncertainties,
including the outcome of political issues concerning the environment,
prices of fuel for electric generation, availability of natural gas, and
risks associated with the construction and operation of nuclear power
facilities.
PERFORMANCE INFORMATION
Each Fund's performance figures are based on historical
earnings and are not intended to indicate future performance. The share
price and total return of each Fund will vary, and an investment in a
Fund, when redeemed, may be worth more or less than an investor's original
cost.
Total Return Computations
Each Fund may advertise certain total return information.
An average annual compounded rate of return ("T") may be computed by using
the redeemable value at the end of a specified period ("ERV") of a
hypothetical initial investment of $1,000 ("P") over a period of time
("n") according to the formula:
P(1+T)n = ERV
- 20 -
<PAGE>
Average annual total return smooths out year-to-year
variations and, in that respect, differs from actual year-to-year results.
The Funds commenced operations on __________, 1996 and,
as of the date of this SAI, have no past performance. However, four
mutual funds that are series of Neuberger & Berman Equity Funds ("N&B
Equity Funds"), each of which has a name similar to a Fund and the same
investment objective, policies, and limitations as that Fund ("Sister
Fund"), also invest in the four Portfolios described herein. Each Sister
Fund had a predecessor. The following data shows the total return for
each Sister Fund and that Sister Fund's predecessor. The Sister Funds
have a different fee structure than the Funds (and do not pay 12b-1 fees).
Had these fees been reflected, the total returns shown below would have
been lower.
The average annual total returns for Neuberger & Berman
MANHATTAN Assets' Sister Fund and its predecessor for the one-, five-, and
ten-year periods ended August 31, 1995, were $26.00%, 17.10%, and 15.01%
respectively. If an investor had invested $10,000 in that predecessor's
shares on March 1, 1979 and had reinvested all distributions and income
dividends, the NAV of that investor's holdings would have been [$_______]
on August 31, 1995.
The average annual total returns for Neuberger & Berman
FOCUS Assets' Sister Fund and its predecessor for the one-, five-, and
ten-year periods ended August 31, 1995, were 27.47%, 18.52%, and 14.77%,
respectively. If an investor had invested $10,000 in that predecessor's
shares on October 19, 1955 and had reinvested all distributions and income
dividends, the NAV of that investor's holdings would have been $[_______]
on August 31, 1995.
The average annual total returns for Neuberger & Berman
GUARDIAN Assets' Sister Fund and its predecessor for the one-, five-, and
ten-year periods ended August 31, 1995, were 24.06%, 20.14%, and 15.66%,
respectively. If an investor had invested $10,000 in that predecessor's
shares on June 1, 1950 and had reinvested all distributions and income
dividends, the NAV of that investor's holdings would have been
[$_________] on August 31, 1995.
The average annual total returns for Neuberger & Berman
PARTNERS Assets' Sister Fund and its predecessor for the one-, five-, and
ten-year periods ended August 31, 1995, were 21.53%, 16.05%, and 14.43%,
respectively. If an investor had invested $10,000 in that predecessor's
shares on January 20, 1975 and had reinvested all distributions and income
dividends, the NAV of that investor's holdings would have been [$_______]
on August 31, 1995.
Comparative Information
Prior to January 5, 1989, the investment policies of the
predecessor of Neuberger & Berman FOCUS Assets' Sister Fund required that
at least 80% of its investments normally be in energy-related investments;
- 21 -
<PAGE>
prior to November 1, 1991, those investment policies required that at
least 25% of its investments normally be in the energy sector. Neuberger
& Berman FOCUS Assets may be required, under applicable law, to include
information reflecting the Sister Fund's predecessor's performance and
expenses before November 1, 1991, in its advertisements, sales literature,
financial statements, and other documents filed with the SEC and/or
provided to current and prospective shareholders. Investors should be
aware that such information may not accurately reflect the level of
performance and expenses that would have been experienced had the Sister
Fund's predecessor been operating under the Fund's current investment
policies.
From time to time each Fund's performance may be compared
with:
(1) data (that may be expressed as rankings or
ratings) published by independent services or
publications (including newspapers, newsletters, and
financial periodicals) that monitor the performance of
mutual funds, such as Lipper Analytical Services, Inc.,
C.D.A. Investment Technologies, Inc., Wiesenberger
Investment Companies Service, Investment Company Data
Inc., Morningstar, Inc., Micropal Incorporated, and
quarterly mutual fund rankings by Money, Fortune, Forbes,
Business Week, Personal Investor, and U.S. News & World
Report magazines, The Wall Street Journal, 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. Each Portfolio may invest in different types
of securities from those included in some of the above
indices.
- 22 -
<PAGE>
Evaluations of the Funds' performance, their total
returns, and comparisons may be used in advertisements and in information
furnished to current and prospective shareholders (collectively,
"Advertisements"). The Neuberger & Berman Funds may also be compared to
individual asset classes such as common stocks, small-cap stocks, or
Treasury bonds, based on information supplied by Ibbotson and Sinquefield.
Other Performance Information
From time to time, information about a Portfolio's
portfolio allocation and holdings as of a particular date may be included
in Advertisements for the corresponding Fund. This information, for
example, may include the Portfolio's portfolio diversification by asset
type. Information used in Advertisements may include statements or
illustrations relating to the appropriateness of types of securities
and/or mutual funds that may be employed to meet specific financial goals,
such as (1) funding retirement, (2) paying for children's education, and
(3) financially supporting aging parents.
N&B Management believes that many of its common stock
funds may be attractive investment vehicles for conservative investors who
are interested in long-term appreciation from stock investments, but who
have a moderate tolerance for risk. Such investors may include, for
example, individuals (1) planning for or facing retirement, (2) receiving
or expecting to receive lump-sum distributions from individual retirement
accounts ("IRAs"), self-employed individual retirement plans ("Keogh
plans"), or other retirement plans, (3) anticipating rollovers of CDs or
IRAs, Keogh plans, or other retirement plans, and (4) receiving a
significant amount of money as a result of inheritance, sale of a
business, or termination of employment.
Investors who may find Neuberger & Berman PARTNERS
Assets, Neuberger & Berman GUARDIAN Assets or Neuberger & Berman FOCUS
Assets to be an attractive investment vehicle also include parents saving
to meet college costs for their children. For instance, the cost of a
college education is rapidly approaching the cost of the average family
home. Four years' tuition, room and board at a top private institution
can already cost over $80,000. If college expenses continue to increase
at current rates, by the time today's pre-schooler enters the ivy-covered
halls in 2009, four years at a private college may easily cost
$200,000! 1/
________________________________
Source: College Board, 1994, 1995 Annual Survey of Colleges,
Princeton, NJ, assuming an average 6% increase in annual expenses.
- 23 -
<PAGE>
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 Funds'
Advertisements. This philosophy is described in further detail in "The
Art of Investing: A Conversation with Roy Neuberger," attached as
Appendix B to this SAI.
CERTAIN RISK CONSIDERATIONS
Although each Portfolio seeks to reduce risk by investing
in a diversified portfolio, diversification does not eliminate all risk.
There can, of course, be no assurance that any Portfolio will achieve its
investment objective, and an investment in a Fund involves certain risks
that are described in the sections entitled "Investment Programs" and
"Description of Investments" in the Prospectus and "Investment Information
-- Additional Investment Information" in this SAI.
TRUSTEES AND OFFICERS
The following table sets forth information concerning the
trustees and officers of the Trusts, including their addresses and
principal business experience during the past five years. Some persons
named as trustees and officers also serve in similar capacities for other
funds, and (where applicable) their corresponding portfolios, advised by
N&B Management and Neuberger & Berman, L.P. ("Neuberger & Berman").
<TABLE>
<CAPTION>
Name, Age, and Positions Held
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
435 East 52nd Street President and Director of Exxon
New York, NY 10022 Corporation; Director of Emigrant
Savings Bank.
- 24 -
<PAGE>
Name, Age, and Positions Held
Address(1) With the Trusts Principal Occupation(s)(2)
Stanley Egener* (61) Chairman of the Board, Partner of Neuberger & Berman;
Chief Executive Offi- President and Director of N&B Man-
cer, and Trustee of agement; Chairman of the Board,
each Trust Chief Executive Officer, and Trustee
of eight other mutual funds for
which N&B Management acts as
investment manager or administrator.
Alan R. Gruber (68) Trustee of each Trust Chairman and Chief Executive Officer
Orion Capital of Orion Capital Corporation (prop-
Corporation erty and casualty insurance);
600 Fifth Avenue Director of Trenwick Group, Inc.
24th Floor (property and casualty reinsurance);
New York, NY 10020 Chairman of the Board and Director
of Guaranty National Corporation
(property and casualty insurance);
formerly Director of Ketema, Inc.
(diversified manufac-turer).
Howard A. Mileaf (57) Trustee of each Trust Vice President and Special Counsel
Wheeling Pittsburgh to Wheeling Pittsburgh Corporation
Corporation (holding company) since 1992;
110 East 59th Street formerly Vice President and General
New York, NY 10022 Counsel of Keene Corporation (manu-
facturer 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
12 Woods Lane Securities Industry Association
Scarsdale, NY 10583 ("SIA") (securities industry's
representative in government
relations and regulatory matters at
the federal and state levels); until
November 1993, employee of the SIA;
Director of Legg Mason, Inc.
John T. Patterson, Jr. Trustee of each Trust President of SOBRO (South Bronx
(67) Overall Economic Development
90 Riverside Drive Corporation).
Apartment 1B
New York, NY 10024
- 25 -
<PAGE>
Name, Age, and Positions Held
Address(1) With the Trusts Principal Occupation(s)(2)
John P. Rosenthal (63) Trustee of each Trust Senior Vice President of Burnham
Burnham Securities Securities Inc. (a registered
Inc. broker-dealer) since 1991; formerly
Burnham Asset Partner of Silberberg, Rosenthal &
Management Corp. Co. (member of National Association
1325 Avenue of the of Securities Dealers, Inc.);
Americas Director, Cancer Treatment Holdings,
17th Floor Inc.
New York, NY 10019
Cornelius T. Ryan (64) Trustee of each Trust General Partner of Oxford Partners
Oxford Bioscience and Oxford Bioscience Partners
Partners (venture capital partnerships) and
Soundview Plaza President of Oxford Venture
315 Post Road West Corporation; Director of Capital
Westport, CT 06880 Cash Management Trust (money market
fund) and Prime Cash Fund.
Gustave H. Shubert (67) Trustee of each Trust Senior Fellow/Corporate Advisor and
13838 Sunset Boulevard Advisory Trustee of Rand (a non-
Pacific Palisades, CA profit public interest research
90272 institution) since 1989; Honorary
Member of the Board of Overseers of
the Institute for Civil Justice, the
Policy Advisory Committee of the
Clinical Scholars Program at the
University of California, the Ameri-
can 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 Partner of Neuberger & Berman;
of each Trust Director of N&B Management;
President and/or Trustee of five
other mutual funds for which N&B
Management acts as investment
manager or administrator.
- 26 -
<PAGE>
Name, Age, and Positions Held
Address(1) With the Trusts Principal Occupation(s)(2)
Daniel J. Sullivan (55) Vice President of each Senior Vice President of N&B
Trust Management since 1992; prior
thereto, Vice President of N&B
Management; Vice President of eight
other mutual funds for which N&B
Management acts as investment
manager or administrator.
Michael J. Weiner (48) Vice President and Senior Vice President and Treasurer
Principal Financial of N&B Management since 1992; prior
Officer of each Trust thereto, Vice President and
Treasurer of N&B Management and
Treasurer of certain mutual funds
for which N&B Management acted as
investment adviser; Vice President
and Principal Financial Officer of
eight other mutual funds for which
N&B Management acts as investment
manager or administrator.
Claudia A. Brandon (38) Secretary of each Vice President of N&B Management;
Trust Secretary of eight other mutual
funds for which N&B Management acts
as investment manager or
administrator.
Richard Russell (49) Treasurer and Princi- Vice President of N&B Management
pal Accounting Officer since 1993; prior thereto, Assistant
of each Trust Vice President of N&B Management;
Treasurer and Principal Accounting
Officer of eight other mutual funds
for which N&B Management acts as
investment manager or administrator.
Stacy Cooper-Shugrue Assistant Secretary of Assistant Vice President of N&B
(32) each Trust Management since 1993; employee of
N&B Management since 1989; Assistant
Secretary of eight other mutual
funds for which N&B Management acts
as investment manager or
administrator.
- 27 -
<PAGE>
Name, Age, and Positions Held
Address(1) With the Trusts Principal Occupation(s)(2)
C. Carl Randolph (57) Assistant Secretary of Partner of Neuberger & Berman since
each Trust 1992; employee thereof since 1971;
Assistant Secretary of eight other
mutual funds for which N&B
M a n a g e m e n t a c t s a s
investment manager or administrator.
</TABLE>
____________________
(1) Unless otherwise indicated, the business address of each listed
person is 605 Third Avenue, New York, New York 10158.
(2) Except as otherwise indicated, each individual has held the positions
shown for at least the last five years.
* Indicates 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 Portfolios 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, or by a majority of disinterested trustees, based upon a
review of readily available facts, or in a written opinion of independent
counsel) that such officers or trustees have not engaged in willful
misfeasance, bad faith, gross negligence, or reckless disregard of their
duties.
The following table sets forth information concerning the
compensation of the trustees and officers of the Trust. None of the
Neuberger & Berman Funds(SERVICE MARK) has any retirement plan for its
trustees or officers.
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<PAGE>
TABLE OF COMPENSATION
FOR FISCAL YEAR ENDED 8/31/95
Aggregate Total Compensation from the
Compensation Neuberger & Berman Fund
Name and Position with from the Trust Complex Paid to Trustees
the Trust
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, (9 other investment
Chief Executive 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)
- 29 -
<PAGE>
Lawrence Zicklin $0 $0
President and Trustee (5 other investment
companies)
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
Investment Manager and Administrator
Because all of the Funds' net investable assets are
invested in their corresponding Portfolios, the Funds do not need an
investment manager. N&B Management serves as the Portfolios' investment
manager pursuant to a management agreement with Managers Trust, dated as
of August 2, 1993 ("Management Agreement"). The Management Agreement was
approved for each Portfolio by the Portfolio Trustees, including a
majority of the Portfolio Trustees who are not "interested persons" of N&B
Management or Managers Trust ("Independent Portfolio Trustees"), on July
15, 1993, and was approved by the holders of the interests in all the
Portfolios on August 2, 1993.
The Management Agreement provides, in substance, that N&B
Management will make and implement investment decisions for the Portfolios
in its discretion and will continuously develop an investment program for
the Portfolios' assets. The Management Agreement permits N&B Management
to effect securities transactions on behalf of each Portfolio through
associated persons of N&B Management. The Management Agreement also
specifically permits N&B Management to compensate, through higher
commissions, brokers and dealers who provide investment research and
analysis to the Portfolios, although N&B Management has no current plans
to do so.
N&B Management provides to each Portfolio, without
separate cost, office space, equipment, and facilities and the personnel
necessary to perform executive, administrative, and clerical functions.
N&B Management pays all salaries, expenses, and fees of the officers,
trustees, and employees of Managers Trust who are officers, directors, or
employees of N&B Management. Two 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 both
Trusts. See "Trustees and Officers." Each Portfolio pays N&B Management
a management fee based on the Portfolio's average daily net assets, as
described in the Prospectus.
N&B Management provides similar facilities, services and
personnel, as well as shareholder accounting, recordkeeping, and other
shareholder services, to each Fund pursuant to an administration agreement
dated November 1, 1994 ("Administration Agreement"). Each Fund was
authorized to become subject to the Administration Agreement by vote of
the Fund Trustees on October 25, 1995, and became subject to it on
___________. For such administrative services, each Fund pays N&B
Management a fee based on the Fund's average daily net assets, as
described in the Prospectus. With a Fund's consent, N&B Management may
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subcontract to third parties, including Institutions, some of its
responsibilities to that Fund under an administration agreement and may
compensate third parties that provide such services. N&B Management
compensates Institutions for services they provide under an administrative
services agreement and/or dealer agreement and, from time to time, may
make other payments to Institutions.
N&B Management has voluntarily undertaken until December
31, 1997, to reimburse each Fund for its Operating Expenses and its pro
rata share of its corresponding Portfolio's Operating Expenses which, in
the aggregate, exceed 1.50% per annum of the Fund's average daily net
assets. "Operating Expenses" exclude interest, taxes, brokerage
commissions, and extraordinary expenses.
The Management Agreement continues with respect to each
Portfolio for a period of two years after the date the Portfolio became
subject thereto. The Management Agreement is renewable thereafter from
year to year with respect to each Portfolio, so long as its continuance is
approved at least annually (1) by the vote of a majority of the
Independent Portfolio Trustees, cast in person at a meeting called for the
purpose of voting on such approval, and (2) by the vote of a majority of
the Portfolio Trustees or by a 1940 Act majority vote of the outstanding
shares in that Portfolio. The Administration Agreement continues with
respect to each Fund for a period of two years after the date the Fund
became subject thereto. The Administration Agreement is renewable from
year to year with respect to a Fund, so long as its continuance is
approved at least annually (1) by the vote of 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 with respect to a
Portfolio without penalty on 60 days' written notice either by Managers
Trust or by N&B Management. The Administration Agreement is terminable
with respect to a Fund without penalty 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 each Fund's expenses, as follows. If, in any fiscal year, a
Fund's Aggregate Operating Expenses (as defined below) exceed the most
restrictive expense limitation imposed under the securities laws of the
states in which that 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 a
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Fund, however, for any expenses that exceed the pro rata portion of the
management fees attributable to that Fund's interest in its corresponding
Portfolio. At the date of this SAI, the most restrictive State Expense
Limitation to which any 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.
For purposes of the State Expense Limitation, the term
"Aggregate Operating Expenses" means a Fund's operating expenses plus its
pro rata portion of its corresponding Portfolio's operating expenses
(including any fees or expense reimbursements payable to N&B Management
and any compensation payable thereto pursuant to (1) the Administration
Agreement or (2) any other agreement or arrangement with Managers Trust in
regard to the Portfolio; but excluding (with respect to both the Fund and
the Portfolio) interest, taxes, brokerage commissions, litigation and
indemnification expenses, and other extraordinary expenses not incurred in
the ordinary course of business).
Sub-Adviser
N&B Management retains Neuberger & Berman, 605 Third
Avenue, New York, NY 10158, as sub-adviser with respect to each Portfolio
pursuant to a sub-advisory agreement dated August 2, 1993 ("Sub-Advisory
Agreement"). The Sub-Advisory Agreement was authorized by the Portfolio
Trustees, including a majority of the Independent Portfolio Trustees, on
July 15, 1993 and was approved by the holders of the interests in the
Portfolios on August 2, 1993.
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 the services rendered by Neuberger & Berman will
be paid for by N&B Management on the basis of 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 each
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 each Portfolio by the Portfolio Trustees, by a 1940 Act
majority vote of the outstanding Portfolio shares, by N&B Management, or
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by Neuberger & Berman on not less than 30 nor more than 60 days' written
notice. The Sub-Advisory Agreement also terminates automatically with
respect to each Portfolio if it is assigned or if the Management Agreement
terminates with respect to that Portfolio.
Most money managers that come to the Neuberger & Berman
organization have at least fifteen years experience. Neuberger & Berman
and N&B Management employ experienced professionals that work in a
competitive environment.
