As filed with the Securities and Exchange Commission on December 12, 1997
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. 9 [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 11 [ X ]
(Check appropriate box or boxes)
NEUBERGER & BERMAN EQUITY ASSETS
(Exact Name of the Registrant as Specified in Charter)
605 Third Avenue
New York, New York 10158-0180
(Address of Principal Executive Offices)
Registrant's Telephone Number, including area code: (212) 476-8800
Lawrence Zicklin, President
Neuberger & Berman Equity Assets
605 Third Avenue, 2nd Floor
New York, New York 10158-0180
Arthur C. Delibert, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W., 2nd Floor
Washington, D.C. 20036-1800
(Names and Addresses of agents for service)
Approximate Date of Proposed Public Offering: Continuous
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
- ------
X on December 15, 1997 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 to paragraph (a)(2)
- ------ ------------
Registrant has filed a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940 as amended, and filed the notice required by such
rule for its 1997 fiscal year on November 25, 1997.
Neuberger & Berman Equity Assets is a "master/feeder fund." This
Post-Effective Amendment No. 9 includes a signature page for the master fund,
Equity Managers Trust, and appropriate officers and trustees thereof.
<PAGE>
NEUBERGER & BERMAN EQUITY ASSETS
CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 9 ON FORM N-1A
This Post-Effective Amendment consists of the following papers and
documents:
Cover Sheet
Contents of Post-Effective Amendment No. 9 on Form N-1A
Cross Reference Sheet
Neuberger & Berman Focus Assets, Neuberger & Berman Genesis Assets, Neuberger
& Berman Guardian Assets, Neuberger & Berman Manhattan Assets, and Neuberger
& Berman Partners Assets
Part A - Prospectus
Part B - Statement of Additional Information
Neuberger & Berman Socially Responsive Trust
Part A - Prospectus
Part B - Statement of Additional Information
Part C - Other Information
Signature Pages
Exhibits
<PAGE>
NEUBERGER & BERMAN EQUITY ASSETS
POST-EFFECTIVE AMENDMENT NO. 9 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 Genesis Assets
Neuberger & Berman Guardian Assets
Neuberger & Berman Manhattan Assets
Neuberger & Berman Partners Assets
Form N-1A Item No. Caption in Part A Prospectus
------------------ ----------------------------
Item 1. Cover Page Front Cover Page
Item 2. Synopsis Expense Information; Summary
Item 3. Condensed Financial Financial Highlights; Performance
Information Information
Item 4. General Description of Investment Programs; Description of
Registrant Investments; Special Information
Regarding Organization, Capitalization,
and Other Matters
Item 5. Management of the Fund Management and Administration;
Directory; Back Cover Page
Item 6. Capital Stock and Front Cover Page; Dividends, Other
Other Securities Distributions, and Taxes; Special
Information Organization,
Capitalization, and Other Matters
Item 7. Purchase of Securities Shareholder Services; Share Prices and
Being Offered Net Asset Value; Management and
Administration
Item 8. Redemption or Shareholder Services; Share Prices and
Repurchase Net Asset Value
Item 9. Pending Legal Not Applicable
Proceedings
<PAGE>
Caption in Part B
Form N-1A Item No. Statement of Additional Information
------------------ -----------------------------------
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information Organization
and History
Item 13. Investment Objectives Investment Information; Certain Risk
and Policies Considerations
Item 14. Management of the Fund Trustees and Officers
Item 15. Control Persons and Control Persons and Principal Holders
Principal Holders of of Securities
Securities
Item 16. Investment Advisory Investment Management and
and Other Services Administration Services; Trustees and
Officers; Distribution Arrangements;
Reports To Shareholders; Custodian and
Transfer Agent; Independent
Auditors/Accountants
Item 17 Brokerage Allocation Portfolio Transactions
Item 18. Capital Stock and Investment Information; Additional
Other Securities Redemption Information; Dividends and
Other Distributions
Item 19. Purchase and Redemption Additional Exchange Information;
Additional Redemption Information;
Distribution Arrangements
Item 20. Tax Status Dividends and Other Distributions;
Additional Tax Information
Item 21. Underwriters Investment Management and
Administration Services; Distribution
Arrangements
Item 22. Calculation of Performance Information
Performance Data
Item 23. Financial Statements Financial Statements
<PAGE>
This cross-reference sheet relates to
Prospectus and Statement of Additional Information for
Neuberger & Berman Socially Responsive Trust
--------------------------------------------
Form N-1A Item No. Caption in Part A Prospectus
------------------ ----------------------------
Item 1. Cover Page Front Cover Page
Item 2. Synopsis Expense Information; Summary
Item 3. Condensed Financial Financial Highlights; Performance
Information Information
Item 4. General Description of Investment Programs; Description of
Registrant Investments; Special Information
Regarding Organization, Capitalization,
and Other Matters
Item 5. Management of the Fund Management and Administration;
Directory; Back Cover Page
Item 6. Capital Stock and Front Cover Page; Dividends, Other
Other Securities Distributions, and Taxes; Special
Information Organization,
Capitalization, and Other Matters
Item 7. Purchase of Securities Shareholder Services; Share Prices and
Being Offered Net Asset Value; Management and
Administration
Item 8. Redemption or Shareholder Services; Share Prices and
Repurchase Net Asset Value
Item 9. Pending Legal Not Applicable
Proceedings
<PAGE>
Caption in Part B
Form N-1A Item No. Statement of Additional Information
------------------ -----------------------------------
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information Not Applicable
and History
Item 13. Investment Objectives Investment Information; Certain Risk
and Policies Considerations
Item 14. Management of the Fund Trustees and Officers
Item 15. Control Persons and Control Persons and Principal Holders
Principal Holders of of Securities
Securities
Item 16. Investment Advisory Investment Management and
and Other Services Administration Services; Trustees and
Officers; Distribution Arrangements;
Reports To Shareholders; Custodian and
Transfer Agent; Independent Accountants
Item 17 Brokerage Allocation Portfolio Transactions
Item 18. Capital Stock and Investment Information; Additional
Other Securities Redemption Information; Dividends and
Other Distributions
Item 19. Purchase and Redemption Additional Redemption Information;
Distribution Arrangements
Item 20. Tax Status Dividends and Other Distributions;
Additional Tax Information
Item 21. Underwriters Investment Management and
Administration Services; Distribution
Arrangements
Item 22. Calculation of Performance Information
Performance Data
Item 23. Financial Statements Financial Statements
Part C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Post-Effective Amendment No. 9
<PAGE>
<PAGE>
PROSPECTUS
--------------------------------------------------------
December 15, 1997
[LOGO OF NEUBERGER & BERMAN EQUITY ASSESTS/(sm)/ APPEARS HERE]
Neuberger & Berman
FOCUS ASSETS
Neuberger & Berman
GENESIS ASSETS
Neuberger & Berman
GUARDIAN ASSETS
Neuberger & Berman
MANHATTAN ASSETS
Neuberger & Berman
PARTNERS ASSETS
[ART APPEARS IN BACKGROUND]
No Redemption Fees
<PAGE>
Neuberger&Berman
EQUITY ASSETS
Equity Funds
- --------------------------------------------------------------------------------
Neuberger&Berman FOCUS ASSETS Neuberger&Berman MANHATTAN ASSETS
Neuberger&Berman GENESIS ASSETS Neuberger&Berman PARTNERS ASSETS
Neuberger&Berman GUARDIAN ASSETS
YOU CAN BUY, OWN, AND SELL FUND SHARES ONLY THROUGH AN ACCOUNT WITH AN
ADMINISTRATOR, BROKER-DEALER, OR OTHER INSTITUTION THAT PROVIDES ACCOUNT-
ING, RECORDKEEPING, AND/OR OTHER SERVICES TO INVESTORS AND THAT HAS AN AD-
MINISTRATIVE SERVICES AGREEMENT WITH NEUBERGER&BERMAN MANAGEMENT INCORPO-
RATED ("N&B MANAGEMENT") AND/OR AN AGREEMENT WITH N&B MANAGEMENT TO MAKE
FUND SHARES AVAILABLE TO ITS CLIENTS (EACH AN "INSTITUTION").
- --------------------------------------------------------------------------------
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 com-
pany managed by N&B Management. Each Portfolio invests in securities in
accordance with an investment objective, policies, and limitations identi-
cal to those of its corresponding Fund. The investment performance of each
Fund directly corresponds with the investment performance of its corre-
sponding 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 structure
that you should consider, see "Summary" on page 3, and "Information Re-
garding Organization, Capitalization, and Other Matters" on page 35.
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 Addi-
tional Information ("SAI") about the Funds and Portfolios, dated December
15, 1997, is on file with the Securities and Exchange Commission ("SEC").
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 DECEMBER 15, 1997
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 SECURI-
TIES AND EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMIS-
SION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRE-
SENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY 3
The Funds and
Portfolios;
Risk Factors 3
Management 5
The Neuberger&Berman
Investment Approach 5
EXPENSE INFORMATION 7
Shareholder
Transaction Expenses
for Each Fund 7
Annual Fund Operating
Expenses 7
Example 9
FINANCIAL
HIGHLIGHTS 10
Selected Per Share
Data and Ratios 10
Focus Assets 11
Genesis Assets 12
Guardian Assets 13
Manhattan Assets 14
Partners Assets 15
INVESTMENT PROGRAMS 17
Focus Portfolio 17
Genesis Portfolio 18
Guardian Portfolio 19
Manhattan Portfolio 19
Partners Portfolio 20
Special
Considerations of
Small- and Mid-Cap
Company Stocks 20
Short-Term Trading;
Portfolio Turnover 21
Borrowings 21
Other Investments 21
</TABLE>
<TABLE>
<S> <C>
PERFORMANCE
INFORMATION 22
Total Return
Information 24
SHAREHOLDER
SERVICES 25
How to Buy Shares 25
How to Sell Shares 25
Exchanging Shares 26
SHARE PRICES AND
NET ASSET VALUE 27
DIVIDENDS, OTHER
DISTRIBUTIONS, AND
TAXES 28
Distribution Options 28
Taxes 28
MANAGEMENT AND
ADMINISTRATION 30
Trustees and Officers 30
Investment Manager,
Administrator,
Distributor, and
Sub-Adviser 30
Expenses 32
Transfer Agent 34
INFORMATION
REGARDING
ORGANIZATION,
CAPITALIZATION, AND
OTHER
MATTERS 35
The Funds 35
The Portfolios 36
DESCRIPTION OF
INVESTMENTS 38
USE OF JOINT
PROSPECTUS AND
STATEMENT OF
ADDITIONAL
INFORMATION 41
DIRECTORY 42
FUNDS ELIGIBLE FOR
EXCHANGE 43
</TABLE>
<PAGE>
SUMMARY
The Funds and Portfolios; Risk Factors
- --------------------------------------------------------------------------------
Each Fund is a series of Neuberger&Berman Equity Assets (the "Trust")
and invests in its corresponding Portfolio which, in turn, invests in se-
curities in accordance with an investment objective, policies, and limita-
tions that are identical to those of the Fund. This is sometimes called a
master/feeder fund structure, because each Fund "feeds" shareholders' in-
vestments into its corresponding Portfolio, a "master" fund. The structure
looks like this:
-----------------------------
SHAREHOLDERS
-----------------------------
BUY SHARES IN
-----------------------------
FUNDS
-----------------------------
INVEST IN
-----------------------------
PORTFOLIOS
-----------------------------
INVEST IN
-----------------------------
STOCKS & OTHER SECURITIES
-----------------------------
The trustees who oversee the Funds believe that this structure may ben-
efit shareholders; investment in a Portfolio by investors in addition to a
Fund may enable the Portfolio to achieve economies of scale that could re-
duce expenses. For more information about the organization of the Funds
and the Portfolios, including certain features of the master/feeder fund
structure, see "Information Regarding Organization, Capitalization, and
Other Matters" on page 35. 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 17 and "Description of In-
vestments" on page 38.
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.
3
<PAGE>
<TABLE>
<CAPTION>
NEUBERGER&BERMAN INVESTMENT PORTFOLIO
EQUITY ASSETS STYLE CHARACTERISTICS
- -------------------------------------------------------------------
<S> <C> <C>
GUARDIAN ASSETS Broadly diversified, A growth and income
large-cap value fund. fund that invests
primarily in stocks of
established, high-
quality companies that
are not well followed
on Wall Street or are
temporarily out of
favor.
FOCUS ASSETS Large-cap value fund, Invests principally in
more concentrated common stocks selected
portfolio than from 13 multi-industry
Guardian. sectors of the
economy. To maximize
potential return, the
Portfolio normally
makes at least 90% of
its investments in not
more than six sectors
believed by the
portfolio managers to
be undervalued.
GENESIS ASSETS Broadly diversified, Invests primarily in
small-cap value fund. stocks of companies
with small market
capitalizations (up to
$1.5 billion at the
time of the
Portfolio's
investment). Portfolio
managers seek to buy
the stocks of strong
companies with a
history of solid
performance and a
proven management
team, which are
selling at attractive
prices.
MANHATTAN ASSETS Broadly diversified, Invests in securities
small-, medium- and believed to have the
large-cap growth fund. maximum potential for
long-term capital
appreciation.
Portfolio managers
seek stocks of
companies that are
projected to grow at
above-average rates
and that may appear
poised for a period of
accelerated earnings.
PARTNERS ASSETS Broadly diversified, Seeks capital growth
medium- to large-cap through an approach
value fund. that is intended to
increase capital with
reasonable risk.
Portfolio managers
look at fundamentals,
focusing particularly
on cash flow, return
on capital, and asset
values.
</TABLE>
4
<PAGE>
Management
- --------------------------------------------------------------------------------
N&B Management, with the assistance of Neuberger&Berman, LLC
("Neuberger&Berman") as sub-adviser, selects investments for the Portfo-
lios. N&B Management also provides administrative services to the Portfo-
lios 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(R) made available through an Institution, see "Shareholder Servic-
es -- How to Buy Shares" on page 25, "Shareholder Services -- How to Sell
Shares" on page 25, "Shareholder Services -- Exchanging Shares" on page
26, and the policies of the Institution through which you are purchasing
shares.
The Neuberger&Berman Investment Approach
- --------------------------------------------------------------------------------
While each Portfolio has its own investment objective, policies, and
limitations, each Portfolio is managed using one of two basic investment
approaches -- value or growth.
A value-oriented portfolio manager buys stocks that are selling for a
price that is lower than what the manager believes they are worth. 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). A value-oriented man-
ager 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 values. This approach also contemplates selling portfolio securi-
ties when N&B Management believes they have reached their potential.
While a value approach concentrates on securities that are undervalued
in relation to their fundamental economic values, a growth approach seeks
stocks of companies that N&B Management projects will grow at above-aver-
age rates and faster than others expect. While a growth portfolio manager
may be willing to pay a higher multiple of earnings per share than a value
manager, the multiple tends to be reasonable relative to the manager's ex-
pectation of the company's earnings growth rate.
5
<PAGE>
In general, Neuberger&Berman FOCUS, Neuberger&Berman GENESIS,
Neuberger&Berman GUARDIAN, and Neuberger&Berman PARTNERS Portfolios adhere
to a value-oriented investment approach. Neuberger&Berman MANHATTAN Port-
folio adheres to a growth-oriented investment approach. Neuberger&Berman
MANHATTAN Portfolio is therefore willing to invest in securities with
prices that are higher multiples of earnings than securities likely to be
purchased by the other Portfolios, but generally buys companies that are
projected by N&B Management to have higher earnings growth rates.
6
<PAGE>
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, after tak-
ing expenses into account.
Shareholder Transaction Expenses for Each Fund
- --------------------------------------------------------------------------------
As shown by this table, the Funds impose no transaction charges when
you buy or sell Fund shares.
<TABLE>
<S> <C>
Sales Charge Imposed on Purchases NONE
Sales Charge Imposed on Reinvested Dividends NONE
Deferred Sales Charges NONE
Redemption Fees NONE
Exchange Fees NONE
</TABLE>
Annual Fund Operating Expenses
(as a percentage of average daily net assets)
- --------------------------------------------------------------------------------
The following table shows annual 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
("Total Operating Expenses"). "Total Operating Expenses" exclude interest,
taxes, brokerage commissions, and extraordinary expenses.
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. "Management and
Administration Fees" in the following table (except with respect to
Neuberger&Berman GENESIS Assets) are based upon administration fees in-
curred by each Fund and management fees incurred by its corresponding
Portfolio during the past fiscal year. Management and Administration Fees
for Neuberger&Berman GENESIS Assets have been restated based on current
fee rates. For more information, see "Management and Administration" and
the SAI.
The Funds and Portfolios incur other expenses for things such as ac-
counting and legal fees, transfer agency fees, custodial fees, printing
and furnishing shareholder statements and Fund reports and compensating
trustees who are not affiliated with N&B Management ("Other Expenses").
Other Expenses in the following table (except with respect to
Neuberger&Berman GENESIS Assets) are based on each Fund's and Portfolio's
expenses for the past fiscal year. Other Expenses for Neuberger&Berman
GENESIS Assets are estimated amounts for the current fiscal
7
<PAGE>
year and assume average net assets of $25,000,000. All expenses are fac-
tored into the Funds' share prices and dividends and are not charged di-
rectly to Fund shareholders.
<TABLE>
<CAPTION>
NEUBERGER&BERMAN MANAGEMENT AND 12B-1 OTHER TOTAL OPERATING
EQUITY ASSETS ADMINISTRATION FEES FEES EXPENSES EXPENSES
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FOCUS ASSETS 0.90% 0.25% 0.35%* 1.50%*
GENESIS ASSETS 1.21% 0.25% 0.04%* 1.50%*
GUARDIAN ASSETS 0.84% 0.25% 0.41%* 1.50%*
MANHATTAN ASSETS 0.93% 0.25% 0.32%* 1.50%*
PARTNERS ASSETS 0.86% 0.25% 0.39%* 1.50%*
</TABLE>
* Reflects N&B Management's expense reimbursement undertaking, described
below.
As set forth in "Expenses" on page 32, N&B Management has voluntarily
undertaken to reimburse each Fund if its Total Operating Expenses exceed
certain limits. Absent the reimbursement, Other Expenses would be 75.59%,
0.39%, 4.56%, 76.65% and 7.63% per annum and Total Operating Expenses
would be 76.74%, 1.85%, 5.65%, 77.83% and 8.74% per annum of the average
daily net assets of Neuberger&Berman FOCUS Assets, Neuberger&Berman GENE-
SIS Assets, Neuberger&Berman GUARDIAN Assets, Neuberger&Berman MANHATTAN
Assets and Neuberger&Berman PARTNERS Assets, respectively.
Because the Funds pay 12b-1 fees, long-term investors in Fund shares
may pay more in distribution expenses than the economic equivalent of the
maximum front-end sales charge permitted by the National Association of
Securities Dealers, Inc. ("NASD").
For more information, see "Expenses" on page 32.
8
<PAGE>
Example
- --------------------------------------------------------------------------------
To illustrate the effect of Total Operating Expenses, let's assume that
each Fund's annual return is 5% and that it had Total Operating Expenses
described in the table above. For every $1,000 you invested in each Fund,
you would have paid the following amounts of total expenses if you closed
your account at the end of each of the following time periods:
<TABLE>
<CAPTION>
NEUBERGER&BERMAN
EQUITY ASSETS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------------
<S> <C> <C> <C> <C>
FOCUS ASSETS $15 $47 $82 $179
GENESIS ASSETS $15 $47 N/A N/A
GUARDIAN ASSETS $15 $47 $82 $179
MANHATTAN ASSETS $15 $47 $82 $179
PARTNERS ASSETS $15 $47 $82 $179
</TABLE>
The assumption in this example of a 5% annual return is required by
regulations of the SEC applicable to all mutual funds. THE INFORMATION IN
THE PREVIOUS TABLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR RATES OF RETURN; ACTUAL EXPENSES OR RETURNS MAY BE
GREATER OR LESS THAN THOSE SHOWN AND MAY CHANGE IF EXPENSE REIMBURSEMENTS
CHANGE.
9
<PAGE>
FINANCIAL HIGHLIGHTS
Selected Per Share Data and Ratios
- --------------------------------------------------------------------------------
The financial information in the following tables is for each Fund as
of August 31, 1997 and prior periods. This information has been audited by
the Funds' respective independent auditors/accountants. You may obtain, at
no cost, further information about the performance of the Funds in their
annual report to shareholders. The auditors'/accountants' reports are in-
corporated in the SAI by reference to the annual report. Please call 800-
366-6264 for a free copy of the annual report and for up-to-date informa-
tion. Also, see "Performance Information."
10
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
Focus Assets
- -------------------------------------------------------------------------------
The following table includes selected data for a share outstanding throughout
the period and other performance information derived from the Financial
Statements. The per share amounts and ratios which are shown reflect income and
expenses, including the Fund's proportionate share of its corresponding
Portfolio's income and expenses. It should be read in conjunction with its
corresponding Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
September 4, 1996(/1/)
to August 31,
1997
- ----------------------------------------------------------------------------
<S> <C>
Net Asset Value, Beginning of Period $10.00
-------------------------------
Income From Investment Operations
Net Investment Loss (.05)
Net Gains or Losses on Securities (both realized
and unrealized) 4.39
-------------------------------
Total From Investment Operations 4.34
-------------------------------
Net Asset Value, End of Period $14.34
-------------------------------
Total Return(/2/)(/3/) +43.40%
-------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in thousands) $143.4
-------------------------------
Ratio of Gross Expenses to Average Net As-
sets(/4/)(/5/) 1.50%
-------------------------------
Ratio of Net Expenses to Average Net As-
sets(/5/)(/6/) 1.50%
-------------------------------
Ratio of Net Investment Loss to Average Net As-
sets(/5/)(/6/) (.43%)
-------------------------------
</TABLE>
See Notes to Financial Highlights
11
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
Genesis Assets
- -------------------------------------------------------------------------------
The following table includes selected data for a share outstanding throughout
the period and other performance information derived from the Financial
Statements. The per share amounts and ratios which are shown reflect income and
expenses, including the Fund's proportionate share of its corresponding
Portfolio's income and expenses. It should be read in conjunction with its
corresponding Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
April 2, 1997(/1/)
to August 31,
1997
- -------------------------------------------------------------------------------
<S> <C>
Net Asset Value, Beginning of Period $10.00
----------------------------------
Income From Investment Operations
Net Investment Loss (.01)
Net Gains or Losses on Securities (both realized and
unrealized) 3.22
----------------------------------
Total From Investment Operations 3.21
----------------------------------
Net Asset Value, End of Period $13.21
----------------------------------
Total Return(/2/)(/3/) +32.10%
----------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in thousands) $730.2
----------------------------------
Ratio of Gross Expenses to Average Net Assets(/4/)(/5/) 1.50%
----------------------------------
Ratio of Net Expenses to Average Net Assets(/5/)(/6/) 1.50%
----------------------------------
Ratio of Net Investment Loss to Average Net As-
sets(/5/)(/6/) (.36%)
----------------------------------
</TABLE>
See Notes to Financial Highlights
12
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
Guardian Assets
- -------------------------------------------------------------------------------
The following table includes selected data for a share outstanding throughout
the period and other performance information derived from the Financial
Statements. The per share amounts and ratios which are shown reflect income and
expenses, including the Fund's proportionate share of its corresponding
Portfolio's income and expenses. It should be read in conjunction with its
corresponding Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
September 4, 1996(/1/)
to August 31,
1997
- ----------------------------------------------------------------------------
<S> <C>
Net Asset Value, Beginning of Period $ 10.00
-------------------------------
Income From Investment Operations
Net Investment Income .01
Net Gains or Losses on Securities (both realized
and unrealized) 3.88
-------------------------------
Total From Investment Operations 3.89
-------------------------------
Less Distributions
Dividends (from net investment income) (.01)
-------------------------------
Net Asset Value, End of Period $ 13.88
-------------------------------
Total Return(/2/)(/3/) +38.92%
-------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in thousands) $9,307.5
-------------------------------
Ratio of Gross Expenses to Average Net As-
sets(/4/)(/5/) 1.50%
-------------------------------
Ratio of Net Expenses to Average Net As-
sets(/5/)(/6/) 1.50%
-------------------------------
Ratio of Net Investment Loss to Average Net As-
sets(/5/)(/6/) (.12%)
-------------------------------
</TABLE>
See Notes to Financial Highlights
13
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
Manhattan Assets
- -------------------------------------------------------------------------------
The following table includes selected data for a share outstanding throughout
the period and other performance information derived from the Financial
Statements. The per share amounts and ratios which are shown reflect income and
expenses, including the Fund's proportionate share of its corresponding
Portfolio's income and expenses. It should be read in conjunction with its
corre-sponding Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
September 4, 1996(/1/)
to August 31,
1997
- ----------------------------------------------------------------------------
<S> <C>
Net Asset Value, Beginning of Period $10.00
-------------------------------
Income From Investment Operations
Net Investment Loss (.08)
Net Gains or Losses on Securities (both realized
and unrealized) 3.94
-------------------------------
Total From Investment Operations 3.86
-------------------------------
Less Distributions
Distributions (from net capital gains) (.11)
-------------------------------
Net Asset Value, End of Period $13.75
-------------------------------
Total Return(/2/)(/3/) +38.86%
-------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in thousands) $138.9
-------------------------------
Ratio of Gross Expenses to Average Net As-
sets(/4/)(/5/) 1.50%
-------------------------------
Ratio of Net Expenses to Average Net As-
sets(/5/)(/6/) 1.50%
-------------------------------
Ratio of Net Investment Loss to Average Net As-
sets(/5/)(/6/) (.70%)
-------------------------------
</TABLE>
See Notes to Financial Highlights
14
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
Partners Assets
- -------------------------------------------------------------------------------
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. The per share amounts and ratios which are shown reflect income and
expenses, including the Fund's proportionate share of its corresponding
Portfolio's income and expenses. It should be read in conjunction with its
corre-sponding Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
Year Ended August 19, 1996(/1/)
August 31, to August 31,
1997 1996
- -------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Year $ 9.91 $10.00
---------------------------------------
Income From Investment Operations
Net Investment Income .01 --
Net Gains or Losses on Securities (both
realized and unrealized) 4.56 (.09)
---------------------------------------
Total From Investment Operations 4.57 (.09)
---------------------------------------
Less Distributions
Dividends (from net investment income) (.01) --
Distributions (from net capital gains) (.05) --
---------------------------------------
Total Distributions (.06) --
---------------------------------------
Net Asset Value, End of Year $ 14.42 $ 9.91
---------------------------------------
Total Return(/2/) +46.26% -0.90%(/3/)
---------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in thousands) $5,819.2 $103.5
---------------------------------------
Ratio of Gross Expenses to Average Net As-
sets(/4/) 1.50% 1.50%(/5/)
---------------------------------------
Ratio of Net Expenses to Average Net As-
sets(/6/) 1.50% 1.50%(/5/)
---------------------------------------
Ratio of Net Investment Income to Average
Net Assets(/6/) .08% 2.38%(/5/)
---------------------------------------
</TABLE>
See Notes to Financial Highlights
15
<PAGE>
NOTES TO FINANCIAL HIGHLIGHTS
1) The date investment operations commenced.
2) Total return based on per share net asset value reflects the effects of
changes in net asset value on the performance of each Fund during each
fiscal period and assumes dividends and other distributions, if any,
were reinvested. Results represent past performance and do not guaran-
tee future results. Investment returns and principal may fluctuate and
shares when redeemed may be worth more or less than original cost. To-
tal return would have been lower if N&B Management had not reimbursed
certain expenses. In addition, for Neuberger&Berman GENESIS Assets, to-
tal return would have been lower if N&B Management had not waived a
portion of the management fee.
3) Not annualized.
4) The Fund is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset arrange-
ments. These ratios reflect the reimbursement of certain expenses
and/or the waiver of a portion of the management fee.
5) Annualized.
6) After waiver of fees and/or reimbursement of expenses by N&B Manage-
ment. Had N&B Management not undertaken such action the annualized ra-
tios of net expenses and net investment income to average daily net as-
sets would have been higher and lower, respectively.
7) Because each Fund invests only in its corresponding Portfolio and that
Portfolio (rather than the Fund) engages in securities transactions, no
Fund calculates a portfolio turnover rate or pays any brokerage commis-
sions. For the year ended August 31, 1996, the portfolio turnover rate
for Neuberger&Berman PARTNERS Portfolio was 96%, and the average com-
mission rate paid by that Portfolio was $0.0494. For the year ended Au-
gust 31, 1997, the portfolio turnover rates for and average commission
rates paid by each Portfolio were as follows:
<TABLE>
<CAPTION>
PORTFOLIO AVERAGE
TURNOVER RATE COMMISSION RATE
- ---------------------------------------------------------------------
<S> <C> <C>
Neuberger&Berman FOCUS Portfolio 63% $0.0555
Neuberger&Berman GENESIS Portfolio 18% $0.0565
Neuberger&Berman GUARDIAN Portfolio 50% $0.0538
Neuberger&Berman MANHATTAN Portfolio 89% $0.0573
Neuberger&Berman PARTNERS Portfolio 77% $0.0522
</TABLE>
16
<PAGE>
INVESTMENT PROGRAMS
The investment policies and limitations of each Fund are identical to
those of its corresponding Portfolio. Each Fund invests only in its corre-
sponding Portfolio. Therefore, the following shows you the kinds of secu-
rities in which each Portfolio invests. For an explanation of some types
of investments, see "Description of Investments" on page 38.
Investment policies and limitations of the Funds and Portfolios are not
fundamental unless otherwise specified in this Prospectus or the SAI. Fun-
damental policies may not be changed without shareholder approval. A non-
fundamental policy or limitation may be changed by the trustees of the
Trust or of Managers Trust without shareholder approval.
The investment objectives of the Funds and Portfolios are not fundamen-
tal. 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:
.Autos & Housing .Health Care .Technology
.Consumer Goods & Services .Heavy Industry .Transportation
.Defense & Aerospace .Machinery & Equipment .Utilities
.Energy .Media & Entertainment
.Financial Services .Retailing
To maximize potential return, the Portfolio normally makes at least 90%
of its investments in not more than six sectors it identifies as underval-
ued. 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 in-
vestment approach to identify stocks believed to be undervalued, including
stocks that are temporarily out of favor in the market. The Portfolio then
focuses its investments in the sectors in which the undervalued stocks are
clustered. These sectors are believed to offer the greatest potential for
capital growth. This investment approach is different from that of most
other mutual funds that emphasize sector investment. Those funds either
invest in
17
<PAGE>
only a single economic sector or choose a number of sectors by analyzing
general economic trends. Further information on the Portfolio's securities
holdings and their allocation by sector as of the end of the Fund's most
recent fiscal year is included in the Fund's annual report to sharehold-
ers, which is available at no cost upon request. 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 purchase any security if, as a re-
sult, (1) more than 50% of its total assets would be invested in any one
sector, or (2) 25% or more of its total assets would be invested in the
securities of companies having their principal business activities in any
one industry (this policy is fundamental).
Neuberger&Berman Genesis Portfolio
- --------------------------------------------------------------------------------
The investment objective of Neuberger&Berman GENESIS Portfolio and
Neuberger&Berman GENESIS Assets is to seek capital appreciation.
Neuberger&Berman GENESIS Portfolio invests primarily in common stocks
of companies with small market capitalizations ("small-cap companies").
Market capitalization means the total market value of a company's out-
standing common stock. The Portfolio regards companies with market capi-
talizations of up to $1.5 billion at the time of the Portfolio's invest-
ment as small-cap companies. Companies whose market capitalizations exceed
$1.5 billion after purchase continue to be considered small-cap companies
for purposes of the Portfolio's investment policies. There is no necessary
correlation between market capitalization and the financial attributes --
such as levels of assets, revenues, or income -- commonly used to measure
the size of a company.
