As filed with the Securities and Exchange Commission on December 31, 1996
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. __5__ [__X__]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [__X__]
Amendment No. 7 [__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
1800 Massachusetts Avenue, N.W., 2nd Floor
Washington, D.C. 20036-1800
(Names and Addresses of agents for service)
Approximate Date of Proposed Public Offering: Continuous
It is proposed that this filing will become effective:
_____ immediately upon filing pursuant to paragraph (b)
__X__ on December 31, 1996 pursuant to paragraph (b)
_____ 60 days after filing pursuant to paragraph (a)(1)
_____ on __________ pursuant to paragraph (a)(1)
_____ 75 days after filing pursuant to paragraph (a)(2)
_____ on __________ pursuant to paragraph (a)(2)
Registrant has filed a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940 as amended, and filed the notice required by such
rule for its 1996 fiscal year on October 29, 1996.
Neuberger & Berman Equity Assets is a "master/feeder fund." This
Post-Effective Amendment No. 5 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. 5 ON FORM N-1A
This Post-Effective Amendment consists of the following papers and
documents:
Cover Sheet
Contents of Post-Effective Amendment No. 5 on Form N-1A
Cross Reference Sheet
NEUBERGER & BERMAN FOCUS ASSETS, NEUBERGER & BERMAN GUARDIAN ASSETS,
- --------------------------------------------------------------------
NEUBERGER & BERMAN MANHATTAN ASSETS AND NEUBERGER & BERMAN PARTNERS ASSETS
- --------------------------------------------------------------------------
Part A - Amendment to Prospectus
Prospectus
Part B - Amendment to Statement of Additional Information
Statement of Additional Information
Part C - Other Information
Signature Pages
Exhibits
No change is intended to be made by this Post-Effective Amendment No. 5 to
the prospectus or statement of additional information for Neuberger & Berman
Socially Responsive Trust.
<PAGE>
NEUBERGER & BERMAN EQUITY ASSETS
POST-EFFECTIVE AMENDMENT NO. 5 ON FORM N-1A
Cross Reference Sheet
Thiscross reference sheet relates to the Prospectus and Statement
of Additional Information for:
NEUBERGER & BERMAN FOCUS ASSETS
-------------------------------
NEUBERGER & BERMAN GUARDIAN ASSETS
----------------------------------
NEUBERGER & BERMAN MANHATTAN 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 Financial Highlights; Performance
Information Information
Item 4. General Description of Investment Programs; Description of
Registrant Investments; Special Information
Regarding Organization, Capitalization,
and Other Matters
Item 5. Management of the Fund Management and Administration;
Directory; Back Cover Page
Item 6. Capital Stock and Front Cover Page; Dividends, Other
Other Securities Distributions, and Taxes; Special
Information Organization,
Capitalization, and Other Matters
Item 7. Purchase of Securities Shareholder Services; Share Prices and
Being Offered Net Asset Value; Management and
Administration
Item 8. Redemption or Shareholder Services; Share Prices and
Repurchase Net Asset Value
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 Objectives Investment Information; Certain Risk
and Policies Considerations
Item 14. Management of the Fund Trustees and Officers
Item 15. Control Persons and Control Persons and Principal Holders
Principal Holders of of Securities
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/Accountants
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 Redemption Additional Exchange Information;
Additional Redemption Information;
Distribution Arrangements
Item 20. Tax Status Dividends and Other Distributions;
Additional Tax Information
Item 21. Underwriters Investment Management and
Administration Services; Distribution
Arrangements
Item 22. Calculation of Performance Information
Performance Data
Item 23. Financial Statements Financial Statements
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. 5.
<PAGE>
<PAGE>
[LOGO]
Amendment dated December 31, 1996 to Prospectus dated February 13, 1996
Effective November 1, 1996, the sub-adviser reorganized as a limited
liability company known as Neuberger&Berman, LLC. All persons described in the
Prospectus as partners of Neuberger&Berman, L.P. are principals of the new
company.
SUMMARY
The section on Neuberger&Berman MANHATTAN Assets under "The Funds and
Portfolios; Risk Factors" (Page 4) is amended to read as follows:
<TABLE>
<CAPTION>
NEUBERGER&BERMAN INVESTMENT PORTFOLIO
EQUITY ASSETS STYLE CHARACTERISTICS
- ------------------------------------------------------------------------------------
<S> <C> <C>
MANHATTAN ASSETS Broadly diversified, small-, Invests in securities believed
medium- and large-cap growth to have the maximum potential
fund. for long-term capital
appreciation. Portfolio manager
follows a "growth at a
reasonable price" philosophy
and searches for financially
sound, growing companies with
special competitive advantages
or products that make their
stocks attractive.
</TABLE>
<PAGE>
EXPENSE INFORMATION
The section on "Annual Fund Operating Expenses" (Pages 7-8) is amended to
read as follows:
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. 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.
<TABLE>
<CAPTION>
OTHER TOTAL
NEUBERGER&BERMAN MANAGEMENT AND 12B-1 EXPENSES OPERATING
EQUITY ASSETS ADMINISTRATION FEES FEES (ESTIMATED) EXPENSES
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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%
</TABLE>
"Management and Administration Fees" for each Fund are 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
and assume average daily net assets of $50 million. There can be no assurance
that the Funds will achieve that asset level. The trustees of the Trust believe
that the aggregate per share expenses of each Fund and its corresponding
Portfolio will be approximately equal to the expenses the Fund would incur if
its assets were invested directly in the type of securities held by its
corresponding Portfolio. The trustees of the Trust also believe that investment
in a Portfolio by investors in addition to a Fund may enable the Portfolio to
achieve economies of scale which could reduce expenses. The expenses and,
accordingly, the returns of other funds that may invest in the Portfolios may
differ from those of the Funds.
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.
2
<PAGE>
Because the Funds pay 12b-1 fees, 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").
The "Example" is amended to read as follows:
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:
<TABLE>
<CAPTION>
NEUBERGER&BERMAN
EQUITY ASSETS 1 YEAR 3 YEARS
- -------------------------------------------------------------
<S> <C> <C>
FOCUS ASSETS $13 $40
GUARDIAN ASSETS $12 $38
MANHATTAN ASSETS $13 $41
PARTNERS ASSETS $13 $39
</TABLE>
The assumption in this example of a 5% annual return is required by
regulations of the SEC applicable to all mutual funds. THE INFORMATION IN THE
PREVIOUS TABLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR RATES OF RETURN; ACTUAL EXPENSES OR RETURNS MAY BE GREATER OR LESS
THAN THOSE SHOWN AND MAY CHANGE IF EXPENSE REIMBURSEMENTS CHANGE.
3
<PAGE>
The following section is added prior to "Investment Programs" (page 9):
FINANCIAL HIGHLIGHTS
Selected Per Share Data and Ratios
- ----------------------------------------------------------------------
The financial information in the following table is for Neuberger&Berman
PARTNERS Assets as of August 31, 1996. As of that date, none of the other Funds
had commenced operations. The following information has been audited by the
Fund's independent auditors. You may obtain, at no cost, further information
about the performance of Neuberger&Berman PARTNERS Assets in its annual report.
The auditors' report with respect to Neuberger&Berman PARTNERS Assets is
incorporated in the SAI by reference to the annual report. Please call
800-366-6264 for a free copy of the annual report and for up-to-date
information.
4
<PAGE>
FINANCIAL HIGHLIGHTS
Partners Assets
The following table includes selected data for a share outstanding throughout
the period and other performance information derived from the Financial
Statements. The per share amounts and ratios which are shown reflect income and
expenses, including the Fund's proportionate share of the Portfolio's income and
expenses. It should be read in conjunction with the Portfolio's Financial
Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
August 19, 1996(1)
to August 31,
1996
-------------------
<S> <C>
Net Asset Value, Beginning of Period $10.00
------
Income from Investment Operations
Net Investment Income --
Net Gains or Losses on Securities
(both realized and unrealized) (.09)
------
Total from Investment Operations (.09)
------
Net Asset Value, End of Period $ 9.91
------
Total Return+ -0.90%(1)
------
Ratios/Supplemental Data
Net Assets, End of Period (in thousands) $103.5
------
Ratio of Expenses to Average Net Assets(1) 1.50%(3)
------
Ratio of Net Investment Income to Average Net
Assets(3) 2.38%(1)
------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
5
<PAGE>
NOTES TO FINANCIAL HIGHLIGHTS
Neuberger&Berman August 31, 1996
Partners Assets
- ----------------------------------------------------------------------
1)The date investment operations commenced.
2)Not annualized.
3)After reimbursement of expenses by N&B Management. Had N&B Management
not undertaken such action the annualized ratios to average daily net assets
would have been:
<TABLE>
<CAPTION>
PERIOD FROM
AUGUST 19, 1996
TO AUGUST 31, 1996
- ------------------------------------------------------------------------------------
<S> <C>
Expenses 2.50%
Net Investment Income 1.38%
</TABLE>
4)Annualized.
5)Because the Fund invests only in the Portfolio and the Portfolio (rather than
the Fund) engages in securities transactions, the Fund does not calculate a
portfolio turnover rate or pay any brokerage commissions. For the year ended
August 31, 1996, the portfolio turnover rate for the Portfolio was 96% and the
average commission rate paid by the Portfolio was $0.0494.
+ Total return based on per share net asset value reflects the effects of
changes in net asset value on the performance of the Fund during the period
and assumes dividends and other distributions, if any, were reinvested.
Results represent past performance and do not guarantee future results.
Investment returns and principal may fluctuate and shares when redeemed may be
worth more or less than original cost. Total return would be lower if N&B
Management had not reimbursed certain expenses.
6
<PAGE>
INVESTMENT PROGRAMS
The investment program of Neuberger&Berman MANHATTAN Portfolio (Pages 10-11)
is amended to read as follows:
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
small-, medium-, and 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 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. The Portfolio focuses on companies
with strong balance sheets and reasonable valuations relative to their growth
rates. It also diversifies its investments among many companies and industries.
The Portfolio's growth investment program involves greater risks and share
price volatility than programs that invest in more undervalued securities. The
Portfolio may invest in common stocks of companies with small market
capitalizations ("small-cap companies"). Small-cap company stocks have higher
risk and volatility than securities of companies with larger market
capitalizations because most small-cap company stocks are not as broadly traded
and their prices thus may fluctuate more widely and abruptly. Small-cap company
securities are also less researched and often overlooked and undervalued in the
market. There is no necessary correlation between market capitalization and the
financial attributes -- such as levels of assets, revenues or income -- commonly
used to measure the size of a company. Studies indicate that, over the last 30
years, small-cap company stocks have outperformed larger capitalization stocks
about two-thirds of the time, even though small-cap stocks have usually declined
more than larger capitalization stocks in declining markets. There can be no
assurance that this pattern will continue. Most small-cap company stocks pay low
or no dividends; however, the Portfolio seeks long-term appreciation, rather
than income.
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.
7
<PAGE>
PERFORMANCE INFORMATION
This section (pages 13-14) is amended to include the following:
As of August 31, 1996, none of the Funds had any past performance except for
Neuberger&Berman PARTNERS Assets, which commenced operations in August 1996.
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 of each
Sister Fund and its predecessor for the 1-year, 5-year, and 10-year periods
ended August 31, 1996 (for Neuberger&Berman PARTNERS Assets, returns for the
period from August 19, 1996 to August 31, 1996 represent the actual performance
of that Fund). 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. 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 or expenses of investing in the individual securities they
track.
AVERAGE ANNUAL TOTAL RETURNS OF THE SISTER FUNDS
FOR PERIODS ENDED AUGUST 31, 1996
<TABLE>
<CAPTION>
10 SINCE INCEPTION
1 YEAR 5 YEARS YEARS INCEPTION DATE
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FOCUS +3.70% +15.90% +13.40% +11.75% 10/19/55
GUARDIAN +5.27% +15.09% +13.32% +12.92% 6/1/50
MANHATTAN -2.91% +11.12% +11.12% +16.39% 3/1/79+
PARTNERS* +13.88% +15.22% +12.59% +17.50% 1/20/75+
S&P "500" +18.70% +13.59% +13.35% N/A N/A
</TABLE>
+THE DATES WHEN N&B MANAGEMENT BECAME INVESTMENT ADVISER TO THE PREDECESSORS OF
THE SISTER FUNDS.
*INCLUDES PERFORMANCE RESULTS OF THE FUND FOR THE PERIOD FOLLOWING ITS
COMMENCEMENT OF OPERATIONS ON AUGUST 19, 1996.
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.
8
<PAGE>
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 of the last ten calendar years (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 and their
predecessors. Please note that the previous chart reflects information for
periods ended on the Sister Funds' last fiscal year-end (that is, as of August
31, 1996).
TOTAL RETURNS OF THE SISTER FUNDS FOR CALENDAR YEARS
ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1986 1987 1988 1989 1990 1991
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------
FOCUS +10.1% +0.6% +16.5% +29.8% -5.9% +24.7%
GUARDIAN +11.9 -1.0 +28.0 +21.5 -4.7 +34.3
MANHATTAN +16.8 +0.4 +18.3 +29.1 -8.1 +30.9
PARTNERS +17.3 +4.3 +15.5 +22.8 -5.1 +22.4
S&P "500" +18.6 +5.2 +16.5 +31.6 -3.1 +30.3
<CAPTION>
1992 1993 1994 1995
<S> <C> <C> <C> <C>
- ------------------------------
FOCUS +21.1% +16.3% +0.9% +36.2%
GUARDIAN +19.0 +14.5 +0.6 +32.1
MANHATTAN +17.8 +10.0 -3.6 +31.0
PARTNERS +17.5 +16.5 -1.9 +35.2
S&P "500" +7.6 +10.0 +1.4 +37.5
</TABLE>
9
<PAGE>
MANAGEMENT AND ADMINISTRATION
The section on management of Neuberger&Berman FOCUS Portfolio and
Neuberger&Berman GUARDIAN Portfolio under "Investment Manager, Administrator,
Distributor, and Sub-Adviser" (Pages 23-24) is amended to read as follows:
Neuberger&Berman FOCUS Portfolio and Neuberger&Berman GUARDIAN
Portfolio -- Kent C. Simons and Kevin L. Risen. Mr. Simons is a Vice President
of N&B Management and a principal 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. Risen has had those responsibilities since 1996. Mr. Risen has been an
Assistant Vice President of N&B Management since May 1996 and a portfolio
manager for Neuberger&Berman since 1995. He was a research analyst at
Neuberger&Berman from 1992 to 1995; from 1990 to 1992, he was a research analyst
at another prominent financial services firm.
[LOGO]
(recycle logo)
PRINTED ON RECYCLED PAPER
NBLSP1351296
10
<PAGE>
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 13, 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 800-366-6264.
PROSPECTUS DATED FEBRUARY 13, 1996
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY BANK OR OTHER DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE
FDIC, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR 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............................................... 3
Shareholder Transaction Expenses for Each Fund .......... 3
Annual Fund Operating Expenses........................... 3
Example.................................................. 4
INVESTMENT PROGRAMS............................................... 4
Focus Portfolio ......................................... 5
Guardian Portfolio....................................... 5
Manhattan Portfolio...................................... 6
Partners Portfolio....................................... 6
Short-Term Trading; Portfolio Turnover................... 7
Borrowings............................................... 7
Other Investments........................................ 7
PERFORMANCE INFORMATION........................................... 7
Total Return Information................................. 8
SPECIAL INFORMATION REGARDING ORGANIZATION,
CAPITALIZATION, AND OTHER MATTERS................................. 9
The Funds ............................................... 9
The Portfolios........................................... 9
SHAREHOLDER SERVICES.............................................. 11
How to Buy Shares ....................................... 11
How to Sell Shares....................................... 11
Exchanging Shares ....................................... 12
SHARE INFORMATION................................................. 12
Share Prices and Net Asset Value......................... 12
DIVIDENDS, OTHER DISTRIBUTIONS,
AND TAXES......................................................... 13
Distribution Options..................................... 13
Taxes.................................................... 13
MANAGEMENT AND ADMINISTRATION..................................... 14
Trustees and Officers ................................... 14
Investment Manager, Administrator, Distributor, and
Sub-Adviser ............................................. 14
Expenses................................................. 15
Transfer Agent........................................... 16
- ii -
<PAGE>
DESCRIPTION OF INVESTMENTS........................................ 16
USE OF JOINT PROSPECTUS AND STATEMENT
OF ADDITIONAL INFORMATION......................................... 18
DIRECTORY......................................................... 19
FUNDS ELIGIBLE FOR EXCHANGE....................................... 20
- iii -
<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 structure looks like this:
-------------------------------
Shareholders
-------------------------------
BUY SHARES IN
-------------------------------
Funds
-------------------------------
INVEST IN
-------------------------------
Portfolios
-------------------------------
INVEST IN
-------------------------------
Stocks and Other Securities
-------------------------------
The trustees who oversee the Funds believe that this structure may
benefit shareholders; investment in a Portfolio by investors in addition to a
Fund may enable the Portfolio to achieve economies of scale that could reduce
expenses. For more information about the organization of the Funds and the
Portfolios, including certain features of the master/feeder fund structure, see
"Special Information Regarding Organization, Capitalization, and Other Matters"
on page 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.
<PAGE>
<TABLE>
<CAPTION>
Neuberger&Berman Equity Investment Portfolio
Assets Style Characteristics
<S> <C> <C>
GUARDIAN ASSETS Broadly diversified, large-cap A growth and income fund that invests in
value fund. Relatively low stocks of established, high-quality
portfolio turnover. companies that are not well followed on
Wall Street or are temporarily out of
favor.
FOCUS ASSETS Large-cap value fund, more Invests in common stocks selected from 13
concentrated portfolio than multi-industry sectors of the economy. To
Guardian. Relatively low portfolio maximize potential return, the Portfolio
turnover. normally makes at least 90% of its
investments in not more than six sectors
believed by the portfolio managers to be
undervalued.
MANHATTAN ASSETS Broadly diversified, medium- to Invests in securities believed to have the
large-cap growth fund. Relatively maximum potential for long-term capital
low portfolio 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 Seeks capital growth through an approach
large-cap value fund. Moderate that is intended to increase capital with
portfolio turnover. 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.
- 2 -
<PAGE>
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 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.
