<PAGE>
As filed with the Securities and Exchange Commission on February 9, 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. __3__ [__X__]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [__X__]
Amendment No. __5___ [__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.
Washington, D.C. 20036-1800
(Names and Addresses of agents for service)
Approximate Date of Proposed Public Offering: As soon as practicable
after the effective date of this registration statement.
It is proposed that this filing will become effective:
____ immediately upon filing pursuant to paragraph (b)
_X__ on February 11, 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.
<PAGE>
Neuberger & Berman Equity Assets is a "master/feeder fund." This
Post-Effective Amendment No. 3 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. 3 ON FORM N-1A
This Post-Effective Amendment consists of the following papers
and documents:
Cover Sheet
Contents of Post-Effective Amendment No. 3 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 - Prospectus
Part B - Statement of Additional Information
Part C - Other Information
Signature Pages
Exhibits
No change is intended to be made by this Post-Effective Amendment
No. 3 to the prospectus or statement of additional information for
Neuberger & Berman Socially Responsive Trust.
<PAGE>
NEUBERGER & BERMAN EQUITY ASSETS
POST-EFFECTIVE AMENDMENT NO. 3 ON FORM N-1A
Cross Reference Sheet
This cross 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
<TABLE>
<CAPTION>
Form N-1A Item No. Caption in Part A Prospectus
------------------ ----------------------------
<S> <C> <C>
Item 1. Cover Page Front Cover Page
Item 2. Synopsis Expense Information; Summary
Item 3. Condensed Financial Performance Information
Information
Item 4. General Description of Investment Programs; Description of
Registrant Investments; Special Information
Regarding Organization, Capitalization,
and Other Matters
Item 5. Management of the Fund Management and Administration; Back
Cover Page
Item 6. Capital Stock and Other Front Cover Page; Dividends, Other
Securities Distributions, and Taxes; Special
Information Regarding Organization,
Capitalization, and Other Matters
Item 7. Purchase of Securities Shareholder Services; Share
Being Offered Information; Management and
Administration
Item 8. Redemption or Repurchase Shareholder Services; Share Information
Item 9. Pending Legal Not Applicable
Proceedings
<PAGE>
Caption In Part B
Form N-1A Item No. Statement of Additional Information
------------------ ------------------------------------
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and Organization
History
Item 13. Investment Objectives Investment Information; Certain Risk
and Policies Considerations
Item 14. Management of the Fund Trustees and Officers
Item 15. Control Persons and Not Applicable
Principal Holders of
Securities
Item 16. Investment Advisory and Investment Management and
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 Other Investment Information; Additional
Securities Redemption Information; Dividends and
Other Distributions
Item 19. Purchase and Redemption Additional Exchange Information;
Additional Redemption Information;
Distribution Arrangements
Item 20. Tax Status Dividends and Other Distributions;
Additional Tax Information
Item 21. Underwriters Investment Management and
Administration Services; Distribution
Arrangements
Item 22. Calculation of Performance Information
Performance Data
Item 23. Financial Statements Financial Statements
</TABLE>
<PAGE>
Part C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Post-Effective Amendment
No. 3.
<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").
<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%
- 4 -
<PAGE>
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:
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.
- 5 -
<PAGE>
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:
<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
- 6 -
<PAGE>
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 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.
- 7 -
<PAGE>
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.
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
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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 ("N&B Equity Funds"), each of which has a
name similar to a Fund and the same investment objective, policies, and
limitations as that Fund ("Sister Fund"), also invest in the four
Portfolios described herein. Each Sister Fund had a predecessor. The
following table shows the average annual total returns for the period
ended August 31, 1995 (the most recent fiscal year-end of the Sister
Funds) of a 1-year, 5-year, and 10-year investment in each Sister Fund and
its predecessor. The Sister Funds have a different fee structure than the
Funds and do not pay 12b-1 fees. Had these fees been reflected, the total
returns shown in the table would have been lower. The table also shows a
comparison with the S&P 500 Index for each Sister Fund and its
predecessor. The S&P 500 Index is the Standard & Poor's 500 Composite
Stock Price Index, an unmanaged index generally considered to be
representative of overall stock market activity. Please note that indices
do not take into account any fees and expenses of investing in the
individual securities they track, and that individuals cannot invest
directly in any index.
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<PAGE>
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS
ENDED AUGUST 31, 1995
(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).
<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%
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<PAGE>
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%
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.
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
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<PAGE>
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, tradi-
tionally 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 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
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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.
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.
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<PAGE>
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 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
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<PAGE>
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
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
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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.
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.
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<PAGE>
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.
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
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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.
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
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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 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.
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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 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.
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<PAGE>
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 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.
- 21 -
<PAGE>
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.
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
- 22 -
<PAGE>
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.
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.
- 23 -
<PAGE>
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
- 24 -
<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.
- 25 -
<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"), respec-
tively.
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
<PAGE>
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
ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
CUSTODIAN AND TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . 57
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<PAGE>
Page
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
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<PAGE>
INVESTMENT INFORMATION
Each Fund is a separate series of Neuberger & Berman
Equity Assets ("Trust"), a Delaware business trust that is registered with
the Securities and Exchange Commission ("SEC") as an open-end management
investment company. Each Fund seeks its investment objective by investing
all of its net investable assets in a Portfolio of Equity Managers Trust
("Managers Trust") that has an investment objective identical to, and a
name similar to, that of the Fund. Each Portfolio, in turn, invests in
accordance with an investment objective, policies, and limitations
identical to those of its corresponding Fund. (The Trust and Managers
Trust, which is an open-end management investment company managed by N&B
Management, are together referred to below as the "Trusts.") Prior to
January 1, 1995, the name of Neuberger & Berman FOCUS Portfolio was
Neuberger & Berman Selected Sectors Portfolio.
The following information supplements the discussion in
the Prospectus of the investment objective, policies, and limitations of
each Fund and Portfolio. The investment objective and, unless otherwise
specified, the investment policies and limitations of each Fund and
Portfolio are not fundamental. Although any investment policy or
limitation that is not fundamental may be changed by the trustees of the
Trust ("Fund Trustees") or of Managers Trust ("Portfolio Trustees")
without shareholder approval, each Fund intends to notify its shareholders
before changing its investment objective or implementing any material
change in any non-fundamental policy or limitation. The fundamental
investment policies and limitations of a Fund or a Portfolio may not be
changed without the approval of the lesser of (1) 67% of the total units
of beneficial interest ("shares") of the Fund or Portfolio represented at
a meeting at which more than 50% of the outstanding Fund or Portfolio
shares are represented or (2) a majority of the outstanding shares of the
Fund or Portfolio. This vote is required by the Investment Company Act of
1940 ("1940 Act") and is referred to in this SAI as a "1940 Act majority
vote." Whenever a Fund is called upon to vote on a change in a
fundamental investment policy or limitation of its corresponding
Portfolio, the Fund casts its votes thereon in proportion to the votes of
its shareholders at a meeting thereof called for that purpose.
Investment Policies and Limitations
-----------------------------------
Each Fund has the following fundamental investment
policy, to enable it to invest in its corresponding Portfolio:
Notwithstanding any other investment policy of the Fund,
the Fund may invest all of its net investable assets
(cash, securities, and receivables relating to securi-
ties) in an open-end management investment company having
substantially the same investment objective, policies,
and limitations as the Fund.
All other fundamental investment policies and limitations
and the non-fundamental investment policies and limitations of each Fund
and its corresponding Portfolio are identical. Therefore, although the
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<PAGE>
following discusses the investment policies and limitations of the
Portfolios, it applies equally to their corresponding Funds.
Except for the limitation on borrowing and the limitation
on ownership of portfolio securities by officers and trustees, any
investment policy or limitation that involves a maximum percentage of
securities or assets will not be considered to be violated unless the
percentage limitation is exceeded immediately after, and because of, a
transaction by a Portfolio.
The Portfolios' fundamental investment policies and
limitations are as follows:
1. BORROWING. No Portfolio may borrow money, except
that a Portfolio may (i) borrow money from banks for temporary or
emergency purposes and not for leveraging or investment and (ii) enter
into reverse repurchase agreements for any purpose; provided that (i) and
(ii) in combination do not exceed 33-1/3% of the value of its total assets
(including the amount borrowed) less liabilities (other than borrowings).
If at any time borrowings exceed 33-1/3% of the value of a Portfolio's
total assets, that Portfolio will reduce its borrowings within three days
(excluding Sundays and holidays) to the extent necessary to comply with
the 33-1/3% limitation.
2. COMMODITIES. No Portfolio may purchase physical
commodities or contracts thereon, unless acquired as a result of the
ownership of securities or instruments, but this restriction shall not
prohibit a Portfolio from purchasing futures contracts or options
(including options on futures contracts, but excluding options or futures
contracts on physical commodities) or from investing in securities of any
kind.
3. DIVERSIFICATION. No Portfolio may, with respect
to 75% of the value of its total assets, purchase the securities of any
issuer (other than securities issued or guaranteed by the U.S. Government
or any of its agencies or instrumentalities) if, as a result, (i) more
than 5% of the value of the Portfolio's total assets would be invested in
the securities of that issuer or (ii) the Portfolio would hold more than
10% of the outstanding voting securities of that issuer.
4. INDUSTRY CONCENTRATION. No Portfolio may
purchase any security if, as a result, 25% or more of its total assets
(taken at current value) would be invested in the securities of issuers
having their principal business activities in the same industry. This
limitation does not apply to securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities.
5. LENDING. No Portfolio may lend any security or
make any other loan if, as a result, more than 33-1/3% of its total assets
(taken at current value) would be lent to other parties, except, in
accordance with its investment objective, policies, and limitations, (i)
through the purchase of a portion of an issue of debt securities or (ii)
by engaging in repurchase agreements.
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<PAGE>
6. REAL ESTATE. No Portfolio may purchase real
estate unless acquired as a result of the ownership of securities or
instruments, but this restriction shall not prohibit a Portfolio from
purchasing securities issued by entities or investment vehicles that own
or deal in real estate or interests therein or instruments secured by real
estate or interests therein.
7. SENIOR SECURITIES. No Portfolio may issue senior
securities, except as permitted under the 1940 Act.
8. UNDERWRITING. No Portfolio may underwrite
securities of other issuers, except to the extent that a Portfolio, in
disposing of portfolio securities, may be deemed to be an underwriter
within the meaning of the Securities Act of 1933 ("1933 Act").
The following non-fundamental investment policies and
limitations apply to all Portfolios:
1. BORROWING. No Portfolio may purchase securities
if outstanding borrowings, including any reverse repurchase agreements,
exceed 5% of its total assets.
2. LENDING. Except for the purchase of debt
securities and engaging in repurchase agreements, no Portfolio may make
any loans other than securities loans.
3. INVESTMENTS IN OTHER INVESTMENT COMPANIES. No
Portfolio may purchase securities of other investment companies, except to
the extent permitted by the 1940 Act and in the open market at no more
than customary brokerage commission rates. This limitation does not apply
to securities received or acquired as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
4. MARGIN TRANSACTIONS. No Portfolio may purchase
securities on margin from brokers or other lenders, except that a
Portfolio may obtain such short-term credits as are necessary for the
clearance of securities transactions. Margin payments in connection with
transactions in futures contracts and options on futures contracts shall
not constitute the purchase of securities on margin and shall not be
deemed to violate the foregoing limitation.
5. SHORT SALES. No Portfolio may sell securities
short unless it owns, or has the right to obtain without payment of
additional consideration, securities equivalent in kind and amount to the
securities sold. Transactions in forward contracts, futures contracts and
options shall not constitute selling securities short.
6. OWNERSHIP OF PORTFOLIO SECURITIES BY OFFICERS AND
TRUSTEES. No Portfolio may purchase or retain the securities of any
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.
- 3 -
<PAGE>
7. UNSEASONED ISSUERS. No Portfolio may purchase
the securities of any issuer (other than securities issued or guaranteed
by domestic or foreign governments or political subdivisions thereof) if,
as a result, more than 5% of the Portfolio's total assets would be
invested in the securities of business enterprises that, including
predecessors, have a record of less than three years of continuous
operation.
8. PUTS, CALLS, STRADDLES, OR SPREADS. No Portfolio
may invest in puts, calls, straddles, spreads, or any combination thereof,
except that each Portfolio may (i) write (sell) covered call options
against portfolio securities having a market value not exceeding 10% of
its net assets and (ii) purchase call options in related closing transac-
tions. The Portfolios do not construe the foregoing limitation to pre-
clude them from purchasing or writing options on futures contracts or from
purchasing securities with rights to put the securities to the issuer or a
guarantor.
9. ILLIQUID SECURITIES. No Portfolio may purchase
any security if, as a result, more than 10% of its net assets would be in-
vested in illiquid securities. Illiquid securities include securities
that cannot be sold within seven days in the ordinary course of business
for approximately the amount at which the Portfolio has valued the
securities, such as repurchase agreements maturing in more than seven
days.
10. FOREIGN SECURITIES. No Portfolio may invest more
than 10% of the value of its total assets in securities of foreign
issuers, provided that this limitation shall not apply to foreign
securities denominated in U.S. dollars, including American Depositary
Receipts ("ADRs").
11. OIL AND GAS PROGRAMS. No Portfolio may invest in
participations or other direct interests in oil, gas, or other mineral
leases or exploration or development programs, but each Portfolio may
purchase securities of companies that own interests in any of the
foregoing.
12. REAL ESTATE. No Portfolio may purchase or sell real
property (including interests in real estate limited partnerships, but
excluding readily marketable interests in real estate investment trusts
and readily marketable securities of companies that invest in real
estate); provided that no Portfolio may purchase any security if, as a
result, more than 10% of its total assets would be invested in securities
of real estate investment trusts.
In addition to the foregoing non-fundamental investment
policies and limitations, which apply to each Portfolio, the following
non-fundamental investment policies and limitations apply to the indicated
Portfolios:
13. INVESTMENTS IN ANY ONE ISSUER (NEUBERGER & BERMAN
FOCUS AND NEUBERGER & BERMAN GUARDIAN PORTFOLIOS). Neither of these Port-
folios may purchase the securities of any one issuer (other than
securities issued or guaranteed by the U.S. Government or any of its
- 4 -
<PAGE>
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 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."
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KENT C. SIMONS AND LAWRENCE MARX III, PORTFOLIO MANAGERS OF NEUBERGER &
BERMAN FOCUS AND NEUBERGER & BERMAN GUARDIAN PORTFOLIOS
These Portfolios are managed by two veterans of N&B Man-
agement who have consistently followed their value-oriented philosophy
over many years: Kent Simons and Larry Marx.
Neuberger & Berman FOCUS Portfolio's investment objective
is long-term capital appreciation. Like the other Portfolios that use a
value-oriented investment approach, it seeks to buy undervalued securities
that offer opportunities for growth, but then focuses its assets in those
sectors where undervalued stocks are clustered. "We begin by looking for
stocks that are selling for less than we think they're worth, a 'bottom-up
approach'" says Mr. Simons. "More often than not, such stocks are in a
few economic sectors that are out of favor and are undervalued as a group.
I think 90% of cheap stocks deserve to be cheap. My job is to find the
10% that don't."
"We don't pick sectors for Neuberger & Berman FOCUS
Portfolio based on our perception of how the economy is going to do. Nor
do we engage in making economic or currency predictions. We look for
stocks with either low relative or low absolute valuations," explains Mr.
Marx. "Often, these stocks will be found in a particular sector, but we
didn't start out being bullish on that sector. It's just where we
happened to find the values. We find that if one company comes under a
cloud, it tends to happen to its whole industry. If an investment manager
rotated the sectors in a portfolio by buying sectors when they are
undervalued and selling them when they become fully valued, the manager
would be able to achieve above-average performance."
Neuberger & Berman GUARDIAN Portfolio subscribes to the
same stock-picking philosophy followed since 1950, when Roy R. Neuberger
founded the predecessor of Neuberger & Berman GUARDIAN Fund, which, like
Neuberger & Berman GUARDIAN Assets, invests all its net investable assets
in Neuberger & Berman GUARDIAN Portfolio.
It's no great trick for a mutual fund to make money when
the market is rising. The tide that lifts stock values will carry most
funds along. The true test of management is its ability to make money
even when the market is flat or declining. By that measure, Neuberger &
Berman GUARDIAN Fund and its predecessor have served shareholders well and
have paid a dividend every quarter and a capital gain distribution EVERY
YEAR since 1950. Of course, there can be no assurance that this trend
will continue.
Both Mr. Simons and Mr. Marx place a high premium on
being knowledgeable about the companies whose stocks they buy for
Neuberger & Berman GUARDIAN Portfolio. That knowledge is important,
because sometimes it takes courage to buy stocks that the rest of the
market has forsaken. Says Mr. Marx, "We're usually early in and early
out. We'd rather buy an undervalued stock because we expect it to become
fairly valued than buy one fairly valued and hope it becomes overvalued.
We like a stock 'under a rock' or with a cloud over it; you are not going
to get great companies at great valuations when the market perception is
great."
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"People who switch around a lot are not going to benefit
from our approach. They're following the market -- we're looking at
fundamentals."
MICHAEL M. KASSEN AND ROBERT I. GENDELMAN, PORTFOLIO MANAGERS OF NEUBERGER
& BERMAN PARTNERS PORTFOLIO
"Neuberger & Berman PARTNERS Portfolio's objective is
capital growth," say its portfolio managers Michael Kassen and Robert
Gendelman. "We want to make money in good markets and not give up those
gains during rough times."
"Our investors seek consistent performance and have a
moderate risk tolerance. They do know, however, that stock investments
can provide the long-term upside potential essential to meeting their
long-term investment goals, particularly a comfortable retirement and
planning for a college education."
"We look for stocks that are undervalued in the market-
place either in relation to strong current fundamentals, such as low
price-to-earnings ratios, consistent cash flow, and support from asset
values, or in relation to the growth of their future earnings, as
projected by N&B Management. If the market goes down, those stocks we
elect to hold, historically, go down less."
The co-portfolio managers monitor stocks of medium- to
large-sized companies that often are not closely scrutinized by other
investors. The managers research these companies in order to determine if
they will produce a new product, become an acquisition target, or undergo
a financial restructuring.
What else catches Mr. Kassen's and Mr. Gendelman's eyes?
"We like managements that own their own stock. These companies usually
seek to build shareholder wealth by buying back shares or making
acquisitions that have a swift and positive impact on the bottom line."
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
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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.
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 guide-
lines 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
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<PAGE>
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.
FOREIGN SECURITIES (ALL PORTFOLIOS). Each Portfolio may
invest in U.S. dollar-denominated securities issued by foreign issuers
(including banks, governments, and quasi-governmental organizations) and
foreign branches of U.S. banks, including negotiable certificates of depo-
sit ("CDs"), bankers' acceptances and commercial paper. These investments
are subject to each Portfolio's quality standards. While investments in
foreign securities are intended to reduce risk by providing further diver-
sification, such investments involve sovereign and other risks, in
addition to the credit and market risks normally associated with domestic
securities. These additional risks include the possibility of adverse
political and economic developments (including political instability) and
the potentially adverse effects of unavailability of public information
regarding issuers, less governmental supervision and regulation of
financial markets, reduced liquidity of certain financial markets, and the
lack of uniform accounting, auditing, and financial standards or the
application of standards that are different or less stringent than those
applied in the United States.
Each Portfolio also may invest in equity, debt, or other
income-producing securities 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
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<PAGE>
foreign governments or their subdivisions, agencies, and instrumentali-
ties, international agencies, and supranational entities. Investing in
foreign currency denominated securities includes the special risks asso-
ciated with investing in non-U.S. issuers described in the preceding
paragraph and the additional risks of (1) adverse changes in foreign
exchange rates, (2) nationalization, expropriation, or confiscatory taxa-
tion, (3) adverse changes in investment or exchange control regulations
(which could prevent cash from being brought back to the United States),
and (4) expropriation or nationalization of foreign portfolio companies.
Additionally, dividends and interest payable on foreign securities may be
subject to foreign taxes, including taxes withheld from those payments.
Commissions on foreign securities exchanges are often at fixed rates and
are generally higher than negotiated commissions on U.S. exchanges,
although the 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 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
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<PAGE>
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 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
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<PAGE>
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 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.
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<PAGE>
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.
FORWARD FOREIGN CURRENCY CONTRACTS (ALL PORTFOLIOS).
Each Portfolio may enter into contracts for the purchase or sale of a
specific currency at a future date at a fixed price ("forward contracts")
in amounts not exceeding 5% of its net assets. The Portfolios enter into
forward contracts in an attempt to hedge against expected changes in
prevailing currency exchange rates. The Portfolios do not engage in
transactions in forward contracts for speculation; they view investments
in forward contracts as a means of establishing more definitely the effec-
tive return on securities denominated in foreign currencies that are held
or intended to be acquired by them. Forward contract transactions include
forward sales or purchases of foreign currencies for the purpose of pro-
tecting the U.S. dollar value of securities held or to be acquired by a
Portfolio or protecting the U.S. dollar equivalent of dividends, interest,
or other payments on those securities.
N&B Management believes that the use of foreign currency
hedging techniques, including "cross-hedges," can help protect against
declines in the U.S. dollar value of income available for distribution and
declines in a Portfolio's NAV resulting from adverse changes in currency
exchange rates. For example, the return available from securities denomi-
nated in a particular foreign currency would diminish if the value of the
U.S. dollar increased against that currency. Such a decline could be
partially or completely offset by an increase in value of a cross-hedge
involving a forward contract to sell a different foreign currency, where
the contract is available on terms more advantageous to a Portfolio than a
contract to sell the currency in which the securities being hedged are
denominated. N&B Management believes that hedges and cross-hedges can,
therefore, provide significant protection of NAV in the event of a general
rise in the U.S. dollar against foreign currencies. However, a hedge or
cross-hedge cannot protect against exchange rate risks perfectly, and, if
N&B Management is incorrect in its judgment of future exchange rate
relationships, a Portfolio could be in a less advantageous position than
if such a hedge had not been established. In addition, because forward
contracts are not traded on an exchange, the assets used to cover such
contracts may be illiquid.
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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 foreign currencies that are traded on an
exchange regulated by the Commodity Futures Trading Commission ("CFTC")
other than for bona fide hedging purposes (as defined by the CFTC), the
aggregate initial margin and premiums on those positions (excluding the
amount by which options are "in-the-money") may not exceed 5% of the
Portfolio's net assets.
GENERAL CONSIDERATIONS INVOLVING OPTIONS AND FORWARD CONTRACTS
(COLLECTIVELY, "HEDGING INSTRUMENTS")
RISKS INVOLVED IN USING HEDGING INSTRUMENTS. The primary
risks in using Hedging Instruments are (1) imperfect correlation or no
correlation between changes in market value of the securities held or to
be acquired by a Portfolio and changes in market value of Hedging
Instruments; (2) possible lack of a liquid secondary market for Hedging
Instruments and the resulting inability to close out Hedging Instruments
when desired; (3) the fact that the skills needed to use Hedging Instru-
ments are different from those needed to select a Portfolio's securities;
(4) the fact that, although use of these instruments for hedging purposes
can reduce the risk of loss, they also can reduce the opportunity for
gain, or even result in losses, by offsetting favorable price movements in
hedged investments; and (5) the possible inability of a Portfolio to
purchase or sell a portfolio security at a time that would otherwise be
favorable for it to do so, or the possible need for a Portfolio to sell a
portfolio security at a disadvantageous time, due to its need to maintain
"cover" or to segregate securities in connection with its use of Hedging
Instruments. N&B Management intends to reduce the risk of imperfect
correlation by investing only in Hedging Instruments whose behavior is
expected to resemble that of a Portfolio's underlying securities. N&B
Management intends to reduce the risk that a Portfolio will be unable to
close out Hedging Instruments by entering into such transactions only if
N&B Management believes there will be an active and liquid secondary
market. Hedging Instruments used by the Portfolios are generally
considered "derivatives." There can be no assurance that a Portfolio's
use of Hedging Instruments will be successful.
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
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<PAGE>
qualify as a regulated investment company ("RIC"). See "Additional Tax
Information."