Investment Companies Managed
N&B Management currently serves as investment manager of
the following investment companies. As of 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
September 30,
Name 1995
Neuberger & Berman Cash Reserves Portfolio $ 377,608,619
(investment portfolio for
Neuberger & Berman Cash Reserves)
Neuberger & Berman Government Income $ 12,053,656
Portfolio
(investment portfolio for
Neuberger & Berman Government
Income Fund and Neuberger &
Berman Government Income Trust)
Neuberger & Berman Government Money $ 346,898,132
Portfolio
(investment portfolio for
Neuberger & Berman Government
Money Fund)
Neuberger & Berman Limited Maturity Bond $ 309,540,451
Portfolio
(investment portfolio for
Neuberger & Berman Limited
Maturity Bond Fund and Neuberger
& Berman Limited Maturity Bond
Trust)
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<PAGE>
Approximate Net
Assets at
September 30,
Name 1995
Neuberger & Berman Municipal Money $ 149,657,613
Portfolio
(investment portfolio for
Neuberger & Berman Municipal
Money Fund)
Neuberger & Berman Municipal Securities $ 44,568,635
Portfolio
(investment portfolio for
Neuberger & Berman Municipal
Securities Trust)
Neuberger & Berman New York Insured $ 10,679,324
Intermediate Portfolio
(investment portfolio for
Neuberger & Berman New York
Insured Intermediate Fund)
Neuberger & Berman Ultra Short Bond $ 102,903,312
Portfolio
(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,
Neuberger & Berman Focus Trust
and Neuberger & Berman Focus
Assets)
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,
Neuberger & Berman Guardian Trust
and Neuberger & Berman Guardian
Assets)
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<PAGE>
Approximate Net
Assets at
September 30,
Name 1995
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, Neuberger & Berman
Manhattan Trust and Neuberger &
Berman Manhattan Assets)
Neuberger & Berman Partners Portfolio $1,664,460,688
(investment portfolio for
Neuberger & Berman Partners Fund,
Neuberger & Berman Partners Trust
and Neuberger & Berman Partners
Assets)
Neuberger & Berman Socially Responsive $ 102,675,093
Portfolio
(investment portfolio for
Neuberger & Berman Socially
Responsive Fund, Neuberger &
Berman Socially Responsive Trust,
and Neuberger & Berman NYCDC
Socially Responsive Trust)
Neuberger & Berman Advisers $1,257,506,124
Managers Trust
(six series)
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 Portfolios and
the other funds and portfolios referred to above (collectively, "Other N&B
Funds") have been and will continue to be made independently of one
another. In terms of their investment objectives, most of the Other N&B
Funds differ from the Portfolios. Even where the investment objectives
are similar, however, the methods used by the Other N&B Funds and the
Portfolios to achieve their objectives may differ.
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<PAGE>
There may be occasions when a Portfolio and one or more
of the Other N&B Funds or other accounts managed by Neuberger & Berman are
contemporaneously engaged in purchasing or selling the same securities
from or to third parties. When this occurs, the transactions are averaged
as to price and allocated as to amounts in accordance with a formula
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 a Portfolio, in other cases it is believed that a
Portfolio's ability to participate in volume transactions may produce
better executions for it. In any case, it is the judgment of the
Portfolio Trustees that the desirability of the Portfolios' having their
advisory arrangements with N&B Management outweighs any disadvantages that
may result from contemporaneous transactions. The investment results
achieved by all of the funds managed by N&B Management have varied from
one another in the past and are likely to vary in the future.
Management and Control of N&B Management
The directors and officers of N&B Management, all of whom
have offices at the same address as N&B Management, are Richard A. Cantor,
Chairman of the Board and director; Stanley Egener, President and
director; Theresa A. Havell, Vice President and director; Irwin Lainoff,
director; Marvin C. Schwartz, director; Lawrence Zicklin, director; Daniel
J. Sullivan, Senior Vice President; Michael J. Weiner, Senior Vice
President and Treasurer; Claudia A. Brandon, 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; Margaret Didi
Weinblatt, Vice President; Stephen A. White, 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.
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<PAGE>
DISTRIBUTION ARRANGEMENTS
Distributor
N&B Management serves as the distributor ("Distributor")
in connection with the offering of each Fund's shares on a no-load basis
to Institutions. In connection with the sale of its shares, each Fund has
authorized the Distributor to give only the information, and to make only
the statements and representations, contained in the Prospectus and this
SAI or that properly may be included in sales literature and
advertisements in accordance with the 1933 Act, the 1940 Act, and
applicable rules of self-regulatory organizations. Sales may be made only
by the Prospectus, which may be delivered either personally, through the
mails, or by electronic means. The Distributor is the Funds' "principal
underwriter" within the meaning of the 1940 Act and, as such, acts as
agent in arranging for the sale of each Fund's shares to Institutions
without sales commission and bears all advertising and promotion expenses
incurred in the sale of the Funds' shares.
The Distributor or one of its affiliates may from time to
time deem it desirable to offer to a 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 Funds' 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 Funds'
shareholders any investment products or services other than those managed
or distributed by N&B Management or Neuberger & Berman.
The Trust, on behalf of each Fund, and the Distributor
are parties to a Distribution Agreement dated ________________ that was
approved by the Fund Trustees, including a majority of the Independent
Fund Trustees who have no direct or indirect financial interest in the
Distribution Agreement, on October 25, 1995. The Distribution Agreement
continues until ___________________. 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.
Rule 12b-1 Plan
The Fund Trustees adopted a plan pursuant to Rule 12b-1
under the 1940 Act ("Plan") on October 25, 1995. The Plan was approved by
N&B Management as sole initial shareholder of each Fund on _____________,
and became effective on ________, 1996.
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<PAGE>
The Plan provides that, as compensation for its ongoing
services to investors in the Funds, its activities and expenses related to
the sale and distribution of Fund shares, and other services provided to
the Funds, N&B Management receives from each Fund a fee at the annual rate
of 0.25% of that Fund's average daily net assets. N&B Management pays
this amount to Institutions that distribute Fund shares and provide
services to the Funds and their shareholders. Those Institutions may use
the payments for, among other purposes, compensating employees engaged in
sales and/or shareholder servicing. The amount of fees paid by a Fund
during any year may be more or less than the cost of distribution and
other services provided to the Fund.
The Plan provides that a written report identifying the
amounts expended by each Fund and the purposes for which such expenditures
were made must be provided to the Fund Trustees for their review at least
quarterly.
The Plan continues in effect until ________. The Plan is
renewable thereafter from year to year with respect to each Fund, so long
as its continuance is approved at least annually (1) by the vote of a
majority of the Fund Trustees and (2) by a vote of the majority of the
Independent Fund Trustees who have no direct or indirect financial
interest in the operation of the Plan ("Rule 12b-1 Trustees"), cast in
person at a meeting called for the purpose of voting on such approval.
The Plan may not be amended to increase materially the amount of fees paid
by any Fund thereunder unless such amendment is approved by a 1940 Act
majority vote of the outstanding shares of the Fund and by the Fund
Trustees in the manner described above. The Plan is terminable with
respect to a Fund at any time by a vote of a majority of the Rule 12b-1
Trustees or by a 1940 Act majority vote of the outstanding shares in the
Fund.
ADDITIONAL EXCHANGE INFORMATION
As more fully set forth in the section of the Prospectus
entitled "Exchanging Shares," an Institution may exchange shares of any
Fund for shares of one or more of the other Funds described in the
Prospectus. Any Fund may terminate or modify its exchange privilege in
the future.
Before effecting an exchange, Fund shareholders must
obtain and should review a currently effective Prospectus of the Fund into
which the exchange is to be made. 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
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<PAGE>
The right to redeem a 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 corresponding Portfolio to dispose of
securities it owns or fairly to determine the value of its net assets, or
(4) for such other period as the SEC may by order permit for the
protection of a Fund's shareholders; provided that applicable SEC rules
and regulations shall govern whether the conditions prescribed in (2) or
(3) exist. If the right of redemption is suspended, shareholders may
withdraw their offers of redemption, or they will receive payment at the
NAV per share in effect at the close of business on the first day the NYSE
is open ("Business Day") after termination of the suspension.
Redemptions in Kind
Each Fund reserves the right, under certain conditions,
to honor any request for redemption by making payment in whole or in part
in securities valued as described under "Share Information -- Share Prices
and Net Asset Value" in the Prospectus. If payment is made in securities,
a shareholder generally will incur brokerage expenses in converting those
securities into cash and will be subject to fluctuations in the market
price of those securities until they are sold. The Funds do not redeem in
kind under normal circumstances, but would do so when the Fund Trustees
determine that it is in the best interests of a Fund's shareholders as a
whole. Redemptions in kind will be made with readily marketable
securities to the extent possible.
DIVIDENDS AND OTHER DISTRIBUTIONS
Each Fund distributes to its shareholders amounts equal
to substantially all of its proportionate share of any net investment
income (after deducting expenses incurred directly by the Fund), net
capital gains (both long-term and short-term), and net gains from foreign
currency transactions earned or realized by its corresponding Portfolio.
Each Fund calculates its net investment income and NAV per share as of the
close of regular trading on the NYSE on each Business Day (usually 4:00
p.m. Eastern time).
A Portfolio's net investment income consists of all
income accrued on portfolio assets less accrued expenses, but does not
include realized gains and losses. Net investment income and realized
gains and losses are reflected in a Portfolio's NAV (and, hence, its
corresponding Fund's NAV) until they are distributed. Dividends from net
investment income and distributions of net realized capital and foreign
currency gains, if any, normally are paid once annually, in December,
except that Neuberger & Berman GUARDIAN Assets distributes substantially
all of its share of Neuberger & Berman GUARDIAN Portfolio's net investment
income, if any, at the end of each calendar quarter.
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<PAGE>
Dividends and/or other distributions are automatically
reinvested in additional shares of the distributing Fund, unless and until
the Institution elects to receive them in cash ("cash election"). To the
extent dividends and other distributions are subject to federal, state, or
local income taxation, they are taxable to the shareholders whether
received in cash or reinvested in Fund shares. A cash election with
respect to any Fund remains in effect until the Institution notifies the
Fund in writing to discontinue the election.
ADDITIONAL TAX INFORMATION
Taxation of the Funds
In order to continue to qualify for treatment as a RIC
under the Code, each Fund must distribute to its shareholders for each
taxable year at least 90% of 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. With respect to each Fund, these requirements include the
following: (1) the Fund must derive at least 90% of its gross income each
taxable year from dividends, interest, payments with respect to securities
loans, and gains from the sale or other disposition of securities or
foreign currencies, or other income (including gains from Hedging
Instruments) derived with respect to its business of investing in secu-
rities or those currencies ("Income Requirement"); (2) the Fund must
derive less than 30% of its gross income each taxable year from the sale
or other disposition of securities, or any of the following, that were
held for less than three months -- (i) options (other than those on
foreign currencies), or (ii) foreign currencies or Hedging Instruments
thereon that are not directly related to the Fund's principal business of
investing in securities (or options with respect thereto) ("Short-Short
Limitation"); and (3) at the close of each quarter of the Fund's taxable
year, (i) at least 50% of the value of its total assets must be
represented by cash and cash items, U.S. Government securities, and other
securities limited, in respect of any one issuer, to an amount that does
not exceed 5% of the value of the Fund's total assets and does not
represent more than 10% of the issuer's outstanding voting securities, and
(ii) not more than 25% of the value of its total assets may be invested in
securities (other than U.S. Government securities) of any one issuer.
Certain funds managed by N&B Management, including the
Sister Funds, have received a ruling from the Internal Revenue Service
("Service") that each such fund, as an investor in a corresponding
portfolio of Managers Trust or Income Managers Trust, will be deemed to
own a proportionate share of the portfolio's assets and income for pur-
poses of determining whether the fund satisfies all the requirements
described above to qualify as a RIC. Although that ruling may not be
relied on as precedent by the Funds, N&B Management believes that the
reasoning thereof and, hence, its conclusion apply to the Funds as well.
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Each Fund will be subject to a nondeductible 4% excise
tax ("Excise Tax") to the extent it fails to distribute by the end of any
calendar year substantially all of its ordinary income for that year and
capital gain net income for the one-year period 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 Funds of distributions to them from the Portfolios,
investments by the Portfolios in certain securities, and hedging trans-
actions engaged in by the Portfolios.
Taxation of the Portfolios
The Portfolios have received a ruling from the Service to
the effect that, among other things, each Portfolio will be treated as a
separate partnership for federal income tax purposes and will not be a
"publicly traded partnership." As a result, no Portfolio is subject to
federal income tax; instead, each investor in a Portfolio, such as a Fund,
is required to take into account in determining its federal income tax
liability its share of the Portfolio's income, gains, losses, deductions,
and credits, without regard to whether it has received any cash
distributions from the Portfolio. Each Portfolio also is not subject to
Delaware or New York income or franchise tax.
Because each Fund is deemed to own a proportionate share
of its corresponding Portfolio's assets and income for purposes of
determining whether the Fund satisfies the requirements to qualify as a
RIC, each Portfolio intends to continue to conduct its operations so that
its corresponding Fund will be able to continue to satisfy all those
requirements.
Distributions to a Fund from its corresponding Portfolio
(whether pursuant to a partial or complete withdrawal or otherwise) will
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. A Fund's basis for its interest in its
corresponding Portfolio generally equals the amount of cash the Fund
invests in the Portfolio, increased by the Fund's share of the Portfolio's
net income and gains and decreased by (1) the amount of cash and the basis
of any property the Portfolio distributes to the Fund and (2) the Fund's
share of the Portfolio's losses.
Dividends and interest received by a Portfolio may be
subject to income, withholding, or other taxes imposed by foreign
countries and U.S. possessions that would reduce the yield on its
securities. Tax conventions between certain countries and the United
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<PAGE>
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.
A 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 a Portfolio holds stock of a PFIC, its corresponding
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 its shareholders. 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 its shareholders.
If a Portfolio invests in a PFIC and elects to treat the
PFIC as a "qualified electing fund," then in lieu of its corresponding
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
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 Funds, 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 Portfolios' use of hedging strategies, such as writ-
ing (selling) and purchasing options and entering into Forward Contracts,
involves complex rules that will determine for income tax purposes the
character and timing of recognition of the gains and losses the Portfolios
realize in connection therewith. 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 cur-
rencies, will qualify as permissible income for its corresponding Fund
under the Income Requirement. However, income from the disposition by a
Portfolio of options (other than those on foreign currencies) will be
subject to the Short-Short Limitation for its corresponding Fund if they
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<PAGE>
are held for less than three months. Income from the disposition of
foreign currencies, and Hedging Instruments on foreign currencies, that
are not directly related to a Portfolio's principal business of investing
in securities (or options with respect thereto) also will be subject to
the Short-Short Limitation for its corresponding Fund if they are held for
less than three months.
If a Portfolio satisfies certain requirements, any in-
crease in value of a position that is part of a "designated hedge" will be
offset by any decrease in value (whether realized or not) of the
offsetting hedging position during the period of the hedge for purposes of
determining whether its corresponding Fund satisfies the Short-Short
Limitation. Thus, only the net gain (if any) from the designated hedge
will be included in gross income for purposes of that limitation. Each
Portfolio will consider whether it should seek to qualify for this
treatment for its hedging transactions. To the extent a Portfolio does
not so qualify, it may be forced to defer the closing out of certain
Hedging Instruments beyond the time when it otherwise would be
advantageous to do so, in order for its corresponding Fund to continue to
qualify as a RIC.
Neuberger & Berman PARTNERS Portfolio may acquire zero
coupon securities or other securities issued with original issue discount
("OID"). As a holder of those securities, that Portfolio (and, through
it, its corresponding Fund) must take into account the OID that accrues on
the securities during the taxable year, even if it receives no
corresponding payment on the securities during the year. Because
Neuberger & Berman PARTNERS Assets 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, that Fund may be required in a parti-
cular year to distribute as a dividend an amount that is greater than its
proportionate share of the total amount of cash Neuberger & Berman
PARTNERS Portfolio actually receives. Those distributions will be made
from that Fund's (or its proportionate share of that Portfolio's) cash
assets or from the proceeds of sales of that Portfolio's securities, if
necessary. That Portfolio may realize capital gains or losses from those
sales, which would increase or decrease Neuberger & Berman PARTNERS
Assets' 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 Neuberger & Berman PARTNERS Portfolio's
ability to sell other securities, or certain Hedging Instruments, held for
less than three months that it might wish to sell in the ordinary course
of its portfolio management.
Taxation of the Funds' Shareholders
If Fund shares are sold at a loss after being held for
six months or less, the loss will be treated as long-term, instead of
short-term, capital loss to the extent of any capital gain distributions
received on those shares. Investors also should be aware that if shares
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<PAGE>
of any Fund are purchased shortly before the record date for a dividend or
other distribution, the purchaser will receive some portion of the
purchase price back as a taxable distribution.
PORTFOLIO TRANSACTIONS
Neuberger & Berman acts as each Portfolio's principal
broker in the purchase and sale of portfolio securities and in connection
with the writing of covered call 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 August 3 to August 31, 1993, Neuberger
& Berman MANHATTAN Portfolio paid brokerage commissions of $42,780, of
which $32,922 was paid to Neuberger & Berman. During the fiscal year
ended August 31, 1994, that Portfolio paid brokerage commissions of
$655,640, of which $525,610 was paid to Neuberger & Berman.
During the fiscal year ended August 31, 1995, Neuberger &
Berman MANHATTAN Portfolio paid brokerage commissions of $654,982, of
which $436,568 was paid to Neuberger & Berman. Transactions in which that
Portfolio used Neuberger & Berman as broker comprised 73.70% of the
aggregate dollar amount of transactions involving the payment of
commissions, and 66.65% of the aggregate brokerage commissions paid by it,
during the fiscal year ended August 31, 1995. 94.53% of the $218,414 paid
to other brokers by that Portfolio during that fiscal year (representing
commissions on transactions involving approximately $81,737,328) was
directed to those brokers because of research services they provided.
During the fiscal year ended August 31, 1995, that Portfolio acquired
securities of the following of its "regular brokers or dealers" (as
defined in the 1940 Act) ("Regular B/Ds"): Bear Stearns & Co. Inc., and
Morgan Stanley & Co., Inc.; at that date, that Portfolio held the
securities of its Regular B/Ds with an aggregate value as follows: Bear
Stearns & Co. Inc., $6,187,500, and Morgan Stanley & Co., Inc.
$10,859,370.
During the period August 3 to August 31, 1993,
Neuberger & Berman FOCUS Portfolio paid brokerage commissions of $46,296,
of which $42,606 was paid to Neuberger & Berman. During the fiscal year
ended August 31, 1994, that Portfolio paid brokerage commissions of
$719,994, of which $567,972 was paid to Neuberger & Berman.
During the fiscal year ended August 31, 1995, Neuberger &
Berman FOCUS Portfolio paid brokerage commissions of $1,031,245, of which
$617,957 was paid to Neuberger & Berman. Transactions in which that
Portfolio used Neuberger & Berman as broker comprised 66.83% of the
aggregate dollar amount of transactions involving the payment of
commissions, and 59.92% of the aggregate brokerage commissions paid by it,
during the fiscal year ended August 31, 1995. 89.62% of the $413,288 paid
to other brokers by that Portfolio during that fiscal year (representing
commissions on transactions involving approximately $160,855,610) was
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<PAGE>
directed to those brokers because of research services they provided.
During the fiscal year ended August 31, 1995, that Portfolio acquired
securities of the following of its Regular B/Ds: EXXON Credit Corp.,
General Electric Capital Corp., and Merrill Lynch, Pierce, Fenner & Smith,
Inc.; at that date, that Portfolio held the securities of its Regular B/Ds
with an aggregate value as follows: General Electric Capital Corp.,
$2,300,000, and Merrill Lynch, Pierce, Fenner & Smith, Inc., $14,406,250.
During the period August 3 to August 31, 1993,
Neuberger & Berman GUARDIAN Portfolio paid brokerage commissions of
$201,981, of which $149,496 was paid to Neuberger & Berman. During the
fiscal year ended August 31, 1994, that Portfolio paid brokerage
commissions of $2,207,401, of which $1,647,807 was paid to Neuberger &
Berman.