Studies indicate that the market values of small-cap company stocks,
such as those included in the Russell 2000 Index and the Wilshire 1750 In-
dex or quoted on Nasdaq, are out-of-sync with larger capitalization
stocks. Over the last 30 years, small-cap company stocks have outperformed
larger capitalization stocks about two-thirds of the time, even though
small-cap stocks have usually declined more than larger capitalization
stocks in declining markets. There can be no assurance that this pattern
will continue.
The Portfolio tries to enhance the potential for appreciation and limit
the risk of decline in the value of its securities by employing the value-
oriented investment approach. The Portfolio seeks securities that appear
to be underpriced and are issued by companies with proven management,
sound finances, and strong potential
18
<PAGE>
for market growth. To reduce risk, the Portfolio diversifies its holdings
among many companies and industries. The Portfolio focuses on the funda-
mentals of each small-cap company, instead of trying to anticipate what
changes might occur in the stock market, the economy, or the political en-
vironment. This approach differs from that used by many other funds in-
vesting in small-cap company stocks. Those funds often buy stocks of com-
panies they believe will have above-average earnings growth, based on
anticipated future developments. In contrast, the Portfolio's securities
are generally selected with the belief that they are currently underval-
ued, based on EXISTING conditions.
For more information, see "Special Considerations of Small- and Mid-Cap
Company Stocks" on page 20.
Neuberger&Berman Guardian Portfolio
- --------------------------------------------------------------------------------
The investment objective of Neuberger&Berman GUARDIAN Portfolio and
Neuberger&Berman GUARDIAN Assets is to seek capital appreciation and, sec-
ondarily, current income.
Neuberger&Berman GUARDIAN Portfolio invests primarily in 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 managements, and consistent earnings.
Neuberger&Berman GUARDIAN Fund, a mutual fund administered by N&B Man-
agement that also invests all of its net investable assets in
Neuberger&Berman GUARDIAN Portfolio, has paid its shareholders an income
dividend every quarter and a capital gain distribution every year since
its 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 can invest in securities of small-
, medium-, and large-capitalization companies believed by N&B Management
to have the maximum potential for long-term capital appreciation. The
portfolio managers currently intend to focus primarily on the securities
of medium-capitalization companies ("mid-cap companies"). The portfolio
managers do not seek to invest in securities that pay dividends or inter-
est, and any such income is incidental.
19
<PAGE>
The Portfolio uses a growth-oriented investment approach. When N&B Man-
agement 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 measure of economic value
(such as earnings or cash flow) than securities likely to be purchased by
other Portfolios. In selecting stocks, N&B Management considers, among
other factors, a company's financial strength, competitive position, pro-
jected future earnings, management strength and experience, reasonable
valuation and other investment criteria. The Portfolio also diversifies
its investments among companies and industries.
The Portfolio's growth investment program involves greater risks and
share price volatility than programs that invest in more undervalued secu-
rities. 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.
For more information, see "Special Considerations of Small- and Mid-Cap
Company Stocks" below.
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. N&B Management looks for securities believed to be under-
valued based on strong fundamentals, including a low price-to-earnings ra-
tio, 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.
For more information, see "Special Considerations of Small- and Mid-Cap
Company Stocks" below.
Special Considerations of Small- and Mid-Cap Company Stocks
- --------------------------------------------------------------------------------
Investments in small- and mid-cap company stocks may present greater
opportunities for capital appreciation than investments in stocks of
large-capitalization companies ("large-cap companies"). However, small-
and mid-cap company stocks
20
<PAGE>
may have higher risk and volatility. These stocks generally are not as
broadly traded as large-cap company stocks and their prices thus may fluc-
tuate more widely and abruptly. Any such movements in stocks held by a
Portfolio would be reflected in the corresponding Fund's net asset value.
Small- and mid-cap company stocks also are less researched than large-cap
company stocks and are often overlooked in the market.
Short-Term Trading; Portfolio Turnover
- --------------------------------------------------------------------------------
Although none of the Portfolios purchases 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. See
"Notes to Financial Highlights" for more information about the portfolio
turnover rate of each Portfolio. It is anticipated that the annual turn-
over rate of Neuberger&Berman MANHATTAN Portfolio and of Neuberger&Berman
PARTNERS Portfolio may exceed 100% in some fiscal years. Turnover rates in
excess of 100% generally result in higher transaction costs (which are
borne directly by the Portfolio and indirectly by the corresponding Fund)
and a possible increase in realized short-term capital gains or losses.
See "Dividends, Other Distributions, and Taxes" on page 28 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 liabili-
ties (other than borrowings). None of the Portfolios expects to borrow
money or to enter into reverse repurchase agreements. 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 instru-
ments, as well as repurchase agreements collateralized by the foregoing.
21
<PAGE>
PERFORMANCE INFORMATION
The performance of the Funds is commonly measured as TOTAL RETURN. TO-
TAL RETURN is the change in value of an investment in a fund over a par-
ticular period, assuming that all distributions have been reinvested.
Thus, total return reflects dividends, 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 evens out year-to-year varia-
tions in actual performance. Past results do not, of course, guarantee fu-
ture performance. Share prices may vary, and your shares when redeemed may
be worth more or less than your original purchase price.
The Funds commenced operations in August or September 1996, except
Neuberger&Berman GENESIS Assets, which commenced operations in April 1997.
However, mutual funds that are series of Neuberger&Berman Equity Funds(R)
("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 Portfolios and have longer operating histories.
The following table shows the average annual total returns of each Fund
for the 1-year, 5-year, 10-year and since inception periods ended August
31, 1997. Returns for periods prior to each Fund's commencement of opera-
tions represent the performance of the respective Sister Fund. The table
also shows a comparison with the S&P "500" Index for each Fund, except
Neuberger&Berman GENESIS Assets, which is compared with the Russell
2000(R) Index and Neuberger&Berman MANHATTAN Assets, which is compared
with the Russell Midcap Growth(TM) Index. The S&P "500" Index is the Stan-
dard & Poor's 500 Composite Stock Price Index, an unmanaged index gener-
ally considered to be representative of overall stock market activity. The
Russell 2000 is an unmanaged index of the securities of the 2,000 issuers
having the smallest capitalization in the Russell 3000(R) Index, repre-
senting about 10% of the Russell 3000's total market capitalization. The
Russell Midcap Growth Index measures the performance of those Russell
Midcap(TM) Index companies with higher price-to-book ratios and higher
forecasted growth values. The Russell Midcap Index measures the perfor-
mance of the 800 smallest companies in the Russell 1000(R) Index, which
represents approximately 35% of the total market capitalization of the
Russell 1000 Index (which in turn consists of the 1,000 largest U.S. com-
panies based on market capitalization). Please note that indices do not
take into account any fees or expenses of investing in the individual se-
curities they track. Further information regarding the Funds' performance
is presented in their annual report to shareholders, which is available
without charge by calling 800-366-6264.
22
<PAGE>
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS
ENDED AUGUST 31, 1997
(INCLUDES PERFORMANCE RESULTS OF THE SISTER FUNDS)
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FOCUS +43.20% +21.78% +14.33% +12.41% 10/19/55
GUARDIAN +38.69 +19.72 +14.35 +13.41 6/1/50
PARTNERS +46.26 +22.32 +14.27 +18.64 1/20/75+
S&P "500" INDEX +40.73 +19.78 +13.85 N/A N/A
MANHATTAN +38.04 +17.43 +11.43 +17.47 3/1/79+
RUSSELL MIDCAP GROWTH INDEX +31.23 +18.56 +13.18 N/A N/A
GENESIS +44.42 +22.24 N/A +16.70 9/27/88
RUSSELL 2000 INDEX +28.96 +19.36 N/A +14.57* N/A
</TABLE>
+ The dates when N&B Management became investment adviser to the Sister
Funds.
* From the inception date of Neuberger&Berman GENESIS Assets' Sister Fund.
The Sister Funds have a different fee structure than the Funds and do
not pay 12b-1 fees. Had the higher fees of the Funds been reflected, the
total returns for periods prior to the Funds' commencement of operations
would have been lower. Had N&B Management not reimbursed certain expenses
or waived certain fees, the total returns of the Funds would have been
lower. Prior to November 1991, the investment policies 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 ef-
fect during that period. Neuberger&Berman MANHATTAN Portfolio has the
ability to invest in the stocks of small-, medium- and large-capitaliza-
tion companies. Prior to July 1997, Neuberger&Berman MANHATTAN Portfolio
invested in the stocks of companies from each of these capitalization lev-
els. In July 1997, Neuberger&Berman MANHATTAN Portfolio changed its focus
to the stocks of medium-capitalization companies. Therefore, performance
results for Neuberger&Berman MANHATTAN Assets prior to July 1997 may be
more appropriately compared to the S&P "500" Index.
The following table lets you take a closer look at how each Fund and
its respective Sister Fund performed year by year, in terms of an annual
per share total return for each of the last ten calendar years (ending De-
cember 31). Please note that the previous chart reflects information for
periods ended on the Funds' last fiscal year-end (that is, as of August
31, 1997).
23
<PAGE>
TOTAL RETURNS FOR CALENDAR YEARS ENDED DECEMBER 31
(PERFORMANCE RESULTS OF THE SISTER FUNDS)
<TABLE>
<CAPTION>
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996*
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FOCUS +0.6% +16.5% +29.8% - 5.9% +24.7% +21.1% +16.3% +0.9% +36.2% +16.1%
GUARDIAN -1.0 +28.0 +21.5 - 4.7 +34.3 +19.0 +14.5 +0.6 +32.1 +17.6
MANHATTAN +0.4 +18.3 +29.1 - 8.1 +30.9 +17.8 +10.0 -3.6 +31.0 + 9.6
PARTNERS +4.3 +15.5 +22.8 - 5.1 +22.4 +17.5 +16.5 -1.9 +35.2 +26.3
S&P "500" INDEX +5.2 +16.5 +31.6 - 3.1 +30.3 + 7.6 +10.0 +1.4 +37.5 +22.9
GENESIS N/A N/A +17.3 -16.2 +41.6 +15.6 +13.9 -1.8 +27.3 +29.9
RUSSELL 2000 INDEX N/A N/A +16.3 -19.5 +46.0 +18.4 +18.9 -1.8 +28.5 +16.5
</TABLE>
* Includes performance results of the Funds (except Neuberger&Berman GENE-
SIS Assets) for periods following their inceptions.
TOTAL RETURN INFORMATION. You can obtain current performance informa-
tion about each Fund by calling N&B Management at 800-366-6264.
24
<PAGE>
SHAREHOLDER SERVICES
How to Buy Shares
- --------------------------------------------------------------------------------
YOU CAN BUY AND OWN FUND SHARES ONLY THROUGH AN ACCOUNT WITH AN INSTI-
TUTION. 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 in connection with investments in the Funds. 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, 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. Investors should consult their Institution to
determine the time by which it must receive an order so that Fund shares
can be purchased at that day's price. Prices for shares of all Funds are
calculated as of the close of regular trading on the NYSE, usually 4 p.m.
Eastern time. An 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 an investor has no access to that Institution to buy shares.
Other Information:
. An Institution must pay for shares it purchases on its clients' be-
half 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 or-
ders using an exchange of shares. See "Shareholder Services -- Ex-
changing Shares."
. The Funds do not issue certificates for shares.
. Some Institutions may charge their clients a fee in connection with
purchases of shares of the Funds.
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 pro-
cedures for the sale of Fund shares and the payment of redemption pro-
ceeds. 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. In-
vestors should consult their Institution to determine the time by which it
must receive an order so that Fund shares can be sold at
25
<PAGE>
that day's price. Prices for shares of all Funds are calculated as of the
close of regular trading on the NYSE, usually 4 p.m. Eastern time. An In-
stitution may be closed on days when the NYSE is open. As a result, prices
for Fund shares may be significantly affected on days when an investor has
no access to that Institution to sell shares.
Other Information:
. Redemption proceeds will be paid to Institutions as agreed with N&B
Management, but in any case within three business days (under unusual
circumstances a Fund may take longer, as permitted by law). An Insti-
tution may not follow the same procedures for payment of redemption
proceeds to its clients.
. Each Fund may suspend redemptions or postpone payments on days when
the NYSE is closed, when trading on the NYSE is restricted, or as
permitted by the SEC.
. Some Institutions may charge their clients a fee in connection with
redemptions of shares of the Funds.
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.
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 deemed not 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 Institu-
tion advance notice whenever it can reasonably do so.
26
<PAGE>
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 correspond-
ing Portfolio are calculated by subtracting liabilities from total assets
(in the case of a Portfolio, the market value of the securities the Port-
folio holds plus cash and other assets; in the case of a Fund, its per-
centage interest in its corresponding Portfolio, multiplied by the Portfo-
lio'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 Port-
folio 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 reported sale of such a security on that day,
the security is valued at the mean between its closing bid and asked
prices on that day. The Portfolios value all other securities and assets,
including restricted securities, by a method that the trustees of Managers
Trust believe accurately reflects fair value.
If N&B Management believes that the price of a security obtained under
a Portfolio's valuation procedures (as described above) does not represent
the amount that the Portfolio reasonably expects to receive on a current
sale of the security, the Portfolio will value the security based on a
method that the trustees of Managers Trust believe accurately reflects
fair value.
27
<PAGE>
DIVIDENDS, OTHER DISTRIBUTIONS, AND TAXES
Each Fund distributes, normally in December, substantially all of its
share of any net investment income (net of the Fund's expenses), any net
capital gains from investment transactions, and any net gains from foreign
currency transactions earned or realized by its corresponding Portfolio.
In addition, Neuberger&Berman GUARDIAN Assets distributes substantially
all of its share of Neuberger&Berman GUARDIAN Portfolio's net investment
income, if more than a DE MINIMIS amount, near the end of each other cal-
endar 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
- --------------------------------------------------------------------------------
An investment has certain tax consequences, depending on the type of
account through which the investment is made. FOR AN ACCOUNT UNDER A QUAL-
IFIED RETIREMENT PLAN OR AN INDIVIDUAL RETIREMENT ACCOUNT, TAXES ARE DE-
FERRED.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax
and generally also are subject to state and local income taxes. Distribu-
tions 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 follow-
ing January are taxable as if they were paid on December 31 of the year in
which the distributions were declared. Investors who buy Fund shares just
before a Fund deducts a dividend or other distribution from its NAV will
pay the full price for the shares and then receive a portion of the price
back in the form of a taxable distribution. Investors who are considering
the purchase of Fund shares in December (or, in the case of
Neuberger&Berman GUARDIAN Assets, near the end of any other calendar quar-
ter) should take this into account.
For federal income tax purposes, dividends and distributions of net
short-term capital gain and net gains from certain foreign currency trans-
actions are taxed as
28
<PAGE>
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
an investor has owned Fund shares. Distributions of net capital gain may
include gains from the sale of portfolio securities that appreciated in
value before an investor bought Fund shares. Under the Taxpayer Relief Act
of 1997, different maximum tax rates apply to a Fund's distributions of
net capital gain depending on its corresponding Portfolio's holding
period.
Every January, each Fund will send each Institution that is a share-
holder therein a statement showing the amount of distributions paid in
cash or reinvested in Fund shares for the previous year. Each Institution
will also receive information showing (1) the portion, if any, of those
distributions that generally is not subject to state and local income
taxes in certain states and (2) capital gain distributions broken down in
a manner that will enable investors or their tax advisers to determine the
appropriate rate of capital gains tax on such distributions.
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 generally is the difference be-
tween 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. Capital gain on shares held for more than one year will
be long-term capital gain, in which event it will be subject to federal
income tax at the capital gains rate applicable to an investor's holding
period and tax bracket.
When an Institution sells Fund shares, it will receive a confirmation
statement showing the number of shares sold and the price.
OTHER. Every January, Institutions will receive a consolidated transac-
tion statement for the previous year. Each Institution is required annu-
ally to send each investor in its account a statement showing the invest-
or's distribution and transaction information for the previous year.
Each Fund intends to qualify for treatment as a regulated investment
company for federal income tax purposes so that it will not have to pay
federal income tax on that part of its taxable income and realized gains
that it distributes to its shareholders.
The foregoing is only a summary of some of the important income 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.
29
<PAGE>
MANAGEMENT AND ADMINISTRATION
Trustees and Officers
- --------------------------------------------------------------------------------
The trustees of the Trust and the trustees of Managers Trust, who are
currently the same individuals, have oversight responsibility for the op-
erations of each Fund and each Portfolio, respectively. The SAI contains
general background information about each trustee and officer of the Trust
and of Managers Trust. The trustees and officers of the Trust and of Man-
agers Trust who are officers and/or directors of N&B Management and/or
principals of Neuberger&Berman serve without compensation from the Funds
or the Portfolios.
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 manage-
ment of no-load mutual funds since 1950. In addition to serving the Port-
folios, N&B Management currently serves as investment manager of other mu-
tual funds. Neuberger&Berman acts as sub-adviser for the Portfolios and
other mutual funds managed by N&B Management. The mutual funds managed by
N&B Management and Neuberger&Berman had aggregate net assets of approxi-
mately $21.2 billion as of September 30, 1997.
As sub-adviser, Neuberger&Berman furnishes N&B Management with invest-
ment recommendations and research without added cost to the Portfolios.
N&B Management compensates Neuberger&Berman for its costs in connection
with those services. 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 affil-
iates, including N&B Management, manage securities accounts that had ap-
proximately $54.1 billion of assets as of September 30, 1997. All of the
voting stock of N&B Management is owned by individuals who are principals
of Neuberger&Berman.
The following is information about the individuals who are primarily
responsible for the day-to-day management of the Portfolios:
Neuberger&Berman FOCUS Portfolio and Neuberger&Berman GUARDIAN Portfo-
lio -- Kent C. Simons and Kevin L. Risen are co-managers of the Portfo-
lios. Mr. Simons and Mr. Risen are Vice Presidents of N&B Management and
principals of Neuberger&Berman. Mr. Simons has had responsibility for
Neuberger&Berman FOCUS Portfolio since 1988, and for Neuberger&Berman
GUARDIAN Portfolio since
30
<PAGE>
1981. Mr. Risen has had those responsibilities since 1996, and during the
year prior thereto, he was a portfolio manager for Neuberger&Berman. He
was a research analyst at Neuberger&Berman from 1992 to 1995.
Neuberger&Berman GENESIS Portfolio -- Judith M. Vale and Robert W.
D'Alelio are co-managers of the Portfolio. Ms. Vale and Mr. D'Alelio have
been senior members of Neuberger&Berman's Small Cap Group since 1992 and
1996, respectively, and are both Vice Presidents of N&B Management. Ms.
Vale is a principal of Neuberger&Berman. Ms. Vale and Mr. D'Alelio have
been primarily responsible for the day-to-day management of
Neuberger&Berman GENESIS Portfolio since February 1994 and July 1997, re-
spectively. Mr. D'Alelio was a senior portfolio manager for another in-
vestment management group from 1992 to 1996.
Neuberger&Berman MANHATTAN Portfolio -- Jennifer K. Silver and Brooke
A. Cobb are co-managers of the Portfolio. Ms. Silver is Director of the
Neuberger&Berman Growth Equity Group and both she and Mr. Cobb are Vice
Presidents of N&B Management. Ms. Silver is a principal of
Neuberger&Berman. Ms. Silver and Mr. Cobb have had responsibility for
Neuberger&Berman MANHATTAN Portfolio since July 1997. Previously, Ms. Sil-
ver was a portfolio manager for several large mutual funds managed by a
prominent investment adviser. Mr. Cobb was the chief investment officer
for an investment advisory firm managing individual accounts from 1995 to
1997 and, from 1992 to 1995, a portfolio manager of a large mutual fund
managed by a prominent investment adviser.
Neuberger&Berman PARTNERS Portfolio -- Michael M. Kassen and Robert I.
Gendelman are co-managers of the Portfolio. Mr. Kassen and Mr. Gendelman
are Vice Presidents of N&B Management and principals of Neuberger&Berman.
Mr. Kassen and Mr. Gendelman have had responsibility for Neuberger&Berman
PARTNERS Portfolio since June 1990 and October 1994, respectively. Mr.
Kassen has been an employee of N&B Management since 1990. Mr. Gendelman
was a portfolio manager for another mutual fund manager from 1992 to 1993.
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 effect-
ing securities transactions, each portfolio seeks to obtain the best price
and execution of orders. For more information, see the SAI.
The principals and employees of Neuberger&Berman and officers and em-
ployees of N&B Management, together with their families, have invested
over $100 million of their own money in Neuberger&Berman Funds.
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 trad-
ing in the
31
<PAGE>
personal accounts of the portfolio managers and others who normally come
into possession of information on portfolio transactions.
Expenses
- --------------------------------------------------------------------------------
N&B Management provides investment management services to each Portfo-
lio that include, among other things, making and implementing investment
decisions and providing facilities and personnel necessary to operate the
Portfolio. For investment management services, each Portfolio (except
Neuberger&Berman GENESIS Portfolio) pays N&B Management a fee at the an-
nual 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.
Neuberger&Berman GENESIS Portfolio pays N&B Management a fee for invest-
ment management services at the annual rate of 0.85% of the first $250
million of the Portfolio's average daily net assets, 0.80% of the next
$250 million, 0.75% of the next $250 million, 0.70% of the next $250 mil-
lion, and 0.65% of average daily net assets in excess of $1 billion.
N&B Management provides administrative services to each Fund that in-
clude furnishing facilities and personnel for the Fund and performing ac-
counting, recordkeeping, and other services. For such administrative serv-
ices, 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 Manage-
ment may subcontract to Institutions some of its responsibilities to that
Fund under the administration agreement and may compensate each Institu-
tion that provides such services at an annual rate of up to 0.25% of the
average net asset value of Fund shares held through that Institution.
N&B Management acts as agent in arranging for the sale of Fund shares
to Institutions without commission and bears advertising and promotion ex-
penses. The trustees of the Trust have adopted a plan pursuant to Rule
12b-1 under the 1940 Act ("Plan"), under which each Fund compensates N&B
Management for administrative and other services provided to the Funds,
its activities and expenses related to the sale and distribution of Fund
shares, and ongoing services provided to investors in the Funds. Under the
Plan, 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 may pay up
to the full amount of this fee to Institutions that distribute (or make
available) Fund shares and/or provide services to the Funds and their
shareholders. The fee paid to an Institution is based on the level of such
services provided. Institutions may use the payments for, among other pur-
poses, compensating employees engaged in sales and/or shareholder servic-
ing. The amount of fees
32
<PAGE>
paid by a Fund during any year may be more or less than the cost of dis-
tribution and other services provided to the Fund. NASD rules limit the
amount of annual distribution and service fees that may be paid by a mu-
tual fund and impose a ceiling on the cumulative distribution fees paid.
The Trust's Plan complies with those rules.
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 the "Other Expenses" described on page 7.
See "Expense Information -- Annual Fund Operating Expenses" for infor-
mation about how these fees and expenses may affect the value of your in-
vestment.
During its 1997 fiscal year, each Fund accrued administration fees and
a pro rata portion of the corresponding Portfolio's management fees (prior
to any expense reimbursement or fee waiver), as a percentage of the Fund's
average daily net assets, as follows:
<TABLE>
- -------------------------------------------
<S> <C>
Neuberger&Berman FOCUS ASSETS 0.90%
Neuberger&Berman GENESIS ASSETS 0.50%*
Neuberger&Berman GUARDIAN ASSETS 0.84%
Neuberger&Berman MANHATTAN ASSETS 0.93%
Neuberger&Berman PARTNERS ASSETS 0.86%
</TABLE>
* Not Annualized.
During its 1997 fiscal year, each Fund bore aggregate expenses as a
percentage of its average daily net assets (after taking into considera-
tion N&B Management's expense reimbursement for each Fund and N&B Manage-
ment's then current waiver of a portion of the management fee borne indi-
rectly by Neuberger&Berman GENESIS Assets), as follows:
<TABLE>
- ------------------------------------------
<S> <C>
Neuberger&Berman FOCUS ASSETS 1.50%
Neuberger&Berman GENESIS ASSETS 1.50%
Neuberger&Berman GUARDIAN ASSETS 1.50%
Neuberger&Berman MANHATTAN ASSETS 1.50%
Neuberger&Berman PARTNERS ASSETS 1.50%
</TABLE>
33
<PAGE>
N&B Management has voluntarily undertaken until December 31, 1998, to
reimburse each Fund for its Total Operating Expenses which exceed 1.50%
per annum of the Fund's average daily net assets. The effect of reimburse-
ment 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. All correspondence
should be addressed to the Neuberger&Berman Funds, Institutional Services,
605 Third Avenue, 2nd Floor, New York, NY 10158-0180.
34
<PAGE>
INFORMATION REGARDING ORGANIZATION, CAPITALIZATION, AND OTHER MATTERS
The Funds
- --------------------------------------------------------------------------------
Each Fund is a separate operating series of the Trust, a Delaware busi-
ness 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 six separate series. Each
Fund invests all of its net investable assets in its corresponding Portfo-
lio, 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, liqui-
dation, and other rights. All shares issued are fully paid and non-assess-
able, and shareholders have no preemptive or other rights to subscribe to
any additional shares.
SHAREHOLDER MEETINGS. The trustees of the Trust do not intend to hold
annual meetings of shareholders of the Funds. The trustees will call spe-
cial 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 share-
holders of a Fund will not be personally liable for the obligations of any
Fund; a shareholder is entitled to the same limitation of personal liabil-
ity extended to shareholders of a corporation. To guard against the risk
that Delaware law might not be applied in other states, the Trust Instru-
ment 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 Trust or Fund
property of any shareholder nevertheless held personally liable for Trust
or Fund obligations, respectively.
OTHER. Because Fund shares can be bought, owned and sold only through
an account with an Institution, a client of an Institution may be unable
to purchase additional shares and/or may be required to redeem shares (and
possibly incur a tax liability) if the client no longer has a relationship
with the Institution or if the
35
<PAGE>
Institution no longer has a contract with N&B Management to perform servic-
es. Depending on the policies of the Institutions involved, an investor may
be able to transfer an account from one Institution to another.
The Portfolios
- --------------------------------------------------------------------------------
Each Portfolio is a separate operating series of Managers Trust, a New
York common law trust organized as of December 1, 1992. Managers Trust is
registered under the 1940 Act as a diversified, open-end management invest-
ment 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 limi-
tations as the Fund, in turn invests in securities; the Fund thus acquires
an indirect interest in those securities.
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 Sister Funds that are
series of N&B Equity Funds and other mutual funds that are series of
Neuberger&Berman Equity Trust(R) ("N&B Equity Trust") invest all of their
respective net investable assets in corresponding Portfolios of Managers
Trust. 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. The
Trust does not sell its shares directly to 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 in-
vest in a Portfolio on the same terms and conditions as a Fund and will pay
a proportionate share of the Portfolio's expenses. Other investors in a
Portfolio (including the series of N&B Equity Funds and N&B Equity Trust)
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 and N&B Equity Trust) might charge a sales
commission. Therefore, Fund shareholders may have different returns than
shareholders in another investment company that invests exclusively in the
Portfolio. Information regarding any fund that invests in a Portfolio is
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 by other potential in-
vestors in addi -
36
<PAGE>
tion 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.
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 with-
drawal could result in a distribution in kind of portfolio securities (as
opposed to a cash distribution) by the Portfolio to the Fund. That distri-
bution 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 of the Trust would
consider what actions might be taken, including the investment of all of
the Fund's net investable assets in another pooled investment entity hav-
ing substantially the same investment objective as the Fund or the reten-
tion by the Fund of its own investment manager to manage its assets in ac-
cordance with its investment objective, policies, and limitations. The
inability of the Fund to find a suitable replacement could have a signifi-
cant 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 benefi-
cial interest in the Portfolio. On most issues subjected to a vote of in-
vestors, 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 beyond the amount of
its investment on account of such liability would be limited to circum-
stances 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.
37
<PAGE>
DESCRIPTION OF INVESTMENTS
In addition to common stocks and other securities referred to in "In-
vestment Programs" herein, each Portfolio may make the following invest-
ments, among others, individually or in combination, although it may not
necessarily buy all of the types of securities or use all of the invest-
ment techniques that are described. For additional information on the fol-
lowing investments and on other types of investments which the Portfolios
may make, see the SAI.
ILLIQUID, RESTRICTED AND RULE 144A SECURITIES. Each Portfolio may in-
vest up to 15% of its net assets in illiquid securities, which are securi-
ties that cannot be expected to be sold within seven days at approximately
the price at which they are valued. These may include unregistered or
other restricted securities and repurchase agreements maturing in greater
than seven days. Illiquid securities may also include commercial paper un-
der section 4(2) of the Securities Act of 1933, as amended, and Rule 144A
securities (restricted securities that may be traded freely among quali-
fied institutional buyers pursuant to an exemption from the registration
requirements of the securities laws); these securities are considered il-
liquid unless N&B Management, acting pursuant to guidelines established by
the trustees of Managers Trust, determines they are liquid. Generally,
foreign securities freely tradable in their principal market are not con-
sidered restricted or illiquid. Illiquid securities may be difficult for a
Portfolio to value or dispose of due to the absence of an active trading
market. The sale of some illiquid securities by the Portfolios may be sub-
ject to legal restrictions which could be costly to the Portfolios.
FOREIGN SECURITIES. Foreign securities are those of issuers organized
and doing business principally outside the United States, including non-
U.S. governments, their agencies, and instrumentalities. Each Portfolio
may invest up to 10% of the value of its total assets in foreign securi-
ties. The 10% limitation does not apply to foreign securities that are de-
nominated in U.S. dollars, including American Depositary Receipts
("ADRs"). Foreign securities (including those denominated in U.S. dollars
and ADRs) are affected by political and 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 mar-
kets may be less liquid and 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 ex-
change transactions and changes in rates of exchange with the U.S. dollar,
irrespective of the performance of the underlying investment.
38
<PAGE>
COVERED CALL OPTIONS. Each Portfolio may try to reduce the risk of se-
curities price changes (hedge) or generate income by writing (selling)
covered call options against portfolio securities and may purchase call
options in related closing transactions. When a Portfolio writes a covered
call option against a security, the Portfolio is obligated to sell that
security to the purchaser of the option at a fixed price at any time dur-
ing a specified period if the purchaser decides to exercise the option.
The maximum price the Portfolio may realize on the security during the op-
tion period is the fixed price; the Portfolio continues to bear the risk
of a decline in the security's price, although this risk is reduced, at
least in part, by the premium received for writing the option.
The primary risks in using call options are (1) possible lack of a liq-
uid secondary market for options and the resulting inability to close out
options when desired; (2) the fact that use of options is a highly spe-
cialized activity that involves skills, techniques, and risks (including
price volatility and a high degree of leverage) different from those asso-
ciated with selection of a Portfolio's securities; (3) the fact that, al-
though use of these instruments for hedging purposes can reduce the risk
of loss, they also can reduce the opportunity for gain, by offsetting fa-
vorable price movements in hedged investments; and (4) the possible in-
ability 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.
REPURCHASE AGREEMENTS/SECURITIES LOANS. In a repurchase agreement, a
Portfolio buys a security from a Federal Reserve member bank or a securi-
ties dealer and simultaneously agrees to sell it back at a higher price,
at a specified date, usually less than a week later. The underlying secu-
rities must fall within the Portfolio's investment policies and limita-
tions. Each Portfolio also may lend portfolio securities to banks, broker-
age 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. Gov-
ernment 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 by in-
strumentalities of the U.S. Government, such as the Government National
Mortgage Association, Fannie
39
<PAGE>
Mae (formerly, Federal National Mortgage Association), Freddie Mac (for-
merly, Federal Home Loan Mortgage Corporation), Student Loan Marketing As-
sociation (commonly known as "Sallie Mae"), and Tennessee Valley Authori-
ty. 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 is-
suer's ability to borrow from the U.S. Treasury, subject to the Treasury's
discretion in certain cases, or only by the credit of the issuer. U.S.
Government Agency Securities include U.S. Government Agency mortgage-
backed securities. The market prices of U.S. Government and Agency Securi-
ties are not guaranteed by the Government.