- 3 -
<PAGE>
Shareholder Transaction Expenses for Each Fund
As shown by this table, there are no transaction charges when you buy
or sell Fund shares.
Sales Charge Imposed on Purchases NONE
Sales Charge Imposed on Reinvested Dividends NONE
Deferred Sales Charges NONE
Redemption Fees NONE
Exchange Fees NONE
Annual Fund Operating Expenses
(as a percentage of average daily net assets)
The following table shows 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").
- 4 -
<PAGE>
<TABLE>
<CAPTION>
Management and Other Total
Neuberger&Berman Administration Expenses Operating
Equity Assets Fees 12b-1 Fees (estimated) Expenses
- ----------------- -------------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
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%
</TABLE>
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. The management fee paid
by each Portfolio is 0.55% of average daily net assets at current asset levels.
Example
To illustrate the effect of Operating Expenses, let's assume that 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:
- 5 -
<PAGE>
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.
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:
- 6 -
<PAGE>
<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.
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
- 7 -
<PAGE>
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
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.
- 8 -
<PAGE>
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 distributions, and variations in share prices
from the beginning to the end of a period.
An average annual total return is a hypothetical rate of return that,
if achieved annually, would result in the same cumulative total return as was
actually achieved for the period. This smooths out variations in performance.
Past results do not, of course, guarantee future performance. Share prices may
vary, and your shares when redeemed may be worth more or less than your original
purchase price.
As of the date of this Prospectus, the Funds have no past performance.
However, four mutual funds that are series of Neuberger&Berman Equity Funds
- 9 -
<PAGE>
("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.
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS
ENDED AUGUST 31, 1995
(PERFORMANCE RESULTS OF THE SISTER FUNDS)
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 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).
- 10 -
<PAGE>
<TABLE>
<CAPTION>
TOTAL RETURN FOR CALENDAR YEARS ENDED DECEMBER 31
(PERFORMANCE RESULTS OF THE SISTER FUNDS)
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 800-366-6264.
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 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 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 32 feeder funds. This "master/feeder
fund" structure is depicted in the "Summary" on page 1.
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 in a Portfolio
(including the series of N&B Equity Funds) that might sell shares to members of
- 12 -
<PAGE>
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 800-366-6264.
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 to the
Fund. That distribution could result in a less diversified portfolio of
investments for the Fund and could affect adversely the liquidity of the Fund's
investment portfolio. If the Fund decided to convert those securities to cash,
it usually would incur brokerage fees or other transaction costs. If 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 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.
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<PAGE>
CERTAIN PROVISIONS. Each investor in a Portfolio, including a Fund, will be
liable for all obligations of the Portfolio. However, the risk of an investor in
a Portfolio incurring financial loss on account of such liability would be
limited to circumstances in which the Portfolio had inadequate insurance and was
unable to meet its obligations out of its assets. Upon liquidation of a
Portfolio, investors would be entitled to 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 to buy shares. The Funds will not issue a certificate
for your shares.
Other Information:
. An Institution must pay for shares it purchases in U.S.
dollars.
. Each Fund has the right to suspend the offering of its
shares for a period of time. Each Fund also has the right
to accept or reject a purchase order in its sole
discretion, including certain purchase orders using an
exchange of shares. See "Shareholder Services--
Exchanging Shares."
How to Sell Shares
You can sell (redeem) all or some of your Fund shares only through an
account with an Institution. Each Institution will establish its own procedures
for the sale of Fund shares. Shares are sold at the next price calculated on a
day the NYSE is open, after a sales order is received and accepted by an
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<PAGE>
Institution. Prices for Fund shares are usually calculated as of 4 p.m. Eastern
time. Your Institution may be closed on days when the NYSE is open. As a result,
prices for Fund shares may be significantly affected on days when you have no
access to your Institution to sell shares.
Each Fund has reserved the right, if conditions exist which make cash
payments undesirable, to honor any request for a redemption by making payments
in securities valued in the same way as they would be valued for purposes of
computing that Fund's net asset value per share. If payment is made in
securities, an Institution generally will incur brokerage expenses or other
transaction costs in converting those securities into cash and will be subject
to fluctuation in the market prices of those securities until they are sold.
Other Information:
. Redemption proceeds will be paid to Institutions as agreed
with each Fund, but in any case within three calendar days
(under unusual circumstances a Fund may take longer, as
permitted by law).
. Each Fund may suspend redemptions or postpone payments on days
when the NYSE is closed (besides weekends and holidays), when
trading on the NYSE is restricted, or as permitted by the
Securities and Exchange Commission.
Exchanging Shares
Through an account with an Institution, you may be able to exchange
shares of a Fund for shares of another Fund described in this Prospectus. Each
Institution will establish its own exchange policy and procedures for its
accounts. Shares are exchanged at the next price calculated on a day the NYSE is
open, after an exchange order is received and accepted by an Institution.
. Shares can be exchanged only between accounts registered
in the same name, address, and taxpayer ID number of the
Institution.
. An exchange can be made only into a Fund whose shares are
eligible for sale in the state where the Institution is
located.
. An exchange may have tax consequences.
. 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
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<PAGE>
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.
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.
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<PAGE>
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 amount of any dividends and other distributions that were
reinvested) and the amount received when shares are sold.
When an Institution sells shares, it will receive a confirmation
statement showing the number of shares sold and the price. Every January,
Institutions will also receive a consolidated transaction statement for the
previous year.
Each Institution annually will send investors in its accounts
statements showing distribution and transaction information for the previous
year.
The foregoing is only a summary of some of the important tax
considerations affecting each Fund and its shareholders. See the SAI for
additional tax information. There may be other federal, state, local, or foreign
tax considerations applicable to a particular investor. Therefore, investors
should consult their tax advisers.
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<PAGE>
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
investment companies. The mutual funds managed by N&B Management and
Neuberger&Berman had aggregate net assets of approximately $11.9 billion as of
December 31, 1995.
As sub-adviser, Neuberger&Berman furnishes N&B Management with
investment recommendations and research without added cost to the Portfolios.
Neuberger&Berman is a member firm of the NYSE and other principal exchanges and
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 approximately $38.7 billion of assets as of
December 31, 1995. All of the voting stock of N&B Management is owned by
individuals who are general partners of Neuberger&Berman.
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.
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<PAGE>
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].
To mitigate the possibility that a Portfolio will be adversely affected
by employees' personal trading, the Trust, Managers Trust, N&B Management, and
Neuberger&Berman have adopted policies that restrict securities trading in the
personal accounts of 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
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<PAGE>
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 administrative and other
services provided for the Funds, its activities and expenses related to the sale
and distribution of Fund shares, and ongoing services to investors in 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 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
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<PAGE>
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 10158-0180.
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 general 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 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
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<PAGE>
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."
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.
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<PAGE>
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.
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 (commonly known as "junk bonds"), 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 is included in the Appendix to the SAI.
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<PAGE>
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.
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
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
800-366-6264
Legal Counsel
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, NW
Washington, DC 20036-1800
FUNDS ELIGIBLE FOR EXCHANGE
Equity Assets
Neuberger&Berman Focus Assets
Neuberger&Berman Guardian Assets
Neuberger&Berman Manhattan Assets
Neuberger&Berman Partners Assets
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<PAGE>
Neuberger&Berman, Neuberger & Berman Management Inc., and the above named Funds
are service marks of Neuberger&Berman Management Inc.
[COPYRIGHT] 1996 Neuberger&Berman Management Inc.
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<PAGE>
NEUBERGER & BERMAN EQUITY ASSETS
Amendment dated December 31, 1996 to Statement of Additional
Information ("SAI") dated February 13, 1996
Effective November 1, 1996, the sub-adviser reorganized as a limited
liability company known as Neuberger & Berman, LLC. All persons described in the
SAI as partners of Neuberger & Berman, L.P. are principals of the new company.
PERFORMANCE INFORMATION
THE SECTION ON TOTAL RETURN COMPUTATIONS (PAGES 23-24) IS AMENDED TO INCLUDE THE
FOLLOWING:
As of August 31, 1996, none of the Funds had any past performance
except for Neuberger & Berman PARTNERS Assets, which commenced operations in
August 1996. 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 total return data is for each
Sister Fund and its predecessor (except that, for Neuberger & Berman PARTNERS
Assets, returns for the period from August 19, 1996 to August 31, 1996 represent
the actual performance of that Fund). 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, 1996, were -2.91%, +11.12%, and +11.12%, respectively.
If an investor had invested $10,000 in that predecessor's shares on March 1,
1979 and had reinvested all income dividends and other distributions, the NAV of
that investor's holdings would have been $142,767 on August 31, 1996.
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, 1996, were +3.70%, +15.90%, and +13.40%, respectively. If an investor
had invested $10,000 in that predecessor's shares on October 19, 1955 and had
reinvested all income dividends and other distributions, the NAV of that
investor's holdings would have been $939,649 on August 31, 1996.
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, 1996, were +5.27%, +15.09%, and +13.32%, respectively.
If an investor had invested $10,000 in that predecessor's shares on June 1, 1950
and had reinvested all income dividends and other distributions, the NAV of that
investor's holdings would have been $2,767,857 on August 31, 1996.
The average annual total returns for Neuberger & Berman PARTNERS
Assets (following its commencement of operations on August 19, 1996), its Sister
Fund and that Sister Fund's predecessor for the one-, five-, and ten-year
periods ended August 31, 1996, were 13.88%, 15.22%, and 12.59%, respectively. If
an investor had invested $10,000 in that predecessor's shares on January 20,
1975 and had reinvested all income dividends and other distributions, the NAV of
that investor's holdings would have been $327,193 on August 31, 1996.
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; 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 include
information reflecting the Sister Fund's predecessor's performance and expenses
for periods 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 necessarily 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.
<PAGE>
TRUSTEES AND OFFICERS
THIS SECTION (PAGES 33-34) IS AMENDED TO INCLUDE THE FOLLOWING:
The following table sets forth information concerning the compensation
of the trustees and officers of the Trust. None of the Neuberger & Berman
Funds(R) has any retirement plan for its trustees or officers.
TABLE OF COMPENSATION
FOR FISCAL YEAR ENDED 8/31/96
Aggregate Total Compensation from
Compensation Trusts in the Neuberger &
Name and Position with from the Berman Fund Complex Paid
The Trust Trust to Trustees
- ----------------------- ----------- --------------------------
Faith Colish $0 $38,500
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 $28,000
Trustee (3 other investment
companies)
Howard A. Mileaf $0 $37,000
Trustee (4 other investment
companies)
Edward I. O'Brien $0 $31,500
Trustee (3 other investment
companies)
John T. Patterson, Jr. $0 $40,500
Trustee (4 other investment
companies)
John P. Rosenthal $0 $36,500
Trustee (4 other investment
companies)
Cornelius T. Ryan $0 $30,500
Trustee (3 other investment
companies)
Gustave H. Shubert $0 $30,500
Trustee (3 other investment
companies)
Lawrence Zicklin $0 $0
President and Trustee (5 other investment
companies)
At December 16, 1996, the trustees and officers of the Trusts as a
group, owned beneficially or of record less than 1% of the outstanding shares of
each Fund.
<PAGE>
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
THE SECTION ON INVESTMENT MANAGER AND ADMINISTRATOR (PAGES 34-36) IS AMENDED TO
INCLUDE THE FOLLOWING:
During the period from August 19, 1996 (commencement of operations) to
August 31, 1996, Neuberger & Berman PARTNERS Assets accrued management and
administration fees of $4. During that period, N&B Management reimbursed
Neuberger & Berman PARTNERS Assets for $13,840 of expenses.
THE SECTION ON INVESTMENT COMPANIES MANAGED (PAGES 37-40) IS AMENDED TO INCLUDE
THE FOLLOWING:
The Portfolios are subject to certain limitations imposed on all
advisory clients of Neuberger & Berman (including the Portfolios, the Other N&B
Funds, and other managed accounts) and personnel of Neuberger & Berman and its
affiliates. These include, for example, limits that may be imposed in certain
industries or by certain companies, and policies of Neuberger & Berman that
limit the aggregate purchases, by all accounts under management, of the
outstanding shares of public companies.
PORTFOLIO TRANSACTIONS
THIS SECTION (PAGES 48-55) IS AMENDED TO INCLUDE THE FOLLOWING:
During the fiscal year ended August 31, 1996, Neuberger & Berman
MANHATTAN Portfolio paid brokerage commissions of $940,324, of which $543,020
was paid to Neuberger & Berman. Transactions in which that Portfolio used
Neuberger & Berman as broker comprised 65.36% of the aggregate dollar amount of
transactions involving the payment of commissions, and 57.75% of the aggregate
brokerage commissions paid by the Portfolio, during the fiscal year ended August
31, 1996. 85.38% of the $397,304 paid to other brokers by that Portfolio during
that fiscal year (representing commissions on transactions involving
approximately $144,595,529) was directed to those brokers because of research
services they provided. During the fiscal year ended August 31, 1996, 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.,
Exxon Credit Corp., General Electric Capital Corp., 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., $5,142,500 and Morgan
Stanley & Co., Inc., $10,266,250.
During the fiscal year ended August 31, 1996, Neuberger & Berman FOCUS
Portfolio paid brokerage commissions of $1,165,851, of which $583,212 was paid
to Neuberger & Berman. Transactions in which that Portfolio used Neuberger &
Berman as broker comprised 56.27% of the aggregate dollar amount of transactions
involving the payment of commissions, and 50.02% of the aggregate brokerage
commissions paid by the Portfolio, during the fiscal year ended August 31, 1996.
89.49% of the $582,639 paid to other brokers by that Portfolio during that
fiscal year (representing commissions on transactions involving approximately
$257,981,759) was directed to those brokers because of research services they
provided. During the fiscal year ended August 31, 1996, that Portfolio acquired
securities of the following of its Regular B/Ds: Exxon Credit Corp., General
Electric Capital Corp., and State Street Bank and Trust Company, N.A.; at that
date, that Portfolio held the securities of its Regular B/Ds with an aggregate
value as follows: Merrill Lynch, Pierce, Fenner & Smith, Inc., $15,312,000 and
General Electric Capital Corp., $29,400,000.
<PAGE>
During the fiscal year ended August 31, 1996, Neuberger & Berman
GUARDIAN Portfolio paid brokerage commissions of $6,886,590, of which $3,542,127
was paid to Neuberger & Berman. Transactions in which that Portfolio used
Neuberger & Berman as broker comprised 54.13% of the aggregate dollar amount of
transactions involving the payment of commissions, and 51.44% of the aggregate
brokerage commissions paid by the Portfolio, during the fiscal year ended August
31, 1996. 83.78% of the $3,344,463 paid to other brokers by that Portfolio
during that fiscal year (representing commissions on transactions involving
approximately $1,568,004,886) was directed to those brokers because of research
services they provided. During the fiscal year ended August 31, 1996, that
Portfolio acquired securities of the following of its Regular B/Ds: General
Electric Capital Corp., Merrill Lynch, Pierce, Fenner & Smith, Inc., and State
Street Bank and Trust Company, N.A.; at that date, that Portfolio held the
securities of its Regular B/Ds with an aggregate value as follows: Merrill
Lynch, Pierce, Fenner & Smith, Inc., $76,562,500.
During the fiscal year ended August 31, 1996, Neuberger & Berman
PARTNERS Portfolio paid brokerage commissions of $4,697,854, of which $2,741,666
was paid to Neuberger & Berman. Transactions in which that Portfolio used
Neuberger & Berman as broker comprised 61.16% of the aggregate dollar amount of
transactions involving the payment of commissions, and 58.36% of the aggregate
brokerage commissions paid by the Portfolio, during the fiscal year ended August
31, 1996. 93.84% of the $1,956,188 paid to other brokers by that Portfolio
during that fiscal year (representing commissions on transactions involving
approximately $1,078,447,908) was directed to those brokers because of research
services they provided. During the fiscal year ended August 31, 1996, that
Portfolio acquired securities of the following of its Regular B/Ds: Exxon Credit
Corp., General Electric Capital Corp., and State Street Bank and Trust Company,
N.A.; at that date, that Portfolio held the securities of its Regular B/Ds with
an aggregate value as follows: General Electric Capital Corp., $30,000,000.
During the fiscal year ended August 31, 1996, the Portfolios earned the
following amounts of interest income from the collateralization of securities
loans, from which Neuberger & Berman was paid the indicated amounts:
Neuberger & Berman
----------------------------------------------------------
GUARDIAN FOCUS PARTNERS MANHATTAN
Portfolio Portfolio Portfolio Portfolio
1996
- ----
Interest $2,427,096 368,663 173,908 301,788
Payment to N&B $2,129,341 330,001 118,041 186,163
Mark R. Goldstein; Kent C. Simons and Kevin L. Risen; and Michael M.
Kassen and Robert I. Gendelman, each of whom is a Vice President of N&B
Management (except for Mr. Risen and Mr. Gendelman, who are Assistant Vice
Presidents) and a principal of Neuberger & Berman (except for Mr. Risen and Mr.
Gendelman), are the persons primarily responsible for making decisions as to
specific action to be taken with respect to the investment portfolios 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.
<PAGE>
THE FOLLOWING SECTION IS ADDED PRIOR TO REGISTRATION STATEMENT (PAGE 56):
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
The following table sets forth the name, address, and percentage of
ownership of each person who was known by each Fund to own beneficially or of
record 5% or more of that Fund's outstanding shares at December 16, 1996.
Percentage of
Ownership at
Name and Address December 16, 1996
---------------- -----------------
Neuberger & Berman Neuberger & Berman 100.00%
MANHATTAN Assets Management Inc.
605 Third Avenue, 2nd Floor
New York, NY 10158-0180
Neuberger & Berman Neuberger & Berman 100.00%
FOCUS Assets Management Inc.
605 Third Avenue, 2nd Floor
New York, NY 10158-0180
Neuberger & Berman Travelers Insurance Co. #4 63.12%
GUARDIAN Assets Attn: Roger Ferlund
5MS - One Tower Sq.
Hartford, CT 06183-0001
Neuberger & Berman 36.88%
Management Inc.
605 Third Avenue, 2nd Floor
New York, NY 10158-0180
Neuberger & Berman Neuberger & Berman 70.39%
PARTNERS Assets Management Inc.
605 Third Avenue, 2nd Floor
New York, NY 10158-0180
Travelers Insurance Co. #4 29.16%
Attn: Roger Ferlund
5MS - One Tower Sq.