COVER FOR HEDGING INSTRUMENTS. Each Portfolio will com-
ply with SEC guidelines regarding cover for Hedging Instruments and, if
the guidelines so require, set aside in a segregated account with its
custodian cash, U.S. Government or Agency Securities, or other liquid,
high-grade debt securities in the prescribed amount. Securities held in a
segregated account cannot be sold while the option or forward strategy
covered by those securities is outstanding, unless they are replaced with
other suitable assets. As a result, segregation of a large percentage of
a Portfolio's assets could impede portfolio management or the Portfolio's
ability to meet current obligations. A Portfolio may be unable promptly
to dispose of assets which cover, or are segregated with respect to, an
illiquid option or forward position; 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
- 15 -
<PAGE>
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 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 periodi-
cally. Zero coupon securities are likely to respond to changes in
interest rates to a greater degree than other types of debt securities
having similar maturities and credit quality.
CONVERTIBLE SECURITIES (ALL PORTFOLIOS). The Portfolios
may invest in convertible securities. A convertible security entitles the
- 16 -
<PAGE>
holder to receive interest paid or accrued on debt or the dividend paid on
preferred stock until the convertible security matures or is redeemed,
converted or exchanged. Before conversion, such securities ordinarily
provide a stream of income with generally higher yields than common stocks
of the same or similar issuers, but lower than the yield on non-
convertible debt. Convertible securities are usually subordinated to
comparable-tier non-convertible securities but rank senior to common stock
in a corporation's capital structure. The value of a convertible security
is a function of (1) its yield in comparison to the yields of other
securities of comparable maturity and quality that do not have a
conversion privilege and (2) its worth if converted into the underlying
common stock.
Convertible securities are typically issued by smaller
capitalization companies whose stock prices may be volatile. The price of
a convertible security often reflects variations in the price of the
underlying common stock in a way that non-convertible debt does not. A
convertible security may be subject to redemption at the option of the
issuer at a price established in the security's governing instrument. If
a convertible security held by 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,
- 17 -
<PAGE>
production, sale, or storage of packaged, canned, bottled, or frozen foods
and beverages and design, production, or sale of home furnishings,
appliances, clothing, accessories, cosmetics, or perfumes. Certain of
these companies are subject to government regulation affecting the use of
various food additives and production methods, which could affect
profitability. Also, the success of food- and fashion-related products
may be strongly affected by fads, marketing campaigns, health concerns,
and other factors affecting supply and demand.
(3) DEFENSE AND AEROSPACE SECTOR: Companies engaged in re-
search, manufacture, or sale of products or services related to the
defense or aerospace industries, including air transport; data processing
or computer-related services; communications systems; military weapons or
transportation; general aviation equipment, missiles, space launch
vehicles, or spacecraft; machinery for guidance, propulsion, or control of
flight vehicles; and airborne or ground-based equipment essential to the
test, operation, or maintenance of flight vehicles. Because these
companies rely largely on U.S. (and foreign) governmental demand for their
products and services, their financial conditions are heavily influenced
by defense spending policies.
(4) ENERGY SECTOR: Companies involved in the production,
transmission, or marketing of energy from oil, gas, or coal, as well as
nuclear, geothermal, oil shale, or solar sources of energy (but excluding
public utility companies). Also included are companies that provide
component products or services for those activities. The value of these
companies' securities varies based on the price and supply of energy fuels
and may be affected by international politics, energy conservation, the
success of exploration projects, environmental considerations, and the tax
and other regulatory policies of various governments.
(5) FINANCIAL SERVICES SECTOR: Companies providing financial
services to consumers or industry, including commercial banks and savings
and loan associations, consumer and industrial finance companies,
securities brokerage companies, leasing companies, and insurance
companies. These companies are subject to extensive governmental
regulations. Their profitability may fluctuate significantly as a result
of volatile interest rates, concerns about particular banks and savings
institutions, and general economic conditions.
(6) HEALTH CARE SECTOR: Companies engaged in design, manu-
facture, or sale of products or services used in connection with the
provision of health care, including pharmaceutical companies; firms that
design, manufacture, sell, or supply medical, dental, or optical products,
hardware, or services; companies involved in biotechnology, medical
diagnostic, or biochemical research and development; and companies that
operate health care facilities. Many of these companies are subject to
government regulation and potential health care reforms, which could
affect the price and availability of their products and services. Also,
products and services of these companies could quickly become obsolete.
(7) HEAVY INDUSTRY SECTOR: Companies engaged in research,
development, manufacture, or marketing of products, processes, or services
related to the agriculture, chemicals, containers, forest products,
non-ferrous metals, steel, or pollution control industries, including
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<PAGE>
synthetic and natural materials (for example, chemicals, plastics,
fertilizers, gases, fibers, flavorings, or fragrances), paper, wood
products, steel, and cement. Certain of these companies are subject to
state and federal regulation, which could require alteration or cessation
of production of a product, payment of fines, or cleaning of a disposal
site. Furthermore, because some of the materials and processes used by
these companies involve hazardous components, there are additional risks
associated with their production, handling, and disposal. The risk of
product obsolescence also is present.
(8) MACHINERY AND EQUIPMENT SECTOR: Companies engaged in the
research, development, or manufacture of products, processes, or services
relating to electrical equipment, machinery, pollution control, or
construction services, including transformers, motors, turbines, hand
tools, earth-moving equipment, and waste disposal services. The
profitability of most of these companies may fluctuate significantly in
response to capital spending and general economic conditions. As is the
case for the heavy industry sector, there are risks associated with the
production, handling, and disposal of materials and processes that involve
hazardous components and the risk of product obsolescence.
(9) MEDIA AND ENTERTAINMENT SECTOR: Companies engaged in
design, production, or distribution of goods or services for the media
industries (including television or radio broadcasting or manufacturing,
publishing, recordings and musical instruments, motion pictures, and
photography) and the entertainment industries (including sports arenas,
amusement and theme parks, gaming casinos, sporting goods, camping and
recreational equipment, toys and games, travel-related services, hotels
and motels, and fast food and other restaurants). Many products produced
by companies in this sector -- for example, video and electronic games --
may become obsolete quickly. Additionally, companies engaged in tele-
vision and radio broadcast are subject to government regulation.
(10) RETAILING SECTOR: Companies engaged in retail distribu-
tion of home furnishings, food products, clothing, pharmaceuticals,
leisure products, or other consumer goods, including department stores,
supermarkets, and retail chains specializing in particular items such as
shoes, toys, or pharmaceuticals. The value of these companies' securities
fluctuates based on consumer spending patterns, which depend on inflation
and interest rates, the level of consumer debt, and seasonal shopping
habits. The success or failure of a company in this highly competitive
sector depends on its ability to predict rapidly changing consumer tastes.
(11) TECHNOLOGY SECTOR: Companies that are expected to have or
develop products, processes, or services that will provide, or will
benefit significantly from, technological advances and improvements or
future automation trends, including semiconductors, computers and
peripheral equipment, scientific instruments, computer software,
telecommunications equipment, and electronic components, instruments, and
systems. These companies are sensitive to foreign competition and import
tariffs. Also, many of their products may become obsolete quickly.
(12) TRANSPORTATION SECTOR: Companies involved in providing
transportation of people and products, including airlines, railroads, and
- 19 -
<PAGE>
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.
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
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<PAGE>
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.
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.,
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<PAGE>
C.D.A. Investment Technologies, Inc., Wiesenberger
Investment Companies Service, Investment Company Data
Inc., Morningstar, Inc., Micropal Incorporated, and
quarterly mutual fund rankings by Money, Fortune, Forbes,
Business Week, Personal Investor, and U.S. News & World
Report magazines, The Wall Street Journal, New York
Times, Kiplingers Personal Finance, and Barron's News-
paper, or
(2) recognized stock and other indices, such as
the S&P 500 Composite Stock Price Index ("S&P 500
Index"), S&P Small Cap 600 Index ("S&P 600 Index"), S&P
Mid Cap 400 Index ("S&P 400 Index"), Russell 2000 Stock
Index, Dow Jones Industrial Average ("DJIA"), Wilshire
1750, Nasdaq Composite Index, Value Line Index, U.S.
Department of Labor Consumer Price Index ("Consumer Price
Index"), College Board Survey of Colleges Annual
Increases of College Costs, Kanon Bloch's Family
Performance Index, the Barra Growth Index, the Barra
Value Index, and various other domestic, international,
and global indices. The S&P 500 Index is a broad index
of common stock prices, while the DJIA represents a
narrower segment of industrial companies. The S&P 600
Index includes stocks that range in market value from $27
million to $880 million, with an average of $302 million.
The S&P 400 Index measures mid-sized companies with an
average market capitalization of $1.2 billion. Each
assumes reinvestment of distributions and is calculated
without regard to tax consequences or the costs of
investing. Each Portfolio may invest in different types
of securities from those included in some of the above
indices.
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.
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
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<PAGE>
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 Man-
agement's founder, Roy R. Neuberger, may be included in the Funds'
Advertisements. This philosophy is described in further detail in "The
Art of Investing: A Conversation with Roy Neuberger," attached as
Appendix B to this SAI.
CERTAIN RISK CONSIDERATIONS
Although each Portfolio seeks to reduce risk by investing
in a diversified portfolio, diversification does not eliminate all risk.
There can, of course, be no assurance that any Portfolio will achieve its
investment objective, and an investment in a Fund involves certain risks
that are described in the sections entitled "Investment Programs" and
"Description of Investments" in the Prospectus and "Investment Information
-- Additional Investment Information" in this SAI.
TRUSTEES AND OFFICERS
The following table sets forth information concerning the
trustees and officers of the Trusts, including their addresses and
principal business experience during the past five years. Some persons
1/ Source: College Board, 1994, 1995 Annual Survey of Colleges, Princeton, NJ, assuming an average 6%
increase in annual expenses.
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<PAGE>
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>
<TABLE>
<CAPTION>
Name, Age, and Positions Held
Address(1) With the Trusts Principal Occupation(s)(2)
<S> <C> <C>
Faith Colish (60) Trustee of each Trust Attorney at Law, Faith Colish, A
63 Wall Street Professional Corporation.
24th Floor
New York, NY 10005
Donald M. Cox (73) Trustee of each Trust Retired. Formerly Senior Vice President
435 East 52nd Street and Director of Exxon Corporation;
New York, NY 10022 Director of Emigrant Savings Bank.
Stanley Egener* (61) Chairman of the Board, Partner of Neuberger & Berman; President
Chief Executive Officer, and Director of N&B Management; Chairman
and Trustee of each of the Board, Chief Executive Officer,
Trust and Trustee of eight other mutual funds
for which N&B Management acts as
investment manager or administrator.
Alan R. Gruber (68) Trustee of each Trust Chairman and Chief Executive Officer of
Orion Capital Orion Capital Corporation (property and
Corporation casualty insurance); Director of Trenwick
600 Fifth Avenue Group, Inc. (property and casualty
24th Floor reinsurance); Chairman of the Board and
New York, NY 10020 Director of Guaranty National Corporation
(property and casualty insurance);
formerly Director of Ketema, Inc. (diver-
sified manufacturer).
Howard A. Mileaf (59) Trustee of each Trust Vice President and Special Counsel to WHX
WHX Corporation Corporation (holding company) since 1992;
110 East 59th Street formerly Vice President and General
New York, NY 10022 Counsel of Keene Corporation (manu-
facturer of industrial products);
Director of Kevlin Corporation
(manufacturer of microwave and other
products).
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<PAGE>
Name, Age, and Positions Held
Address(1) With the Trusts Principal Occupation(s)(2)
Edward I. O'Brien* (67) Trustee of each Trust Until 1993, President of the Securities
12 Woods Lane Industry Association ("SIA") (securities
Scarsdale, NY 10583 industry's representative in government
relations and regulatory matters at the
federal and state levels); until November
1993, employee of the SIA; Director of
Legg Mason, Inc.
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.
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.
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<PAGE>
Name, Age, and Positions Held
Address(1) With the Trusts Principal Occupation(s)(2)
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 Senior Vice President and Treasurer of
Principal Financial N&B Management since 1992; prior thereto,
Officer of each Trust 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.
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 1992;
each Trust employee thereof since 1971; Assistant
Secretary of eight other mutual funds for
which N&B Management acts as
investment manager or administrator.
____________________
</TABLE>
(1) Unless otherwise indicated, the business address of each listed
person is 605 Third Avenue, New York, New York 10158.
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<PAGE>
(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 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)
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<PAGE>
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)
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
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<PAGE>
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.
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.
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<PAGE>
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 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 inter-
ests 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
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<PAGE>
Neuberger & Berman. This staff consists of approximately fourteen
investment analysts, each of whom specializes in studying one or more
industries, under the supervision of the Director of Research, who is also
available for consultation with N&B Management. The Sub-Advisory
Agreement provides that N&B Management will pay for the services rendered
by Neuberger & Berman based on the direct and indirect costs to Neuberger
& Berman in connection with those services. Neuberger & Berman also
serves as sub-adviser for all of the other mutual funds managed by N&B
Management.
The Sub-Advisory Agreement continues with respect to 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)
- 31 -
<PAGE>
Approximate Net Assets
Name at December 31,
----- 1995
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)
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)
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<PAGE>
Approximate Net Assets
Name at December 31,
----- 1995
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)
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
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<PAGE>
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
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.
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<PAGE>
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
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.
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<PAGE>
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
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
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<PAGE>
The right to redeem a Fund's shares may be suspended or
payment of the redemption price postponed (1) when the NYSE is closed
(other than weekend and holiday closings), (2) when trading on the NYSE is
restricted, (3) when an emergency exists as a result of which it is not
reasonably practicable for the corresponding Portfolio to dispose of
securities it owns or fairly to determine the value of its net assets, or
(4) for such other period as the SEC may by order permit for the
protection of a Fund's shareholders; provided that applicable SEC rules
and regulations shall govern whether the conditions prescribed in (2) or
(3) exist. If the right of redemption is suspended, shareholders may
withdraw their offers of redemption, or they will receive payment at the
NAV per share in effect at the close of business on the first day the NYSE
is open ("Business Day") after termination of the suspension.
REDEMPTIONS IN KIND
Each Fund reserves the right, under certain conditions,
to honor any request for redemption by making payment in whole or in part
in securities valued as described under "Share Information -- Share Prices
and Net Asset Value" in the Prospectus. If payment is made in securities,
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
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<PAGE>
local income taxation, they are taxable to the shareholders whether
received in cash or reinvested in Fund shares. A cash election with
respect to any Fund remains in effect until the Institution notifies the
Fund in writing to discontinue the election.
ADDITIONAL TAX INFORMATION
TAXATION OF THE FUNDS
In order to continue to qualify for treatment as a RIC
under the Code, each Fund must distribute to its shareholders for each
taxable year at least 90% of its investment company taxable income
(consisting generally of net investment income, net short-term capital
gain, and net gains from certain foreign currency transactions)
("Distribution Requirement") and must meet several additional
requirements. With respect to each Fund, these requirements include the
following: (1) the Fund must derive at least 90% of its gross income each
taxable year from dividends, interest, payments with respect to securities
loans, and gains from the sale or other disposition of securities or
foreign currencies, or other income (including gains from Hedging
Instruments) derived with respect to its business of investing in secu-
rities or those currencies ("Income Requirement"); (2) the Fund must
derive less than 30% of its gross income each taxable year from the sale
or other disposition of securities, or any of the following, that were
held for less than three months -- (i) options (other than those on
foreign currencies), or (ii) foreign currencies or Hedging Instruments
thereon that are not directly related to the Fund's principal business of
investing in securities (or options with respect thereto) ("Short-Short
Limitation"); and (3) at the close of each quarter of the Fund's taxable
year, (i) at least 50% of the value of its total assets must be
represented by cash and cash items, U.S. Government securities, and other
securities limited, in respect of any one issuer, to an amount that does
not exceed 5% of the value of the Fund's total assets and does not
represent more than 10% of the issuer's outstanding voting securities, and
(ii) not more than 25% of the value of its total assets may be invested in
securities (other than U.S. Government securities) of any one issuer.
Certain funds managed by N&B Management, including the
Sister Funds, have received a ruling from the Internal Revenue Service
("Service") that each such fund, as an investor in a corresponding
portfolio of Managers Trust or Income Managers Trust, will be deemed to
own a proportionate share of the portfolio's assets and income for pur-
poses of determining whether the fund satisfies all the requirements
described above to qualify as a RIC. Although that ruling may not be
relied on as precedent by the Funds, N&B Management believes that the
reasoning thereof and, hence, its conclusion apply to the Funds as well.
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.
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<PAGE>
See the next section for a discussion of the tax conse-
quences to the Funds of distributions to them from the Portfolios,
investments by the Portfolios in certain securities, and hedging trans-
actions engaged in by the Portfolios.
TAXATION OF THE PORTFOLIOS
The Portfolios have received a ruling from the Service to
the effect that, among other things, each Portfolio will be treated as a
separate partnership for federal income tax purposes and will not be a
"publicly traded partnership." As a result, no Portfolio is subject to
federal income tax; instead, each investor in a Portfolio, such as a Fund,
is required to take into account in determining its federal income tax
liability its share of the Portfolio's income, gains, losses, deductions,
and credits, without regard to whether it has received any cash
distributions from the Portfolio. Each Portfolio also is not subject to
Delaware or New York income or franchise tax.
Because each Fund is deemed to own a proportionate share
of its corresponding Portfolio's assets and income for purposes of
determining whether the Fund satisfies the requirements to qualify as a
RIC, each Portfolio intends to continue to conduct its operations so that
its corresponding Fund will be able to continue to satisfy all those
requirements.
Distributions to a Fund from its corresponding Portfolio
(whether pursuant to a partial or complete withdrawal or otherwise) will
not result in the Fund's recognition of any gain or loss for federal
income tax purposes, except that (1) gain will be recognized to the extent
any cash that is distributed exceeds the Fund's basis for its interest in
the Portfolio before the distribution, (2) income or gain will be
recognized if the distribution is in liquidation of the Fund's entire
interest in the Portfolio and includes a disproportionate share of any
unrealized receivables held by the Portfolio, and (3) loss will be
recognized if a liquidation distribution consists solely of cash and/or
unrealized receivables. A Fund's basis for its interest in its
corresponding Portfolio generally equals the amount of cash the Fund
invests in the Portfolio, increased by the Fund's share of the Portfolio's
net income and gains and decreased by (1) the amount of cash and the basis
of any property the Portfolio distributes to the Fund and (2) the Fund's
share of the Portfolio's losses.
Dividends and interest received by a Portfolio may be
subject to income, withholding, or other taxes imposed by foreign
countries and U.S. possessions that would reduce the yield on its
securities. Tax 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
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<PAGE>
circumstances, if a Portfolio holds stock of a PFIC, its corresponding
Fund (indirectly through its interest in the Portfolio) will be subject to
federal income tax on a portion of any "excess distribution" received on
the stock or of any gain on disposition of the stock (collectively, "PFIC
income"), plus interest thereon, even if the Fund distributes the PFIC
income as a taxable dividend to its shareholders. The balance of the PFIC
income will be included in the Fund's investment company taxable income
and, accordingly, will not be taxable to it to the extent that income is
distributed to its shareholders.
If a Portfolio invests in a PFIC and elects to treat the
PFIC as a "qualified electing fund," then in lieu of its corresponding
Fund's incurring the foregoing tax and interest obligation, the Fund would
be required to include in income each year its pro rata share of the
Portfolio's pro rata share of the qualified electing fund's annual
ordinary earnings and net capital gain (the excess of net long-term
capital gain over net short-term capital loss) -- which most likely would
have to be distributed by the Fund to satisfy the Distribution Requirement
and to avoid imposition of the Excise Tax -- even if those earnings and
gain were not received by the Portfolio. In most instances it will be
very difficult, if not impossible, to make this election because of
certain requirements thereof.
Pursuant to proposed regulations, open-end RICs, such as
the Funds, would be entitled to elect to mark to market their stock in
certain PFICs. Marking to market in this context means recognizing as
gain for each taxable year the excess, as of the end of that year, of the
fair market value of each such PFIC's stock over the adjusted basis in
that stock (including mark to market gain for each prior year for which an
election was in effect).
The Portfolios' use of hedging strategies, such as writ-
ing (selling) and purchasing options and entering into forward contracts,
involves complex rules that will determine for income tax purposes the
character and timing of recognition of the gains and losses the Portfolios
realize in connection therewith. Income from foreign currencies (except
certain gains therefrom that may be excluded by future regulations), and
income from transactions in Hedging Instruments derived by the Portfolio
with respect to its business of investing in securities or foreign cur-
rencies, will qualify as permissible income for its corresponding Fund
under the Income Requirement. However, income from the disposition by a
Portfolio of options (other than those on foreign currencies) will be
subject to the Short-Short Limitation for its corresponding Fund if they
are held for less than three months. Income from the disposition of
foreign currencies, and Hedging Instruments on foreign currencies, that
are not directly related to a Portfolio's principal business of investing
in securities (or options with respect thereto) also will be subject to
the Short-Short Limitation for its corresponding Fund if they are held for
less than three months.
If a Portfolio satisfies certain requirements, any in-
crease in value of a position that is part of a "designated hedge" will be
offset by any decrease in value (whether realized or not) of the
offsetting hedging position during the period of the hedge for purposes of
determining whether its corresponding Fund satisfies the Short-Short
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<PAGE>
Limitation. Thus, only the net gain (if any) from the designated hedge
will be included in gross income for purposes of that limitation. Each
Portfolio will consider whether it should seek to qualify for this
treatment for its hedging transactions. To the extent a Portfolio does
not so qualify, it may be forced to defer the closing out of certain
Hedging Instruments beyond the time when it otherwise would be
advantageous to do so, in order for its corresponding Fund to continue to
qualify as a RIC.
Neuberger & Berman PARTNERS Portfolio may acquire zero
coupon securities or other securities issued with original issue discount
("OID"). As a holder of those securities, that Portfolio (and, through
it, its corresponding Fund) must take into account the OID that accrues on
the securities during the taxable year, even if it receives no
corresponding payment on the securities during the year. Because
Neuberger & Berman PARTNERS Assets annually must distribute substantially
all of its investment company taxable income (including its share of the
Portfolio's accrued OID) to satisfy the Distribution Requirement and to
avoid imposition of the Excise Tax, that Fund may be required in a parti-
cular year to distribute as a dividend an amount that is greater than its
proportionate share of the total amount of cash Neuberger & Berman
PARTNERS Portfolio actually receives. Those distributions will be made
from that Fund's (or its proportionate share of that Portfolio's) cash
assets or, 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 connec-
tion with the writing of covered call options on its securities.
Transactions in portfolio securities for which Neuberger & Berman serves
as broker will be effected in accordance with Rule 17e-1 under the 1940
Act.
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<PAGE>
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.
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.
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<PAGE>
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 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
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<PAGE>
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
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
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<PAGE>
paid $2,881. During the same period, none of the other Portfolios earned
interest income from the collateralization of securities loans.
Each Portfolio may also lend securities to unaffiliated
entities, including brokers or dealers, banks and other recognized
institutional borrowers of securities, provided that cash or equivalent
collateral, equal to at least 100% of the market value of the securities
loaned, is continuously maintained by the borrower with the Portfolio.
During the time securities are on loan, the borrower will pay the
Portfolio an amount equivalent to any dividends or interest paid on such
securities. The Portfolio may invest the cash collateral and earn income,
or it may receive an agreed upon amount of interest income from a borrower
who has delivered equivalent collateral. These loans are subject to
termination at the option of the Portfolio or the borrower. The Portfolio
may pay reasonable administrative and custodial fees in connection with a
loan and may pay a negotiated portion of the interest earned on the cash
or equivalent collateral to the borrower or placing broker. The Portfolio
does not have the right to vote securities on loan, but would terminate
the loan and regain the right to vote if that were considered important
with respect to the investment.
A committee of Independent Portfolio Trustees from time
to time reviews, among other things, information relating to securities
loans by the Portfolios.
In effecting securities transactions, each Portfolio gen-
erally seeks to obtain the best price and execution of orders. Commission
rates, being a component of price, are considered along with other
relevant factors. Each Portfolio plans to continue to use Neuberger &
Berman as its principal broker where, in the judgment of N&B Management
(the Portfolio's investment manager and an affiliate of Neuberger &
Berman), that firm is able to obtain a price and execution at least as
favorable as other qualified brokers. To the Portfolios' knowledge,
however, no affiliate of any Portfolio receives give-ups or reciprocal
business in connection with their securities transactions.