During the fiscal year ended August 31, 1995, Neuberger &
Berman GUARDIAN Portfolio paid brokerage commissions of $3,751,206, of
which $2,521,523 was paid to Neuberger & Berman. Transactions in which
that Portfolio used Neuberger & Berman as broker comprised 70.49% of the
aggregate dollar amount of transactions involving the payment of
commissions, and 67.22% of the aggregate brokerage commissions paid by it,
during the fiscal year ended August 31, 1995. 82.78% of the $1,229,683
paid to other brokers by that Portfolio during that fiscal year
(representing commissions on transactions involving approximately
$509,609,733) was directed to those brokers because of research services
they provided. During the fiscal year ended August 31, 1995, that
Portfolio acquired securities of the following of its Regular B/Ds: EXXON
Credit Corp., General Electric Capital Corp., and Merrill Lynch, Pierce,
Fenner & Smith, Inc.; at that date, that Portfolio held the securities of
its Regular B/Ds with an aggregate value as follows: General Electric
Capital Corp., $1,500,000, and Merrill Lynch, Pierce, Fenner & Smith,
Inc., $48,116,875.
During the period August 3 to August 31, 1993, Neuberger
& Berman PARTNERS Portfolio paid brokerage commissions of $373,486, of
which $272,542 was paid to Neuberger & Berman. During the fiscal year
ended August 31, 1994, that Portfolio paid brokerage commissions of
$2,994,540, of which $2,031,570 was paid to Neuberger & Berman.
During the fiscal year ended August 31, 1995, Neuberger &
Berman PARTMERS Portfolio paid brokerage commissions of $4,608,156, of
which $3,092,789 was paid to Neuberger & Berman. Transactions in which
that Portfolio used Neuberger & Berman as broker comprised 71.83% of the
aggregate dollar amount of transactions involving the payment of
commissions, and 67.12% of the aggregate brokerage commissions paid by it,
during the fiscal year ended August 31, 1995. 95.02% of the $1,515,367
paid to other brokers by that Portfolio during that fiscal year
(representing commissions on transactions involving approximately
$600,676,631) was directed to those brokers because of research services
they provided. During the fiscal year ended August 31, 1995, that
Portfolio acquired securities of the following of its Regular B/Ds:
Salomon Brothers, Inc., EXXON Credit Corp., and General Electric Capital
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<PAGE>
Corp.; at that date, that Portfolio held the securities of its Regular
B/Ds with an aggregate value as follows: General Electric Capital Corp.,
$7,600,000.
Insofar as portfolio transactions of Neuberger & Berman
PARTNERS Portfolio result from active management of equity securities, and
insofar as portfolio transactions of Neuberger & Berman MANHATTAN
Portfolio result from seeking capital appreciation by selling securities
whenever sales are deemed advisable without regard to the length of time
the securities may have been held, it may be expected that the aggregate
brokerage commissions paid by those Portfolios to brokers (including
Neuberger & Berman where it acts in that capacity) may be greater than if
securities were selected solely on a long-term basis.
Portfolio securities are, from time to time, loaned by a
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 a Portfolio to Neuberger & Berman must
be fully secured by cash collateral. Under the order, the portion of the
income on the 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 a Portfolio in order to relend them to others, Neuberger & Berman is
required to pay that 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 a Portfolio has indicated a willingness to lend, Neuberger &
Berman must borrow such security from that 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
that Portfolio. If a Portfolio's expenses exceed its income in any
securities loan transaction with Neuberger & Berman, Neuberger & Berman
must reimburse that Portfolio for such loss.
During the fiscal years ended August 31, 1995 and 1994,
the Portfolios earned the following amounts of interest from the
collateralization of securities loans, from which Neuberger & Berman was
paid the indicated amounts:
1994 1995
Payment to Payment to
Neuberger Neuberger
Portfolio Interest & Berman Interest & Berman
Neuberger & Berman $147,103 $119,620 $1,430,672 $1,252,190
GUARDIAN Portfolio
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<PAGE>
Neuberger & Berman 38,627 33,225 327,447 291,207
FOCUS Portfolio
Neuberger & Berman 16,085 13,880 52,410 48,736
PARTNERS Portfolio
Neuberger & Berman 0 0 507,239 270,594
MANHATTAN
Portfolio
During the period August 3 to August 31, 1993, Neuberger
& Berman GUARDIAN Portfolio earned interest income of $3,164 from the
collateralization of securities loans, from which Neuberger & Berman was
paid $2,881. During the same period, none of the other Portfolios earned
interest income from the collateralization of securities loans.
Each 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
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 Portfolios.
In effecting securities transactions, each 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. Each 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 Neuberger &
Berman), that firm is able to obtain a price and execution at least as
favorable as other qualified brokers. To the Portfolios' knowledge,
however, no affiliate of any Portfolio receives give-ups or reciprocal
business in connection with their securities transactions.
The use of Neuberger & Berman as a broker for each Port-
folio is subject to the requirements of Section 11(a) of the Securities
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<PAGE>
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 a 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 each Portfolio's policy that the
commissions paid to Neuberger & Berman must, in N&B Management's judgment,
be (1) at least as favorable as those charged by other brokers having
comparable execution capability and (2) at least as favorable as
commissions contemporaneously charged by Neuberger & Berman on comparable
transactions for its most favored unaffiliated customers, except for
accounts for which Neuberger & Berman acts as a clearing broker for
another brokerage firm and customers of Neuberger & Berman considered by a
majority of the Independent Portfolio Trustees not to be comparable to the
Portfolio. The Portfolios do not deem it practicable and in their best
interests to solicit competitive bids for commissions on each transaction
effected by Neuberger & Berman. However, consideration regularly is given
to information concerning the prevailing level of commissions charged by
other brokers on comparable transactions during comparable periods of
time. The 1940 Act generally prohibits Neuberger & Berman from acting as
principal in the purchase or sale of securities for a 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 Portfolios 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 Portfolios must be reviewed
and approved no less often than annually by a majority of the Independent
Portfolio Trustees.
Each 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 will consider the quality and
reliability of brokerage services, including execution capability,
performance, and financial responsibility, and may consider research and
other investment information provided by, and sale of Fund shares effected
through, those brokers.
A committee comprised of officers of N&B Management and
partners of Neuberger & Berman who are portfolio managers of some of the
Portfolios and Other N&B Funds (collectively, "N&B Funds") and some of
Neuberger & Berman's managed accounts ("Managed Accounts") evaluates semi-
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<PAGE>
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 ranking of preferred brokers for use in
determining the relative amounts of commissions to be allocated to those
brokers. Ordinarily, the brokers on the list effect a large portion of
the brokerage transactions for the N&B Funds and the Managed Accounts that
are not effected by Neuberger & Berman. However, in any semi-annual
period, brokers not on the list may be used, and the relative amounts of
brokerage commissions paid to the brokers on the list may vary
substantially from the projected rankings. These variations reflect the
following factors, among others: (1) brokers not on the list or ranking
below other brokers on the list may be selected for particular transac-
tions 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 greater 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 Portfolios 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
executing portfolio transactions on behalf of the Managed Accounts may be
used for the Portfolios' benefit.
Mark R. Goldstein, Lawrence Marx III and Kent C. Simons,
and Michael M. Kassen and Robert I. Gendelman, each of whom is a Vice
President of N&B Management (except for Mr. Gendelman, who is an Assistant
Vice President) and a general partner of Neuberger & Berman (except for
Mr. Gendelman), are the persons primarily responsible for making decisions
as to specific action to be taken with respect to the investment portfo-
lios of Neuberger & Berman MANHATTAN, Neuberger & Berman FOCUS and
Neuberger & Berman GUARDIAN, and Neuberger & Berman PARTNERS Portfolios,
respectively. Each of them 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 Mr. Goldstein is
unavailable to perform his responsibilities, Susan Switzer, who is an
Assistant Vice President of N&B Management, will assume responsibility for
the portfolio of Neuberger & Berman MANHATTAN Portfolio.
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<PAGE>
Portfolio Turnover
The portfolio turnover rate is the lesser of the cost of
the securities purchased or the value of the securities sold, excluding
all securities, including options, whose maturity or expiration date at
the time of acquisition was one year or less, divided by the average
monthly value of such securities owned during the year.
REPORTS TO SHAREHOLDERS
Shareholders of each Fund receive unaudited semi-annual
financial statements, as well as year-end financial statements audited by
the independent auditors or independent accountants for the Fund and its
corresponding Portfolio. Each Fund's statements show the investments
owned by its corresponding Portfolio and the market values thereof and
provide other information about the Fund and its operations, including the
Fund's beneficial interest in its corresponding Portfolio.
ORGANIZATION
Prior to January 1, 1995, the name of Neuberger & Berman
Focus Portfolio was Neuberger & Berman Selected Sectors Portfolio.
CUSTODIAN AND TRANSFER AGENT
Each Fund and Portfolio has selected State 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
each Fund's transfer agent, administering purchases, redemptions, and
transfers of Fund shares with respect to Institutions and the payment of
dividends and other distributions to Institutions.
INDEPENDENT AUDITORS/ACCOUNTANTS
Each Fund and Portfolio (other than Neuberger & Berman
MANHATTAN Assets and Portfolio) has selected Ernst & Young LLP, 200
Clarendon Street, Boston, MA 02116, as the independent auditors who will
audit its financial statements. Neuberger & Berman MANHATTAN Assets 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
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Each Fund and Portfolio has selected Kirkpatrick &
Lockhart LLP, 1800 Massachusetts Avenue, N.W., Washington, D.C. 20036, as
its 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
statement, each such statement being qualified in all respects by such
reference.
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<PAGE>
Appendix A
RATINGS OF CORPORATE BONDS AND COMMERCIAL PAPER
S&P corporate bond ratings:
AAA - Bonds rated AAA have the highest rating assigned by
S&P. Capacity to pay interest and repay principal is extremely strong.
AA - Bonds rated AA have a very strong capacity to pay
interest and repay principal and differ from the higher rated issues only
in small degree.
A - Bonds rated A have a strong capacity to pay interest
and repay principal, although they are somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
bonds in higher rated categories.
BBB - Bonds rated BBB are regarded as having an adequate
capacity to pay principal and interest. Whereas they normally exhibit
adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
principal and interest for bonds in this category than for bonds in higher
rated categories.
BB, B, CCC, CC, C - Bonds rated BB, B, CCC, CC, and C are
regarded, on balance, as predominantly speculative with respect to
capacity to pay interest and repay principal in accordance with the terms
of the obligation. BB indicates the lowest degree of speculation and C
the highest degree of speculation. While such bonds will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
CI - The rating CI is reserved for income bonds on
which no interest is being paid.
D - Bonds rated D are in default, and payment of interest
and/or repayment of principal is in arrears.
Plus (+) or Minus (-) - The ratings above may be modified
by the addition of a plus or minus sign to show relative standing within
the major rating categories.
Moody's corporate bond ratings:
Aaa - Bonds rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edge." Interest payments are protected by
a large or an exceptionally stable margin, and principal is secure.
Although the various protective elements are likely to change, the changes
that can be visualized are most unlikely to impair the fundamentally
strong position of the issuer.
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<PAGE>
Aa - Bonds rated Aa are judged to be of high quality by
all standards. Together with the Aaa group, they comprise what are
generally known as "high-grade bonds." They are rated lower than the best
bonds because margins of protection may not be as large as in Aaa-rated
securities, fluctuation of protective elements may be of greater
amplitude, or there may be other elements present that make the long-term
risks appear somewhat larger than in Aaa-rated securities.
A - Bonds rated A possess many favorable investment
attributes and are to be considered as upper-medium grade obligations.
Factors giving security to principal and interest are considered adequate,
but elements may be present that suggest a susceptibility to impairment
sometime in the future.
Baa - Bonds which are rated Baa are considered as medium-
grade obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate for the
present, but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. These bonds
lack outstanding investment characteristics and in fact have speculative
characteristics as well.
Ba - Bonds rated Ba are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class.
B - Bonds rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
Caa - Bonds rated Caa are of poor standing. Such
issues may be in default or there may be present elements of danger with
respect to principal or interest.
Ca - Bonds rated Ca represent obligations that are
speculative in a high degree. Such issues are often in default or have
other marked shortcomings.
C - Bonds rated C are the lowest rated class of bonds,
and issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
Modifiers--Moody's may apply numerical modifiers 1, 2, and 3 in each
generic rating classification described above. The modifier 1 indicates
that the security ranks in the higher end of its generic rating category;
the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates
that the issuer ranks in the lower end of its generic rating.
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<PAGE>
S&P commercial paper ratings:
A-1 - This highest category indicates that the degree of
safety regarding timely payment is strong. Those issues determined to
possess extremely strong safety characteristics are denoted with a plus
sign (+).
Moody's commercial paper ratings
Issuers rated Prime-1 (or related supporting
institutions), also known as P-1, have a superior capacity for repayment
of short-term promissory obligations. Prime-1 repayment capacity will
normally be evidenced by the following characteristics:
- Leading market positions in well-established
industries.
- High rates of return on funds employed.
- Conservative capitalization structures with
moderate reliance on debt and ample asset
protection.
- Broad margins in earnings coverage of fixed
financial charges and high internal cash
generation.
- Well-established access to a range of financial
markets and assured sources of alternate
liquidity.
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APPENDIX B
[PICTURE OF ROY NEUBERGER]
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]
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<PAGE>
[PICTURE OF ROY NEUBERGER]
During my more than sixty-five years of
buying and selling securities, I've been asked
many questions about my approach to investing.
On the pages that follow are a variety of my
thoughts, ideas and investment principles which
have served me well over the years. If you gain
useful knowledge in the pursuit of profit as well
as enjoyment from these comments, I shall be more
than content.
\s\ Roy R. Neuberger
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<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"?
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<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.
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<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.
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<PAGE>
Neuberger & Berman Management
Inc.[SERVICE MARK]
605 Third Avenue, 2nd
Floor
New York, NY 10158-
0006
Shareholder Services
(800) 877-9700
[COPYRIGHT
SYMBOL]1995 Neuberger
& Berman
PRINTED ON RECYCLED PAPER
WITH SOY BASED INKS
</TABLE>
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<PAGE>
NEUBERGER & BERMAN EQUITY ASSETS
POST-EFFECTIVE AMENDMENT NO. 1 ON FORM N-1A
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Financial statements for Neuberger & Berman Focus Assets
and Portfolio, Neuberger & Berman Guardian Assets and
Portfolio, Neuberger & Berman Manhattan Assets and
Portfolio, and Neuberger & Berman Partners Assets and
Portfolio will be filed by amendment to Registrant's
Registration Statement.
(b) Exhibits:
Exhibit
Number Description
(1) (a) Certificate of Trust. Filed herewith.
(b) Trust Instrument of Neuberger & Berman Equity
Assets. Filed herewith.
(c) Schedule A - Current Series of Neuberger &
Berman Equity Assets. Filed herewith.
(2) By-Laws of Neuberger & Berman Equity Assets.
Filed herewith.
(3) Voting Trust Agreement. None.
(4) (a) Specimen Share Certificate for Neuberger &
Berman Socially 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 Assets. To be Filed by Amendment.
(c) Specimen Share Certificate for Neuberger &
Berman Guardian Assets. To be Filed by
Amendment.
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<PAGE>
(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. 0000898342-95-
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.
0000898342-95-000314.
(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.
0000898342-95-000314.
(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 No. 70 to
Registration Statement of Neuberger &
Berman Equity Funds, File Nos. 2-11357
and 811-582, EDGAR Accession No.
0000898342-95-000314.
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<PAGE>
(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. 0000898342-95-000314.
(6) (a) (i) Distribution Agreement Between
Neuberger & Berman Equity Assets and
Neuberger & Berman Management
Incorporated with Respect to Neuberger
& Berman Socially Responsive Trust.
Filed herewith.
(ii) Schedule A - Series of Neuberger &
Berman Equity Assets Currently Subject
to the Distribution Agreement. Filed
herewith.
(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 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.
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<PAGE>
(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) (a) Consent of Ernst & Young LLP, Independent
Auditors. To be Filed by Amendment.
(b) Consent of Coopers & Lybrand L.L.P.,
Independent Accountants. To be Filed by
Amendment.
(12) Financial Statements Omitted from Prospectus.
None.
(13) Letter of Investment Intent. None.
(14) Prototype Retirement Plan. None.
(15) Plan Pursuant to Rule 12b-1. To be Filed by
Amendment.
(16) Schedule of Computation of Performance
Quotations. None.
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<PAGE>
(17) Financial Data Schedule. To be Filed by
Amendment.
(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 3, 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
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<PAGE>
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
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
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<PAGE>
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.
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
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<PAGE>
and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the 1933 Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred
or paid by a trustee, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is asserted by
such trustee, officer or controlling person, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed
in the 1933 Act and will be governed by the final adjudication of such
issue.
Item 28. Business and Other Connections of Adviser and
Sub-Adviser.
There is set forth below information as to any other business,
profession, vocation or employment of a substantial nature in which each
director or officer of N&B Management and each partner of Neuberger &
Berman is, or at any time during the past two years has been, engaged for
his or her own account or in the capacity of director, officer, employee,
partner or trustee.
<TABLE>
<CAPTION>
NAME BUSINESS AND OTHER CONNECTIONS
<S> <C>
Claudia A. Brandon Secretary, Neuberger & Berman Advisers Management
Vice President, N&B Trust (Delaware business trust); Secretary, Advisers
Management 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.
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NAME BUSINESS AND OTHER CONNECTIONS
Stacy Cooper-Shugrue Assistant Secretary, Neuberger & Berman Advisers
Assistant Vice President, Management Trust (Delaware business trust);
N&B Management 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 Global Asset
Assistant Vice President, Management L.P. (joint venture of Neuberger & Berman
N&B Management and Banque Nationale de Paris) (2); Assistant
Portfolio Manager, Vontobel (Swiss bank) (3).
Stanley Egener Chairman of the Board and Trustee, Neuberger &
President and Director, Berman Advisers Management Trust (Delaware business
N&B Management; General trust); Chairman of the Board and Trustee, Advisers
Partner, Neuberger & Managers Trust; Chairman of the Board and Trustee,
Berman 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.
Robert I. Gendelman Senior Portfolio Manager, Harpel Advisors (4).
Assistant Vice President,
N&B Management
Theodore P. Giuliano Vice President, Neuberger & Berman Advisers
Vice President, N&B Management Trust (Massachusetts business trust) (6);
Management (5); General Executive Vice President and Trustee, Neuberger &
Partner, Neuberger & Berman Income Funds (7); Executive Vice President
Berman and Trustee, Neuberger & Berman Income Trust (7);
Executive Vice President and Trustee, Income
Managers Trust (7).
C-9
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
Mark R. Goldstein Vice President, Neuberger & Berman Advisers
Vice President, N&B Management Trust (Massachusetts Business Trust) (6).
Management; General
Partner,
Neuberger & Berman
Theresa A. Havell Vice President, Neuberger & Berman Advisers
Vice President and Management Trust (Massachusetts business trust) (6);
Director, N&B Management; President and Trustee, Neuberger & Berman Income
General Partner, Funds; President and Trustee, Neuberger & Berman
Neuberger & Berman Income Trust; President and Trustee, Income Managers
Trust
Josephine Mahaney Assistant Vice President, Neuberger & Berman
Assistant Vice President Advisers Management Trust (Massachusetts business
(5), trust) (6)
Vice President, N&B
Management
C. Carl Randolph Assistant Secretary, Neuberger & Berman Advisers
General Partner, Management Trust (Delaware business trust);
Neuberger & Berman 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 Portfolio
Vice President, Manager, BNP-N&B Global Asset Management L.P. (joint
N&B Management venture of Neuberger & Berman and Banque Nationale
de Paris) (2); Portfolio Manager, Vontobel (Swiss
bank) (8).
C-10
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
Richard Russell Treasurer, Neuberger & Berman Advisers Management
Vice President, Trust (Delaware business trust); Treasurer, Advisers
N&B Management Managers Trust; Assistant Treasurer (6), Treasurer,
Neuberger & Berman Advisers Management Trust
(Massachusetts business trust) (1); Treasurer,
Neuberger & Berman Income Funds; Treasurer,
Neuberger & Berman Income Trust; Treasurer,
Neuberger & Berman Equity Funds; Treasurer,
Neuberger & Berman Equity Trust; Treasurer, Income
Managers Trust; Treasurer, Equity Managers Trust;
Treasurer, Global Managers Trust; Treasurer,
Neuberger & Berman Equity Assets.