"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 or-
ganization ("NRSRO") or, if unrated by any NRSRO, deemed comparable by N&B
Management to such rated securities ("Comparable Unrated Securities"). Se-
curities rated by Moody's in its fourth highest category (Baa) or Compara-
ble Unrated Securities may be deemed to have speculative characteristics.
The value of the fixed income securities in which a Portfolio may invest
is likely to decline in times of rising market 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 as-
sets in debt securities rated below investment grade and Comparable
Unrated Securities. Such securities may be considered predominantly specu-
lative, 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 Appen-
dix to the SAI.
40
<PAGE>
USE OF JOINT PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION
Each Fund and its corresponding Portfolio acknowledges that it is
solely responsible for all information or lack of information about that
Fund and Portfolio in this Prospectus or in the SAI, and no other Fund or
Portfolio is responsible therefor. The trustees of the Trust and of Manag-
ers Trust have considered this factor in approving each Fund's use of a
single combined Prospectus and combined SAI.
41
<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, LLC
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
2nd Floor
Washington, DC 20036-1800
42
<PAGE>
FUNDS ELIGIBLE FOR EXCHANGE
EQUITY ASSETS
Neuberger&Berman Focus Assets
Neuberger&Berman Genesis Assets
Neuberger&Berman Guardian Assets
Neuberger&Berman Manhattan Assets
Neuberger&Berman Partners Assets
Neuberger&Berman, Neuberger&Berman Management Inc., and the above named
Funds are service marks or registered trademarks of Neuberger&Berman, LLC
or Neuberger&Berman Management Inc.
(C)1997 Neuberger&Berman Management Incorporated.
43
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
[LOGO OF NEUBERGER & BERMAN MANAGEMENT INC./(B)/ APPEARS HERE]
605 THIRD AVENUE 2ND FLOOR
NEW YORK, NY 10158-0180
INSTITUTIONAL SERVICES [ART APPEARS HERE]
800-366-6264
WWW.NBFUNDS.COM
This wrapper is not part of the Prospective.
[RECYCLED LOGO APPEARS HERE] NBEAPR001297
<PAGE>
- --------------------------------------------------------------------------------
NEUBERGER & BERMAN EQUITY ASSETS AND PORTFOLIOS
STATEMENT OF ADDITIONAL INFORMATION
DATED DECEMBER 15, 1997
Neuberger & Berman Neuberger & Berman Genesis
Manhattan Assets (and Neuberger Assets (and Neuberger & Berman
& Berman Manhattan Portfolio) Genesis Portfolio)
Neuberger & Berman Focus Assets Neuberger & Berman Guardian
(and Neuberger & BermanFocus Assets (and Neuberger & Berman
Portfolio) Guardian Portfolio)
Neuberger & Berman
Partners Assets
(and Neuberger & Berman Partners Portfolio)
605 Third Avenue, 2nd Floor, New York, NY 10158-0180
Toll-Free 800-366-6264
- --------------------------------------------------------------------------------
Neuberger & Berman MANHATTAN Assets, Neuberger & Berman GENESIS Assets,
Neuberger & Berman Focus Assets, Neuberger & Berman GUARDIAN Assets, and
Neuberger & Berman PARTNERS Assets (each a "Fund") are mutual funds that offer
shares pursuant to a Prospectus dated December 15, 1997. The Funds invest all of
their net investable assets in Neuberger & Berman MANHATTAN Portfolio, Neuberger
& Berman GENESIS Portfolio, Neuberger & Berman FOCUS Portfolio, Neuberger &
Berman GUARDIAN Portfolio, and Neuberger & Berman PARTNERS Portfolio (each a
"Portfolio"), respectively.
AN INVESTOR CAN BUY, OWN, AND SELL FUND SHARES ONLY THROUGH AN ACCOUNT
WITH AN ADMINISTRATOR, BROKER-DEALER, OR OTHER INSTITUTION THAT PROVIDES
ACCOUNTING, RECORDKEEPING, AND OTHER SERVICES TO INVESTORS AND THAT HAS AN
ADMINISTRATIVE SERVICES AGREEMENT WITH NEUBERGER & BERMAN MANAGEMENT
INCORPORATED ("N&B MANAGEMENT") AND/OR AN AGREEMENT WITH N&B MANAGEMENT TO MAKE
FUND SHARES AVAILABLE TO ITS CLIENTS (EACH AN "INSTITUTION").
The Funds' Prospectus provides basic information that an investor
should know before investing. A copy of the Prospectus may be obtained, without
charge, from N&B Management, Institutional Services, 605 Third Avenue, 2nd
Floor, New York, NY 10158-0180, or by calling 800-366-6264.
<PAGE>
This Statement of Additional Information ("SAI") is not a prospectus
and should be read in conjunction with the Prospectus.
No person has been authorized to give any information or to make any
representations not contained in the Prospectus or in this SAI in connection
with the offering made by the Prospectus, and, if given or made, such
information or representations must not be relied upon as having been authorized
by a Fund or its distributor. The Prospectus and this SAI do not constitute an
offering by a Fund or its distributor in any jurisdiction in which such offering
may not lawfully be made.
<PAGE>
TABLE OF CONTENTS
Page
----
INVESTMENT INFORMATION........................................................1
Investment Policies and Limitations......................................1
Investment Insight.......................................................5
Neuberger & Berman MANHATTAN Portfolio..............................5
Neuberger & Berman GENESIS Portfolio................................6
Neuberger & Berman FOCUS and Neuberger & Berman
GUARDIAN Portfolios............................................9
Neuberger & Berman PARTNERS Portfolio...............................10
Additional Investment Information........................................11
Neuberger & Berman FOCUS Portfolio - Description of
Economic Sectors....................................................25
PERFORMANCE INFORMATION.................................................... ..28
Total Return Computations................................................29
Comparative Information..................................................30
Other Performance Information............................................31
CERTAIN RISK CONSIDERATIONS...................................................32
TRUSTEES AND OFFICERS.........................................................33
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES.............................40
Investment Manager and Administrator.................................40
Sub-Adviser..........................................................43
Investment Companies Managed.........................................44
Management and Control of N&B Management.............................46
DISTRIBUTION ARRANGEMENTS.....................................................47
Distributor..........................................................47
Rule 12b-1 Plan......................................................48
ADDITIONAL EXCHANGE INFORMATION...............................................50
ADDITIONAL REDEMPTION INFORMATION.............................................50
Suspension of Redemptions............................................50
Redemptions in Kind..................................................50
DIVIDENDS AND OTHER DISTRIBUTIONS.............................................51
i
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ADDITIONAL TAX INFORMATION....................................................52
Taxation of the Funds................................................52
Taxation of the Portfolios...........................................53
Taxation of the Funds' Shareholders..................................56
PORTFOLIO TRANSACTIONS........................................................56
Portfolio Turnover...................................................65
REPORTS TO SHAREHOLDERS.......................................................65
ORGANIZATION..................................................................65
CUSTODIAN AND TRANSFER AGENT..................................................65
INDEPENDENT AUDITORS/ACCOUNTANTS..............................................66
LEGAL COUNSEL.................................................................66
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES...........................66
REGISTRATION STATEMENT........................................................68
FINANCIAL STATEMENTS..........................................................68
Appendix A....................................................................69
RATINGS OF CORPORATE BONDS AND COMMERCIAL PAPER......................69
ii
<PAGE>
INVESTMENT INFORMATION
Each Fund is a separate series of Neuberger & Berman Equity Assets
("Trust"), a Delaware business trust that is registered with the Securities and
Exchange Commission ("SEC") as an open-end management investment company. Each
Fund seeks its investment objective by investing all of its net investable
assets in a Portfolio of Equity Managers Trust ("Managers Trust") that has an
investment objective identical to, and a name similar to, that of the Fund. Each
Portfolio, in turn, invests in securities 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.")
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. Any investment objective, policy or limitation that is not
fundamental may be changed by the trustees of the Trust ("Fund Trustees") or of
Managers Trust ("Portfolio Trustees") without shareholder approval. The
fundamental investment policies and limitations of 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. These percentages are required by the Investment Company Act of 1940
("1940 Act") and are referred to in this SAI as a "1940 Act majority vote."
Whenever 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 in
proportion to the votes of its shareholders at a meeting thereof called for that
purpose.
INVESTMENT POLICIES AND LIMITATIONS
- -----------------------------------
Each Fund has the following fundamental investment policy, to enable it
to invest in its corresponding Portfolio:
Notwithstanding any other investment policy of the Fund,
the Fund may invest all of its net investable assets
(cash, securities, and receivables relating to
securities) in an open-end management investment company
having substantially the same investment objective,
policies, and limitations as the Fund.
<PAGE>
All other fundamental investment policies and limitations and the
non-fundamental investment policies and limitations of each Fund are identical
to those of its corresponding Portfolio. Therefore, although the following
discusses the investment policies and limitations of the Portfolios, it applies
equally to their corresponding Funds.
Except for the limitation on borrowing, 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 following investment policies and limitations are fundamental and
apply to all Portfolios:
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.
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<PAGE>
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.
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").
For purposes of the limitation on commodities, the Portfolios do not
consider foreign currencies or forward contracts to be physical commodities.
The following investment policies and limitations are non-fundamental
and apply to all Portfolios unless otherwise indicated:
1. BORROWING. No Portfolio may purchase securities if outstanding
borrowings, including any reverse repurchase agreements, exceed 5% of its total
assets.
3
<PAGE>
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. 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.
4. 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").
5. ILLIQUID SECURITIES. No Portfolio may purchase any security if, as a
result, more than 15% of its net assets would be invested in illiquid
securities. Illiquid securities include securities that cannot be sold within
seven days in the ordinary course of business for approximately the amount at
which the Portfolio has valued the securities, such as repurchase agreements
maturing in more than seven days.
6. PLEDGING (NEUBERGER & BERMAN GENESIS AND NEUBERGER & BERMAN GUARDIAN
PORTFOLIOS). Neither of these Portfolios may pledge or hypothecate any of its
assets, except that (i) Neuberger & Berman GENESIS Portfolio may pledge or
hypothecate up to 15% of its total assets to collateralize a borrowing permitted
under fundamental policy 1 above or a letter of credit issued for a purpose set
forth in that policy and (ii) each 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. The other Portfolios are not subject
to any restrictions on their ability to pledge or hypothecate assets and may do
so in connection with permitted borrowings.
7. SECTOR CONCENTRATION (NEUBERGER & BERMAN FOCUS PORTFOLIO). This
Portfolio may not invest more than 50% of its total assets in any one economic
sector.
4
<PAGE>
Each Portfolio, as an operating policy, does not intend to invest in
futures contracts and options thereon during the coming year. In addition,
although the Portfolios do not have policies limiting their investment in
warrants, no Portfolio currently intends to invest in warrants unless acquired
in units or attached to securities.
INVESTMENT INSIGHT
- ------------------
NEUBERGER & BERMAN MANHATTAN PORTFOLIO
--------------------------------------
The portfolio co-managers of Neuberger & Berman MANHATTAN Portfolio
love surprises - positive earnings surprises that is. Their extensive research
has revealed that historically the stocks of companies that consistently
exceeded consensus earnings estimates tended to be terrific performers. They
screen the mid-cap growth stock universe to isolate stocks whose most recent
earnings have beat the Street's expectations. They then roll up their sleeves
and, through diligent fundamental research, strive to identify those companies
most likely to record a string of positive earnings surprises. Their goal is to
invest today in the fast growing mid-sized companies that will comprise
tomorrow's Fortune 500.
The co-managers explain, "Let us begin by saying we are growth stock
investors in the purest sense of the term. We want to own the stocks of
companies that are growing earnings faster than the average American business
and ideally, faster than the competitors in their respective industries." The
co-managers explain that they are particularly biased towards companies that
have consistently beaten consensus earnings estimates. Their extensive research
has revealed that stocks whose earnings consistently exceeded expectations
offered greater potential for long-term capital appreciation.
The co-managers focus their research efforts on mid-cap stocks in new
and/or rapidly evolving industries. The mid-cap growth sector is less widely
followed by Wall Street analysts and therefore, less efficient than the
large-cap stock market. By focusing on stocks with market capitalizations
between $500 million and $8 billion, the co-managers believe they are likely to
identify more of their brand of growth stock opportunities. Considering the
currently high valuations of large-cap growth stocks relative to mid-cap growth
5
<PAGE>
stocks with what the co-managers think is comparable or, in many cases, better
earnings growth potential, they believe the Portfolio is particularly well
positioned in today's market. The Portfolio now uses the Russell MidcapTM Growth
Index as its benchmark. Consistent with the Portfolio's capitalization
parameters and growth style, the co-managers believe this is a more appropriate
benchmark than the S&P "500".
They reiterate, "Let us once again emphasize we are growth stock
investors. But, there is a value component to our discipline as well. We just
define value differently." The kind of fast growth companies the co-managers
favor generally do not trade at below market average price/earnings ratios.
However, they often trade at very reasonable multiples relative to annual
earnings growth rates. Given the choice between two good companies with
comparable earnings growth rates, the co-managers will select the one trading at
the lower multiple to earnings growth.
"We are dispassionate sellers," say the co-managers. "If a stock does
not live up to our earnings expectations or if we believe its valuation has
become excessive, we will sell and direct the assets to another opportunity we
find more attractive. We will maintain a broadly diversified portfolio rather
than heavily concentrating our holdings in just a few of the fastest growing
industry groups."
NEUBERGER & BERMAN GENESIS PORTFOLIO
------------------------------------
Neuberger & Berman GENESIS Fund (which, like Neuberger & Berman GENESIS
Assets, invests all of its net investable assets in Neuberger & Berman GENESIS
Portfolio) was established in 1988. A fund dedicated primarily to
small-capitalization stocks (companies with total market value of outstanding
common stock of up to $1.5 billion at the time the Portfolio invests), Neuberger
& Berman GENESIS Portfolio is devoted to the same value principles as most of
the other equity funds managed by N&B Management. The Portfolio is comprised of
small-cap stocks with solid earnings today, not just promises for tomorrow.
Many people think that small-capitalization stock funds are
predominantly invested in high-risk companies. That is not necessarily the case.
Neuberger & Berman GENESIS Portfolio looks for the same fundamentals in
small-capitalization stocks as other Portfolios look for in stocks of larger
companies. The portfolio co-managers stick to the areas they understand. They
look for the most persistent earnings growth at the lowest multiple, as well as
6
<PAGE>
for well-established companies with entrepreneurial management and sound
finances. Also considered are catalysts to exposing value, such as management
changes and new product lines. Often, these are firms that have suffered
temporary setbacks or undergone a restructuring.
Neuberger & Berman GENESIS Portfolio's motto is "boring is beautiful."
Instead of investing in trendy, high-priced stocks that tend to hurt
shareholders on the downside, the Portfolio looks for little-known, solid,
growing companies whose stocks the managers believe are wonderful bargains.
An Interview with the Portfolio Co-Manager
Q: If I already own a large-cap stock fund, why should I consider
investing in a small-cap fund as well?
A: Look at how fast a sapling grows compared to, say, a mature tree.
Much of the same can be true about companies. It's possible for a smaller
company to grow 50% faster than an IBM or a Coca-Cola.
So, many small-cap stocks offer superior growth potential. Consider the
cereal you eat, the detergent you use, the coffee you drink -- and imagine if
you had invested in these products before they became household names. If you
had invested only in the blue-chip companies of the day, you would have missed
out on these opportunities.
Of course, we're not advocating that an investor's portfolio consist
only of small-cap stock funds. It pays to diversify. Let's look back about 25
years. While past performance cannot indicate future performance, small-cap
stocks outperformed larger-cap stocks 16 of the years from 1971 to 1996, which
means larger-cap stocks did better the rest of the time.1/
- -------------------------
1/ Results are on a total return basis and include reinvestment of all dividends
and other distributions. Small-cap stocks are represented by the fifth
capitalization quintile of stocks on the NYSE from 1971 to 1981 and performance
of the Dimensional Fund Advisors (DFA) Small Company Fund from 1982 to 1996.
Larger-cap stocks are represented by the S&P "500" Index, an unmanaged group of
stocks. Please note that indices do not take into account any fees or expenses
of investing in the individual securities that they track. Data about these
7
<PAGE>
Q: Neuberger & Berman GENESIS Assets is classified as a "small-cap
value fund." To many people, "small-cap value" is an oxymoron. Can you clarify
the Portfolio's investment approach?
A: We understand the confusion. After all, a lot of people equate
"small-cap" with "growth." They also equate "value" with "cheap." At Neuberger &
Berman GENESIS Portfolio, we're 100% behind finding growing small-cap companies
- -- what we believe are highly profitable companies with solid records and
promising futures. So where do we part company with managers who follow a
"small-cap growth" style? It comes down to how much growth and at what price.
Small-cap growth investors seem willing to pay a premium for vastly superior
growth. This results in two problems: a) growth tends to be discounted by the
premium valuations, and b) the growth expectations are so high as to be
unsustainable. We believe superior yet more stable returns can be purchased at
significant discounts. They may be found in mundane, perhaps even boring,
industries. Remember, the same glamorous appeal that attracts so many growth
investors also attracts competitors.
In that respect, we're "value" managers. Yet we'd like to make this
point clear: Low price-to-earnings multiples, in and of themselves, cannot
justify a "buy" decision. When we search for growing, high-quality small-cap
companies selling at what we feel are bargain prices, we ask ourselves: Is the
company cheap for a good reason? Or, does it have the financial muscle and the
management talent to make it into the big leagues?
Q: Let's turn to specifics. What criteria are used to decide which
small-cap companies make the cut -- and which ones don't?
A: Over the years, we've seen hundreds of small-cap companies that
flourished and just as many that failed to deliver on their early promises. What
made the difference? While every case is unique, here are a few important traits
of the winners.
(..continued)
indices are prepared or obtained by N&B Management. The Portfolio may invest in
many securities not included in the above-described indices. Source: Stocks,
Bonds, Bills and Inflation 1997 YearbookTM, Ibbotson Associates, Chicago
(annually updates work by Roger G. Ibbotson and Rex A. Sinquefield). Used with
permission. All rights reserved.
8
<PAGE>
First of all, a successful small-cap company normally produces high
returns. In practice, this means the business has a number of barriers to entry.
Perhaps the company has a technology that's hard to duplicate. Or maybe it can
make a product at a substantially lower cost than anyone else. Unlike most
businesses, it has an advantage that allows it to continue earning above-market
returns.
In addition to having a competitive edge, a successful small-cap
company should generate healthy cash flow. With excess cash, a company has the
ability to finance its own growth without diluting the ownership stake of
existing stockholders by issuing more shares.
No small-cap company can grow without having the right people on board.
That's why we spend so much time meeting the CEOs and CFOs of small-cap
companies. While we question the managers about future plans and strategies, we
spend as much time evaluating them as people. Do they seem honest and capable?
Or do they puff up their case? Making portfolio decisions is a lot about making
character judgments -- who has the stuff to manage a growing company, and who
doesn't.
The risks involved in seeking capital appreciation from investments
primarily in companies with small market capitalization are set forth in the
Prospectus.
NEUBERGER & BERMAN FOCUS AND NEUBERGER & BERMAN GUARDIAN
--------------------------------------------------------
PORTFOLIOS
----------
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 it focuses its assets in those sectors where
undervalued stocks are clustered. The portfolio co-managers begin by looking for
stocks that are selling for less than the managers think they're worth, a
"bottom-up approach." More often than not, such stocks are in a few economic
sectors that are out of favor and are undervalued as a group. The portfolio
co-managers think most cheap stocks deserve to be cheap and their job is to find
the few that don't.
The portfolio co-managers don't pick sectors for Neuberger & Berman
FOCUS Portfolio based on their perception of what the economy is going to do.
They look for stocks with low valuations; often, these stocks will be found in a
9
<PAGE>
particular sector. If an investment manager rotates the sectors in a portfolio
by buying sectors when they are undervalued and selling them when they become
fully valued, the manager may be able to achieve above-average performance.
Neuberger & Berman GUARDIAN Portfolio subscribes to the same
stock-picking philosophy followed since Roy R. Neuberger founded Neuberger &
Berman GUARDIAN Fund (which, like Neuberger & Berman GUARDIAN Assets, invests
all of its net investable assets in Neuberger & Berman GUARDIAN Portfolio) in
1950.
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 has served
shareholders well and has paid a dividend every quarter and a capital gain
distribution EVERY YEAR since 1950. Of course, this past record does not
necessarily predict the Fund's future practices.
The portfolio co-managers place a high premium on being knowledgeable
about the companies whose stocks they buy. That knowledge is important, because
sometimes it takes courage to buy stocks that the rest of the market has
forsaken. The managers would rather buy an undervalued stock because they expect
it to become fairly valued than buy one fairly valued and hope it becomes
overvalued. The managers tend to buy stocks that are out of favor, believing
that an investor is not going to get great companies at great valuations when
the market perception is great.
Investors who switch around a lot are not going to benefit from
Neuberger & Berman GUARDIAN Portfolio's approach. They're following the market
- -- this Portfolio is looking at fundamentals.
NEUBERGER & BERMAN PARTNERS PORTFOLIO
-------------------------------------
Neuberger & Berman PARTNERS Portfolio's objective is capital growth. It
seeks to make money in good markets and not give up those gains during rough
times.
10
<PAGE>
Investors in Neuberger & Berman PARTNERS Assets typically 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.
The portfolio co-managers look for stocks that are undervalued in the
marketplace either in relation to strong current fundamentals, such as a low
price-to-earnings ratio, consistent cash flow, and support from asset values, or
in relation to their projection of the growth of the company's future earnings.
If the market goes down, those stocks the Portfolio elects to hold,
historically, have gone down less.
The portfolio co-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 are likely to
produce a new product, become an acquisition target, or undergo a financial
restructuring.
What else catches the portfolio co-managers' eyes? Companies whose
managements 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. The managers'
reasoning? Market leaders tend to earn higher levels of profits.
* * * * *
Each Portfolio invests in a wide array of stocks, and no single stock
makes up more than a small fraction of any Portfolio's total assets. Of course,
each 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
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of securities or use all of the investment techniques that are described.
REPURCHASE AGREEMENTS (ALL PORTFOLIOS). In a repurchase agreement, a
Portfolio purchases securities from a bank that is a member of the Federal
Reserve System or from a securities dealer that agrees to repurchase the
securities from the Portfolio at a higher price on a designated future date.
Repurchase agreements generally are for a short period of time, usually less
than a week. Repurchase agreements with a maturity of more than seven days are
considered to be illiquid securities. No Portfolio may enter into a repurchase
agreement with a maturity of more than seven days if, as a result, more than 15%
of the value of its net assets would then be invested in such repurchase
agreements and other illiquid securities. A Portfolio may enter into a
repurchase agreement only if (1) the underlying securities are of a type that
the Portfolio's investment policies and limitations would allow it to purchase
directly, (2) the market value of the underlying securities, including accrued
interest, at all times equals or exceeds the repurchase price, and (3) payment
for the underlying securities is made only upon satisfactory evidence that the
securities are being held for the Portfolio's account by its custodian or a bank
acting as the Portfolio's agent.
SECURITIES LOANS (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 other institutional investors
judged creditworthy by N&B Management. Borrowers are required continuously to
secure their obligations to return securities on loan from a 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. Before they are registered, such securities may be sold only in a privately
negotiated transaction or pursuant to an exemption from registration. In
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recognition of the increased size and liquidity of the institutional market for
unregistered securities and the importance of institutional investors in the
formation of capital, the SEC has adopted Rule 144A under the 1933 Act. Rule
144A is designed to facilitate efficient trading among institutional investors
by permitting the sale of certain unregistered securities to qualified
institutional buyers. To the extent privately placed securities held by a
Portfolio qualify under Rule 144A and an institutional market develops for those
securities, the Portfolio likely will be able to dispose of the securities
without registering them under the 1933 Act. To the extent that institutional
buyers become, for a time, uninterested in purchasing these securities,
investing in Rule 144A securities could increase the level of a Portfolio's
illiquidity. N&B Management, acting under guidelines established by the
Portfolio Trustees, may determine that certain securities qualified for trading
under Rule 144A are liquid. Foreign securities that are freely tradable in their
principal market 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 restricted
securities, including Rule 144A securities, are illiquid, purchases thereof will
be subject to each Portfolio's 15% limit on investments in illiquid securities.
Restricted securities for which no market exists are priced by a method that the
Portfolio Trustees believe accurately reflects fair value.
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
each Portfolio's investment policies and limitations concerning borrowings.
While a reverse repurchase agreement is outstanding, a Portfolio will deposit in
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a segregated account with its custodian cash or appropriate liquid securities,
marked to market daily, in an amount at least equal to the Portfolio's
obligations under the agreement. There is a risk that the counter-party to a
reverse repurchase agreement will be unable or unwilling to complete the
transaction as scheduled, which may result in losses to the Portfolio.
FOREIGN SECURITIES (ALL PORTFOLIOS). Each Portfolio may invest in U.S.
dollar-denominated securities of foreign issuers (including banks, governments,
and quasi-governmental organizations) and foreign branches of U.S. banks,
including negotiable certificates of deposit ("CDs"), bankers' acceptances and
commercial paper. These investments are subject to each Portfolio's quality
standards. While investments in foreign securities are intended to reduce risk
by providing further diversification, such investments involve sovereign and
other risks, in addition to the credit and market risks normally associated with
domestic securities. These additional risks include the possibility of adverse
political and economic developments (including political instability,
nationalization, expropriation, or confiscatory taxation) and the potentially
adverse effects of unavailability of public information regarding issuers, less
governmental supervision and regulation of financial markets, reduced liquidity
of certain financial markets, and the lack of uniform accounting, auditing, and
financial reporting standards or the application of standards that are different
or less stringent than those applied in the United States.
Each Portfolio also may invest in equity, debt, or other
income-producing securities that are denominated in or indexed to foreign
currencies, including (1) common and preferred stocks, (2) CDs, commercial
paper, fixed time deposits, and bankers' acceptances issued by foreign banks,
(3) obligations of other corporations, and (4) obligations of foreign
governments and their subdivisions, agencies, and instrumentalities,
international agencies, and supranational entities. Investing in foreign
currency denominated securities involves the special risks associated with
investing in non-U.S. issuers, as described in the preceding paragraph, and the
additional risks of (1) adverse changes in foreign exchange rates, and (2)
adverse changes in investment or exchange control regulations (which could
prevent cash from being brought back to the United States). Additionally,
dividends and interest payable on foreign securities 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
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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.
Foreign markets also have different clearance and settlement
procedures. In certain markets, there have been times when settlements have been
unable to keep pace with the volume of securities transactions, making it
difficult to conduct such transactions. Delays in settlement could result in
temporary periods when a portion of the assets of 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 securities or, if the Portfolio has
entered into a contract to sell the securities, could result in possible
liability to the purchaser.
Interest rates prevailing in other countries may affect the prices of
foreign securities and exchange rates for foreign currencies. Local factors,
including the strength of the local economy, the demand for borrowing, the
government's fiscal and monetary policies, and the international balance of
payments, often affect interest rates in other countries. Individual foreign
economies may differ favorably or unfavorably from the U.S. economy in such
respects as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency, and balance of payments position.
In order to limit the risks inherent in investing in foreign currency
denominated securities, a Portfolio may not purchase any such security if, as a
result, more than 10% of its total assets (taken at market value) would be
invested in foreign currency denominated securities. Within that limitation,
however, no Portfolio is restricted in the amount it may invest in securities
denominated in any one foreign currency.
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<PAGE>
OPTIONS ON SECURITIES,
FORWARD CONTRACTS, AND OPTIONS ON FOREIGN
CURRENCIES (COLLECTIVELY, "HEDGING INSTRUMENTS")
(ALL PORTFOLIOS)
COVERED CALL OPTIONS ON SECURITIES (ALL PORTFOLIOS). Each Portfolio may
write covered call options and may purchase call options in related closing
transactions. The purpose of writing call options is to hedge (i.e., to reduce,
at least in part, the effect of price fluctuations of securities held by the
Portfolio on the Portfolio's and its corresponding Fund's net asset values
("NAVs")) or to earn premium income. 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 until a certain date if
the purchaser decides to exercise the option. The Portfolio receives a premium
for writing the call option. So long as the obligation of the call option
continues, the Portfolio may be assigned an exercise notice, requiring it to
deliver the underlying security against payment of the exercise price. The
Portfolio may be obligated to deliver securities underlying an option at less
than the market price.
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.
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<PAGE>
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 exercise price of an option may be below, equal to, or above the
market value of the underlying security at the time the option is written.
Options normally have expiration dates between three and nine months from the
date written. American-style options are exercisable at any time prior to their
expiration date. The obligation under any option written by a Portfolio
terminates upon expiration of the option or, at an earlier time, when the
Portfolio offsets the option by entering into a "closing purchase transaction"
to purchase an option of the same series. If an option is purchased by a
Portfolio and is never exercised or closed out, the Portfolio will lose the
entire amount of the premium paid.
Options are traded both on national securities exchanges and in the
over-the-counter ("OTC") market. Exchange-traded options in the United States
are issued by a clearing organization affiliated with the exchange on which the
option is listed; the clearing organization in effect guarantees completion of
every exchange-traded option. In contrast, OTC options are contracts between a
Portfolio and a counter-party, with no clearing organization guarantee. Thus,
when a 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.
The assets used as cover (or held in a segregated account) 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
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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 a Portfolio when it writes (or
purchases) an option is the amount at which the option is currently traded on
the applicable market. The premium may reflect, among other things, the current
market price of the underlying security, the relationship of the exercise price
to the market price, the historical price volatility of the underlying security,
the length of the option period, the general supply of and demand for credit,
and the interest rate environment. The premium received by a Portfolio for
writing an option is recorded as a liability on the Portfolio's statement of
assets and liabilities. This liability is adjusted daily to the option's current
market value.
Closing transactions are effected in order to realize a profit (or
minimize a loss) on an outstanding option, to prevent an underlying security
from being called, or to permit the sale or the put of the underlying security.
There is, of course, no assurance that a Portfolio will be able to effect
closing transactions at favorable prices. If a Portfolio cannot enter into such
a transaction, it may be required to hold a security that it might otherwise
have sold, in which case it would continue to be at market risk on the security.
A Portfolio will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more than the premium
received from writing the call option. Because increases in the market price of
a call option generally reflect increases in the market price of the underlying
security, any loss resulting from the repurchase of a call option is likely to
be offset, in whole or in part, by appreciation of the underlying security owned
by the Portfolio; however, the Portfolio could be in a less advantageous
position than if it had not written the call option.
A Portfolio pays brokerage commissions or spreads in connection with
purchasing or writing options, including those used to close out existing
positions.
The hours of trading for options may not conform to the hours during
which the underlying securities are traded. To the extent that the
options markets close before the markets for the underlying securities,
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significant price, and rate movements can take place in the underlying markets
that cannot be reflected in the options markets.
FOREIGN CURRENCY TRANSACTIONS (ALL PORTFOLIOS). Each Portfolio may
enter into contracts for the purchase or sale of a specific currency at a future
date (usually less than one year from the date of the contract) at a fixed price
("forward contracts"). The Portfolios enter into forward contracts in an attempt
to hedge against changes in prevailing currency exchange rates. The Portfolios
do not engage in transactions in forward contracts for speculation; they view
investments in forward contracts as a means of establishing more definitely the
effective return on, or the purchase price of, securities denominated in foreign
currencies. Forward contract transactions include forward sales or purchases of
foreign currencies for the purpose of protecting the U.S. dollar value of
securities held or to be acquired by a Portfolio or protecting the U.S. dollar
equivalent of dividends, interest, or other payments on those securities.
Forward contracts are traded in the interbank market directly between
dealers (usually large commercial banks) and their customers. A forward contract
generally has no deposit requirement, and no commissions are charged at any
stage for trades; foreign exchange dealers realize a profit based on the
difference (the spread) between the prices at which they are buying and selling
various currencies.