Hartford, CT 06183-0001
FINANCIAL STATEMENTS
THIS SECTION (PAGE 57) IS AMENDED TO READ AS FOLLOWS:
The following financial statements and related documents are
incorporated herein by reference from Neuberger & Berman PARTNERS Assets' Annual
Report to Shareholders for the fiscal year ended August 31, 1996:
The audited financial statements of the Fund and the Portfolio and
notes thereto for the fiscal year ended August 31, 1996, and the
report of Ernst & Young LLP, independent auditors, with respect to
such audited financial statements of Neuberger & Berman PARTNERS
Assets and Portfolio.
<PAGE>
The following financial statements and related documents are
incorporated herein by reference from the Annual Report to Shareholders of
Neuberger & Berman Equity Funds for
the fiscal year ended August 31, 1996:
The audited financial statements of the Portfolios and notes
thereto for the fiscal year ended August 31, 1996, and the reports
of Ernst & Young LLP, independent auditors, with respect to such
audited financial statements of Neuberger & Berman FOCUS Portfolio
and Neuberger & Berman GUARDIAN Portfolio, and the report of
Coopers & Lybrand L.L.P., independent accountants, with respect to
such audited financial statements of Neuberger & Berman MANHATTAN
Portfolio.
<PAGE>
- -----------------------------------------------------------------
NEUBERGER & BERMAN EQUITY ASSETS AND PORTFOLIOS
STATEMENT OF ADDITIONAL INFORMATION
DATED FEBRUARY 13, 1996
Neuberger & Berman Neuberger & Berman Focus Assets
Manhattan Assets (and (and Neuberger & Berman Focus
Neuberger & Berman Portfolio)
Manhattan Portfolio)
Neuberger & Berman Guardian Neuberger & Berman Partners
Assets (and Neuberger & Berman Assets (and Neuberger & Berman
Guardian Portfolio) Partners Portfolio)
No-Load Mutual Funds
605 Third Avenue, 2nd Floor, New York, NY 10158-0180
Toll-Free 800-366-6264
- -----------------------------------------------------------------
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 13, 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, Institutional Services,
605 Third Avenue, 2nd Floor, New York, NY 10158- 0180, or by calling
800-366-6264.
This Statement of Additional Information ("SAI") is not a
prospectus and should be read in conjunction with the Prospectus.
No person has been authorized to give any information or to make
any representations not contained in the Prospectus or in this SAI in connection
with the offering made by the Prospectus, and, if given or made, such
information or representations must not be relied upon as having been authorized
by a Fund or its distributor. The Prospectus and this SAI do not constitute an
offering by a Fund or its distributor in any jurisdiction in which such offering
may not lawfully be made.
<PAGE>
TABLE OF CONTENTS
PAGE
INVESTMENT INFORMATION..................................................... 1
Investment Policies and Limitations................................. 1
Mark R. Goldstein, Portfolio Manager of Neuberger & Berman
Manhattan Portfolio........................................... 6
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...................... 8
Additional Investment Information................................... 8
Neuberger & Berman Focus Portfolio - Description of Economic
Sectors....................................................... 20
PERFORMANCE INFORMATION.................................................... 23
Total Return Computations........................................... 23
Comparative Information............................................. 24
Other Performance Information....................................... 26
CERTAIN RISK CONSIDERATIONS................................................ 27
TRUSTEES AND OFFICERS...................................................... 27
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES.......................... 34
Investment Manager and Administrator................................ 34
Sub-Adviser......................................................... 37
Investment Companies Managed........................................ 38
Management and Control of N&B Management............................ 40
DISTRIBUTION ARRANGEMENTS.................................................. 41
Distributor......................................................... 41
Rule 12b-1 Plan..................................................... 42
ADDITIONAL EXCHANGE INFORMATION............................................ 44
ADDITIONAL REDEMPTION INFORMATION.......................................... 44
DIVIDENDS AND OTHER DISTRIBUTIONS.......................................... 45
ADDITIONAL TAX INFORMATION................................................. 45
Taxation of the Funds............................................... 45
Taxation of the Portfolios.......................................... 46
Taxation of the Funds' Shareholders................................. 49
PORTFOLIO TRANSACTIONS..................................................... 49
Portfolio Turnover.................................................. 56
REPORTS TO SHAREHOLDERS.................................................... 56
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<PAGE>
PAGE
ORGANIZATION............................................................... 57
CUSTODIAN AND TRANSFER AGENT............................................... 57
INDEPENDENT AUDITORS/ACCOUNTANTS........................................... 57
LEGAL COUNSEL.............................................................. 57
REGISTRATION STATEMENT..................................................... 57
FINANCIAL STATEMENTS....................................................... 58
Appendix A................................................................. 59
RATINGS OF CORPORATE BONDS AND COMMERCIAL PAPER..................... 59
Appendix B................................................................. 62
THE ART OF INVESTMENT:
A CONVERSATION WITH ROY NEUBERGER................... 62
- ii -
<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. 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 securities) in an open-end management investment
company having substantially the same investment objective, policies, and
limitations as the Fund.
- 1 -
<PAGE>
All other fundamental investment policies and limitations and the
non-fundamental investment policies and limitations of each Fund and its
corresponding Portfolio are identical. Therefore, although the 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.
- 2 -
<PAGE>
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) 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.
- 3 -
<PAGE>
6. OWNERSHIP OF PORTFOLIO SECURITIES BY OFFICERS AND TRUSTEES. No
Portfolio may purchase or retain the securities of any issuer if, to the
knowledge of N&B Management, those officers and trustees of Managers Trust and
officers and directors of N&B Management who each owns individually more than
1/2 of 1% of the outstanding securities of such issuer, together own more than
5% of such securities.
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 transactions. The Portfolios do not construe the
foregoing limitation to preclude 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 invested in illiquid
securities. Illiquid securities include securities that cannot be sold within
seven days in the ordinary course of business for approximately the amount at
which the Portfolio has valued the securities, such as repurchase agreements
maturing in more than seven days.
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.
- 4 -
<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 Portfolios 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 shouldn't try
- 5 -
<PAGE>
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 Management 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 even when the market is
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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 marketplace 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 its 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 in a form determined to be satisfactory by the Portfolio Trustees.
The collateral, which must be marked to market daily, must be equal to at least
100% of the market value of the loaned securities, which will also be marked to
market daily. N&B Management believes the risk of loss on these transactions is
slight because, if a borrower were to default for any reason, the collateral
should satisfy the obligation. However, as with other extensions of secured
credit, loans of portfolio securities involve some risk of loss of rights in the
collateral should the borrower fail financially.
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RESTRICTED SECURITIES AND RULE 144A SECURITIES (ALL PORTFOLIOS).
Each Portfolio may invest in restricted securities, which are securities that
may not be sold to the public without an effective registration statement under
the 1933 Act or, if they are unregistered, may be sold only in a privately
negotiated transaction or pursuant to an exemption from registration. In
recognition of the increased size and liquidity of the institutional market for
unregistered securities and the importance of institutional investors in the
formation of capital, the SEC has adopted Rule 144A under the 1933 Act. Rule
144A is designed further to facilitate efficient trading among institutional
investors by permitting the sale of certain unregistered securities to qualified
institutional buyers. To the extent privately placed securities held by a
Portfolio qualify under Rule 144A, and an institutional market develops for
those securities, the Portfolio likely will be able to dispose of the securities
without registering them under the 1933 Act. To the extent that institutional
buyers become, for a time, uninterested in purchasing these securities,
investing in Rule 144A securities could increase the level of a Portfolio's
illiquidity. N&B Management, acting under guidelines established by the
Portfolio Trustees, may determine that certain securities qualified for trading
under Rule 144A are liquid. Foreign securities that can be freely sold in the
markets in which they are principally traded are not considered to be
restricted. Regulation S under the 1933 Act permits the sale abroad of
securities that are not registered for sale in the United States.
Where registration is required, a Portfolio may be obligated to pay
all or part of the registration expenses, and a considerable period may elapse
between the decision to sell and the time the Portfolio may be permitted to sell
a security under an effective registration statement. If, during such a period,
adverse market conditions were to develop, the Portfolio might obtain a less
favorable price than prevailed when it decided to sell. To the extent privately
placed securities, including Rule 144A securities, are illiquid, purchases
thereof will be subject to each Portfolio's 10% limit on investments in illiquid
securities. Restricted securities for which no market exists are priced at fair
value as determined in accordance with procedures approved and periodically
reviewed by the Portfolio Trustees.
REVERSE REPURCHASE AGREEMENTS (ALL PORTFOLIOS). In a reverse
repurchase agreement, a Portfolio sells portfolio securities subject to its
agreement to repurchase the securities at a later date for a fixed price
reflecting a market rate of interest; these agreements are considered borrowings
for purposes of the Portfolios' investment policies and limitations concerning
borrowings. While a reverse repurchase agreement is outstanding, a Portfolio
will maintain with its custodian in a segregated account cash, U.S. Government
or Agency Securities, or other liquid, high-grade debt securities, marked to
market daily, in an amount at least equal to the Portfolio's obligations under
the agreement. There is a risk that the contra-party to a reverse repurchase
agreement will be unable or unwilling to complete the transaction as scheduled,
which may result in losses to the Portfolio.
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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 deposit ("CDs"), bankers'
acceptances and commercial paper. These investments are subject to each
Portfolio's quality standards. While investments in foreign securities are
intended to reduce risk by providing further diversification, such investments
involve sovereign and other risks, in addition to the credit and market risks
normally associated with domestic securities. These additional risks include the
possibility of adverse political and economic developments (including political
instability) and the potentially adverse effects of unavailability of public
information regarding issuers, less governmental supervision and regulation of
financial markets, reduced liquidity of certain financial markets, and the lack
of uniform accounting, auditing, and financial standards or the application of
standards that are different or less stringent than those applied in the United
States.
Each Portfolio also may invest in equity, debt, or other
income-producing securities that are denominated in or indexed to foreign
currencies, including (1) common and preferred stocks, (2) CDs, commercial
paper, fixed time deposits, and bankers' acceptances issued by foreign banks,
(3) obligations of other corporations, and (4) obligations of foreign
governments or their subdivisions, agencies, and instrumentalities,
international agencies, and supranational entities. Investing in foreign
currency denominated securities includes the special risks associated with
investing in non-U.S. issuers described in the preceding paragraph and the
additional risks of (1) adverse changes in foreign exchange rates, (2)
nationalization, expropriation, or confiscatory taxation, (3) adverse changes in
investment or exchange control regulations (which could prevent cash from being
brought back to the United States), and (4) expropriation or nationalization of
foreign portfolio companies. Additionally, dividends and interest payable on
foreign securities may be subject to foreign taxes, including taxes withheld
from those payments. Commissions on foreign securities exchanges are often at
fixed rates and are generally higher than negotiated commissions on U.S.
exchanges, although the Portfolios endeavor to achieve the most favorable net
results on portfolio transactions. Each Portfolio may invest only in securities
of issuers in countries whose governments are considered stable by N&B
Management.
Foreign securities often trade with less frequency and in less
volume than domestic securities and therefore may exhibit greater price
volatility. Additional costs associated with an investment in foreign securities
may include higher custodial fees than apply to domestic custody arrangements,
and transaction costs of foreign currency conversions.
Prices of foreign securities and exchange rates for foreign
currencies may be affected by the interest rates prevailing in other countries.
Interest rates in other countries are often affected by local factors, including
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<PAGE>
the strength of the local economy, the demand for borrowing, the government's
fiscal and monetary policies, and the international balance of payments.
Individual foreign economies may differ favorably or unfavorably from the U.S.
economy in such respects as growth of gross national product, rate of inflation,
capital reinvestment, resource self-sufficiency, and balance of payments
position.
Foreign markets also have different clearance and settlement
procedures, and, in certain markets, there have been times when settlements have
been unable to keep pace with the volume of securities transactions, making it
difficult to conduct such transactions. Such delays in settlement could result
in temporary periods when a portion of the assets of a Portfolio are uninvested
and no return is earned thereon. The inability of a Portfolio to make intended
security purchases due to settlement problems could cause the Portfolio to miss
attractive investment opportunities. Inability to dispose of portfolio
securities due to settlement problems could result in losses to a Portfolio due
to subsequent declines in value of the portfolio securities, or, if the
Portfolio has entered into a contract to sell the securities, could result in
possible liability to the purchaser.
In order to limit the risk inherent in investing in foreign
currency denominated securities, 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 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
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<PAGE>
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 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
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<PAGE>
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 the premium
received from writing the call 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.
A Portfolio pays brokerage commissions in connection with
purchasing or writing options, including those used to close out existing
positions. These brokerage commissions normally are higher than those applicable
to purchases and sales of portfolio securities.
Options normally have expiration dates between three and nine
months from the date written. The exercise price of an option may be below,
equal to, or above the market value of the underlying security at the time the
option is written.
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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 effective 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
protecting 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 denominated in a particular
foreign currency would diminish if the value of the U.S. dollar increased
against that currency. Such a decline could be partially or completely offset by
an increase in value of a 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 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. A Portfolio would engage in such
transactions to protect against declines in the U.S. dollar value of portfolio
securities or increases in the U.S. dollar cost of securities to be acquired, or
to protect the U.S. dollar equivalent of dividends, interest, or other payments
on those securities. As with other types of options, however, writing an option
on foreign currency constitutes only a partial hedge, up to the amount of the
premium received, and a Portfolio could be required to purchase or sell foreign
currencies at disadvantageous exchange rates, thereby incurring losses. The
risks of currency options are similar to the risks of other options, discussed
herein. Certain options on foreign currencies are traded on the OTC market and
involve liquidity and credit risks that may not be present in the case of
exchange-traded currency options. To the extent a Portfolio writes options on
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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 Instruments 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.
The Portfolios' use of Hedging Instruments may be limited by
provisions of the Internal Revenue Code of 1986, as amended ("Code"), with which
each Portfolio must comply if its corresponding Fund is to qualify as a
regulated investment company ("RIC"). See "Additional Tax Information."
COVER FOR HEDGING INSTRUMENTS. Each Portfolio will comply with SEC
guidelines regarding cover for Hedging Instruments and, if the guidelines so
require, set aside in a segregated account with its custodian cash, U.S.
Government or Agency Securities, or other liquid, high-grade debt securities in
the prescribed amount. Securities held in a segregated account cannot be sold
while the 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
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promptly to dispose of assets which cover, or are segregated with respect to, an
illiquid option or forward position; this inability 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 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 that Portfolio. In such a case,
N&B Management will engage in an orderly disposition of the downgraded
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<PAGE>
securities to the extent necessary to ensure that the Portfolio's holdings of
such securities will not exceed 5% of its net assets (15% in the case of
Neuberger & Berman Partners Portfolio)
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.
The market prices of zero coupon securities generally are more
volatile than the prices of securities that pay interest periodically. Zero
coupon securities are likely to respond to changes in interest rates to a
greater degree than other types of debt securities having 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, such securities ordinarily provide a stream of income with generally
higher yields than common stocks of the same or similar issuers, but lower than
the yield on non-convertible debt. Convertible securities are usually
subordinated to comparable-tier non-convertible securities but rank senior to
common stock in a corporation's capital structure. The value of a convertible
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security is a function of (1) its yield in comparison to the yields of other
securities of comparable maturity and quality that do not have a conversion
privilege and (2) its worth if converted into the underlying common stock.
Convertible securities are typically issued by smaller
capitalization companies whose stock prices may be volatile. The price of a
convertible security often reflects variations in the price of the underlying
common stock in a way that non-convertible debt does not. A convertible security
may be subject to redemption at the option of the issuer at a price established
in the security's governing instrument. If a convertible security held by 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 not more than six such sectors:
(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,
- 18 -
<PAGE>
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 research,
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.
(6) HEALTH CARE SECTOR: Companies engaged in design, manufacture, 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
- 19 -
<PAGE>
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 television and radio broadcast are subject to government
regulation.
(10) RETAILING SECTOR: Companies engaged in retail distribution 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 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.
- 20 -
<PAGE>
(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:
n
P(1+T) = ERV
Average annual total return smooths out year-to-year variations
and, in that respect, differs from actual year-to-year results.
As of the date of this SAI, the Funds 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.
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<PAGE>
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 $148,028 on January 31, 1996.
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 $940,972 on January 31, 1996.
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 $2,731,965 on January 31, 1996.
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 $316,602 on January 31, 1996.
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; 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.
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<PAGE>
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 Newspaper, or
(2) recognized stock and other indices, such as the S&P 500
Composite Stock Price Index ("S&P 500 Index"), S&P Small Cap 600
Index ("S&P 600 Index"), S&P Mid Cap 400 Index ("S&P 400 Index"),
Russell 2000 Stock Index, 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.
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 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.
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<PAGE>
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
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 Management'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.
- --------
1 Source: College Board, 1994, 1995 Annual Survey of Colleges, Princeton, NJ,
assuming an average 6% increase in annual expenses.
- 24 -
<PAGE>
TRUSTEES AND OFFICERS
The following table sets forth information concerning the trustees
and officers of the Trusts, including their addresses and principal business
experience during the past five years. Some persons named as trustees and
officers also serve in similar capacities for other funds, and (where
applicable) their corresponding portfolios, administered or managed by N&B
Management and Neuberger & Berman, L.P. ("Neuberger & Berman").
<TABLE>
<CAPTION>
Name, Age, and Positions Held PRINCIPAL OCCUPATION(S)(2)
ADDRESS(1) WITH THE TRUSTS
<C>
<S> <C>
Attorney at Law, Faith Colish, A
Faith Colish (60) Trustee of each Trust Professional Corporation.
63 Wall Street
24th Floor
New York, NY 10005
Retired. Formerly Senior Vice President
Donald M. Cox (73) Trustee of each Trust and Director of Exxon Corporation;
435 East 52nd Street Director of Emigrant Savings Bank.
New York, NY 10022
Partner of Neuberger & Berman; President
Stanley Egener* (61) Chairman of the Board, and Director of N&B Management; Chairman
Chief Executive Officer, of the Board, Chief Executive Officer,
and Trustee of each and Trustee of eight other mutual funds
Trust for which N&B Management acts as
investment manager or administrator.