The use of Neuberger & Berman as a broker for each Port-
folio is subject to the requirements of Section 11(a) of the Securities
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
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<PAGE>
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 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
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<PAGE>
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 transac-
tions because they provide better price and/or execution, which is the
primary consideration in allocating brokerage; (2) adjustments may be
required because of periodic changes in the execution or research
capabilities of particular brokers, or in the execution or research needs
of the N&B Funds and/or the Managed Accounts; and (3) the aggregate amount
of brokerage commissions generated by transactions for the N&B Funds and
the Managed Accounts may change substantially from one semi-annual period
to the next.
The commissions charged by a broker other than Neuberger
& Berman may be 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. 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 portfo-
lios of Neuberger & Berman MANHATTAN, Neuberger & Berman FOCUS and
Neuberger & Berman GUARDIAN, and Neuberger & Berman PARTNERS Portfolios,
respectively. Each of them has full authority to take action with respect
to portfolio transactions and may or may not consult with other personnel
of N&B Management prior to taking such action. If Mr. Goldstein is
unavailable to perform his responsibilities, Susan Switzer, who is an
Assistant Vice President of N&B Management, will assume responsibility for
the portfolio of Neuberger & Berman MANHATTAN Portfolio.
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
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<PAGE>
the time of acquisition was one year or less, divided by the average
monthly value of such securities owned during the year.
REPORTS TO SHAREHOLDERS
Shareholders of each Fund receive unaudited semi-annual
financial statements, as well as year-end financial statements audited by
the independent auditors or independent accountants for the Fund and its
corresponding Portfolio. Each Fund's statements show the investments
owned by its corresponding Portfolio and the market values thereof and
provide other information about the Fund and its operations, including the
Fund's beneficial interest in its corresponding Portfolio.
ORGANIZATION
Prior to January 1, 1995, the name of Neuberger & Berman
FOCUS Portfolio was Neuberger & Berman Selected Sectors Portfolio.
CUSTODIAN AND TRANSFER AGENT
Each Fund and Portfolio has selected State Street Bank
and Trust Company ("State Street"), 225 Franklin Street, Boston, MA 02110,
as custodian for its securities and cash. All correspondence should be
mailed to Neuberger & Berman Funds, Institutional Services, 605 Third
Avenue, 2nd Floor, New York, NY 10158-0180. State Street also serves as
each Fund's transfer agent, administering purchases, redemptions, and
transfers of Fund shares with respect to Institutions and the payment of
dividends and other distributions to Institutions.
INDEPENDENT AUDITORS/ACCOUNTANTS
Each Fund and Portfolio (other than Neuberger & Berman
MANHATTAN Assets and Portfolio) has selected Ernst & Young LLP, 200
Clarendon Street, Boston, MA 02116, as the independent auditors who will
audit its financial statements. Neuberger & Berman MANHATTAN Assets and
Portfolio have selected Coopers & Lybrand L.L.P., One Post Office Square,
Boston, MA 02109, as the independent accountants who will audit their
financial statements.
LEGAL COUNSEL
Each Fund and Portfolio has selected Kirkpatrick &
Lockhart LLP, 1800 Massachusetts Avenue, N.W., Washington, D.C. 20036, as
its legal counsel.
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<PAGE>
REGISTRATION STATEMENT
This SAI and the Prospectus do not contain all the infor-
mation included in the Trust's registration statement filed with the SEC
under the 1933 Act with respect to the securities offered by the
Prospectus. Certain portions of the registration statement have been
omitted pursuant to SEC rules and regulations. The registration
statement, including the exhibits filed therewith, may be examined at the
SEC's offices in Washington, D.C.
Statements contained in this SAI and in the Prospectus as
to the contents of any contract or other document referred to are not
necessarily complete, and in each instance reference is made to the copy
of the contract or other document filed as an exhibit to the registration
statement, each such statement being qualified in all respects by such
reference.
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, 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 visualized are most unlikely to impair the fundamentally
strong position of the issuer.
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<PAGE>
Aa - Bonds rated Aa are judged to be of high quality by
all standards. Together with the Aaa group, they comprise what are
generally known as "high-grade bonds." They are rated lower than the best
bonds because margins of protection may not be as large as in Aaa-rated
securities, fluctuation of protective elements may be of greater
amplitude, or there may be other elements present that make the long-term
risks appear somewhat larger than in Aaa-rated securities.
A - Bonds rated A possess many favorable investment
attributes and are to be considered as upper-medium grade obligations.
Factors giving security to principal and interest are considered adequate,
but elements may be present that suggest a susceptibility to impairment
sometime in the future.
Baa - Bonds which are rated Baa are considered as medium-
grade obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate for the
present, but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. These bonds
lack outstanding investment characteristics and in fact have speculative
characteristics as well.
Ba - Bonds rated Ba are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class.
B - Bonds rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
Caa - Bonds rated Caa are of poor standing. Such
issues may be in default or there may be present elements of danger with
respect to principal or interest.
Ca - Bonds rated Ca represent obligations that are
speculative in a high degree. Such issues are often in default or have
other marked shortcomings.
C - Bonds rated C are the lowest rated class of bonds,
and issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
Modifiers--Moody's may apply numerical modifiers 1, 2, and 3 in each
generic rating classification described above. The modifier 1 indicates
that the security ranks in the higher end of its generic rating category;
the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates
that the issuer ranks in the lower end of its generic rating.
S&P commercial paper ratings:
- 51 -
<PAGE>
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.
- 52 -
<PAGE>
Appendix B
THE ART OF INVESTMENT:
A CONVERSATION WITH ROY NEUBERGER
The Art of Investing:
A Conversation with Roy Neuberger
"I firmly believe that
if you want to manage
your own money, you
must be a student of
the market. If you are
unwilling or unable to
do that, find someone
else to manage your
money for you."
NEUBERGER & BERMAN
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<PAGE>
[THIS PAGE IS BLANK - IT IS AN INSIDE PAGE OF THIS BROCHURE]
- 54 -
<PAGE>
[PICTURE OF ROY NEUBERGER]
During my more than sixty-five
years of buying and selling securities,
I've been asked many questions about my
approach to investing. On the pages
that follow are a variety of my
thoughts, ideas and investment
principles which have served me well
over the years. If you gain useful
knowledge in the pursuit of profit as
well as enjoyment from these comments, I
shall be more than content.
\s\ Roy R.
Neuberger
- 1 -
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
YOU'VE BEEN ABLE TO CONDENSE SOME OF THE
CHARACTERISTICS OF SUCCESSFUL INVESTING INTO
FIVE "RULES." WHAT ARE THEY?
Rule #1: Be flexible. My philosophy has
necessarily changed from time to time because
of events and because of mistakes. My views
change as economic, political, and
technological changes occur both on and
sometimes off our planet. It is imperative
that you be willing to change your thoughts to
meet new conditions.
Rule #2: Take your temperament into account.
Recognize whether you are by nature very
speculative or just the opposite - fearful,
timid of taking risks. But in any event --
Diversify your investments, Rule #3: Be broad-gauged. Diversify your
make sure that some of your investments, make sure that some of your
principal is kept safe, and principal is kept safe, and try to increase
try to increase your income your income as well as your capital.
as well as your capital.
[PICTURE OF ROY NEUBERGER]
Rule #4: Always remember there are many ways to
skin a cat! Ben Graham and David Dodd did it by
understanding basic values. Warren Buffet
invested his portfolio in a handful of long-
term holdings, while staying involved with the
companies' managements. Peter Lynch chose to
understand, first-hand, the products of many
hundreds of the companies he invested in.
George Soros showed his genius as a hedge fund
investor who could decipher world currency
trends. Each has been successful in his own
way. But to be successful, remember to
- 2 -
<PAGE>
Rule #5: Be skeptical. To repeat a few well-
worn useful phrases:
A. Dig for yourself.
B. Be from Missouri.
C. If it sounds too good to be true,
it probably is.
IN YOUR 65 YEARS OF INVESTING ARE THERE ANY
GENERAL PATTERNS YOU'VE OBSERVED AS TO HOW THE
MARKET BEHAVES?
Every decade that I've been involved with Wall
Street has a nuance of its own, an economic and
social climate that influences investors. But
generally, bull markets tend to be longer than
bear markets, and stock prices tend to go up
more slowly and erratically than they go down.
Bear markets tend to be shorter and of greater
intensity. The market rarely rises or declines
concurrently with business cycles longer than
six months.
AS A LEGENDARY "VALUE INVESTOR," HOW DO YOU
DEFINE VALUE INVESTING?
Value investing means finding the best values -
- either absolute or relative. Absolute means
a stock has a low market price relative to its
own fundamentals. Relative value means the
price is attractive relative to the market as a
whole.
COULD YOU DESCRIBE A STOCK WITH "GOOD VALUE"?
A classic example is a company that has a low
price to earnings ratio, a low price to book
ratio, free cash flow, a strong balance sheet,
undervalued corporate assets, unrecognized
earnings turnaround and is selling at a
discount to private market value.
These characteristics usually lead to companies
that are under-researched and have a high
degree of inside ownership and entrepreneurial
management.
- 3 -
<PAGE>
One of my colleagues at Neuberger & Berman says
he finds his value stocks either "under a
cloud" or "under a rock." "Under a cloud"
stocks are those Wall Street in general doesn't
like, because an entire industry is out of
favor and even the good stocks are being
dropped. "Under a rock" stocks are those Wall
Street is ignoring, so you have to uncover them
on your own.
ARE THERE OTHER KEY CRITERIA YOU USE TO JUDGE
STOCKS?
I'm more interested in longer-term trends in
earnings than short-term trends. Earnings
gains should be the product of long-term
strategies, superior management, taking
advantage of business opportunities and so on.
If these factors are in their proper place,
short-term earnings should not be of major
concern. Dividends are an important extra
because, if they're stable, they help support
the price of the stock.
WHAT ABOUT SELLING STOCKS?
Most individual investors should invest for the
long term but not mindlessly. A sell
discipline, often neglected by investors, is
vitally important.
"One should fall in love One should fall in love with ideas, with
with ideas, with people or people, or with idealism. But in my book, the
with idealism. But in my last thing to fall in love with is a particular
book, the last thing to security. It is after all just a sheet of paper
fall in love with is a indicating a part ownership in a corporation
particular security." and its use is purely mercenary. If you must
love a security, stay in love with it until it
gets overvalued; then let somebody else fall in
love.
[PICTURE OF ROY NEUBERGER]
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<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"?
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.
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<PAGE>
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?
Both are an art, although picking stocks is a
minor art compared with painting, sculpture or
"When things look bad, I literature. I started buying art in the 30s,
become optimistic. When and in the 40s it was a daily, almost hourly
everything looks rosy, and occurrence. My inclination to buy the works of
the crowd is optimistic, I living artists comes from Van Gogh, who sold
like to be a seller." only one painting during his lifetime. He died
in poverty, only then to become a legend and
have his work sold for millions of dollars.
[PICTURE OF ROY NEUBERGER]
- 6 -
<PAGE>
There are more variables to consider now in
both buying art and picking stocks. In the
modern stock markets, the heavy use of futures
and options has changed the nature of the
investment world. In past times, the stock
market was much less complicated, as was the
art world.
Artists rose and fell on their own merits
without a lot of publicity and attention. As
more and more dealers are involved with
artists, the price of their work becomes
inflated. So I almost always buy works of
unknown, relatively undiscovered artists,
which, I suppose is similar to value investing.
But the big difference in my view of art and
stocks is that I buy a stock to sell it and
make money. I never bought paintings or
sculptures for investment in my life. The
objective is to enjoy their beauty.
- 7 -
<PAGE>
WHAT DO YOU CONSIDER THE BUSINESS MILESTONES IN
YOUR LIFE?
Being a founder of Neuberger & Berman and
creating one of the first no-load mutual funds.
I started on Wall Street in 1929, and during
the depression I managed my own money and that
of my clientele. We all prospered, but I
wanted to have my own firm. In 1939 I became a
founder of Neuberger & Berman, and for about 10
years we managed money for individuals with
substantial financial assets. But I also
wanted to offer the smaller investor the
benefits of professional money management, so
in 1950 I created the Guardian Mutual Fund (now
known as the Neuberger & Berman Guardian Fund).
The Fund was kind of an innovation in its time
because it didn't charge a sales commission. I
thought the public was being overcharged for
mutual funds, so I wanted to create a fund that
would be offered directly to the public without
a sales charge. Now of course the "no-load"
fund business is a huge industry. I managed
the Fund myself for over 28 years.
[PICTURE OF ROY NEUBERGER]
YOU'RE IN YOUR NINETIES AND STILL YOU GO INTO
THE OFFICE EVERY DAY TO MANAGE YOUR
INVESTMENTS. WHY?
I like the fun of being nimble in the stock
market, and I'm addicted to the market's
fascinations.
WHAT CLOSING WORDS OF ADVICE DO YOU HAVE ABOUT
INVESTING?
Realize that there are opportunities at all
times for the adventuresome investor. And stay
in good physical condition. It's a strange
thing. You do not dissipate your energies by
using them. Exercise your body and your brain
every day, and you'll do better in investments
and in life.
- 8 -
<PAGE>
ROY NEUBERGER: A BRIEF BIOGRAPHY
Roy Neuberger is a founder of the investment
management firm Neuberger & Berman, and a
renowned value investor. He is also a
recognized collector of contemporary American
art, much of which he has given away to museums
and colleges across the country.
During the 1920s, Roy studied art in
Paris. When he realized he didn't possess the
talent to become an artist, he decided to
collect art, and to support this passion, Roy
turned to investing -- a pursuit for which his
talents have proven more than adequate.
A TALENT FOR INVESTING
Roy began his investment career by
joining a brokerage firm in 1929, seven months
before the "Great Crash." Just weeks before
"Black Monday," he shorted the stock of RCA,
thinking it was overvalued. He profited from
the falling market and gained a reputation for
market prescience and stock selection that has
lasted his entire career.
NEUBERGER & BERMAN'S FOUNDING
Roy's investing acumen attracted many
people who wished to have him manage their
money. In 1939, at the age of 36, after
purchasing a seat on the New York Stock
Exchange, Roy founded Neuberger & Berman to
provide money management services to people who
lacked the time, interest or expertise to
manage their own assets.
- 9 -
<PAGE>
NEUBERGER & BERMAN -- OVER FIVE DECADES OF
GROWTH
Neuberger & Berman has grown through
the years and now manages approximately $30
billion of equity and fixed income assets, both
domestic and international, for individuals,
institutions, and its family of no-load mutual
funds. Today, as when the firm was founded,
Neuberger & Berman follows a value approach to
investing, designed to enable clients to
advance in good markets and minimize losses
when conditions are less favorable.
For more complete information about
the Neuberger & Berman Guardian Fund,
including fees and expenses, call
Neuberger & Berman Management at 800-
877-9700 for a free prospectus.
Please read it carefully, before you
invest or send money.
- 10 -
<PAGE>
Neuberger & Berman Management
Inc.[SERVICE MARK]
605 Third Avenue, 2nd
Floor
New York, NY 10158-
0006
Shareholder Services
(800) 877-9700
[COPYRIGHT
SYMBOL]1995 Neuberger
& Berman
PRINTED ON RECYCLED PAPER
WITH SOY BASED INKS
</TABLE>
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<PAGE>
NEUBERGER & BERMAN EQUITY ASSETS
POST-EFFECTIVE AMENDMENT NO. 3 ON FORM N-1A
PART C
OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
Audited financial statements for Neuberger & Berman Focus
Portfolio, Neuberger & Berman Guardian Portfolio,
Neuberger & Berman Manhattan Portfolio, and Neuberger &
Berman Partners Portfolio and the reports of the
independent auditors/accountants are incorporated into
the Statement of Additional Information by reference from
the Annual Report to Shareholders of Neuberger & Berman
Equity Funds for the period ended August 31, 1995, File
Nos. 2-11357 and 811-582, EDGAR Accession No. 0000898432-
95-000353.
(b) Exhibits:
Exhibit
Number Description
------- -------------------
(1) (a) Certificate of Trust. Incorporated by Reference
to Post-Effective Amendment No. 1 to Registrant's
Registration Statement, File Nos. 33-82568 and
811-8106, EDGAR Accession No.
000089-8432-95-000393.
(b) Trust Instrument of Neuberger & Berman Equity
Assets. Incorporated by Reference to Post-
Effective Amendment No. 1 to Registrant's
Registration Statement, File Nos. 33-82568 and
811-8106, EDGAR Accession No.
000089-8432-95-000393.
(c) Schedule A - Current Series of Neuberger & Berman
Equity Assets. Incorporated by Reference to
Post-Effective Amendment No. 1 to Registrant's
Registration Statement, File Nos. 33-82568 and
811-8106, EDGAR Accession No.
000089-8432-95-000393.
(2) By-Laws of Neuberger & Berman Equity Assets.
Incorporated by Reference to Post-Effective
Amendment No. 1 to Registrant's Registration
Statement, File Nos. 33-82568 and 811-8106, EDGAR
Accession No. 000089-8432-95-000393.
C-1
<PAGE>
(3) Voting Trust Agreement. None.
(4) Specimen Share Certificate. None.
(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.
(6) (a) (i) Distribution Agreement Between Neuberger &
Berman Equity Assets and Neuberger & Berman
Management Incorporated. Incorporated by
Reference to Post-Effective Amendment No. 1
to Registrant's Registration Statement,
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<PAGE>
File Nos. 33-82568 and 811-8106, EDGAR
Accession No. 000089-8432-95-000393.
(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. 000089-8432-95-000393.
(b) (i) Form of Distribution and Services Agreement
between Neuberger & Berman Equity Assets
and Neuberger & Berman Management
Incorporated. Filed herewith.
(ii) Form of 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. Filed herewith.
(b) Schedule A - Approved Foreign Banking
Institutions and Securities Depositories Under
the Custodian Contract. Filed herewith.
(9) (a) Transfer Agency Agreement Between Neuberger &
Berman Equity Assets and State Street Bank and
Trust Company. Filed herewith.
(b) (i) Administration Agreement Between Neuberger
& Berman Equity Assets and Neuberger &
Berman Management Incorporated. Filed
herewith.
(ii) Schedule A - Series of Neuberger & Berman
Equity Assets Currently Subject to the
Administration Agreement. Filed herewith.
(iii) Schedule B - Schedule of Compensation Under
the Administration Agreement. Filed
herewith.
(10) Opinion and Consent of Kirkpatrick & Lockhart LLP
on Securities Matters. Filed herewith.
(11) (a) Consent of Ernst & Young LLP, Independent
Auditors. Filed herewith.
C-3
<PAGE>
(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) Form of 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.
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 January 30, 1996:
Number of
Title of Class Record Holders
-------------- --------------
Shares of beneficial interest, $0.001
par value, of:
Neuberger & Berman Focus Assets 0
Neuberger & Berman Guardian Assets 0
Neuberger & Berman Manhattan Assets 0
Neuberger & Berman Partners Assets 0
Neuberger & Berman Socially Responsive
Trust 1
Item 27. INDEMNIFICATION.
A Delaware business trust may provide in its governing
instrument for indemnification of its officers and trustees from and
against any and all claims and demands whatsoever. Article IX, Section 2
of the Trust Instrument provides that the Registrant shall indemnify any
present or former trustee, officer, employee or agent of the Registrant
("Covered Person") to the fullest extent permitted by law against
liability and all expenses reasonably incurred or paid by him or her in
C-4
<PAGE>
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.
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.
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<PAGE>
Section 1 of the Sub-Advisory Agreement between N&B Management and
Neuberger & Berman, L.P. ("Neuberger & Berman")with respect to Managers
Trust provides that in the absence of willful misfeasance, bad faith or
gross negligence in the performance of its duties, or of reckless
disregard of its duties and obligations under the Agreement, Neuberger &
Berman will not be subject to liability for any act or omission or any
loss suffered by any series of Managers Trust or its interest holders in
connection with the matters to which the Agreement relates.
Section 8 of the Administration Agreement between the Registrant
and N&B Management provides that N&B Management shall look only to the
assets of each Series for performance of the Agreement by the Registrant
on behalf of such Series, and neither the Shareholders of the Registrant,
its Trustees nor any of the Registrant's officers, employees or agents,
whether past, present or future shall be personally liable therefor.
Section 9 of the Agreement provides that each Series shall indemnify N&B
Management and hold it harmless from and against any and all losses,
damages and expenses, including reasonable attorneys' fees and expenses,
incurred by N&B Management that result from: (i) any claim, action, suit
or proceeding in connection with N&B Management's entry into or
performance of the Agreement with respect to such Series; or (ii) any
action taken or omission to act committed by N&B Management in the
performance of its obligations under the Agreement with respect to such
Series; or (iii) any action of N&B Management upon instructions believed
in good faith by it to have been executed by a duly authorized officer or
representative of the Registrant with respect to such Series; provided,
that N&B Management shall not be entitled to such indemnification in
respect of actions or omissions constituting negligence or misconduct on
the part of N&B Management, or its employees, agents or contractors.
Section 10 of the Agreement provides that N&B Management shall indemnify
each Series and hold it harmless from and against any and all losses,
damages and expenses, including reasonable attorneys' fees and expenses,
incurred by such Series which result from: (i) N&B Management's failure
to comply with the terms of the Agreement with respect to such Series; or
(ii) N&B Management's lack of good faith in performing its obligations
under the Agreement with respect to such Series; or (iii) the negligence
or misconduct of N&B Management, or its employees, agents or contractors
in connection with the Agreement with respect to such Series. A Series
shall not be entitled to such indemnification in respect of actions or
omissions constituting negligence or misconduct on the part of that Series
or its employees, agents or contractors other than N&B Management, unless
such negligence or misconduct results from or is accompanied by negligence
or misconduct on the part of N&B Management, any affiliated person of N&B
Management, or any affiliated person of an affiliated person of N&B
Management.
Section 11 of the Distribution Agreement between the Registrant
and N&B Management provides that N&B Management shall look only to the
assets of a Series for the Registrant's performance of the Agreement by
the Registrant on behalf of such Series, and neither the Shareholders, the
Trustees nor any of the Registrant's officers, employees or agents,
whether past, present or future, shall be personally liable therefor.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 ("1933 Act") may be permitted to trustees, officers
C-6
<PAGE>
and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the 1933 Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred
or paid by a trustee, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is asserted by
such trustee, officer or controlling person, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed
in the 1933 Act and will be governed by the final adjudication of such
issue.
Item 28. BUSINESS AND OTHER CONNECTIONS OF
ADVISER AND SUB-ADVISER.
There is set forth below information as to any other business,
profession, vocation or employment of a substantial nature in which each
director or officer of N&B Management and each partner of Neuberger &
Berman is, or at any time during the past two years has been, engaged for
his or her own account or in the capacity of director, officer, employee,
partner or trustee.
<TABLE>
<CAPTION>
NAME BUSINESS AND OTHER CONNECTIONS
<S> <C>
Claudia A. Brandon Secretary, Neuberger & Berman Advisers Management Trust
Vice President, N&B (Delaware business trust); Secretary, Advisers Managers
Management 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 Advisers Management
Assistant Vice President, N&B Trust (Delaware business trust); Assistant Secretary,
Management 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>
NAME BUSINESS AND OTHER CONNECTIONS
Robert Cresci Assistant Portfolio Manager, BNP-N&B Global Asset
Assistant Vice President, N&B Management L.P. (joint venture of Neuberger & Berman and
Management Banque Nationale de Paris) (2); Assistant Portfolio
Manager, Vontobel (Swiss bank) (3).
Stanley Egener Chairman of the Board and Trustee, Neuberger & Berman
President and Director, N&B Advisers Management Trust (Delaware business trust);
Management; General Partner, Chairman of the Board and Trustee, Advisers Managers Trust;
Neuberger & Berman 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 Executive Vice President and Trustee, Neuberger & Berman
Vice President, N&B Management Income Funds (5); Executive Vice President and Trustee,
(4); General Partner, Neuberger & Berman Income Trust (5); Executive Vice
Neuberger & Berman President and Trustee, Income Managers Trust (5).