At the consummation of a forward contract to sell currency, a Portfolio
may either make delivery of the foreign currency or terminate its contractual
obligation to deliver by purchasing an offsetting contract. If the Portfolio
chooses to make delivery of the foreign currency, it may be required to obtain
such currency through the sale of portfolio securities denominated in such
currency or through conversion of other assets of the Portfolio into such
currency. If the Portfolio engages in an offsetting transaction, it will incur a
gain or a loss to the extent that there has been a change in forward contract
prices. Closing purchase transactions with respect to forward contracts are
usually made with the currency dealer who is a party to the original forward
contract.
N&B Management believes that the use of foreign currency hedging
techniques, including "proxy-hedges," can provide significant protection of NAV
in the event of a general rise in the U.S. dollar against foreign currencies.
For example, the return available from securities denominated in a particular
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foreign currency would diminish if the value of the U.S. dollar increased
against that currency. Such a decline could be partially or completely offset by
an increase in value of a hedge involving a forward contract to sell that
foreign currency or a proxy-hedge involving a forward contract to sell a
different foreign currency whose behavior is expected to resemble the currency
in which the securities being hedged are denominated but which is available on
more advantageous terms.
However, a hedge or proxy-hedge cannot protect against exchange rate
risks perfectly, and, if 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. If a Portfolio uses
proxy-hedging, it may experience losses on both the currency in which it has
invested and the currency used for hedging if the two currencies do not vary
with the expected degree of correlation. Using forward contracts to protect the
value of a Portfolio's securities against a decline in the value of a currency
does not eliminate fluctuations in the prices of underlying securities. Because
forward contracts are not traded on an exchange, the assets used to cover such
contracts may be illiquid. A Portfolio may experience delays in the settlement
of its foreign currency transactions.
OPTIONS ON FOREIGN CURRENCIES (ALL PORTFOLIOS). Each Portfolio may
write and purchase covered call and put options on foreign currencies. 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. Currency options
have characteristics and risks similar to those of securities options, as
discussed herein. Certain options on foreign currencies are traded on the OTC
market and involve liquidity and credit risks that may not be present in the
case of exchange-traded currency options.
REGULATORY LIMITATIONS ON USING HEDGING INSTRUMENTS. 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
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margin and premiums on those positions (excluding the amount by which options
are "in-the-money") may not exceed 5% of the Portfolio's net assets.
COVER FOR HEDGING INSTRUMENTS. Each Portfolio will comply with SEC
guidelines regarding "cover" for Hedging Instruments and, if the guidelines so
require, set aside in a segregated account with its custodian the prescribed
amount of cash or appropriate liquid securities. Securities held in a segregated
account cannot be sold while the options or forward strategy covered by those
securities is outstanding, unless they are replaced with other suitable assets.
As a result, segregation of a large percentage of 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 options or forward
position; this inability may result in a loss to the Portfolio.
GENERAL RISKS OF HEDGING INSTRUMENTS. The primary risks in using
Hedging Instruments are (1) imperfect correlation or no correlation between
changes in market value of the securities or currencies held or to be acquired
by a Portfolio and the prices of Hedging Instruments; (2) possible lack of a
liquid secondary market for Hedging Instruments and the resulting inability to
close out Hedging Instruments when desired; (3) the fact that the skills needed
to use Hedging Instruments are different from those needed to select a
Portfolio's securities; (4) the fact that, although use of Hedging Instruments
for hedging purposes can reduce the risk of loss, they also can reduce the
opportunity for gain, or even result in losses, by offsetting favorable price
movements in hedged investments; and (5) the possible inability of 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 or offset
that of a Portfolio's underlying securities or currency. 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. There can be no assurance
that a Portfolio's use of Hedging Instruments will be successful.
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Each Portfolio's use of Hedging Instruments may be limited by the
provisions of the Internal Revenue Code of 1986, as amended ("Code"), with which
it must comply if its corresponding Fund is to continue to qualify as a
regulated investment company ("RIC"). See "Additional Tax Information."
FIXED INCOME SECURITIES (ALL PORTFOLIOS). While the emphasis of the
Portfolios' investment programs is on common stocks and other equity securities,
the Portfolios may also invest in money market instruments, U.S. Government and
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. Although the Portfolios may rely on the ratings of any NRSRO,
the Portfolios primarily refer to ratings assigned by S&P and Moody's, which are
described in Appendix A to this SAI.
Fixed income securities are subject to the risk of an issuer's
inability to meet principal and interest payments on its obligations ("credit
risk") and are subject to price volatility due to such factors as interest rate
sensitivity, market perception of the creditworthiness of the issuer, and market
liquidity ("market risk"). 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
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incidence of default. The market for lower-rated securities may be thinner and
less active than for higher-rated securities. Pricing of thinly traded
securities requires greater judgment than pricing of securities for which market
transactions are regularly reported. N&B Management will invest in lower-rated
securities only when it concludes that the anticipated return on such an
investment to Neuberger & Berman Partners Portfolio 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
no longer be eligible for purchase by that Portfolio. In such a case, each
Portfolio will engage in an orderly disposition of the downgraded securities to
the extent necessary to ensure that the Portfolio's holdings of securities rated
below investment grade and Comparable Unrated Securities will not exceed 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, usually 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 comparable 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 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") must
be taken into income ratably by the Portfolio prior to the receipt of any actual
payments. Because Neuberger & Berman PARTNERS Assets must distribute
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substantially all of its net income (including its share of the Portfolio's
accrued original issue discount) to its shareholders each year for income and
excise tax purposes, the Portfolio may have to dispose of portfolio securities
under disadvantageous circumstances to generate cash, or may be required to
borrow, to satisfy that Fund's distribution requirements. See "Additional Tax
Information."
The market prices of zero coupon securities generally are more volatile
than the prices of securities that pay interest periodically. Zero coupon
securities are likely to respond to changes in interest rates to a greater
degree than other types of debt securities having a similar maturity and credit
quality.
CONVERTIBLE SECURITIES (ALL PORTFOLIOS). Each Portfolio may invest in
convertible securities. A convertible security entitles the holder to receive
the interest paid or accrued on debt or the dividend paid on preferred stock
until the convertible security matures or is redeemed, converted or exchanged.
Before conversion, such securities ordinarily provide a stream of income with
generally higher yields than common stocks of the same or similar issuers, but
lower than the yield on non-convertible debt. Convertible securities are usually
subordinated to comparable-tier non-convertible securities but rank senior to
common stock in a corporation's capital structure. The value of a convertible
security is a function of (1) its yield in comparison to the yields of other
securities of comparable maturity and quality that do not have a conversion
privilege and (2) its worth if converted into the underlying common stock.
Convertible debt securities are subject to each Portfolio's investment policies
and limitations concerning fixed income securities.
The price of a convertible security often reflects variations in the
price of the underlying common stock in a way that non-convertible debt may not.
Convertible securities are typically issued by smaller capitalization companies
whose stock prices may be volatile. A convertible security may be subject to
redemption at the option of the issuer at a price established in the security's
governing instrument. If a convertible security held by 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 its corresponding Fund's ability to achieve their investment objectives.
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PREFERRED STOCK (ALL PORTFOLIOS). Each Portfolio may invest in
preferred stock. Unlike interest payments on debt securities, dividends on
preferred stock are generally payable at the discretion of the issuer's board of
directors. Preferred shareholders may have certain rights if dividends are not
paid but generally have no legal recourse against the issuer. Shareholders may
suffer a loss of value if dividends are not paid. The market prices of preferred
stocks are generally more sensitive to changes in the issuer's creditworthiness
than are the prices of debt securities.
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 making at least 90% of its investments
in not more than six such sectors:
(1) AUTOS AND HOUSING SECTOR: Companies engaged in design, production,
or sale of automobiles, automobile parts, mobile homes, or related products
("automobile industries") or design, construction, renovation, or refurbishing
of residential dwellings. The value of securities of companies in the automobile
industries is affected by, among other things, foreign competition, the level of
consumer confidence and consumer debt, and installment loan rates. The housing
construction industry may be affected by the level of consumer confidence and
consumer debt, mortgage rates, tax laws, and the inflation outlook.
(2) CONSUMER GOODS AND SERVICES SECTOR: Companies engaged in providing
consumer goods or services, including design, processing, production, sale, or
storage of packaged, canned, bottled, or frozen foods and beverages and design,
production, or sale of home furnishings, appliances, clothing, accessories,
cosmetics, or perfumes. Certain of these companies are subject to government
regulation affecting the use of various food additives and production methods,
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.
25
<PAGE>
(3) DEFENSE AND AEROSPACE SECTOR: Companies engaged in research,
manufacture, or sale of products or services related to the defense or aerospace
industries, including air transport; data processing or computer-related
services; communications systems; military weapons or transportation; general
aviation equipment, missiles, space launch vehicles, or spacecraft; machinery
for guidance, propulsion, or control of flight vehicles; and airborne or
ground-based equipment essential to the test, operation, or maintenance of
flight vehicles. Because these companies rely largely on U.S. (and foreign)
governmental demand for their products and services, their financial conditions
are heavily influenced by defense spending policies.
(4) ENERGY SECTOR: Companies involved in the production, transmission,
or marketing of energy from oil, gas, or coal, as well as nuclear, geothermal,
oil shale, or solar sources of energy (but excluding public utility companies).
Also included are companies that provide component products or services for
those activities. The value of these companies' securities varies based on the
price and supply of energy fuels and may be affected by international politics,
energy conservation, the success of exploration projects, environmental
considerations, and the tax and other regulatory policies of various
governments.
(5) FINANCIAL SERVICES SECTOR: Companies providing financial services
to consumers or industry, including commercial banks and savings and loan
associations, consumer and industrial finance companies, securities brokerage
companies, leasing companies, and insurance companies. These companies are
subject to extensive governmental regulations. Their profitability may fluctuate
significantly as a result of volatile interest rates, concerns about particular
banks and savings institutions, and general economic conditions.
(6) HEALTH CARE SECTOR: Companies engaged in design, manufacture, or
sale of products or services used in connection with the provision of health
care, including pharmaceutical companies; firms that design, manufacture, sell,
or supply medical, dental, or optical products, hardware, or services; companies
involved in biotechnology, medical diagnostic, or biochemical research and
development; and companies that operate health care facilities. Many of these
companies are subject to government regulation and potential health care
reforms, which could affect the price and availability of their products and
services. Also, products and services of these companies could quickly become
obsolete.
26
<PAGE>
(7) HEAVY INDUSTRY SECTOR: Companies engaged in research, development,
manufacture, or marketing of products, processes, or services related to the
agriculture, chemicals, containers, forest products, non-ferrous metals, steel,
or pollution control industries, including synthetic and natural materials (for
example, chemicals, plastics, fertilizers, gases, fibers, flavorings, or
fragrances), paper, wood products, steel, and cement. Certain of these companies
are subject to state and federal regulation, which could require alteration or
cessation of production of a product, payment of fines, or cleaning of a
disposal site. Furthermore, because some of the materials and processes used by
these companies involve hazardous components, there are additional risks
associated with their production, handling, and disposal. The risk of product
obsolescence also is present.
(8) MACHINERY AND EQUIPMENT SECTOR: Companies engaged in the research,
development, or manufacture of products, processes, or services relating to
electrical equipment, machinery, pollution control, or construction services,
including transformers, motors, turbines, hand tools, earth-moving equipment,
and waste disposal services. The profitability of most of these companies may
fluctuate significantly in response to capital spending and general economic
conditions. As is the case for the heavy industry sector, there are risks
associated with the production, handling, and disposal of materials and
processes that involve hazardous components and the risk of product
obsolescence.
(9) MEDIA AND ENTERTAINMENT SECTOR: Companies engaged in design,
production, or distribution of goods or services for the media industries
(including television or radio broadcasting or manufacturing, publishing,
recordings and musical instruments, motion pictures, and photography) and the
entertainment industries (including sports arenas, amusement and theme parks,
gaming casinos, sporting goods, camping and recreational equipment, toys and
games, travel-related services, hotels and motels, and fast food and other
restaurants). Many products produced by companies in this sector -- for example,
video and electronic games -- may become obsolete quickly. Additionally,
companies engaged in television and radio broadcast are subject to government
regulation.
(10) RETAILING SECTOR: Companies engaged in retail distribution of home
furnishings, food products, clothing, pharmaceuticals, leisure products, or
other consumer goods, including department stores, supermarkets, and retail
chains specializing in particular items such as shoes, toys, or pharmaceuticals.
27
<PAGE>
The value of these companies' securities fluctuates based on consumer spending
patterns, which depend on inflation and interest rates, the level of consumer
debt, and seasonal shopping habits. The success or failure of a company in this
highly competitive sector depends on its ability to predict rapidly changing
consumer tastes.
(11) TECHNOLOGY SECTOR: Companies that are expected to have or develop
products, processes, or services that will provide, or will benefit
significantly from, technological advances and improvements or future automation
trends, including semiconductors, computers and peripheral equipment, scientific
instruments, computer software, telecommunications equipment, and electronic
components, instruments, and systems. These companies are sensitive to foreign
competition and import tariffs. Also, many of their products may become obsolete
quickly.
(12) TRANSPORTATION SECTOR: Companies involved in providing
transportation of people and products, including airlines, railroads, and
trucking firms. Revenues of these companies are affected by fluctuations in fuel
prices and government regulation of fares.
(13) UTILITIES SECTOR: Companies in the public utilities industry and
companies that derive a substantial majority of their revenues through supplying
public utilities (including companies engaged in the manufacture, production,
generation, transmission, or sale of gas and electric energy) and that provide
telephone, telegraph, satellite, microwave, and other communication facilities
to the public. The gas and electric public utilities industries are subject to
various uncertainties, including the outcome of political issues concerning the
environment, prices of fuel for electric generation, availability of natural
gas, and risks associated with the construction and operation of nuclear power
facilities.
PERFORMANCE INFORMATION
Each Fund's performance figures are based on historical results 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.
28
<PAGE>
TOTAL RETURN COMPUTATIONS
- -------------------------
Each Fund may advertise certain total return information. An average
annual compounded rate of return ("T") may be computed by using the redeemable
value at the end of a specified period ("ERV") of a hypothetical initial
investment of $1,000 ("P") over a period of time ("n") according to the formula:
P(1+T)n = ERV
Average annual total return smoothes out year-to-year variations in
performance and, in that respect, differs from actual year-to-year results.
The Funds commenced operations in August or September 1996, except for
Neuberger & Berman GENESIS Assets, which commenced operations in April 1997.
However, five 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 five Portfolios described herein. Each Sister Fund had a
predecessor. The following total return data is for each Fund since its
inception and, for periods prior to each Fund's inception, its Sister Fund
(which, as used herein, includes data for that Sister Fund's predecessor). The
Sister Funds have a different fee structure than the Funds and do not pay 12b-1
fees. Had the higher fees of the Funds been reflected, the total returns shown
below would have been lower.
The average annual total returns for Neuberger & Berman MANHATTAN
Assets and its Sister Fund for the one-, five-, and ten-year periods ended
August 31, 1997, were +38.04%, +17.43%, and +11.43%, respectively.
The average annual total returns for Neuberger & Berman GENESIS Assets
and its Sister Fund for the one- and five-year periods ended August 31, 1997 and
for the period from September 27, 1988 (commencement of operations) through
August 31, 1997, were +44.42%, +22.24%, and +16.70%, respectively.
The average annual total returns for Neuberger & Berman FOCUS Assets
and its Sister Fund for the one-, five-, and ten-year periods ended August 31,
1997, were +43.20%, +21.78%, and +14.33%, respectively.
29
<PAGE>
The average annual total returns for Neuberger & Berman GUARDIAN Assets
and its Sister Fund for the one-, five-, and ten-year periods ended August 31,
1997, were +38.69%, +19.72%, and 14.35%, respectively.
The average annual total returns for Neuberger & Berman PARTNERS Assets
and its Sister Fund for the one-, five-, and ten-year periods ended August 31,
1997, were +46.26%, +22.32%, and +14.27%, respectively.
Prior to January 5, 1989, the investment policies of Neuberger & Berman
FOCUS Assets' Sister Fund required that at least 80% of its investments normally
be in energy-related investments; prior to November 1, 1991, those investment
policies required that at least 25% of its investments normally be in the energy
sector. Neuberger & Berman FOCUS Assets may include information reflecting the
Sister Fund's performance and expenses for periods before November 1, 1991, in
its advertisements, sales literature, financial statements, and other documents
filed with the SEC and/or provided to current and prospective shareholders.
Investors should be aware that such information may not necessarily reflect the
level of performance and expenses that would have been experienced had the
Fund's current investment policies been in effect.
N&B Management may from time to time waive a portion of its fees due
from any Fund or Portfolio, or reimburse a Fund or Portfolio for a portion of
its expenses. Such action has the effect of increasing total return. Actual
reimbursements and waivers are described in the Prospectus, and in "Investment
Management and Administration Services" below.
COMPARATIVE INFORMATION
- -----------------------
From time to time each Fund's performance may be compared with:
(1) data (that may be expressed as rankings or ratings)
published by independent services or publications (including
newspapers, newsletters, and financial periodicals) that monitor the
performance of mutual funds, such as Lipper Analytical Services, Inc.,
C.D.A. Investment Technologies, Inc., Wiesenberger Investment Companies
Service, Investment Company Data Inc., Morningstar, Inc., Micropal
Incorporated, and quarterly mutual fund rankings by Money, Fortune,
30
<PAGE>
Forbes, Business Week, Personal Investor, and U.S. News & World Report
magazines, The Wall Street Journal, The New York Times, Kiplinger's
Personal Finance, and Barron's Newspaper, or
(2) recognized stock and other indices, such as the S&P "500"
Composite Stock Price Index ("S&P 500 Index"), S&P Small Cap 600 Index
("S&P 600 Index"), S&P Mid Cap 400 Index ("S&P 400 Index"), Russell
2000 Stock Index, Russell Midcap Growth Index, Dow Jones Industrial
Average ("DJIA"), Wilshire 1750 Index, Nasdaq Composite Index,
Montgomery Securities Growth Stock Index, Value Line Index, U.S.
Department of Labor Consumer Price Index ("Consumer Price Index"),
College Board Annual Survey of Colleges, Kanon Bloch's Family
Performance Index, the Barra Growth Index, the Barra Value Index, and
various other domestic, international, and global indices. The S&P 500
Index is a broad index of common stock prices, while the DJIA
represents a narrower segment of industrial companies. The S&P 600
Index includes stocks that range in market value from $39 million to
$2.7 billion, with an average of $616 million. The S&P 400 Index
measures mid-sized companies that have an average market capitalization
of $2.2 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 may include the Portfolio's portfolio
31
<PAGE>
diversification by asset type. Information used in Advertisements may include
statements or illustrations relating to the appropriateness of types of
securities and/or mutual funds that may be employed to meet specific financial
goals, such as (1) funding retirement, (2) paying for children's education, and
(3) financially supporting aging parents.
N&B Management believes that many of its common stock funds may be
attractive investment vehicles for conservative investors who are interested in
long-term appreciation from stock investments, but who have a moderate tolerance
for risk. Such investors may include, for example, individuals (1) planning for
or facing retirement, (2) receiving or expecting to receive lump-sum
distributions from individual retirement accounts ("IRAs"), self-employed
individual retirement plans ("Keogh plans"), or other retirement plans, (3)
anticipating rollovers of CDs or IRAs, Keogh plans, or other retirement plans,
and (4) receiving a significant amount of money as a result of inheritance, sale
of a business, or termination of employment.
Investors who may find Neuberger & Berman PARTNERS Assets, Neuberger &
Berman GUARDIAN Assets or Neuberger & Berman FOCUS Assets to be an attractive
investment vehicle also include parents saving to meet college costs for their
children. For instance, the cost of a college education is rapidly approaching
the cost of the average family home. Estimates of total four-year costs
(including tuition, room and board, books and other expenses) for students
starting college in various years may be included in Advertisements, based on
the College Board Annual Survey of Colleges.
Information relating to inflation and its effects on the dollar also
may be included in Advertisements. For example, after ten years, the purchasing
power of $25,000 would shrink to $16,621, $14,968, $13,465, and $12,100,
respectively, if the annual rates of inflation during that period were 4%, 5%,
6%, and 7%, respectively. (To calculate the purchasing power, the value at the
end of each year is reduced by the inflation rate for the ten-year period.)
CERTAIN RISK CONSIDERATIONS
Although each Portfolio seeks to reduce risk by investing in a
diversified portfolio of securities, diversification does not eliminate all
32
<PAGE>
risk. There can, of course, be no assurance that any Portfolio will achieve its
investment objective.
TRUSTEES AND OFFICERS
The following table sets forth information concerning the trustees and
officers of the Trusts, including their addresses and principal business
experience during the past five years. Some persons named as trustees and
officers also serve in similar capacities for other funds and their
corresponding portfolios administered or managed by N&B Management and Neuberger
& Berman, LLC ("Neuberger & Berman").
<TABLE>
<CAPTION>
Name, Age, and Positions Held Principal
Address(1) With the Trusts Occupation(s)(2)
- -------------- --------------- ----------------
<S> <C> <C>
Faith Colish (62) Trustee of each Attorney at Law, Faith
63 Wall Street Trust Colish, A Professional
24th Floor Corporation.
New York, NY 10005
Donald M. Cox (75) Trustee of each Retired. Formerly
435 East 52nd Street Trust Senior Vice President
New York, NY 10022 and Director of Exxon
Corporation; Director
of Emigrant Savings
Bank.
Stanley Egener* (63) Chairman of the Principal of Neuberger
Board, Chief & Berman; President
Executive Officer, and Director of N&B
and Trustee of each Management; Chairman
Trust of the Board, Chief
Executive Officer and
Trustee of eight other
mutual funds for which
N&B Management acts as
investment manager
or administrator.
33
<PAGE>
Name, Age, and Positions Held Principal
Address(1) With the Trusts Occupation(s)(2)
- -------------- --------------- ----------------
Howard A. Mileaf (60) Trustee of each Vice President and
WHX Corporation Trust Special Counsel to WHX
110 East 59th Street Corporation (holding
30th Floor company) since 1992;
New York, NY 10022 Director of Kevlin
Corporation
(manufacturer of
microwave and other
products).
Edward I. O'Brien* (69) Trustee of each Until 1993, President
12 Woods Lane Trust of the Securities
Scarsdale, NY 10583 Industry Association
("SIA") (securities
industry's
representative in
government relations
and regulatory matters
at the federal and
state levels); until
November 1993,
employee of the SIA;
Director of Legg
Mason, Inc.
John T. Patterson, Jr. (69) Trustee of each Retired. Formerly,
183 Ledge Drive Trust President of SOBRO
Torrington, CT 06790 (South Bronx Overall Economic
Development Corporation).
John P. Rosenthal (64) Trustee of each Senior Vice President
Burnham Securities Inc. Trust of Burnham Securities
Burnham Asset Management Corp. Inc. (a registered
1325 Avenue of the broker-dealer) since
Americas 1991; Director, Cancer
17th Floor Treatment Holdings,
New York, NY 10019 Inc.
Cornelius T. Ryan (66) Trustee of each General Partner of
Oxford Bioscience Trust Oxford Partners and
Partners Oxford Bioscience
315 Post Road West Partners (venture
Westport, CT 06880 capital partnerships)
34
<PAGE>
Name, Age, and Positions Held Principal
Address(1) With the Trusts Occupation(s)(2)
- -------------- --------------- ----------------
and President of
Oxford Venture
Corporation; Director
of Capital Cash
Management Trust
(money market fund)
and Prime Cash Fund.
Gustave H. Shubert (68) Trustee of each Senior Fellow/
13838 Sunset Boulevard Trust Corporate Advisor and
Pacific Palisades, CA Advisory Trustee of
90272 Rand (a non-profit
public interest
research institution)
since 1989; Honorary
Member of the Board of
Overseers of the
Institute for Civil
Justice, the Policy
Advisory Committee of
the Clinical Scholars
Program at the
University of
California, the
American Association
for the Advancement of
Science, the Counsel on
Foreign Relations, and
the Institute for
Strategic Studies
(London); advisor to
the Program Evaluation
and Methodology
Division of the U.S.
General Accounting
Office; formerly Senior
Vice President and
Trustee of Rand.
Lawrence Zicklin* (61) President and Principal of Neuberger
Trustee of each & Berman; Director of
Trust N&B Management;
President and/or
35
<PAGE>
Name, Age, and Positions Held Principal
Address(1) With the Trusts Occupation(s)(2)
- -------------- --------------- ----------------
Trustee of five other
mutual funds for which
N&B Management acts as
investment manager or
administrator.
Daniel J. Sullivan (57) Vice President of Senior Vice President
each Trust of N&B Management
since 1992; Vice
President of eight
other mutual funds for
which N&B Management
acts as investment
manager or
administrator.
Michael J. Weiner (50) Vice President and Senior Vice President
Principal Financial of N&B Management
Officer of each since 1992; Treasurer
Trust of N&B Management from
1992 to 1996; 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 (41) Secretary of each Vice President of N&B
Trust Management; Secretary
of eight other mutual
funds for which N&B
Management acts as
investment manager or
administrator.
Richard Russell (50) Treasurer and Vice President of N&B
Principal Account- Management since 1993;
ing Officer of each prior thereto,
Trust Assistant Vice
President of N&B
Management; Treasurer
and Principal Ac-
counting Officer of
36
<PAGE>
Name, Age, and Positions Held Principal
Address(1) With the Trusts Occupation(s)(2)
- -------------- --------------- ----------------
eight other mutual
funds for which N&B
Management acts as
investment manager or
administrator.
Stacy Cooper-Shugrue (34) Assistant Secretary Assistant Vice
of each Trust President of N&B
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 (60) Assistant Secretary Principal of Neuberger
of each Trust & Berman since 1992;
Assistant Secretary of
eight other mutual
funds for which N&B
Management acts as
investment manager or
administrator.
Barbara DiGiorgio (38) Assistant Treasurer Assistant Vice
of each Trust President of N&B
Management since 1993;
prior thereto, employee
of N&B Management;
Assistant Treasurer
since 1996 of eight
other mutual funds for
which N&B Management
acts as investment
manager or
administrator.
Celeste Wischerth (36) Assistant Treasurer Assistant Vice
of each Trust President of N&B
Management since 1994;
37
<PAGE>
Name, Age, and Positions Held Principal
Address(1) With the Trusts Occupation(s)(2)
- -------------- --------------- ----------------
prior thereto, employee
of N&B Management;
Assistant Treasurer
since 1996 of eight
other mutual funds for
which N&B Management
acts as investment
manager or
administrator.
</TABLE>
- --------------------
(1) Unless otherwise indicated, the business address of each listed person is
605 Third Avenue, New York, New York 10158.
(2) Except as otherwise indicated, each individual has held the positions shown
for at least the last five years.
* Indicates a trustee who is an "interested person" of each Trust within the
meaning of the 1940 Act. Messrs. Egener and Zicklin are interested persons by
virtue of the fact that they are officers and/or directors of N&B Management and
principals of Neuberger & Berman. Mr. O'Brien is an interested person by virtue
of the fact that he is a director of Legg Mason, Inc., a wholly owned subsidiary
of which, from time to time, serves as a broker or dealer to the 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
provide that each such Trust will indemnify its trustees and officers against
liabilities and expenses reasonably incurred in connection with litigation in
which they may be involved because of their offices with the Trust, unless it is
adjudicated that they (a) engaged in bad faith, willful misfeasance, gross
negligence, or reckless disregard of the duties involved in the conduct of their
offices, or (b) did not act in good faith in the reasonable belief that their
action was in the best interest of the Trust. In the case of 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
38
<PAGE>
engaged in willful misfeasance, bad faith, gross negligence, or reckless
disregard of their duties.
The following table sets forth information concerning the compensation
of the trustees of the Trust. None of the Neuberger & Berman Funds(R) has any
retirement plan for its trustees.
TABLE OF COMPENSATION
FOR FISCAL YEAR ENDED 8/31/97
-----------------------------
Aggregate Total Compensation from
Name and Position with Compensation Investment Companies in
the Trust from the the Neuberger & Berman
- --------- Trust Fund Complex Paid to
----- Trustees
--------
Faith Colish $3 $64,000
Trustee (5 other investment
companies)
Donald M. Cox $3 $31,000
Trustee (3 other investment
companies)
Stanley Egener $0 $0
Chairman of the Board, (9 other investment
Chief Executive companies)
Officer, and Trustee
Alan R. Gruber, $1 $20,000
Trustee, and The (3 other investment
Estate of Alan R. companies)
Gruber
Howard A. Mileaf $3 $33,500
Trustee (4 other investment
companies)
Edward I. O'Brien $4 $34,500
(3 other investment
companies)
John T. Patterson, Jr. $4 $37,500
Trustee (4 other investment
companies)
John P. Rosenthal $3 $32,500
Trustee (4 other investment
companies)
39
<PAGE>
TABLE OF COMPENSATION
FOR FISCAL YEAR ENDED 8/31/97
-----------------------------
Aggregate Total Compensation from
Name and Position with Compensation Investment Companies in
the Trust from the the Neuberger & Berman
- --------- Trust Fund Complex Paid to
----- Trustees
--------
Cornelius T. Ryan $3 $30,500
Trustee (3 other investment
companies)
Gustave H. Shubert $3 $30,500
Trustee (3 other investment
companies)
Lawrence Zicklin $0 $0
President and Trustee (5 other investment
companies)
At November 28, 1997, the trustees and officers of the Trusts, as a
group, owned beneficially or of record less than 1% of the outstanding shares of
each Fund.
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
40
<PAGE>
securities transactions on behalf of each Portfolio through associated persons
of N&B Management. The Management Agreement also specifically permits N&B
Management to compensate, through higher commissions, brokers and dealers who
provide investment research and analysis to the Portfolios, although N&B
Management has no current plans to pay a material amount of such compensation.
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 principals 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 facilities, services and personnel, as well as
accounting, recordkeeping, and other services, to each Fund pursuant to an
administration agreement with the Trust, dated November 1, 1994, as amended
August 2, 1996 ("Administration Agreement"). Each Fund (except Neuberger &
Berman GENESIS Assets) 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. Neuberger & Berman GENESIS Assets was authorized to
become subject to the Administration Agreement by vote of the Fund Trustees on
October 24, 1996, and became subject to it on March 31, 1997. 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 Institutions for accounting, recordkeeping and other services that
they provide in connection with investments in the Funds.
Institutions may be subject to federal or state laws that limit their
ability to provide certain administrative or distribution-related services. For
example, the Glass-Steagall Act is generally interpreted to prohibit most banks
from underwriting mutual fund shares. N&B Management intends to contract with
Institutions for only those services they may legally provide. If, due to a
change in the laws governing Institutions or in the interpretation of any such
41
<PAGE>
law, an Institution is prohibited from performing some or all of the
above-described services, N&B Management may be required to find alternative
means of providing those services. Any such change is not expected to impact the
Funds or their shareholders adversely.
During the fiscal year ended August 31, 1997 and the period from August
19, 1996 (commencement of operations) to August 31, 1996, Neuberger & Berman
PARTNERS Assets accrued management and administration fees of $11,490 and $4,
respectively.
During the period from commencement of operations (September 4, 1996
for each Fund listed below, except Neuberger & Berman GENESIS Assets, which
commenced operations on April 2, 1997) to August 31, 1997, Neuberger & Berman
FOCUS Assets, Neuberger & Berman GENESIS Assets, Neuberger & Berman GUARDIAN
Assets and Neuberger & Berman MANHATTAN Assets accrued management and
administration fees of $1,083, $1,123, $20,291 and $1,108, respectively. From
May 1, 1995 to December 15, 1997, N&B Management voluntarily waived a portion of
the management fee borne by Neuberger & Berman GENESIS Portfolio to reduce the
fee by 0.10% per annum of the average daily net assets of that Portfolio. During
the period from April 2, 1997 to August 31, 1997, N&B Management waived $94 of
management fees that otherwise would have been borne indirectly by Neuberger &
Berman GENESIS Assets.