Chairman and Chief Executive Officer of
Alan R. Gruber (68) Trustee of each Trust Orion Capital Corporation (property and
Orion Capital casualty insurance); Director of
Corporation Trenwick Group, Inc. (property and
600 Fifth Avenue casualty reinsurance); Chairman of the
24th Floor Board and Director of Guaranty National
New York, NY 10020 Corporation (property and casualty
insurance); formerly Director of Ketema,
Inc. (diver- sified manufacturer).
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<PAGE>
Vice President and Special Counsel to
Howard A. Mileaf (59) Trustee of each Trust WHX Corporation (holding company) since
WHX Corporation 1992; formerly Vice President and
110 East 59th Street General Counsel of Keene Corporation
New York, NY 10022 (manu- facturer of industrial products);
Director of Kevlin Corporation
(manufacturer of microwave and other
products).
Until 1993, President of the Securities
Edward I. O'Brien* (67) Trustee of each Trust Industry Association ("SIA") (securities
12 Woods Lane industry's representative in government
Scarsdale, NY 10583 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. (67) Trustee of each Trust President of SOBRO (South Bronx Overall
90 Riverside Drive Economic Development Corporation).
Apartment 1B
New York, NY 10024
John P. Rosenthal (63) Trustee of each Trust Senior Vice President of Burnham
Burnham Securities Inc. Securities Inc. (a registered broker-
Burnham Asset Management Corp. dealer) since 1991; formerly Partner of
1325 Avenue of the Silberberg, Rosenthal & Co. (member of
Americas National Association of Securities
17th Floor Dealers, Inc.); Director, Cancer
New York, NY 10019 Treatment Holdings, Inc.
Cornelius T. Ryan (64) Trustee of each Trust General Partner of Oxford Partners and
Oxford Bioscience Oxford Bioscience Partners (venture
Partners capital partnerships) and President of
315 Post Road West Oxford Venture Corporation; Director of
Westport, CT 06880 Capital Cash Management Trust (money
market fund) and Prime Cash Fund.
- 26 -
<PAGE>
Gustave H. Shubert (67) Trustee of each Trust Senior Fellow/Corporate Advisor and
13838 Sunset Boulevard Advisory Trustee of Rand (a non-profit
Pacific Palisades, CA 90272 public interest research institution)
since 1989; Honorary Member of the Board
of Overseers of the Institute for Civil
Justice, the Policy Advisory Committee
of the Clinical Scholars Program at the
University of California, the American
Association for the Advancement of
Science, the Counsel on Foreign
Relations, and the Institute for
Strategic Studies (London); advisor to
the Program Evaluation and Methodology
Division of the U.S. General Accounting
Office; formerly Senior Vice President
and Trustee of Rand.
Lawrence Zicklin* (59) President and Trustee of Partner of Neuberger & Berman; Director
each Trust of N&B Management; President and/or
Trustee of five other mutual funds for
which N&B Management acts as investment
manager or administrator.
Daniel J. Sullivan (56) Vice President of each Senior Vice President of N&B Management
Trust since 1992; prior thereto, Vice
President of N&B Management; Vice
President of eight other mutual funds
for which N&B Management acts as
investment manager or administrator.
Michael J. Weiner (48) Vice President and 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 (39) Secretary of each Trust Vice President of N&B Management;
Secretary of eight other mutual funds
for which N&B Management acts as
investment manager or administrator.
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<PAGE>
Richard Russell (49) Treasurer and Principal Vice President of N&B Management since
Accounting Officer of 1993; prior thereto, Assistant Vice
each Trust President of N&B Management; Treasurer
and Principal Accounting Officer of
eight other mutual funds for which N&B
Management acts as investment manager or
administrator.
Stacy Cooper-Shugrue (32) Assistant Secretary of Assistant Vice President of N&B
each Trust Management since 1993; prior thereto,
employee of N&B Management; Assistant
Secretary of eight other mutual funds
for which N&B Management acts as
investment manager or administrator.
C. Carl Randolph (58) Assistant 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 Management
acts as investment manager or
administrator.
- --------------------
</TABLE>
(1) Unless otherwise indicated, the business address of each listed person is
605 Third Avenue, New York, New York 10158.
(2) Except as otherwise indicated, each individual has held the positions shown
for at least the last five years.
* Indicates a trustee who is an "interested person" of 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
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<PAGE>
offices. In the case of settlement, such indemnification will not be provided
unless it has been determined (by a court or other body approving the settlement
or other disposition, by a majority of disinterested trustees based upon a
review of readily available facts, or in a written opinion of independent
counsel) that such officers or trustees have not engaged in willful misfeasance,
bad faith, gross negligence, or reckless disregard of their duties.
The following table sets forth information concerning the
compensation of the trustees and officers of the Trust. None of the Neuberger &
Berman Funds[SERVICEMARK] has any retirement plan for its trustees or officers.
<TABLE>
<CAPTION>
TABLE OF COMPENSATION
FOR FISCAL YEAR ENDED 8/31/95
-----------------------------
Aggregate Total Compensation from the
Name and Position with Compensation from Neuberger & Berman Fund Complex
the Trust the Trust Paid to Trustees
- ---------------------- ----------------- -------------------------------
<S> <C> <C>
Faith Colish $0 $39,000
Trustee (5 other investment companies)
Donald M. Cox $0 $31,000
Trustee (3 other investment companies)
Stanley Egener $0 $0
Chairman of the Board, (9 other investment companies)
Chief Executive 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)
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<PAGE>
Cornelius T. Ryan $0 $33,500
Trustee (3 other investment companies)
Gustave H. Shubert $0 $30,000
Trustee (3 other investment companies)
Lawrence Zicklin $0 $0
President and Trustee (5 other investment companies)
</TABLE>
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 were 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 the Trusts. See "Trustees and Officers." Each Portfolio pays N&B
Management a management fee based on the Portfolio's average daily net assets,
as described in the Prospectus.
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<PAGE>
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 February 12, 1996. For such administrative services,
each Fund pays N&B Management a fee based on the Fund's average daily net
assets, as described in the Prospectus. N&B Management enters into
administrative services agreements with Institutions, pursuant to which it
compensates such Institutions for accounting, recordkeeping and other services
that they provide to investors who purchase shares of the Funds.
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, without penalty, with
respect to a Portfolio on 60 days' written notice either by Managers Trust or by
N&B Management. The Administration Agreement is terminable, without penalty,
with respect to a Fund on 60 days' written notice either by N&B Management or by
the Trust if authorized by the Fund Trustees, including a majority of the
Independent Fund Trustees. Each Agreement terminates automatically if it is
assigned.
In addition to the voluntary expense 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
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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 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 10158-3698, 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 approved 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 N&B Management will pay for the services rendered by Neuberger &
Berman based on the direct and indirect costs to Neuberger & Berman in
connection with those services. Neuberger & Berman also serves as sub-adviser
for all of the other mutual funds managed by N&B Management.
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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 by Neuberger & Berman on not less than 30 nor more
than 60 days' written notice. The Sub-Advisory Agreement also terminates
automatically with respect to each Portfolio if it is assigned or if the
Management Agreement terminates with respect to that Portfolio.
Most money managers that come to the Neuberger & Berman
organization have at least fifteen years experience. Neuberger & Berman and N&B
Management employ experienced professionals that work in a competitive
environment.
INVESTMENT COMPANIES MANAGED
N&B Management currently serves as investment manager of the
following investment companies. As of December 31, 1995, these companies, along
with three investment companies advised by Neuberger & Berman, had aggregate net
assets of approximately $11.9 billion, as shown in the following list:
Approximate Net Assets
Name at December 31,
----- 1995
Neuberger & Berman Cash Reserves Portfolio $ 433,504,363
(investment portfolio for Neuberger &
Berman Cash Reserves)
Neuberger & Berman Government Money $ 275,569,350
Portfolio
(investment portfolio for Neuberger &
Berman Government Money Fund)
Neuberger & Berman Limited Maturity Bond $ 318,037,698
Portfolio
(investment portfolio for Neuberger &
Berman Limited Maturity Bond Fund and
Neuberger & Berman Limited Maturity
Bond Trust)
Neuberger & Berman Municipal Money $ 152,876,653
Portfolio
(investment portfolio for Neuberger &
Berman Municipal Money Fund)
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<PAGE>
Neuberger & Berman Municipal Securities $ 43,859,557
Portfolio
(investment portfolio for Neuberger &
Berman Municipal Securities Trust)
Neuberger & Berman New York Insured $ 11,742,945
Intermediate Portfolio
(investment portfolio for Neuberger &
Berman New York Insured Intermediate
Fund)
Neuberger & Berman Ultra Short Bond $ 102,724,936
Portfolio
(investment portfolio for Neuberger &
Berman Ultra Short Bond Fund and
Neuberger & Berman Ultra Short Bond
Trust)
Neuberger & Berman Focus Portfolio $1,057,224,027
(investment portfolio for Neuberger &
Berman Focus Fund, Neuberger & Berman
Focus Trust and Neuberger & Berman
Focus Assets)
Neuberger & Berman Genesis Portfolio $ 152,439,092
(investment portfolio for Neuberger &
Berman Genesis Fund and Neuberger &
Berman Genesis Trust)
Neuberger & Berman Guardian Portfolio $5,321,221,497
(investment portfolio for Neuberger &
Berman Guardian Fund, Neuberger &
Berman Guardian Trust and Neuberger &
Berman Guardian Assets)
Neuberger & Berman International Portfolio $ 33,320,099
(investment portfolio for Neuberger &
Berman International Fund)
Neuberger & Berman Manhattan Portfolio $ 638,295,408
(investment portfolio for Neuberger &
Berman Manhattan Fund, Neuberger &
Berman Manhattan Trust and Neuberger
& Berman Manhattan Assets)
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<PAGE>
Neuberger & Berman Partners Portfolio $1,741,742,815
(investment portfolio for Neuberger &
Berman Partners Fund, Neuberger &
Berman Partners Trust and Neuberger &
Berman Partners Assets)
Neuberger & Berman Socially Responsive $ 115,240,931
Portfolio
(investment portfolio for Neuberger &
Berman Socially Responsive Fund,
Neuberger & Berman Socially
Responsive Trust, and Neuberger &
Berman NYCDC Socially Responsive
Trust)
Advisers Managers Trust $1,306,368,916
(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 $64,302,128, $99,396,468, and
$26,077,793, respectively, at December 31, 1995.
The investment decisions concerning the Portfolios and the other
funds and portfolios managed by N&B Management (collectively, "Other N&B Funds")
have been and will continue to be made independently of one another. In terms of
their investment objectives, most of the Other N&B Funds differ from the
Portfolios. Even where the investment objectives are similar, however, the
methods used by the Other N&B Funds and the Portfolios to achieve their
objectives may differ.
There may be occasions when a Portfolio and one or more of the
Other N&B Funds or other accounts managed by Neuberger & Berman are
contemporaneously engaged in purchasing or selling the same securities from or
to third parties. When this occurs, the transactions are averaged as to price
and allocated as to amounts in accordance with a formula 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
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<PAGE>
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; Peter E. Sundman, Senior Vice
President; Michael J. Weiner, Senior Vice President; Claudia A. Brandon,
Vice President; Robert Conti, Treasurer; William Cunningham, Vice
President; Clara Del Villar, Vice President; Mark R. Goldstein, Vice
President; Farha-Joyce Haboucha, Vice President; Michael M. Kassen, Vice
President; Michael Lamberti, Vice President; Josephine P. Mahaney, Vice
President; Lawrence Marx III, Vice President; Ellen Metzger, Vice
President and Secretary; Janet W. Prindle, Vice President; Felix Rovelli,
Vice President; Richard Russell, Vice President; Kent C. Simons, Vice
President; Frederick B. Soule, Vice President; Judith M. Vale, Vice
President; Thomas Wolfe, Vice President; Andrea Trachtenberg, Vice
President of Marketing; Patrick T. Byrne, Assistant Vice President; Stacy
Cooper-Shugrue, Assistant Vice President; Robert Cresci, Assistant Vice
President; Barbara DiGiorgio, Assistant Vice President; Roberta D'Orio,
Assistant Vice President; Joseph G. Galli, Assistant Vice President;
Robert I. Gendelman, Assistant Vice President; Leslie Holliday-Soto,
Assistant Vice President; Jody L. Irwin, Assistant Vice President; Carmen
G. Martinez, Assistant Vice President; Paul Metzger, Assistant Vice
President; Susan Switzer, Assistant Vice President; Susan Walsh, Assistant
Vice President; and Celeste Wischerth, Assistant Vice President. Messrs.
Cantor, Egener, Lainoff, Schwartz, Zicklin, Goldstein, Kassen, Marx, and
Simons and Mmes. Havell and Prindle are general partners of Neuberger &
Berman.
Messrs. Egener and Zicklin are trustees and officers, and
Messrs. Sullivan, Weiner, and Russell and Mmes. Brandon and Cooper-Shugrue
are officers, of each Trust. C. Carl Randolph, a general partner of
Neuberger & Berman, also is an officer of each Trust.
All of the outstanding voting stock in N&B Management is owned by
persons who are also general partners of Neuberger & Berman.
DISTRIBUTION ARRANGEMENTS
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
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<PAGE>
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.
From time to time, N&B Management may enter into arrangements
pursuant to which it compensates a registered broker-dealer or other third party
for services in connection with the distribution of Fund shares.
The Trust, on behalf of each Fund, and the Distributor are parties
to a Distribution Agreement dated February 12, 1996 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 February 12, 1997. 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 and a majority of those Independent Fund Trustees who have no direct or
indirect financial interest in the Distribution Agreement or the Trust's plan
pursuant to Rule 12b-1 under the 1940 Act ("Plan") ("Rule 12b-1 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 the Plan on October 25, 1995, as amended
on January 31, 1996. The Plan provides that, as compensation for administrative
and other services provided for the Funds, its activities and expenses related
to the sale and distribution of Fund shares, and ongoing services to investors
in 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
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<PAGE>
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 for a period of one year from its
execution. 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
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
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
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<PAGE>
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, an Institution
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.
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.
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<PAGE>
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 securities or those currencies
("Income Requirement"); (2) the Fund must derive less than 30% of its gross
income each taxable year from the sale or other disposition of securities, or
any of the following, that were held for less than three months -- (i) 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 purposes of determining whether the fund
satisfies all the requirements described above to qualify as a RIC. Although
that ruling may not be relied on as precedent by the Funds, N&B Management
believes that the reasoning thereof and, hence, its conclusion apply to the
Funds as well.
Each Fund will be subject to a nondeductible 4% excise tax ("Excise
Tax") to the extent it fails to distribute by the end of any calendar year
substantially all of its ordinary income for that year and capital gain net
income for the one-year period ended on October 31 of that year, plus certain
other amounts.
See the next section for a discussion of the tax consequences to
the Funds of distributions to them from the Portfolios, investments by the
Portfolios in certain securities, and hedging transactions engaged in by the
Portfolios.
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<PAGE>
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 treaties between
certain countries and the United States may reduce or eliminate these foreign
taxes, however, and many foreign countries do not impose taxes on capital gains
in respect of investments by foreign investors.
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
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<PAGE>
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 writing
(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 currencies, 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 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 increase in
value of a position that is part of a "designated hedge" will be offset by any
decrease in value (whether realized or not) of the offsetting hedging position
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<PAGE>
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 particular 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, if necessary,
from the proceeds of sales of that Portfolio's securities. 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 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 its portfolio securities and in connection with the writing
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<PAGE>
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 the Portfolio, 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 the Portfolio, 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 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.
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<PAGE>
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 the Portfolio, 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
PARTNERS 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 the Portfolio, 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 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
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<PAGE>
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 income from the
collateralization of securities loans, from which Neuberger & Berman was paid
the indicated amounts:
<TABLE>
<CAPTION>
1994 1995
------------------------ ------------------------
Payment to Payment to
Neuberger & Neuberger &
Portfolio Interest Berman Interest Berman
- --------- -------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Neuberger & Berman $147,103 $119,620 $1,430,672 $1,252,190
GUARDIAN Portfolio
Neuberger & Berman FOCUS 38,627 33,225 327,447 291,207
Portfolio
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<PAGE>
Neuberger & Berman 16,085 13,880 52,410 48,736
PARTNERS Portfolio
Neuberger & Berman 0 0 507,239 270,594
MANHATTAN Portfolio
</TABLE>
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 generally
seeks to obtain the best price and execution of orders. Commission rates, being
a component of price, are considered along with other relevant factors. 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
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<PAGE>
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 Portfolio is
subject to the requirements of Section 11(a) of the Securities Exchange Act of
1934. Section 11(a) prohibits members of national securities exchanges from
retaining compensation for executing exchange transactions for accounts which
they or their affiliates manage, except where they have the authorization of the
persons authorized to transact business for the account and comply with certain
annual reporting requirements. The Portfolio Trustees have expressly authorized
Neuberger & Berman to retain such compensation, and Neuberger & Berman complies
with the reporting requirements of Section 11(a).
Under the 1940 Act, commissions paid by 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 of portfolio securities from, or the sale of portfolio securities to, a
Portfolio unless an appropriate exemption is available.
A committee of Independent Portfolio Trustees from time to time
reviews, among other things, information relating to the commissions charged by
Neuberger & Berman to the 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 considers the quality and reliability of brokerage
services, including execution capability, performance, and financial
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<PAGE>
responsibility, and may consider research and other investment information
provided by, and sale of Fund shares effected through, those brokers.
To ensure that accounts of all investment clients, including a
Portfolio, are treated fairly in the event that transaction instructions for
more than one investment account regarding the same security are received by
Neuberger & Berman at or about the same time, Neuberger & Berman may combine
transaction orders placed on behalf of clients, including advisory accounts in
which affiliated persons have an investment interest, for the purpose of
negotiating brokerage commissions or obtaining a more favorable price. Where
appropriate, securities purchased or sold may be allocated, in terms of amount,
to a client according to the proportion that the size of the transaction order
actually placed by the account bears to the aggregate size of transaction orders
simultaneously made by the other accounts, subject to de minimis exceptions,
with all participating accounts paying or receiving the same price.