Susan Switzer Portfolio Manager, Mitchell Hutchins Asset
Assistant Vice President, Management Inc. (9).
N&B Management
Daniel J. Sullivan Vice President, Neuberger & Berman Advisers
Senior Vice President, Management Trust (Delaware business trust); Vice
N&B Management President, Advisers Managers Trust; Vice President,
Neuberger & Berman Advisers Management Trust
(Massachusetts business trust) (1); Vice President,
Neuberger & Berman Income Funds; Vice President,
Neuberger & Berman Income Trust; Vice President,
Neuberger & Berman Equity Funds; Vice President,
Neuberger & Berman Equity Trust; Vice President,
Income Managers Trust; Vice President, Equity
Managers Trust; Vice President, Global Managers
Trust; Vice President, Neuberger & Berman Equity
Assets.
Michael J. Weiner Vice President, Neuberger & Berman Advisers
Senior Vice President and Management Trust (Delaware business trust); Vice
Treasurer, N&B Management President, Advisers Managers Trust; Treasurer (6),
Vice President, Neuberger & Berman Advisers
Management Trust (Massachusetts business trust) (1);
Vice President, Neuberger & Berman Income Funds;
Vice President, Neuberger & Berman Income Trust;
Vice President, Neuberger & Berman Equity Funds;
Vice President, Neuberger & Berman Equity Trust;
Vice President, Income Managers Trust; Vice
President, Equity Managers Trust; Vice President,
Global Managers Trust; Vice President, Neuberger &
Berman Equity Assets.
C-11
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
Lawrence Zicklin President and Trustee, Neuberger & Berman Advisers
Director, N&B Management; Management Trust (Delaware business trust);
General Partner, President and Trustee, Advisers Managers Trust;
Neuberger & Berman 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
</TABLE>
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 December 2, 1993.
(7) Until June 22, 1994.
(8) Until April 1994.
(9) Until 1994.
Item 29. Principal Underwriters.
(a) N&B Management, the principal underwriter distributing
securities of the Registrant, is also the principal underwriter and
distributor for each of the following investment companies:
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.
C-12
<PAGE>
(b) Set forth below is information concerning the directors
and officers of the Registrant's principal underwriter. The principal
business address of each of the persons listed is 605 Third Avenue, New
York, New York 10158-0180, which is also the address of the Registrant's
principal underwriter.
<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND
NAME WITH UNDERWRITER OFFICES 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
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
C-13
<PAGE>
POSITIONS AND OFFICES POSITIONS AND
NAME WITH UNDERWRITER OFFICES WITH
REGISTRANT
Michael Lamberti Vice President None
Josephine Mahaney Vice President None
Carmen G. Martinez Assistant Vice President None
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
Margaret Didi Vice President None
Weinblatt
Michael J. Weiner Senior Vice President and Vice President
Treasurer (Principal Financial
Officer)
Stephen A. White Vice President None
C-14
<PAGE>
POSITIONS AND OFFICES POSITIONS AND
NAME WITH UNDERWRITER OFFICES WITH
REGISTRANT
Celeste Wischerth Assistant Vice President None
Lawrence Zicklin Director Trustee and
President
</TABLE>
(c) No commissions or other compensation were received
directly or indirectly from the Registrant by any principal underwriter
who was not an affiliated person of the Registrant.
Item 30. Location of Accounts and Records.
All accounts, books and other documents required to be
maintained by Section 31(a) of the 1940 act, as amended, and the rules
promulgated thereunder with respect to the Registrant are maintained at
the offices of State Street Bank and Trust Company, 225 Franklin Street,
Boston, Massachusetts 02110, except for the Registrant's Trust Instrument
and By-Laws, minutes of meetings of the Registrant's Trustees and
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 Focus Assets, Neuberger & Berman
Guardian Assets, Neuberger & Berman Manhattan Assets, and Neuberger &
Berman Partners Assets, which need not be certified, within four to six
months from the date of each respective Fund's commencement of operations.
C-15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, EQUITY MANAGERS TRUST has duly caused
the Post-Effective Amendment No. 1 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 November, 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. 1 has been signed below by the following
persons in the capacities and on the date indicated.
Signature Title Date
/s/ Faith Colish Trustee November 28, 1995
______________________
Faith Colish
/s/ Donald M. Cox Trustee November 28, 1995
______________________
Donald M. Cox
/s/ Stanley Egener Chairman of the November 28, 1995
__________________________ Board and Trustee
Stanley Egener (Chief Executive
Officer)
/s/ Howard A. Mileaf Trustee November 28, 1995
__________________________
Howard A. Mileaf
/s/ Edward I. O'Brien Trustee November 28, 1995
__________________________
Edward I. O'Brien
/s/ John T. Patterson, Jr. Trustee November 28, 1995
__________________________
John T. Patterson, Jr.
/s/ John P. Rosenthal Trustee November 28, 1995
__________________________
John P. Rosenthal
<PAGE>
Signature Title Date
/s/ Cornelius T. Ryan Trustee November 28, 1995
__________________________
Cornelius T. Ryan
/s/ Gustave H. Shubert Trustee November 28, 1995
__________________________
Gustave H. Shubert
/s/ Alan R. Gruber Trustee November 28, 1995
__________________________
Alan R. Gruber
/s/ Lawrence Zicklin President and November 28, 1995
__________________________ Trustee
Lawrence Zicklin
/s/ Michael J. Weiner Vice President November 28, 1995
__________________________ (Principal
Michael J. Weiner Financial Officer)
/s/ Richard Russell Treasurer November 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, the Registrant, NEUBERGER & BERMAN
EQUITY ASSETS has duly caused this Post-Effective Amendment No. 1 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 November 1995.
NEUBERGER & BERMAN EQUITY FUNDS
By: /s/ Lawrence Zicklin
_________________________
Lawrence Zicklin
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 1 has been signed below by the following
persons in the capacities and on the date indicated.
Signature Title Date
/s/ Faith Colish Trustee November 28, 1995
__________________________
Faith Colish
/s/ Donald M. Cox Trustee November 28, 1995
__________________________
Donald M. Cox
/s/ Stanley Egener Chairman of the November 28, 1995
__________________________ Board and Trustee
Stanley Egener (Chief Executive
Officer)
/s/ Howard A. Mileaf Trustee November 28, 1995
__________________________
Howard A. Mileaf
/s/ Edward I. O'Brien Trustee November 28, 1995
__________________________
Edward I. O'Brien
/s/ John T. Patterson, Jr. Trustee November 28, 1995
__________________________
John T. Patterson, Jr.
/s/ John P. Rosenthal Trustee November 28, 1995
__________________________
John P. Rosenthal
<PAGE>
Signature Title Date
/s/ Cornelius T. Ryan Trustee November 28, 1995
______________________
Cornelius T. Ryan
/s/ Gustave H. Shubert Trustee November 28, 1995
______________________
Gustave H. Shubert
/s/ Alan R. Gruber Trustee November 28, 1995
______________________
Alan R. Gruber
/s/ Lawrence Zicklin President and November 28, 1995
______________________ Trustee
Lawrence Zicklin
/s/ Michael J. Weiner Vice President November 28, 1995
______________________ (Principal
Michael J. Weiner Financial
Official)
/s/ Richard Russell Treasurer November 28, 1995
______________________ (Principal
Richard Russell Accounting
Officer)
<PAGE>
NEUBERGER & BERMAN EQUITY ASSETS
POST-EFFECTIVE AMENDMENT NO. 1 ON FORM N-1A
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
<S> <C> <C>
(1) (a) Certificate of Trust. Filed herewith. ____
(b) Trust Instrument of Neuberger & Berman ____
Equity Assets. Filed herewith.
(c) Schedule A - Current Series of Neuberger ____
& Berman Equity Assets. Filed herewith.
(2) By-Laws of Neuberger & Berman Equity ____
Assets. Filed herewith.
(3) Voting Trust Agreement. None. N.A.
(4) (a) Specimen Share Certificate for Neuberger N.A.
& Berman Socially 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 N.A.
& Berman Focus Assets. To be Filed by
Amendment.
(c) Specimen Share Certificate for Neuberger N.A.
& Berman Guardian Assets. To be Filed by
Amendment.
(d) Specimen Share Certificate for Neuberger N.A.
& Berman Manhattan Assets. To be Filed
by Amendment.
(e) Specimen Share Certificate for Neuberger N.A.
& Berman Partners Assets. To be Filed by
Amendment.
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
(5) (a) (i) Management Agreement Between N.A.
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.
0000898342-95-000314. N.A.
(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. 0000898342-
95-000314.
(iii) Schedule B - Schedule of N.A.
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. 0000898342-
95-000314.
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
(b) (i) Sub-Advisory Agreement Between N.A.
Neuberger & Berman 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.
0000898342-95-000314.
N.A.
(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
Equity Managers Trust, File Nos.
2-11357 and 811-582, EDGAR
Accession No. 0000898342-95-
000314.
(6) (a) (i) Distribution Agreement Between ____
Neuberger & Berman Equity Assets
and Neuberger & Berman
Management Incorporated with
respect to Neuberger & Berman
Socially Responsive Trust.
Filed herewith.
(ii) Schedule A - Series of Neuberger ____
& Berman Equity Assets Currently
Subject to the Distribution
Agreement. Filed herewith.
(b) (i) Form of Distribution Agreement N.A.
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 N.A.
& Berman Equity Assets Currently
Subject to Distribution
Agreement. To be Filed by
Amendment.
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
(7) Bonus, Profit Sharing or Pension Plans. None. N.A.
(8) (a) Custodian Contract Between Neuberger & N.A.
Berman Equity Assets and State Street
Bank and Trust Company. Incorporated by
Reference to Pre-Effective Amendment No.
1 to Registrant's Registration Statement.
(b) Schedule A - Approved Foreign Banking N.A.
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 N.A.
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 N.A.
& Berman Equity Assets Currently
Subject to the Transfer Agency
Agreement. To be Filed by
Amendment.
(b) (i) Administration Agreement Between N.A.
Neuberger & Berman Equity Assets
and Neuberger & Berman
Management Incorporated. To be
Filed by Amendment.
(ii) Schedule A - Series of Neuberger N.A.
& Berman Equity Assets Currently
Subject to the Administration
Agreement. To be Filed by
Amendment.
(iii) Schedule B - Schedule of N.A.
Compensation Under the
Administration Agreement. To be
Filed by Amendment.
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
(10) Opinion and Consent of Kirkpatrick & Lockhart LLP N.A.
on Securities Matters. To be Filed by Amendment.
(11) (a) Consent of Ernst & Young LLP, Independent N.A.
Auditors. To be Filed by Amendment.
(b) Consent of Coopers & Lybrand L.L.P., N.A.
Independent Accountants. To be Filed by
Amendment.
(12) Financial Statements Omitted from Prospectus. N.A.
None.
(13) Letter of Investment Intent. None. N.A.
(14) Prototype Retirement Plan. None. N.A.
(15) Plan Pursuant to Rule 12b-1. To be Filed by N.A.
Amendment.
(16) Schedule of Computation of Performance N.A.
Quotations. None.
(17) Financial Data Schedule. To be Filed by N.A.
Amendment.
(18) Plan Pursuant to Rule 18f-3. None. N.A.
</TABLE>
<PAGE>
<PAGE>
CERTIFICATE OF TRUST
OF
NEUBERGER & BERMAN EQUITY ASSETS
This Certificate of Trust ("Certificate") is filed in accordance
with the provisions of the Delaware Business Trust Act (12 Del. Code Ann.
Tit. 12 Section 3801 et seq.) and sets forth the following:
1. The name of the trust is: Neuberger & Berman Equity
Assets ("Trust").
2. The business address of the registered office of the
Trust and of the registered agent of the Trust is:
The Corporation Trust Company
Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
3. This Certificate is effective upon filing.
4. The Trust is a Delaware business trust to be registered
under the Investment Company Act of 1940. Notice is
hereby given that the Trust shall consist of one or more
series. The debts, liabilities, obligations and expenses
incurred, contracted for or otherwise existing with
respect to a particular series of the Trust shall be
enforceable against the assets of such series only, and
not against the assets of the Trust generally or any
other series.
IN WITNESS WHEREOF, the undersigned, being the initial Trustees,
have executed this Certificate on this 14th day of October, 1993.
/s/ Claudia A. Brandon
---------------------------------------
Claudia A. Brandon, as
Trustee and not individually
/s/ Ellen Metzger
---------------------------------------
Ellen Metzger, as
Trustee and not individually
/s/ Michael J. Wiener
---------------------------------------
Michael J. Wiener, as
Trustee and not individually
Address: 605 Third Avenue
New York, NY 10158
<PAGE>
STATE OF NEW YORK
CITY OF NEW YORK
Before me this 14th day of October, 1993, personally appeared the
above-named Claudia A. Brandon, Ellen Metzger, and Michael J. Wiener,
known to me to be the persons who executed the foregoing instrument and
who acknowledged that they executed the same.
/s/ Loraine Olavarria
---------------------------------------
Notary Public
My commission expires April 15, 1995
Loraine Olavarria
Notary Public, State of New York
Qualified in Bronx County
Commission Expires 4-15-95
- 2 -
<PAGE>
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
------------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE,
DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE
CERTIFICATE OF BUSINESS TRUST REGISTRATION OF "NEUBERGER & BERMAN EQUITY
ASSETS", FILED IN THIS OFFICE ON THE EIGHTEENTH DAY OF OCTOBER, A.D. 1993,
at 10 O'CLOCK A.M.
[LOGO]
SEAL OF THE STATE OF DELAWARE
/s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
- 3 -
<PAGE>
<PAGE>
NEUBERGER & BERMAN EQUITY ASSETS
--------------------------------
TRUST INSTRUMENT
---------------
TABLE OF CONTENTS
PAGE
----
ARTICLE I --Definitions . . . . . . . . . . . . . . . . . . 1
ARTICLE II--The Trustees . . . . . . . . . . . . . . . . . 2
Section 1. Management of the Trust . . . . . . . . . . 2
Section 2. Initial Trustees; Election and
Number of Trustees . . . . . . . . . . . . 2
Section 3. Term of Office of Trustees . . . . . . . . 2
Section 4. Vacancies; Appointment of Trustees . . . . 3
Section 5. Temporary Vacancy or Absence . . . . . . . 3
Section 6. Chairman . . . . . . . . . . . . . . . . . 3
Section 7. Action by the Trustees . . . . . . . . . . 3
Section 8. Ownership of Trust Property . . . . . . . . 4
Section 9. Effect of Trustees Not Serving . . . . . . 4
Section 10. Trustees, etc. as Shareholders . . . . . . 4
ARTICLE III--Powers of the Trustees . . . . . . . . . . . . 4
Section 1. Powers . . . . . . . . . . . . . . . . . . 4
Section 2. Certain Transactions . . . . . . . . . . . 7
ARTICLE IV--Series; Classes; Shares . . . . . . . . . . . . 8
Section 1. Establishment of Series or Class . . . . . 8
Section 2. Shares . . . . . . . . . . . . . . . . . . 8
Section 3. Investment in the Trust . . . . . . . . . . 9
Section 4. Assets and Liabilities of Series . . . . . 9
Section 5. Ownership and Transfer of Shares . . . . . 10
Section 6. Status of Shares; Limitation of Shareholder
Liability . . . . . . . . . . . . . . . . . 10
ARTICLE V--Distributions and Redemptions . . . . . . . . . . 11
Section 1. Distributions . . . . . . . . . . . . . . . 11
Section 2. Redemptions . . . . . . . . . . . . . . . . 11
Section 3. Determination of Net Asset Value . . . . . 12
Section 4. Suspension of Right of Redemption . . . . . 12
Section 5. Redemptions Necessary for Qualification as
Regulated Investment Company . . . . . . . 12
ARTICLE VI--Shareholders' Voting Powers and Meetings . . . . 13
Section 1. Voting Powers . . . . . . . . . . . . . . . 13
Section 2. Meetings of Shareholders . . . . . . . . . 13
<PAGE>
Section 3. Quorum; Required Vote . . . . . . . . . . . 13
ARTICLE VII--Contracts with Service Providers . . . . . . . 14
Section 1. Investment Adviser . . . . . . . . . . . . 14
Section 2. Principal Underwriter . . . . . . . . . . . 14
Section 3. Transfer Agency, Shareholder Services, and
Administration Agreements . . . . . . . . . 14
Section 4. Custodian . . . . . . . . . . . . . . . . . 15
Section 5. Parties to Contracts with Service Providers 15
ARTICLE VIII--Expenses of the Trust and Series . . . . . . . 15
ARTICLE IX--Limitation of Liability and Indemnification . . 16
Section 1. Limitation of Liability . . . . . . . . . . 16
Section 2. Indemnification . . . . . . . . . . . . . . 17
Section 3. Indemnification of Shareholders . . . . . . 18
ARTICLE X--Miscellaneous . . . . . . . . . . . . . . . . . . 19
Section 1. Trust Not a Partnership . . . . . . . . . . 19
Section 2. Trustee Action; Expert Advice; No Bond
or Surety . . . . . . . . . . . . . . . . . 19
Section 3. Record Dates . . . . . . . . . . . . . . . 19
Section 4. Termination of the Trust . . . . . . . . . 19
Section 5. Reorganization . . . . . . . . . . . . . . 20
Section 6. Trust Instrument . . . . . . . . . . . . . 21
Section 7. Applicable Law . . . . . . . . . . . . . . 21
Section 8. Amendments . . . . . . . . . . . . . . . . 21
Section 9. Fiscal Year . . . . . . . . . . . . . . . . 22
Section 10. Severability . . . . . . . . . . . . . . . 22
- ii -
<PAGE>
NEUBERGER & BERMAN EQUITY ASSETS
--------------------------------
TRUST INSTRUMENT
----------------
This TRUST INSTRUMENT is made on October 18, 1993, by the
Trustees, to establish a business trust for the investment and
reinvestment of funds contributed to the Trust by investors. The Trustees
declare that all money and property contributed to the Trust shall be held
and managed in trust pursuant to this Trust Instrument. The name of the
Trust created by this Trust Instrument is Neuberger & Berman Equity
Assets.
ARTICLE I
---------
DEFINITIONS
-----------
Unless otherwise provided or required by the context:
(a) "By-laws" means the By-laws of the Trust adopted by the
Trustees, as amended from time to time;
(b) "Class" means the class of Shares of a Series established
pursuant to Article IV;
(c) "Commission," "Interested Person," and "Principal
Underwriter" have the meanings provided in the 1940 Act;
(d) "Covered Person" means a person so defined in Article IX,
Section 2;
(e) "Delaware Act" means Chapter 38 of Title 12 of the Delaware
Code entitled "Treatment of Delaware Business Trusts," as amended from
time to time;
(f) "Majority Shareholder Vote" means "the vote of a majority of
the outstanding voting securities" as defined in the 1940 Act;
(g) "Net Asset Value" means the net asset value of each Series
of the Trust, determined as provided in Article V, Section 3;
(h) "Outstanding Shares" means Shares shown in the books of the
Trust or its transfer agent as then issued and outstanding, but does not
include Shares which have been repurchased or redeemed by the Trust and
which are held in the treasury of the Trust;
(i) "Series" means a series of Shares established pursuant to
Article IV;
(j) "Shareholder" means a record owner of Outstanding Shares;
(k) "Shares" means the equal proportionate transferable units of
interest into which the beneficial interest of each Series or Class is
<PAGE>
divided from time to time (including whole Shares and fractions of
Shares);
(l) "Trust" means Neuberger & Berman Equity Assets, established
hereby, and reference to the Trust, when applicable to one or more Series,
refers to that Series;
(m) "Trustees" means the persons who have signed this Trust
Instrument, so long as they shall continue in office in accordance with
the terms hereof, and all other persons who may from time to time be duly
qualified and serving as Trustees in accordance with Article II, in all
cases in their capacities as Trustees hereunder;
(n) "Trust Property" means any and all property, real or
personal, tangible or intangible, which is owned or held by or for the
Trust or any Series or by the Trustees on behalf of the Trust or any
Series;
(o) The "1940 Act" means the Investment Company Act of 1940, as
amended from time to time.