N&B Management has voluntarily undertaken until December 31, 1998, to
reimburse each Fund for its Total Operating Expenses (as defined in the
Prospectus) which exceed 1.50% per annum of the Fund's average daily net assets.
During the year ended August 31, 1997 and the period from August 19, 1996
(commencement of operations) to August 31, 1996, N&B Management reimbursed
Neuberger & Berman PARTNERS Assets for $96,351 and $13,840, respectively of
expenses. During the period from commencement of operations (September 4, 1996
for each Fund listed below, except Neuberger & Berman GENESIS Assets, which
commenced operations on April 2, 1997) to August 31, 1997, N&B Management
reimbursed Neuberger & Berman FOCUS Assets, Neuberger & Berman GENESIS Assets,
Neuberger & Berman GUARDIAN Assets and Neuberger & Berman MANHATTAN Assets for
$90,760, $22,622, $99,842 and $90,551, respectively, of expenses.
The Management Agreement continues until August 2, 1998. 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
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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 interests in that Portfolio. The Administration Agreement continues
until August 2, 1998. 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 that Fund.
The Management Agreement is terminable, without penalty, with respect
to a Portfolio on 60 days' written notice either by Managers Trust or by N&B
Management. The Administration Agreement is terminable, without penalty, with
respect to a Fund on 60 days' written notice either by N&B Management or by the
Trust. Each Agreement terminates automatically if it is assigned.
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 holders of the interests in the
Portfolios on August 2, 1993.
The Sub-Advisory Agreement provides in substance that Neuberger &
Berman will furnish to N&B Management, upon reasonable request, the same type of
investment recommendations and research that Neuberger & Berman, from time to
time, provides to its principals and employees for use in managing client
accounts. In this manner, N&B Management expects to have available to it, in
addition to research from other professional sources, the capability of the
research staff of Neuberger & Berman. This staff consists of numerous investment
analysts, each of whom specializes in studying one or more industries, under the
supervision of the Director of Research, who is also available for consultation
with 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.
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Neuberger & Berman also serves as sub-adviser for all of the other mutual funds
managed by N&B Management.
The Sub-Advisory Agreement continues until August 2, 1998 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 or a 1940 Act majority vote of the outstanding interests in that
Portfolio, by N&B Management, or by Neuberger & Berman on not less than 30 nor
more than 60 days' prior 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
- ----------------------------
As of September 30, 1997, the investment companies managed by N&B
Management had aggregate net assets of approximately $21.2 billion. N&B
Management currently serves as investment manager of the following investment
companies:
Approximate
Net Assets at
NAME September 30, 1997
- ---- ------------------
Neuberger & Berman Cash Reserves Portfolio.........................$667,531,894
(investment portfolio for Neuberger & Berman Cash Reserves)
Neuberger & Berman Government Money Portfolio......................$248,190,672
(investment portfolio for Neuberger & Berman Government Money Fund)
Neuberger & Berman Limited Maturity Bond Portfolio.................$295,393,823
(investment portfolio for Neuberger & Berman Limited
Maturity Bond Fund and Neuberger & Berman Limited Maturity
Bond Trust)
Neuberger & Berman Municipal Money Portfolio.......................$146,706,408
44
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(investment portfolio for Neuberger & Berman Municipal Money
Fund)
Neuberger & Berman Municipal Securities Portfolio...................$31,573,660
(investment portfolio for Neuberger & Berman Municipal
Securities Trust)
Neuberger & Berman Ultra Short Bond Portfolio.......................$62,627,463
(investment portfolio for Neuberger & Berman Ultra Short Bond
Fund and Neuberger & Berman Ultra Short Bond Trust)
Neuberger & Berman Focus Portfolio...............................$1,661,565,204
(investment portfolio for Neuberger & Berman Focus Fund,
Neuberger & Berman Focus Trust and Neuberger & Berman Focus
Assets)
Neuberger & Berman Genesis Portfolio.............................$1,491,048,221
(investment portfolio for Neuberger & Berman Genesis Fund,
Neuberger & Berman Genesis Trust and Neuberger & Berman Genesis
Assets)
Neuberger & Berman Guardian Portfolio.......................... $9,123,101,599
(investment portfolio for Neuberger & Berman Guardian Fund,
Neuberger & Berman Guardian Trust and Neuberger & Berman
Guardian Assets)
Neuberger & Berman International Portfolio.... ....................$127,016,071
(investment portfolio for Neuberger & Berman International Fund
and Neuberger & Berman International Trust)
Neuberger & Berman Manhattan Portfolio.............................$655,156,471
(investment portfolio for Neuberger & Berman Manhattan Fund,
Neuberger & Berman Manhattan Trust and Neuberger & Berman
Manhattan Assets)
Neuberger & Berman Partners Portfolio............................$3,783,754,657
(investment portfolio for Neuberger & Berman Partners Fund,
Neuberger & Berman Partners Trust and Neuberger & Berman
Partners Assets)
Neuberger & Berman Socially Responsive.............................$274,230,723
Portfolio (investment portfolio for Neuberger & Berman
Socially Responsive Fund, Neuberger & Berman Socially
Responsive Trust and Neuberger & Berman NYCDC Socially
Responsive Trust)
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Advisers Managers Trust..........................................$2,651,503,613
(seven series)
The investment decisions concerning the Portfolios and the other mutual
funds managed by N&B Management (collectively, "Other N&B Funds") have been and
will continue to be made independently of one another. In terms of their
investment objectives, most of the Other N&B Funds differ from the Portfolios.
Even where the investment objectives are similar, however, the methods used by
the Other N&B Funds and the Portfolios to achieve their objectives may differ.
The investment results achieved by all of the mutual funds managed by N&B
Management have varied from one another in the past and are likely to vary in
the future.
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, in
terms of amount, in accordance with a formula considered to be equitable to the
funds involved. Although in some cases this arrangement may have a detrimental
effect on the price or volume of the securities as to 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 Portfolios are subject to certain limitations imposed on all
advisory clients of Neuberger & Berman (including the Portfolios, the Other N&B
Funds, and other managed accounts) and personnel of Neuberger & Berman and its
affiliates. These include, for example, limits that may be imposed in certain
industries or by certain companies, and policies of Neuberger & Berman that
limit the aggregate purchases, by all accounts under management, of the
outstanding shares of public companies.
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; Theodore P.
Giuliano, Vice President and director; Michael M. Kassen, Vice President and
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director; Irwin Lainoff, 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;
Patrick T. Byrne, Vice President; Brooke A. Cobb, Vice President; Robert W.
D'Alelio, Vice President; Roberta D'Orio, Vice President; Clara Del Villar, Vice
President; Brian J. Gaffney, Vice President; Joseph G. Galli, Vice President;
Robert I. Gendelman, Vice President; Josephine P. Mahaney, Vice President; Ellen
Metzger, Vice President and Secretary; Paul Metzger, Vice President; Janet W.
Prindle, Vice President; Kevin L. Risen, Vice President; Richard Russell, Vice
President; Jennifer K. Silver, Vice President; Kent C. Simons, Vice President;
Frederic B. Soule, Vice President; Judith M. Vale, Vice President; Susan Walsh,
Vice President; Thomas Wolfe, Vice President; Andrea Trachtenberg, Vice
President of Marketing; Robert Conti, Treasurer; Valerie Chang, Assistant Vice
President; Stacy Cooper-Shugrue, Assistant Vice President; Barbara DiGiorgio,
Assistant Vice President; Michael J. Hanratty, Assistant Vice President; Leslie
Holliday-Soto, Assistant Vice President; Jody L. Irwin, Assistant Vice
President; Robert L. Ladd, Assistant Vice President; Carmen G. Martinez,
Assistant Vice President; Joseph S. Quirk, Assistant Vice President; Ingrid
Saukaitis, Assistant Vice President; Josephine Velez, Assistant Vice President;
Celeste Wischerth, Assistant Vice President; and Loraine Olavarria, Assistant
Secretary. Messrs. Cantor, Egener, Gendelman, Giuliano, Kassen, Lainoff, Risen,
Simons, Sundman and Zicklin and Mmes. Prindle, Silver and Vale are principals of
Neuberger & Berman.
Messrs. Egener and Zicklin are trustees and officers, and Messrs.
Russell, Sullivan and Weiner, and Mmes. Brandon, Cooper-Shugrue, DiGiorgio, and
Wischerth are officers, of each Trust. C. Carl Randolph, a principal of
Neuberger & Berman, also is an officer of each Trust.
All of the outstanding voting stock in N&B Management is owned by
persons who are also principals of Neuberger & Berman.
DISTRIBUTION ARRANGEMENTS
DISTRIBUTOR
- -----------
N&B Management serves as the distributor ("Distributor") in connection
with the offering of each Fund's shares 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
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<PAGE>
the Prospectus and this SAI or that properly may be included in sales literature
and advertisements in accordance with the 1933 Act, the 1940 Act, and applicable
rules of self-regulatory organizations. Sales may be made only by the
Prospectus, which may be delivered personally, through the mails, or by
electronic means. The Distributor is the 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
advertising and promotion expenses incurred in the sale of the Funds' shares.
The Trust, on behalf of each Fund, and the Distributor are parties to a
Distribution and Services Agreement dated February 12, 1996, as amended August
2, 1996 ("Distribution Agreement"). The Distribution Agreement was approved by
the Fund Trustees, including 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"), on October 25,
1995. The Distribution Agreement continues until August 2, 1998. 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 the 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 terminate automatically on its
assignment, in the same manner as the Management Agreement.
RULE 12B-1 PLAN
- ---------------
The Fund Trustees adopted the Plan on October 25, 1995, as amended on
January 31, 1996 and August 2, 1996. Neuberger & Berman GENESIS Assets was
authorized to become subject to the Plan by vote of the Fund Trustees on October
24, 1996, and became subject to it on March 31, 1997. The Plan provides that
each Fund will compensate N&B Management for administrative and other services
provided to the Funds, its activities and expenses related to the sale and
distribution of Fund shares, and ongoing services to investors in the Funds.
Under the Plan, N&B Management receives from each Fund a fee at the annual rate
48
<PAGE>
of 0.25% of that Fund's average daily net assets. N&B Management may pay up to
the full amount of this fee to Institutions that distribute or make available
Fund shares and/or provide services to the Funds and their shareholders. The fee
paid to an Institution is based on the level of such services provided.
Institutions may use the payments for, among other purposes, compensating
employees engaged in sales and/or shareholder servicing. The amount of fees paid
by a Fund during any year may be more or less than the cost of distribution and
other services provided to the Fund.
During the fiscal year ended August 31, 1997, Neuberger & Berman
PARTNERS Assets accrued $3,176 of fees under the Plan. During the period from
September 4, 1996 (commencement of operations) to August 31, 1997, Neuberger &
Berman GUARDIAN Assets accrued $5,738 of fees under the Plan. During the period
from April 2, 1997 (commencement of operations) to August 31, 1997, Neuberger &
Berman GENESIS Assets accrued $21 of fees under the Plan.
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.
Prior to approving the Plan, the Fund Trustees considered various
factors relating to the implementation of the Plan and determined that there is
a reasonable likelihood that the Plan will benefit the Funds and their
shareholders. The Fund Trustees noted that the purpose of the master/feeder fund
structure is to permit access to a variety of markets. To the extent the Plan
allows the Funds to penetrate markets to which they would not otherwise have
access, the Plan may result in additional sales of Fund shares; this, in turn,
may enable the Funds to achieve economies of scale that could reduce expenses.
In addition, certain on-going shareholder services may be provided more
effectively by Institutions with which shareholders have an existing
relationship.
The Plan continues until August 2, 1998. 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
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<PAGE>
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, if made available through that Institution.
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 capital gain or loss may be realized.
ADDITIONAL REDEMPTION INFORMATION
SUSPENSION OF REDEMPTIONS
- -------------------------
The right to redeem a Fund's shares may be suspended or payment of the
redemption price postponed (1) when the NYSE is closed, (2) when trading on the
NYSE is restricted, (3) when an emergency exists as a result of which it is not
reasonably practicable for its 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 the Fund's
shareholders. Applicable SEC rules and regulations shall govern whether the
conditions prescribed in (2) or (3) exist. If the right of redemption is
suspended, shareholders may withdraw their offers of redemption, or they will
receive 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 (or a combination of requests from the same shareholder
in any 90-day period) exceeding $250,000 or 1% of the net assets of the Fund,
whichever is less, by making payment in whole or in part in securities valued as
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<PAGE>
described under "Share Prices and Net Asset Value" in the Prospectus. If payment
is made in securities, an Institution generally will incur brokerage expenses or
other transaction costs in converting those securities into cash and will be
subject to fluctuation in the market prices of those securities until they are
sold. The Funds do not redeem in kind under normal circumstances, but would do
so when the Fund Trustees determined that it was in the best interests of a
Fund's shareholders as a whole.
DIVIDENDS AND OTHER DISTRIBUTIONS
Each Fund distributes to its shareholders substantially all of its
share of any net investment income (after deducting expenses incurred directly
by the Fund), any net realized capital gains, and any net realized gains from
foreign currency transactions earned or realized by its corresponding Portfolio.
A Portfolio's net investment income consists of all income accrued on portfolio
assets less accrued expenses, but does not include capital and foreign currency
gains and losses. Net investment income and realized gains and losses are
reflected in a Portfolio's NAV (and, hence, its corresponding Fund's NAV) until
they are distributed. 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).
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 (after deducting expenses incurred directly by Neuberger &
Berman GUARDIAN Assets), if more than a de minimis amount, near the end of each
other calendar quarter.
Dividends and other distributions are automatically reinvested in
additional shares of the distributing Fund, unless the Institution elects to
receive them in cash ("cash election"). To the extent dividends and other
distributions are subject to federal, state, or local income taxation, they are
taxable to the shareholders whether received in cash or reinvested in Fund
shares. A cash election with respect to any Fund remains in effect until the
Institution notifies the Fund in writing to discontinue the election.
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ADDITIONAL TAX INFORMATION
TAXATION OF THE FUNDS
- ---------------------
In order to continue to qualify for treatment as a RIC under the Code,
each Fund must distribute to its shareholders for each taxable year at least 90%
of its investment company taxable income (consisting generally of net investment
income, net short-term capital gain, and net gains from certain foreign currency
transactions) ("Distribution Requirement") and must meet several additional
requirements. With respect to each Fund, these requirements include the
following: (1) the Fund must derive at least 90% of its gross income each
taxable year from dividends, interest, payments with respect to securities
loans, and gains from the sale or other disposition of securities or foreign
currencies, or other income (including gains from Hedging Instruments) derived
with respect to its business of investing in securities or those currencies
("Income Requirement"); and (2) at the close of each quarter of the Fund's
taxable year, (i) at least 50% of the value of its total assets must be
represented by cash and cash items, U.S. Government securities, securities of
other RICs, and other securities limited, in respect of any one issuer, to an
amount that does not exceed 5% of the value of the Fund's total assets and that
does not represent more than 10% of the issuer's outstanding voting securities,
and (ii) not more than 25% of the value of its total assets may be invested in
securities (other than U.S. Government securities or securities of other RICs)
of any one issuer.
Certain funds that invest in portfolios managed by N&B Management,
including the Sister Funds, have received rulings from the Internal Revenue
Service ("Service") that each such fund, as an investor in its corresponding
portfolio, will be deemed to own a proportionate share of the portfolio's assets
and income for purposes of determining whether the fund satisfies all the
requirements described above to qualify as a RIC. Although these rulings may not
be relied on as precedent by the Funds, N&B Management believes that the
reasoning thereof and, hence, their 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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See the next section for a discussion of the tax consequences to the
Funds of distributions to them from the Portfolios, investments by the
Portfolios in certain securities, and hedging transactions engaged in by the
Portfolios.
TAXATION OF THE PORTFOLIOS
- --------------------------
The Portfolios have received rulings from the Service to the effect
that, among other things, each Portfolio will be treated as a separate
partnership for federal income tax purposes and will not be a "publicly traded
partnership." 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
capital gains and decreased by (1) the amount of cash and the basis of any
property the Portfolio distributes to the Fund and (2) the Fund's share of the
Portfolio's losses.
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Dividends and interest received by a Portfolio, and gains realized by a
Portfolio, may be subject to income, withholding, or other taxes imposed by
foreign countries and U.S. possessions ("foreign taxes") that would reduce the
yield and/or total return on its securities. Tax treaties between certain
countries and the United States may reduce or eliminate 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 -- other than a
"controlled foreign corporation" (i.e., a foreign corporation in which, on any
day during its taxable year, more than 50% of the total voting power of all
voting stock therein or the total value of all stock therein is owned, directly,
indirectly, or constructively, by "U.S. shareholders," defined as U.S. persons
that individually own, directly, indirectly, or constructively, at least 10% of
that voting power) as to which a Portfolio is a U.S. shareholder (effective for
the taxable year beginning September 1, 1998) -- that, in general, meets either
of the following tests: (1) at least 75% of its gross income is passive or (2)
an average of at least 50% of its assets produce, or are held for the production
of, passive income. Under certain circumstances, if a Portfolio holds stock of a
PFIC, its corresponding Fund (indirectly through its interest in the Portfolio)
will be subject to federal income tax on its share of a portion of any "excess
distribution" received by the Portfolio on the stock or of any gain on the
Portfolio's disposition of the stock (collectively, "PFIC income"), plus
interest thereon, even if the Fund distributes its share of the PFIC income as a
taxable dividend to its shareholders. The balance of the Fund's share of the
PFIC income will be included in its investment company taxable income and,
accordingly, will not be taxable to it to the extent that income is distributed
to its shareholders.
If a Portfolio invests in a PFIC and elects to treat the PFIC as a
"qualified electing fund" ("QEF"), 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 share of the Portfolio's pro rata share of
the QEF's annual ordinary earnings and net capital gain (the excess of net
long-term capital gain over net short-term capital loss) -- which most likely
would have to be distributed by the Fund to satisfy the Distribution Requirement
and avoid imposition of the Excise Tax -- even if those earnings and gain were
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<PAGE>
not received by the Portfolio from the QEF. In most instances it will be very
difficult, if not impossible, to make this election because of certain
requirements thereof.
Effective for taxable years beginning after 1997, a holder of stock in
any PFIC may elect to include in ordinary income each taxable year the excess,
if any, of the fair market value of the PFIC's stock over the adjusted basis
therein as of the end of that year. Pursuant to the election, a deduction (as an
ordinary, not capital, loss) also would be allowed for the excess, if any, of
the holder's adjusted basis in PFIC stock over the fair market value thereof as
of the taxable year-end, but only to the extent of any net mark-to-market gains
with respect to that stock included in income for prior taxable years. The
adjusted basis in each PFIC's stock subject to the election would be adjusted to
reflect the amounts of income included and deductions taken thereunder. Proposed
regulations would provide a similar election with respect to the stock of
certain PFICs.
The Portfolios' use of hedging strategies, such as writing (selling)
and purchasing options and entering into forward contracts, involves complex
rules that will determine for income tax purposes the amount, character and
timing of recognition of the gains and losses the Portfolios realize in
connection therewith. Gains from the disposition of foreign currencies (except
certain gains that may be excluded by future regulations), and gains from
Hedging Instruments derived by the Portfolio with respect to its business of
investing in securities or foreign currencies, will qualify as permissible
income for its corresponding Fund under the Income Requirement.
Certain forward contracts and listed options thereon ("Section 1256
contracts") are required to be marked to market (that is, treated as having been
sold at market value)for federal income tax purposes at the end of a Portfolio's
taxable year. Sixty percent of any net gain or loss recognized as a result of
these "deemed sales," and 60% of any net realized gain or loss from any actual
sales, of Section 1256 contracts are treated as long-term capital gain or loss;
the remainder is treated as short-term capital gain or loss. As of the date of
this SAI, it is not entirely clear whether that 60% portion will qualify for the
reduced maximum tax rates on net capital gain enacted by the Taxpayer Relief Act
of 1997 -- 20% (10% for taxpayers in the 15% marginal tax bracket) for gain
recognized on capital assets held for more than 18 months -- instead of the 28%
rate in effect before that legislation, which now applies to gain recognized on
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<PAGE>
capital assets held for more than one year but not more than 18 months. However,
proposed technical corrections legislation would clarify that the 20% rate
applies.
Neuberger & Berman PARTNERS Portfolio may acquire zero coupon
securities or other securities issued with original issue discount ("OID"). As a
holder of those securities, the Portfolio (and, through it, Neuberger & Berman
PARTNERS Assets) must take into income the OID that accrues on the securities
during the taxable year, even if it receives no corresponding payment on the
securities during the year. Because the Fund annually must distribute
substantially all of its investment company taxable income (including its share
of the Portfolio's accrued OID) to satisfy the Distribution Requirement and
avoid imposition of the Excise Tax, the Fund may be required in a particular
year to distribute as a dividend an amount that is greater than its share of the
total amount of cash Neuberger & Berman PARTNERS Portfolio actually receives.
Those distributions will be made from the Fund's (or its share of the
Portfolio's) cash assets or, if necessary, from the proceeds of sales of the
Portfolio's securities. The Portfolio may realize capital gains or losses from
those sales, which would increase or decrease Neuberger & Berman PARTNERS
Assets' investment company taxable income and/or net capital gain.
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.
PORTFOLIO TRANSACTIONS
Neuberger & Berman acts as principal broker for each Portfolio in the
purchase and sale of its portfolio securities (other than certain securities
traded on the OTC market) and in connection with the purchase and sale of
options on its securities. A substantial portion of the portfolio transactions
of Neuberger & Berman GENESIS Portfolio involves securities traded on the OTC
market; that Portfolio purchases and sells OTC securities in principal
transactions with dealers who are the principal market makers for such
securities.
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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. During the fiscal year ended August 31, 1996,
Neuberger & Berman MANHATTAN Portfolio paid brokerage commissions of $940,324,
of which $543,020 was paid to Neuberger & Berman.
During the fiscal year ended August 31, 1997, Neuberger & Berman
MANHATTAN Portfolio paid brokerage commissions of $971,026, of which $458,679
was paid to Neuberger & Berman. Transactions in which that Portfolio used
Neuberger & Berman as broker comprised 59.11% of the aggregate dollar amount of
transactions involving the payment of commissions, and 47.24% of the aggregate
brokerage commissions paid by the Portfolio, during the fiscal year ended August
31, 1997. 92.43% of the $512,347 paid to other brokers by that Portfolio during
that fiscal year (representing commissions on transactions involving
approximately $299,598,328) was directed to those brokers because of research
services they provided. During the fiscal year ended August 31, 1997, that
Portfolio acquired securities of the following of its "regular brokers or
dealers" (as defined in the 1940 Act) ("Regular B/Ds"): General Electric Capital
Corp., Merrill, Lynch, Pierce, Fenner & Smith Inc., and State Street Bank and
Trust Company, N.A.; at that date, that Portfolio held the securities of its
Regular B/Ds with an aggregate value as follows: General Electric Capital Corp.,
$18,100,000 and State Street Bank & Trust Company, N.A., $6,987,488.
During the fiscal year ended August 31, 1995, Neuberger & Berman
GENESIS Portfolio paid brokerage commissions of $199,718, of which $118,014 was
paid to Neuberger & Berman. During the fiscal year ended August 31, 1996,
Neuberger & Berman GENESIS Portfolio paid brokerage commissions of $206,150, of
which $95,999 was paid to Neuberger & Berman.
During the fiscal year ended August 31, 1997, Neuberger & Berman
GENESIS Portfolio paid brokerage commissions of $860,097, of which $516,040 was
paid to Neuberger & Berman. Transactions in which that Portfolio used Neuberger
& Berman as broker comprised 62.57% of the aggregate dollar amount of
transactions involving the payment of commissions, and 60.00% of the aggregate
brokerage commissions paid by the Portfolio, during the fiscal year ended August
31, 1997. 89.06% of the $344,057 paid to other brokers by that Portfolio during
that fiscal year (representing commissions on transactions involving
approximately $128,731,955) was directed to those brokers because of research
services they provided. During the fiscal year ended August 31, 1997, that
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Portfolio acquired securities of the following of its Regular B/Ds: Chevron Oil
Finance Company, General Electric Capital Corp., and State Street Bank and Trust
Company, N.A.; at that date, that Portfolio held the securities of its Regular
B/Ds with an aggregate value as follows: General Electric Capital Corp.,
$40,000,000.
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. During the fiscal year ended August 31, 1996, Neuberger &
Berman FOCUS Portfolio paid brokerage commissions of $1,165,851, of which
$583,212 was paid to Neuberger & Berman.
During the fiscal year ended August 31, 1997, Neuberger & Berman FOCUS
Portfolio paid brokerage commissions of $1,825,493, of which $920,202 was paid
to Neuberger & Berman. Transactions in which that Portfolio used Neuberger &
Berman as broker comprised 55.85% of the aggregate dollar amount of transactions
involving the payment of commissions, and 50.41% of the aggregate brokerage
commissions paid by the Portfolio, during the fiscal year ended August 31, 1997.
80.39% of the $905,291 paid to other brokers by that Portfolio during that
fiscal year (representing commissions on transactions involving approximately
$398,888,691) was directed to those brokers because of research services they
provided. During the fiscal year ended August 31, 1997, that Portfolio acquired
securities of the following of its Regular B/Ds: General Electric Capital Corp.,
Merrill, Lynch, Pierce, Fenner & Smith Inc., Morgan Stanley, Dean Witter,
Discover & Co., and State Street Bank and Trust Company, N.A.; at that date,
that Portfolio held the securities of its Regular B/Ds with an aggregate value
as follows: General Electric Capital Corp., $46,120,000; Merrill, Lynch, Pierce,
Fenner & Smith Inc., $35,055,000; and Morgan Stanley, Dean Witter, Discover &
Co., $27,397,563.
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. During the fiscal year ended August 31, 1996,
Neuberger & Berman GUARDIAN Portfolio paid brokerage commissions of $6,886,590,
of which $3,542,127 was paid to Neuberger & Berman.
During the fiscal year ended August 31, 1997, Neuberger & Berman
GUARDIAN Portfolio paid brokerage commissions of $8,540,335, of which $4,806,913
was paid to Neuberger & Berman. Transactions in which that Portfolio used
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Neuberger & Berman as broker comprised 60.45% of the aggregate dollar amount of
transactions involving the payment of commissions, and 56.28% of the aggregate
brokerage commissions paid by the Portfolio, during the fiscal year ended August
31, 1997. 87.31% of the $3,733,422 paid to other brokers by that Portfolio
during that fiscal year (representing commissions on transactions involving
approximately $1,958,958,289); was directed to those brokers because of research
services they provided. During the fiscal year ended August 31, 1997, that
Portfolio acquired securities of the following of its Regular B/Ds: Chevron Oil
Finance Company, General Electric Capital Corp., Merrill, Lynch, Pierce, Fenner
& Smith Inc., Morgan Stanley, Dean Witter, Discover & Co., and State Street Bank
and Trust Company, N.A.; at that date, that Portfolio held the securities of its
Regular B/Ds with an aggregate value as follows: General Electric Capital Corp.,
$36,480,000; Merrill, Lynch, Pierce, Fenner & Smith Inc., $201,720,000; and
Morgan Stanley, Dean Witter, Discover & Co., $178,784,375.
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. During the fiscal year ended August 31, 1996,
Neuberger & Berman PARTNERS Portfolio paid brokerage commissions of $4,697,854,
of which $2,741,666 was paid to Neuberger & Berman.
During the fiscal year ended August 31, 1997, Neuberger & Berman
PARTNERS Portfolio paid brokerage commissions of $5,413,453, of which $3,508,790
was paid to Neuberger & Berman. Transactions in which that Portfolio used
Neuberger & Berman as broker comprised 66.94% of the aggregate dollar amount of
transactions involving the payment of commissions, and 64.82% of the aggregate
brokerage commissions paid by the Portfolio, during the fiscal year ended August
31, 1997. 89.93% of the $1,904,663 paid to other brokers by that Portfolio
during that fiscal year (representing commissions on transactions involving
approximately $1,164,076,407) was directed to those brokers because of research
services they provided. During the fiscal year ended August 31, 1997, that
Portfolio acquired securities of the following of its Regular B/Ds: Chevron Oil
Finance Company, General Electric Capital Corp., and State Street Bank and Trust
Company, N.A.; at that date, that Portfolio held securities of its Regular B/Ds
with an aggregate value as follows: General Electric Capital Corp., $43,550,000.
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Insofar as portfolio transactions of Neuberger & Berman PARTNERS
Portfolio result from active management of equity securities, and insofar as
portfolio transactions of Neuberger & Berman MANHATTAN Portfolio result from
seeking capital appreciation by selling securities whenever sales are deemed
advisable without regard to the length of time the securities may have been
held, it may be expected that the aggregate brokerage commissions paid by those
Portfolios to brokers (including Neuberger & Berman where it acts in that
capacity) may be greater than if securities were selected solely on a long-term
basis.
Portfolio securities are, from time to time, loaned by a Portfolio to
Neuberger & Berman in accordance with the terms and conditions of an order
issued by the SEC. The order exempts such transactions from provisions of the
1940 Act that would otherwise prohibit such transactions, subject to certain
conditions. In accordance with the order, securities loans made by a Portfolio
to Neuberger & Berman are fully secured by cash collateral. The portion of the
income on the cash collateral which may be shared with Neuberger & Berman is to
be determined by reference to concurrent arrangements between Neuberger & Berman
and non-affiliated lenders with which it engages in similar transactions. In
addition, where Neuberger & Berman borrows securities from a Portfolio in order
to re-lend them to others, Neuberger & Berman may be required to pay that
Portfolio, on a quarterly basis, certain of the earnings that Neuberger & Berman
otherwise has derived from the re-lending of the borrowed securities. When
Neuberger & Berman desires to borrow a security that 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, in any month, 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, 1997, 1996 and 1995, Neuberger
& Berman MANHATTAN Portfolio earned interest income of $988,931, $301,788, and
$507,239, respectively, from the collateralization of securities loans, from
which Neuberger & Berman was paid $326,403, $186,163 and $270,594, respectively.
During the fiscal year ended August 31, 1997, Neuberger & Berman
GENESIS Portfolio earned interest income of $168,552, from the collateralization
of securities loans, from which Neuberger & Berman was paid $69,948. During the
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fiscal years ended August 31, 1996 and 1995, Neuberger & Berman GENESIS
Portfolio earned no interest income from the collateralization of securities
loans.
During the fiscal years ended August 31, 1997, 1996 and 1995, Neuberger
& Berman GUARDIAN Portfolio earned interest income of $4,005,765, $2,427,096 and
$1,430,672, respectively, from the collateralization of securities loans, from
which Neuberger & Berman was paid $3,523,486, $2,129,341 and $1,252,190,
respectively.
During the fiscal years ended August 31, 1997, 1996 and 1995, Neuberger
& Berman FOCUS Portfolio earned interest income of $1,053,272, $368,663 and
$327,447, respectively, from the collateralization of securities loans, from
which Neuberger & Berman was paid $898,127, $330,001 and $291,207, respectively.
During the fiscal years ended August 31, 1997, 1996 and 1995, Neuberger
& Berman PARTNERS Portfolio earned interest income of $797,133, $173,908 and
$52,410, respectively, from the collateralization of securities loans, from
which Neuberger & Berman was paid $688,624, $118,041 and $48,736, respectively.