Theresa A. Havell President and Trustee, Neuberger & Berman Income Funds;
Vice President and President and Trustee, Neuberger & Berman Income Trust;
Director, N&B Management; President and Trustee, Income Managers Trust
General Partner, Neuberger &
Berman
C. Carl Randolph Assistant Secretary, Neuberger & Berman Advisers Management
General Partner, Neuberger & Trust (Delaware business trust); Assistant Secretary,
Berman Advisers Managers Trust; Assistant Secretary, Neuberger &
Berman Advisers Management Trust (Massachusetts business
trust) (1); Assistant Secretary, Neuberger & Berman Income
Funds; Assistant Secretary, Neuberger & Berman Income
Trust; Assistant Secretary, Neuberger & Berman Equity
Funds; Assistant Secretary, Neuberger & Berman Equity
Trust; Assistant Secretary, Income Managers Trust;
Assistant Secretary, Equity Managers Trust; Assistant
Secretary, Global Managers Trust; Assistant Secretary,
Neuberger & Berman Equity Assets.
Felix Rovelli Senior Vice President-Senior Equity Portfolio Manager, BNP-
Vice President, N&B Global Asset Management L.P. (joint venture of
N&B Management Neuberger & Berman and Banque Nationale de Paris) (2);
Portfolio Manager, Vontobel (Swiss bank) (6).
C-8
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
Richard Russell Treasurer, Neuberger & Berman Advisers Management Trust
Vice President, (Delaware business trust); Treasurer, Advisers Managers
N&B Management 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.
Susan Switzer Portfolio Manager, Mitchell Hutchins Asset Management Inc.
Assistant Vice President, N&B (7).
Management
Daniel J. Sullivan Vice President, Neuberger & Berman Advisers Management
Senior Vice President, Trust (Delaware business trust); Vice President, Advisers
N&B Management Managers Trust; Vice President, Neuberger & Berman Advisers
Management Trust (Massachusetts business trust) (1); Vice
President, Neuberger & Berman Income Funds; Vice President,
Neuberger & Berman Income Trust; Vice President,
Neuberger & Berman Equity Funds; Vice President,
Neuberger & Berman Equity Trust; Vice President, Income
Managers Trust; Vice President, Equity Managers Trust; Vice
President, Global Managers Trust; Vice President, Neuberger
& Berman Equity Assets.
Michael J. Weiner Vice President, Neuberger & Berman Advisers Management
Senior Vice President, N&B Trust (Delaware business trust); Vice President, Advisers
Management Managers Trust; Vice President, Neuberger & Berman Advisers
Management Trust (Massachusetts business trust) (1); Vice
President, Neuberger & Berman Income Funds; Vice President,
Neuberger & Berman Income Trust; Vice President,
Neuberger & Berman Equity Funds; Vice President,
Neuberger & Berman Equity Trust; Vice President, Income
Managers Trust; Vice President, Equity Managers Trust; Vice
President, Global Managers Trust; Vice President, Neuberger
& Berman Equity Assets.
Lawrence Zicklin President and Trustee, Neuberger & Berman Advisers
Director, N&B Management; Management Trust (Delaware business trust); President and
General Partner, Neuberger & Trustee, Advisers Managers Trust; President and Trustee,
Berman Neuberger & Berman Advisers Management Trust (Massachusetts
business trust) (1); President and Trustee, Neuberger &
Berman Equity Funds; President and Trustee, Neuberger &
Berman Equity Trust; President and Trustee, Equity Managers
Trust; President, Global Managers Trust; President and
Trustee, Neuberger & Berman Equity Assets
</TABLE>
The principal address of N&B Management, Neuberger & Berman, BNP-
N&B Global Asset Management L.P. and of each of the investment companies
C-9
<PAGE>
named above, is 605 Third Avenue, New York, New York 10158. Other
addresses to be provided by amendment.
_____________________
(1) Until April 30, 1995.
(2) Until October 31, 1995.
(3) Until May 1994.
(4) Until November 4, 1994.
(5) Until June 22, 1994.
(6) Until April 1994.
(7) Until 1994.
Item 29. PRINCIPAL UNDERWRITERS.
(a) N&B Management, the principal underwriter distributing
securities of the Registrant, is also the principal underwriter and
distributor for each of the following investment companies:
Neuberger & Berman Advisers Management Trust
Neuberger & Berman Equity Funds
Neuberger & Berman Equity Trust
Neuberger & Berman Income Funds
Neuberger & Berman Income Trust
N&B Management Incorporated is also the investment
manager to the master funds in which the above-named investment companies
invest.
(b) Set forth below is information concerning the directors
and officers of the Registrant's principal underwriter. The principal
business address of each of the persons listed is 605 Third Avenue, New
York, New York 10158-0180, which is also the address of the Registrant's
principal underwriter.
<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND OFFICES WITH
NAME WITH UNDERWRITER REGISTRANT
<S> <C> <C>
Claudia A. Brandon Vice President Secretary
Patrick T. Byrne Assistant Vice President None
Richard A. Cantor Chairman of the Board and None
Director
Robert Conti Treasurer None
Stacy Cooper-Shugrue Assistant Vice President Assistant Secretary
Robert Cresci Assistant Vice President None
C-10
<PAGE>
POSITIONS AND OFFICES POSITIONS AND OFFICES WITH
NAME WITH UNDERWRITER REGISTRANT
William Cunningham Vice President None
Barbara DiGiorgio Assistant Vice President None
Roberta D'Orio Assistant Vice President None
Stanley Egener President and Director Chairman of the Board of
Trustees
(Chief Executive Officer)
Joseph G. Galli Assistant Vice President None
Robert I. Gendelman Assistant Vice President None
Mark R. Goldstein Vice President None
Farha-Joyce Haboucha Vice President None
Theresa A. Havell Vice President and Director None
Leslie Holliday-Soto Assistant Vice President None
Jody L. Irwin Assistant Vice President None
Michael M. Kassen Vice President None
Irwin Lainoff Director None
Michael Lamberti Vice President None
Josephine Mahaney Vice President None
Carmen G. Martinez Assistant Vice President None
Lawrence Marx III Vice President None
Ellen Metzger Vice President and Secretary None
Paul Metzger Assistant Vice President None
Janet W. Prindle Vice President None
Felix Rovelli Vice President None
Richard Russell Vice President Treasurer (Principal
Accounting Officer)
Marvin C. Schwartz Director None
Kent C. Simons Vice President None
Frederick B. Soule Vice President None
C-11
<PAGE>
POSITIONS AND OFFICES POSITIONS AND OFFICES WITH
NAME WITH UNDERWRITER REGISTRANT
Susan Switzer Assistant Vice President None
Daniel J. Sullivan Senior Vice President Vice President
Peter E. Sundman Senior Vice President None
Andrea Trachtenberg Vice President of Marketing None
Judith M. Vale Vice President None
Clara Del Villar Vice President None
Susan Walsh Assistant Vice President None
Michael J. Weiner Senior Vice President Vice President
(Principal Financial
Officer)
Celeste Wischerth Assistant Vice President None
Thomas Wolfe Vice President None
Lawrence Zicklin Director Trustee and President
</TABLE>
(c) No commissions or other compensation were received
directly or indirectly from the Registrant by any principal underwriter
who was not an affiliated person of the Registrant.
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
C-12
<PAGE>
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 first annual report to
shareholders of Neuberger & Berman Focus Assets, Neuberger & Berman
Guardian Assets, Neuberger & Berman Manhattan Assets, and Neuberger &
Berman Partners Assets, after such annual report has been prepared and
distributed to shareholders, 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, EQUITY MANAGERS TRUST certifies that
it meets all of the requirements for effectiveness of the Post-Effective
Amendment No. 3 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 31st day of January 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. 3 has been signed below by the following
persons in the capacities and on the date indicated.
Signature Title Date
/s/ Faith Colish Trustee January 31, 1996
______________________
Faith Colish
/s/ Donald M. Cox Trustee January 31, 1996
______________________
Donald M. Cox
/s/ Stanley Egener Chairman of the January 31, 1996
__________________________ Board and Trustee
Stanley Egener (Chief Executive
Officer)
/s/ Howard A. Mileaf Trustee January 31, 1996
__________________________
Howard A. Mileaf
/s/ Edward I. O'Brien Trustee January 31, 1996
__________________________
Edward I. O'Brien
/s/ John T. Patterson, Jr. Trustee January 31, 1996
__________________________
John T. Patterson, Jr.
/s/ John P. Rosenthal Trustee January 31, 1996
__________________________
John P. Rosenthal
<PAGE>
Signature Title Date
/s/ Cornelius T. Ryan Trustee January 31, 1996
__________________________
Cornelius T. Ryan
/s/ Gustave H. Shubert Trustee January 31, 1996
__________________________
Gustave H. Shubert
/s/ Alan R. Gruber Trustee January 31, 1996
__________________________
Alan R. Gruber
/s/ Lawrence Zicklin President and January 31, 1996
__________________________ Trustee
Lawrence Zicklin
/s/ Michael J. Weiner Vice President January 31, 1996
__________________________ (Principal
Michael J. Weiner Financial Officer)
/s/ Richard Russell Treasurer January 31, 1996
__________________________ (Principal
Richard Russell Accounting
Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant, NEUBERGER & BERMAN
EQUITY ASSETS, certifies that it meets all of the requirements for
effectiveness of this Post-Effective Amendment No. 3 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 31st day of January 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. 3 has been signed below by the following
persons in the capacities and on the date indicated.
Signature Title Date
/s/ Faith Colish Trustee January 31, 1996
__________________________
Faith Colish
/s/ Donald M. Cox Trustee January 31, 1996
__________________________
Donald M. Cox
/s/ Stanley Egener Chairman of the January 31, 1996
__________________________ Board and Trustee
Stanley Egener (Chief Executive
Officer)
/s/ Howard A. Mileaf Trustee January 31, 1996
__________________________
Howard A. Mileaf
/s/ Edward I. O'Brien Trustee January 31, 1996
__________________________
Edward I. O'Brien
/s/ John T. Patterson, Jr. Trustee January 31, 1996
__________________________
John T. Patterson, Jr.
/s/ John P. Rosenthal Trustee January 31, 1996
__________________________
John P. Rosenthal
<PAGE>
Signature Title Date
/s/ Cornelius T. Ryan Trustee January 31, 1996
______________________
Cornelius T. Ryan
/s/ Gustave H. Shubert Trustee January 31, 1996
______________________
Gustave H. Shubert
/s/ Alan R. Gruber Trustee January 31, 1996
______________________
Alan R. Gruber
/s/ Lawrence Zicklin President and January 31, 1996
______________________ Trustee
Lawrence Zicklin
/s/ Michael J. Weiner Vice President January 31, 1996
______________________ (Principal
Michael J. Weiner Financial
Official)
/s/ Richard Russell Treasurer January 31, 1996
______________________ (Principal
Richard Russell Accounting
Officer)
<PAGE>
NEUBERGER & BERMAN EQUITY ASSETS
POST-EFFECTIVE AMENDMENT NO. 3 ON FORM N-1A
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
------- ---------------- ------------
<S> <C> <C>
(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. 000089-8432-95-000393.
(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. 000089-8432-95-000393.
(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 811-8106, EDGAR
Accession No. 000089-8432-95-000393.
(2) By-Laws of Neuberger & Berman Equity N.A.
Assets. Incorporated by Reference to
Post-Effective Amendment No. 1 to
Registrant's Registration Statement, File
Nos. 33-82568 and 811-8106, EDGAR
Accession No. 000089-8432-95-000393.
(3) Voting Trust Agreement. None. N.A.
(4) Specimen Share Certificate. None.
(5) (a) (i) Management Agreement Between N.A.
Equity Managers Trust and
Neuberger & Berman Management
Incorporated. Incorporated by
Reference to Post-Effective
Amendment No. 70 to Registration
Statement of Neuberger & Berman
Equity Funds, File Nos. 2-11357
and 811-582, EDGAR Accession No.
0000898432-95-000314.
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
------- ---------------- ------------
(ii) Schedule A - Series of Neuberger N.A.
& 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 N.A.
Compensation Under the Management
Agreement. Incorporated by
Reference to Post-Effective
Amendment No. 70 to Registration
Statement of Neuberger & Berman
Equity Funds, File Nos. 2-11357
and 811-582, EDGAR Accession No.
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.
N.A.
(ii) Schedule A - Series of Equity
Managers Trust Currently Subject
to the Sub-Advisory Agreement.
Incorporated by Reference to
Post-Effective Amendment No. 70
to Registration Statement of
Equity Managers Trust, File Nos.
2-11357 and 811-582, EDGAR
Accession No. 0000898432-95-
000314.
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
------- ---------------- ------------
(6) (a) (i) Distribution Agreement Between N.A.
Neuberger & Berman Equity Assets
and Neuberger & Berman Management
Incorporated. Incorporated by
Reference to Post-Effective
Amendment No. 1 to Registrant's
Registration Statement, File Nos.
33-82568 and 811-8106, EDGAR
Accession No.
000089-8432-95-000393.
(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.
000089-8432-95-000393.
(b) (i) Form of Distribution and Services ----
Agreement between Neuberger &
Berman Equity Assets and
Neuberger & Berman Management
Incorporated. Filed herewith.
(ii) Form of Schedule A - Series of N.A.
Neuberger & 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 & ____
Berman Equity Assets and State Street Bank
and Trust Company. Filed herewith.
(b) Schedule A - Approved Foreign Banking
Institutions and Securities Depositories
Under the Custodian Contract. Filed ----
herewith.
(9) (a) Transfer Agency Agreement Between ____
Neuberger & Berman Equity Assets and State
Street Bank and Trust Company. Filed
herewith.
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
------- ---------------- ------------
(b) (i) Administration Agreement Between ____
Neuberger & Berman Equity Assets
and Neuberger & Berman Management
Incorporated. Filed herewith.
(ii) Schedule A - Series of Neuberger ____
& Berman Equity Assets Currently
Subject to the Administration
Agreement. Filed herewith.
(iii) Schedule B - Schedule of ____
Compensation Under the
Administration Agreement. Filed
herewith.
(10) Opinion and Consent of Kirkpatrick & Lockhart LLP ____
on Securities Matters. Filed herewith.
(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) Form of Plan Pursuant to Rule 12b-1. Filed N.A.
herewith.
(16) Schedule of Computation of Performance Quotations. ____
None.
(17) Financial Data Schedule. Filed herewith. ____
(18) Plan Pursuant to Rule 18f-3. None. N.A.
</TABLE>
<PAGE>
<PAGE>
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.
- 5 -
<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: -------------------------
------------------------ Title: ----------------------
Secretary
NEUBERGER & BERMAN
MANAGEMENT INCORPORATED
Attest: By: -------------------------
----------------------- Title: ----------------------
Secretary
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<PAGE>
<PAGE>
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
<PAGE>
<PAGE>
CUSTODIAN CONTRACT
Between
NEUBERGER & BERMAN EQUITY ASSETS
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to be Held By It . . . 1
2. Duties of the Custodian with Respect to Property of the
Fund Held by the Custodian in the United States . . . . . . 2
2.1 Holding Securities . . . . . . . . . . . . . . . 2
2.2 Delivery of Securities . . . . . . . . . . . . . 2
2.3 Registration of Securities . . . . . . . . . . . 5
2.4 Bank Accounts . . . . . . . . . . . . . . . . . . 5
2.5 Availability of Federal Funds . . . . . . . . . . 5
2.6 Collection of Income . . . . . . . . . . . . . . 6
2.7 Payment of Fund Monies . . . . . . . . . . . . . 6
2.8 Liability for Payment in Advance of
Receipt of Securities Purchased . . . . . . . . . 8
2.9 Appointment of Agents . . . . . . . . . . . . . . 8
2.10 Deposit of Fund Assets in Securities
System . . . . . . . . . . . . . . . . . . . . . 8
2.11 Fund Assets Held in the Custodian's
Direct Paper System . . . . . . . . . . . . . . . 9
2.12 Segregated Account . . . . . . . . . . . . . . 10
2.13 Ownership Certificates for Tax Purposes . . . . 11
2.14 Proxies . . . . . . . . . . . . . . . . . . . . 11
2.15 Communications Relating to Portfolio
Securities . . . . . . . . . . . . . . . . . . 11
3. Duties of the Custodian with Respect to Property of the
Fund Held Outside of the United States . . . . . . . . . 12
3.1 Appointment of Foreign Sub-Custodians . . . . . 12
3.2 Assets to be Held . . . . . . . . . . . . . . . 12
3.3 Foreign Securities Depositories . . . . . . . . 12
3.4 Agreements with Foreign Banking
Institutions . . . . . . . . . . . . . . . . . 12
3.5 Access of Independent Accountants of the
Fund . . . . . . . . . . . . . . . . . . . . . 13
3.6 Reports by Custodian . . . . . . . . . . . . . 13
3.7 Transactions in Foreign Custody Account . . . . 13
3.8 Liability of Foreign Sub-Custodians . . . . . . 14
3.9 Liability of Custodian . . . . . . . . . . . . 14
3.10 Reimbursement for Advances . . . . . . . . . . 15
3.11 Monitoring Responsibilities . . . . . . . . . . 16
3.12 Branches of U.S. Banks . . . . . . . . . . . . 16
3.13 Foreign Exchange Transactions . . . . . . . . . 17
3.13 Tax Law . . . . . . . . . . . . . . . . . . . . 17
4. Payments for Sales or Repurchase or Redemptions of Shares
of the Fund . . . . . . . . . . . . . . . . . . . . . . 18
5. Proper Instructions . . . . . . . . . . . . . . . . . . 19
<PAGE>
6. Actions Permitted Without Express Authority . . . . . . . 19
7. Evidence of Authority . . . . . . . . . . . . . . . . . 20
8. Duties of Custodian With Respect to the Books
of Account and Calculations of Net Asset Value and
Net Income . . . . . . . . . . . . . . . . . . . . . . . 20
9. Records . . . . . . . . . . . . . . . . . . . . . . . . 20
10. Opinion of Fund's Independent Accountants . . . . . . . . 21
11. Reports to Fund by Independent Public Accountants . . . . 21
12. Compensation of Custodian . . . . . . . . . . . . . . . 21
13. Responsibility of Custodian . . . . . . . . . . . . . . 22
14. Effective Period, Termination and Amendment . . . . . . . 23
15. Successor Custodian . . . . . . . . . . . . . . . . . . 24
16. Interpretive and Additional Provisions . . . . . . . . . 24
17. Additional Funds . . . . . . . . . . . . . . . . . . . . 25
18. Massachusetts Law to Apply . . . . . . . . . . . . . . . 25
19. Limitation of Trustee, Officer and Shareholder
Liability . . . . . . . . . . . . . . . . . . . . . . . 25
20. No Liability of Other Portfolios . . . . . . . . . . . . 26
21. Confidentiality . . . . . . . . . . . . . . . . . . . . 26
22. Assignment . . . . . . . . . . . . . . . . . . . . . . . 26
23. Severability . . . . . . . . . . . . . . . . . . . . . . 26
24. Prior Contracts . . . . . . . . . . . . . . . . . . . . 26
25. Shareholder Communications Election . . . . . . . . . . . 26
<PAGE>
CUSTODIAN CONTRACT
This Contract between Neuberger & Berman Equity Assets, a
business trust organized and existing under the laws of Delaware, having
its principal place of business at 605 Third Avenue, New York, New York
10158 hereinafter called the "Fund", and State Street Bank and Trust
Company, a Massachusetts trust company, having its principal place of
business at 225 Franklin Street, Boston, Massachusetts, 02110, hereinafter
called the "Custodian",
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate
series, with each such series representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, the Fund intends to initially offer shares in one
series, Neuberger & Berman Socially Responsive Trust (such series together
with all other series subsequently established by the Fund and made
subject to this Contract in accordance with paragraph 17, being herein
referred to as the "Portfolio(s)");
NOW THEREFORE, in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of the
assets of each Portfolio, including securities which the Fund, on behalf
of the applicable Portfolio desires to be held in places within the United
States ("domestic securities") and securities it desires to be held
outside the United States ("foreign securities") pursuant to the
provisions of the Trust Instrument. The Fund on behalf of each Portfolio
agrees to deliver to the Custodian all securities and cash of the
Portfolios, and all payments of income, payments of principal or capital
distributions received by it with respect to all securities owned by the
Portfolio(s) from time to time, and the cash consideration received by it
for such new or treasury shares of beneficial interest of the Fund
representing interests in the Portfolios, ("Shares") as may be issued or
sold from time to time. The Custodian shall not be responsible for any
property of a Portfolio held or received by the Portfolio and not
delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of
Article 5), the Custodian shall on behalf of the applicable Portfolio(s)
from time to time employ one or more sub-custodians, located in the United
States but only in accordance with an applicable vote by the Board of
Trustees of the Fund on behalf of the applicable Portfolio(s), and
<PAGE>
provided that the Custodian shall have no more or less responsibility or
liability to the Fund on account of any actions or omissions of any
sub-custodian so employed than any such sub-custodian has to the
Custodian. The Custodian may employ as sub-custodian for the Fund's
foreign securities on behalf of the applicable Portfolio(s) the foreign
banking institutions and foreign securities depositories designated in
Schedule A hereto but only in accordance with the provisions of Article 3.
2. Duties of the Custodian with Respect to Property of the Fund Held
By the Custodian in the United States
2.1 Holding Securities. The Custodian shall hold and physically
segregate for the account of each Portfolio all non-cash
property, to be held by it in the United States including all
domestic securities owned by such Portfolio, other than (a)
securities which are maintained pursuant to Section 2.10 in a
clearing agency which acts as a securities depository or in a
book-entry system authorized by the U.S. Department of the
Treasury, collectively referred to herein as "Securities System"
and (b) commercial paper of an issuer for which State Street Bank
and Trust Company acts as issuing and paying agent ("Direct
Paper") which is deposited and/or maintained in the Direct Paper
System of the Custodian pursuant to Section 2.11.
2.2 Delivery of Securities. The Custodian shall release and deliver
domestic securities owned by a Portfolio held by the Custodian or
in a Securities System account of the Custodian or in the
Custodian's Direct Paper book entry system account ("Direct Paper
System Account") only upon receipt of Proper Instructions from
the Fund on behalf of the applicable Portfolio, which may be
continuing instructions when deemed appropriate by the parties,
and only in the following cases:
1) Upon sale of such securities for the account of the
Portfolio and receipt of payment therefor;
2) Upon the receipt of payment in connection with any
repurchase agreement related to such securities entered
into by the Portfolio;
3) In the case of a sale effected through a Securities
System, in accordance with the provisions of Section 2.10
hereof;
4) To the depository agent in connection with tender or
other similar offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities
are called, redeemed, retired or otherwise become
payable; provided that, in any such case, the cash or
other consideration is to be delivered to the Custodian;
2
<PAGE>
6) To the issuer thereof, or its agent, for transfer into
the name of the Portfolio or into the name of any nominee
or nominees of the Custodian or into the name or nominee
name of any agent appointed pursuant to Section 2.9 or
into the name or nominee name of any sub-custodian
appointed pursuant to Article 1; or for exchange for a
different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of
units; provided that, in any such case, the new
securities are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of the
Portfolio, to the broker or its clearing agent, against a
receipt, for examination in accordance with "street
delivery" custom; provided that in any such case, the
Custodian shall have no responsibility or liability for
any loss arising from the delivery of such securities
prior to receiving payment for such securities except as
may arise from the Custodian's own negligence or willful
misconduct;
8) For exchange or conversion pursuant to any plan of
merger, consolidation, recapitalization, reorganization
or readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion
contained in such securities, or pursuant to any deposit
agreement; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the
Custodian;
9) In the case of warrants, rights or similar securities,
the surrender thereof in the exercise of such warrants,
rights or similar securities or the surrender of interim
receipts or temporary securities for definitive
securities; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the
Custodian;
10) For delivery in connection with any loans of securities
made by the Portfolio, but only against receipt of
adequate collateral as agreed upon from time to time by
the Custodian and the Fund on behalf of the Portfolio,
which may be in the form of cash or obligations issued by
the United States government, its agencies or
instrumentalities, except that in connection with any
loans for which collateral is to be credited to the
Custodian's account in the book-entry system authorized
by the U.S. Department of the Treasury, the Custodian
will not be held liable or responsible for the delivery
of securities owned by the Portfolio prior to the receipt
of such collateral;
3
<PAGE>
11) For delivery as security in connection with any
borrowings by the Fund on behalf of the Portfolio
requiring a pledge of assets by the Fund on behalf of the
Portfolio, but only against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian and a broker-dealer registered under the
Securities Exchange Act of 1934 (the "Exchange Act") and
a member of The National Association of Securities
Dealers, Inc. ("NASD"), relating to compliance with the
rules of The Options Clearing Corporation and of any
registered national securities exchange, or of any
similar organization or organizations, regarding escrow
or other arrangements in connection with transactions by
the Portfolio of the Fund;
13) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian, and a Futures Commission Merchant registered
under the Commodity Exchange Act, relating to compliance
with the rules of the Commodity Futures Trading
Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits
in connection with transactions by the Portfolio of the
Fund;
14) Upon receipt of instructions from the transfer agent
("Transfer Agent") for a Portfolio, for delivery to such
Transfer Agent or to the holders of shares in connection
with distributions in kind, as may be described from time
to time in the currently effective prospectus and
statement of additional information of the Fund, related
to the Portfolio ("Prospectus"), in satisfaction of
requests by holders of Shares for repurchase or
redemption; and
15) For any other proper corporate purpose, but only upon
receipt of, in addition to Proper Instructions from the
Fund on behalf of the applicable Portfolio, a certified
copy of a resolution of the Board of Trustees or of the
Executive Committee signed by an officer of the Fund and
certified by the Secretary or an Assistant Secretary,
specifying the securities of the Portfolio to be
delivered, setting forth the purpose for which such
delivery is to be made, declaring such purpose to be a
proper corporate purpose, and naming the person or
persons to whom delivery of such securities shall be
made.