ARTICLE II
----------
THE TRUSTEES
------------
Section 1. Management of the Trust. The business and affairs of
the Trust shall be managed by or under the direction of the Trustees, and
they shall have all powers necessary or desirable to carry out that
responsibility. The Trustees may execute all instruments and take all
action they deem necessary or desirable to promote the interests of the
Trust. Any determination made by the Trustees in good faith as to what is
in the interests of the Trust shall be conclusive.
Section 2. Initial Trustees; Election and Number of Trustees.
The initial Trustees shall be the persons initially signing this Trust
Instrument. The number of Trustees (other than the initial Trustees)
shall be fixed from time to time by a majority of the Trustees; provided,
that there shall be at least two (2) Trustees. The Shareholders shall
elect the Trustees (other than the initial Trustees) on such dates as the
Trustees may fix from time to time.
Section 3. Term of Office of Trustees. Each Trustee shall hold
office for life or until his successor is elected or the Trust terminates;
except that (a) any Trustee may resign by delivering to the other Trustees
or to any Trust officer a written resignation effective upon such delivery
or a later date specified therein; (b) any Trustee may be removed with or
without cause at any time by a written instrument signed by at least
two-thirds of the other Trustees, specifying the effective date of
removal; (c) any Trustee who requests to be retired, or who has become
physically or mentally incapacitated or is otherwise unable to serve, may
be retired by a written instrument signed by a majority of the other
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<PAGE>
Trustees, specifying the effective date of retirement; and (d) any Trustee
may be removed at any meeting of the Shareholders by a vote of at least
two-thirds of the Outstanding Shares.
Section 4. Vacancies; Appointment of Trustees. Whenever a
vacancy shall exist in the Board of Trustees, regardless of the reason for
such vacancy, the remaining Trustees shall appoint any person as they
determine in their sole discretion to fill that vacancy, consistent with
the limitations under the 1940 Act. Such appointment shall be made by a
written instrument signed by a majority of the Trustees or by a resolution
of the Trustees, duly adopted and recorded in the records of the Trust,
specifying the effective date of the appointment. The Trustees may
appoint a new Trustee as provided above in anticipation of a vacancy
expected to occur because of the retirement, resignation, or removal of a
Trustee, or an increase in number of Trustees, provided that such
appointment shall become effective only at or after the expected vacancy
occurs. As soon as any such Trustee has accepted his appointment in
writing, the trust estate shall vest in the new Trustee, together with the
continuing Trustees, without any further act or conveyance, and he shall
be deemed a Trustee hereunder. The power of appointment is subject to
Section 16(a) of the 1940 Act.
Section 5. Temporary Vacancy or Absence. Whenever a vacancy in
the Board of Trustees shall occur, until such vacancy is filled, or while
any Trustee is absent from his domicile (unless that Trustee has made
arrangements to be informed about, and to participate in, the affairs of
the Trust during such absence), or is physically or mentally
incapacitated, the remaining Trustees shall have all the powers hereunder
and their certificate as to such vacancy, absence, or incapacity shall be
conclusive. To the extent permitted under the 1940 Act, any Trustee may,
by power of attorney, delegate his powers as Trustee for a period not
exceeding six (6) months at any one time to any other Trustee or Trustees.
Section 6. Chairman. The Trustees shall appoint one of their
number to be Chairman of the Board of Trustees. The Chairman shall
preside at all meetings of the Trustees, shall be authorized to execute
the policies established by the Trustees and the administration of the
Trust, and may be the chief executive, financial and/or accounting officer
of the Trust.
Section 7. Action by the Trustees. The Trustees shall act by
majority vote at a meeting duly called (including at a telephonic meeting,
unless the 1940 Act requires that a particular action be taken only at a
meeting of Trustees in person) at which a quorum is present or by written
consent of a majority of Trustees (or such greater number as may be
required by applicable law) without a meeting. A majority of the Trustees
shall constitute a quorum at any meeting. Meetings of the Trustees may be
called orally or in writing by the Chairman of the Board of Trustees or by
any two other Trustees. Notice of the time, date and place of all
Trustees meetings shall be given to each Trustee by telephone, facsimile
or other electronic mechanism sent to his home or business address at
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<PAGE>
least twenty-four hours in advance of the meeting or by written notice
mailed to his home or business address at least seventy-two hours in
advance of the meeting. Notice need not be given to any Trustee who
attends the meeting without objecting to the lack of notice or who signs a
waiver of notice either before or after the meeting. Subject to the
requirements of the 1940 Act, the Trustees by majority vote may delegate
to any Trustee or Trustees authority to approve particular matters or take
particular actions on behalf of the Trust. Any written consent or waiver
may be provided and delivered to the Trust by facsimile or other similar
electronic mechanism.
Section 8. Ownership of Trust Property. The Trust Property of
the Trust and of each Series shall be held separate and apart from any
assets now or hereafter held in any capacity other than as Trustee
hereunder by the Trustees or any successor Trustees. All of the Trust
Property and legal title thereto shall at all times be considered as
vested in the Trustees on behalf of the Trust, except that the Trustees
may cause legal title to any Trust Property to be held by or in the name
of the Trust, or in the name of any person as nominee. No Shareholder
shall be deemed to have a severable ownership in any individual asset of
the Trust or of any Series or any right of partition or possession
thereof, but each Shareholder shall have, as provided in Article IV, a
proportionate undivided beneficial interest in the Trust or Series
represented by Shares.
Section 9. Effect of Trustees Not Serving. The death,
resignation, retirement, removal, incapacity, or inability or refusal to
serve of the Trustees, or any one of them, shall not operate to annul the
Trust or to revoke any existing agency created pursuant to the terms of
this Trust Instrument.
Section 10. Trustees, etc. as Shareholders. Subject to any
restrictions in the By-laws, any Trustee, officer, agent or independent
contractor of the Trust may acquire, own and dispose of Shares to the same
extent as any other Shareholder; the Trustees may issue and sell Shares to
and buy Shares from any such person or any firm or company in which such
person is interested, subject only to any general limitations herein.
ARTICLE III
-----------
POWERS OF THE TRUSTEES
----------------------
Section 1. Powers. The Trustees in all instances shall act as
principals, free of the control of the Shareholders. The Trustees shall
have full power and authority to take or refrain from taking any action
and to execute any contracts and instruments that they may consider
necessary or desirable in the management of the Trust. The Trustees shall
not in any way be bound or limited by current or future laws or customs
applicable to trust investments, but shall have full power and authority
to make any investments which they, in their sole discretion, deem proper
to accomplish the purposes of the Trust, and to dispose of the same. The
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<PAGE>
Trustees may exercise all of their powers without recourse to any court or
other authority. Subject to any applicable limitation herein or in the
By-laws or resolutions of the Trust, the Trustees shall have power and
authority, without limitation:
(a) To invest and reinvest cash and other property, and to hold
cash or other property uninvested, without in any event being bound or
limited by any current or future law or custom concerning investments by
trustees, and to sell, exchange, lend, pledge, mortgage, hypothecate,
write options on and lease any or all of the Trust Property; to invest in
obligations and securities of any kind, and without regard to whether they
may mature before the possible termination of the Trust; and without
limitation to invest all or any part of its cash and other property in
securities issued by a registered investment company or series thereof,
subject to the provisions of the 1940 Act;
(b) To operate as and carry on the business of a registered
investment company, and exercise all the powers necessary and proper to
conduct such a business;
(c) To adopt By-laws not inconsistent with this Trust Instrument
providing for the conduct of the business of the Trust and to amend and
repeal them to the extent such right is not reserved to the Shareholders;
(d) To elect and remove such officers and appoint and terminate
such agents as they deem appropriate;
(e) To employ as custodian of any assets of the Trust, subject to
any provisions herein or in the By-laws, one or more banks, trust
companies or companies that are members of a national securities exchange,
or other entities permitted by the Commission to serve as such;
(f) To retain one or more transfer agents and Shareholder
servicing agents, or both;
(g) To provide for the distribution of Shares either through a
Principal Underwriter as provided herein or by the Trust itself, or both,
and, subject to applicable law, to adopt a distribution plan of any kind;
(h) To set record dates in the manner provided for herein or in
the By-laws;
(i) To delegate such authority as they consider desirable to any
officers of the Trust and to any agent, independent contractor, manager,
investment adviser, custodian or underwriter, in either general or
specific terms;
(j) To sell or exchange any or all of the assets of the Trust,
subject to Article X, Section 4;
(k) To vote or give assent, or exercise any rights of ownership,
with respect to other securities or property; and, if necessary, to
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<PAGE>
execute and deliver powers of attorney delegating such power to other
persons;
(l) To exercise powers and rights of subscription or otherwise
which in any manner arise out of ownership of securities;
(m) To hold any security or other property (i) in a form not
indicating any trust, whether in bearer, book entry, unregistered or other
negotiable form, or (ii) either in the Trust's or Trustees' own name or in
the name of a custodian or a nominee or nominees, subject to safeguards
according to the usual practice of business trusts or investment
companies;
(n) To establish separate and distinct Series with separately
defined investment objectives and policies and distinct investment
purposes, and with separate Shares representing beneficial interests in
such Series, and to establish separate Classes, all in accordance with the
provisions of Article IV;
(o) To the full extent permitted by Section 3804 of the Delaware
Act, to allocate assets, liabilities and expenses of the Trust to a
particular Series and liabilities and expenses to a particular Class or to
apportion the same between or among two or more Series or Classes,
provided that any liabilities or expenses incurred by a particular Series
or Class shall be payable solely out of the assets belonging to that
Series or Class as provided for in Article IV, Section 4;
(p) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or concern
whose securities are held by the Trust; to consent to any contract, lease,
mortgage, purchase, or sale of property by such corporation or concern;
and to pay calls or subscriptions with respect to any security held in the
Trust;
(q) To compromise, arbitrate, or otherwise adjust claims in favor
of or against the Trust or any matter in controversy including, but not
limited to, claims for taxes;
(r) To make distributions of income and of capital gains to
Shareholders in the manner hereinafter provided for;
(s) To borrow money;
(t) To establish, from time to time, a minimum total investment
for Shareholders, and to require the redemption of the Shares of any
Shareholders whose investment is less than such minimum upon giving notice
to such Shareholder;
(u) To establish committees for such purposes, with such
membership, and with such responsibilities as the Trustees may consider
proper, including a committee consisting of fewer than all of the Trustees
then in office, which may act for and bind the Trustees and the Trust with
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<PAGE>
respect to the institution, prosecution, dismissal, settlement, review or
investigation of any legal action, suit or proceeding, pending or
threatened;
(v) To issue, sell, repurchase, redeem, cancel, retire, acquire,
hold, resell, reissue, dispose of and otherwise deal in Shares; to
establish terms and conditions regarding the issuance, sale, repurchase,
redemption, cancellation, retirement, acquisition, holding, resale,
reissuance, disposition of or dealing in Shares; and, subject to Articles
IV and V, to apply to any such repurchase, redemption, retirement,
cancellation or acquisition of Shares any funds or property of the Trust
or of the particular Series with respect to which such Shares are issued;
(w) To definitively interpret the investment objectives, policies
and limitations of the Trust or any Series; and
(x) To carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary or
desirable to accomplish any purpose or to further any of the foregoing
powers, and to take every other action incidental to the foregoing
business or purposes, objects or powers.
The clauses above shall be construed as objects and powers, and
the enumeration of specific powers shall not limit in any way the general
powers of the Trustees. Any action by one or more of the Trustees in
their capacity as such hereunder shall be deemed an action on behalf of
the Trust or the applicable Series, and not an action in an individual
capacity. No one dealing with the Trustees shall be under any obligation
to make any inquiry concerning the authority of the Trustees, or to see to
the application of any payments made or property transferred to the
Trustees or upon their order. In construing this Trust Instrument, the
presumption shall be in favor of a grant of power to the Trustees.
Section 2. Certain Transactions. Except as prohibited by
applicable law, the Trustees may, on behalf of the Trust, buy any
securities from or sell any securities to, or lend any assets of the Trust
to, any Trustee or officer of the Trust or any firm of which any such
Trustee or officer is a member acting as principal, or have any such
dealings with any investment adviser, administrator, distributor or
transfer agent for the Trust or with any Interested Person of such person.
The Trust may employ any such person or entity in which such person is an
Interested Person, as broker, legal counsel, registrar, investment
adviser, administrator, distributor, transfer agent, dividend disbursing
agent, custodian or in any other capacity upon customary terms.
ARTICLE IV
----------
SERIES; CLASSES; SHARES
-----------------------
Section 1. Establishment of Series or Class. The Trust shall
consist of one or more Series. The Trustees hereby establish the Series
listed in Schedule A attached hereto and made a part hereof. Each
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<PAGE>
additional Series shall be established by the adoption of a resolution of
the Trustees. The Trustees may designate the relative rights and
preferences of the Shares of each Series. The Trustees may divide the
Shares of any Series into Classes. In such case each Class of a Series
shall represent interests in the assets of that Series and have identical
voting, dividend, liquidation and other rights and the same terms and
conditions, except that expenses allocated to a Class may be borne solely
by such Class as determined by the Trustees and a Class may have exclusive
voting rights with respect to matters affecting only that Class. The
Trust shall maintain separate and distinct records for each Series and
hold and account for the assets thereof separately from the other assets
of the Trust or of any other Series. A Series may issue any number of
Shares and need not issue Shares. Each Share of a Series shall represent
an equal beneficial interest in the net assets of such Series. Each
holder of Shares of a Series shall be entitled to receive his pro rata
share of all distributions made with respect to such Series. Upon
redemption of his Shares, such Shareholder shall be paid solely out of the
funds and property of such Series. The Trustees may change the name of
any Series or Class.
Section 2. Shares. The beneficial interest in the Trust shall
be divided into Shares of one or more separate and distinct Series or
Classes established by the Trustees. The number of Shares of each Series
and Class is unlimited and each Share shall have a par value of $0.001 per
Share. All Shares issued hereunder shall be fully paid and nonassessable.
Shareholders shall have no preemptive or other right to subscribe to any
additional Shares or other securities issued by the Trust. The Trustees
shall have full power and authority, in their sole discretion and without
obtaining Shareholder approval: to issue original or additional Shares at
such times and on such terms and conditions as they deem appropriate; to
issue fractional Shares and Shares held in the treasury; to establish and
to change in any manner Shares of any Series or Classes with such
preferences, terms of conversion, voting powers, rights and privileges as
the Trustees may determine (but the Trustees may not change Outstanding
Shares in a manner materially adverse to the Shareholders of such Shares);
to divide or combine the Shares of any Series or Classes into a greater or
lesser number; to classify or reclassify any unissued Shares of any Series
or Classes into one or more Series or Classes of Shares; to abolish any
one or more Series or Classes of Shares; to issue Shares to acquire other
assets (including assets subject to, and in connection with, the
assumption of liabilities) and businesses; and to take such other action
with respect to the Shares as the Trustees may deem desirable. Shares
held in the treasury shall not confer any voting rights on the Trustees
and shall not be entitled to any dividends or other distributions declared
with respect to the Shares.
Section 3. Investment in the Trust. The Trustees shall accept
investments in any Series from such persons and on such terms as they may
from time to time authorize. At the Trustees' discretion, such
investments, subject to applicable law, may be in the form of cash or
securities in which that Series is authorized to invest, valued as
provided in Article V, Section 3. Investments in a Series shall be
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<PAGE>
credited to each Shareholder's account in the form of full Shares at the
Net Asset Value per Share next determined after the investment is received
or accepted as may be determined by the Trustees; provided, however, that
the Trustees may, in their sole discretion, (a) impose a sales charge upon
investments in any Series or Class, (b) issue fractional Shares, or (c)
determine the Net Asset Value per Share of the initial capital
contribution. The Trustees shall have the right to refuse to accept
investments, or any investment, in any Series at any time without any
cause or reason therefor whatsoever.
Section 4. Assets and Liabilities of Series. All consideration
received by the Trust for the issue or sale of Shares of a particular
Series, together with all assets in which such consideration is invested
or reinvested, all income, earnings, profits, and proceeds thereof
(including any proceeds derived from the sale, exchange or liquidation of
such assets, and any funds or payments derived from any reinvestment of
such proceeds in whatever form the same may be), shall be held and
accounted for separately from the other assets of the Trust and every
other Series and are referred to as "assets belonging to" that Series.
The assets belonging to a Series shall belong only to that Series for all
purposes, and to no other Series, subject only to the rights of creditors
of that Series. Any assets, income, earnings, profits, and proceeds
thereof, funds, or payments which are not readily identifiable as
belonging to any particular Series shall be allocated by the Trustees
between and among one or more Series as the Trustees deem fair and
equitable. Each such allocation shall be conclusive and binding upon the
Shareholders of all Series for all purposes, and such assets, earnings,
income, profits or funds, or payments and proceeds thereof shall be
referred to as assets belonging to that Series. The assets belonging to a
Series shall be so recorded upon the books of the Trust, and shall be held
by the Trustees in trust for the benefit of the Shareholders of that
Series. The assets belonging to a Series shall be charged with the
liabilities of that Series and all expenses, costs, charges and reserves
attributable to that Series, except that liabilities and expenses
allocated solely to a particular Class shall be borne by that Class. Any
general liabilities, expenses, costs, charges or reserves of the Trust
which are not readily identifiable as belonging to any particular Series
or Class shall be allocated and charged by the Trustees between or among
any one or more of the Series or Classes in such manner as the Trustees
deem fair and equitable. Each such allocation shall be conclusive and
binding upon the Shareholders of all Series or Classes for all purposes.
Without limiting the foregoing, but subject to the right of the
Trustees to allocate general liabilities, expenses, costs, charges or
reserves as herein provided, the debts, liabilities, obligations and
expenses incurred, contracted for or otherwise existing with respect to a
particular Series shall be enforceable against the assets of such Series
only, and not against the assets of the Trust generally or of any other
Series. Notice of this contractual limitation on liabilities among Series
may, in the Trustees' discretion, be set forth in the certificate of trust
of the Trust (whether originally or by amendment) as filed or to be filed
in the Office of the Secretary of State of the State of Delaware pursuant
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to the Delaware Act, and upon the giving of such notice in the certificate
of trust, the statutory provisions of Section 3804 of the Delaware Act
relating to limitations on liabilities among Series (and the statutory
effect under Section 3804 of setting forth such notice in the certificate
of trust) shall become applicable to the Trust and each Series. Any
person extending credit to, contracting with or having any claim against
any Series may look only to the assets of that Series to satisfy or
enforce any debt, with respect to that Series. No Shareholder or former
Shareholder of any Series shall have a claim on or any right to any assets
allocated or belonging to any other Series.
Section 5. Ownership and Transfer of Shares. The Trust shall
maintain a register containing the names and addresses of the Shareholders
of each Series and Class thereof, the number of Shares of each Series and
Class held by such Shareholders, and a record of all Share transfers. The
register shall be conclusive as to the identity of Shareholders of record
and the number of Shares held by them from time to time. The Trustees may
authorize the issuance of certificates representing Shares and adopt rules
governing their use. The Trustees may make rules governing the transfer
of Shares, whether or not represented by certificates.
Section 6. Status of Shares; Limitation of Shareholder Liability.
(a) Shares shall be deemed to be personal property giving Shareholders
only the rights provided in this Trust Instrument. Every Shareholder, by
virtue of having acquired a Share, shall be held expressly to have
assented to and agreed to be bound by the terms of this Trust Instrument
and to have become a party hereto.
(b) No Shareholder shall be personally liable for the debts,
liabilities, obligations and expenses incurred by, contracted for, or
otherwise existing with respect to, the Trust or any Series. Neither the
Trust nor the Trustees shall have any power to bind any Shareholder
personally or to demand payment from any Shareholder for anything, other
than as agreed by the Shareholder. Shareholders shall have the same
limitation of personal liability as is extended to shareholders of a
private corporation for profit incorporated in the State of Delaware.