A committee comprised of officers of N&B Management and partners of
Neuberger & Berman who are portfolio managers of 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-annually the nature and
quality of the brokerage and research services provided by other brokers. Based
on this evaluation, the committee establishes a list and projected rankings of
preferred brokers for use in determining the relative amounts of commissions to
be allocated to those brokers. Ordinarily, the brokers on the list effect a
large portion of the brokerage transactions for the N&B Funds and the Managed
Accounts that are not effected by Neuberger & Berman. However, in any
semi-annual period, brokers not on the list may be used, and the relative
amounts of brokerage commissions paid to the brokers on the list may vary
substantially from the projected rankings. These variations reflect the
following factors, among others: (1) brokers not on the list or ranking below
other brokers on the list may be selected for particular transactions because
they provide better price and/or execution, which is the primary consideration
in allocating brokerage; (2) adjustments may be required because of periodic
changes in the execution or research capabilities of particular brokers, or in
the execution or research needs of the N&B Funds and/or the Managed Accounts;
and (3) the aggregate amount of brokerage commissions generated by transactions
for the N&B Funds and the Managed Accounts may change substantially from one
semi-annual period to the next.
The commissions charged by a broker other than Neuberger & Berman
may be higher than the amount another firm might charge if N&B Management
determines in good faith that the amount of those commissions is reasonable in
relation to the value of the brokerage and research services provided by the
broker. N&B Management believes that those research services benefit the
Portfolios by supplementing the research otherwise available to N&B Management.
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<PAGE>
That research may be used by N&B Management in servicing Other N&B Funds and, in
some cases, by Neuberger & Berman in servicing the Managed Accounts. On the
other hand, research received by N&B Management from brokers effecting portfolio
transactions on behalf of the Other N&B Funds and by Neuberger & Berman from
brokers effecting portfolio transactions on behalf of the Managed Accounts may
be used for the 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 portfolios 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.
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
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<PAGE>
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
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 information
included in the Trust's registration statement filed with the SEC under the 1933
Act with respect to the securities offered by the Prospectus. 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.
FINANCIAL STATEMENTS
The following financial statements and related documents are
incorporated herein by reference from the Annual Report to Shareholders of
Neuberger & Berman Equity Funds for the fiscal year ended August 31, 1995:
The audited financial statements of the Portfolios and
notes thereto for the fiscal year ended August 31,
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<PAGE>
1995, and the reports of Ernst & Young LLP, independent auditors,
with respect to such audited financial statements of Neuberger &
Berman Focus Portfolio, Neuberger & Berman Guardian Portfolio, and
Neuberger & Berman Partners Portfolio, and the report of Coopers &
Lybrand L.L.P., independent accountants, with respect to such
audited financial statements of Neuberger & Berman Manhattan
Portfolio.
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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
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<PAGE>
visualized are most unlikely to impair the fundamentally strong position
of the issuer.
Aa - Bonds rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally known
as "high-grade bonds." They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa-rated securities, fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present that make the long-term risks appear somewhat larger than in Aaa-rated
securities.
A - Bonds rated A possess many favorable investment attributes and
are to be considered as upper-medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
that suggest a susceptibility to impairment sometime in the future.
Baa - Bonds which are rated Baa are considered as medium- grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present, but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. These bonds lack outstanding
investment characteristics and in fact have speculative characteristics as well.
Ba - Bonds rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa - Bonds rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca - Bonds rated Ca represent obligations that are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
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
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<PAGE>
security ranks in the higher end of its generic rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the issuer
ranks in the lower end of its generic rating.
S&P commercial paper ratings:
A-1 - This highest category indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted with a plus sign (+).
Moody's commercial paper ratings
Issuers rated Prime-1 (or related supporting institutions), also
known as P-1, have a superior capacity for repayment of short-term promissory
obligations. Prime-1 repayment capacity will normally be evidenced by the
following characteristics:
- Leading market positions in well-established
industries.
- High rates of return on funds employed.
- Conservative capitalization structures with moderate
reliance on debt and ample asset protection.
- Broad margins in earnings coverage of fixed financial
charges and high internal cash generation.
- Well-established access to a range of financial markets
and assured sources of alternate liquidity.
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<PAGE>
Appendix B
The Art of Investing:
A Conversation with Roy Neuberger
"I firmly believe that if you want to manage your own
money, you must be a student of the market. If you
are unwilling or unable to do that, find someone else
to manage your money for you."
NEUBERGER & BERMAN
<PAGE>
[THIS PAGE IS BLANK - IT IS AN INSIDE PAGE OF THIS BROCHURE]
<PAGE>
[PICTURE OF ROY NEUBERGER]
During my more than sixty-five years of buying and selling
securities, I've been asked many questions about my approach to
investing. On the pages that follow are a variety of my thoughts,
ideas and investment principles which have served me well over the
years. If you gain useful knowledge in the pursuit of profit as well
as enjoyment from these comments, I shall be more than content.
\s\ Roy R. Neuberger
- 1 -
<PAGE>
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
book, the last thing to particular security. It is after all just a
fall in love with is a sheet of paper indicating a part ownership in
particular security." a corporation and its use is purely
mercenary. If you must love a security, stay
in love with it until it gets overvalued;
then let somebody else fall in love.
[PICTURE OF ROY NEUBERGER]
- 4 -
<PAGE>
ANY OTHER ADVICE FOR INVESTORS?
I firmly believe that if you want to manage
your own money, you must be a student of the
market. If you're unwilling or unable to do
that, find someone else to manage your money
for you. Two options are a well-managed
no-load mutual fund or, if you have enough
assets for separate account management, a
money manager you trust with a good record.
HOW WOULD YOU DESCRIBE YOUR PERSONAL
INVESTING STYLE?
Every stock I buy is bought to be sold. The
market is a daily event, and I continually
review my holdings looking for selling
opportunities. I take a profit occasionally
on something that has gone up in price over
what was expected and simultaneously take
losses whenever misjudgment seems evident.
This creates a reservoir of buying power that
can be used to make fresh judgments on what
are the best values in the market at that
time. My active investing style has worked
well for me over the years, but for most
investors I recommend a longer-term approach.
I tend not to worry very must about the day
to day swings of the market, which are very
hard to comprehend. Instead, I try to be
rather clever in diagnosing values and trying
to win 70 to 80 percent of the time.
YOU BEGAN INVESTING IN 1929. WHAT WAS YOUR
EXPERIENCE WITH THE "GREAT CRASH"?
- 5 -
<PAGE>
The only money I managed in the Panic of 1929
was my own. My portfolio was down about 12
percent, and I had an uneasy feeling about
the market and conditions in general. Those
were the days of 10 percent margin. I studied
the lists carefully for a stock that was
overvalued in my opinion and which I could
sell short as a hedge. I came across RCA at
about $100 per share. It had recently split 5
for 1 and appeared overvalued. There were no
dividends, little income, a low net worth and
a weak financial position. I sold RCA short
in the amount equal to the dollar value of my
long portfolio. It proved to be a timely and
profitable move.
HOW DID THE CRASH OF 1929 AFFECT YOUR
INVESTING STYLE?
I am prematurely bearish when the market goes
up for a long time and everybody is happy
because they are richer. I am very bullish
when the market has gone down perceptibly and
I feel it has discounted any troubles we are
going to have.
HOW IMPORTANT ARE PSYCHOLOGICAL FACTORS TO
MARKET BEHAVIOR?
There are many factors in addition to
economic statistics or security analysis in a
buy or sell decision. I believe psychology
plays an important role in the Market. Some
people follow the crowd in hopes they'll be
swept along in the right direction, but if
the crowd is late in acting, this can be a
bad move.
I like to be contrary. When things look bad,
I become optimistic. When everything looks
rosy, and the crowd is optimistic, I like to
be a seller. Sometimes I'm too early, but I
generally profit.
AS A RENOWNED ART COLLECTOR, DO YOU FIND
SIMILARITIES BETWEEN SELECTING STOCKS AND
SELECTING WORKS OF ART?
- 6 -
<PAGE>
Both are an art, although picking stocks is a
minor art compared with painting, sculpture
"When things look bad, I or literature. I started buying art in the
become optimistic. When 30s, and in the 40s it was a daily, almost
everything looks rosy, and hourly occurrence. My inclination to buy the
the crowd is optimistic, I works of living artists comes from Van Gogh,
like to be a seller." who sold only one painting during his
lifetime. He died in poverty, only then to
become a legend and have his work sold for
millions of dollars.
[PICTURE OF ROY NEUBERGER]
There are more variables to consider now in
both buying art and picking stocks. In the
modern stock markets, the heavy use of
futures and options has changed the nature of
the investment world. In past times, the
stock market was much less complicated, as
was the art world.
Artists rose and fell on their own merits
without a lot of publicity and attention. As
more and more dealers are involved with
artists, the price of their work becomes
inflated. So I almost always buy works of
unknown, relatively undiscovered artists,
which, I suppose is similar to value
investing.
But the big difference in my view of art and
stocks is that I buy a stock to sell it and
make money. I never bought paintings or
sculptures for investment in my life. The
objective is to enjoy their beauty.
- 7 -
<PAGE>
WHAT DO YOU CONSIDER THE BUSINESS MILESTONES
IN YOUR LIFE?
Being a founder of Neuberger & Berman and
creating one of the first no-load mutual
funds. I started on Wall Street in 1929, and
during the depression I managed my own money
and that of my clientele. We all prospered,
but I wanted to have my own firm. In 1939 I
became a founder of Neuberger & Berman, and
for about 10 years we managed money for
individuals with substantial financial
assets. But I also wanted to offer the
smaller investor the benefits of professional
money management, so in 1950 I created the
Guardian Mutual Fund (now known as the
Neuberger & Berman Guardian Fund). The Fund
was kind of an innovation in its time because
it didn't charge a sales commission. I
thought the public was being overcharged for
mutual funds, so I wanted to create a fund
that would be offered directly to the public
without a sales charge. Now of course the
"no-load" fund business is a huge industry. I
managed the Fund myself for over 28 years.
[PICTURE OF ROY NEUBERGER]
YOU'RE IN YOUR NINETIES AND STILL YOU GO INTO
THE OFFICE EVERY DAY TO MANAGE YOUR
INVESTMENTS. WHY?
I like the fun of being nimble in the stock
market, and I'm addicted to the market's
fascinations.
WHAT CLOSING WORDS OF ADVICE DO YOU HAVE
ABOUT INVESTING?
Realize that there are opportunities at all
times for the adventuresome investor. And
stay in good physical condition. It's a
strange thing. You do not dissipate your
energies by using them. Exercise your body
and your brain every day, and you'll do
better in investments and in life.
- 8 -
<PAGE>
ROY NEUBERGER: A BRIEF BIOGRAPHY
Roy Neuberger is a founder of the investment
management firm Neuberger & Berman, and a
renowned value investor. He is also a
recognized collector of contemporary American
art, much of which he has given away to
museums and colleges across the country.
During the 1920s, Roy studied art in
Paris. When he realized he didn't possess the
talent to become an artist, he decided to
collect art, and to support this passion, Roy
turned to investing -- a pursuit for which
his talents have proven more than adequate.
A TALENT FOR INVESTING
Roy began his investment career by
joining a brokerage firm in 1929, seven
months before the "Great Crash." Just weeks
before "Black Monday," he shorted the stock
of RCA, thinking it was overvalued. He
profited from the falling market and gained a
reputation for market prescience and stock
selection that has lasted his entire career.
NEUBERGER & BERMAN'S FOUNDING
Roy's investing acumen attracted many
people who wished to have him manage their
money. In 1939, at the age of 36, after
purchasing a seat on the New York Stock
Exchange, Roy founded Neuberger & Berman to
provide money management services to people
who lacked the time, interest or expertise to
manage their own assets.
- 9 -
<PAGE>
NEUBERGER & BERMAN -- OVER FIVE DECADES OF
GROWTH
Neuberger & Berman has grown through
the years and now manages approximately $30
billion of equity and fixed income assets,
both domestic and international, for
individuals, institutions, and its family of
no-load mutual funds. Today, as when the firm
was founded, Neuberger & Berman follows a
value approach to investing, designed to
enable clients to advance in good markets and
minimize losses when conditions are less
favorable.
For more complete information about the
Neuberger & Berman Guardian Fund,
including fees and expenses, call
Neuberger & Berman Management at
800-877- 9700 for a free prospectus.
Please read it carefully, before you
invest or send money.
- 10 -
<PAGE>
Neuberger & Berman Management
Inc.[SERVICE MARK]
605 Third Avenue, 2nd Floor
New York, NY 10158-0006
Shareholder Services
(800) 877-9700
[COPYRIGHT SYMBOL]1995
Neuberger & Berman
PRINTED ON RECYCLED PAPER
WITH SOY BASED INKS
- 11 -
<PAGE>
NEUBERGER & BERMAN EQUITY ASSETS
POST-EFFECTIVE AMENDMENT NO. 5 ON FORM N-1A
PART C
OTHER INFORMATION
Item 24. Financial Statements And Exhibits
- ------- ---------------------------------
(a) Financial Statements:
The audited financial statements contained in the Annual Report to
Shareholders of Neuberger & Berman Partners Assets for the fiscal
year ended August 31, 1996, with respect to Neuberger & Berman
Partners Assets and Portfolio (series of Neuberger & Berman Equity
Assets and Equity Managers Trust, respectively), and contained in
the Annual Report to Shareholders of Neuberger & Berman Equity Funds
for the fiscal year ended August 31, 1996, with respect to Neuberger
& Berman Focus Portfolio, Neuberger & Berman Guardian Portfolio, and
Neuberger & Berman Manhattan Portfolio (each a series of Equity
Managers Trust), and the reports of the independent
auditors/accountants are incorporated into the Statement of
Additional Information by reference.
Included in Part A of this Post-Effective Amendment:
FINANCIAL HIGHLIGHTS for Neuberger & Berman Partners Assets for the
period indicated therein.
(b) Exhibits:
Exhibit
Number Description
------- -----------
(1) (a) Certificate of Trust. Incorporated by Reference to
Post-Effective Amendment No. 1 to Registrant's
Registration Statement, File Nos. 33-82568 and 811-8106,
EDGAR Accession No. 0000898432-95-000393.
(b) Trust Instrument of Neuberger & Berman Equity Assets.
Incorporated by Reference to Post-Effective Amendment
No. 1 to Registrant's Registration Statement, File Nos.
33-82568 and 811-8106, EDGAR Accession No.
0000898432-95-000393.
(c) Schedule A - Current Series of Neuberger & Berman Equity
Assets. Incorporated by Reference to Post-Effective
Amendment No. 1 to Registrant's Registration Statement,
File Nos. 33-82568 and 811-8106, EDGAR Accession No.
0000898432-95-000393.
(2) By-Laws of Neuberger & Berman Equity Assets.
Incorporated by Reference to Post-Effective Amendment
No. 1 to Registrant's Registration Statement, File Nos.
33-82568 and 811-8106, EDGAR Accession No.
0000898432-95-000393.
C-1
<PAGE>
(3) Voting Trust Agreement. None.
(4) (a) Trust Instrument of Neuberger & Berman Equity Assets,
Articles IV, V, and VI. Incorporated by Reference to
Post-Effective Amendment No. 1 to Registrant's
Registration Statement, File Nos. 33-82568 and 811-8106,
EDGAR Accession No. 0000898432-95-000393.
(b) By-Laws of Neuberger & Berman Equity Assets, Articles V,
VI, and VIII. Incorporated by Reference to
Post-Effective Amendment No. 1 to Registrant's
Registration Statement, File Nos. 33-82568 and 811-8106,
EDGAR Accession No. 0000898432-95-000393.
(5) (a) (i) Management Agreement Between Equity Managers Trust
and Neuberger & Berman Management Incorporated.
Incorporated by Reference to Post-Effective
Amendment No. 70 to Registration Statement of
Neuberger & Berman Equity Funds, File Nos. 2-11357
and 811-582, EDGAR Accession No.
0000898432-95-000314.
(ii) Schedule A - Series of Neuberger & Berman Equity
Managers Trust Currently Subject to the Management
Agreement. Incorporated by Reference to
Post-Effective Amendment No. 70 to Registration
Statement of Neuberger & Berman Equity Funds, File
Nos. 2-11357 and 811-582, EDGAR Accession No.
0000898432-95-000314.
(iii) Schedule B - Schedule of Compensation Under the
Management Agreement. Incorporated by Reference to
Post-Effective Amendment No. 70 to Registration
Statement of Neuberger & Berman Equity Funds, File
Nos. 2-11357 and 811-582, EDGAR Accession No.
0000898432-95-000314.
(b) (i) Sub-Advisory Agreement Between Neuberger &
Berman Management Incorporated and Neuberger &
Berman with Respect to Equity Managers Trust.
Incorporated by Reference to Post-Effective
Amendment No. 70 to Registration Statement of
Neuberger & Berman Equity Funds, File Nos.
2-11357 and 811-582, EDGAR Accession No.
0000898432-95-000314.
(ii) Schedule A - Series of Equity Managers Trust
Currently Subject to the Sub-Advisory Agreement.
Incorporated by Reference to Post-Effective
Amendment No. 70 to Registration Statement of
Neuberger & Berman Equity Funds, File Nos. 2-11357
and 811-582, EDGAR Accession No.
0000898432-95-000314.
(iii) Substitution Agreement Among Neuberger & Berman
Management Incorporated, Equity Managers Trust,
Neuberger & Berman, L.P., and Neuberger & Berman,
LLC. Incorporated by Reference to Amendment No. 7
to Registration Statement of Equity Managers
Trust, File No. 811-7910, Edgar Accession No.
0000898432-96-000557.
C-2
<PAGE>
(6) (a) (i) Distribution Agreement Between Neuberger & Berman
Equity Assets and Neuberger & Berman Management
Incorporated with Respect to Neuberger & Berman
Socially Responsive Trust. Incorporated by
Reference to Post-Effective Amendment No. 1 to
Registrant's Registration Statement, File Nos.
33-82568 and 811-8106, EDGAR Accession No.
0000898432-95-000393.
(ii) Schedule A - Series of Neuberger & Berman Equity
Assets Currently Subject to the Distribution
Agreement. Incorporated by Reference to Post-
Effective Amendment No. 1 to Registrant's
Registration Statement, File Nos. 33-82568 and
811-8106, EDGAR Accession No.0000898432-95-000393.
(b) (i) Distribution and Services Agreement Between
Neuberger & Berman Equity Assets and Neuberger &
Berman Management Incorporated with Respect to
Other Series. Filed Herewith.