2.3 Registration of Securities. Domestic securities held by the
Custodian (other than bearer securities) shall be registered in
4
<PAGE>
the name of the Portfolio or in the name of any nominee of the
Fund on behalf of the Portfolio or of any nominee of the
Custodian which nominee shall be assigned exclusively to the
Portfolio, unless the Fund has authorized in writing the
appointment of a nominee to be used in common with other
registered investment companies having the same investment
adviser as the Portfolio, or in the name or nominee name of any
agent appointed pursuant to Section 2.9 or in the name or nominee
name of any sub-custodian appointed pursuant to Article 1. All
securities accepted by the Custodian on behalf of the Portfolio
under the terms of this Contract shall be in "street name" or
other good delivery form. If, however, the Fund directs the
Custodian to maintain securities in "street name", the Custodian
shall utilize its best efforts only to timely collect income due
the Fund on such securities and to notify the Fund on a best
efforts basis only of relevant corporate actions including,
without limitation, pendency of calls, maturities, tender or
exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate
bank account or accounts in the United States in the name of each
Portfolio of the Fund which shall contain only property held by
the Custodian as custodian for that Portfolio, subject only to
draft or order by the Custodian acting pursuant to the terms of
this Contract, and shall hold in such account or accounts,
subject to the provisions hereof, all cash received by it from or
for the account of the Portfolio, other than cash maintained by
the Portfolio in a bank account established and used in
accordance with Rule 17f-3 under the Investment Company Act of
1940. Funds held by the Custodian for a Portfolio may be
deposited by it to its credit as Custodian in the Banking
Department of the Custodian or in such other banks or trust
companies as it may in its discretion deem necessary or
desirable; provided, however, that every such bank or trust
company shall be qualified to act as a custodian under the
Investment Company Act of 1940 and that each such bank or trust
company and the funds to be deposited with each such bank or
trust company shall on behalf of each applicable Portfolio be
approved by vote of a majority of the Board of Trustees of the
Fund. Such funds shall be deposited by the Custodian in its
capacity as Custodian and shall be withdrawable by the Custodian
only in that capacity.
2.5 Availability of Federal Funds. Upon mutual agreement between the
Fund on behalf of each applicable Portfolio and the Custodian,
the Custodian shall, upon the receipt of Proper Instructions from
the Fund on behalf of a Portfolio, make federal funds available
to such Portfolio as of specified times agreed upon from time to
time by the Fund and the Custodian in the amount of checks
received in payment for Shares of such Portfolio which are
deposited into the Portfolio's account.
5
<PAGE>
2.6 Collection of Income. Subject to the provisions of Section 2.3,
the Custodian shall collect on a timely basis all income and
other payments with respect to registered domestic securities
held hereunder to which each Portfolio shall be entitled either
by law or pursuant to custom in the securities business, and
shall collect on a timely basis all income and other payments
with respect to bearer domestic securities if, on the date of
payment by the issuer, such securities are held by the Custodian
or its agent and shall credit such income, as collected, to such
Portfolio's custodian account. Without limiting the generality
of the foregoing, the Custodian shall detach and present for
payment all coupons and other income items requiring presentation
as and when they become due and shall collect interest when due
on securities held hereunder. Collection of income due each
Portfolio on securities loaned pursuant to the provisions of
Section 2.2 (10) shall be the responsibility of the Custodian so
long as the securities are registered and remain in the name of
the Fund, the Custodian, or its nominee, or in the Depository
Trust Company account of the Custodian, but otherwise shall be
the responsibility of the Fund and the Custodian will have no
duty or responsibility in connection therewith, other than to
provide the Fund with such information or data as may be
necessary to assist the Fund in arranging for the timely delivery
to the Custodian of the income to which the Portfolio is properly
entitled.
2.7 Payment of Fund Monies. Upon receipt of Proper Instructions from
the Fund on behalf of the applicable Portfolio, which may be
continuing instructions when deemed appropriate by the parties,
the Custodian shall pay out monies of a Portfolio in the
following cases only:
1) Upon the purchase of domestic securities, options,
futures contracts or options on futures contracts for the
account of the Portfolio but only (a) against the
delivery of such securities or evidence of title to such
options, futures contracts or options on futures
contracts to the Custodian (or any bank, banking firm or
trust company doing business in the United States or
abroad which is qualified under the Investment Company
Act of 1940, as amended, to act as a custodian and has
been designated by the Custodian as its agent for this
purpose) registered in the name of the Portfolio or in
the name of a nominee of the Custodian referred to in
Section 2.3 hereof or in proper form for transfer; (b) in
the case of a purchase effected through a Securities
System, in accordance with the conditions set forth in
Section 2.10 hereof; (c) in the case of a purchase
involving the Direct Paper System, in accordance with the
conditions set forth in Section 2.11; (d) in the case of
repurchase agreements entered into between the Fund on
behalf of the Portfolio and the Custodian, or another
6
<PAGE>
bank, or a broker-dealer which is a member of NASD, (i)
against delivery of the securities either in certificate
form or through an entry crediting the Custodian's
account at the Federal Reserve Bank with such securities
or (ii) against delivery of the receipt evidencing
purchase by the Portfolio of securities owned by the
Custodian along with written evidence of the agreement by
the Custodian to repurchase such securities from the
Portfolio or (e) for transfer to a time deposit account
of the Fund in any bank, whether domestic or foreign;
such transfer may be effected prior to receipt of a
confirmation from a broker and/or the applicable bank
pursuant to Proper Instructions from the Fund as defined
in Article 5;
2) In connection with conversion, exchange or surrender of
securities owned by the Portfolio as set forth in Section
2.2 hereof;
3) For the redemption or repurchase of Shares issued by the
Portfolio as set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by
the Portfolio, including but not limited to the following
payments for the account of the Portfolio: interest,
taxes, management, accounting, transfer agent and legal
fees, and operating expenses of the Fund whether or not
such expenses are to be in whole or part capitalized or
treated as deferred expenses;
5) For the payment of any dividends on Shares of the
Portfolio declared pursuant to the governing documents of
the Fund;
6) For payment of the amount of dividends received in
respect of securities sold short;
7) For any other proper purpose, but only upon receipt of,
in addition to Proper Instructions from the Fund on
behalf of the Portfolio, a certified copy of a resolution
of the Board of Trustees or of the Executive Committee of
the Fund signed by an officer of the Fund and certified
by its Secretary or an Assistant Secretary, specifying
the amount of such payment, setting forth the purpose for
which such payment is to be made, declaring such purpose
to be a proper purpose, and naming the person or persons
to whom such payment is to be made.
2.8 Liability for Payment in Advance of Receipt of Securities
Purchased. Except as specifically stated otherwise in this
Contract, in any and every case where payment for purchase of
domestic securities for the account of a Portfolio is made by the
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Custodian in advance of receipt of the securities purchased in
the absence of specific written instructions from the Fund on
behalf of such Portfolio to so pay in advance, the Custodian
shall be absolutely liable to the Fund for such securities to the
same extent as if the securities had been received by the
Custodian.
2.9 Appointment of Agents. The Custodian may at any time or times in
its discretion appoint (and may at any time remove) any other
bank or trust company which is itself qualified under the
Investment Company Act of 1940, as amended, and its rules or
regulations to act as a custodian, as its agent to carry out such
of the provisions of this Article 2 as the Custodian may from
time to time direct; provided, however, that the appointment of
any agent shall not relieve the Custodian of its responsibilities
or liabilities hereunder.
2.10 Deposit of Fund Assets in Securities Systems. The Custodian may
deposit and/or maintain securities owned by a Portfolio in a
clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of
1934, which acts as a securities depository, or in the book-entry
system authorized by the U.S. Department of the Treasury and
certain federal agencies, collectively referred to herein as
"Securities System" in accordance with applicable Federal Reserve
Board and Securities and Exchange Commission rules and
regulations, if any, and subject to the following provisions:
1) The Custodian may keep securities of the Portfolio in a
Securities System provided that such securities are
represented in an account ("Account") of the Custodian in
the Securities System which shall not include any assets
of the Custodian other than assets held as a fiduciary,
custodian or otherwise for customers;
2) The records of the Custodian with respect to securities
of the Portfolio which are maintained in a Securities
System shall identify by book-entry those securities
belonging to the Portfolio;
3) The Custodian shall pay for securities purchased for the
account of the Portfolio upon (i) receipt of advice from
the Securities System that such securities have been
transferred to the Account, and (ii) the making of an
entry on the records of the Custodian to reflect such
payment and transfer for the account of the Portfolio.
The Custodian shall transfer securities sold for the
account of the Portfolio upon (i) receipt of advice from
the Securities System that payment for such securities
has been transferred to the Account, and (ii) the making
of an entry on the records of the Custodian to reflect
such transfer and payment for the account of the
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Portfolio. Copies of all advices from the Securities
System of transfers of securities for the account of the
Portfolio shall identify the Portfolio, be maintained for
the Portfolio by the Custodian and be provided to the
Fund at its request. Upon request, the Custodian shall
furnish the Fund on behalf of the Portfolio confirmation
of each transfer to or from the account of the Portfolio
in the form of a written advice or notice and shall
furnish to the Fund on behalf of the Portfolio copies of
daily transaction sheets reflecting each day's
transactions in the Securities System for the account of
the Portfolio;
4) The Custodian shall provide the Fund for the Portfolio
with any report obtained by the Custodian (or by any
agent appointed by the Custodian pursuant to Section 2.9)
on the Securities System's accounting system, internal
accounting control and procedures for safeguarding
securities deposited in the Securities System;
5) The Custodian shall have received from the Fund on behalf
of the Portfolio the certificate required by Article 14
hereof;
6) Anything to the contrary in this Contract
notwithstanding, the Custodian shall be liable to the
Fund for the benefit of the Portfolio for any loss or
damage to the Portfolio resulting from use of the
Securities System by reason of any negligence,
misfeasance or misconduct of the Custodian or any of its
agents or of any of its or their employees or from
failure of the Custodian or any such agent to enforce
effectively such rights as it may have against the
Securities System; at the election of the Fund, it shall
be entitled to be subrogated to the rights of the
Custodian with respect to any claim against the
Securities System or any other person which the Custodian
may have as a consequence of any such loss or damage if
and to the extent that the Portfolio has not been made
whole for any such loss or damage.
2.11 Fund Assets Held in the Custodian's Direct Paper System. The
Custodian may deposit and/or maintain securities owned by a
Portfolio in the Direct Paper System of the Custodian subject to
the following provisions:
1) No transaction relating to securities in the Direct Paper
System will be effected in the absence of Proper
Instructions from the Fund on behalf of the Portfolio;
2) The Custodian may keep securities of the Portfolio in the
Direct Paper System only if such securities are
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represented in an account ("Account") of the Custodian in
the Direct Paper System which shall not include any
assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
3) The records of the Custodian with respect to securities
of the Portfolio which are maintained in the Direct Paper
System shall identify by book-entry those securities
belonging to the Portfolio;
4) The Custodian shall pay for securities purchased for the
account of the Portfolio upon the making of an entry on
the records of the Custodian to reflect such payment and
transfer of securities to the account of the Portfolio.
The Custodian shall transfer securities sold for the
account of the Portfolio upon the making of an entry on
the records of the Custodian to reflect such transfer and
receipt of payment for the account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf of the
Portfolio confirmation of each transfer to or from the
account of the Portfolio, in the form of a written advice
or notice, of Direct Paper on the next business day
following such transfer and shall furnish to the Fund on
behalf of the Portfolio copies of daily transaction
sheets reflecting each day's transaction in the
Securities System for the account of the Portfolio;
6) The Custodian shall provide the Fund on behalf of the
Portfolio with any report on the Custodian's system of
internal accounting control as the Fund may reasonably
request from time to time.
2.12 Segregated Account. The Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Portfolio
establish and maintain a segregated account or accounts for and
on behalf of each such Portfolio, into which account or accounts
may be transferred cash and/or securities, including securities
maintained in an account by the Custodian pursuant to Section
2.10 hereof, (i) in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian and a broker-dealer registered under the Exchange Act
and a member of the NASD (or any futures commission merchant
registered under the Commodity Exchange Act), relating to
compliance with the rules of The Options Clearing Corporation and
of any registered national securities exchange (or the Commodity
Futures Trading Commission or any registered contract market), or
of any similar organization or organizations, regarding escrow or
other arrangements in connection with transactions by the
Portfolio, (ii) for purposes of segregating cash or government
securities in connection with options purchased, sold or written
by the Portfolio or commodity futures contracts or options
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thereon purchased or sold by the Portfolio, (iii) for the
purposes of compliance by the Portfolio with the procedures
required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange
Commission relating to the maintenance of segregated accounts by
registered investment companies and (iv) for other proper
corporate purposes, but only, in the case of clause (iv), upon
receipt of, in addition to Proper Instructions from the Fund on
behalf of the applicable Portfolio, a certified copy of a
resolution of the Board of Trustees or of the Executive Committee
signed by an officer of the Fund and certified by the Secretary
or an Assistant Secretary, setting forth the purpose or purposes
of such segregated account and declaring such purposes to be
proper corporate purposes.
2.13 Ownership Certificates for Tax Purposes. The Custodian shall
execute ownership and other certificates and affidavits for all
federal and state tax purposes in connection with receipt of
income or other payments with respect to domestic securities of
each Portfolio held by it and in connection with transfers of
securities.
2.14 Proxies. The Custodian shall, with respect to the domestic
securities held hereunder, cause to be promptly executed by the
registered holder of such securities, if the securities are
registered otherwise than in the name of the Portfolio or a
nominee of the Portfolio, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly
deliver to the Portfolio such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.15 Communications Relating to Portfolio Securities. Subject to the
provisions of Section 2.3, the Custodian shall transmit promptly
to the Fund for each Portfolio all written information
(including, without limitation, pendency of calls and maturities
of domestic securities and expirations of rights in connection
therewith and notices of exercise of call and put options written
by the Fund on behalf of the Portfolio and the maturity of
futures contracts purchased or sold by the Portfolio) received by
the Custodian from issuers of the securities being held for the
Portfolio. With respect to tender or exchange offers, the
Custodian shall transmit promptly to the Portfolio all written
information received by the Custodian from issuers of the
securities whose tender or exchange is sought and from the party
(or his agents) making the tender or exchange offer. If the
Portfolio desires to take action with respect to any tender
offer, exchange offer or any other similar transaction, the
Portfolio shall when reasonably possible notify the Custodian at
least three business days prior to the date on which the
Custodian is to take such action.
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3. Duties of the Custodian with Respect to Property of the Fund Held
Outside of the United States
3.1 Appointment of Foreign Sub-Custodians. The Fund hereby
authorizes and instructs the Custodian to employ as
sub-custodians for each Portfolio's securities and other assets
maintained outside the United States the foreign banking
institutions and foreign securities depositories designated on
Schedule A hereto ("foreign sub-custodians"). Upon receipt of
"Proper Instructions", as defined in Section 5 of this Contract,
together with a certified resolution of the Fund's Board of
Trustees, the Custodian and the Fund may agree to amend Schedule
A hereto from time to time to designate additional foreign
banking institutions and foreign securities depositories to act
as sub-custodian. Upon receipt of Proper Instructions, the Fund
may instruct the Custodian to cease the employment of any one or
more such sub-custodians for maintaining custody of a Portfolio's
assets.
3.2 Assets to be Held. The Custodian shall limit the securities and
other assets maintained in the custody of the foreign
sub-custodians to: (a) "foreign securities", as defined in
paragraph (c)(1) of Rule 17f-5 under the Investment Company Act
of 1940, and (b) cash and cash equivalents in such amounts as
the Custodian or the Fund may determine to be reasonably
necessary to effect a Portfolio's foreign securities
transactions. The Custodian shall identify on its books as
belonging to each Portfolio, the foreign securities of the
Portfolio held by each foreign sub-custodian.
3.3 Foreign Securities Depositories. Except as may otherwise be
agreed upon in writing by the Custodian and the Fund, assets of
each Portfolio shall be maintained in foreign securities
depositories only through arrangements implemented by the foreign
banking institutions serving as sub-custodians pursuant to the
terms hereof. Where possible, such arrangements shall include
entry into agreements containing the provisions set forth in
Section 3.4 hereof.
3.4 Agreements with Foreign Banking Institutions. Each agreement
with a foreign banking institution shall be substantially in the
form set forth in Exhibit 1 hereto and shall provide that: (a)
the assets of each Portfolio will not be subject to any right,
charge, security interest, lien or claim of any kind in favor of
the foreign banking institution or its creditors or agent, except
a claim of payment for their safe custody or administration; (b)
beneficial ownership for the assets of each Portfolio will be
freely transferable without the payment of money or value other
than for custody or administration; (c) adequate records will be
maintained identifying the assets as belonging to each applicable
Portfolio; (d) officers of or auditors employed by, or other
representatives of the Custodian, including to the extent
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<PAGE>
permitted under applicable law the independent public accountants
for the Fund, will be given access to the books and records of
the foreign banking institution relating to its actions under its
agreement with the Custodian; and (e) assets of each Portfolio
held by the foreign sub-custodian will be subject only to the
instructions of the Custodian or its agents.
3.5 Access of Independent Accountants of the Fund. Upon request of
the Fund, the Custodian will use its best efforts to arrange for
the independent accountants of the Fund to be afforded access to
the books and records of any foreign banking institution employed
as a foreign sub-custodian insofar as such books and records
relate to the performance of such foreign banking institution
under its agreement with the Custodian.
3.6 Reports by Custodian. The Custodian will supply to the Fund from
time to time, as mutually agreed upon, statements in respect of
the securities and other assets of each Portfolio held by foreign
sub-custodians, including but not limited to an identification of
entities having possession of each Portfolio's securities and
other assets and advices or notifications of any transfers of
securities to or from each custodial account maintained by a
foreign banking institution for the Custodian on behalf of each
applicable Portfolio indicating, as to securities acquired for a
Portfolio, the identity of the entity having physical possession
of such securities.
3.7 Transactions in Foreign Custody Account. (a) Except as otherwise
provided in paragraph (b) of this Section 3.7, the provision of
Sections 2.2 and 2.7 of this Contract shall apply, mutatis
mutandis to the foreign securities of the Fund held outside the
United States by foreign sub-custodians.
(b) Notwithstanding any provision of this Contract to the
contrary, settlement and payment for securities received for the
account of each applicable Portfolio and delivery of securities
maintained for the account of each applicable Portfolio may be
effected in accordance with the customary established securities
trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs,
including, without limitation, delivering securities to the
purchaser thereof or to a dealer therefor (or an agent for such
purchaser or dealer) against a receipt with the expectation of
receiving later payment for such securities from such purchaser
or dealer.
(c) Securities maintained in the custody of a foreign
sub-custodian may be maintained in the name of such entity's
nominee to the same extent as set forth in Section 2.3 of this
Contract, and the Fund agrees to hold any such nominee harmless
from any liability as a holder of record of such securities.
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<PAGE>
3.8 Liability of Foreign Sub-Custodians. Each agreement pursuant to
which the Custodian employs a foreign banking institution as a
foreign sub-custodian shall require the institution to exercise
reasonable care in the performance of its duties and to
indemnify, and hold harmless, the Custodian and the Fund from and
against any loss, damage, cost, expense, liability or claim
arising out of or in connection with the institution's
performance of such obligations. At the election of the Fund, it
shall be entitled to be subrogated to the rights of the Custodian
with respect to any claims against a foreign banking institution
as a consequence of any such loss, damage, cost, expense,
liability or claim if and to the extent that the Fund has not
been made whole for any such loss, damage, cost, expense,
liability or claim.
3.9 Liability of Custodian. The Custodian shall be liable for the
acts or omissions of a foreign banking institution to the same
extent as set forth with respect to sub-custodians generally in
this Contract and, regardless of whether assets are maintained in
the custody of a foreign banking institution, a foreign
securities depository or a branch of a U.S. bank as contemplated
by paragraph 3.12 hereof, the Custodian shall not be liable for
any loss, damage, cost, expense, liability or claim resulting
from nationalization, expropriation, currency restrictions, or
acts of war or terrorism or any loss where the sub-custodian has
otherwise exercised reasonable care. Notwithstanding the
foregoing provisions of this paragraph 3.9, in delegating custody
duties to State Street London Ltd., the Custodian shall not be
relieved of any responsibility to the Fund for any loss due to
such delegation, except such loss as may result from (a)
political risk (including, but not limited to, exchange control
restrictions, confiscation, expropriation, nationalization,
insurrection, civil strife or armed hostilities) or (b) other
losses (excluding a bankruptcy or insolvency of State Street
London Ltd. not caused by political risk) due to Acts of God,
nuclear incident or the like, in each case under circumstances
where the Custodian and State Street London Ltd. have exercised
reasonable care.
3.10 Reimbursement for Advances. If the Fund requires the Custodian
to advance cash or securities for any purpose for the benefit of
a Portfolio including the purchase or sale of foreign exchange or
of contracts for foreign exchange ("Advance"), or in the event
that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Contract, except such as
may arise from its or its nominee's own negligent action,
negligent failure to act or willful misconduct ("Liability") then
in such event property equal in value to not more than 125% of
such Advance and accrued interest on the Advance or the
anticipated amount of such Liability, held at any time for the
account of the appropriate Portfolio by the Custodian or sub-
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<PAGE>
custodian may be held as security for such Liability or for such
Advance and accrued interest on the Advance. The Custodian shall
designate the security or securities constituting security for an
Advance or Liability (the "Designated Securities") by notice in
writing to the Fund (which may be sent by tested telefax or
telex). In the event the value of the Designated Securities shall
decline to less than 110% of the amount of such Advance and
accrued interest on the Advance or the anticipated amount of such
Liability, then the Custodian may designate in the same manner an
additional security for such obligation ("Additional
Securities"), but the aggregate value of the Designated
Securities and Additional Securities shall not be in excess of
125% of the amount of such Advance and the accrued interest on
the Advance or the anticipated amount of such Liability. At the
request of the Fund, on behalf of a Portfolio, the Custodian
shall agree to substitution of a security or securities which
have a value equal to the value of the Designated or Additional
Securities which the Fund desires be released from their status
as security, and such release from status as security shall be
effective upon the Custodian and the Fund agreeing in writing as
to the identity of the substituted security or securities, which
shall thereupon become Designated Securities.
Notwithstanding the above, the Custodian shall, at the request of
the Fund, on behalf of a Portfolio, immediately release from
their status as security any or all of the Designated Securities
or Additional Securities upon the Custodian's receipt from such
of Portfolio cash or cash equivalents in an amount equal to 100%
of the value of the Designated Securities or Additional
Securities that the Fund desires to be released from their status
as security pursuant to this Section. The applicable Portfolio
shall reimburse or indemnify the Custodian in respect of a
Liability and shall pay any Advances upon demand; provided,
however, that the Custodian first notified the Fund on behalf of
the Portfolio of such demand for repayment, reimbursement or
indemnification. If, upon notification, the Portfolio shall fail
to pay such Advance or interest when due or shall fail to
reimburse or indemnify the Custodian promptly in respect of a
Liability, the Custodian shall be entitled to dispose of the
Designated Securities and Additional Securities to the extent
necessary to obtain repayment, reimbursement or indemnification.