Every written obligation of the Trust or any Series shall contain a
statement to the effect that such obligation may only be enforced against
the assets of the Trust or such Series; however, the omission of such
statement shall not operate to bind or create personal liability for any
Shareholder or Trustee.
ARTICLE V
---------
DISTRIBUTIONS AND REDEMPTIONS
-----------------------------
Section 1. Distributions. The Trustees may declare and pay
dividends and other distributions, including dividends on Shares of a
particular Series and other distributions from the assets belonging to
that Series. The amount and payment of dividends or distributions and
their form, whether they are in cash, Shares or other Trust Property,
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shall be determined by the Trustees. Dividends and other distributions
may be paid pursuant to a standing resolution adopted once or more often
as the Trustees determine. All dividends and other distributions on
Shares of a particular Series shall be distributed pro rata to the
Shareholders of that Series in proportion to the number of Shares of that
Series they held on the record date established for such payment, except
that such dividends and distributions shall appropriately reflect expenses
allocated to a particular Class of such Series. The Trustees may adopt
and offer to Shareholders such dividend reinvestment plans, cash dividend
payout plans or similar plans as the Trustees deem appropriate.
Section 2. Redemptions. Each Shareholder of a Series shall have the
right at such times as may be permitted by the Trustees to require the
Series to redeem all or any part of his Shares at a redemption price per
Share equal to the Net Asset Value per Share at such time as the Trustees
shall have prescribed by resolution, less any applicable charges or sales
loads. In the absence of such resolution, the redemption price per Share
shall be the Net Asset Value next determined after receipt by the Series
of a request for redemption in proper form less such charges as are
determined by the Trustees and described in the Trust's Registration
Statement for that Series under the Securities Act of 1933. The Trustees
may specify conditions, prices, and places of redemption, and may specify
binding requirements for the proper form or forms of requests for
redemption. Payment of the redemption price may be wholly or partly in
securities or other assets at the value of such securities or assets used
in such determination of Net Asset Value, or may be in cash. Upon
redemption, Shares may be reissued from time to time. The Trustees may
require Shareholders to redeem Shares for any reason under terms set by
the Trustees, including the failure of a Shareholder to supply a personal
identification number if required to do so, or to have the minimum
investment required, or to pay when due for the purchase of Shares issued
to him. To the extent permitted by law, the Trustees may retain the
proceeds of any redemption of Shares required by them for payment of
amounts due and owing by a Shareholder to the Trust or any Series or
Class. Notwithstanding the foregoing, the Trustees may postpone payment
of the redemption price and may suspend the right of the Shareholders to
require any Series or Class to redeem Shares during any period of time
when and to the extent permissible under the 1940 Act.
Section 3. Determination of Net Asset Value. The Trustees shall
cause the Net Asset Value of Shares of each Series or Class to be
determined from time to time in a manner consistent with applicable laws
and regulations. The Trustees may delegate the power and duty to
determine Net Asset Value per Share to one or more Trustees or officers of
the Trust or to a custodian, depository or other agent appointed for such
purpose. The Net Asset Value of Shares shall be determined separately for
each Series or Class at such times as may be prescribed by the Trustees
or, in the absence of action by the Trustees, as of the close of trading
on the New York Stock Exchange on each day for all or part of which such
Exchange is open for unrestricted trading.
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Section 4. Suspension of Right of Redemption. If, as referred
to in Section 2 of this Article, the Trustees postpone payment of the
redemption price and suspend the right of Shareholders to redeem their
Shares, such suspension shall take effect at the time the Trustees shall
specify, but not later than the close of business on the business day next
following the declaration of suspension. Thereafter Shareholders shall
have no right of redemption or payment until the Trustees declare the end
of the suspension. If the right of redemption is suspended, a Shareholder
may either withdraw his request for redemption or receive payment based on
the Net Asset Value per Share next determined after the suspension
terminates.
ARTICLE VI
----------
SHAREHOLDERS' VOTING POWERS AND MEETINGS
----------------------------------------
Section 1. Voting Powers. The Shareholders shall have power to
vote only with respect to (a) the election of Trustees as provided in
Section 2 of this Article; (b) the removal of Trustees as provided in
Article II, Section 3(d); (c) any investment advisory or management
contract as provided in Article VII, Section 1; (d) any termination of the
Trust as provided in Article X, Section 4; (e) the amendment of this Trust
Instrument to the extent and as provided in Article X, Section 8; and (f)
such additional matters relating to the Trust as may be required or
authorized by law, this Trust Instrument, or the By-laws or any
registration of the Trust with the Commission or any State, or as the
Trustees may consider desirable.
On any matter submitted to a vote of the Shareholders, all Shares
shall be voted by individual Series or Class, except (a) when required by
the 1940 Act, Shares shall be voted in the aggregate and not by individual
Series or Class, and (b) when the Trustees have determined that the matter
affects the interests of more than one Series or Class, then the
Shareholders of all such Series or Classes shall be entitled to vote
thereon. Each whole Share shall be entitled to one vote as to any matter
on which it is entitled to vote, and each fractional Share shall be
entitled to a proportionate fractional vote. There shall be no cumulative
voting in the election of Trustees. Shares may be voted in person or by
proxy or in any manner provided for in the By-laws. The By-laws may
provide that proxies may be given by any electronic or telecommunications
device or in any other manner, but if a proposal by anyone other than the
officers or Trustees is submitted to a vote of the Shareholders of any
Series or Class, or if there is a proxy contest or proxy solicitation or
proposal in opposition to any proposal by the officers or Trustees, Shares
may be voted only in person or by written proxy. Until Shares of a Series
are issued, as to that Series the Trustees may exercise all rights of
Shareholders and may take any action required or permitted to be taken by
Shareholders by law, this Trust Instrument or the By-laws.
Section 2. Meetings of Shareholders. The first Shareholders'
meeting shall be held to elect Trustees at such time and place as the
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Trustees designate. Special meetings of the Shareholders of any Series or
Class may be called by the Trustees and shall be called by the Trustees
upon the written request of Shareholders owning at least ten percent of
the Outstanding Shares of such Series or Class entitled to vote.
Shareholders shall be entitled to at least fifteen days' notice of any
meeting, given as determined by the Trustees.
Section 3. Quorum; Required Vote. One-third of the Outstanding
Shares of each Series or Class, or one-third of the Outstanding Shares of
the Trust, entitled to vote in person or by proxy shall be a quorum for
the transaction of business at a Shareholders' meeting with respect to
such Series or Class, or with respect to the entire Trust, respectively.
Any lesser number shall be sufficient for adjournments. Any adjourned
session of a Shareholders' meeting may be held within a reasonable time
without further notice. Except when a larger vote is required by law,
this Trust Instrument or the By-laws, a majority of the Outstanding Shares
voted in person or by proxy shall decide any matters to be voted upon with
respect to the entire Trust (or, if required by law, a Majority
Shareholder Vote of the entire Trust) and a plurality of such Outstanding
Shares shall elect a Trustee; provided, that if this Trust Instrument or
applicable law permits or requires that Shares be voted on any matter by
individual Series or Classes, then a majority of the Outstanding Shares of
that Series or Class (or, if required by law, a Majority Shareholder Vote
of that Series or Class) voted in person or by proxy voted on the matter
shall decide that matter insofar as that Series or Class is concerned.
Shareholders may act as to the Trust or any Series or Class by the written
consent of a majority (or such greater amount as may be required by
applicable law, this Trust Instrument, or the By-laws) of the Outstanding
Shares of the Trust or of such Series or Class, as the case may be.
ARTICLE VII
------------
CONTRACTS WITH SERVICE PROVIDERS
--------------------------------
Section 1. Investment Adviser. Subject to a Majority Shareholder
Vote, the Trustees may enter into one or more investment advisory
contracts on behalf of the Trust or any Series, providing for investment
advisory services, statistical and research facilities and services, and
other facilities and services to be furnished to the Trust or Series on
terms and conditions acceptable to the Trustees. Any such contract may
provide for the investment adviser to effect purchases, sales or exchanges
of portfolio securities or other Trust Property on behalf of the Trustees
or may authorize any officer or agent of the Trust to effect such
purchases, sales or exchanges pursuant to recommendations of the
investment adviser. The Trustees may authorize the investment adviser to
employ one or more sub-advisers.
Section 2. Principal Underwriter. The Trustees may enter into
contracts on behalf of the Trust or any Series or Class, providing for the
distribution and sale of Shares by the other party, either directly or as
sales agent, on terms and conditions acceptable to the Trustees. The
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Trustees may adopt a plan or plans of distribution with respect to Shares
of any Series or Class and enter into any related agreements, whereby the
Series or Class finances directly or indirectly any activity that is
primarily intended to result in sales of its Shares, subject to the
requirements of Section 12 of the 1940 Act, Rule 12b-1 thereunder, and
other applicable rules and regulations.
Section 3. Transfer Agency, Shareholder Services, and Administration
Agreements. The Trustees, on behalf of the Trust or any Series or Class,
may enter into transfer agency agreements, Shareholder service agreements,
and administration and management agreements with any party or parties on
terms and conditions acceptable to the Trustees.
Section 4. Custodian. The Trustees shall at all times place and
maintain the securities and similar investments of the Trust and of each
Series in custody meeting the requirements of Section 17(f) of the 1940
Act and the rules thereunder. The Trustees, on behalf of the Trust or any
Series, may enter into an agreement with a custodian on terms and
conditions acceptable to the Trustees, providing for the custodian, among
other things, to (a) hold the securities owned by the Trust or any Series
and deliver the same upon written order or oral order confirmed in
writing, (b) receive and receipt for any moneys due to the Trust or any
Series and deposit the same in its own banking department or elsewhere,
(c) disburse such funds upon orders or vouchers, and (d) employ one or
more sub-custodians.
Section 5. Parties to Contracts with Service Providers. The
Trustees may enter into any contract with any entity, although one more of
the Trustees or officers of the Trust may be an officer, director,
trustee, partner, shareholder, or member of such entity, and no such
contract shall be invalidated or rendered void or voidable because of such
relationship. No person having such a relationship shall be disqualified
from voting on or executing a contract in his capacity as Trustee and/or
Shareholder, or be liable merely by reason of such relationship for any
loss or expense to the Trust with respect to such a contract or
accountable for any profit realized directly or indirectly therefrom;
provided, that the contract was reasonable and fair and not inconsistent
with this Trust Instrument or the By-laws.
Any contract referred to in Sections 1 and 2 of this Article
shall be consistent with and subject to the applicable requirements of
Section 15 of the 1940 Act and the rules and orders thereunder with
respect to its continuance in effect, its termination, and the method of
authorization and approval of such contract or renewal. No amendment to a
contract referred to in Section 1 of this Article shall be effective
unless assented to as required by Section 15 of the 1940 Act, and the
rules and orders thereunder.
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<PAGE>
ARTICLE VIII
------------
EXPENSES OF THE TRUST AND SERIES
Subject to Article IV, Section 4, the Trust or a particular
Series shall pay, or shall reimburse the Trustees from the Trust estate or
the assets belonging to the particular Series, for their expenses and
disbursements, including, but not limited to, interest charges, taxes,
brokerage fees and commissions; expenses of issue, repurchase and
redemption of Shares; certain insurance premiums; applicable fees,
interest charges and expenses of third parties, including the Trust's
investment advisers, managers, administrators, distributors, custodians,
transfer agents and fund accountants; fees of pricing, interest, dividend,
credit and other reporting services; costs of membership in trade
associations; telecommunications expenses; funds transmission expenses;
auditing, legal and compliance expenses; costs of forming the Trust and
its Series and maintaining its existence; costs of preparing and printing
the prospectuses of the Trust and each Series, statements of additional
information and Shareholder reports and delivering them to Shareholders;
expenses of meetings of Shareholders and proxy solicitations therefor;
costs of maintaining books and accounts; costs of reproduction, stationery
and supplies; fees and expenses of the Trustees; compensation of the
Trust's officers and employees and costs of other personnel performing
services for the Trust or any Series; costs of Trustee meetings;
Commission registration fees and related expenses; state or foreign
securities laws registration fees and related expenses; and for such
non-recurring items as may arise, including litigation to which the Trust
or a Series (or a Trustee or officer of the Trust acting as such) is a
party, and for all losses and liabilities by them incurred in
administering the Trust. The Trustees shall have a lien on the assets
belonging to the appropriate Series, or in the case of an expense
allocable to more than one Series, on the assets of each such Series,
prior to any rights or interests of the Shareholders thereto, for the
reimbursement to them of such expenses, disbursements, losses and
liabilities.
ARTICLE IX
----------
LIMITATION OF LIABILITY AND INDEMNIFICATION
------------------------------------------
Section 1. Limitation of Liability. All persons contracting with or
having any claim against the Trust or a particular Series shall look only
to the assets of the Trust or such Series, respectively, for payment under
such contract or claim; and neither the Trustees nor any of the Trust's
officers, employees or agents, whether past, present or future, shall be
personally liable therefor. Every written instrument or obligation on
behalf of the Trust or any Series shall contain a statement to the
foregoing effect, but the absence of such statement shall not operate to
make any Trustee or officer of the Trust liable thereunder. Provided they
have exercised reasonable care and have acted under the reasonable belief
that their actions are in the best interest of the Trust, the Trustees and
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<PAGE>
officers of the Trust shall not be responsible or liable for any act or
omission or for neglect or wrongdoing of them or any officer, agent,
employee, investment adviser or independent contractor of the Trust, but
nothing contained in this Trust Instrument or in the Delaware Act shall
protect any Trustee or officer of the Trust against liability to the Trust
or to Shareholders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office.
Section 2. Indemnification. (a) Subject to the exceptions and
limitations contained in subsection (b) below:
(i) every person who is, or has been, a Trustee or an
officer, employee or agent of the Trust ("Covered
Person") shall be indemnified by the Trust or the
appropriate Series to the fullest extent permitted by law
against liability and against all expenses reasonably
incurred or paid by him in connection with any claim,
action, suit or proceeding in which he becomes involved
as a party or otherwise by virtue of his being or having
been a Covered Person and against amounts paid or
incurred by him in the settlement thereof; provided,
however, that the Trust shall not be obligated to
indemnify any agent acting pursuant to a written contract
with the Trust, except to the extent required by such
contract;
(ii) as used herein, the words "claim," "action," "suit,"
or "proceeding" shall apply to all claims, actions, suits
or proceedings (civil, criminal or other, including
appeals), actual or threatened, and the words "liability"
and "expenses" shall include, without limitation,
attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered
Person:
(i) who shall have been adjudicated by a court or body
before which the proceeding was brought (A) to be liable
to the Trust or its Shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his
office, or (B) not to have acted in good faith in the
reasonable belief that his action was in the best
interest of the Trust; or
(ii) in the event of a settlement, unless there has been
a determination that such Covered Person did not engage
in willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct
of his office (A) by the court or other body approving
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<PAGE>
the settlement; (B) by at least a majority of those
Trustees who are neither Interested Persons of the Trust
nor are parties to the matter based upon a review of
readily available facts (as opposed to a full trial-type
inquiry); or (C) by written opinion of independent legal
counsel based upon a review of readily available facts
(as opposed to a full trial-type inquiry).
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not
be exclusive of or affect any other rights to which any Covered Person may
now or hereafter be entitled, and shall inure to the benefit of the heirs,
executors and administrators of a Covered Person.
(d) To the maximum extent permitted by applicable law, expenses
in connection with the preparation and presentation of a defense to any
claim, action, suit or proceeding of the character described in subsection
(a) of this Section shall be paid by the Trust or applicable Series from
time to time prior to final disposition thereof upon receipt of an
undertaking by or on behalf of such Covered Person that such amount will
be paid over by him to the Trust or applicable Series if it is ultimately
determined that he is not entitled to indemnification under this Section;
provided, however, that either (i) such Covered Person shall have provided
appropriate security for such undertaking, (ii) the Trust is insured
against losses arising out of any such advance payments or (iii) either a
majority of the Trustees who are neither Interested Persons of the Trust
nor parties to the matter, or independent legal counsel in a written
opinion, shall have determined, based upon a review of readily available
facts (as opposed to a full trial-type inquiry) that there is reason to
believe that such Covered Person will not be disqualified from
indemnification under this Section; provided, however, that the Trust
shall not be obligated to pay the expenses of any agent acting pursuant to
a written contract with the Trust, except to the extent required by such
contract;
(e) Any repeal or modification of this Article IX by the
Shareholders of the Trust, or adoption or modification of any other
provision of the Trust Instrument or By-laws inconsistent with this
Article, shall be prospective only, to the extent that such repeal or
modification would, if applied retrospectively, adversely affect any
limitation on the liability of any Covered Person or adversely affect any
indemnification available to any Covered Person with respect to any act or
omission which occurred prior to such repeal, modification or adoption.
Section 3. Indemnification of Shareholders. If any Shareholder or
former Shareholder of any Series shall be held personally liable solely by
reason of his being or having been a Shareholder and not because of his
acts or omissions or for some other reason, the Shareholder or former
Shareholder (or his heirs, executors, administrators or other legal
representatives or in the case of any entity, its general successor) shall
be entitled out of the assets belonging to the applicable Series to be
held harmless from and indemnified against all loss and expense arising
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<PAGE>
from such liability. The Trust, on behalf of the affected Series, shall,
upon request by such Shareholder, assume the defense of any claim made
against such Shareholder for any act or obligation of the Series and
satisfy any judgment thereon from the assets of the Series.
ARTICLE X
---------
MISCELLANEOUS
-------------
Section 1. Trust Not a Partnership. This Trust Instrument creates a
trust and not a partnership. No Trustee shall have any power to bind
personally either the Trust's officers or any Shareholder to any
obligation to which such person has not consented.
Section 2. Trustee Action; Expert Advice; No Bond or Surety. The
exercise by the Trustees of their powers and discretion hereunder in good
faith and with reasonable care under the circumstances then prevailing
shall be binding upon everyone interested. Subject to the provisions of
Article IX, the Trustees shall not be liable for errors of judgment or
mistakes of fact or law. The Trustees may take advice of counsel or other
experts with respect to the meaning and operation of this Trust
Instrument, and subject to the provisions of Article IX, shall not be
liable for any act or omission in accordance with such advice or for
failing to follow such advice. The Trustees shall not be required to give
any bond as such, nor any surety if a bond is obtained.
Section 3. Record Dates. The Trustees may fix in advance a date up
to ninety (90) days before the date of any Shareholders' meeting, or the
date for the payment of any dividends or other distributions, or the date
for the allotment of any other rights, or the date when any change or
conversion or exchange of Shares shall go into effect as a record date for
the determination of the Shareholders entitled to notice of, and to vote
at, any such meeting, or entitled to receive payment of such dividend or
other distribution, or to receive any such allotment of rights, or to
exercise such rights in respect of any such change, conversion or exchange
of Shares.
Section 4. Termination of the Trust. (a) This Trust shall have
perpetual existence. Subject to a Majority Shareholder Vote of the Trust
or of each Series to be affected, the Trustees may
(i) sell and convey all or substantially all of the
assets of the Trust or any affected Series to another
Series or to another entity which is an open-end
investment company as defined in the 1940 Act, or is a
series thereof, for adequate consideration, which may
include the assumption of all outstanding obligations,
taxes and other liabilities, accrued or contingent, of
the Trust or any affected Series, and which may include
shares of or interests in such Series, entity, or series
thereof; or
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<PAGE>
(ii) at any time sell and convert into money all or
substantially all of the assets of the Trust or any
affected Series.
Upon making reasonable provision for the payment of all known liabilities
of the Trust or any affected Series in either (i) or (ii), by such
assumption or otherwise, the Trustees shall distribute the remaining
proceeds or assets (as the case may be) ratably among the Shareholders of
the Trust or any affected Series; however, the payment to any particular
Series or Class of such Series may be reduced by any fees, expenses or
charges allocated to that Series or Class.