Each Portfolio may also lend securities to unaffiliated entities,
including banks, brokerage firms, and other institutional investors judged
creditworthy by N&B Management, provided that cash or equivalent collateral,
equal to at least 100% of the market value of the loaned securities, is
continuously maintained by the borrower with the Portfolio. The Portfolio may
invest the cash collateral and earn income, or it may receive an agreed upon
amount of interest income from a borrower who has delivered equivalent
collateral. During the time securities are on loan, the borrower will pay the
Portfolio an amount equivalent to any dividends or interest paid on such
securities. These loans are subject to termination at the option of the
Portfolio or the borrower. The Portfolio may pay reasonable administrative and
custodial fees in connection with a loan and may pay a negotiated portion of the
interest earned on the cash or equivalent collateral to the borrower or placing
broker. The Portfolio does not have the right to vote securities on loan, but
would terminate the loan and regain the right to vote if that were considered
important with respect to the investment.
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A committee of Independent Portfolio Trustees from time to time
reviews, among other things, information relating to securities loans by the
Portfolios.
In effecting securities transactions, each Portfolio generally seeks to
obtain the best price and execution of orders. Commission rates, being a
component of price, are considered along with other relevant factors. Each
Portfolio plans to continue to use Neuberger & Berman as its principal broker
where, in the judgment of N&B Management, that firm is able to obtain a price
and execution at least as favorable as other qualified brokers. To the
Portfolios' knowledge, no affiliate of any Portfolio receives give-ups or
reciprocal business in connection with their securities transactions.
The use of Neuberger & Berman as a broker for each Portfolio is subject
to the requirements of Section 11(a) of the Securities Exchange Act of 1934.
Section 11(a) prohibits members of national securities exchanges from retaining
compensation for executing exchange transactions for accounts which they or
their affiliates manage, except where they have the authorization of the persons
authorized to transact business for the account and comply with certain annual
reporting requirements. Managers Trust and N&B Management have expressly
authorized Neuberger & Berman to retain such compensation, and Neuberger &
Berman has agreed to comply with the reporting requirements of Section 11(a).
Under the 1940 Act, commissions paid by a Portfolio to Neuberger &
Berman in connection with a purchase or sale of securities on a securities
exchange may not exceed the usual and customary broker's commission.
Accordingly, it is each Portfolio's policy that the commissions paid to
Neuberger & Berman must, in N&B Management's judgment, be (1) at least as
favorable as those charged by other brokers having comparable execution
capability and (2) at least as favorable as commissions contemporaneously
charged by Neuberger & Berman on comparable transactions for its most favored
unaffiliated customers, except for accounts for which Neuberger & Berman acts as
a clearing broker for another brokerage firm and customers of Neuberger & Berman
considered by a majority of the Independent Portfolio Trustees not to be
comparable to the Portfolio. The Portfolios do not deem it practicable and in
their best interests to solicit competitive bids for commissions on each
transaction effected by Neuberger & Berman. However, consideration regularly is
given to information concerning the prevailing level of commissions charged by
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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.
To ensure that accounts of all investment clients, including a
Portfolio, are treated fairly in the event that Neuberger & Berman receives
transaction instructions regarding a security for more than one investment
account at or about the same time, Neuberger & Berman may combine orders placed
on behalf of clients, including advisory accounts in which affiliated persons
have an investment interest, for the purpose of negotiating brokerage
commissions or obtaining a more favorable price. Where appropriate, securities
purchased or sold may be allocated, in terms of amount, to a client according to
the proportion that the size of the order placed by that account bears to the
aggregate size of orders contemporaneously placed by the other accounts, subject
to de minimis exceptions. All participating accounts will pay or receive the
same price.
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.
A committee comprised of officers of N&B Management and principals of
Neuberger & Berman who are portfolio managers of some of the Portfolios and
Other N&B Funds (collectively, "N&B Funds") and some of Neuberger & Berman's
managed accounts ("Managed Accounts") evaluates semi-annually the nature and
quality of the brokerage and research services provided by other brokers. Based
on this evaluation, the committee establishes a list and projected rankings of
preferred brokers for use in determining the relative amounts of commissions to
be allocated to those brokers. Ordinarily, the brokers on the list effect a
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large portion of the brokerage transactions for the N&B Funds and the Managed
Accounts that are not effected by Neuberger & Berman. However, in any
semi-annual period, brokers not on the list may be used, and the relative
amounts of brokerage commissions paid to the brokers on the list may vary
substantially from the projected rankings. These variations reflect the
following factors, among others: (1) brokers not on the list or ranking below
other brokers on the list may be selected for particular transactions because
they provide better price and/or execution, which is the primary consideration
in allocating brokerage; (2) adjustments may be required because of periodic
changes in the execution capabilities of or research provided by 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 paid to 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 information 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.
Kent C. Simons and Kevin L. Risen; Judith M. Vale and Robert W.
D'Alelio; Jennifer K. Silver and Brooke A. Cobb; and Michael M. Kassen and
Robert I. Gendelman, each of whom is a Vice President of N&B Management and a
principal of Neuberger & Berman (except for Mr. D'Alelio and Mr. Cobb), are the
persons primarily responsible for making decisions as to specific action to be
taken with respect to the investment portfolios of Neuberger & Berman FOCUS and
Neuberger & Berman GUARDIAN, Neuberger & Berman GENESIS, Neuberger & Berman
MANHATTAN, and Neuberger & Berman PARTNERS Portfolios, respectively. Each of
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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.
PORTFOLIO TURNOVER
- ------------------
A Portfolio's portfolio turnover rate is calculated by dividing (1) the
lesser of the cost of the securities purchased or proceeds from the securities
sold by the Portfolio during the fiscal year (other than securities, including
options, whose maturity or expiration date at the time of acquisition was one
year or less) by (2) the month-end average of the value of such securities owned
by the Portfolio during the fiscal year.
REPORTS TO SHAREHOLDERS
Shareholders of 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. 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. All correspondence should be mailed to Neuberger & Berman Funds,
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Institutional Services, 605 Third Avenue, 2nd Floor, New York, NY 10158-0180. In
addition, State Street serves as transfer agent for each Portfolio.
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., 2nd Floor, Washington, D.C. 20036-1800, as its legal
counsel.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
The following table sets forth the name, address, and percentage of
ownership of each person who was known by each Fund to own beneficially or of
record 5% or more of that Fund's outstanding shares at December 1, 1997.
Percentage of
Ownership at
Name and Address December 1, 1997
---------------- ----------------
Neuberger & Berman Neuberger & Berman 74.52%
MANHATTAN Assets Management Inc.
605 Third Avenue
2nd Floor
New York, NY 10158-0180
Red & Co. 25.47%
c/o Brown Brothers Harriman
& Co.
40 Water Street
Boston, MA 02109-3604
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Percentage of
Ownership at
Name and Address December 1, 1997
---------------- ----------------
Neuberger & Berman Key Trust Co. 52.80%
GENESIS Assets FBO Prism
4900 Tiedeman Rd.
Brooklyn, OH 44144-2338
Red & Co. 17.71%
c/o Brown Brothers Harriman
& Co.
40 Water Street
Boston, MA 02109-3604
Neuberger and Berman 16.89%
Management Inc.
605 Third Avenue, 2nd Floor
New York, NY 10158-0299
Corelink Financial Inc. 11.21%
P.O. Box 4045
Concord, CA 94524-4045
Neuberger & Berman Neuberger & Berman 99.58%
FOCUS Assets Management Inc.
605 Third Avenue
2nd Floor
New York, NY 10158-0180
Neuberger & Berman Travelers Insurance Co. 98.60%
GUARDIAN Assets 5MS - One Tower Square
Hartford, CT 06183-0001
Neuberger & Berman Travelers Insurance Co. 88.13%
PARTNERS Assets 5MS - One Tower Square
Hartford, CT 06183-0001
Key Trust Co. 10.70%
FBO Prism
4900 Tiedeman Rd.
Brooklyn, OH 44144-2238
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REGISTRATION STATEMENT
This SAI and the Prospectus do not contain all the information included
in the Trust's registration statement filed with the SEC under the 1933 Act with
respect to the securities offered by the Prospectus. The registration statement,
including the exhibits filed therewith, may be examined at the SEC's offices in
Washington, D.C.
Statements contained in this SAI and in the Prospectus as to the
contents of any contract or other document referred to are not necessarily
complete. In each instance where reference is made to the copy of any contract
or other document filed as an exhibit to the registration statement, each such
statement is qualified in all respects by such reference.
FINANCIAL STATEMENTS
The following financial statements and related documents are
incorporated herein by reference from the Annual Report to Shareholders of
Neuberger & Berman Equity Assets for the fiscal year ended August 31, 1997:
The audited financial statements of the Funds and
Portfolios and notes thereto for the fiscal year ended
August 31, 1997, and the reports of Ernst & Young LLP,
independent auditors, with respect to such audited
financial statements of Neuberger & Berman Focus Assets
and Portfolio, Neuberger & Berman GENESIS Assets and
Portfolio and Neuberger & Berman GUARDIAN Assets and
Portfolio, and Neuberger & Berman PARTNERS Assets and
Portfolio, and the report of Coopers & Lybrand L.L.P.,
independent accountants, with respect to such audited
financial statements of Neuberger & Berman MANHATTAN
Assets and Portfolio.
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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:
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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.
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.
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Caa - Bonds rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca - Bonds rated Ca represent obligations that are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C - Bonds rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
MODIFIERS--Moody's may apply numerical modifiers 1, 2, and 3 in each generic
rating classification described above. The modifier 1 indicates that the
security ranks in the higher end of its generic rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the issuer
ranks in the lower end of its generic rating.
S&P COMMERCIAL PAPER RATINGS:
A-1 - This highest category indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted with a plus sign (+).
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.
71
<PAGE>
- Well-established access to a range of financial markets and assured
sources of alternate liquidity.
72
<PAGE>
<PAGE> 1
Neuberger&Berman Neuberger&Berman
EQUITY TRUST EQUITY ASSETS
- ------------------------------
No-Load Equity Funds
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Neuberger&Berman FOCUS TRUST Neuberger&Berman MANHATTAN TRUST
Neuberger&Berman GENESIS TRUST Neuberger&Berman PARTNERS TRUST
Neuberger&Berman GUARDIAN TRUST Neuberger&Berman SOCIALLY RESPONSIVE TRUST
</TABLE>
YOU CAN BUY, OWN, AND SELL FUND SHARES ONLY THROUGH AN ACCOUNT WITH AN
ADMINISTRATOR, BROKER-DEALER, OR OTHER INSTITUTION THAT PROVIDES ACCOUNTING,
RECORDKEEPING, AND OTHER SERVICES TO INVESTORS AND THAT HAS AN ADMINISTRATIVE
SERVICES AGREEMENT WITH NEUBERGER&BERMAN MANAGEMENT INCORPORATED(R) (EACH AN
"INSTITUTION").
- --------------------------------------------------------------------------------
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
Neuberger&Berman Management Incorporated ("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 structure that
you should consider, see "Summary" on page 3, and "Information Regarding
Organization, Capitalization, and Other Matters" on page 40.
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 December 15, 1997, is on file with
the Securities and Exchange Commission ("SEC"). The SAI is incorporated herein
by reference (so it is legally considered a part of this Prospectus). You can
obtain a free copy of the SAI by calling N&B Management at 800-877-9700.
PROSPECTUS DATED DECEMBER 15, 1997
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, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY 3
The Funds and Portfolios;
Risk Factors 3
Management 5
The Neuberger&Berman
Investment Approach 5
EXPENSE INFORMATION 7
Shareholder Transaction
Expenses for Each Fund 7
Annual Fund Operating
Expenses 7
Example 8
FINANCIAL HIGHLIGHTS 9
Selected Per Share Data and
Ratios 9
Focus Trust 10
Genesis Trust 11
Guardian Trust 12
Manhattan Trust 13
Partners Trust 14
Socially Responsive Trust 15
INVESTMENT PROGRAMS 19
Focus Portfolio 19
Genesis Portfolio 20
Guardian Portfolio 21
Manhattan Portfolio 21
Partners Portfolio 22
Socially Responsive
Portfolio 22
Special Considerations of
Small-and Mid-Cap Company
Stocks 24
Short-Term Trading;
Portfolio Turnover 25
Borrowings 25
Other Investments 25
PERFORMANCE INFORMATION 27
Total Return Information 29
SHAREHOLDER SERVICES 30
How to Buy Shares 30
How to Sell Shares 30
Exchanging Shares 31
SHARE PRICES AND NET
ASSET VALUE 32
DIVIDENDS, OTHER
DISTRIBUTIONS, AND
TAXES 33
Distribution Options 33
Taxes 33
MANAGEMENT AND
ADMINISTRATION 35
Trustees and Officers 35
Investment Manager,
Administrator, Distributor,
and Sub-Adviser 35
Expenses 37
Transfer Agent 39
INFORMATION REGARDING
ORGANIZATION,
CAPITALIZATION, AND
OTHER MATTERS 40
The Funds 40
The Portfolios 41
DESCRIPTION OF
INVESTMENTS 44
USE OF JOINT PROSPECTUS
AND STATEMENT OF
ADDITIONAL INFORMATION 47
DIRECTORY 48
FUNDS ELIGIBLE FOR
EXCHANGE 49
</TABLE>
<PAGE> 3
SUMMARY
- -----------------------------------------------------
The Funds and Portfolios; Risk Factors
- --------------------------------------------------------------------------------
Each Fund is a series of Neuberger&Berman Equity Trust(R) ("N&B Equity
Trust"), with the exception of Neuberger&Berman SOCIALLY RESPONSIVE Trust, which
is a series of Neuberger&Berman Equity AssetsSM ("N&B Equity Assets") (N&B
Equity Trust and N&B Equity Assets are referred to below individually as a
"Trust" and collectively as the "Trusts"). Each Fund invests in its
corresponding Portfolio which, 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 & 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 "Information
Regarding Organization, Capitalization, and Other Matters" on page 40. 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 19
and "Description of Investments" on page 44.
3
<PAGE> 4
The following table is a summary highlighting features of the Funds and
their corresponding Portfolios. You may want to invest in a variety of Funds to
fit your particular investment needs. Of course, there can be no assurance that
a Fund will meet its investment objective.
<TABLE>
<CAPTION>
NEUBERGER&BERMAN INVESTMENT PORTFOLIO
EQUITY TRUSTS STYLE CHARACTERISTICS
- -----------------------------------------------------------------------
<S> <C> <C>
GUARDIAN TRUST Broadly diversified, A growth and income fund
large- cap value fund. that invests primarily in
stocks of established,
high- quality companies
that are not well
followed on Wall Street
or are temporarily out of
favor.
FOCUS TRUST Large-cap value fund, Invests principally in
more concentrated common stocks selected
portfolio than from 13 multi-industry
Guardian. sectors of the economy.
To maximize potential
return, the Portfolio
normally makes at least
90% of its investments in
not more than six sectors
believed by the portfolio
managers to be
undervalued.
GENESIS TRUST Broadly diversified, Invests primarily in
small-cap value fund. stocks of companies with
small market
capitalizations (up to
$1.5 billion at the time
of the Portfolio's
investment). Portfolio
managers seek to buy the
stocks of strong
companies with a history
of solid performance and
a proven management team,
which are selling at
attractive prices.
MANHATTAN TRUST Broadly diversified, Invests in securities
small-, medium- and believed to have the
large-cap growth fund. maximum potential for
long-term capital
appreciation. Portfolio
managers seek stocks of
companies that are
projected to grow at
above-average rates and
that may appear poised
for a period of
accelerated earnings.
</TABLE>
4
<PAGE> 5
<TABLE>
<CAPTION>
NEUBERGER&BERMAN INVESTMENT PORTFOLIO
EQUITY TRUSTS STYLE CHARACTERISTICS
- -----------------------------------------------------------------------
<S> <C> <C>
PARTNERS TRUST Broadly diversified, Seeks capital growth
medium-to large-cap through an approach that
value fund. is intended to increase
capital with reasonable
risk. Portfolio managers
look at fundamentals,
focusing particularly on
cash flow, return on
capital, and asset
values.
SOCIALLY Broadly diversified, Seeks long-term capital
RESPONSIVE TRUST large- cap value fund. appreciation by investing
in common stocks of
companies that meet both
financial and social
criteria.
</TABLE>
- -------------------
Management
- --------------------------------------------------------------------------------
N&B Management, with the assistance of Neuberger&Berman, LLC
("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 35. If you want to know how to buy and sell shares of the Funds or exchange
them for shares of other Neuberger&Berman Funds(R) made available through an
Institution, see "Shareholder Services -- How to Buy Shares" on page 30,
"Shareholder Services -- How to Sell Shares" on page 30, "Shareholder
Services -- Exchanging Shares" on page 31, and the policies of the Institution
through which you are purchasing shares.
- --------------------------------------------------------------
The Neuberger&Berman Investment Approach
- --------------------------------------------------------------------------------
While each Portfolio has its own investment objective, policies, and
limitations, each Portfolio is managed using one of two basic investment
approaches -- value or growth.
A value-oriented portfolio manager buys stocks that are selling for a price
that is lower than what the manager believes they are worth. 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). A
5
<PAGE> 6
value-oriented manager 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 values. This approach also contemplates selling portfolio securities
when N&B Management believes they have reached their potential.
While a value approach concentrates on securities that are undervalued in
relation to their fundamental economic values, a growth approach seeks stocks of
companies that N&B Management projects will grow at above-average rates and
faster than others expect. While a growth portfolio manager may be willing to
pay a higher multiple of earnings per share than a value manager, the multiple
tends to be reasonable relative to the manager's expectation of the company's
earnings growth rate.
In general, Neuberger&Berman FOCUS, Neuberger&Berman GENESIS,
Neuberger&Berman GUARDIAN, Neuberger&Berman PARTNERS and Neuberger& Berman
SOCIALLY RESPONSIVE Portfolios adhere to a value-oriented investment approach.
Neuberger&Berman MANHATTAN Portfolio adheres to a growth-oriented investment
approach. Neuberger&Berman MANHATTAN Portfolio is therefore willing to invest in
securities with prices that are higher multiples of earnings than securities
likely to be purchased by the other Portfolios, but generally buys companies
that are projected by N&B Management to have higher earnings growth rates.
6
<PAGE> 7
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, after taking expenses into
account.
- -------------------------------------------------------------------
Shareholder Transaction Expenses for Each Fund
- --------------------------------------------------------------------------------
As shown by this table, the Funds impose no transaction charges when you buy
or sell Fund shares.
<TABLE>
<S> <C>
Sales Charge Imposed on Purchases NONE
Sales Charge Imposed on Reinvested Dividends NONE
Deferred Sales Charges NONE
Redemption Fees NONE
Exchange Fees NONE
</TABLE>
- ----------------------------------------------------
Annual Fund Operating Expenses
(as a percentage of average daily net assets)
- --------------------------------------------------------------------------------
The following table shows annual 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 ("Total Operating
Expenses"). "Total Operating Expenses" exclude interest, taxes, brokerage
commissions, and extraordinary expenses.
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. "Management and
Administration Fees" in the following table (except with respect to
Neuberger&Berman GENESIS Trust) are based upon administration fees incurred by
each Fund and management fees incurred by its corresponding Portfolio during the
past fiscal year. Management and Administration Fees for Neuberger&Berman
GENESIS Trust have been restated based on current fee rates. For more
information, see "Management and Administration" and the SAI.
The Funds and Portfolios incur other expenses for things such as accounting
and legal fees, transfer agency fees, custodial fees, printing and furnishing
shareholder statements and Fund reports and compensating trustees who are not
affiliated with N&B Management ("Other Expenses"). Other Expenses in the
following table (except with respect to Neuberger&Berman SOCIALLY RESPONSIVE
Trust) are based on each Fund's and Portfolio's expenses for the past fiscal
year. Other Expenses for Neuberger&Berman SOCIALLY RESPONSIVE Trust are
estimated amounts for the current fiscal year and assume average net assets of
$25,000,000. All expenses are
7
<PAGE> 8
factored into the Funds' share prices and dividends and are not charged directly
to Fund shareholders.
<TABLE>
<CAPTION>
NEUBERGER&BERMAN MANAGEMENT AND 12B-1 OTHER TOTAL OPERATING
EQUITY TRUSTS ADMINISTRATION FEES FEES EXPENSES EXPENSES
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FOCUS TRUST 0.90% None 0.06%* 0.96%*
GENESIS TRUST 1.21% None 0.14% 1.35%
GUARDIAN TRUST 0.84% None 0.04% 0.88%
MANHATTAN TRUST 0.93% None 0.15%* 1.08%*
PARTNERS TRUST 0.86% None 0.05%* 0.91%*
SOCIALLY RESPONSIVE TRUST 0.95% None 0.35%* 1.30%*
</TABLE>
*Reflects N&B Management's expense reimbursement undertaking described below.
As set forth in "Expenses" on page 37, N&B Management has voluntarily
undertaken to reimburse each Fund if its Total Operating Expenses exceed certain
limits. Absent the reimbursement, Other Expenses would be 0.16%, 0.30%, 0.08%
and 0.48% per annum and Total Operating Expenses would be 1.06%, 1.23%, 0.94%
and 1.43% per annum of the average daily net assets of Neuberger&Berman FOCUS
Trust, Neuberger&Berman MANHATTAN Trust, Neuberger&Berman PARTNERS Trust and
Neuberger&Berman SOCIALLY RESPONSIVE Trust, respectively.
For more information, see "Expenses" on page 37.
- -------------
Example
- --------------------------------------------------------------------------------
To illustrate the effect of Total Operating Expenses, let's assume that each
Fund's annual return is 5% and that it had Total Operating Expenses described in
the table above. For every $1,000 you invested in each Fund, you would have paid
the following amounts of total expenses if you closed your account at the end of
each of the following time periods:
<TABLE>
<CAPTION>
NEUBERGER&BERMAN
EQUITY TRUSTS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FOCUS TRUST $10 $ 31 $ 53 $ 118
GENESIS TRUST $14 $ 43 $ 74 $ 162
GUARDIAN TRUST $ 9 $ 28 $ 49 $ 108
MANHATTAN TRUST $11 $ 34 $ 60 $ 132
PARTNERS TRUST $ 9 $ 29 $ 50 $ 112
SOCIALLY RESPONSIVE TRUST $13 $ 41 N/A N/A
</TABLE>
The assumption in this example of a 5% annual return is required by
regulations of the SEC applicable to all mutual funds. THE INFORMATION IN THE
PREVIOUS TABLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR RATES OF RETURN; ACTUAL EXPENSES OR RETURNS MAY BE GREATER OR LESS
THAN THOSE SHOWN, AND MAY CHANGE IF EXPENSE REIMBURSEMENTS CHANGE.
8
<PAGE> 9
FINANCIAL HIGHLIGHTS
- --------------------------------------------------
Selected Per Share Data and Ratios
- --------------------------------------------------------------------------------
The financial information in the following tables is for each Fund as of
August 31, 1997 and prior periods. This information has been audited by the
Funds' respective independent auditors/accountants. You may obtain, at no cost,
further information about the performance of the Funds in their annual report to
shareholders. The auditors'/accountants' reports are incorporated in the SAI by
reference to the annual report. Please call 800-877-9700 for a free copy of the
annual report and for up-to-date information. Also, see "Performance
Information."
9
<PAGE> 10
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- -------------------
Focus Trust(1)
- --------------------------------------------------------------------------------
The following table includes selected data for a share outstanding
throughout each year and other performance information derived from the
Financial Statements. The per share amounts and ratios which are shown reflect
income and expenses, including the Fund's proportionate share of its
corresponding Portfolio's income and expenses. It should be read in conjunction
with its corresponding Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
August 30,
1993(2)
Year Ended August 31, to August 31,
1997 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $14.83 $14.41 $11.36 $10.03 $ 10.00
---------------------------------------------------------------
Income From Investment Operations
Net Investment Income .01 .06 .05 .05 --
Net Gains or Losses on Securities (both realized and
unrealized) 6.49 .46 3.05 1.31 .03
---------------------------------------------------------------
Total From Investment Operations 6.50 .52 3.10 1.36 .03
---------------------------------------------------------------
Less Distributions
Dividends (from net investment income) (.06) (.02) (.05) (.02) --
Distributions (from net capital gains) -- (.08) -- (.01) --
---------------------------------------------------------------
Total Distributions (.06) (.10) (.05) (.03) --
---------------------------------------------------------------
Net Asset Value, End of Year $21.27 $14.83 $14.41 $11.36 $ 10.03
---------------------------------------------------------------
Total Return(3) +43.93% +3.62% +27.44% +13.58% +0.30%(4)
---------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $160.9 $ 55.6 $ 14.5 $ 1.6 $ --
---------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets(5) .96% .99% -- -- --
---------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets(6) .96% .99% .96% .85% .92%(7)
---------------------------------------------------------------
Ratio of Net Investment Income to Average Net Assets(6) .11% .63% .67% .92% .05%(7)
---------------------------------------------------------------
</TABLE>
See Notes to Financial Highlights
10
<PAGE> 11
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- -------------------
Genesis Trust
- --------------------------------------------------------------------------------
The following table includes selected data for a share outstanding
throughout each year and other performance information derived from the
Financial Statements. The per share amounts and ratios which are shown reflect
income and expenses, including the Fund's proportionate share of its
corresponding Portfolio's income and expenses. It should be read in conjunction
with its corresponding Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
August 26,
1993(2)
Year Ended August 31, to August 31,
1997 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $14.99 $12.65 $10.59 $10.05 $10.00
---------------------------------------------------------------
Income From Investment Operations
Net Investment Loss (.01) (.02) (.01) (.01) --
Net Gains or Losses on Securities (both realized and
unrealized) 6.61 2.68 2.08 .56 .05
---------------------------------------------------------------
Total From Investment Operations 6.60 2.66 2.07 .55 .05
---------------------------------------------------------------
Less Distributions
Distributions (from net capital gains) (.14) (.32) (.01) (.01) --
---------------------------------------------------------------
Net Asset Value, End of Year $21.45 $14.99 $12.65 $10.59 $10.05
---------------------------------------------------------------
Total Return(3) +44.31% +21.44% +19.51% +5.47% +0.50%(4)
---------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $382.7 $ 65.2 $ 30.6 $ 3.1 $ --
---------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets(5) 1.26% 1.38% -- -- --
---------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets(6) 1.25% 1.38% 1.42% 1.36% 1.51%(7)
---------------------------------------------------------------
Ratio of Net Investment Loss to Average Net Assets(6) (.16%) (.27%) (.24%) (.21%) (.44%)(7)
---------------------------------------------------------------
</TABLE>
See Notes to Financial Highlights
11
<PAGE> 12
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- ---------------------
Guardian Trust
- --------------------------------------------------------------------------------
The following table includes selected data for a share outstanding
throughout each year and other performance information derived from the
Financial Statements. The per share amounts and ratios which are shown reflect
income and expenses, including the Fund's proportionate share of its
corresponding Portfolio's income and expenses. It should be read in conjunction
with its corresponding Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
August 3,
1993(2)
Year Ended August 31, to August 31,
1997 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 14.24 $ 13.83 $11.27 $10.27 $10.00
------------------------------------------------------------------
Income From Investment Operations
Net Investment Income .08 .16 .13 .09 --
Net Gains or Losses on Securities (both realized and
unrealized) 5.48 .55 2.55 .99 .27
------------------------------------------------------------------
Total From Investment Operations 5.56 .71 2.68 1.08 .27
------------------------------------------------------------------
Less Distributions
Dividends (from net investment income) (.10) (.14) (.12) (.07) --
Distributions (from net capital gains) (.23) (.16) -- (.01) --
------------------------------------------------------------------
Total Distributions (.33) (.30) (.12) (.08) --
------------------------------------------------------------------
Net Asset Value, End of Year $ 19.47 $ 14.24 $13.83 $11.27 $10.27
------------------------------------------------------------------
Total Return(3) +39.56% +5.19% +24.01% +10.57% +2.70%(4)
------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $2,269.8 $1,340.1 $683.1 $ 75.8 $ --
------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets(5) .88% .92% -- -- --
------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets .88% .92%(6) .90%(6) .80%(6) .81%(6)(7)
------------------------------------------------------------------
Ratio of Net Investment Income to Average Net Assets .47% 1.26%(6) 1.35%(6) 1.50%(6) 1.00%(6)(7)
------------------------------------------------------------------
</TABLE>
See Notes to Financial Highlights
12
<PAGE> 13
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- -----------------------
Manhattan Trust
- --------------------------------------------------------------------------------
The following table includes selected data for a share outstanding
throughout each year and other performance information derived from the
Financial Statements. The per share amounts and ratios which are shown reflect
income and expenses, including the Fund's proportionate share of its
corresponding Portfolio's income and expenses. It should be read in conjunction
with its corresponding Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
August 30,
1993(2)
Year Ended August 31, to August 31,
1997 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 12.18 $12.99 $10.37 $10.01 $10.00
----------------------------------------------------------------
Income From Investment Operations
Net Investment Income (Loss) (.04) (.04) -- .01 --
Net Gains or Losses on Securities (both realized and
unrealized) 4.55 (.34) 2.67 .36 .01
----------------------------------------------------------------
Total From Investment Operations 4.51 (.38) 2.67 .37 .01
----------------------------------------------------------------
Less Distributions
Dividends (from net investment income) -- -- (.01) (.01) --
Distributions (from net capital gains) (.92) (.43) (.04) -- --
----------------------------------------------------------------
Total Distributions (.92) (.43) (.05) (.01) --
----------------------------------------------------------------
Net Asset Value, End of Year $ 15.77 $12.18 $12.99 $10.37 $10.01
----------------------------------------------------------------
Total Return(3) +38.84% -2.98% +25.90% +3.70% +0.10%(4)
----------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $ 51.1 $ 48.2 $ 35.6 $ 12.1 $ --
----------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets(5) 1.09% 1.08% -- -- --
----------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets(6) 1.09% 1.08% 1.06% .96% 1.04%(7)
----------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net
Assets(6) (.30%) (.38%) (.03%) .16% 5.48%(7)
----------------------------------------------------------------
</TABLE>
See Notes to Financial Highlights
13
<PAGE> 14
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------
Partners Trust
- --------------------------------------------------------------------------------
The following table includes selected data for a share outstanding
throughout each year and other performance information derived from the
Financial Statements. The per share amounts and ratios which are shown reflect
income and expenses, including the Fund's proportionate share of its
corresponding Portfolio's income and expenses. It should be read in conjunction
with its corresponding Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
August 30,
1993(2)
Year Ended August 31, to August 31,
1997 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $13.39 $12.68 $10.54 $10.01 $10.00
---------------------------------------------------------------
Income From Investment Operations
Net Investment Income .07 .08 .05 .03 --
Net Gains or Losses on Securities (both realized and
unrealized) 6.06 1.59 2.19 .53 .01
---------------------------------------------------------------
Total From Investment Operations 6.13 1.67 2.24 .56 .01
---------------------------------------------------------------
Less Distributions
Dividends (from net investment income) (.08) (.07) (.02) (.01) --
Distributions (from net capital gains) (.64) (.89) (.08) (.02) --
---------------------------------------------------------------
Total Distributions (.72) (.96) (.10) (.03) --
---------------------------------------------------------------
Net Asset Value, End of Year $18.80 $13.39 $12.68 $10.54 $10.01
---------------------------------------------------------------
Total Return(3) +47.11% +13.76% +21.52% +5.61% +0.10%(4)
---------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $470.6 $128.5 $ 61.3 $ 4.7 $ --
---------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets(5) .91% .94% -- -- --
---------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets(6) .91% .94% .92% .81% .84%(7)
---------------------------------------------------------------
Ratio of Net Investment Income to Average Net Assets(6) .64% .84% .81% .47% 2.65%(7)
---------------------------------------------------------------
</TABLE>
See Notes to Financial Highlights
14
<PAGE> 15
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- ----------------------------------
Socially Responsive Trust
- --------------------------------------------------------------------------------
The following table includes selected data for a share outstanding
throughout the period and other performance information derived from the
Financial Statements. The per share amounts and ratios which are shown reflect
income and expenses, including the Fund's proportionate share of its
corresponding Portfolio's income and expenses. It should be read in conjunction
with its corresponding Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
March 3,
1997(2)
to August 31,
1997
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Net Asset Value, Beginning of Period $10.00
------
Income From Investment Operations
Net Investment Income --
Net Gains or Losses on Securities (both realized and unrealized) 1.43
------
Total From Investment Operations 1.43
------
Net Asset Value, End of Period $11.43
------
Total Return(3)(4) +14.30%
------
Ratios/Supplemental Data
Net Assets, End of Period (in millions) $ 7.7
------
Ratio of Gross Expenses to Average Net Assets(5)(7) 1.58%
------
Ratio of Net Expenses to Average Net Assets(7)(8) 1.58%
------
Ratio of Net Investment Income to Average Net Assets(7)(8) .06%
------
</TABLE>
See Notes to Financial Highlights
15
<PAGE> 16
NOTES TO FINANCIAL HIGHLIGHTS
1)Prior to January 1, 1995, the name of Neuberger&Berman FOCUS Trust was
Neuberger&Berman Selected Sectors Trust.