Interest, dividends and other distributions paid or received on
the Designated Securities and Additional Securities, other than
payments of principal or payments upon retirement, redemption or
repurchase, shall remain the property of the Portfolio, and shall
not be subject to this Section. To the extent that the
disposition of the Portfolio's property, designated as security
for such Advance or Liability, results in an amount less than
necessary to obtain repayment, reimbursement or indemnification,
the Portfolio shall continue to be liable to the Custodian for
the differences between the proceeds of the disposition of the
Portfolio's property, designated as security for such Advance or
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Liability, and the amount of the repayment, reimbursement or
indemnification due to the Custodian and the Custodian shall have
the right to designate in the same manner described above an
additional security for such obligation which shall constitute
Additional Securities hereunder.
3.11 Monitoring Responsibilities. The Custodian shall furnish
annually to the Fund, during the month of June, information
concerning the foreign sub-custodians employed by the Custodian.
Such information shall be similar in kind and scope to that
furnished to the Fund in connection with the initial approval of
this Contract. In addition, the Custodian will promptly inform
the Fund in the event that the Custodian learns of a material
adverse change in the financial condition of a foreign
sub-custodian or any material loss of the assets of the Fund or
in the case of any foreign sub-custodian not the subject of an
exemptive order from the Securities and Exchange Commission is
notified by such foreign sub-custodian that there appears to be a
substantial likelihood that its shareholders' equity will decline
below $200 million (U.S. dollars or the equivalent thereof) or
that its shareholders' equity has declined below $200 million (in
each case computed in accordance with generally accepted U.S.
accounting principles).
3.12 Branches of U.S. Banks. (a) Except as otherwise set forth in
this Contract, the provisions hereof shall not apply where the
custody of a Portfolio's assets are maintained in a foreign
branch of a banking institution which is a "bank" as defined by
Section 2(a)(5) of the Investment Company Act of 1940 meeting the
qualification set forth in Section 26(a) of said Act. The
appointment of any such branch as a sub-custodian shall be
governed by paragraph 1 of this Contract.
(b) Cash held for each Portfolio of the Fund in the United
Kingdom shall be maintained in an interest bearing account
established for the Fund with the Custodian's London branch,
which account shall be subject to the direction of the Custodian,
State Street London Ltd. or both.
3.13 Foreign Exchange Transactions. (a) Upon receipt of Proper
Instructions, the Custodian shall settle foreign exchange
contracts or options to purchase and sell foreign currencies for
spot and future delivery on behalf of and for the account of a
Portfolio with such brokers, banks or trust companies other than
the Custodian ("Currency Brokers") as the Fund may determine and
direct pursuant to Proper Instructions or as the Custodian may
select ("Transactions Other Than As Principal").
(b) The Custodian shall not be obligated to enter into foreign
exchange transactions as principal ("Transactions As Principal").
However, if the Custodian has made available to the Fund its
services as a principal in foreign exchange transactions and
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subject to any separate agreement between the parties relating to
such transactions, the Custodian shall enter into foreign
exchange contracts or options to purchase and sell foreign
currencies for spot and future delivery on behalf of and for the
account of a Portfolio, with the Custodian as principal.
(c) If, in a Transaction Other Than As Principal, a Currency
Broker is selected by the Fund, on behalf of a Portfolio, the
Custodian shall have no duty with respect to the selection of the
Currency Broker, or, so long as the Custodian acts in accordance
with Proper Instructions, for the failure of such Currency Broker
to comply with the terms of any contract or option. If, in a
Transaction Other Than As Principal, the Currency Broker is
selected by the Custodian or if the Custodian enters into a
Transaction As Principal, the Custodian shall be responsible for
the selection of the Currency Broker and the failure of such
Currency Broker to comply with the terms of nay contract or
option.
(d) In Transactions Other Than As Principal and Transactions
As Principal, the Custodian shall be responsible for any transfer
of cash, the transmission of instructions to and from a Currency
Broker, if any, the safekeeping of all certificates and other
documents and agreements evidencing or relating to such foreign
exchange transactions and the maintenance of proper records as
set forth in Section 9 of this Contract.
3.14 Tax Law. Except to the extent that imposition of any tax
liability arises from State Street's failure to perform in
accordance with the terms of this Section 3.14 or from the
failure of any sub-custodian to perform in accordance with the
terms of the applicable subcustody agreement, State Street shall
have no responsibility or liability for any obligations now or
hereafter imposed on each Portfolio by the tax law of the
domicile of each Portfolio or of any jurisdiction in which each
Portfolio is invested or any political subdivision thereof. It
shall be the responsibility of State Street to use due care to
perform such steps as are required to collect any tax refund, to
ascertain the appropriate rate of tax withholding and to provide
such information and documents as may be required to enable each
Portfolio to receive appropriate tax treatment under applicable
tax laws and any applicable treaty provisions. Unless otherwise
informed by each Portfolio, State Street, in performance of its
duties under this Section, shall be entitled to apply categorical
treatment of each Portfolio according to the nationality of each
Portfolio, the particulars of its organization and other relevant
details that shall be supplied by each Portfolio. State Street
shall be entitled to rely on any information supplied by each
Portfolio. State Street may engage reasonable professional
advisors disclosed to each Portfolio by State Street, which may
include attorneys, accountants or financial institutions in the
regular business of investment administration and may rely upon
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advice received therefrom. It shall be the duty of each
Portfolio to inform State Street of any change in the
organization, domicile or other relevant fact concerning tax
treatment of each Portfolio and further to inform State Street if
each Portfolio is or becomes the beneficiary of any special
ruling or treatment not applicable to the general nationality and
category of entity of which each Portfolio is a part under
general laws and treaty provisions.
4. Payments for Sales or Repurchases or Redemptions of Shares of the
Fund
The Custodian shall receive from the distributor for the Shares
or from the Transfer Agent of the Fund and deposit into the account of the
appropriate Portfolio such payments as are received for Shares of that
Portfolio issued or sold from time to time by the Fund. The Custodian
will provide timely notification to the Fund on behalf of each such
Portfolio and the Transfer Agent of any receipt by it of payments for
Shares of such Portfolio.
From such funds as may be available for the purpose but subject
to the limitations of the Trust Instrument and any applicable votes of the
Board of Trustees of the Fund pursuant thereto, the Custodian shall, upon
receipt of instructions from the Transfer Agent, make funds available for
payment to holders of Shares who have delivered to the Transfer Agent a
request for redemption or repurchase of their Shares. In connection with
the redemption or repurchase of Shares of a Portfolio, the Custodian is
authorized upon receipt of instructions from the Transfer Agent to wire
funds to or through a commercial bank designated by the redeeming
shareholders. In connection with the redemption or repurchase of Shares
of the Fund, the Custodian shall honor checks drawn on the Custodian by a
holder of Shares, which checks have been furnished by the Fund to the
holder of Shares, when presented to the Custodian in accordance with such
procedures and controls as are mutually agreed upon from time to time
between the Fund and the Custodian.
5. Proper Instructions
Proper Instructions as used throughout this Contract means a
writing signed or initialled by two or more person or persons as the Board
of Trustees shall have from time to time authorized. Each such writing
shall set forth the specific transaction or type of transaction involved,
including a specific statement of the purpose for which such action is
requested. Oral instructions will be considered Proper Instructions if
the Custodian reasonably believes them to have been given by a person
authorized to give such instructions with respect to the transaction
involved. The Fund shall cause all oral instructions to be confirmed in
writing. Upon receipt of a certificate of the Secretary or an Assistant
Secretary as to the authorization by the Board of Trustees of the Fund
accompanied by a detailed description of procedures approved by the Board
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<PAGE>
of Trustees, Proper Instructions may include communications effected
directly between electro-mechanical or electronic devices provided that
the Fund and the Custodian are satisfied that such procedures afford
adequate safeguards for the Portfolios' assets. For purposes of this
Section, Proper Instructions shall include instructions received by the
Custodian pursuant to any three - party agreement which requires a
segregated asset account in accordance with Section 2.12.
6. Actions Permitted without Express Authority
The Custodian may in its discretion, without express authority
from the Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to
its duties under this Contract, provided that all such
payments shall be accounted for to the Fund on behalf of
the Portfolio;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Portfolio,
checks, drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution,
purchase, transfer and other dealings with the securities
and property of the Portfolio except as otherwise
directed by the Board of Trustees of the Fund.
7. Evidence of Authority
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper
believed by it to be genuine and to have been properly executed by or on
behalf of the Fund. The Custodian may receive and accept a certified copy
of a vote of the Board of Trustees of the Fund as conclusive evidence (a)
of the authority of any person to act in accordance with such vote or (b)
of any determination or of any action by the Board of Trustees pursuant to
the Trust Instrument as described in such vote, and such vote may be
considered as in full force and effect until receipt by the Custodian of
written notice to the contrary.
8. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income
If, and to the extent requested by the Fund, the Custodian shall
cooperate with and supply necessary information to the entity or entities
19
<PAGE>
appointed by the Board of Trustees of the Fund to keep the books of
account of each Portfolio and/or compute the net asset value per share of
the outstanding shares of each Portfolio or, if directed in writing to do
so by the Fund on behalf of the Portfolio, shall itself keep such books of
account and/or compute such net asset value per share. If so directed,
the Custodian shall also calculate daily the net income of the Portfolio
as described in the Fund's currently effective prospectus related to such
Portfolio and shall advise the Fund and the Transfer Agent daily of the
total amounts of such net income and, if instructed in writing by an
officer of the Fund to do so, shall advise the Transfer Agent periodically
of the division of such net income among its various components. The
calculations of the net asset value per share and the daily income of each
Portfolio shall be made at the time or times described from time to time
in the Fund's currently effective prospectus related to such Portfolio.
9. Records
The Custodian shall with respect to each Portfolio create and
maintain all records relating to its activities and obligations under this
Contract in such manner as will meet the obligations of the Fund under the
Investment Company Act of 1940, with particular attention to Section 31
thereof and Rules 31a-1 and 31a-2 thereunder. All such records shall be
the property of the Fund and shall at all times during the regular
business hours of the Custodian be open for inspection by duly authorized
officers, employees or agents of the Fund and employees and agents of the
Securities and Exchange Commission. The Custodian shall, at the Fund's
request, supply the Fund with a tabulation of securities owned by each
Portfolio and held by the Custodian and shall, when requested to do so by
the Fund and for such compensation as shall be agreed upon between the
Fund and the Custodian, include certificate numbers in such tabulations.
10. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the Fund on
behalf of each applicable Portfolio may from time to time request, to
obtain from year to year favorable opinions from the Fund's independent
accountants with respect to its activities hereunder in connection with
the preparation of the Fund's Form N-1A, and Form N-SAR or other annual
reports to the Securities and Exchange Commission and with respect to any
other requirements of such Commission.
11. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, on behalf of each Portfolio
at such times as the Fund may reasonably require, with reports by
independent public accountants on the accounting system, internal
accounting control and procedures for safeguarding securities, futures
contracts and options on futures contracts, including securities deposited
and/or maintained in a Securities System, relating to the services
20
<PAGE>
provided by the Custodian under this Contract; such reports, shall be of
sufficient scope and in sufficient detail, as may reasonably be required
by the Fund to provide reasonable assurance that any material inadequacies
would be disclosed by such examination, and, if there are no such
inadequacies, the reports shall so state.
12. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for
its services and expenses as Custodian, as agreed upon from time to time
between the Fund on behalf of each applicable Portfolio and the Custodian.
13. Responsibility of Custodian
So long as and to the extent that it is in the exercise of
reasonable care, the Custodian shall not be responsible for the title,
validity or genuineness of any property or evidence of title thereto
received by it or delivered by it pursuant to this Contract and shall be
held harmless in acting upon any notice, request, consent, certificate or
other instrument reasonably believed by it to be genuine and to be signed
by the proper party or parties, including any futures commission merchant
acting pursuant to the terms of a three-party futures or options
agreement. The Custodian shall be held to the exercise of reasonable care
in carrying out the provisions of this Contract, but shall be kept
indemnified by and shall be without liability to the Fund for any action
taken or omitted by it in good faith without negligence. It shall be
entitled to rely on and may act upon advice of counsel (who may be
counsel for the Fund) on all matters, and shall be without liability for
any action reasonably taken or omitted pursuant to such advice.
As a condition to the indemnification provided for in this
Section 13, if in any case the indemnifying party is asked to indemnify
and hold the indemnified party harmless, the indemnified party shall fully
and promptly advise the indemnifying party of all pertinent facts
concerning the situation in question, and shall use all reasonable care to
identify, and promptly notify the indemnifying party of, any situation
which presents or appears likely to present the probability of such a
claim for indemnification against the indemnifying party. The
indemnifying party shall be entitled, at its own expense, to participate
in the investigation and to be consulted as to the defense of any such
claim, and in such event, the indemnified party shall keep the
indemnifying party fully and currently informed of all developments
relating to such investigation or defense. At any time, the indemnifying
party shall be entitled at its own expense to conduct the defense of any
such claim, provided that the indemnifying party: (a) reasonably
demonstrates to the other party its ability to pay the full amount of
potential liability in connection with such claim and (b) first admits in
writing to the other party that such claim is one in respect of which the
indemnifying party is obligated to indemnify the other party hereunder.
21
<PAGE>
Upon satisfaction of the foregoing conditions, the indemnifying party
shall take over complete defense of the claim, and the indemnified party
shall initiate no further legal or other expenses for which it shall seek
indemnification. The indemnified party shall in no case confess any claim
or make any compromise in any case in which the indemnifying party may be
asked to indemnify the indemnified party, except with the indemnifying
party's prior written consent.
If the Fund on behalf of a Portfolio requires the Custodian to
take any action with respect to securities, which action involves the
payment of money or which action may, in the opinion of the Custodian,
result in the Custodian or its nominee assigned to the Fund or the
Portfolio being liable for the payment of money or incurring liability of
some other form, the Fund on behalf of the Portfolio, as a prerequisite to
requiring the Custodian to take such action, shall provide indemnity to
the Custodian in an amount and form satisfactory to it.
14. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution, shall
continue in full force and effect with respect to each Portfolio until
terminated as hereinafter provided, may be amended at any time by mutual
agreement of the parties hereto and may be terminated by either party by
an instrument in writing delivered or mailed, postage prepaid to the other
party, such termination to take effect not sooner than thirty (30) days
after the date of such delivery or mailing; provided, however that the
Custodian shall not with respect to a Portfolio act under Section 2.10
hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board of Trustees of the
Fund has approved the use of a particular Securities System by such
Portfolio as required by Rule 17f-4 under the Investment Company Act of
1940, as amended and that the Custodian shall not with respect to a
Portfolio act under Section 2.11 hereof in the absence of receipt of an
initial certificate of the Secretary or an Assistant Secretary that the
Board of Trustees has approved the initial use of the Direct Paper System
by such Portfolio and the receipt of an annual certificate of the
Secretary or an Assistant Secretary that the Board of Trustees has
reviewed the use by such Portfolio of the Direct Paper System; provided
further, however, that the Fund shall not amend or terminate this Contract
in contravention of any applicable federal or state regulations, or any
provision of the Trust Instrument, and further provided, that the Fund on
behalf of one or more of the Portfolios may at any time by action of its
Board of Trustees (i) substitute another bank or trust company for the
Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the
Currency or upon the happening of a like event at the direction of an
appropriate regulatory agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund on behalf of each
applicable Portfolio shall pay to the Custodian such compensation as may
22
<PAGE>
be due as of the date of such termination and shall likewise reimburse the
Custodian for its costs, expenses and disbursements. Termination of the
Contract with respect to one Portfolio (but less than all of the
Portfolios) will not constitute termination of the Contract, and the terms
of the Contract continue to apply to the other Portfolios.
15. Successor Custodian
If a successor custodian for the Fund, of one or more of the
Portfolios shall be appointed by the Board of Trustees of the Fund, the
Custodian shall, upon termination, deliver to such successor custodian at
the office of the Custodian, duly endorsed and in the form for transfer,
all securities of each applicable Portfolio then held by it hereunder and
shall transfer to an account of the successor custodian all of the
securities of each such Portfolio held in a Securities System.
If no such successor custodian shall be appointed, the Custodian
shall, in like manner, upon receipt of a certified copy of a vote of the
Board of Trustees of the Fund, deliver at the office of the Custodian and
transfer such securities, funds and other properties in accordance with
such vote.
In the event that no written order designating a successor
custodian or certified copy of a vote of the Board of Trustees shall have
been delivered to the Custodian on or before the date when such
termination shall become effective, then the Custodian shall have the
right to deliver to a bank or trust company, which is a "bank" as defined
in the Investment Company Act of 1940, doing business in Boston,
Massachusetts, of its own selection, having an aggregate capital, surplus,
and undivided profits, as shown by its last published report, of not less
than $25,000,000, all securities, funds and other properties held by the
Custodian on behalf of each applicable Portfolio and all instruments held
by the Custodian relative thereto and all other property held by it under
this Contract on behalf of each applicable Portfolio and to transfer to an
account of such successor custodian all of the securities of each such
Portfolio held in any Securities System. Thereafter, such bank or trust
company shall be the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain
in the possession of the Custodian after the date of termination hereof
owing to failure of the Fund to procure the certified copy of the vote
referred to or of the Board of Trustees to appoint a successor custodian,
the Custodian shall be entitled to fair compensation for its services
during such period as the Custodian retains possession of such securities,
funds and other properties and the provisions of this Contract relating to
the duties and obligations of the Custodian shall remain in full force and
effect.
23
<PAGE>
16. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian
and the Fund on behalf of each of the Portfolios, may from time to time
agree on such provisions interpretive of or in addition to the provisions
of this Contract as may in their joint opinion be consistent with the
general tenor of this Contract. Any such interpretive or additional
provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional
provisions shall contravene any applicable federal or state regulations or
any provision of the Trust Instrument of the Fund. No interpretive or
additional provisions made as provided in the preceding sentence shall be
deemed to be an amendment of this Contract.
17. Additional Funds
In the event that the Fund establishes one or more series of
Shares in addition to Neuberger & Berman Socially Responsive Trust with
respect to which it desires to have the Custodian render services as
custodian under the terms hereof, it shall so notify the Custodian in
writing, and if the Custodian agrees in writing to provide such services,
such series of Shares shall become a Portfolio hereunder.
18. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of The Commonwealth of
Massachusetts.
19. Limitation of Trustee, Officer and Shareholder Liability
It is expressly agreed that the obligations of the Fund and each
Portfolio hereunder shall not be binding upon any of the Trustees,
officers, agents or employees of the Fund or upon the shareholders of any
Portfolio personally, but shall only bind the assets and property of the
Fund, as provided in its Trust Instrument. The execution and delivery of
this Contract have been authorized by the Trustees of the Fund, and this
Contract has been executed and delivered by an authorized officer of the
Fund acting as such; neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made
by any of them individually or to impose any liability on any of them
personally, but shall bind only the assets and property of the Fund, as
provided in its Trust Instrument.
20. No Liability of Other Portfolios
Notwithstanding any other provision of this Contract, the parties
agree that the assets and liabilities of each Portfolio are separate and
24
<PAGE>
distinct from the assets and liabilities of each other Portfolio and that
no Portfolio shall be liable or shall be charged for any debt, obligation
or liability of any other Portfolio, whether arising under this Contract
or otherwise.
21. Confidentiality
The Custodian agrees that all books, records, information and
data pertaining to the business of the Fund which are exchanged or
received pursuant to the negotiation or carrying out of this Contract
shall remain confidential, shall not be voluntarily disclosed to any
other person, except as may be required by law, and shall not be used by
the Custodian for any purpose not directly related to the business of the
Fund, except with the Fund's written consent.
22. Assignment
Neither the Fund nor the Custodian shall have the right to assign
any of its rights or obligations under this Contract without the prior
written consent of the other party.
23. Severability
If any provision of this Contract is held to be unenforceable as
a matter of law, the other terms and provisions hereof shall not be
affected thereby and shall remain in full force and effect.
24. Prior Contracts
This Contract supersedes and terminates, as of the date hereof,
all prior contracts between the Fund on behalf of each of the Portfolios,
or any predecessor(s) thereto, and the Custodian relating to the custody
of the Fund's assets.
25. Shareholder Communications Election
Securities and Exchange Commission Rule 14b-2 requires banks
which hold securities for the account of customers to respond to requests
by issuers of securities for the names, addresses and holdings of
beneficial owners of securities of that issuer held by the bank unless the
beneficial owner has expressly objected to disclosure of this information.
In order to comply with the rule, the Custodian needs the Fund to indicate
whether it authorizes the Custodian to provide the Fund's name, address,
and share position to requesting companies whose securities the Fund owns.
If the Fund tells the Custodian "no", the Custodian will not provide this
information to requesting companies. If the Fund tells the Custodian
"yes" or does not check either "yes" or "no" below, the Custodian is
25
<PAGE>
required by the rule to treat the Fund as consenting to disclosure of this
information for all securities owned by the Fund or any funds or accounts
established by the Fund. For the Fund's protection, the Rule prohibits
the requesting company from using the Fund's name and address for any
purpose other than corporate communications. Please indicate below
whether the Fund consents or objects by checking one of the alternatives
below.
YES [ ] The Custodian is authorized to release the Fund's
name, address, and share positions.
NO [x] The Custodian is not authorized to release the
Fund's name, address, and share positions.
26
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly authorized
representative and its seal to be hereunder affixed as of the 19th day of
August 1994.
ATTEST NEUBERGER & BERMAN EQUITY ASSETS
/s/ Stanley Egener
/s/ Stacy Cooper-Shugrue --------------------------
------------------------ By Stanley Egener
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ E. Solomon /s/ Ronald E. Logue
---------------------- ---------------------------
By Ronald E. Logue
Executive Vice President
27
<PAGE>
<PAGE>
SCHEDULE A
EQUITY MANAGERS TRUST
NEUBERGER & BERMAN EQUITY FUNDS
NEUBERBER & BERMAN EQUITY TRUST
NEUBERGER & BERMAN EQUITY ASSETS
(Focus, Genesis, Guardian, Manhattan, Partners,
and Socially Responsive Series)
The following foreign banking institutions and foreign securities
depositories have been approved by the boards of trustees of the above-
mentioned trusts for use by the indicated series of the trust as sub-
custodians for the securities and other assets:
Westpac Banking Corp. (Austraclear Ltd. and Reserve Bank Information and
Transfer System) (Australia)
GiroCredit Bank Aktiengesellschaft der Sparkassen (OEKB)
(Austria)
Generale Bank (Banque Nationale de Belgique) (C.I.K.) (Belgium)
Canada Trustco Mortgage Company (CDS) (Canada)
Den Danske Bank (VP-Centralen) (Denmark)
Merita Bank Limited (Central Share Register) (Finland)
Banque Paribas (Banque de France) (SICOVAM) (France)
BHF-Bank Aktiengesellschaft (Kassenverein) (Germany)
Standard Chartered Bank,Hong Kong (CCASS) (Hong Kong)
Bank of Ireland (The Gilt Settlement Office) (Ireland)
Morgan Guaranty Trust Company (Banca d'Italia and Monte Titoli S.p.A.)