(b) The Trustees may take any of the actions specified in
subsection (a) (i) and (ii) above without obtaining a Majority Shareholder
Vote of the Trust or any Series if a majority of the Trustees determines
that the continuation of the Trust or Series is not in the best interests
of the Trust, such Series, or their respective Shareholders as a result of
factors or events adversely affecting the ability of the Trust or such
Series to conduct its business and operations in an economically viable
manner. Such factors and events may include the inability of the Trust or
a Series to maintain its assets at an appropriate size, changes in laws or
regulations governing the Trust or the Series or affecting assets of the
type in which the Trust or Series invests, or economic developments or
trends having a significant adverse impact on the business or operations
of the Trust or such Series.
(c) Upon completion of the distribution of the remaining proceeds
or assets pursuant to subsection (a), the Trust or affected Series shall
terminate and the Trustees and the Trust shall be discharged of any and
all further liabilities and duties hereunder with respect thereto and the
right, title and interest of all parties therein shall be canceled and
discharged. Upon termination of the Trust, following completion of
winding up of its business, the Trustees shall cause a certificate of
cancellation of the Trust's certificate of trust to be filed in accordance
with the Delaware Act, which certificate of cancellation may be signed by
any one Trustee.
Section 5. Reorganization. Notwithstanding anything else
herein, to change the Trust's form of organization the Trustees may,
without Shareholder approval, (a) cause the Trust to merge or consolidate
with or into one or more entities, if the surviving or resulting entity is
the Trust or another open-end management investment company under the 1940
Act, or a series thereof, that will succeed to or assume the Trust's
registration under the 1940 Act, or (b) cause the Trust to incorporate
under the laws of Delaware. Any agreement of merger or consolidation or
certificate of merger may be signed by a majority of Trustees and
facsimile signatures conveyed by electronic or telecommunication means
shall be valid.
Pursuant to and in accordance with the provisions of Section
3815(f) of the Delaware Act, an agreement of merger or consolidation
approved by the Trustees in accordance with this Section 5 may effect any
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<PAGE>
amendment to the Trust Instrument or effect the adoption of a new trust
instrument of the Trust if it is the surviving or resulting trust in the
merger or consolidation.
Section 6. Trust Instrument. The original or a copy of this
Trust Instrument and of each amendment hereto or Trust Instrument
supplemental shall be kept at the office of the Trust where it may be
inspected by any Shareholder. Anyone dealing with the Trust may rely on a
certificate by a Trustee or an officer of the Trust as to the authenticity
of the Trust Instrument or any such amendments or supplements and as to
any matters in connection with the Trust. The masculine gender herein
shall include the feminine and neuter genders. Headings herein are for
convenience only and shall not affect the construction of this Trust
Instrument. This Trust Instrument may be executed in any number of
counterparts, each of which shall be deemed an original.
Section 7. Applicable Law. This Trust Instrument and the Trust
created hereunder are governed by and construed and administered according
to the Delaware Act and the applicable laws of the State of Delaware;
provided, however, that there shall not be applicable to the Trust, the
Trustees or this Trust Instrument (a) the provisions of Section 3540 of
Title 12 of the Delaware Code, or (b) any provisions of the laws
(statutory or common) of the State of Delaware (other than the Delaware
Act) pertaining to trusts which relate to or regulate (i) the filing with
any court or governmental body or agency of trustee accounts or schedules
of trustee fees and charges, (ii) affirmative requirements to post bonds
for trustees, officers, agents or employees of a trust, (iii) the
necessity for obtaining court or other governmental approval concerning
the acquisition, holding or disposition of real or personal property,
(iv) fees or other sums payable to trustees, officers, agents or employees
of a trust, (v) the allocation of receipts and expenditures to income or
principal, (vi) restrictions or limitations on the permissible nature,
amount or concentration of trust investments or requirements relating to
the titling, storage or other manner of holding of trust assets, or (vii)
the establishment of fiduciary or other standards of responsibilities or
limitations on the acts or powers of trustees, which are inconsistent with
the limitations or liabilities or authorities and powers of the Trustees
set forth or referenced in this Trust Instrument. The Trust shall be of
the type commonly called a Delaware business trust, and, without limiting
the provisions hereof, the Trust may exercise all powers which are
ordinarily exercised by such a trust under Delaware law. The Trust
specifically reserves the right to exercise any of the powers or
privileges afforded to trusts or actions that may be engaged in by trusts
under the Delaware Act, and the absence of a specific reference herein to
any such power, privilege or action shall not imply that the Trust may not
exercise such power or privilege or take such actions.
Section 8. Amendments. All rights granted to Shareholders
hereunder are granted subject to a right to amend this Trust Instrument,
except as otherwise provided herein. The Trustees may, without any
Shareholder vote, amend or otherwise supplement this Trust Instrument by
making an amendment, a Trust Instrument supplemental hereto or an amended
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<PAGE>
and restated trust instrument; provided, that Shareholders shall have the
right to vote on any amendment (a) which would affect the voting rights of
Shareholders granted in Article VI, Section 1, (b) to this Section 8, (c)
required to be approved by Shareholders by law or by the Trust's
registration statement(s) filed with the Commission, and (d) submitted to
them by the Trustees in their discretion. Any amendment submitted to
Shareholders which the Trustees determine would affect the Shareholders of
any Series shall be authorized by vote of the Shareholders of such Series
and no vote shall be required of Shareholders of a Series not affected.
Notwithstanding anything else herein, any amendment to Article IX which
would have the effect of reducing the indemnification and other rights
provided thereby to Trustees, officers, employees, and agents of the Trust
or to Shareholders or former Shareholders, and any repeal or amendment of
this sentence, shall each require the affirmative vote of the holders of
two-thirds of the Outstanding Shares of the Trust entitled to vote
thereon.
Section 9. Fiscal Year. The fiscal year of the Trust shall end
on a specified date as set forth in the By-laws. The Trustees may change
the fiscal year of the Trust without Shareholder approval.
Section 10. Severability. The provisions of this Trust
Instrument are severable. If the Trustees determine, with the advice of
counsel, that any provision hereof conflicts with the 1940 Act, the
regulated investment company provisions of the Internal Revenue Code or
with other applicable laws and regulations, the conflicting provision
shall be deemed never to have constituted a part of this Trust Instrument;
provided, however, that such determination shall not affect any of the
remaining provisions of this Trust Instrument or render invalid or
improper any action taken or omitted prior to such determination. If any
provision hereof shall be held invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall attach only to
such provision only in such jurisdiction and shall not affect any other
provision of this Trust Instrument.
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<PAGE>
IN WITNESS WHEREOF, the undersigned, being the initial Trustees,
have executed this Trust Instrument as of the date first above written.
/s/ Claudia A. Brandon
-----------------------------
Claudia A. Brandon, as
Trustee and not individually
/s/ Ellen Metzger
------------------------------
Ellen Metzger, as Trustee
and not individually
/s/ Michael J.Weiner
-------------------------------
Michael J. Weiner, as
Trustee and not individually
Address: 605 Third Avenue
New York, New York 10158
STATE OF NEW YORK ss
CITY OF NEW YORK
Before me this 14th day of October 1993, personally appeared the
above-named Claudia A. Brandon, Ellen Metzger, and Michael J. Weiner,
known to me to be the persons who executed the foregoing instrument and
who acknowledged that they executed the same.
/s/ Loraine Olavarria
________________________________
Notary Public
My Commission expires 4-15-95.
Loraine Olavarria
Notary Public, State of New York
No. 03-4979299
Qualified in Bronx County
Commission Expires 4-15-95
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<PAGE>
<PAGE>
SCHEDULE A
INITIAL SERIES
Neuberger & Berman Socially Responsive Trust
ADDITIONAL SERIES
Neuberger & Berman Focus Assets
Neuberger & Berman Guardian Assets
Neuberger & Berman Manhattan Assets
Neuberger & Berman Partners Trust
<PAGE>
<PAGE>
NEUBERGER & BERMAN EQUITY ASSETS
BY-LAWS
October 18, 1993
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I PRINCIPAL OFFICE AND SEAL . . . . . . . . . . . . . . . . 1
Section 1. Principal Office . . . . . . . . . . . . . . . . 1
Section 2. Seal . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II MEETINGS OF TRUSTEES . . . . . . . . . . . . . . . . . . 1
Section 1. Action by Trustees . . . . . . . . . . . . . . . 1
Section 2. Compensation of Trustees . . . . . . . . . . . . 1
ARTICLE III COMMITTEES . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Establishment . . . . . . . . . . . . . . . . . 1
Section 2. Proceedings; Quorum; Action . . . . . . . . . . 2
Section 3. Executive Committee . . . . . . . . . . . . . . 2
Section 4. Nominating Committee . . . . . . . . . . . . . . 2
Section 5. Audit Committee . . . . . . . . . . . . . . . . 2
Section 6. Compensation of Committee Members . . . . . . . 2
ARTICLE IV OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1. General . . . . . . . . . . . . . . . . . . . . 2
Section 2. Election, Tenure and Qualifications
of Officers . . . . . . . . . . . . . . . . . . 2
Section 3. Vacancies and Newly Created Offices . . . . . . 3
Section 4. Removal and Resignation . . . . . . . . . . . . 3
Section 5. Chairman . . . . . . . . . . . . . . . . . . . . 3
Section 6. President . . . . . . . . . . . . . . . . . . . 3
Section 7. Vice President(s) . . . . . . . . . . . . . . . 3
Section 8. Treasurer and Assistant Treasurer(s) . . . . . . 4
Section 9. Secretary and Assistant Secretaries . . . . . . 4
Section 10. Compensation of Officers . . . . . . . . . . . . 4
Section 11. Surety Bond . . . . . . . . . . . . . . . . . . 4
ARTICLE V MEETINGS OF SHAREHOLDERS . . . . . . . . . . . . . . . . . 5
Section 1. No Annual Meetings . . . . . . . . . . . . . . . 5
Section 2. Special Meetings . . . . . . . . . . . . . . . . 5
Section 3. Notice of Meetings; Waiver . . . . . . . . . . . 5
Section 4. Adjourned Meetings . . . . . . . . . . . . . . . 6
Section 5. Validity of Proxies . . . . . . . . . . . . . . 6
Section 6. Record Date . . . . . . . . . . . . . . . . . . 7
Section 7. Action Without a Meeting . . . . . . . . . . . . 7
ARTICLE VI SHARES OF BENEFICIAL INTEREST . . . . . . . . . . . . . . 7
Section 1. No Share Certificates . . . . . . . . . . . . . 7
Section 2. Transfer of Shares . . . . . . . . . . . . . . . 7
ARTICLE VII FISCAL YEAR AND ACCOUNTANT . . . . . . . . . . . . . . . 7
Section 1. Fiscal Year . . . . . . . . . . . . . . . . . . 7
Section 2. Accountant . . . . . . . . . . . . . . . . . . . 7
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<PAGE>
ARTICLE VIII AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . 8
Section 1. General . . . . . . . . . . . . . . . . . . . . 8
Section 2. By Shareholders Only . . . . . . . . . . . . . . 8
ARTICLE IX NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE X CONFLICT OF INTEREST PROCEDURES . . . . . . . . . . . . . 9
Section 1. Monitoring and Reporting Conflicts . . . . . . . 9
Section 2. Annual Report . . . . . . . . . . . . . . . . . 9
Section 3. Resolution of Conflicts . . . . . . . . . . . . 9
Section 4. Annual Review . . . . . . . . . . . . . . . . . 9
- ii -
<PAGE>
BY-LAWS
OF
NEUBERGER & BERMAN EQUITY ASSETS
These By-laws of Neuberger & Berman Equity Assets (the "Trust"),
a Delaware business trust, are subject to the Trust Instrument of the
Trust dated as of October 18, 1993, as from time to time amended,
supplemented or restated (the "Trust Instrument"). Capitalized terms used
herein have the same meanings as in the Trust Instrument.
ARTICLE I
---------
PRINCIPAL OFFICE AND SEAL
--------------------------
Section 1. Principal Office. The principal office of the Trust shall be
located in New York, New York, or such other location as the Trustees
determine. The Trust may establish and maintain other offices and places
of business, as the Trustees determine.
Section 2. Seal. The Trustees may adopt a seal for the Trust in such
form and with such inscription as the Trustees determine. Any Trustee or
officer of the Trust shall have authority to affix the seal to any
document.
ARTICLE II
----------
MEETINGS OF TRUSTEES
--------------------
Section 1. Action by Trustees. Trustees may take actions at meetings
held at such places and times as the Trustees may determine, or without
meetings, all as provided in Article II, Section 7, of the Trust
Instrument.
Section 2. Compensation of Trustees. Each Trustee who is neither an
employee of an investment adviser of the Trust or any Series nor an
employee of an entity affiliated with the investment adviser may receive
such compensation from the Trust for services and reimbursement for
expenses as the Trustees may determine.
ARTICLE III
-----------
COMMITTEES
----------
Section 1. Establishment. The Trustees may designate one or more
committees of the Trustees, which shall include an Executive Committee, a
Nominating Committee, and an Audit Committee (collectively, the
"Established Committees"). The Trustees shall determine the number of
members of each committee and its powers and shall appoint its members and
its chair. Each committee member and each committee chair shall serve as
<PAGE>
such at the pleasure of the Trustees. The Trustees may abolish any
committee, other than the Established Committees, at any time. Each
committee shall maintain records of its meetings and report its actions to
the Trustees. The Trustees may rescind any action of any committee, but
such rescission shall not have retroactive effect. The Trustees may
delegate to any committee any of its powers, subject to the limitations of
applicable law.
Section 2. Proceedings; Quorum; Action. Each committee may adopt such
rules governing its proceedings, quorum and manner of acting as it shall
deem proper and desirable. In the absence of such rules, a majority of
any committee shall constitute a quorum, and a committee shall act by the
vote of a majority of a quorum.
Section 3. Executive Committee. The Executive Committee shall have all
the powers of the Trustees when the Trustees are not in session. The
Chairman shall be a member and the chair of the Executive Committee. A
majority of the members of the Executive Committee shall be trustees who
are not "interested persons" of the Trust, as defined in the 1940 Act
("Disinterested Trustees").
Section 4. Nominating Committee. The Nominating Committee shall nominate
individuals to serve as Trustees (including Disinterested Trustees), as
members of committees, and as officers of the Trust. The members of the
Committee shall be Disinterested Trustees.
Section 5. Audit Committee. The Audit Committee shall review and
evaluate the audit function, including recommending the selection of
independent certified public accountants for each Series. The members of
the Committee shall be Disinterested Trustees.
Section 6. Compensation of Committee Members. Each committee member who
is a Disinterested Trustee may receive such compensation from the Trust
for services and reimbursement for expenses as the Trustees may determine.
ARTICLE IV
----------
OFFICERS
--------
Section 1. General. The officers of the Trust shall be a Chairman, a
President, one or more Vice Presidents, a Treasurer, and a Secretary, and
may include one or more Assistant Treasurers or Assistant Secretaries and
such other officers ("Other Officers") as the Trustees may determine.
Section 2. Election, Tenure and Qualifications of Officers. The Trustees
shall elect the officers of the Trust. Each officer elected by the
Trustees shall hold office until his or her successor shall have been
elected and qualified or until his or her earlier death, inability to
serve, or resignation. Any person may hold one or more offices, except
that the Chairman and the Secretary may not be the same individual. A
person who holds more than one office in the Trust may not act on behalf
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<PAGE>
of the Trust in more than one capacity to execute, acknowledge, or verify
an instrument required by law to be executed, acknowledged, or verified by
more than one officer. No officer other than the Chairman need be a
Trustee or Shareholder.
Section 3. Vacancies and Newly Created Offices. Whenever a vacancy shall
occur in any office or if any new office is created, the Trustees may fill
such vacancy or new office.
Section 4. Removal and Resignation. Officers serve at the pleasure of
the Trustees and may be removed at any time with or without cause. The
Trustees may delegate this power to the Chairman or President with respect
to any Other Officer. Such removal shall be without prejudice to the
contract rights, if any, of the person so removed. Any officer may resign
from office at any time by delivering a written resignation to the
Trustees, Chairman, or the President. Unless otherwise specified therein,
such resignation shall take effect upon delivery.
Section 5. Chairman. The Chairman shall be the chief executive officer
of the Trust. Subject to the direction of the Trustees, the Chairman
shall have general charge, supervision and control over the Trust's
business affairs and shall be responsible for the management thereof and
the execution of policies established by the Trustees. The Chairman shall
preside at any Shareholders' meetings and at all meetings of the Trustees
and shall in general exercise the powers and perform the duties of the
Chairman of the Trustees. Except as the Trustees may otherwise order, the
Chairman shall have the power to grant, issue, execute or sign powers of
attorney, proxies, agreements or other documents. The Chairman also shall
have the power to employ attorneys, accountants and other advisers and
agents for the Trust. The Chairman shall exercise such other powers and
perform such other duties as the Trustees may assign to the Chairman.
Section 6. President. The President shall have such powers and perform
such duties as the Trustees or the Chairman may determine. At the request
or in the absence or disability of the Chairman, the President shall
perform all the duties of the Chairman and, when so acting, shall have all
the powers of the Chairman.
Section 7. Vice President(s). The Vice President(s) shall have such
powers and perform such duties as the Trustees or the Chairman may
determine. At the request or in the absence or disability of the
President, the Vice President (or, if there are two or more Vice
Presidents, then the senior of the Vice Presidents present and able to
act) shall perform all the duties of the President and, when so acting,
shall have all the powers of the President. The Trustees may designate a
Vice President as the principal financial officer of the Trust or to serve
one or more other functions. If a Vice President is designated as
principal financial officer of the Trust, he or she shall have general
charge of the finances and books of the Trust and shall report to the
Trustees annually regarding the financial condition of each Series as soon
as possible after the close of such Series's fiscal year. The Trustees
also may designate one of the Vice Presidents as Executive Vice President.
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<PAGE>
Section 8. Treasurer and Assistant Treasurer(s). The Treasurer may be
designated by the Trustees as the principal financial officer or as the
principal accounting officer of the Trust. If designated as principal
financial officer, the Treasurer shall have general charge of the finances
and books of the Trust, and shall report to the Trustees annually
regarding the financial condition of each Series as soon as possible after
the close of such Series' fiscal year. The Treasurer shall be responsible
for the delivery of all funds and securities of the Trust to such company
as the Trustees shall retain as Custodian. The Treasurer shall furnish
such reports concerning the financial condition of the Trust as the
Trustees may request. The Treasurer shall perform all acts incidental to
the office of Treasurer, subject to the Trustees' supervision, and shall
perform such additional duties as the Trustees may designate.
Any Assistant Treasurer may perform such duties of the Treasurer
as the Trustees or the Treasurer may assign, and, in the absence of the
Treasurer, may perform all the duties of the Treasurer.
Section 9. Secretary and Assistant Secretaries. The Secretary shall
record all votes and proceedings of the meetings of Trustees and
Shareholders in books to be kept for that purpose. The Secretary shall be
responsible for giving and serving notices of the Trust. The Secretary
shall have custody of any seal of the Trust and shall be responsible for
the records of the Trust, including the Share register and such other
books and documents as may be required by the Trustees or by law. The
Secretary shall perform all acts incidental to the office of Secretary,
subject to the supervision of the Trustees, and shall perform such
additional duties as the Trustees may designate.
Any Assistant Secretary may perform such duties of the Secretary
as the Trustees or the Secretary may assign, and, in the absence of the
Secretary, may perform all the duties of the Secretary.
Section 10. Compensation of Officers. Each officer may receive such
compensation from the Trust for services and reimbursement for expenses as
the Trustees may determine.
Section 11. Surety Bond. The Trustees may require any officer or agent
of the Trust to execute a bond (including, without limitation, any bond
required by the 1940 Act and the rules and regulations of the Securities
and Exchange Commission ("Commission")) to the Trust in such sum and with
such surety or sureties as the Trustees may determine, conditioned upon
the faithful performance of his or her duties to the Trust, including
responsibility for negligence and for the accounting of any of the Trust's
property, funds or securities that may come into his or her hands.