(ii) Schedule A - Series of Neuberger & Berman Equity
Assets Currently Subject to Distribution and
Services Agreement. Filed Herewith.
(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 Post-Effective Amendment
No. 3 to Registrant's Registration Statement, File Nos.
33-82568 and 811-8106, Edgar Accession No.
0000898432-96-000048.
(b) Schedule A - Approved Foreign Banking Institutions and
Securities Depositories Under the Custodian Contract.
Incorporated by Reference to Post-Effective Amendment
No. 3 to Registrant's Registration Statement, File Nos.
33-82568 and 811-8106, Edgar Accession No.
0000898432-96-000048.
(c) Schedule of Compensation under the Custodian Contract.
Incorporated by Reference to Post-Effective Amendment
No. 4 to Registrant's Registration Statement, File Nos.
33-82568 and 811-8106, Edgar Accession No.
0000898432-96-000558.
(9) (a) (i) Transfer Agency Agreement Between Neuberger &
Berman Equity Assets and State Street Bank and
Trust Company. Incorporated by Reference to
Post-Effective Amendment No. 3 to Registrant's
Registration Statement, File Nos. 33-82568 and
811-8106, Edgar Accession No. 0000898432-96-
000048.
(ii) Schedule of Compensation under the Transfer Agency
Agreement. Incorporated by Reference to
Post-Effective Amendment No. 4 to Registrant's
Registration Statement, File Nos. 33-82568 and
811-8106, Edgar Accession No.
0000898432-96-000558.
C-3
<PAGE>
(b) (i) Administration Agreement Between Neuberger &
Berman Equity Assets and Neuberger & Berman
Management Incorporated. Incorporated by Reference
to Post-Effective Amendment No. 3 to Registrant's
Registration Statement, File Nos. 33-82568 and
811-8106, Edgar Accession No. 0000898432-96-
000048.
(ii) Schedule A - Series of Neuberger & Berman Equity
Assets Currently Subject to the Administration
Agreement. Incorporated by Reference to
Post-Effective Amendment No. 3 to Registrant's
Registration Statement, File Nos. 33-82568 and
811-8106, Edgar Accession No. Incorporated by
Reference to Post-Effective Amendment No. 3 to
Registrant's Registration Statement, File Nos.
33-82568 and 811-8106, Edgar Accession No.
0000898432-96-000048.
(iii) Schedule B - Schedule of Compensation Under the
Administration Agreement. Incorporated by
Reference to Post-Effective Amendment No. 3 to
Registrant's Registration Statement, File Nos.
33-82568 and 811-8106, Edgar Accession No.
0000898432-96-000048.
(10) Opinion and Consent of Kirkpatrick & Lockhart LLP on
Securities Matters. Incorporated by Reference to
Registrant's Rule 24f-2 Notice for the Fiscal Year Ended
August 31, 1996, File Nos. 33-82568 and 811-8106, Edgar
Accession No. 0000898432-96-000463.
(11) (a) Consent of Ernst & Young LLP, Independent Auditors.
Filed Herewith.
(b) Consent of Coopers & Lybrand L.L.P., Independent
Accountants. Filed Herewith.
(12) Financial Statements Omitted from Prospectus. None.
(13) Letter of Investment Intent. None.
(14) Prototype Retirement Plan. None.
(15) (a) Plan Pursuant to Rule 12b-1. Filed Herewith.
(b) Schedule A - Series of Neuberger & Berman Equity Assets
Currently Subject to Plan Pursuant to Rule 12b-1. Filed
Herewith.
(16) Schedule of Computation of Performance Quotations.
None.
(17) Financial Data Schedule. Filed Herewith.
(18) Plan Pursuant to Rule 18f-3. None.
C-4
<PAGE>
Item 25. Persons Controlled By Or Under Common Control With Registrant.
- -------- --------------------------------------------------------------
No person is controlled by or under common control with the
Registrant.
Item 26. Number Of Holders Of Securities.
- -------- -------------------------------
The following information is given as of December 16, 1996:
Number of
Title Of Class Record Holders
-------------- --------------
Shares of beneficial
interest, $0.001 par value, of:
Neuberger & Berman Focus Assets 1
Neuberger & Berman Guardian Assets 2
Neuberger & Berman Manhattan Assets 1
Neuberger & Berman Partners Assets 3
Neuberger & Berman Socially Responsive Trust 2
Item 27. Indemnification.
- ------- ---------------
A Delaware business trust may provide in its governing instrument
for indemnification of its officers and trustees from and against any and all
claims and demands whatsoever. Article IX, Section 2 of the Trust Instrument
provides that the Registrant shall indemnify any present or former trustee,
officer, employee or agent of the Registrant ("Covered Person") to the fullest
extent permitted by law against liability and all expenses reasonably incurred
or paid by him or her in connection with any claim, action, suit or proceeding
("Action") in which he or she becomes involved as a party or otherwise by virtue
of his or her being or having been a Covered Person and against amounts paid or
incurred by him or her in settlement thereof. Indemnification will not be
provided to a person adjudged by a court or other body to be liable to the
Registrant or its shareholders by reason of "willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his 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.
C-5
<PAGE>
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, LLC ("Neuberger & Berman") with respect to Managers Trust
provides that in the absence of willful misfeasance, bad faith or gross
negligence in the performance of its duties, or of reckless disregard of its
duties and obligations under the Agreement, Neuberger & Berman will not be
subject to liability for any act or omission or any loss suffered by any series
of Managers Trust or its interest holders in connection with the matters to
which the Agreement relates.
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.
C-6
<PAGE>
Section 11 of the Distribution Agreement between the Registrant and
N&B Management provides that N&B Management shall look only to the assets of a
Series for the Registrant's performance of the Agreement by the Registrant on
behalf of such Series, and neither the Shareholders, the Trustees nor any of the
Registrant's officers, employees or agents, whether past, present or future,
shall be personally liable therefor.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 ("1933 Act") may be permitted to trustees, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the 1933 Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the 1933 Act and will be governed by the final adjudication of such
issue.
Item 28. Business And Other Connections Of Adviser And Sub-adviser.
- -------- ---------------------------------------------------------
There is set forth below information as to any other business,
profession, vocation or employment of a substantial nature in which each
director or officer of N&B Management and each principal of Neuberger & Berman
is, or at any time during the past two years has been, engaged for his or her
own account or in the capacity of director, officer, employee, partner or
trustee.
NAME BUSINESS AND OTHER CONNECTIONS
- ---- ------------------------------
Claudia A. Brandon Secretary, Neuberger & Berman Advisers
Vice President, Management Trust (Delaware business
N&B Management trust); Secretary, Advisers Managers
Trust; Secretary, Neuberger & Berman
Advisers Management Trust (Massachusetts
business trust) (1); Secretary,
Neuberger & Berman Income Funds;
Secretary, Neuberger & Berman Income
Trust; Secretary, Neuberger & Berman
Equity Funds; Secretary, Neuberger &
Berman Equity Trust; Secretary, Income
Managers Trust; Secretary, Equity
Managers Trust; Secretary, Global
Managers Trust; Secretary, Neuberger &
Berman Equity Assets.
Stacy Cooper-Shugrue Assistant Secretary, Neuberger & Berman
Assistant Vice President, Advisers Management Trust (Delaware
N&B Management business trust); Assistant Secretary,
Advisers Managers Trust; Assistant
Secretary, Neuberger & Berman Advisers
Management Trust (Massachusetts business
trust) (1); Assistant Secretary,
Neuberger & Berman Income Funds;
Assistant Secretary, Neuberger & Berman
Income Trust; Assistant Secretary,
Neuberger & Berman Equity Funds;
Assistant Secretary, Neuberger & Berman
Equity Trust; Assistant Secretary,
Income Managers Trust; Assistant
Secretary, Equity Managers Trust;
Assistant Secretary, Global Managers
Trust; Assistant Secretary, Neuberger &
Berman Equity Assets.
C-7
<PAGE>
Robert Cresci Assistant Portfolio Manager, BNP-N&B
Assistant Vice President, Global Asset Management L.P. (joint
N&B Management venture of Neuberger & Berman and Banque
Nationale de Paris) (2).
Barbara DiGiorgio, Assistant Treasurer, Neuberger & Berman
Assistant Vice President, Advisers Management Trust (Delaware
N&B Management business trust); Assistant Treasurer,
Advisers Managers Trust; Assistant
Treasurer, Neuberger & Berman Income
Funds; Assistant Treasurer, Neuberger &
Berman Income Trust; Assistant
Treasurer, Neuberger & Berman Equity
Funds; Assistant Treasurer, Neuberger &
Berman Equity Trust; Assistant
Treasurer, Income Managers Trust;
Assistant Treasurer, Equity Managers
Trust; Assistant Treasurer, Global
Managers Trust; Assistant Treasurer,
Neuberger & Berman Equity Assets.
Stanley Egener Chairman of the Board and Trustee,
President and Director, Neuberger & Berman Advisers Management
N&B Management; Principal, Trust (Delaware business trust);
Neuberger & Berman Chairman of the Board and Trustee,
Advisers Managers Trust; Chairman of the
Board and Trustee, Neuberger & Berman
Advisers Management Trust (Massachusetts
business trust) (1); Chairman of the
Board and Trustee, Neuberger & Berman
Income Funds; Chairman of the Board and
Trustee, Neuberger & Berman Income
Trust; Chairman of the Board and
Trustee, Neuberger & Berman Equity
Funds; Chairman of the Board and
Trustee, Neuberger & Berman Equity
Trust; Chairman of the Board and
Trustee, Income Managers Trust; Chairman
of the Board and Trustee, Equity
Managers Trust; Chairman of the Board
and Trustee, Global Managers Trust;
Chairman of the Board and Trustee,
Neuberger & Berman Equity Assets.
Theodore P. Giuliano President and Trustee, Neuberger &
Vice President and Director, Berman Income Funds; President and
N&B Management; Principal, Trustee, Neuberger & Berman Income
Neuberger & Berman Trust; President and Trustee, Income
Managers Trust.
C-8
<PAGE>
C. Carl Randolph Assistant Secretary, Neuberger & Berman
Principal, Advisers Management Trust (Delaware
Neuberger & Berman business trust); Assistant Secretary,
Advisers Managers Trust; Assistant
Secretary, Neuberger & Berman Advisers
Management Trust (Massachusetts business
trust) (1); Assistant Secretary,
Neuberger & Berman Income Funds;
Assistant Secretary, Neuberger & Berman
Income Trust; Assistant Secretary,
Neuberger & Berman Equity Funds;
Assistant Secretary, Neuberger & Berman
Equity Trust; Assistant Secretary,
Income Managers Trust; Assistant
Secretary, Equity Managers Trust;
Assistant Secretary, Global Managers
Trust; Assistant Secretary, Neuberger &
Berman Equity Assets.
Felix Rovelli Senior Vice President-Senior Equity
Vice President, Portfolio Manager, BNP-N&B Global Asset
N&B Management Management L.P. (joint venture of
Neuberger & Berman and Banque Nationale
de Paris) (2).
Richard Russell Treasurer, Neuberger & Berman Advisers
Vice President, Management Trust (Delaware business
N&B Management trust); Treasurer, Advisers Managers
Trust; Treasurer, Neuberger & Berman
Advisers Management Trust (Massachusetts
business trust) (1); Treasurer,
Neuberger & Berman Income Funds;
Treasurer, Neuberger & Berman Income
Trust; Treasurer, Neuberger & Berman
Equity Funds; Treasurer, Neuberger &
Berman Equity Trust; Treasurer, Income
Managers Trust; Treasurer, Equity
Managers Trust; Treasurer, Global
Managers Trust; Treasurer, Neuberger &
Berman Equity Assets.
Daniel J. Sullivan Vice President, Neuberger & Berman
Senior Vice President, Advisers Management Trust (Delaware
N&B Management business trust); Vice President,
Advisers Managers Trust; Vice President,
Neuberger & Berman Advisers Management
Trust (Massachusetts business trust)
(1); Vice President, Neuberger & Berman
Income Funds; Vice President, Neuberger
& Berman Income Trust; Vice President,
Neuberger & Berman Equity Funds; Vice
President, Neuberger & Berman Equity
Trust; Vice President, Income Managers
Trust; Vice President, Equity Managers
Trust; Vice President, Global Managers
Trust; Vice President, Neuberger &
Berman Equity Assets.
Susan Switzer Portfolio Manager, Mitchell Hutchins
Assistant Vice President, Asset Management Inc., 1285 Avenue of
N&B Management the Americas, New York, New York 10019
(3).
C-9
<PAGE>
Michael J. Weiner Vice President, Neuberger & Berman
Senior Vice President, Advisers Management Trust (Delaware
N&B Management business trust); Vice President,
Advisers Managers Trust; Vice President,
Neuberger & Berman Advisers Management
Trust (Massachusetts business trust)
(1); Vice President, Neuberger & Berman
Income Funds; Vice President, Neuberger
& Berman Income Trust; Vice President,
Neuberger & Berman Equity Funds; Vice
President, Neuberger & Berman Equity
Trust; Vice President, Income Managers
Trust; Vice President, Equity Managers
Trust; Vice President, Global Managers
Trust; Vice President, Neuberger &
Berman Equity Assets.
Celeste Wischerth, Assistant Treasurer, Neuberger & Berman
Assistant Vice President, Advisers Management Trust (Delaware
N&B Management business trust); Assistant Treasurer,
Advisers Managers Trust; Assistant
Treasurer, Neuberger & Berman Income
Funds; Assistant Treasurer, Neuberger &
Berman Income Trust; Assistant
Treasurer, Neuberger & Berman Equity
Funds; Assistant Treasurer, Neuberger &
Berman Equity Trust; Assistant
Treasurer, Income Managers Trust;
Assistant Treasurer, Equity Managers
Trust; Assistant Treasurer, Global
Managers Trust; Assistant Treasurer,
Neuberger & Berman Equity Assets.
Lawrence Zicklin President and Trustee, Neuberger &
Director, N&B Management; Berman Advisers Management Trust
Principal, Neuberger & Berman (Delaware business trust); President and
Trustee, Advisers Managers Trust;
President and Trustee, Neuberger &
Berman Advisers Management Trust
(Massachusetts business trust) (1);
President and Trustee, Neuberger &
Berman Equity Funds; President and
Trustee, Neuberger & Berman Equity
Trust; President and Trustee, Equity
Managers Trust; President, Global
Managers Trust; President and Trustee,
Neuberger & Berman Equity Assets.
The principal address of N&B Management, Neuberger & Berman, LLC,
and of each of the investment companies named above, is 605 Third Avenue, New
York, New York 10158.
- --------------------------
(1) Until April 30, 1995.
(2) Until October 31, 1995.
(3) Until 1994.
C-10
<PAGE>
Item 29. Principal Underwriters.
- ------- ----------------------
(a) N&B Management, the principal underwriter distributing securities of
the Registrant, is also the principal underwriter and distributor for each of
the following investment companies:
Neuberger & Berman Advisers Management Trust
Neuberger & Berman Equity Funds
Neuberger & Berman Equity Trust
Neuberger & Berman Income Funds
Neuberger & Berman Income Trust
N&B Management is also the investment manager to the master funds in
which the above-named investment companies invest.
(b) Set forth below is information concerning the directors and officers
of the Registrant's principal underwriter. The principal business address of
each of the persons listed is 605 Third Avenue, New York, New York 10158-0180,
which is also the address of the Registrant's principal underwriter.
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- ---- --------------------- ---------------
Claudia A. Brandon Vice President Secretary
Patrick T. Byrne Vice President None
Richard A. Cantor Chairman of the Board and None
Director
Robert Conti Treasurer None
Stacy Cooper-Shugrue Assistant Vice President Assistant Secretary
Robert Cresci Assistant Vice President None
William Cunningham Vice President None
Clara Del Villar Vice President None
Barbara DiGiorgio Assistant Vice President Assistant Treasurer
Roberta D'Orio Assistant Vice President None
Stanley Egener President and Director Chairman of the Board
of Trustees
(Chief Executive Officer)
Joseph G. Galli Assistant Vice President None
Robert I. Gendelman Assistant Vice President None
Mark R. Goldstein Vice President None
Theodore P. Giuliano Vice President and None
Director
Farha-Joyce Haboucha Vice President None
Leslie Holliday-Soto Assistant Vice President None
Jody L. Irwin Assistant Vice President None
Michael M. Kassen Vice President and None
Director
C-11
<PAGE>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- ---- --------------------- ---------------
Irwin Lainoff Director None
Michael Lamberti Vice President None
Josephine Mahaney Vice President None
Carmen G. Martinez Assistant Vice President None
Lawrence Marx III Vice President None
Ellen Metzger Vice President and None
Secretary
Paul Metzger Assistant Vice President None
Loraine Olavarria Assistant Secretary None
Janet W. Prindle Vice President None
Joseph S. Quirk Assistant Vice President None
Kevin L. Risen Assistant Vice President None
Felix Rovelli Vice President None
Richard Russell Vice President Treasurer (Principal
Accounting Officer)
Kent C. Simons Vice President None
Frederick B. Soule Vice President None
Daniel J. Sullivan Senior Vice President Vice President
Peter E. Sundman Senior Vice President None
Susan Switzer Assistant Vice President None
Andrea Trachtenberg Vice President of None
Marketing
Judith M. Vale Vice President None
Susan Walsh Vice President None
Michael J. Weiner Senior Vice President Vice President
(Principal Financial
Officer)
Celeste Wischerth Assistant Vice President Assistant Treasurer
Thomas Wolfe Vice President None
KimMarie Zamot Assistant Vice President None
Lawrence Zicklin Director Trustee and President
C-12
<PAGE>
(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.
Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of Registrant's latest annual report to shareholders of
Neuberger & Berman Partners Assets, upon request and without charge.
C-13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, NEUBERGER & BERMAN EQUITY ASSETS
certifies that it meets all of the requirements for effectiveness of this
Post-Effective Amendment No. 5 to its Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Post-Effective
Amendment to its Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City and State of New York on the
26th day of December, 1996.