(Italy)
Daiwa Bank, Limited, and Sumitomo Trust & Banking Company, Limited
(JASDEC/Bank of Japan) (Japan)
Standard Chartered Bank Malaysia Berhad (MCD) (Malaysia)
Citibank, S.A.-Mexico (Banco de Mexico and INDEVAL) (Mexico)
MeesPierson N.V. (NECIGEF) (The Netherlands)
ANZ Banking Group (NZ) Ltd. (Austraclear NZ) (New Zealand)
Christiania Bank Og Kreditkasse (VPS) (Norway)
Banco Comercial Portugues (Central de Valores Mobiliarios) (Portugal)
<PAGE>
The Development Bank of Singapore, Ltd. (CDP) (Singapore)
Banco Santander, S.A. (SCLV/Banco de Espana) (Spain)
Skandinaviska Enskilda Banken (VPC) (Sweden)
Union Bank of Switzerland (SEGA) (Switzerland)
State Street Bank and Trust Co., and State Street London Limited (The
Central Gilts Office and The Central Moneymarkets Office) (United Kingdom)
Euroclear
<PAGE>
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
between
NEUBERGER & BERMAN EQUITY ASSETS
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
1. Terms of Appointment; Duties of the Bank . . . . . . . . . . 1
2. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . 4
3. Representations and Warranties of the Bank . . . . . . . . . 4
4. Representations and Warranties of the Fund . . . . . . . . . 5
5. Data Access and Proprietary Information . . . . . . . . . . 5
6. Indemnification . . . . . . . . . . . . . . . . . . . . . . 7
7. Covenants of the Fund and the Bank . . . . . . . . . . . . . 8
8. Termination of Agreement . . . . . . . . . . . . . . . . . . 9
9. Additional Funds . . . . . . . . . . . . . . . . . . . . . . 10
10. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 10
11. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 10
12. Massachusetts Law to Apply . . . . . . . . . . . . . . . . . 10
13. Force Majeure . . . . . . . . . . . . . . . . . . . . . . . 11
14. Consequential Damages . . . . . . . . . . . . . . . . . . . 11
15. Merger of Agreement . . . . . . . . . . . . . . . . . . . . 11
16. Limitations of Liability of the Trustees and Shareholders,
Officers, Employees and Agent . . . . . . . . . . . . . . . 11
17. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 11
18. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 11
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
-------------------------------------
AGREEMENT made as of the 19th day of August, 1994, by and between
NEUBERGER & BERMAN EQUITY ASSETS, a Delaware business trust, having its
principal office and place of business at 605 Third Avenue, New York, New
York 10158 (the "Fund"), and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company having its principal office and place of
business at 225 Franklin Street, Boston, Massachusetts 02110 (the "Bank").
WHEREAS, the Fund is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund intends to initially offer shares in one series,
Neuberger & Berman Socially Responsive Trust (such series, together with
all other series subsequently established by the Fund and made subject to
this Agreement in accordance with Article 9, being herein referred to as a
"Portfolio", and collectively as the "Portfolios");
WHEREAS, the Fund on behalf of the Portfolios desires to appoint the Bank
as its transfer agent, dividend disbursing agent, custodian of certain
retirement plans and agent in connection with certain other activities,
and the Bank desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. Terms of Appointment; Duties of the Bank
1.1 Subject to the terms and conditions set forth in this Agreement,
the Fund, on behalf of the Portfolios, hereby employs and
appoints the Bank to act as, and the Bank agrees to act as its
transfer agent for the Fund's authorized and issued shares of
beneficial interest of the Fund representing interests in each of
the respective Portfolios ("Shares"), dividend disbursing agent,
custodian of certain retirement plans and agent in connection
with any accumulation, open-account or similar plans provided to
the shareholders of each of the respective Portfolios of the Fund
("Shareholders") and set out in the currently effective
prospectus and statement of additional information ("prospectus")
of the Fund on behalf of the applicable Portfolio, including
without limitation any periodic investment plan or periodic
withdrawal program.
1.2 The Bank agrees that it will perform the following services:
(a) In accordance with procedures established from time to
time by agreement between the Fund on behalf of each of
<PAGE>
the Portfolios, as applicable and the Bank, the Bank
shall:
(i) Receive for acceptance, orders for the
purchase of Shares, and promptly deliver
payment and appropriate documentation
thereof to the Custodian of the Fund
authorized pursuant to the Trust
Instrument of the Fund (the
"Custodian");
(ii) Pursuant to purchase orders, issue the
appropriate number of Shares and hold
such Shares in the appropriate
Shareholder account;
(iii) Receive for acceptance redemption
requests and redemption directions and
deliver the appropriate documentation
thereof to the Custodian;
(iv) At the appropriate time as and when it
receives monies paid to it by the
Custodian with respect to any
redemption, pay over or cause to be paid
over in the appropriate manner such
monies as instructed by the redeeming
Shareholders;
(v) Effect transfers of Shares by the
registered owners thereof upon receipt
of appropriate instructions;
(vi) Prepare and transmit (or credit the
appropriate shareholder account)
payments for dividends and distributions
declared by the Fund on behalf of the
applicable Portfolio;
(vii) Issue replacement certificates for
those certificates alleged to have been
lost, stolen or destroyed upon receipt
by the Bank of indemnification
satisfactory to the Bank and protecting
the Bank and the Fund, and the Bank at
its option, may issue replacement
certificates in place of mutilated
stock certificates upon presentation
thereof and without such indemnity;
2
<PAGE>
(viii) Maintain records of account for and
advise the Fund and its Shareholders as
to the foregoing; and
(ix) Record the issuance of shares of the
Fund and maintain pursuant to SEC Rule
17Ad-10(e) a record of the total number
of shares of the Fund which are
authorized, based upon data provided to
it by the Fund, and issued and
outstanding. The Bank shall also
provide the Fund on a regular basis with
the total number of shares which are
authorized and issued and outstanding
and shall have no obligation, when
recording the issuance of shares, to
monitor the issuance of such Shares or
to take cognizance of any laws relating
to the issue or sale of such Shares,
which functions shall be the sole
responsibility of the Fund.
(b) In addition to and neither in lieu nor in contravention
of the services set forth in the above paragraph (a), the
Bank shall: (i) perform the customary services of a
transfer agent, dividend disbursing agent, custodian of
certain retirement plans and, as relevant, agent in
connection with accumulation, open-account or similar
plans (including without limitation any periodic
investment plan or periodic withdrawal program),
including but not limited to: maintaining all Shareholder
accounts, preparing Shareholder meeting lists, mailing
proxies, receiving and tabulating proxies, mailing
Shareholder reports and prospectuses to current
Shareholders, withholding taxes on U.S. resident and
non-resident alien accounts, preparing and filing U.S.
Treasury Department Forms 1099 and other appropriate
forms required with respect to dividends and
distributions by federal authorities for all
Shareholders, preparing and mailing confirmation forms
and statements of account to Shareholders for all
purchases and redemptions of Shares and other confirmable
transactions in Shareholder accounts, preparing and
mailing activity statements for Shareholders, and
providing Shareholder account information and (ii)
provide a system which will enable the Fund to monitor
the total number of Shares sold in each State.
(c) In addition, the Fund shall (i) identify to the Bank in
writing those transactions and assets to be treated as
exempt from blue sky reporting for each State and (ii)
verify the establishment of transactions for each State
3
<PAGE>
on the system prior to activation and thereafter monitor
the daily activity for each State. The responsibility of
the Bank for the Fund's blue sky State registration
status is solely limited to the initial establishment
of transactions subject to blue sky compliance by the
Fund and the reporting of such transactions to the Fund
as provided above.
(d) Procedures as to who shall provide certain of these
services in Section 1 may be established from time to
time by agreement between the Fund on behalf of each
Portfolio and the Bank per the attached service
responsibility schedule. The Bank may at times perform
only a portion of these services and the Fund or its
agent may perform these services on the Fund's behalf.
(e) The Bank shall provide additional services on behalf of
the Fund (i.e., escheatment services) which may be agreed
upon in writing between the Fund and the Bank.
2. Fees and Expenses
2.1 For the performance by the Bank pursuant to this Agreement, the
Fund, on behalf of each Portfolio agrees to pay the Bank an
annual maintenance fee for each Shareholder account as set out in
the initial fee schedule attached hereto. Such fees and
out-of-pocket expenses and advances identified under Section 2.2
below may be changed from time to time subject to mutual written
agreement between the Fund and the Bank.
2.2 In addition to the fee paid under Section 2.1 above, the Fund, on
behalf of the applicable Portfolio, agrees to reimburse the Bank
for out-of-pocket expenses, including but not limited to
confirmation production, postage, forms, telephone, microfilm,
microfiche, tabulating proxies, records storage, or advances
incurred by the Bank for the items set out in the fee schedule
attached hereto. In addition, any other expenses incurred by the
Bank at the request or with the consent of the Fund, will be
reimbursed by the Fund on behalf of the applicable Portfolio.
2.3 The Fund, on behalf of the applicable Portfolio, agrees to pay
all fees and reimbursable expenses within five days following the
mailing of the respective billing notice. Postage for mailing of
dividends, proxies, Fund reports and other mailings to all
Shareholder accounts shall be advanced to the Bank by the Fund at
least seven (7) days prior to the mailing date of such materials.
3. Representations and Warranties of the Bank
The Bank represents and warrants to the Fund that:
4
<PAGE>
3.1 It is a trust company duly organized and existing and in good
standing under the laws of the Commonwealth of Massachusetts.
3.2 It is duly qualified to carry on its business in the Commonwealth
of Massachusetts.
3.3 It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform this Agreement.
3.4 All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement.
3.5 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
4. Representations and Warranties of the Fund
The Fund represents and warrants to the Bank that:
4.1 It is a business trust duly organized and existing and in good
standing under the laws of Delaware.
4.2 It is empowered under applicable laws and by its Trust Instrument
and By-Laws to enter into and perform this Agreement.
4.3 All corporate proceedings required by said Trust Instrument and
By-Laws have been taken to authorize it to enter into and perform
this Agreement.
4.4 It is an open-end management investment company registered under
the Investment Company Act of 1940, as amended.
4.5 A registration statement under the Securities Act of 1933, as
amended on behalf of each of the Portfolios is currently
effective and will remain effective, and appropriate state
securities law filings have been made and will continue to be
made, with respect to all Shares of the Fund being offered for
sale.
5. Data Access and Proprietary Information
5.1 The Fund acknowledges that the computer programs, screen formats,
report formats (except such screen formats and report formats as
may be necessary to respond to shareholder problems or
inquiries), interactive design techniques, and documentation
manuals furnished to the Fund by the Bank as part of the Fund's
ability to access certain Fund-related data ("Customer Data")
maintained by the Bank on data bases under the control and
ownership of the Bank or other third party ("Data Access
Services") constitute copyrighted, trade secret, or other
proprietary information (collectively, "Proprietary
5
<PAGE>
Information") of substantial value to the Bank or other third
party. In no event shall Proprietary Information be deemed
Customer Data. The Fund agrees to treat all Proprietary
Information as proprietary to the Bank and further agrees that it
shall not divulge any Proprietary Information to any person or
organization except as may be provided hereunder. Without
limiting the foregoing, the Fund agrees for itself and its
employees and agents:
(a) to access Customer Data solely from locations as may be
designated in writing by the Bank and solely in
accordance with the Bank's applicable user documentation;
(b) to refrain from copying or duplicating in any way the
Proprietary Information;
(c) to refrain from obtaining unauthorized access to any
portion of the Proprietary Information, and if such
access is inadvertently obtained, to inform in a timely
manner of such fact and dispose of such information in
accordance with the Bank's instructions;
(d) to honor all reasonable written requests made by the Bank
to protect at the Bank's expense the rights of the Bank
in Proprietary Information at common law, under federal
copyright law and under other federal or state law.
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Section 5. The obligations of this Section
shall survive any earlier termination of this Agreement.
5.2 If the Fund notifies the Bank that any of the Data Access
Services do not operate in material compliance with the most
recently issued user documentation for such services, the Bank
shall endeavor in a timely manner to correct such failure.
Organizations from which the Bank may obtain certain data
included in the Data Access Services are solely responsible for
the contents of such data and the Fund agrees to make no claim
against the Bank arising out of the contents of such third-party
data, including, but not limited to, the accuracy thereof. DATA
ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE
SPECIFICATIONS USED IN CONNECTION THEREWITH ARE PROVIDED ON AN AS
IS, AS AVAILABLE BASIS. THE BANK EXPRESSLY DISCLAIMS ALL
WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT
NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
5.3 If the transactions available to the Fund include the ability to
originate electronic instructions to the Bank in order to (i)
effect the transfer or movement of cash or Shares or (ii)
transmit Shareholder information or other information (such
transactions constituting a "COEFI"), then in such event the Bank
6
<PAGE>
shall be entitled to rely on the validity and authenticity of
such instruction without undertaking any further inquiry as long
as such instruction is undertaken in conformity with security
procedures established by the Bank from time to time.
6. Indemnification
6.1 The Bank shall not be responsible for, and the Fund shall on
behalf of the applicable Portfolio indemnify and hold the Bank
harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising
out of or attributable to:
(a) All actions of the Bank or its agents or subcontractors
required to be taken pursuant to this Agreement, provided
that such actions are taken in good faith and without
negligence or willful misconduct.
(b) The Fund's lack of good faith, negligence or willful
misconduct which arise out of the breach of any
representation or warranty of the Fund hereunder.
(c) The reliance on or use by the Bank or its agents or
subcontractors of information, records, documents or
services which (i) are received by the Bank or its agents
or subcontractors, and (ii) have been prepared,
maintained or performed by the Fund or any other person
or firm on behalf of the Fund including but not limited
to any previous transfer agent or registrar.
(d) The reasonable reliance on, or the carrying out by the
Bank or its agents or subcontractors of any instructions
or requests of the Fund on behalf of the applicable
Portfolio.
(e) The offer or sale of Shares in violation of any
requirement under the federal securities laws or
regulations or the securities laws or regulations of any
state that such Shares be registered in such state or in
violation of any stop order or other determination or
ruling by any federal agency or any state with respect to
the offer or sale of such Shares in such state.
6.2 The Bank shall indemnify and hold the Fund and each Portfolio
thereof harmless from and against any and all losses, damages,
costs, charges, counsel fees, payments, expenses and liability
arising out of or attributed to any action or failure or omission
to act by the Bank as a result of the Bank's lack of good faith,
negligence or willful misconduct.
6.3 At any time the Bank may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to
7
<PAGE>
any matter arising in connection with the services to be
performed by the Bank under this Agreement, and the Bank and its
agents or subcontractors shall not be liable and shall be
indemnified by the Fund on behalf of the applicable Portfolio for
any action taken or omitted by it in reasonable reliance upon
such instructions or upon the opinion of such counsel. The Bank,
its agents and subcontractors shall be protected and indemnified
in acting upon any paper or document furnished by or on behalf of
the Fund, reasonably believed to be genuine and to have been
signed by the proper person or persons, or upon any instruction,
information, data, records or documents provided the Bank or its
agents or subcontractors by machine readable input, telex, CRT
data entry or other similar means authorized by the Fund, and
shall not be held to have notice of any change of authority of
any person, until receipt of written notice thereof from the
Fund. The Bank, its agents and subcontractors shall also be
protected and indemnified in recognizing stock certificates which
are reasonably believed to bear the proper manual or facsimile
signatures of the officers of the Fund, and the proper
countersignature of any former transfer agent or former
registrar, or of a co-transfer agent or co-registrar.
6.4 In order that the indemnification provisions contained in this
Section 6 shall apply, upon the assertion of a claim for which
either party may be required to indemnify the other, the party
seeking indemnification shall promptly notify the Fund of such
assertion, and shall keep the other party advised with respect to
all developments concerning such claim. The party who may be
required to indemnify shall have the option to participate with
the party seeking indemnification in the defense of such claim or
to defend against said claim in its own name or in the name of
the other party. The party seeking indemnification shall in no
case confess any claim or make any compromise in any case in
which the other party may be required to indemnify it except with
the other party's prior written consent.
7. Covenants of the Fund and the Bank
7.1 The Fund shall on behalf of each Portfolio promptly furnish to
the Bank the following:
(a) A certified copy of the resolution of the Trustees of the
Fund authorizing the appointment of the Bank and the
execution and delivery of this Agreement.
(b) A copy of the Trust Instrument and By-Laws of the Fund
and all amendments thereto.
7.2 The Bank hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of
stock certificates, check forms and facsimile signature
8
<PAGE>
imprinting devices, if any; and for the preparation or use, and
for keeping account of, such certificates, forms and devices.
7.3 The Bank shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem
advisable. To the extent required by Section 31 of the
Investment Company Act of 1940, as amended, and the Rules
thereunder, the Bank agrees that all such records prepared or
maintained by the Bank relating to the services to be performed
by the Bank hereunder are the property of the Fund and will be
preserved, maintained and made available in accordance with such
Section and Rules, and will be surrendered promptly to the Fund
on and in accordance with its request.
7.4 The Bank and the Fund agree that all books, records, information
and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying
out of this Agreement shall remain confidential, and shall not be
voluntarily disclosed to any other person, except as may be
required by law.
7.5 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, the Bank will endeavor to notify
the Fund and to secure instructions from an authorized officer of
the Fund as to such inspection. The Bank reserves the right,
however, to exhibit the Shareholder records to any person
whenever it is advised by its counsel that it may be held liable
for the failure to exhibit the Shareholder records to such
person.
7.6 Notwithstanding any other provision of this Agreement, the
parties agree that the assets and liabilities of each Portfolio
of the Fund are separate and distinct from the assets and
liabilities of each other Portfolio and that no Portfolio shall
be liable or shall be charged for any debt, obligation or
liability of any other Portfolio, whether arising under the
Agreement or otherwise.
8. Termination of Agreement
8.1 This Agreement may be terminated by either party upon one hundred
twenty (120) days written notice to the other.
8.2 Should the Fund exercise its right to terminate, all
out-of-pocket expenses associated with the movement of records
and material will be borne by the Fund on behalf of the
applicable Portfolio(s). Additionally, the Bank reserves the
right to charge for any other reasonable expenses associated with
such termination.
9
<PAGE>
9. Additional Funds
In the event that the Fund establishes one or more series of
Shares in addition to Neuberger & Berman Socially Responsive
Trust, with respect to which it desires to have the Bank render
services as transfer agent under the terms hereof, it shall so
notify the Bank in writing, and if the Bank agrees in writing to
provide such services, such series of Shares shall become a
Portfolio hereunder.
10. Assignment
10.1 Except as provided in Section 10.3 below, neither this Agreement
nor any rights or obligations hereunder may be assigned by either
party without the written consent of the other party.
10.2 This Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and
assigns.
10.3 The Bank may, without further consent on the part of the Fund,
subcontract for the performance hereof with (i) Boston Financial
Data Services, Inc., a Massachusetts corporation ("BFDS") which
is duly registered as a transfer agent pursuant to Section
17A(c)(l) of the Securities Exchange Act of 1934, as amended
("Section 17A(c)(1)"), (ii) a BFDS subsidiary duly registered as
a transfer agent pursuant to Section 17A(c)(l) or (iii) a BFDS
affiliate; provided, however, that the Bank shall be as fully
responsible to the Fund for the acts and omissions of any
subcontractor as it is for its own acts and omissions.
11. Amendment
This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a
resolution of the Trustees of the Fund.
12. Massachusetts Law to Apply
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the
Commonwealth of Massachusetts.
13. Force Majeure
In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God,
strikes, equipment or transmission failure or damage reasonably
beyond its control, or other causes reasonably beyond its
control, such party shall not be liable for damages to the other
for any damages resulting from such failure to perform or
otherwise from such causes.
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<PAGE>
14. Consequential Damages
Neither party to this Agreement shall be liable to the other
party for consequential damages under any provision of this
Agreement.
15. Merger of Agreement
This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to
the subject matter hereof whether oral or written.
16. Limitations of Liability of the Trustees and Shareholders,
Officers, Employees and Agent
A copy of the Trust Instrument of the Fund is on file with the
Secretary of the State Of Delaware. The parties agree that
neither the Shareholders, Trustees, officers, employees nor any
agent of the Fund shall be liable hereunder and that the parties
to this Agreement other than the Fund shall look solely to the
Fund property for the performance of this Agreement or payment of
any claim under this Agreement.
17. Counterparts
This Agreement may be executed by the parties hereto on any
number of counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same
instrument.
18. Notices
All notices, requests, consents and other communications
hereunder (collectively "communications") shall be in writing and
shall be personally delivered or mailed, first class postage
prepaid,
(a) if to the Fund, to
Neuberger & Berman Equity Assets
605 Third Avenue
New York, N.Y. 10158
Attention: Michael J. Weiner
Vice President
(b) if to the Bank, to
Boston Financial Data Services, Inc.
Two Heritage Drive
North Quincy, MA 02171
Attn: Paul Alsama
11
<PAGE>
or such other address as either party shall have furnished to the
other in writing; provided that any communication may be sent by
"tested" telex or any other form of electronic transmission
capable of producing a permanent record and agreed upon by the
parties in writing.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly
authorized officers, as of the day and year first above written.
NEUBERGER & BERMAN EQUITY ASSETS
BY: /s/ Michael Weiner
------------------------------
Michael Weiner
ATTEST:
/s/ Claudia A. Brandon
-----------------------
STATE STREET BANK AND TRUST COMPANY
BY: /s/ Ronald E. Logue
------------------------------
Ronald E. Logue
Executive Vice President
ATTEST:
/s/ E. Solomon
----------------------
12
<PAGE>
STATE STREET BANK & TRUST COMPANY
FUND SERVICE RESPONSIBILITIES*
Service Performed Responsibility
Bank Fund
1. Receives orders for X X
the purchase of (if in (if by
Shares. writing) phone)
2. Issue Shares and hold X
Shares in
Shareholders
accounts.
3. Receive redemption X X
requests. (if in (if by
writing) phone)
4. Effect transactions X
1-3 above directly (2 is always
with broker-dealers. BFDS)
5. Pay over monies to X
redeeming
Shareholders.
6. Effect transfers of X
Shares.
7. Prepare and transmit X
dividends and
distributions.
8. Issue Replacement X
Certificates.
9. Reporting of X
abandoned property.
10. Maintain records of X
account.
11. Maintain and keep a X
current and accurate
control book for each
issue of securities.
12. Mail proxies. X
13. Mail Shareholder X
reports.
13
<PAGE>
Service Performed Responsibility
Bank Fund
14. Mail prospectuses to X
current Shareholders.
15. Withhold taxes on X
U.S. resident and
non-resident alien
accounts.
16. Prepare and file U.S. X
Treasury Department
forms.
17. Prepare and mail X
account and
confirmation
statements for
Shareholders.
18. Provide Shareholder X
account information.
19. Blue Sky reporting. X
* Such services are more fully described in Section 1.2 (a), (b) and
(c) of the Agreement.
NEUBERGER & BERMAN EQUITY ASSETS
BY: /s/ Michael Weiner
---------------------------------
Michael Weiner
ATTEST:
/s/ Claudia A. Brandon
---------------------------
STATE STREET BANK AND TRUST COMPANY
BY: /s/ Ronald E. Logue
---------------------------------
Executive Vice President
ATTEST:
/s/ E. Solomon
------------------------
14
<PAGE>
<PAGE>
ADMINISTRATION AGREEMENT
This Agreement is made as of November 1, 1994, between
Neuberger & Berman Equity Assets, a Delaware business trust ("Trust"), and
Neuberger & Berman Management Incorporated, a New York corporation
("Administrator").
WHEREAS, the Trust is registered under the Investment Company Act
of 1940, as amended ("1940 Act"), as an open-end, diversified management
investment company and has the power to establish several separate series
of shares ("Series"), with each Series having its own assets and
investment policies; and
WHEREAS, the Trust desires to retain the Administrator to furnish
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 Administrator is willing to furnish such
services,
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties agree as follows:
1. Services of the Administrator.
1.1 Administrative Services. The Administrator shall
supervise each Series's business and affairs and shall provide such
services required for effective administration of such Series as are not
provided by employees or other agents engaged by such Series; provided,
that the Administrator shall not have any obligation to provide under this
Agreement any direct or indirect services to a Series's shareholders, any
services related to the distribution of a Series's shares, or any other
services that are the subject of a separate agreement or arrangement
between a Series and the Administrator. Subject to the foregoing, in
providing administrative services hereunder, the Administrator shall:
1.1.1 Office Space, Equipment and Facilities.
Furnish without cost to each Series, or pay the cost of, such office
space, office equipment and office facilities as are adequate for the
Series's needs.
1.1.2 Personnel. Provide, without remuneration
from or other cost to each Series, the services of individuals competent
to perform all of the Series's executive, administrative and clerical
functions that are not performed by employees or other agents engaged by
the Series or by the Administrator acting in some other capacity pursuant
to a separate agreement or arrangement with the Series.
<PAGE>
1.1.3 Agents. Assist each Series in selecting
and coordinating the activities of the other agents engaged by the Series,
including the Series's shareholder servicing agent, custodian, independent
auditors and legal counsel.
1.1.4 Trustees and Officers. Authorize and
permit the Administrator's directors, officers or employees who may be
elected or appointed as trustees or officers of the Trust to serve in such
capacities, without remuneration from or other cost to the Trust or any
Series.
1.1.5 Books and Records. Assure that all
financial, accounting and other records required to be maintained and
preserved by each Series are maintained and preserved by it or on its
behalf in accordance with applicable laws and regulations.