2)The date investment operations commenced.
3)Total return based on per share net asset value reflects the effects of
changes in net asset value on the performance of each Fund during each fiscal
period and assumes dividends and other distributions, if any, were reinvested.
Results represent past performance and do not guarantee future results.
Investment returns and principal may fluctuate and shares when redeemed may be
worth more or less than original cost. Total return would have been lower if
N&B Management had not reimbursed certain expenses. In addition, for
Neuberger&Berman GENESIS Trust, total return would have been lower if N&B
Management had not waived a portion of the management fee.
4)Not annualized.
5)For fiscal periods ending after September 1, 1995, the Fund is required to
calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements. These ratios reflect the
reimbursement of certain expenses and/or the waiver of a portion of the
management fee.
6)After reimbursement of expenses by N&B Management. Had N&B Management not
undertaken such action, the annualized ratios of net expenses and net
investment income (loss) to average daily net assets would have been:
<TABLE>
<CAPTION>
Period from
August 30, 1993
NEUBERGER&BERMAN Year Ended August 31, to August 31,
FOCUS TRUST 1997 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Expenses 1.06% 1.27% 2.50% 2.50% 2.50%
----------------------------------------------
Net Investment Income (Loss) .01% .35% (.87%) (.73%) (1.53%)
----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Period from
August 3, 1993
NEUBERGER&BERMAN Year Ended August 31, to August 31,
GUARDIAN TRUST 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Expenses .92% .96% 1.52% 2.50%
--------------------------------------
Net Investment Income (Loss) 1.26% 1.29% .78% (.69%)
--------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Period from
August 30, 1993
NEUBERGER&BERMAN Year Ended August 31, to August 31,
MANHATTAN TRUST 1997 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Expenses 1.23% 1.25% 1.46% 2.50% 2.50%
----------------------------------------------
Net Investment Income (Loss) (.44%) (.55%) (.43%) (1.38%) 4.02%
----------------------------------------------
</TABLE>
16
<PAGE> 17
<TABLE>
<CAPTION>
Period from
August 30, 1993
NEUBERGER&BERMAN Year Ended August 31, to August 31,
PARTNERS TRUST 1997 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Expenses .94% 1.06% 1.24% 2.50% 2.50%
----------------------------------------------
Net Investment Income (Loss) .61% .72% .49% (1.22%) .99%
----------------------------------------------
</TABLE>
After reimbursement of expenses by N&B Management and/or the waiver of a
portion of the management fee borne directly by Neuberger&Berman GENESIS
Portfolio. Had N&B Management not undertaken such action, the annualized
ratios of net expenses and net investment income (loss) to average daily net
assets would have been:
<TABLE>
<CAPTION>
Period from
August 26, 1993
NEUBERGER&BERMAN Year Ended August 31, to August 31,
GENESIS TRUST 1997 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Expenses 1.35% 1.65% 1.78% 2.50% 2.50%
----------------------------------------------
Net Investment Loss (.26%) (.54%) (.60%) (1.35%) (1.43%)
----------------------------------------------
</TABLE>
7)Annualized.
8)After reimbursement of expenses by N&B Management. Had N&B Management not
undertaken such action, the annualized ratios of net expenses and net
investment income to average daily net assets would have been higher and
lower, respectively.
9)Because each Fund invests only in its corresponding Portfolio and that
Portfolio (rather than the Fund) engages in securities transactions, no Fund
calculates a portfolio turnover rate or pays any brokerage commissions. The
portfolio turnover rates for each Portfolio were as follows:
<TABLE>
<CAPTION>
Period from
August 2, 1993
Year Ended August 31, to August 31,
1997 1996 1995 1994 1993
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Neuberger&Berman FOCUS Portfolio 63% 39% 36% 52% 4%
Neuberger&Berman GENESIS Portfolio 18% 21% 37% 63% 3%
Neuberger&Berman GUARDIAN Portfolio 50% 37% 26% 24% 3%
Neuberger&Berman MANHATTAN Portfolio 89% 53% 44% 50% 3%
Neuberger&Berman PARTNERS Portfolio 77% 96% 98% 75% 8%
Neuberger&Berman SOCIALLY RESPONSIVE
Portfolio 51% 53% 58% 14%* N/A
</TABLE>
* Period from March 14, 1994 (commencement of operations) to August 31,
1994.
17
<PAGE> 18
The average commission rates paid by each Portfolio were as follows:
<TABLE>
<CAPTION>
Year Ended
August 31,
1997 1996
----------------------------------------------------------------------------------
<S> <C> <C>
Neuberger&Berman FOCUS Portfolio $0.0555 $0.0578
Neuberger&Berman GENESIS Portfolio $0.0565 $0.0576
Neuberger&Berman GUARDIAN Portfolio $0.0538 $0.0580
Neuberger&Berman MANHATTAN Portfolio $0.0573 $0.0373
Neuberger&Berman PARTNERS Portfolio $0.0522 $0.0494
Neuberger&Berman SOCIALLY RESPONSIVE Portfolio $0.0568 $0.0587
</TABLE>
18
<PAGE> 19
INVESTMENT PROGRAMS
The investment policies and limitations of each Fund are identical to those
of its corresponding Portfolio. 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 44.
Investment policies and limitations of the Funds and Portfolios are not
fundamental unless otherwise specified in this Prospectus or the SAI.
Fundamental policies may not be changed without shareholder approval. A
non-fundamental policy or limitation may be changed by the trustees of the
respective Trust or of Managers Trust without shareholder approval.
The investment objectives of the Funds and Portfolios are not fundamental.
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 Trust 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>
<S> <C> <C>
- - Autos & Housing - Health Care - Technology
- - Consumer Goods & Services - Heavy Industry - Transportation
- - Defense & Aerospace - Machinery & Equipment - Utilities
- - Energy - Media & Entertainment
- - Financial Services - Retailing
</TABLE>
To maximize potential return, the Portfolio normally makes at least 90% of
its investments in not more than six sectors it identifies as undervalued. Where
a particular industry may fall within more than one sector, N&B Management uses
its judgment and experience to determine the placement of that industry within a
sector. The Portfolio uses the value-oriented investment approach to identify
stocks believed to be undervalued, including stocks that are temporarily out of
favor in the market. The Portfolio then focuses its investments in the sectors
in which the undervalued stocks are clustered. These sectors are believed to
offer the greatest potential for capital growth. This investment approach is
different from that of most other mutual funds that emphasize sector investment.
Those funds either invest in only a single economic sector or choose a number of
sectors by analyzing general
19
<PAGE> 20
economic trends. Further information on the Portfolio's securities holdings and
their allocation by sector as of the end of the Fund's most recent fiscal year
is included in the Fund's annual report to shareholders, which is available at
no cost upon request. 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 purchase any security if, as a result, (1) more than 50%
of its total assets would be invested in any one sector, or (2) 25% or more of
its total assets would be invested in the securities of companies having their
principal business activities in any one industry (this policy is fundamental).
- ----------------------------------------------------
Neuberger&Berman Genesis Portfolio
- --------------------------------------------------------------------------------
The investment objective of Neuberger&Berman GENESIS Portfolio and
Neuberger&Berman GENESIS Trust is to seek capital appreciation.
Neuberger&Berman GENESIS Portfolio invests primarily in common stocks of
companies with small market capitalizations ("small-cap companies"). Market
capitalization means the total market value of a company's outstanding common
stock. The Portfolio regards companies with market capitalizations of up to $1.5
billion at the time of the Portfolio's investment as small-cap companies.
Companies whose market capitalizations exceed $1.5 billion after purchase
continue to be considered small-cap companies for purposes of the Portfolio's
investment policies. There is no necessary correlation between market
capitalization and the financial attributes -- such as levels of assets,
revenues, or income -- commonly used to measure the size of a company.
Studies indicate that the market values of small-cap company stocks, such as
those included in the Russell 2000 Index and the Wilshire 1750 Index or quoted
on Nasdaq, are out-of-sync with larger capitalization stocks. Over the last 30
years, small-cap company stocks have outperformed larger capitalization stocks
about two-thirds of the time, even though small-cap stocks have usually declined
more than larger capitalization stocks in declining markets. There can be no
assurance that this pattern will continue.
The Portfolio tries to enhance the potential for appreciation and limit the
risk of decline in the value of its securities by employing the value-oriented
investment approach. The Portfolio seeks securities that appear to be
underpriced and are issued by companies with proven management, sound finances,
and strong potential for market growth. To reduce risk, the Portfolio
diversifies its holdings among many companies and industries. The Portfolio
focuses on the fundamentals of each small-cap company, instead of trying to
anticipate what changes might occur in the stock
20
<PAGE> 21
market, the economy, or the political environment. This approach differs from
that used by many other funds investing in small-cap company stocks. Those funds
often buy stocks of companies they believe will have above-average earnings
growth, based on anticipated future developments. In contrast, the Portfolio's
securities are generally selected with the belief that they are currently
undervalued, based on existing conditions.
For more information, see "Special Considerations of Small- and Mid-Cap
Company Stocks" on page 24.
- -----------------------------------------------------
Neuberger&Berman Guardian Portfolio
- --------------------------------------------------------------------------------
The investment objective of Neuberger&Berman GUARDIAN Portfolio and
Neuberger&Berman GUARDIAN Trust is to seek capital appreciation and,
secondarily, current income.
Neuberger&Berman GUARDIAN Portfolio invests primarily in 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
managements, and consistent earnings.
Neuberger&Berman GUARDIAN Fund, a mutual fund administered by N&B
Management, also invests all of its net investable assets in Neuberger&Berman
GUARDIAN Portfolio. Neuberger&Berman GUARDIAN Fund has paid its shareholders an
income dividend every quarter and a capital gain distribution every year since
Neuberger&Berman GUARDIAN Fund's inception in 1950; Neuberger&Berman GUARDIAN
Trust has done so since December 1993. 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 Trust is to seek capital appreciation without regard
to income.
Neuberger&Berman MANHATTAN Portfolio can invest in securities of small-,
medium-, and large-capitalization companies believed by N&B Management to have
the maximum potential for long-term capital appreciation. The portfolio managers
currently intend to focus primarily on the securities of medium-capitalization
companies ("mid-cap companies"). The portfolio managers do not seek to invest in
securities that pay dividends or interest, and any such income is incidental.
The Portfolio uses a growth-oriented 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
21
<PAGE> 22
flow) than securities likely to be purchased by other Portfolios. In selecting
stocks, N&B Management considers, among other factors, a company's financial
strength, competitive position, projected future earnings, management strength
and experience, reasonable valuation and other investment criteria. The
Portfolio also diversifies its investments among companies and industries.
The Portfolio's growth investment program involves greater risks and share
price volatility than programs that invest in more undervalued 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.
For more information, see "Special Considerations of Small- and Mid-Cap
Company Stocks" on page 24.
- ----------------------------------------------------
Neuberger&Berman Partners Portfolio
- --------------------------------------------------------------------------------
The investment objective of Neuberger&Berman PARTNERS Portfolio and
Neuberger&Berman PARTNERS Trust 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. N&B
Management looks for securities believed to be undervalued based on strong
fundamentals, including a low price-to-earnings ratio, 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.
For more information, see "Special Considerations of Small- and Mid-Cap
Company Stocks" on page 24.
- -------------------------------------------------------------------
Neuberger&Berman Socially Responsive Portfolio
- --------------------------------------------------------------------------------
The investment objective of Neuberger&Berman SOCIALLY RESPONSIVE Portfolio
and Neuberger&Berman SOCIALLY RESPONSIVE Trust is to seek long-term capital
appreciation by investing primarily in securities of companies that meet both
financial criteria and the Social Policy.
In seeking capital appreciation, the Portfolio generally follows a
value-oriented investment approach to the selection of individual securities.
Prospective investments are first subjected to detailed financial analysis and
are not studied further unless N&B Management believes that they are currently
undervalued relative to the issuer's assets and potential earning power.
22
<PAGE> 23
The Portfolio expects to be nearly fully invested at all times, primarily in
common stock. It may also invest in convertible securities and preferred stock
and in foreign securities and American Depositary Receipts ("ADRs") of foreign
companies that meet the Social Policy. On occasion, deposits with community
banks and credit unions may be considered for investment. Under normal
conditions, at least 65% of the Portfolio's total assets are invested in
accordance with the Social Policy, and at least 65% of its total assets are
invested in equity securities. The Portfolio expects that substantially all of
its equity securities will be selected in accordance with the Social Policy.
The Portfolio may also engage in portfolio management techniques that are
not subject to the Social Policy, such as lending securities and purchasing and
selling put and call options on securities and currencies, futures contracts,
options on futures contracts, and forward contracts.
SOCIAL POLICY. Companies deemed acceptable from a financial standpoint are
evaluated by N&B Management using a database that Neuberger&Berman has designed
to develop and monitor information on companies in various categories of social
criteria. N&B Management seeks to invest in issuers that show leadership in the
following major areas of social impact: environment and workplace diversity and
employment. N&B Management also evaluates investments based on companies'
records in other areas of concern: public health, type of products, and
corporate citizenship.
The Portfolio's social orientation is predicated in part on the belief that
good corporate citizenship is good business; that is, good policies with respect
to such social criteria as employment and environmental practices may often have
a positive impact on the company's "bottom line." N&B Management recognizes,
however, that many social criteria represent goals rather than achievements and
that goals are often difficult to quantify. In each area, N&B Management seeks
to elicit and understand management's vision of the company's social role and,
in making investment decisions, gives weight to enlightened, progressive
policies. The information used by N&B Management in evaluating prospective
investments for conformity with the Social Policy is obtained primarily from
services that specialize in reporting information from issuers or from agencies
that oversee issuers' activities or compliance with laws and regulations.
Additionally, the information may come from public interest groups and from N&B
Management's discussions with company representatives. N&B Management attempts
to assess the objectivity of all information that it receives. However,
decisions made by N&B Management inevitably involve some level of subjective
judgment.
The Portfolio seeks to invest in companies that show leadership in
addressing environmental problems effectively and in promoting progressive
workplace policies, especially as they affect women and minorities. N&B
Management seeks to identify
23
<PAGE> 24
companies committed to improving their environmental performance by examining
their policies and programs in such areas as energy conservation, pollution
reduction and control, waste management, recycling, and careful stewardship of
natural resources. In a similar manner, N&B Management seeks to identify
companies whose policies and practices recognize the importance of human
resources to corporate productivity and the centrality of the work experience to
the quality of life of all employees. The Portfolio seeks to invest in companies
that demonstrate leadership in such areas as providing and promoting equal
opportunity, investing in the training and re-training of workers, promoting a
safe working environment, providing family-oriented flexible benefits, and
involving workers in job and workflow engineering.
In making investment decisions, N&B Management takes into account a
company's record as a member of the various communities of which it is a part
and its commitment to product quality and value. Currently, the Social Policy
screens out any company that derives more than 5% of its total annual revenue
from (i) manufacturing and selling alcohol and/or tobacco, (ii) sales in or
services related to gambling, or (iii) the manufacturing of weapons systems.
Additionally, the Portfolio does not invest in any company that derives its
total annual revenue primarily from non-consumer sales to the military or that
owns or operates one or more nuclear power facilities or is a major supplier of
nuclear power services.
Not every issuer selected by N&B Management will demonstrate leadership in
each category of the Social Policy. The social records of most companies are
written in shades of gray. For example, a company may have a progressive record
in employee relations and community affairs but a poor one on product marketing
issues. Another company may have a mixed record within a single area. Finally,
it is often difficult to distinguish between substantive commitment and public
relations. This principle works both ways: there are many companies with
excellent records on social issues that maintain a low profile for one reason or
another. Taking these factors into consideration, N&B Management emphasizes the
overall approach that companies take toward the areas of social impact and pays
particular attention to progress achieved toward the goals of the Social Policy.
If securities held by the Portfolio no longer satisfy the Social Policy, the
Portfolio will seek to dispose of the securities as soon as reasonably
practicable, which may cause the Portfolio to sell the securities at a time not
desirable from a purely financial standpoint.
- ---------------------------------------------------
Special Considerations of Small- and
Mid-Cap Company Stocks
- --------------------------------------------------------------------------------
Investments in small- and mid-cap company stocks may present greater
opportunities for capital appreciation than investments in stocks of
large-capitalization com-
24
<PAGE> 25
panies ("large-cap companies"). However, small- and mid-cap company stocks may
have higher risk and volatility. These stocks generally are not as broadly
traded as large-cap company stocks and their prices thus may fluctuate more
widely and abruptly. Any such movements in stocks held by a Portfolio would be
reflected in the corresponding Fund's net asset value. Small- and mid-cap
company stocks also are less researched than large-cap company stocks and are
often overlooked in the market.
- -----------------------------------------------------
Short-Term Trading; Portfolio Turnover
- --------------------------------------------------------------------------------
Although none of the Portfolios purchases 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. See "Notes to
Financial Highlights" for more information about the portfolio turnover rate of
each Portfolio. It is anticipated that the annual turnover rate of
Neuberger&Berman MANHATTAN Portfolio and of Neuberger&Berman PARTNERS Portfolio
may exceed 100% in some fiscal years. Turnover rates in excess of 100% generally
result in higher transaction costs (which are borne directly by the Portfolio
and indirectly by the corresponding Fund) and a possible increase in realized
short-term capital gains or losses. See "Dividends, Other Distributions, and
Taxes" on page 33 and the SAI.
- -----------------
Borrowings
- --------------------------------------------------------------------------------
Each Portfolio has a fundamental policy that it may not borrow money, except
that it may (1) borrow money from banks for temporary or emergency purposes and
not for leveraging or investment and (2) enter into reverse repurchase
agreements for any purpose, so long as the aggregate amount of borrowings and
reverse repurchase agreements does not exceed one-third of the Portfolio's total
assets (including the amount borrowed) less liabilities (other than borrowings).
None of the Portfolios expects to borrow money or to enter into reverse
repurchase agreements. 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 (except Neuberger&Berman
SOCIALLY RESPONSIVE 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.
Any part of Neuberger&Berman SOCIALLY RESPONSIVE Portfolio's assets may be
retained temporarily in investment grade fixed income securities of non-govern-
25
<PAGE> 26
mental issuers, U.S. Government and Agency Securities, repurchase agreements,
money market instruments, commercial paper, and cash and cash equivalents when
N&B Management believes that significant adverse market, economic, political, or
other circumstances require prompt action to avoid losses. In addition, the
feeder funds that invest in Neuberger&Berman SOCIALLY RESPONSIVE Portfolio deal
with large institutional investors, and the Portfolio may hold such instruments
pending investment or payout when the Portfolio has received a large influx of
cash due to sales of Neuberger&Berman SOCIALLY RESPONSIVE Trust shares, or
shares of another fund which invests in the Portfolio, or when it anticipates a
substantial redemption. Generally, the foregoing temporary investments for
Neuberger&Berman SOCIALLY RESPONSIVE Portfolio are selected with a concern for
the social impact of each investment.
26
<PAGE> 27
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 dividends, 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 evens out year-to-year variations in
actual performance. Past results do not, of course, guarantee future
performance. Share prices may vary, and your shares when redeemed may be worth
more or less than your original purchase price.
The Funds commenced operations in August 1993, except Neuberger&Berman
SOCIALLY RESPONSIVE Trust, which commenced operations in March 1997. However,
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 Portfolios and have longer operating histories. The following table shows
the average annual total returns of each Fund for the 1-year, 5-year, 10-year
and since inception periods ended August 31, 1997. Returns for periods prior to
each Fund's commencement of operations represent the performance of the
respective Sister Fund. The table also shows a comparison with the S&P "500"
Index for each Fund, except Neuberger&Berman GENESIS Trust, which is compared
with the Russell 2000(R) Index and Neuberger&Berman MANHATTAN Trust, which is
compared with the Russell Midcap GrowthTM Index. The S&P "500" Index is the
Standard & Poor's 500 Composite Stock Price Index, an unmanaged index generally
considered to be representative of overall stock market activity. The Russell
2000 is an unmanaged index of the securities of the 2,000 issuers having the
smallest capitalization in the Russell 3000(R) Index, representing about 10% of
the Russell 3000's total market capitalization. The Russell Midcap Growth Index
measures the performance of those Russell Midcap Index companies with higher
price-to-book ratios and higher forecasted growth values. The Russell MidcapTM
Index measures the performance of the 800 smallest companies in the Russell
1000(R) Index, which represents approximately 35% of the total market
capitalization of the Russell 1000 Index (which in turn consists of the 1,000
largest U.S. companies based on market capitalization). Please note that indices
do not take into account any fees or expenses of investing in the individual
securities that they track. Further information regarding the Funds' performance
is presented in their annual report to shareholders, which is available without
charge by calling 800-877-9700.
27
<PAGE> 28
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS
ENDED AUGUST 31, 1997
<TABLE>
<CAPTION>
NEUBERGER&BERMAN SINCE INCEPTION
EQUITY TRUSTS 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- --------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FOCUS TRUST +43.93% +22.58% +14.70% +12.50% 10/19/55
GUARDIAN TRUST +39.56 +19.85 +14.42 +13.42 6/1/50
PARTNERS TRUST +47.11 +22.44 +14.33 +18.66 1/20/75 +
SOCIALLY RESPONSIVE
TRUST +31.92 N/A N/A +20.02 3/16/94
S&P "500" INDEX +40.73 +19.78 +13.85 N/A N/A
MANHATTAN TRUST +38.84 +17.56 +11.49 +17.50 3/1/79 +
RUSSELL MIDCAP
GROWTH INDEX +31.23 +18.56 13.18 N/A N/A
GENESIS TRUST +44.31 +22.35 N/A +16.76 9/27/88
RUSSELL 2000 INDEX +28.96 +19.36 N/A +14.57* N/A
</TABLE>
+ The dates when N&B Management became investment adviser to the Sister Funds.
* From the inception date of Neuberger&Berman GENESIS Trust's Sister Fund.
Prior to November 1991, the investment policies of Neuberger&Berman FOCUS
Trust's 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.
Neuberger&Berman MANHATTAN Portfolio has the ability to invest in the stocks of
small-, medium- and large-capitalization companies. Prior to July 1997,
Neuberger&Berman MANHATTAN Portfolio invested in the stocks of companies from
each of these capitalization levels. In July 1997, Neuberger&Berman MANHATTAN
Portfolio changed its focus to the stocks of medium-capitalization companies.
Therefore, performance results for Neuberger&Berman MANHATTAN Trust prior to
July 1997 may be more appropriately compared to the S&P "500" Index. Had N&B
Management not reimbursed certain expenses or waived certain fees, the total
returns of the Funds would have been lower. The total returns for periods prior
to the Funds' commencement of operations would have been lower had they
reflected the higher fees of the Funds as compared to those of the Sister Funds.
28
<PAGE> 29
The following table lets you take a closer look at how each Fund and its
respective Sister Fund performed year by year, in terms of an annual per share
total return for each of the last ten calendar years (ending December 31).
Please note that the previous chart reflects information for periods ended on
the Funds' last fiscal year-end (that is, as of August 31, 1997).
TOTAL RETURNS FOR CALENDAR YEARS ENDED DECEMBER 31
<TABLE>
<CAPTION>
NEUBERGER&BERMAN
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
EQUITY TRUSTS 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
- -----------------------------------------------------
FOCUS TRUST +0.6% +16.5% +29.8% -5.9% +24.7% +21.1% +19.6% +0.9% +36.0% +16.3%
GUARDIAN TRUST -1.0 +28.0 +21.5 -4.7 +34.3 +19.0 +13.5 +1.5 +32.0 +17.7
MANHATTAN TRUST +0.4 +18.3 +29.1 -8.1 +30.9 +17.8 +10.0 -3.4 +30.8 +9.7
PARTNERS TRUST +4.3 +15.5 +22.8 -5.1 +22.4 +17.5 +15.5 -1.0 +35.2 +26.5
SOCIALLY RESPONSIVE
TRUST N/A N/A N/A N/A N/A N/A N/A N/A +38.9 +18.5
S&P "500" INDEX +5.2 +16.5 +31.6 -3.1 +30.3 +7.6 +10.0 +1.4 +37.5 +22.9
GENESIS TRUST N/A N/A +17.3 -16.2 +41.6 +15.6 +14.4 -1.7 +27.2 +29.9
RUSSELL 2000 INDEX N/A N/A +16.3 -19.5 +46.0 +18.4 +18.9 -1.8 +28.5 +16.5
</TABLE>
TOTAL RETURN INFORMATION. You can obtain current performance information
about each Fund by calling N&B Management at 800-877-9700.
29
<PAGE> 30
SHAREHOLDER SERVICES
- ---------------------------
How to Buy Shares
- --------------------------------------------------------------------------------
YOU CAN BUY AND OWN FUND SHARES ONLY THROUGH AN ACCOUNT WITH AN INSTITUTION.
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. 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, 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. Investors
should consult their Institution to determine the time by which it must receive
an order so that Fund shares can be purchased at that day's price. Prices for
shares of all Funds are calculated as of the close of regular trading on the
NYSE, usually 4 p.m. Eastern time. An 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 an investor has no access to that Institution to buy shares.
Other Information:
----- An Institution must pay for shares it purchases on its clients' behalf
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."
----- The Funds do not issue certificates for shares.
----- Some Institutions may charge their clients a fee in connection with
purchases of shares of the Funds.
- ---------------------------
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 and the payment of redemption proceeds. 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. Investors should consult their
Institution to determine the time by which it must receive an order so that Fund
shares can be sold at that day's price. Prices for shares of all Funds are
calculated as of the close of regular trading on the NYSE, usually 4 p.m.
Eastern time. An Institution may be closed on
30
<PAGE> 31
days when the NYSE is open. As a result, prices for Fund shares may be
significantly affected on days when an investor has no access to that
Institution to sell shares.
Other Information:
----- Redemption proceeds will be paid to Institutions as agreed with N&B
Management, but in any case within three business days (under unusual
circumstances a Fund may take longer, as permitted by law). An
Institution may not follow the same procedures for payment of
redemption proceeds to its clients.
----- Each Fund may suspend redemptions or postpone payments on days when
the NYSE is closed, when trading on the NYSE is restricted, or as
permitted by the SEC.
----- Some Institutions may charge their clients a fee in connection with
redemptions of shares of the Funds.
- ---------------------------
Exchanging Shares
- --------------------------------------------------------------------------------
Through an account with an Institution, you may be able to exchange shares
of a Fund for shares of another Neuberger&Berman Fund. Each Institution will
establish its own exchange policy and procedures. 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 deemed not 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.
31
<PAGE> 32
SHARE PRICES AND NET ASSET VALUE
Each Fund's shares are bought or sold at a price that is the Fund's net
asset value ("NAV") per share. The NAVs for each Fund and its corresponding
Portfolio are calculated by subtracting liabilities from total assets (in the
case of a Portfolio, the market value of the securities the Portfolio holds plus
cash and other assets; in the case of a Fund, its percentage interest in its
corresponding Portfolio, multiplied by the Portfolio's NAV, plus any other
assets). Each Fund's per share NAV is calculated by dividing its NAV by the
number of Fund shares outstanding and rounding the result to the nearest full
cent. Each Fund and its corresponding Portfolio calculate their NAVs as of the
close of regular trading on the NYSE, usually 4 p.m. Eastern time, on each day
the NYSE is open.
Each Portfolio values securities (including options) listed on the NYSE, the
American Stock Exchange, or other national securities exchanges or quoted on
Nasdaq, and other securities for which market quotations are readily available,
at the last sale price on the day the securities are being valued. If there is
no reported sale of such a security on that day, the security is valued at the
mean between its closing bid and asked prices on that day. The Portfolios value
all other securities and assets, including restricted securities, by a method
that the trustees of Managers Trust believe accurately reflects fair value.
If N&B Management believes that the price of a security obtained under a
Portfolio's valuation procedures (as described above) does not represent the
amount that the Portfolio reasonably expects to receive on a current sale of the
security, the Portfolio will value the security based on a method that the
trustees of Managers Trust believe accurately reflects fair value.
32
<PAGE> 33
DIVIDENDS, OTHER DISTRIBUTIONS,
AND TAXES
Each Fund distributes, normally in December, substantially all of its share
of any net investment income (net of the Fund's expenses), any net capital gains
from investment transactions, and any net gains from foreign currency
transactions earned or realized by its corresponding Portfolio. In addition,
Neuberger&Berman GUARDIAN Trust distributes substantially all of its share of
Neuberger&Berman GUARDIAN Portfolio's net investment income, if any, near the
end of each other 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
- --------------------------------------------------------------------------------
An investment has certain tax consequences, depending on the type of account
through which the investment is made. FOR 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
generally also are 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. Investors who buy Fund shares just before a Fund deducts a dividend or
other distribution from its NAV will pay the full price for the shares and then
receive a portion of the price back in the form of a taxable distribution.
Investors who are considering the purchase of Fund shares in December (or, in
the case of Neuberger&Berman GUARDIAN Trust, near the end of any other calendar
quarter) should take this into account.
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
33
<PAGE> 34
taxed as long-term capital gain, no matter how long an investor has owned Fund
shares. Distributions of net capital gain may include gains from the sale of
portfolio securities that appreciated in value before an investor bought Fund
shares. Under the Taxpayer Relief Act of 1997, different maximum tax rates apply
to a Fund's distributions of net capital gain depending on its corresponding
Portfolio's holding period.
Every January, each Fund will send each Institution that is a shareholder
therein a statement showing the amount of distributions paid in cash or
reinvested in Fund shares for the previous year. Each Institution will also
receive information showing (1) the portion, if any, of those distributions that
generally is not subject to state and local income taxes in certain states and
(2) capital gain distributions broken down in a manner that will enable
investors or their tax advisers to determine the appropriate rate of capital
gains tax on such distributions.
TAXES ON REDEMPTIONS. Capital gains realized on redemptions of Fund shares,
including redemptions in connection with exchanges to other Neuberger&Berman
Funds, are subject to tax. A capital gain or loss generally 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. Capital gain on shares held for more than one year will be long-term
capital gain, in which event it will be subject to federal income tax at the
capital gains rate applicable to an investor's holding period and tax bracket.
When an Institution sells Fund shares, it will receive a confirmation
statement showing the number of shares sold and the price.
OTHER. Every January, Institutions will receive a consolidated transaction
statement for the previous year.
Each Institution is required annually to send each investor in its account a
statement showing the investor's distribution and transaction information for
the previous year. Each Fund intends to continue to qualify for treatment as a
regulated investment company for federal income tax purposes so that it will not
have to pay federal income tax on that part of its taxable income and realized
gains that it distributes to its shareholders.
The foregoing is only a summary of some of the important income 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.
34
<PAGE> 35
MANAGEMENT AND ADMINISTRATION
- -------------------------------
Trustees and Officers
- --------------------------------------------------------------------------------
The trustees of the Trusts and the trustees of Managers Trust, who are
currently the same individuals, have oversight responsibility for the operations
of each Fund and each Portfolio, respectively. The SAI contains general
background information about each trustee and officer of the Trusts and of
Managers Trust. The trustees and officers of the Trusts and of Managers Trust
who are officers and/or directors of N&B Management and/or principals of
Neuberger&Berman serve without compensation from the Funds or the Portfolios.