NEUBERGER & BERMAN EQUITY ASSETS
By:/s/ Lawrence Zicklin
-------------------------------
Lawrence Zicklin
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 5 has been signed below by the following persons in
the capacities and on the date indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ Faith Colish Trustee December 26, 1996
- ---------------------------
Faith Colish*
/s/ Donald M. Cox Trustee December 26, 1996
- ---------------------------
Donald M. Cox*
/s/ Stanley Egener Chairman of the Board December 26, 1996
- --------------------------- and Trustee (Chief
Stanley Egener Executive Officer)
/s/ Howard A. Mileaf Trustee December 26, 1996
- ---------------------------
Howard A. Mileaf*
(Signatures continued on next page)
<PAGE>
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ Edward I. O'Brien Trustee December 26, 1996
- ---------------------------
Edward I. O'Brien*
/s/ John T. Patterson, Jr. Trustee December 26, 1996
- ---------------------------
John T. Patterson, Jr.*
/s/ John P. Rosenthal Trustee December 26, 1996
- ---------------------------
John P. Rosenthal*
/s/ Cornelius T. Ryan Tustee December 26, 1996
- ---------------------------
Cornelius T. Ryan*
/s/ Gustave H. Shubert Trustee December 26, 1996
- ---------------------------
Gustave H. Shubert*
/s/ Alan R. Gruber
- --------------------------- Trustee December 26, 1996
Alan R. Gruber*
/s/ Lawrence Zicklin President and Trustee December 26, 1996
- ---------------------------
Lawrence Zicklin
/s/ Michael J. Weiner Vice President (Principal December 26,1996
- --------------------------- Financial Officer)
Michael J. Weiner
/s/ Richard Russell Treasurer (Principal December 26, 1996
- --------------------------- Financial Officer
Richard Russell
* Signatures affixed by Beth A. Stekler pursuant to a Power of Attorney
dated October 24, 1996, and filed herewith.
<PAGE>
POWER OF ATTORNEY
NEUBERGER & BERMAN EQUITY ASSETS, a Delaware business trust ("Trust"),
and each of its undersigned officers and trustees hereby nominates, constitutes
and appoints Lawrence Zicklin, Michael J. Weiner, Richard M. Phillips, Arthur C.
Delibert, Dana L. Platt, Susan M. Casey and Beth A. Stekler (with full power to
each of them to act alone) its/his/her true and lawful attorney-in-fact and
agent, for it/him/her and on its/his/her behalf and in its/his/her name, place
and stead in any and all capacities, to make, execute and sign the Trust's
Registration Statement on Form N-1A under the Securities Act of 1933 and/or the
Investment Company Act of 1940, any registration statements on Form N-14, and
any and all amendments to such registration statements on Form N-1A or Form
N-14, and to file with the Securities and Exchange Commission, and any other
regulatory authority having jurisdiction over the offer and sale of shares of
the Beneficial Interest of the Trust, any such registration statement or
amendment, and any and all supplements thereto or to any prospectus or statement
of additional information forming a part thereof, and any and all exhibits and
other documents requisite in connection therewith, granting unto said attorneys,
and each of them, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises as fully
to all intents and purposes as the Trust and the undersigned officers and
trustees itself/themselves might or could do.
IN WITNESS WHEREOF, NEUBERGER & BERMAN EQUITY ASSETS has caused this
power of attorney to be executed in its name by its President, and attested by
its Secretary, and the undersigned officers and trustees have hereunto set their
hands and seals this 24th day of October, 1996.
NEUBERGER & BERMAN EQUITY ASSETS
/s/ Lawrence Zicklin
By: ---------------------------
Lawrence Zicklin, President
[SEAL]
ATTEST:
/s/ Claudia A. Brandon
- ------------------------------
Claudia A. Brandon,
Secretary
<PAGE>
Signature Title
--------- -----
/s/ Stanley Egener
- ---------------------------- Chairman of the Board, Chief Executive
Stanley Egener Officer, and Trustee
/s/ Lawrence Zicklin
- ---------------------------- President and Trustee
Lawrence Zicklin
/s/ Michael J. Weiner
- ---------------------------- Vice President and Principal Financial
Michael J. Weiner Officer
/s/ Richard Russell
- ---------------------------- Treasurer and Principal Accounting Officer
Richard Russell
/s/ Faith Colish
- ---------------------------- Trustee
Faith Colish
/s/ Donald M. Cox
- ---------------------------- Trustee
Donald M. Cox
/s/ Alan R. Gruber
- ---------------------------- Trustee
Alan R. Gruber
/s/ Howard A. Mileaf
- ---------------------------- Trustee
Howard A. Mileaf
/s/ Edward I. O'Brien
- ---------------------------- Trustee
Edward I. O'Brien
<PAGE>
Signature Title
--------- -----
/s/ John T. Patterson, Jr.
- ---------------------------- Trustee
John T. Patterson, Jr.
/s/ John P. Rosenthal
- ---------------------------- Trustee
John P. Rosenthal
/s/ Cornelius T. Ryan
- ---------------------------- Trustee
Cornelius T. Ryan
/s/ Gustave H. Shubert
- ---------------------------- Trustee
Gustave H. Shubert
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, EQUITY MANAGERS TRUST certifies that it meets
all of the requirements for effectiveness of the Post-Effective Amendment No. 5
to the Registration Statement pursuant to Rule 485(b) under the Securities Act
of 1933 and has duly caused this Post-Effective Amendment to the Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City and State of New York on the 26th day of December, 1996.
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. 5 has been signed below by the following persons in
the capacities and on the date indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ Faith Colish
- -------------------- Trustee December 26, 1996
Faith Colish*
/s/ Donald M. Cox
- -------------------- Trustee December 26, 1996
Donald M. Cox*
/s/ Stanley Egener Chairman of the Board December 26, 1996
- -------------------- and Trustee (Chief
Stanley Egener Executive Officer)
/s/ Howard A. Mileaf
- -------------------- Trustee December 26, 1996
Howard A. Mileaf*
/s/ Edward I. O'Brien
- -------------------- Trustee December 26, 1996
Edward I. O'Brien*
(signatures continued on next page)
<PAGE>
SIGNATURE TITLE DATE
/s/ John T. Patterson Trustee December 26, 1996
- -----------------------
John T. Patterson, Jr.*
/s/ John P. Rosenthal Trustee December 26, 1996
- ----------------------
John P. Rosenthal*
/s/ Cornelius T. Ryan Trustee December 26, 1996
- ----------------------
Cornelius T. Ryan*
/s/ Gustave H. Shubert Trustee December 26, 1996
- ----------------------
Gustave H. Shubert*
/s/ Alan R. Gruber Trustee December 26, 1996
- ----------------------
Alan R. Gruber*
/s/ Lawrence Zicklin President and Trustee December 26, 1996
- --------------------
Lawrence Zicklin
/s/ Michael J. Weiner Vice President (Principal December 26, 1996
- --------------------- Financial Officer
Michael J. Weiner
/s/ Richard Russell Treasurer (Principal December 26, 1996
- -------------------- Accounting Officer)
Richard Russell
* Signatures affixed by Beth A. Stekler pursuant to a Power of Attorney
dated October 24, 1996, and filed herewith.
<PAGE>
POWER OF ATTORNEY
EQUITY MANAGERS TRUST, a New York trust (the "Trust"), and each of its
undersigned officers and trustees hereby nominates, constitutes and appoints
Lawrence Zicklin, Michael J. Weiner, Richard M. Phillips, Arthur C. Delibert,
Susan M. Casey, Dana L. Platt and Beth A. Stekler (with full power to each of
them to act alone) its/his/her true and lawful attorney-in-fact and agent, for
it/him/her and on its/his/her behalf and in its/his/her name, place and stead in
any and all capacities, to make, execute and sign any feeder fund Registration
Statements on Form N-1A under the Securities Act of 1933 and/or the Investment
Company Act of 1940 and any amendments thereto, any amendments to the Trust's
Registration Statement on Form N-1A under the Investment Company Act of 1940,
any registration statements on Form N-14 and any amendments thereto, and to file
with the Securities and Exchange Commission, and any other regulatory authority
having jurisdiction over the offer and sale of shares of such feeder fund, any
such registration statement or amendments, and any and all supplements thereto
or to any prospectus or statement of additional information forming a part
thereof, and any and all exhibits and other documents requisite in connection
therewith, granting unto said attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises as fully to all intents and purposes as the
Trust and the undersigned officers and trustees itself/themselves might or could
do.
IN WITNESS WHEREOF, EQUITY MANAGERS TRUST has caused this power of
attorney to be executed in its name by its President, and attested by its
Secretary, and the undersigned officers and trustees have hereunto set their
hands this 24th day of October, 1996.
EQUITY MANAGERS TRUST
/s/ Lawrence Zicklin
By: ---------------------------
Lawrence Zicklin, President
[SEAL]
ATTEST:
/s/ Claudia A. Brandon
- ------------------------------
Claudia A. Brandon,
Secretary
[Signatures Continued on Next Page]
<PAGE>
Signature Title
--------- -----
/s/ Stanley Egener
- ---------------------------- Chairman of the Board, Chief Executive
Stanley Egener Officer, and Trustee
/s/ Lawrence Zicklin
- ---------------------------- President and Trustee
Lawrence Zicklin
/s/ Michael J. Weiner
- ---------------------------- Vice President and Principal Financial
Michael J. Weiner Officer
/s/ Richard Russell
- ---------------------------- Treasurer and Principal Accounting Officer
Richard Russell
/s/ Faith Colish
- ---------------------------- Trustee
Faith Colish
/s/ Donald M. Cox
- ---------------------------- Trustee
Donald M. Cox
/s/ Alan R. Gruber
- ---------------------------- Trustee
Alan R. Gruber
/s/ Howard A. Mileaf
- ---------------------------- Trustee
Howard A. Mileaf
/s/ Edward I. O'Brien
- ---------------------------- Trustee
Edward I. O'Brien
<PAGE>
Signature Title
--------- -----
/s/ John T. Patterson, Jr.
- ---------------------------- Trustee
John T. Patterson, Jr.
/s/ John P. Rosenthal
- ---------------------------- Trustee
John P. Rosenthal
/s/ Cornelius T. Ryan
- ---------------------------- Trustee
Cornelius T. Ryan
/s/ Gustave H. Shubert
- ---------------------------- Trustee
Gustave H. Shubert
<PAGE>
NEUBERGER & BERMAN EQUITY ASSETS
POST-EFFECTIVE AMENDMENT NO. 5 ON FORM N-1A
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Description Page
- ------- ------------------------------------------------- ------------
(1) (a) Certificate of Trust. Incorporated by N.A.
Reference to Post-Effective Amendment No. 1
to Registrant's Registration Statement, File
Nos. 33-82568 and 811-8106, EDGAR Accession
No. 0000898432-95-000393.
(b) Trust Instrument of Neuberger & Berman N.A.
Equity Assets. Incorporated by Reference to
Post-Effective Amendment No. 1 to
Registrant's Registration Statement, File
Nos. 33-82568 and 811-8106, EDGAR Accession
No. 0000898432-95-000393.
(c) Schedule A - Current Series of Neuberger & N.A.
Berman Equity Assets. Incorporated by
Reference to Post-Effective Amendment No. 1
to Registrant's Registration Statement, File
Nos. 33-82568 and 811-106, EDGAR Accession
No. 0000898432-95-000393.
(2) By-Laws of Neuberger & Berman Equity Assets. N.A.
Incorporated by Reference to Post-Effective
Amendment No. 1 to Registrant's Registration
Statement, File Nos. 33-82568 and 811-8106, EDGAR
Accession No. 0000898432-95-000393.
(3) Voting Trust Agreement. None. N.A.
(4) (a) Trust Instrument of Neuberger & Berman
Equity Assets, Articles IV, V, and VI.
Incorporated by Reference to Post-Effective
Amendment No. 1 to Registrant's Registration
Statement, File Nos. 33-82568 and 811-8106,
EDGAR Accession No. 0000898432-95-000393.
(b) By-Laws of Neuberger & Berman Equity Assets,
Articles V, VI, and VIII. Incorporated by
Reference to Post-Effective Amendment No. 1
to Registrant's Registration Statement, File
Nos. 33-82568 and 811-8106, EDGAR Accession
No. 0000898432-95-000393.
(5) (a) (i) Management Agreement Between Equity N.A.
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. N.A.
2-11357 and 811-582, EDGAR Accession
No. 0000898432-95-000314.
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
- ------- ------------------------------------------------- ------------
(ii) Schedule A - Series of Neuberger &
Berman Equity Managers Trust
Currently Subject to the Management
Agreement. Incorporated by Reference
to Post-Effective Amendment No. 70 to
Registration Statement of Neuberger &
Berman Equity Funds, File Nos.
2-11357 and 811-582, EDGAR Accession
No. 0000898432-95-000314.
(iii) Schedule B - Schedule of Compensation N.A.
Under the Management Agreement.
Incorporated by Reference to
Post-Effective Amendment No. 70 to
Registration Statement of Neuberger &
Berman Equity Funds, File Nos.
2-11357 and 811-582, EDGAR Accession
No. 0000898432-95-000314.
(b) (i) Sub-Advisory Agreement Between 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. 0000898432-95-000314.
(ii) Schedule A - Series of Equity N.A.
Managers Trust Currently Subject to
the Sub-Advisory Agreement.
Incorporated by Reference to
Post-Effective Amendment No. 70 to
Registration Statement of Equity
Managers Trust, File Nos. 2-11357 and
811-582, EDGAR Accession No.
0000898432-95-000314.
(iii) Substitution Agreement Among
Neuberger & Berman Management
Incorporated, Equity Managers Trust,
Neuberger & Berman, L.P., and
Neuberger & Berman, LLC.
Incorporated by Reference to
Amendment No. 7 to Registration
Statement of Equity Managers Trust,
File No. 811-7910, Edgar Accession
No. 0000898432-96-000557.
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
- ------- ------------------------------------------------- ------------
(6) (a) (i) Distribution Agreement Between N.A.
Neuberger & Berman Equity Assets and
Neuberger & Berman Management
Incorporated with Respect to
Neuberger & Berman Socially
Responsive Trust. Incorporated by
Reference to Post-Effective Amendment
No. 1 to Registrant's Registration
Statement, File Nos. 33-82568 and
811-8106, EDGAR Accession No.
0000898432-95-000393.
(ii) Schedule A - Series of Neuberger & N.A.
Berman Equity Assets Currently
Subject to the Distribution
Agreement. Incorporated by Reference
to Post-Effective Amendment No. 1 to
Registrant's Registration Statement,
File Nos. 33-82568 and 811-8106,
EDGAR Accession No.0000898432-95-000393.
(b) (i) Distribution and Services Agreement N.A.
Between Neuberger & Berman Equity
Assets and Neuberger & Berman
Management Incorporated With Respect
to Other Series. Filed Herewith.
(ii) Schedule A - Series of Neuberger & N.A.
Berman Equity Assets Currently
Subject to Distribution and Services
Agreement. Filed Herewith.
(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 Post-Effective Amendment No. 3
to Registrant's Registration Statement, File
Nos. 33-82568 and 811-8106, Edgar Accession
No. 0000898432-96-000048.
(b) Schedule A - Approved Foreign Banking N.A.
Institutions and Securities Depositories
Under the Custodian Contract. Incorporated
by Reference to Post-Effective Amendment No.
3 to Registrant's Registration Statement,
File Nos. 33-82568 and 811-8106, Edgar
Accession No. 0000898432-96-000048.
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
- ------- ------------------------------------------------- ------------
(c) Schedule of Compensation under the Custodian
Contract. Incorporated by Reference to
Post-Effective Amendment No. 4 to
Registrant's Registration Statement, File
Nos. 33-82568 and 811-8106, Edgar Accession
No. 0000898432-96-000558.
(9) (a) (i) Transfer Agency Agreement Between N.A.
Neuberger & Berman Equity Assets and
State Street Bank and Trust Company.
Incorporated by Reference to
Post-Effective Amendment No. 3 to
Registrant's Registration Statement,
File Nos. 33-82568 and 811-8106, Edgar
Accession No. 0000898432-96-000048.
(ii) Schedule of Compensation under the
Transfer Agency Agreement.
Incorporated by Reference to
Post-Effective Amendment No. 4 to
Registrant's Registration Statement,
File Nos. 33-82568 and 811-8106,
Edgar Accession
No. 0000898432-96-000558.
(b) (i) Administration Agreement Between N.A.
Neuberger & Berman Equity Assets and
Neuberger & Berman Management
Incorporated. Incorporated by
Reference to Post-Effective Amendment
No. 3 to Registrant's Registration
Statement, File Nos. 33-82568 and
811-8106, Edgar Accession
No. 0000898432-96-000048.
(ii) Schedule A - Series of Neuberger & N.A.
Berman Equity Assets Currently
Subject to the Administration
Agreement. Incorporated by Reference
to Post-Effective Amendment No. 3 to
Registrant's Registration Statement,
File Nos. 33-82568 and 811-8106,
Edgar Accession No.
0000898432-96-000048.
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
- ------- ------------------------------------------------- ------------
(iii) Schedule B - Schedule of Compensation N.A.
Under the Administration Agreement.
Incorporated by Reference to
Post-Effective Amendment No. 3 to
Registrant's Registration Statement,
File Nos. 33-82568 and 811-8106,
Edgar Accession
No. 0000898432-96-000048.
(10) Opinion and Consent of Kirkpatrick & Lockhart LLP ____
on Securities Matters. Incorporated by Reference
to Registrant's Rule 24f-2 Notice for the Fiscal
Year Ended August 31, 1996, File Nos. 33-82568 and
811-8106, Edgar Accession No. 0000898432-96-000463.
(11) (a) Consent of Ernst & Young LLP, Independent ____
Auditors. Filed Herewith.
(b) Consent of Coopers & Lybrand L.L.P., ____
Independent Accountants. Filed Herewith.
(12) Financial Statements Omitted from Prospectus. N.A.
None.
(13) Letter of Investment Intent. None. N.A.
(14) Prototype Retirement Plan. None. N.A.
(15) (a) Plan Pursuant to Rule 12b-1. Filed N.A.
Herewith.
(b) Schedule A - Series of Neuberger & Berman
Equity Assets Currently Subject to Plan
Pursuant to Rule 12b-1. Filed Herewith.
(16) Schedule of Computation of Performance N.A.
Quotations. None.
(17) Financial Data Schedule. Filed Herewith. ____
(18) Plan Pursuant to Rule 18f-3. None. N.A.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman Partners Assets Annual Report and is qualified in its
entirety by reference to such document.