1.1.6 Reports and Filings. Assist in (but not
pay for) the preparation and filing of all periodic reports by each Series
to shareholders of such Series and all reports and filings required to
maintain the registration and qualification of the Series and the Series's
shares, or to meet other regulatory or tax requirements applicable to the
Series, under federal and state securities and tax laws.
2. Expenses of each Series.
2.1 Expenses to be Paid by the Administrator. The
Administrator shall pay all salaries, expenses and fees of the officers,
trustees, or employees of the Trust who are officers, directors or
employees of the Administrator.
In the event that the Administrator pays or assumes any
expenses of the Trust or a Series not required to be paid or assumed by
the Administrator under this Agreement, the Administrator shall not be
obligated hereby to pay or assume the same or any similar expense in the
future; provided, that nothing herein contained shall be deemed to relieve
the Administrator of any obligation to the Trust or to a Series under any
separate agreement or arrangement between the parties.
2.2 Expenses to be Paid by the Series. Each Series
shall bear all expenses of its operation, except those specifically
allocated to the Administrator under this Agreement or under any separate
agreement between such Series and the Administrator. Expenses to be borne
by such Series shall include both expenses directly attributable to the
operation of that Series and the offering of its shares, as well as the
portion of any expenses of the Trust that is properly allocable to such
Series in a manner approved by the trustees of the Trust ("Trustees").
Subject to any separate agreement or arrangement between the Trust or a
Series and the Administrator, the expenses hereby allocated to each
Series, and not to the Administrator, include, but are not limited to:
2.2.1 Custody. All charges of depositories,
custodians, and other agents for the transfer, receipt, safekeeping, and
servicing of its cash, securities, and other property.
<PAGE>
2.2.2 Shareholder Servicing. All expenses of
maintaining and servicing shareholder accounts, including but not limited
to the charges of any shareholder servicing agent, dividend disbursing
agent or other agent engaged by a Series to service shareholder accounts.
2.2.3 Shareholder Reports. All expenses of
preparing, setting in type, printing and distributing reports and other
communications to shareholders of a Series.
2.2.4 Prospectuses. All expenses of preparing,
setting in type, printing and mailing annual or more frequent revisions of
a Series's Prospectus and Statement of Additional Information ("SAI") and
any supplements thereto and of supplying them to shareholders of the
Series.
2.2.5 Pricing and Portfolio Valuation. All
expenses of computing a Series's net asset value ("NAV") per share,
including any equipment or services obtained for the purpose of pricing
shares or valuing the Series's investment portfolio.
2.2.6 Communications. All charges for equipment
or services used for communications between the Administrator or the
Series and any custodian, shareholder servicing agent, portfolio
accounting services agent, or other agent engaged by a Series.
2.2.7 Legal and Accounting Fees. All charges
for services and expenses of a Series's legal counsel and independent
auditors.
2.2.8 Trustees' Fees and Expenses. All
compensation of Trustees other than those affiliated with the
Administrator, all expenses incurred in connection with such unaffiliated
Trustees' services as Trustees, and all other expenses of meetings of the
Trustees or committees thereof.
2.2.9 Shareholder Meetings. All expenses
incidental to holding meetings of shareholders, including the printing of
notices and proxy materials, and proxy solicitation therefor.
2.2.10 Federal Registration Fees. All fees and
expenses of registering and maintaining the registration of the Trust and
each Series under the 1940 Act and the registration of each Series's
shares under the Securities Act of 1933 (the "1933 Act"), including all
fees and expenses incurred in connection with the preparation, setting in
type, printing, and filing of any Registration Statement, Prospectus and
SAI under the 1933 Act or the 1940 Act, and any amendments or supplements
that may be made from time to time.
2.2.11 State Registration Fees. All fees and
expenses of qualifying and maintaining the qualification of the Trust and
each Series and of each Series's shares for sale under securities laws of
various states or jurisdictions, and of registration and qualification of
each Series under all other laws applicable to a Series or its business
activities (including registering the Series as a broker-dealer, or any
<PAGE>
officer of the Series or any person as agent or salesman of the Series in
any state).
2.2.12 Share Certificates. All expenses of
preparing and transmitting a Series's share certificates, if any.
2.2.13 Confirmations. All expenses incurred in
connection with the issue and transfer of a Series's shares, including the
expenses of confirming all share transactions.
2.2.14 Bonding and Insurance. All expenses of
bond, liability, and other insurance coverage required by law or
regulation or deemed advisable by the Trustees, including, without
limitation, such bond, liability and other insurance expense that may from
time to time be allocated to the Series in a manner approved by the
Trustees.
2.2.15 Brokerage Commissions. All brokers'
commissions and other charges incident to the purchase, sale or lending of
a Series's portfolio securities.
2.2.16 Taxes. All taxes or governmental fees
payable by or with respect to a Series to federal, state or other
governmental agencies, domestic or foreign, including stamp or other
transfer taxes.
2.2.17 Trade Association Fees. All fees, dues
and other expenses incurred in connection with a Series's membership in
any trade association or other investment organization.
2.2.18 Nonrecurring and Extraordinary Expenses.
Such nonrecurring and extraordinary expenses as may arise, including the
costs of actions, suits, or proceedings to which the Series is a party and
the expenses a Series may incur as a result of its legal obligation to
provide indemnification to the Trust's officers, Trustees and agents.
2.2.19 Organizational Expenses. All
organizational expenses of each Series paid or assessed by the
Administrator, which such Series shall reimburse to the Administrator at
such time or times and subject to such condition or conditions as shall be
specified in the Prospectus and SAI pursuant to which such Series makes
the initial public offering of its shares.
2.2.20 Investment Advisory Services. Any fees
and expenses for investment advisory services that may be incurred or
contracted for by a Series.
3. Administration Fee.
3.1 Fee. As compensation for all services rendered,
facilities provided and expenses paid or assumed by the Administrator to
or for each Series under this Agreement, such Series shall pay the
Administrator an annual fee as set out in Schedule B to this Agreement.
<PAGE>
3.2 Computation and Payment of Fee. The administration
fee shall accrue on each calendar day, and shall be payable monthly on the
first business day of the next succeeding calendar month. The daily fee
accruals for each Series shall be computed by multiplying the fraction of
one divided by the number of days in the calendar year by the applicable
annual administration fee rate (as set forth in Schedule B hereto), and
multiplying this product by the NAV of such Series, determined in the
manner set forth in such Series's then-current Prospectus, as of the close
of business on the last preceding business day on which such Series's NAV
was determined.
3.3 State Expense Limitation. If in any fiscal year a
Series's operating expenses plus such Series's pro rata portion of the
operating expenses of any portfolio of Equity Managers Trust in which such
Series invests all or substantially all of its assets ("Aggregate
Operating Expenses"), which includes any fees or expense reimbursements
payable to the Administrator pursuant to this Agreement and any
compensation payable to the Administrator pursuant to (i) the Management
Agreement between such portfolio and the Administrator, or (ii) any other
agreement or arrangement with respect to such Series, but excluding
interest, taxes, brokerage commissions, litigation and indemnification
expenses, and other extraordinary expenses not incurred in the ordinary
course of such Series's business) exceed the lowest applicable percentage
expense limitation imposed under the securities law and regulations of any
state in which such Series's shares are qualified for sale (the "State
Expense Limitation"), then the administration fee payable to the
Administrator under this Agreement by such Series shall be reduced by the
amount of such excess; provided, that the Administrator shall have no
obligation hereunder to reimburse the Series for any such expenses which
exceed such administration fee.
Any reduction in the administration fee shall be made
monthly, by annualizing the Aggregate Operating Expenses of such Series
for each month as of the last day of such month. An adjustment shall be
made on or before the last day of the first month of the next succeeding
fiscal year if Aggregate Operating Expenses for such Series's fiscal year
do not exceed the State Expense Limitation or if for such fiscal year
there is no applicable State Expense Limitation.
4. Ownership of Records. All records required to be maintained
and preserved by each Series pursuant to the provisions or rules or
regulations of the Securities and Exchange Commission ("SEC") under
Section 31(a) of the 1940 Act and maintained and preserved by the
Administrator on behalf of such Series are the property of such Series and
shall be surrendered by the Administrator promptly on request by the
Series; provided, that the Administrator may at its own expense make and
retain copies of any such records.
<PAGE>
5. Reports to Administrator. Each Series shall furnish or
otherwise make available to the Administrator such copies of that Series's
Prospectus, SAI, financial statements, proxy statements, reports, and
other information relating to its business and affairs as the
Administrator may, at any time or from time to time, reasonably require in
order to discharge its obligations under this Agreement.
6. Reports to each Series. The Administrator shall prepare and
furnish to each Series such reports, statistical data and other
information in such form and at such intervals as such Series may
reasonably request.
7. Services to Other Clients. Nothing herein contained shall
limit the freedom of the Administrator or any affiliated person of the
Administrator to render administrative services to other investment
companies, to act as administrator to other persons, firms, or
corporations, or to engage in other business activities.
8. Limitation of Liability. The Administrator shall look only
to the assets of each Series for performance of this Agreement by the
Trust on behalf of such Series, and neither the Shareholders of the Trust,
its Trustees ("Trustees") nor any of the Trust's officers, employees or
agents, whether past, present or future shall be personally liable
therefor.
9. Indemnification by Series. Each Series shall indemnify the
Administrator and hold it harmless from and against any and all losses,
damages and expenses, including reasonable attorneys' fees and expenses,
incurred by the Administrator that result from: (i) any claim, action,
suit or proceeding in connection with the Administrator's entry into or
performance of this Agreement with respect to such Series; or (ii) any
action taken or omission to act committed by the Administrator in the
performance of its obligations hereunder with respect to such Series; or
(iii) any action of the Administrator upon instructions believed in good
faith by it to have been executed by a duly authorized officer or
representative of the Trust with respect to such Series; provided, that
the Administrator shall not be entitled to such indemnification in respect
of actions or omissions constituting negligence or misconduct on the part
of the Administrator or its employees, agents or contractors. Before
confessing any claim against it which may be subject to indemnification by
a Series hereunder, the Administrator shall give such Series reasonable
opportunity to defend against such claim in its own name or in the name of
the Administrator.
10. Indemnification by the Administrator. The Administrator
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) the
Administrator's failure to comply with the terms of this Agreement with
respect to such Series; or (ii) the Administrator's lack of good faith in
performing its obligations hereunder with respect to such Series; or (iii)
the negligence or misconduct of the Administrator or its employees, agents
or contractors in connection herewith with respect to such Series. A
Series shall not be entitled to such indemnification in respect of actions
<PAGE>
or omissions constituting negligence or misconduct on the part of that
Series or its employees, agents or contractors other than the
Administrator unless such negligence or misconduct results from or is
accompanied by negligence or misconduct on the part of the Administrator,
any affiliated person of the Administrator, or any affiliated person of an
affiliated person of the Administrator. Before confessing any claim
against it which may be subject to indemnification hereunder, a Series
shall give the Administrator reasonable opportunity to defend against such
claim in its own name or in the name of the Trust on behalf of such
Series.
11. Effect of Agreement. Nothing herein contained shall be
deemed to require the Trust or any Series to take any action contrary to
the Trust Instrument or Bylaws of the Trust or any applicable law,
regulation or order to which it is subject or by which it is bound, or to
relieve or deprive the Trustees of their responsibility for and control of
the conduct of the business and affairs of the Series or Trust.
12. Term of Agreement. The term of this Agreement shall begin
on the date first above written with respect to each Series listed in
Schedule A on the date hereof and, unless sooner terminated as hereinafter
provided, this Agreement shall remain in effect through November 1, 1996.
With respect to each Series added by execution of an Addendum to Schedule
A, the term of this Agreement shall begin on the date of such execution
and, unless sooner terminated as hereinafter provided, this Agreement
shall remain in effect to the date two years after such execution.
Thereafter, in each case this Agreement shall continue in effect with
respect to each Series from year to year, subject to the termination
provisions and all other terms and conditions hereof; provided, such
continuance with respect to a Series is approved at least annually by vote
or written consent of the Trustees, including a majority of the Trustees
who are not interested persons of either party hereto ("Disinterested
Trustees"); and provided further, that the Administrator shall not have
notified a Series in writing at least sixty days prior to the first
expiration date hereof or at least sixty days prior to any expiration date
in any year thereafter that it does not desire such continuation. The
Administrator shall furnish any Series, promptly upon its request, such
information as may reasonably be necessary to evaluate the terms of this
Agreement or any extension, renewal or amendment thereof.
13. Amendment or Assignment of Agreement. Any amendment to this
Agreement shall be in writing signed by the parties hereto; provided, that
no such amendment shall be effective unless authorized on behalf of any
Series (i) by resolution of the Trustees, including the vote or written
consent of a majority of the Disinterested Trustees, or (ii) by vote of a
majority of the outstanding voting securities of such Series. This
Agreement shall terminate automatically and immediately in the event of
its assignment; provided, that with the consent of a Series, the
Administrator may subcontract to another person any of its
responsibilities with respect to such Series.
14. Termination of Agreement. This Agreement may be terminated
at any time by either party hereto, without the payment of any penalty,
upon sixty days' prior written notice to the other party; provided, that
<PAGE>
in the case of termination by any Series, such action shall have been
authorized (i) by resolution of the Trustees, including the vote or
written consent of the Disinterested Trustees, or (ii) by vote of a
majority of the outstanding voting securities of such Series.
15. Name of a Series. Each Series hereby agrees that if the
Administrator shall at any time for any reason cease to serve as
administrator to a Series, such Series shall, if and when requested by the
Administrator, eliminate from such Series's name the name "Neuberger &
Berman" and thereafter refrain from using the name "Neuberger & Berman" or
the initials "N&B" in connection with its business or activities, and the
foregoing agreement of each Series shall survive any termination of this
Agreement and any extension or renewal thereof.
16. Interpretation and Definition of Terms. 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 "vote of a majority of the outstanding voting
securities," "interested persons," "assignment" and "affiliated person,"
as used in this Agreement shall have the meanings assigned to them by
Section 2(a) of the 1940 Act. In addition, when the effect of a
requirement of the 1940 Act reflected in any provision of this Agreement
is modified, interpreted or relaxed by a rule, regulation or order of the
SEC, whether of special or of general application, such provision shall be
deemed to incorporate the effect of such rule, regulation or order.
17. Choice of Law. 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.
18. Captions. The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
19. Execution in Counterparts. This Agreement may be executed
simultaneously in counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officers thereunto duly
authorized and their respective seals to be hereunto affixed, as of the
day and year first above written.
<PAGE>
NEUBERGER & BERMAN EQUITY ASSETS
By /s/ Michael J. Weiner
-------------------------
Michael J. Weiner
Vice President
Attest:
/s/ Claudia A. Brandon
-------------------------
NEUBERGER & BERMAN MANAGEMENT
INCORPORATED
By /s/ Stanley Egener
-------------------------
Stanley Egener
President
Attest:
/s/ Ellen Metzger
-----------------------
<PAGE>
<PAGE>
NEUBERGER & BERMAN EQUITY ASSETS
ADMINISTRATION AGREEMENT
SCHEDULE A
The Series of Neuberger & Berman Equity Assets currently subject
to this Agreement are as follows:
INITIAL SERIES
Neuberger & Berman Socially
Responsive Trust
ADDITIONAL SERIES
Neuberger & Berman Focus Assets
Neuberger & Berman Guardian Assets
Neuberger & Berman Manhattan Assets
Neuberger & Berman Partners Assets
Dated: February 12, 1996
<PAGE>
<PAGE>
NEUBERGER & BERMAN EQUITY ASSETS
ADMINISTRATION AGREEMENT
SCHEDULE B
Compensation pursuant to Paragraph 3 of the Neuberger & Berman
Equity Assets Administration Agreement shall be 0.40% per annum of average
daily net assets of each Series.
<PAGE>
<PAGE>
KIRKPATRICK & LOCKHART LLP
1800 Massachusetts Avenue, N.W. 2nd Floor
Washington, D.C. 20036
(202) 778-9000
January 24, 1996
Neuberger & Berman Equity Assets
605 Third Avenue, Second Floor
New York, New York 10158-0180
Ladies and Gentlemen:
Neuberger & Berman Equity Assets ("Trust") is a business trust
organized under the laws of the State of Delaware and governed by a Trust
Instrument dated October 18, 1993. You have requested our opinion
regarding certain matters in connection with the Trust's issuance of
shares of beneficial interest, par value $0.001 per share ("Shares"), in
four new series: Neuberger & Berman Focus Assets, Neuberger & Berman
Guardian Assets, Neuberger & Berman Manhattan Assets, and Neuberger &
Berman Partners Assets (each a "Series").
As counsel to the Trust, we have participated in various matters
of Trust operations and other matters relating to the Trust. We have
examined copies of the Trust Instrument and the Trust's By-Laws, as now in
effect, and the minutes of meetings of the trustees of the Trust, and we
are generally familiar with its affairs. For certain matters of fact, we
have relied upon representations of officers of the Trust. Based upon the
foregoing, it is our opinion that the unissued Shares of each Series,
which are currently being registered, may be legally and validly issued
from time to time in accordance with the Trust's Trust Instrument and By-
Laws; and, when so issued, will be legally issued, fully paid and non-
assessable by the Trust.
The Trust is a business trust established pursuant to the
Delaware Business Trust Act ("Delaware Act"). The Delaware Act provides
that a shareholder of the Trust is entitled to the same limitation of
personal liability extended to shareholders of for-profit corporations.
To the extent that the Trust or any of its shareholders becomes subject to
the jurisdiction of courts in states which do not have statutory or other
authority limiting the liability of business trust shareholders, such
courts might not apply the Delaware Act and could subject Trust
shareholders to liability.
To guard against this risk, the Trust Instrument: (i) requires
that every written obligation of the Trust contain a statement that such
obligation may be enforced only against the assets of the Trust; however,
the omission of such a disclaimer will not operate to create personal
liability for any shareholder; and (ii) provides for indemnification out
of Trust property of any shareholder held personally liable, solely by
<PAGE>
Neuberger & Berman Equity Assets
January 24, 1996
Page 2
reason of being a shareholder, for the obligations of the Trust. Thus,
the risk of a Trust shareholder incurring financial loss beyond his or her
investment because of shareholder liability is limited to circumstances in
which: (i) a court refuses to apply Delaware law; (ii) no contractual
limitation of liability is in effect; and (iii) the Trust itself is unable
to meet its obligations.
We express no opinion as to compliance with the Securities Act of
1933, the Investment Company Act of 1940, or applicable state securities
laws in connection with the sale of Shares.
We hereby consent to the filing of this opinion in connection
with Post-Effective Amendment No. 3 to the Trust's Registration Statement
on Form N-1A. We also consent to the reference to our firm under the
caption "Legal Counsel" in the Statement of Additional Information filed
as part of the Registration Statement.
Sincerely,
KIRKPATRICK & LOCKHART LLP
/s/ Arthur C. Delibert
By:___________________________
Arthur C. Delibert
<PAGE>
<PAGE>
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Reports to
Shareholders", "Independent Auditors/Accountants" and "Financial
Statements" in the Statement of Additional Information in Post-Effective
Amendment Number 3 to the Registration Statement (Form N-1A No. 33-82568)
of Neuberger & Berman Equity Assets, and to the incorporation by reference
to our report dated September 29, 1995 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 1995 Annual Reports to Shareholders of Neuberger & Berman
Equity Funds.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Boston, Massachusetts
February 9, 1996
<PAGE>
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANT
____________________
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. 3 to the
Registration Statement on Form N-1A of Neuberger & Berman Equity Assets
(File #33-82568) (811-8106) of our report dated October 6, 1995, 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, 1995.
We also consent to the reference to our Firm with respect to
Neuberger & Berman Manhattan Assets and Portfolio under the caption
"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
February 8, 1996
<PAGE>
<PAGE>
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, and reports for other than existing
shareholders; and the preparation and distribution of sales literature and
advertising materials.
<PAGE>
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 _________, 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.
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
- 2 -
<PAGE>
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: __________________________ NEUBERGER & BERMAN EQUITY ASSETS
Attest: By: ___________________________
By:______________________________
Agreed and assented to by
NEUBERGER & BERMAN MANAGEMENT INCORPORATED
By:______________________________
- 3 -
<PAGE>
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%
- 4 -
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<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>
<CIK> 0000910055
<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-31-1995
<PERIOD-END> AUG-31-1995
<INVESTMENTS-AT-COST> 674,159
<INVESTMENTS-AT-VALUE> 984,159
<RECEIVABLES> 6,693
<ASSETS-OTHER> 36
<OTHER-ITEMS-ASSETS> 96
<TOTAL-ASSETS> 990,984
<PAYABLE-FOR-SECURITIES> 17,447
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,364
<TOTAL-LIABILITIES> 21,811
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 557,907
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 15,139
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 88,309
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 307,818
<NET-ASSETS> 969,173
<DIVIDEND-INCOME> 10,454
<INTEREST-INCOME> 1,097
<OTHER-INCOME> 0
<EXPENSES-NET> (4,055)
<NET-INVESTMENT-INCOME> 7,496
<REALIZED-GAINS-CURRENT> 50,732
<APPREC-INCREASE-CURRENT> 139,750
<NET-CHANGE-FROM-OPS> 197,978
<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> 324,162
<ACCUMULATED-NII-PRIOR> 7,643
<ACCUMULATED-GAINS-PRIOR> 37,577
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,758
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,055
<AVERAGE-NET-ASSETS> 714,153
<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> .57
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<PAGE>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<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>
<CIK> 0000910055
<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-31-1995
<PERIOD-END> AUG-31-1995
<INVESTMENTS-AT-COST> 3,590,685
<INVESTMENTS-AT-VALUE> 4,736,345
<RECEIVABLES> 25,961
<ASSETS-OTHER> 125
<OTHER-ITEMS-ASSETS> 32
<TOTAL-ASSETS> 4,762,463
<PAYABLE-FOR-SECURITIES> 61,722
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 87,545
<TOTAL-LIABILITIES> 149,267
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,237,636
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 91,725
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 147,623
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,136,212
<NET-ASSETS> 4,613,196
<DIVIDEND-INCOME> 51,765
<INTEREST-INCOME> 17,135
<OTHER-INCOME> 0
<EXPENSES-NET> (15,110)
<NET-INVESTMENT-INCOME> 53,790
<REALIZED-GAINS-CURRENT> 124,394
<APPREC-INCREASE-CURRENT> 627,968
<NET-CHANGE-FROM-OPS> 806,152
<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> 2,132,860
<ACCUMULATED-NII-PRIOR> 37,935
<ACCUMULATED-GAINS-PRIOR> 23,229
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 14,274
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 15,110
<AVERAGE-NET-ASSETS> 3,123,421
<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> .48
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<PAGE>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<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>
<CIK> 0000910055
<NAME> NEUBERGER & BERMAN MANHATTAN PORTFOLIO
<SERIES>
<NUMBER> 02
<NAME> EQUITY MANAGERS TRUST
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-END> AUG-31-1995
<INVESTMENTS-AT-COST> 502,959
<INVESTMENTS-AT-VALUE> 659,762
<RECEIVABLES> 1,833
<ASSETS-OTHER> 37
<OTHER-ITEMS-ASSETS> 1,047
<TOTAL-ASSETS> 662,679
<PAYABLE-FOR-SECURITIES> 2,583
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 14,690
<TOTAL-LIABILITIES> 17,273
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 406,837
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 5,190
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 76,576
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 156,803
<NET-ASSETS> 645,406
<DIVIDEND-INCOME> 4,992
<INTEREST-INCOME> 344
<OTHER-INCOME> 0
<EXPENSES-NET> (3,130)
<NET-INVESTMENT-INCOME> 2,206
<REALIZED-GAINS-CURRENT> 44,742
<APPREC-INCREASE-CURRENT> 85,917
<NET-CHANGE-FROM-OPS> 132,865
<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> 123,671
<ACCUMULATED-NII-PRIOR> 2,984
<ACCUMULATED-GAINS-PRIOR> 31,834
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,832
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,130
<AVERAGE-NET-ASSETS> 528,830
<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> .59
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<PAGE>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<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>
<CIK> 0000910055
<NAME> EQUITY MANAGERS TRUST
<SERIES>
<NUMBER> 05
<NAME> NEUBERGER & BERMAN PARTNERS PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
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<PAGE>
</TABLE>