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<PAGE>
ARTICLE V
---------
MEETINGS OF SHAREHOLDERS
------------------------
Section 1. No Annual Meetings. There shall be no annual Shareholders'
meetings, unless required by law.
Section 2. Special Meetings. The Secretary shall call a special meeting
of Shareholders of the Trust or of any Series or Class whenever ordered by
the Trustees.
The Secretary also shall call a special meeting of Shareholders
of the Trust or of any Series or Class upon the written request of
Shareholders owning at least ten percent of the Outstanding Shares
entitled to vote at such meeting; provided, that (1) such request shall
state the purposes of such meeting and the matters proposed to be acted
on, and (2) the Shareholders requesting such meeting shall have paid to
the Trust the reasonably estimated cost of preparing and mailing the
notice thereof, which the Secretary shall determine and specify to such
Shareholders. If the Secretary fails for more than thirty days to call a
special meeting when required to do so, the Trustees or the Shareholders
requesting such a meeting may, in the name of the Secretary, call the
meeting by giving the required notice. The Secretary shall not call a
special meeting upon the request of Shareholders of the Trust or of any
Series or Class to consider any matter that is substantially the same as a
matter voted upon at any special meeting of Shareholders of the Trust or
of such Series or Class held during the preceding twelve months, unless
requested by the holders of a majority of the Outstanding Shares entitled
to be voted at such meeting.
A special meeting of Shareholders of the Trust or of any Series
or Class shall be held at such time and place as is determined by the
Trustees and stated in the notice of that meeting.
Section 3. Notice of Meetings; Waiver. The Secretary shall call a
special meeting of Shareholders by giving written notice of the place,
date, time, and purposes of that meeting at least fifteen days before the
date of such meeting. The Secretary may deliver or mail, postage prepaid,
the written notice of any meeting to each Shareholder entitled to vote at
such meeting. If mailed, notice shall be deemed to be given when
deposited in the United States mail directed to the Shareholder at his or
her address as it appears on the records of the Trust.
Section 4. Adjourned Meetings. A Shareholders' meeting may be adjourned
one or more times for any reason, including the failure of a quorum to
attend the meeting. No notice of adjournment of a meeting to another time
or place need be given to Shareholders if such time and place are
announced at the meeting at which the adjournment is taken or reasonable
notice is given to persons present at the meeting, and if the adjourned
meeting is held within a reasonable time after the date set for the
original meeting. Any business that might have been transacted at the
original meeting may be transacted at any adjourned meeting. If after the
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<PAGE>
adjournment a new record date is fixed for the adjourned meeting, the
Secretary shall give notice of the adjourned meeting to Shareholders of
record entitled to vote at such meeting. Any irregularities in the notice
of any meeting or the nonreceipt of any such notice by any of the
Shareholders shall not invalidate any action otherwise properly taken at
any such meeting.
Section 5. Validity of Proxies. Subject to the provisions of the Trust
Instrument, Shareholders entitled to vote may vote either in person or by
proxy; provided, that either (1) the Shareholder or his or her duly
authorized attorney has signed and dated a written instrument authorizing
such proxy to act, or (2) the Trustees adopt by resolution an electronic,
telephonic, computerized or other alternative to execution of a written
instrument authorizing the proxy to act, but if a proposal by anyone other
than the officers or Trustees is submitted to a vote of the Shareholders
of any Series or Class, or if there is a proxy contest or proxy
solicitation or proposal in opposition to any proposal by the officers or
Trustees, Shares may be voted only in person or by written proxy. Unless
the proxy provides otherwise, it shall not be valid if dated more than
eleven months before the date of the meeting. All proxies shall be
delivered to the Secretary or other person responsible for recording the
proceedings before being voted. A proxy with respect to Shares held in
the name of two or more persons shall be valid if executed by one of them
unless at or prior to exercise of such proxy the Trust receives a specific
written notice to the contrary from any one of them. Unless otherwise
specifically limited by their terms, proxies shall entitle the Shareholder
to vote at any adjournment of a Shareholders' meeting. A proxy purporting
to be executed by or on behalf of a Shareholder shall be deemed valid
unless challenged at or prior to its exercise, and the burden of proving
invalidity shall rest on the challenger. At every meeting of
Shareholders, unless the voting is conducted by inspectors, the chairman
of the meeting shall decide all questions concerning the qualifications of
voters, the validity of proxies, and the acceptance or rejection of votes.
Subject to the provisions of the Delaware Business Trust Act, the Trust
Instrument, and these By-laws, the General Corporation Law of the State of
Delaware relating to proxies, and judicial interpretations thereunder
shall govern all matters concerning the giving, voting or validity of
proxies, as if the Trust were a Delaware corporation and the Shareholders
were shareholders of a Delaware corporation.
Section 6. Record Date. The Trustees may fix in advance a date up to
ninety days before the date of any Shareholders' meeting as a record date
for the determination of the Shareholders entitled to notice of, and to
vote at, any such meeting. The Shareholders of record entitled to vote at
a Shareholders' meeting shall be deemed the Shareholders of record at any
meeting reconvened after one or more adjournments, unless the Trustees
have fixed a new record date. If the Shareholders' meeting is adjourned
for more than sixty days after the original date, the Trustees shall
establish a new record date.
Section 7. Action Without a Meeting. Shareholders may take any action
without a meeting if a majority (or such greater amount as may be
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<PAGE>
required, or such lesser amount as may be permitted, by law) of the
Outstanding Shares entitled to vote on the matter consent to the action in
writing and such written consents are filed with the records of
Shareholders' meetings. Such written consent shall be treated for all
purposes as a vote at a meeting of the Shareholders.
ARTICLE VI
----------
SHARES OF BENEFICIAL INTEREST
-----------------------------
Section 1. No Share Certificates. Neither the Trust nor any Series or
Class shall issue certificates certifying the ownership of Shares, unless
the Trustees may otherwise specifically authorize such certificates.
Section 2. Transfer of Shares. Shares shall be transferable only by a
transfer recorded on the books of the Trust by the Shareholder of record
in person or by his or her duly authorized attorney or legal
representative. Shares may be freely transferred and the Trustees may,
from time to time, adopt rules and regulations regarding the method of
transfer of such Shares.
ARTICLE VII
-----------
FISCAL YEAR AND ACCOUNTANT
--------------------------
Section 1. Fiscal Year. The fiscal year of the Trust shall end on August
31.
Section 2. Accountant. The Trust shall employ independent certified
public accountants as its Accountant to examine the accounts of the Trust
and to sign and certify financial statements filed by the Trust. The
Accountant's certificates and reports shall be addressed both to the
Trustees and to the Shareholders. A majority of the Disinterested
Trustees shall select the Accountant at any meeting held within ninety
days before or after the beginning of the fiscal year of the Trust, acting
upon the recommendation of the Audit Committee. The Trust shall submit
the selection for ratification or rejection at the next succeeding
Shareholders' meeting, if such a meeting is to be held within the Trust's
fiscal year. If the selection is rejected at that meeting, the Accountant
shall be selected by majority vote of the Trust's outstanding voting
securities, either at the meeting at which the rejection occurred or at a
subsequent meeting of Shareholders called for the purpose of selecting an
Accountant. The employment of the Accountant shall be conditioned upon
the right of the Trust to terminate such employment without any penalty by
vote of a Majority Shareholder Vote at any Shareholders' meeting called
for that purpose.
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<PAGE>
ARTICLE VIII
------------
AMENDMENTS
----------
Section 1. General. Except as provided in Section 2 of this Article,
these By-laws may be amended by the Trustees, or by the affirmative vote
of a majority of the Outstanding Shares entitled to vote at any meeting.
Section 2. By Shareholders Only. After the issue of any Shares, this
Article may be amended only by the affirmative vote of the holders of the
lesser of (a) at least two-thirds of the Outstanding Shares present and
entitled to vote at any meeting at which a quorum is present, or (b) at
least fifty percent of the Outstanding Shares.
ARTICLE IX
----------
NET ASSET VALUE
---------------
The term "Net Asset Value" of any Series shall mean that amount
by which the assets belonging to that Series exceed its liabilities, all
as determined by or under the direction of the Trustees. Net Asset Value
per Share shall be determined separately for each Series and shall be
determined on such days and at such times as the Trustees may determine.
The Trustees shall make such determination with respect to securities for
which market quotations are readily available, at the market value of such
securities, and with respect to other securities and assets, at the fair
value as determined in good faith by the Trustees; provided, however, that
the Trustees, without Shareholder approval, may alter the method of
appraising portfolio securities insofar as permitted under the 1940 Act
and the rules, regulations and interpretations thereof promulgated or
issued by the SEC or its staff or insofar as permitted by any order of the
SEC applicable to the Series. The Trustees may delegate any of their
powers and duties under this Article X with respect to appraisal of assets
and liabilities. At any time the Trustees may cause the Net Asset Value
per Share last determined to be determined again in a similar manner and
may fix the time when such redetermined values shall become effective.
ARTICLE X
---------
CONFLICT OF INTEREST PROCEDURES
-------------------------------
Section 1. Monitoring and Reporting Conflicts. The trustees of Equity
Managers Trust and the Trust (collectively, the "Trusts") are the same
individuals. Set forth in this Article are procedures established to
address potential conflicts of interest that may arise between the Trusts.
On an ongoing basis, the investment adviser ("Manager") of Equity Managers
Trust shall be responsible for monitoring the Trusts for the existence of
any material conflicts of interest between the Trusts. The Manager shall
be responsible for reporting any potential or existing conflicts to
trustees of the Trusts as they may develop.
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<PAGE>
Section 2. Annual Report. The Manager shall report to the trustees of
the Trusts annually regarding its monitoring of the Trusts for conflicts
of interest.
Section 3. Resolution of Conflicts. If a potential conflict of interest
arises, the Trustees shall take such action as is reasonably appropriate
to deal with the conflict, up to and including recommending a change in
the trustees and implementing such recommendation, consistent with
applicable law.
Section 4. Annual Review. The Trustees, including a majority of the
Disinterested Trustees, shall determine no less frequently than annually
that the operating structure is in the best interest of Shareholders. The
Trustees shall consider, among other things, whether the expenses incurred
by the Trust are approximately the same or less than the expenses that the
Trust would incur if it invested directly in the type of securities being
held by Equity Managers Trust. The Trustees, including a majority of the
Disinterested Trustees, shall review no less frequently than annually
these procedures for their continuing appropriateness.
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<PAGE>
<PAGE>
DISTRIBUTION AGREEMENT
This Agreement is made as of November 1, 1994, between
Neuberger & Berman Equity Assets, a Delaware business trust ("Trust"), and
Neuberger & Berman Management Incorporated, a New York corporation (the
"Distributor").
WHEREAS, the Trust is registered under the Investment Company Act
of 1940, as amended ("1940 Act"), as an open-end, diversified management
investment company and has the power to establish several separate series
of shares ("Series"), with each Series having its own assets and
investment policies; and
WHEREAS, the Trust desires to retain the Distributor to furnish
distribution services to each Series listed in Schedule A attached hereto,
and to such other Series of the Trust hereinafter established as agreed to
from time to time by the parties, evidenced by an addendum to Schedule A
(hereinafter "Series" shall refer to each Series which is subject to this
Agreement and all agreements and actions described herein to be made or
taken by a Series shall be made or taken by the Trust on behalf of the
Series), and the Distributor is willing to furnish such services,
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties agree as follows:
1. The Trust hereby appoints the Distributor as agent
to sell the shares of beneficial interest of each Series (the "Shares")
and the Distributor hereby accepts such appointment. All sales by the
Distributor shall be expressly subject to acceptance by the Trust, acting
on behalf of the Series. The Trust may suspend sales of the Shares any
one or more Series at any time, and may resume sales at any later time.
2. (a) The Distributor agrees that (i) all Shares
sold by the Distributor shall be sold at the net asset value ("NAV")
thereof as described in Section 3 hereof, and (ii) the Series shall
receive 100% of such NAV.
(b) The Distributor may enter into agreements, in form
and substance satisfactory to the Trust, with dealers selected by the
Distributor, providing for the sale to such dealers and resale by such
dealers of Shares at their NAV.
3. The Trust agrees to supply to the Distributor,
promptly after the time or times at which NAV is determined, on each day
on which all or part of the New York Stock Exchange is open for
unrestricted trading and on such other days as the Board of Trustees of
the Trust ("Trustees") may from time to time determine (each such day
being hereinafter called a "business day"), a statement of the NAV of each
Series having been determined in the manner set forth in the then-current
Prospectus and Statement of Additional Information ("SAI") of each Series.
Each determination of NAV shall take effect as of such time or times on
each business day as set forth in the then-current Prospectus of each
Series.
<PAGE>
4. Upon receipt by the Trust at its principal place of
business of a written order from the Distributor, together with delivery
instructions, the Trust shall, if it elects to accept such order, as
promptly as practicable, cause the Shares purchased by such order to be
delivered in such amounts and in such names as the Distributor shall
specify, against payment therefor in such manner as may be acceptable to
the Trust. The Trust may, in its discretion, refuse to accept any order
for the purchase of Shares that the Distributor may tender to it.
5. (a) All sales literature and advertisements used
by the Distributor in connection with sales of Shares shall be subject to
approval by the Trust. The Trust authorizes the Distributor, in
connection with the sale or arranging for the sale of Shares of any
Series, to provide only such information and to make only such statements
or representations as are contained in the Series's then-current
Prospectus and SAI or in such financial and other statements furnished to
the Distributor pursuant to the next paragraph or as may properly be
included in sales literature or advertisements in accordance with the
provisions of the Securities Act of 1933 (the "1933 Act"), the 1940 Act
and applicable rules of self-regulatory organizations. Neither the Trust
nor any Series shall be responsible in any way for any information
provided or statements or representations made by the Distributor or its
representatives or agents other than the information, statements and
representations described in the preceding sentence.
(b) Each Series shall keep the Distributor fully
informed with regard to its affairs, shall furnish the Distributor with a
certified copy of all of its financial statements and a signed copy of
each report prepared for it by its independent auditors, and shall
cooperate fully in the efforts of the Distributor to negotiate and sell
Shares of such Series and in the Distributor's performance of all its
duties under this Agreement.
6. The Distributor, as agent of each Series and for the
account and risk of each Series, is authorized, subject to the direction
of the Trust, to redeem outstanding Shares of such Series when properly
tendered by shareholders pursuant to the redemption right granted to such
Series's shareholders by the Trust Instrument of the Trust, as from time
to time in effect, at a redemption price equal to the NAV per Share of
such Series next determined after proper tender and acceptance. The Trust
has delivered to the Distributor a copy of the Trust's Trust Instrument as
currently in effect and agrees to deliver to the Distributor any
amendments thereto promptly upon filing thereof with the Office of the
Secretary of State of the State of Delaware.
7. The Distributor shall assume and pay or reimburse
each Series for the following expenses of such Series: (i) costs of
printing and distributing reports, prospectuses and SAIs used by such
Series in connection with the sale or offering of its Shares and of
preparing, printing and distributing all advertising and sales literature
relating to such Series printed at the instruction of the Distributor; and
(ii) counsel fees and expenses in connection with the foregoing. The
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<PAGE>
Distributor shall also pay all its own costs and expenses connected with
the sale of Shares.
8. Each Series shall maintain a currently effective
Registration Statement on Form N-1A with respect to such Series and shall
file with the Securities and Exchange Commission ("SEC") such reports and
other documents as may be required under the 1933 Act and the 1940 Act or
by the rules and regulations of the SEC thereunder.
Each Series represents and warrants that the Registration
Statement, post-effective amendments, Prospectus and SAI (excluding
statements relating to the Distributor and the services it provides that
are based upon written information furnished by the Distributor expressly
for inclusion therein) of such Series shall not contain any untrue
statement of material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading, and that all statements or information furnished to the
Distributor, pursuant to Section 5(b) hereof, shall be true and correct in
all material respects.
9. (a) This Agreement shall become effective on the
date hereof and shall remain in full force and effect until November 1,
1996 and may be continued from year to year thereafter; PROVIDED, that
such continuance shall be specifically approved each year by the Trustees
or by a majority of the outstanding voting securities of the Series, and
in either case, also by a majority of the Trustees who are not interested
persons of the Trust or the Distributor ("Disinterested Trustees"). This
Agreement may be amended as to any Series with the approval of the
Trustees or of a majority of the outstanding voting securities of such
Series; PROVIDED, that in either case, such amendment also shall be
approved by a majority of the Disinterested Trustees.
(b) Either party may terminate this Agreement
without the payment of any penalty, upon not more than sixty days' nor
less than thirty days' written notice delivered personally or mailed by
registered mail, postage prepaid, to the other party; PROVIDED, that in
the case of termination by any Series, such action shall have been
authorized (i) by resolution of the Trustees, or (ii) by vote of a
majority of the outstanding voting securities of such Series, or (iii) by
written consent of a majority of the Disinterested Trustees.
(c) This Agreement shall automatically terminate
if it is assigned by the Distributor.
(d) Any question of interpretation of any term
or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be resolved by
reference to such term or provision of the 1940 Act and to interpretation
thereof, if any, by the United States courts or, in the absence of any
controlling decision of any such court, by rules, regulations or orders of
the SEC validly issued pursuant to the 1940 Act. Specifically, the terms
"interested persons," "assignment" and "vote of a majority of the
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<PAGE>
outstanding voting securities," as used in this Agreement, shall have the
meanings assigned to them by Section 2(a) of the 1940 Act. In addition,
when the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is modified, interpreted or relaxed by a rule,
regulation or order of the SEC, whether of special or of general
application, such provision shall be deemed to incorporate the effect of
such rule, regulation or order. The Trust and the Distributor may from
time to time agree on such provisions interpreting or clarifying the
provisions of this Agreement as, in their joint opinion, are consistent
with the general tenor of this Agreement and with the specific provisions
of this Section 9(d). Any such interpretations or clarifications shall be
in writing signed by the parties and annexed hereto, but no such
interpretation or clarification shall be effective if in contravention of
any applicable federal or state law or regulations, and no such
interpretation or clarification shall be deemed to be an amendment of this
Agreement.
No term or provision of this Agreement shall be
construed to require the Distributor to provide distribution services to
any series of the Trust other than the Series, or to require any Series to
pay any compensation or expenses that are properly allocable, in a manner
approved by the Trustees, to a series of the Trust other than such Series.
(e) This Agreement is made and to be principally
performed in the State of New York, and except insofar as the 1940 Act or
other federal laws and regulations may be controlling, this Agreement
shall be governed by, and construed and enforced in accordance with, the
internal laws of the State of New York.
(f) This Agreement is made by the Trust solely
with respect to the Series, and the obligations created hereby with
respect to one Series bind only assets belonging to that Series and are
not binding on any other series of the Trust.
10. The Distributor or one of its affiliates may from
time to time deem it desirable to offer to the list of shareholders of
each Series the shares of other mutual funds for which it acts as
Distributor, including other series of the Trust or other products or
services; however, any such use of the list of shareholders of any Series
shall be made subject to such terms and conditions, if any, as shall be
approved by a majority of the Disinterested Trustees.
11. The Distributor shall look only to the assets of
a Series for the performance of this Agreement by the Trust on behalf of
such Series, and neither the Shareholders, the Trustees nor any of the
Trust's officers, employees or agents, whether past, present or future,
shall be personally liable therefor.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be duly executed by their duly authorized officers and under
their respective seals.
NEUBERGER & BERMAN
EQUITY ASSETS
Attest: By: /s/ Michael J. Weiner
/s/ Claudia A. Brandon Title: Vice President
Secretary
NEUBERGER & BERMAN
MANAGEMENT INCORPORATED
Attest: By: /s/ Stanley Egener
/s/ Ellen Metzger Title: President
Secretary
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<PAGE>
<PAGE>
DISTRIBUTION AGREEMENT
SCHEDULE A
The Series of Neuberger & Berman Equity Assets currently subject
to this Agreement are as follows:
Neuberger & Berman Socially Responsive Trust
Dated:
<PAGE>