</LEGEND>
<NAME> NEUBERGER&BERMAN EQUITY ASSETS
<SERIES>
<NUMBER> 05
<NAME> NEUBERGER&BERMAN PARTNERS ASSETS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 104
<RECEIVABLES> 14
<ASSETS-OTHER> 59
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 177
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 73
<TOTAL-LIABILITIES> 73
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 105
<SHARES-COMMON-STOCK> 10
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1)
<NET-ASSETS> 104
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> (1)
<NET-CHANGE-FROM-OPS> (1)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 104
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 14
<AVERAGE-NET-ASSETS> 3,326
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> (.09)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.91
<EXPENSE-RATIO> 1.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman Focus Portfolio Annual Report and is qualified in its
entirety by reference to such document.
</LEGEND>
<NAME> EQUITY MANAGERS TRUST
<SERIES>
<NUMBER> 04
<NAME> NEUBERGER&BERMAN FOCUS PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 838,502
<INVESTMENTS-AT-VALUE> 1,124,592
<RECEIVABLES> 2,059
<ASSETS-OTHER> 52
<OTHER-ITEMS-ASSETS> 95
<TOTAL-ASSETS> 1,126,798
<PAYABLE-FOR-SECURITIES> 3,863
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 564
<TOTAL-LIABILITIES> 4,427
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 669,742
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 26,529
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 140,010
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 286,090
<NET-ASSETS> 1,122,371
<DIVIDEND-INCOME> 15,705
<INTEREST-INCOME> 1,599
<OTHER-INCOME> 0
<EXPENSES-NET> (5,914)
<NET-INVESTMENT-INCOME> 11,390
<REALIZED-GAINS-CURRENT> 51,701
<APPREC-INCREASE-CURRENT> (21,728)
<NET-CHANGE-FROM-OPS> 41,363
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 153,198
<ACCUMULATED-NII-PRIOR> 15,139
<ACCUMULATED-GAINS-PRIOR> 88,309
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5,565
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,914
<AVERAGE-NET-ASSETS> 1,097,714
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .54
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman Guardian Portfolio Annual Report and is qualified in
its entirety by reference to such document.
</LEGEND>
<NAME> EQUITY MANAGERS TRUST
<SERIES>
<NUMBER> 01
<NAME> NEUBERGER&BERMAN GUARDIAN PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 5,252,479
<INVESTMENTS-AT-VALUE> 6,277,499
<RECEIVABLES> 10,961
<ASSETS-OTHER> 229
<OTHER-ITEMS-ASSETS> 69
<TOTAL-ASSETS> 6,288,758
<PAYABLE-FOR-SECURITIES> 18,006
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 38,210
<TOTAL-LIABILITIES> 56,216
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,562,830
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 189,659
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 455,033
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,025,020
<NET-ASSETS> 6,232,542
<DIVIDEND-INCOME> 83,718
<INTEREST-INCOME> 40,556
<OTHER-INCOME> 0
<EXPENSES-NET> (26,340)
<NET-INVESTMENT-INCOME> 97,934
<REALIZED-GAINS-CURRENT> 307,410
<APPREC-INCREASE-CURRENT> (111,192)
<NET-CHANGE-FROM-OPS> 294,152
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,619,347
<ACCUMULATED-NII-PRIOR> 91,725
<ACCUMULATED-GAINS-PRIOR> 147,623
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 25,172
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 26,340
<AVERAGE-NET-ASSETS> 5,687,441
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .46
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman Manhattan Portfolio Annual Report and is qualified in
its entirety by reference to such document.
</LEGEND>
<NAME> EQUITY MANAGERS TRUST
<SERIES>
<NUMBER> 02
<NAME> NEUBERGER&BERMAN MANHATTAN PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 497,389
<INVESTMENTS-AT-VALUE> 580,025
<RECEIVABLES> 133
<ASSETS-OTHER> 41
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 580,199
<PAYABLE-FOR-SECURITIES> 1,618
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 365
<TOTAL-LIABILITIES> 10,790
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 342,686
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 6,019
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 136,085
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 82,636
<NET-ASSETS> 567,426
<DIVIDEND-INCOME> 4,288
<INTEREST-INCOME> 246
<OTHER-INCOME> 0
<EXPENSES-NET> (3,705)
<NET-INVESTMENT-INCOME> 829
<REALIZED-GAINS-CURRENT> 59,509
<APPREC-INCREASE-CURRENT> (74,167)
<NET-CHANGE-FROM-OPS> (13,829)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (77,980)
<ACCUMULATED-NII-PRIOR> 5,190
<ACCUMULATED-GAINS-PRIOR> 76,576
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,402
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,705
<AVERAGE-NET-ASSETS> 642,838
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .58
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Neuberger&Berman Partners Portfolio Annual Report and is qualified in its
entirety by reference to such document.
</LEGEND>
<NAME> EQUITY MANAGERS TRUST
<SERIES>
<NUMBER> 05
<NAME> NEUBERGER&BERMAN PARTNERS PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 1,776,910
<INVESTMENTS-AT-VALUE> 2,004,866
<RECEIVABLES> 5,471
<ASSETS-OTHER> 107
<OTHER-ITEMS-ASSETS> 49
<TOTAL-ASSETS> 2,010,493
<PAYABLE-FOR-SECURITIES> 9,975
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 915
<TOTAL-LIABILITIES> 10,890
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,211,965
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 49,438
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 510,244
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 227,956
<NET-ASSETS> 1,999,603
<DIVIDEND-INCOME> 29,211
<INTEREST-INCOME> 3,659
<OTHER-INCOME> 0
<EXPENSES-NET> (9,376)
<NET-INVESTMENT-INCOME> 23,394
<REALIZED-GAINS-CURRENT> 240,765
<APPREC-INCREASE-CURRENT> (30,217)
<NET-CHANGE-FROM-OPS> 233,942
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 376,077
<ACCUMULATED-NII-PRIOR> 26,044
<ACCUMULATED-GAINS-PRIOR> 269,479
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8,868
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 9,376
<AVERAGE-NET-ASSETS> 1,851,251
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .51
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
EXHIBIT 6(b)(i)
DISTRIBUTION AND SERVICES AGREEMENT
This Agreement is made as of February 12, 1996, between
Neuberger & Berman Equity Assets, a Delaware business trust ("Trust"), and
Neuberger & Berman Management Incorporated, a New York corporation
("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;
WHEREAS, the Trust desires to retain the Distributor to furnish certain
distribution, shareholder, and administrative 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; and
WHEREAS, the Trust has approved a plan pursuant to Rule 12b-1
under the 1940 Act ("Plan");
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 ("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 of 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. The Distributor may compensate dealers for services they provide
under such agreements.
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
<PAGE>
Series, 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.
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 ("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'
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
- 2 -
<PAGE>
printing and distributing reports, prospectuses and SAIs for other than existing
shareholders used in connection with the sale or offering of the Series' Shares;
(ii) costs of preparing, printing and distributing all advertising and sales
literature relating to such Series printed at the instruction of the
Distributor; and (iii) counsel fees and expenses in connection with the
foregoing. The Distributor shall pay all its own costs and expenses connected
with the sale of Shares and may pay the compensation and expenses, including
overhead and telephone and other communication expenses, of organizations and
employees that engage in or support the distribution 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. In addition to the foregoing, the Distributor agrees to
provide or obtain certain administrative and shareholder services for the
Series. Such services shall include, but are not limited to, administering
periodic investment and periodic withdrawal programs; researching and providing
historical account activity information for shareholders requesting it;
preparing and mailing account and confirmation statements to account holders;
preparing and mailing tax forms to account holders; serving as custodian for
retirement plans investing in the Series; dealing appropriately with abandoned
accounts; collating and reporting the number of Shares attributable to each
state for blue sky registration and reporting purposes; identifying and
reporting transactions exempt from blue sky registration requirements; and
providing and maintaining ongoing shareholder services for the duration of the
shareholders' investment in each Series, which may include updates on
performance, total return, other related statistical information, and a
continual analysis of the suitability of the investment in each Series. The
Distributor may subcontract to third parties some or all of its responsibilities
to the Series under this paragraph. The Distributor may pay compensation and
expenses, including overhead and telephone and other communication expenses, to
organizations and employees who provide such services.
10. As compensation for the distribution, shareholder
and administrative services provided under this Agreement, the Distributor
- 3 -
<PAGE>
shall receive from each Series a fee at the rate and under the terms and
conditions set forth in the Plan adopted by the Series, as such Plan may be
amended from time to time. In addition to the expenditures specifically
authorized herein, the Distributor may spend such amounts as it deems
appropriate for any purpose consistent with the Plan, as amended from time to
time.
11. The Distributor shall prepare, at least quarterly, reports
for the Trustees showing expenditures under this Agreement and the purposes for
which such expenditures were made. Such reports shall be in a format suitable to
ensure compliance with the applicable requirements of the SEC and the National
Association of Securities Dealers.
12. (a) This Agreement shall become effective on the date
hereof and shall remain in full force and effect until February 12, 1997 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") and by a majority of those Disinterested
Trustees who have no direct or indirect financial interest in the Plan or this
Agreement ("Rule 12b-1 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 and the Rule
12b-1 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, (ii) by a majority of the outstanding voting securities of such Series
or (iii) by a majority of the Disinterested Trustees or the Rule 12b-1 Trustees.
(c) This Agreement shall automatically terminate if it is
assigned by the Distributor.
(d) Any question of interpretation of any term or provision
of this Agreement having a counterpart in or otherwise derived from a term or
provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretation thereof, if any, by the United
States courts or, in the absence of any controlling decision of any such court,
by rules, regulations or orders of the SEC validly issued pursuant to the 1940
Act. Specifically, the terms "interested persons," "assignment" and "vote of a
majority of the outstanding voting securities," as used in this Agreement, shall
have the meanings assigned to them by Section 2(a) of the 1940 Act. In addition,
when the effect of a requirement of the 1940 Act reflected in any
- 4 -
<PAGE>
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 12(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, shareholder, or administrative
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.
13. 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.
14. 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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EXHIBIT 6(b)(ii)
DISTRIBUTION AND SERVICES AGREEMENT
SCHEDULE A
The Series of Neuberger & Berman Equity Assets currently subject to
this Agreement are as follows:
Neuberger & Berman Focus Assets
Neuberger & Berman Guardian Assets
Neuberger & Berman Manhattan Assets
Neuberger & Berman Partners Assets
Dated: February 12, 1996
EXHIBIT 11(a)
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights" in the Prospectus and "Reports to Shareholders", "Independent
Auditors/Accountants" and "Financial Statements" in the Statement of Additional
Information in Post- Effective Amendment Number 5 to the Registration Statement
(Form N- 1A No. 33-82568) of Neuberger & Berman Equity Assets, and to the
incorporation by reference to our reports dated October 3, 1996 on Neuberger &
Berman Partners Assets, one of the series comprising Neuberger & Berman Equity
Assets, and on Neuberger & Berman Focus Portfolio, Neuberger & Berman Guardian
Portfolio and Neuberger & Berman Partners Portfolio, three of the series
comprising Equity Managers Trust, included in the 1996 Annual Reports to
Shareholders of Neuberger & Berman Partners Assets and Neuberger & Berman Equity
Funds.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Boston, Massachusetts
December 26, 1996
EXHIBIT 11(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
--------------------
To the Board of Trustees of
Neuberger & Berman Equity Assets
We consent to the incorporation by reference in Part B. Statement of
Additional Information in Post-Effective Amendment No. 5 to the Registration
Statement on Form N-1A of Neuberger & Berman Equity Assets (File #33-82568)
(811-8106) of our report dated October 4, 1996, on our audit of the financial
statements and financial highlights of Neuberger & Berman Manhattan Portfolio,
which report is included in the Annual Report to Shareholders of Neuberger &
Berman Equity Funds for the fiscal year ended August 31, 1996.
We also consent to the reference to our Firm with respect to Neuberger
& Berman Manhattan Assets and Portfolio under the captions "Independent
Auditors/Accountants" and "Financial Statements" in Part B of the Registration
Statement.
/s/ Coopers & Lybrand L.L.P
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
December 26, 1996
NEUBERGER & BERMAN EQUITY ASSETS
PLAN PURSUANT TO RULE 12B-1
WHEREAS, Neuberger & Berman Equity Assets ("Trust") is an open-end
management investment company registered under the Investment Company Act of
1940, as amended ("1940 Act"), and intends to offer for public sale shares of
beneficial interest in several series (each series a "Fund");
WHEREAS, the Trust desires to adopt a plan pursuant to Rule 12b-1 under
the 1940 Act and the Board of Trustees has determined that there is a reasonable
likelihood that adoption of said plan will benefit the Funds and their
shareholders; and
WHEREAS, the Trust has employed Neuberger & Berman Management
Incorporated ("N&B Management") as principal underwriter of the shares of the
Trust;
NOW, THEREFORE, the Trust hereby adopts this Plan pursuant to Rule
12b-1 ("Plan") in accordance with Rule 12b-1 under the 1940 Act on the following
terms and conditions:
1. This Plan applies to the Funds listed on Schedule A.
2. A. Each Fund shall pay to N&B Management, as compensation for
selling Fund shares or for providing shareholder and administration services, a
fee at the rate specified for that Fund on Schedule A, such fee to be calculated
and accrued daily and paid monthly or at such other intervals as the Board shall
determine.
B. The fees payable hereunder are payable without regard to the
aggregate amount that may be paid over the years, PROVIDED THAT, so long as the
limitations set forth in Article III, Section 26(d) of the Rules of Fair
Practice ("Section 26(d)") of the National Association of Securities Dealers,
Inc. ("NASD") remain in effect and apply to recipients of payments made under
this Plan, the amounts paid hereunder shall not exceed those limitations,
including permissible interest.
3. A. As principal underwriter of the Trust's shares, N&B
Management may spend such amounts as it deems appropriate on any activities or
expenses primarily intended to result in the sale of shares of the Funds,
including, but not limited to, compensation to employees of N&B Management;
compensation to N&B Management and other broker-dealers that engage in or
support the distribution of shares; expenses of N&B Management and such other
broker-dealers, including overhead and telephone and other communication
expenses; the printing of prospectuses, statements of additional information,
<PAGE>
and reports for other than existing shareholders; and the preparation and
distribution of sales literature and advertising materials.
B. N&B Management may spend such amounts as it deems appropriate
on the administration and servicing of shareholder accounts, including, but not
limited to, administering periodic investment and periodic withdrawal programs;
researching and providing historical account activity information for
shareholders requesting it; preparing and mailing account and confirmation
statements to account holders; preparing and mailing tax forms to account
holders; serving as custodian for retirement plans investing in the Funds;
dealing appropriately with abandoned accounts; collating and reporting the
number of shares attributable to each state for blue sky registration and
reporting purposes; identifying and reporting transactions exempt from blue sky
registration requirements; and providing and maintaining ongoing shareholder
services for the duration of the shareholders' investment in each Fund, which
may include updates on fund performance, total return, other related statistical
information, and a continual analysis of the suitability of the investment in
each Fund; and may pay compensation and expenses, including overhead and
telephone and other communication expenses, to organizations and employees who
provide such services.
4. This Plan shall take effect on April 1, 1996 and shall continue
in effect with respect to each Fund for successive periods of one year from its
execution for so long as such continuance is specifically approved with respect
to such Fund at least annually together with any related agreements, by votes of
a majority of both (a) the Board of Trustees of the Trust and (b) those Trustees
who are not "interested persons" of the Trust, as defined in the 1940 Act, and
who have no direct or indirect financial interest in the operation of this Plan
or any agreements related to it (the "Rule 12b-1 Trustees"), cast in person at a
meeting or meetings called for the purpose of voting on this Plan and such
related agreements; and only if the Trustees who approve the implementation or
continuation of the Plan have reached the conclusion required by Rule 12b-1(e)
under the 1940 Act.
5. Any person authorized to direct the disposition of monies paid or
payable by a Fund pursuant to this Plan or any related agreement shall provide
to the Trust's Board of Trustees and the Board shall review, at least quarterly,
a written report of the amounts so expended and the purposes for which such
expenditures were made.
6. This Plan may be terminated with respect to a Fund at any time by
vote of a majority of the Rule 12b-1 Trustees or by vote of a majority of the
outstanding voting securities of that Fund.
- 2 -
<PAGE>
7. This Plan may not be amended to increase materially the amount of
fees to be paid by any Fund hereunder unless such amendment is approved by a
vote of at least a majority of the outstanding securities (as defined in the
1940 Act) of that Fund, and no material amendment to the Plan shall be made
unless such amendment is approved in the manner provided in paragraph 4 hereof
for annual approval.
8. While this Plan is in effect, the selection and nomination of
Trustees who are not interested persons of the Trust, as defined in the 1940
Act, shall be committed to the discretion of Trustees who are themselves not
interested persons.
9. The Trust shall preserve copies of this Plan and any related
agreements for a period of not less than six years from the date of expiration
of the Plan or agreement, as the case may be, the first two years in an easily
accessible place; and shall preserve copies of each report made pursuant to
Paragraph 5 hereof for a period of not less than six years from the date of such
report, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Trust has executed this Plan pursuant to Rule
12b-1 as of the day and year set forth below.
Date: April 2, 1996 NEUBERGER & BERMAN EQUITY ASSETS
Attest: By:/s/ Michael J. Weiner
------------------------------
Michael J. Weiner
Vice President
By: /s/ Claudia A. Brandon
-----------------------------
Claudia A. Brandon
Secretary
Agreed and assented to by
NEUBERGER & BERMAN MANAGEMENT INCORPORATED
By: /s/ Stanley Egener
----------------------------
Stanley Egener
President
- 3 -
EXHIBIT 15(b)
NEUBERGER & BERMAN EQUITY ASSETS
PLAN PURSUANT TO RULE 12B-1
SCHEDULE A
The series of Neuberger & Berman Equity Assets subject to the Plan
pursuant to 12b-1, and the applicable fee rates, are:
Fee (as a Percentage of
SERIES AVERAGE DAILY NET ASSETS
Neuberger & Berman Focus Assets 0.25%
Neuberger & Berman Guardian Assets 0.25%
Neuberger & Berman Manhattan Assets 0.25%
Neuberger & Berman Partners Assets 0.25%