- --------------------------------------------------
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 Portfolios, N&B
Management currently serves as investment manager of other mutual funds.
Neuberger&Berman acts as sub-adviser for the Portfolios and other mutual funds
managed by N&B Management. The mutual funds managed by N&B Management and
Neuberger&Berman had aggregate net assets of approximately $21.2 billion as of
September 30, 1997.
As sub-adviser, Neuberger&Berman furnishes N&B Management with investment
recommendations and research without added cost to the Portfolios. N&B
Management compensates Neuberger&Berman for its costs in connection with those
services. 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 $54.1 billion of
assets as of September 30, 1997. All of the voting stock of N&B Management is
owned by individuals who are principals of Neuberger&Berman.
The following is information about the individuals who are primarily
responsible for the day-to-day management of the Portfolios:
Neuberger&Berman FOCUS Portfolio and Neuberger&Berman GUARDIAN
Portfolio -- Kent C. Simons and Kevin L. Risen are co-managers of the
Portfolios. Mr. Simons and Mr. Risen are Vice Presidents of N&B Management and
principals of Neuberger&Berman. Mr. Simons has had responsibility for
Neuberger&Berman FOCUS Portfolio since 1988, and for Neuberger&Berman GUARDIAN
Portfolio since 1981. Mr. Risen has had those responsibilities since 1996, and
during the year prior
35
<PAGE> 36
thereto, he was a portfolio manager for Neuberger&Berman. He was a research
analyst at Neuberger&Berman from 1992 to 1995.
Neuberger&Berman GENESIS Portfolio -- Judith M. Vale and Robert W. D'Alelio
are co-managers of the Portfolio. Ms. Vale and Mr. D'Alelio have been senior
members of Neuberger&Berman's Small Cap Group since 1992 and 1996, respectively,
and are both Vice Presidents of N&B Management. Ms. Vale is a principal of
Neuberger&Berman. Ms. Vale and Mr. D'Alelio have been primarily responsible for
the day-to-day management of Neuberger&Berman GENESIS Portfolio since February
1994 and July 1997, respectively. Mr. D'Alelio was a senior portfolio manager
for another investment management group from 1992 to 1996.
Neuberger&Berman MANHATTAN Portfolio -- Jennifer K. Silver and Brooke A.
Cobb are co-managers of the Portfolio. Ms. Silver is Director of the Neuberger&
Berman Growth Equity Group, and both she and Mr. Cobb are Vice Presidents of N&B
Management. Ms. Silver is a principal of Neuberger&Berman. Ms. Silver and Mr.
Cobb have had responsibility for Neuberger&Berman MANHATTAN Portfolio since July
1997. Previously, Ms. Silver was a portfolio manager for several large mutual
funds managed by a prominent investment adviser. Mr. Cobb was the chief
investment officer for an investment advisory firm managing individual accounts
from 1995 to 1997 and, from 1992 to 1995, a portfolio manager of a large mutual
fund managed by a prominent investment adviser.
Neuberger&Berman PARTNERS Portfolio -- Michael M. Kassen and Robert I.
Gendelman are co-managers of the Portfolio. Mr. Kassen and Mr. Gendelman are
Vice Presidents of N&B Management and principals of Neuberger&Berman. Mr. Kassen
and Mr. Gendelman have had responsibility for Neuberger&Berman PARTNERS
Portfolio since June 1990 and October 1994, respectively. Mr. Kassen has been an
employee of N&B Management since 1990. Mr. Gendelman was a portfolio manager for
another mutual fund manager from 1992 to 1993.
Neuberger&Berman SOCIALLY RESPONSIVE Portfolio -- Janet Prindle is manager
of the Portfolio and Robert Ladd and Ingrid Saukaitis are associate managers of
the Portfolio. Ms. Prindle, a Vice President of N&B Management since November
1993, has been a principal of Neuberger&Berman since 1983. Ms. Prindle has been
responsible for Neuberger&Berman SOCIALLY RESPONSIVE Portfolio since its
inception in March 1994. Ms. Prindle is Director of Socially Responsive
Investment Services at Neuberger&Berman, and has been researching and developing
corporate responsibility criteria as they apply to investments since 1989. She
has been managing money using these criteria since 1990. Mr. Ladd and Ms.
Saukaitis have had responsibility for Neuberger&Berman SOCIALLY RESPONSIVE
Portfolio since December 1997. During the five years prior thereto, Mr. Ladd was
a portfolio manager for Neuberger&Berman. Ms. Saukaitis has been Director of
Social Research for Neuberger&Berman since February 1997. From 1995 to January
1997,
36
<PAGE> 37
she was a project director for a non-profit group that provided social research
on companies to the investment industry. Both Mr. Ladd and Ms. Saukaitis are
Assistant Vice Presidents of N&B Management.
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 principals 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.
To mitigate the possibility that a Portfolio will be adversely affected by
employees' personal trading, the Trusts, Managers Trust, N&B Management, and
Neuberger&Berman have adopted policies that restrict securities trading in the
personal accounts of the 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. For
investment management services, each Portfolio (except Neuberger&Berman GENESIS
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. Neuberger&Berman GENESIS Portfolio pays N&B Management a fee
for investment management services at the annual rate of 0.85% of the first $250
million of the Portfolio's average daily net assets, 0.80% of the next $250
million, 0.75% of the next $250 million, 0.70% of the next $250 million, and
0.65% of average daily net assets in excess of $1 billion.
N&B Management provides administrative services to each Fund that include
furnishing facilities and personnel for the Fund and performing accounting,
recordkeeping, and other services. 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
Institutions some of its responsibilities to that Fund under the administration
agreement and may compensate each Institution that provides such services at an
annual rate of up to 0.25% of the average net asset value of Fund shares held
through that Institution.
37
<PAGE> 38
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 the
"Other Expenses" described on page 7.
See "Expense Information -- Annual Fund Operating Expenses" for information
about how these fees and expenses may affect the value of your investment.
During its 1997 fiscal year, each Fund accrued administration fees and a pro
rata portion of the corresponding Portfolio's management fees (prior to any
expense reimbursement or fee waiver), as a percentage of the Fund's average
daily net assets, as follows:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Neuberger&Berman FOCUS Trust 0.90%
Neuberger&Berman GENESIS Trust 1.21%
Neuberger&Berman GUARDIAN Trust 0.84%
Neuberger&Berman MANHATTAN Trust 0.93%
Neuberger&Berman PARTNERS Trust 0.86%
Neuberger&Berman SOCIALLY RESPONSIVE Trust 0.48%*
*Not annualized.
</TABLE>
During its 1997 fiscal year, each Fund bore aggregate expenses as a
percentage of its average daily net assets (after taking into consideration N&B
Management's expense reimbursement for each Fund and N&B Management's then
current waiver of a portion of the management fee borne indirectly by
Neuberger&Berman GENESIS Trust), as follows:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Neuberger&Berman FOCUS Trust 0.96%
Neuberger&Berman GENESIS Trust 1.25%
Neuberger&Berman GUARDIAN Trust 0.88%
Neuberger&Berman MANHATTAN Trust 1.09%
Neuberger&Berman PARTNERS Trust 0.91%
Neuberger&Berman SOCIALLY RESPONSIVE Trust 1.58%
</TABLE>
N&B Management has voluntarily undertaken to reimburse each Fund for its
Total Operating Expenses so that each Fund's expense ratio per annum will not
exceed the expense ratio per annum of its Sister Fund by more than 0.10% of the
Fund's average daily net assets. A Fund's per annum "expense ratio" is the sum
of the Fund's Total Operating Expenses divided by that Fund's average daily net
assets for the year. N&B Management may terminate this undertaking to any Fund
by
38
<PAGE> 39
giving at least 60 days' prior written notice to the Fund. 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. All correspondence should be addressed to the
Neuberger& Berman Funds, Institutional Services, 605 Third Avenue, 2nd Floor,
New York, NY 10158-0180.
39
<PAGE> 40
INFORMATION REGARDING
ORGANIZATION, CAPITALIZATION, AND
OTHER MATTERS
- ----------------
The Funds
- --------------------------------------------------------------------------------
Neuberger&Berman FOCUS Trust, Neuberger&Berman GENESIS Trust,
Neuberger&Berman GUARDIAN Trust, Neuberger&Berman MANHATTAN Trust and
Neuberger&Berman PARTNERS Trust are separate operating series of N&B Equity
Trust, a Delaware business trust organized pursuant to a Trust Instrument dated
May 6, 1993. Neuberger&Berman SOCIALLY RESPONSIVE Trust is a separate operating
series of N&B Equity Assets, a Delaware business trust organized pursuant to a
Trust Instrument dated October 18, 1993. Each 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. N&B Equity Trust
has seven separate series. N&B Equity Assets has six 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
Trusts 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 rights to subscribe to any additional shares.
SHAREHOLDER MEETINGS. The trustees of the Trusts 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 a corporation. To guard against the risk that
Delaware law might not be applied in other states, each 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 that
Trust or Fund and provides for indemnification out of Trust or Fund property of
any shareholder nevertheless held personally liable for Trust or Fund
obligations, respectively.
40
<PAGE> 41
OTHER. Because Fund shares can be bought, owned and sold only through an
account with an Institution, a client of an Institution may be unable to
purchase additional shares and/or may be required to redeem shares (and possibly
incur a tax liability) if the client no longer has a relationship with the
Institution or if the Institution no longer has a contract with N&B Management
to perform services. Depending on the policies of the Institutions involved, an
investor may be able to transfer an account from one Institution to another.
- ---------------------
The Portfolios
- --------------------------------------------------------------------------------
Each Portfolio is a separate operating series of Managers Trust, a New York
common law trust organized as of December 1, 1992. Managers Trust is registered
under the 1940 Act as a diversified, open-end management investment company.
Managers Trust has 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; the Fund thus acquires an indirect interest in
those securities.
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 Sister Funds that are series of
N&B Equity Funds and other mutual funds that are series of N&B Equity Assets
invest all of their respective net investable assets in corresponding Portfolios
of Managers Trust. The shares of each series of N&B Equity Funds are available
for purchase by members of the general public. The Trusts do not sell their
shares directly to 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. Other investors in a Portfolio
(including the series of N&B Equity Funds and N&B Equity Assets) 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 and N&B Equity Assets) might charge a sales commission. Therefore,
Fund shareholders may have different returns than shareholders in another
investment company that invests exclusively in the Portfolio. Information
regarding any fund that invests in a Portfolio is available from N&B Management
by calling 800-877-9700.
41
<PAGE> 42
The trustees of the Trusts believe that investment in a Portfolio by a
series of N&B Equity Funds or by other potential investors in addition to a Fund
may enable the Portfolio to realize economies of scale that could reduce its
operating expenses, thereby producing higher returns and benefitting all
shareholders. However, a Fund's investment in its corresponding Portfolio may be
affected by the actions of other large investors in the Portfolio, if any. For
example, if a large investor in a Portfolio (other than a Fund) redeemed its
interest in the Portfolio, the Portfolio's remaining investors (including the
Fund) might, as a result, experience higher pro rata operating expenses, thereby
producing lower returns.
Each Fund may withdraw its entire investment from its corresponding
Portfolio at any time, if the trustees of the respective 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 respective Trust. A withdrawal could result in
a distribution in kind of portfolio securities (as opposed to a cash
distribution) by the Portfolio to the Fund. That distribution could result in a
less diversified portfolio of investments for the Fund and could affect
adversely the liquidity of the Fund's investment portfolio. If the Fund decided
to convert those securities to cash, it usually would incur brokerage fees or
other transaction costs. If a Fund withdrew its investment from a Portfolio, the
trustees of the respective Trust would consider what actions might be taken,
including the investment of all of the Fund's net investable assets in another
pooled investment entity having substantially the same investment objective as
the Fund or the retention by the Fund of its own investment manager to manage
its assets in accordance 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
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Portfolio incurring financial loss beyond the amount of its investment on
account of such liability would be limited to circumstances in which the
Portfolio had inadequate insurance and was unable to meet its obligations out of
its assets. Upon liquidation of 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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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, RESTRICTED AND RULE 144A SECURITIES. Each Portfolio may invest up
to 15% 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. These may include unregistered or other restricted
securities and repurchase agreements maturing in greater than seven days.
Illiquid securities may also include commercial paper under section 4(2) of the
Securities Act of 1933, as amended, and Rule 144A securities (restricted
securities that may be traded freely among qualified institutional buyers
pursuant to an exemption from the registration requirements of the securities
laws); these securities are considered illiquid unless N&B Management, acting
pursuant to guidelines established by the trustees of Managers Trust, determines
they are liquid. Generally, foreign securities freely tradable in their
principal market are not considered restricted or illiquid. Illiquid securities
may be difficult for a Portfolio to value or dispose of due to the absence of an
active trading market. The sale of some illiquid securities by the Portfolios
may be subject to legal restrictions which could be costly to the Portfolios.
FOREIGN SECURITIES. Foreign securities are those of issuers organized and
doing business principally outside the United States, including non-U.S.
governments, their agencies, and instrumentalities. Each Portfolio may invest up
to 10% of the value of its total assets in foreign securities. The 10%
limitation does not apply to foreign securities that are denominated in U.S.
dollars, including ADRs. Foreign securities (including those denominated in U.S.
dollars and ADRs) are affected by political and 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 and more volatile than U.S. markets and may offer less protection to
investors. Investments in foreign securities that are not denominated in U.S.
dollars (including those made through ADRs) may be subject to special risks,
such as governmental regulation of foreign exchange transactions and changes in
rates of exchange with the U.S. dollar, irrespective of the performance of the
underlying investment.
COVERED CALL OPTIONS. Each Portfolio may try to reduce the risk of
securities price changes (hedge) or generate income by writing (selling) covered
call options against portfolio securities and may purchase call options in
related closing transactions. When a Portfolio writes a covered call option
against a security, the Portfolio is obligated to sell that security to the
purchaser of the option at a fixed price at any
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time during a specified period if the purchaser decides to exercise the option.
The maximum price the Portfolio may realize on the security during the option
period is the fixed price; the Portfolio continues to bear the risk of a decline
in the security's price, although this risk is reduced, at least in part, by the
premium received for writing 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 use of options is a highly specialized activity
that involves skills, techniques, and risks (including price volatility and a
high degree of leverage) different from those associated with selection of 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 hedged
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.
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 by
instrumentalities of the U.S. Government, such as the Government National
Mortgage Association, Fannie Mae (formerly, Federal National Mortgage
Association), Freddie Mac (formerly, Federal Home Loan Mortgage Corporation),
Student Loan Marketing Association (commonly known as "Sallie Mae") and
Tennessee Valley Authority. 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
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Agency mortgage-backed securities. The market prices of U.S. Government and
Agency Securities are not guaranteed by the Government.
Neuberger&Berman SOCIALLY RESPONSIVE Portfolio may invest up to 20% of its
net assets in convertible securities. A convertible security is a bond,
debenture, note, preferred stock, or other security that may be converted into
or exchanged for a prescribed amount of common stock of the same or a different
issuer within a particular period of time at a specified price or formula.
Convertible securities generally have features of both common stock and debt
securities. Neuberger& Berman SOCIALLY RESPONSIVE Portfolio does not intend to
purchase any convertible securities that are not investment grade.
"Investment grade" debt securities are those receiving one of the four
highest ratings from Moody's Investors Service, Inc. ("Moody's"), Standard &
Poor's ("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"). Securities rated by
Moody's in its fourth highest category (Baa) or Comparable Unrated Securities
may be deemed to have speculative characteristics. The value of the fixed income
securities in which a Portfolio may invest is likely to decline in times of
rising market 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 and Comparable Unrated
Securities. Such securities may be considered predominantly speculative,
although, as debt securities, they generally have priority over equity
securities of the same issuer and are generally better secured. Debt securities
in the lowest rating categories may involve a substantial risk of default or may
be in default. Changes in economic conditions or developments regarding the
individual issuer are more likely to cause price volatility and weaken the
capacity of the issuer of such securities to make principal and interest
payments than is the case for higher-grade debt securities. An economic downturn
affecting the issuer may result in an increased incidence of default. The market
for lower-rated securities may be thinner and less active than for higher-rated
securities. Neuberger&Berman PARTNERS Portfolio will invest in such securities
only when N&B Management concludes that the anticipated return to the Portfolio
on such an investment warrants exposure to the additional level of risk. A
further description of Moody's and S&P's ratings is included in the Appendix to
the SAI.
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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 Trusts and of Managers Trust have
considered this factor in approving each Fund's use of a single combined
Prospectus and combined SAI.
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DIRECTORY
INVESTMENT MANAGER, ADMINISTRATOR,
AND DISTRIBUTOR
Neuberger&Berman Management Incorporated
605 Third Avenue 2nd Floor
New York, NY 10158-0180
SUB-ADVISER
Neuberger&Berman, LLC
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
800-877-9700
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, NW
2nd Floor
Washington, DC 20036-1800
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FUNDS ELIGIBLE FOR EXCHANGE
EQUITY TRUSTS
Neuberger&Berman Focus Trust
Neuberger&Berman Genesis Trust
Neuberger&Berman Guardian Trust
Neuberger&Berman Manhattan Trust
Neuberger&Berman Partners Trust
Neuberger&Berman Socially Responsive Trust
INCOME TRUST
Neuberger&Berman Limited Maturity Bond Trust
Neuberger&Berman, Neuberger&Berman Management Inc., and the above-named Funds
are registered trademarks or service marks of Neuberger&Berman, LLC or
Neuberger&Berman Management Inc.
(C) 1997 Neuberger&Berman Management Incorporated.
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NEUBERGER & BERMAN EQUITY TRUST AND PORTFOLIOS
NEUBERGER & BERMAN SOCIALLY RESPONSIVE TRUST AND PORTFOLIO
(a series of Neuberger & Berman Equity Assets)
STATEMENT OF ADDITIONAL INFORMATION
DATED DECEMBER 15, 1997
Neuberger & Berman Neuberger & Berman
Manhattan Trust Genesis Trust
(and Neuberger & Berman (and Neuberger & Berman
Manhattan Portfolio) Genesis Portfolio)
Neuberger & Berman Neuberger & Berman
Focus Trust Guardian Trust
(and Neuberger & Berman (and Neuberger & Berman
Focus Portfolio) Guardian Portfolio)
Neuberger & Berman Neuberger & Berman
Partners Trust Socially Responsive Trust
(and Neuberger & Berman (and Neuberger & Berman
Partners Portfolio) Socially Responsive Portfolio)
No-Load Mutual Funds
605 Third Avenue, 2nd Floor, New York, NY 10158-0180
Toll-Free 800-877-9700
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Neuberger & Berman MANHATTAN Trust, Neuberger & Berman GENESIS Trust,
Neuberger & Berman FOCUS Trust, Neuberger & Berman GUARDIAN Trust, and Neuberger
& Berman PARTNERS Trust and Neuberger & Berman SOCIALLY RESPONSIVE Trust (each a
"Fund") are no-load mutual funds that offer shares pursuant to a Prospectus
dated December 15, 1997. The Funds invest all of their net investable assets in
Neuberger & Berman MANHATTAN Portfolio, Neuberger & Berman GENESIS Portfolio,
Neuberger & Berman FOCUS Portfolio, Neuberger & Berman GUARDIAN Portfolio,
Neuberger & Berman PARTNERS Portfolio and Neuberger & Berman SOCIALLY RESPONSIVE
Portfolio (each a "Portfolio"), respectively.
AN INVESTOR CAN BUY, OWN, AND SELL FUND SHARES ONLY THROUGH AN ACCOUNT
WITH AN ADMINISTRATOR, BROKER-DEALER, OR OTHER INSTITUTION THAT PROVIDES
ACCOUNTING, RECORDKEEPING, AND OTHER SERVICES TO INVESTORS AND THAT HAS AN
ADMINISTRATIVE SERVICES AGREEMENT WITH NEUBERGER & BERMAN MANAGEMENT
INCORPORATED (EACH AN "INSTITUTION").
<PAGE>
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 ("N&B Management"),
Institutional Services, 605 Third Avenue, 2nd Floor, New York, NY 10158-0180, or
by calling 800-877-9700.
This Statement of Additional Information ("SAI") is not a prospectus
and should be read in conjunction with the Prospectus.
No person has been authorized to give any information or to make any
representations not contained in the Prospectus or in this SAI in connection
with the offering made by the Prospectus, and, if given or made, such
information or representations must not be relied upon as having been authorized
by 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....................................2
Investment Insight.....................................................5
Neuberger & Berman MANHATTAN Portfolio...........................5
Neuberger & Berman GENESIS Portfolio.............................7
Neuberger & Berman FOCUS and Neuberger & Berman
GUARDIAN Portfolios...........................................10
Neuberger & Berman PARTNERS Portfolio...........................11
Neuberger & Berman SOCIALLY RESPONSIVE Portfolio................12
Additional Investment Information.....................................15
Neuberger & Berman FOCUS Portfolio - Description of Economic
Sectors.........................................................33
Neuberger & Berman SOCIALLY RESPONSIVE Portfolio - Description of
Social Policy...................................................36
PERFORMANCE INFORMATION.....................................................40
Total Return Computations.............................................40
Comparative Information...............................................41
Other Performance Information.........................................43
CERTAIN RISK CONSIDERATIONS.................................................44
TRUSTEES AND OFFICERS.......................................................44
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES...........................51
Investment Manager and Administrator..................................51
Sub-Adviser...........................................................54
Investment Companies Managed..........................................55
Management and Control of N&B Management..............................58
DISTRIBUTION ARRANGEMENTS...................................................59
ADDITIONAL EXCHANGE INFORMATION.............................................60
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ADDITIONAL REDEMPTION INFORMATION...........................................61
Suspension of Redemptions.............................................61
Redemptions in Kind...................................................61
DIVIDENDS AND OTHER DISTRIBUTIONS...........................................62
ADDITIONAL TAX INFORMATION..................................................62
Taxation of the Funds.................................................62
Taxation of the Portfolios............................................64
Taxation of the Funds' Shareholders...................................67
PORTFOLIO TRANSACTIONS......................................................67
Portfolio Turnover....................................................76
REPORTS TO SHAREHOLDERS.....................................................76
ORGANIZATION................................................................77
CUSTODIAN AND TRANSFER AGENT................................................77
INDEPENDENT AUDITORS/ACCOUNTANTS............................................77
LEGAL COUNSEL...............................................................77
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.........................77
REGISTRATION STATEMENT......................................................82
FINANCIAL STATEMENTS........................................................82
Appendix A..................................................................83
RATINGS OF CORPORATE BONDS AND COMMERCIAL PAPER.......................83
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INVESTMENT INFORMATION
Each Fund (except Neuberger & Berman SOCIALLY RESPONSIVE Trust) is a
separate operating series of Neuberger & Berman Equity Trust ("Equity Trust"), a
Delaware business trust that is registered with the Securities and Exchange
Commission ("SEC") as an open-end management investment company. Neuberger &
Berman SOCIALLY RESPONSIVE Trust is a separate operating series of Neuberger &
Berman Equity Assets ("Equity Assets"), a Delaware business trust that is
registered with the SEC as an open-end management investment company. Neuberger
& Berman Equity Trust and Neuberger & Berman Equity Assets are referred to below
as the "Trusts." 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 securities in accordance
with an investment objective, policies, and limitations identical to those of
its corresponding Fund. Managers Trust is an open-end management investment
company managed by N&B Management.
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. Any investment objective, policy or limitation that is not
fundamental may be changed by the trustees of the respective Trust ("Fund
Trustees") or of Managers Trust ("Portfolio Trustees") without shareholder
approval. 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. These percentages are required by the Investment Company
Act of 1940 ("1940 Act") and are referred to in this SAI as a "1940 Act majority
vote." Whenever 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 in proportion to the votes of its shareholders at a meeting thereof
called for that purpose.
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INVESTMENT POLICIES AND LIMITATIONS
Each Fund (except Neuberger & Berman SOCIALLY RESPONSIVE Trust) 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 investable assets (cash, securities, and receivables
relating to securities) in an open-end management investment company
having substantially the same investment objective, policies, and
limitations as the Fund.
Neuberger & Berman SOCIALLY RESPONSIVE Trust has the following
fundamental investment policy, to enable it to invest in its corresponding
Portfolio:
Notwithstanding any other investment policy of the Fund, the Fund may
invest all of its net investable assets (cash, securities, and
receivables relating to securities) in an open-end management
investment company having substantially the same investment objective,
policies, and limitations as the Fund.
All other fundamental investment policies and limitations and the
non-fundamental investment policies and limitations of each Fund are identical
to those of its corresponding Portfolio. Therefore, although the following
discusses the investment policies and limitations of the Portfolios, it applies
equally to their corresponding Funds.
Except for the limitation on borrowing, 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 following investment policies and limitations are fundamental and
apply to all Portfolios:
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
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(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.
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.
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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").
For purposes of the limitation on commodities, the Portfolios do not
consider foreign currencies or forward contracts to be physical commodities.
The following investment policies and limitations are non-fundamental
and apply to all Portfolios unless otherwise indicated:
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. 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.
4. 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").
5. ILLIQUID SECURITIES. No Portfolio may purchase any security if, as
a result, more than 15% of its net assets would be invested in illiquid
securities. Illiquid securities include securities that cannot be sold within
seven days in the ordinary course of business for approximately the amount at
which the Portfolio has valued the securities, such as repurchase agreements
maturing in more than seven days.
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6. PLEDGING (NEUBERGER & BERMAN GENESIS AND NEUBERGER & BERMAN
GUARDIAN PORTFOLIOS). Neither of these Portfolios may pledge or hypothecate any
of its assets, except that (i) Neuberger & Berman GENESIS Portfolio may pledge
or hypothecate up to 15% of its total assets to collateralize a borrowing
permitted under fundamental policy 1 above or a letter of credit issued for a
purpose set forth in that policy and (ii) each 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. The other Portfolios are
not subject to any restrictions on their ability to pledge or hypothecate assets
and may do so in connection with permitted borrowings.
7. 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 (except Neuberger & Berman SOCIALLY RESPONSIVE
Portfolio) as an operating policy, does not intend to invest in futures
contracts and options thereon during the coming year. In addition, although the
Portfolios do not have policies limiting their investment in warrants, no
Portfolio currently intends to invest in warrants unless acquired in units or
attached to securities.
INVESTMENT INSIGHT
NEUBERGER & BERMAN MANHATTAN PORTFOLIO
The portfolio co-managers of Neuberger & Berman MANHATTAN Portfolio
love surprises - positive earnings surprises that is. Their extensive research
has revealed that historically the stocks of companies that consistently
exceeded consensus earnings estimates tended to be terrific performers. They
screen the mid-cap growth stock universe to isolate stocks whose most recent
earnings have beat the Street's expectations. They then roll up their sleeves
and, through diligent fundamental research, strive to identify those companies
most likely to record a string of positive earnings surprises. Their goal is to
invest today in the fast growing mid-sized companies that will comprise
tomorrow's Fortune 500.
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The co-managers explain, "Let us begin by saying we are growth stock
investors in the purest sense of the term. We want to own the stocks of
companies that are growing earnings faster than the average American business
and ideally, faster than the competitors in their respective industries." The
co-managers explain that they are particularly biased towards companies that
have consistently beaten consensus earnings estimates. Their extensive research
has revealed that stocks whose earnings consistently exceeded expectations
offered greater potential for long-term capital appreciation.
The co-managers focus their research efforts on mid-cap stocks in new
and/or rapidly evolving industries. The mid-cap growth sector is less widely
followed by Wall Street analysts and therefore, less efficient than the
large-cap stock market. By focusing on stocks with market capitalizations
between $500 million and $8 billion, the co-managers believe they are likely to
identify more of their brand of growth stock opportunities. Considering the
currently high valuations of large-cap growth stocks relative to mid-cap growth
stocks with what the co-managers think is comparable or, in many cases, better
earnings growth potential, they believe the Portfolio is particularly well
positioned in today's market. The Portfolio now uses the Russell MidcapTM Growth
Index as its benchmark. Consistent with the Portfolio's capitalization
parameters and growth style, the co-managers believe this is a more appropriate
benchmark than the S&P "500."
They reiterate, "Let us once again emphasize we are growth stock
investors. But, there is a value component to our discipline as well. We just
define value differently." The kind of fast growth companies the co-managers
favor generally do not trade at below market average price/earnings ratios.
However, they often trade at very reasonable multiples relative to annual
earnings growth rates. Given the choice between two good companies with
comparable earnings growth rates, the co-managers will select the one trading at
the lower multiple to earnings growth.
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"We are dispassionate sellers," say the co-managers. "If a stock does
not live up to our earnings expectations or if we believe its valuation has
become excessive, we will sell and direct the assets to another opportunity we
find more attractive. We will maintain a broadly diversified portfolio rather
than heavily concentrating our holdings in just a few of the fastest growing
industry groups."
NEUBERGER & BERMAN GENESIS PORTFOLIO
Neuberger & Berman Genesis Fund (which, like Neuberger & Berman
GENESIS Trust, invests all of its net investable assets in Neuberger & Berman
GENESIS Portfolio) was established in 1988. A fund dedicated primarily to
small-capitalization stocks (companies with total market value of outstanding
common stock of up to $1.5 billion at the time the Portfolio invests), Neuberger
& Berman GENESIS Portfolio is devoted to the same value principles as most of
the other equity funds managed by N&B Management. The Portfolio is comprised of
small-cap stocks with solid earnings today, not just promises for tomorrow.
Many people think that small-capitalization stock funds are
predominantly invested in high-risk companies. That is not necessarily the case.
Neuberger & Berman GENESIS Portfolio looks for the same fundamentals in
small-capitalization stocks as other Portfolios look for in stocks of larger
companies. The portfolio co-managers stick to the areas they understand. They
look for the most persistent earnings growth at the lowest multiple, as well as
for well-established companies with entrepreneurial management and sound
finances. Also considered are catalysts to exposing value, such as management
changes and new product lines. Often, these are firms that have suffered
temporary setbacks or undergone a restructuring.
Neuberger & Berman GENESIS Portfolio's motto is "boring is beautiful."
Instead of investing in trendy, high-priced stocks that tend to hurt
shareholders on the downside, the Portfolio looks for little-known, solid,
growing companies whose stocks the managers believe are wonderful bargains.
AN INTERVIEW WITH THE PORTFOLIO CO-MANAGER
Q: If I already own a large-cap stock fund, why should I consider
investing in a small-cap fund as well?
A: Look at how fast a sapling grows compared to, say, a mature tree.
Much of the same can be true about companies. It's possible for a smaller
company to grow 50% faster than an IBM or a Coca-Cola.
So, many small-cap stocks offer superior growth potential. Consider
the cereal you eat, the detergent you use, the coffee you drink -- and imagine
if you had invested in these products BEFORE they became household names. If you
had invested only in the blue-chip companies of the day, you would have missed
out on these opportunities.
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Of course, we're not advocating that an investor's portfolio consist
only of small-cap stock funds. It pays to diversify. Let's look back about 25
years. While past performance cannot indicate future performance, small-cap
stocks outperformed larger-cap stocks 16 of the years from 1971 to 1996, which
means larger-cap stocks did better the rest of the time.1/
Q: Neuberger & Berman GENESIS Trust is classified as a "small-cap
value fund." To many people, "small-cap value" is an oxymoron. Can you clarify
the Portfolio's investment approach?
A: We understand the confusion. After all, a lot of people equate
"small-cap" with "growth." They also equate "value" with "cheap." At Neuberger &
Berman GENESIS Portfolio, we're 100% behind finding GROWING small-cap companies
- -- what we believe are highly profitable companies with solid records and
promising futures. So where do we part company with managers who follow a
"small-cap growth" style? It comes down to how much growth and at what price.
Small-cap growth investors seem willing to pay a premium for vastly superior
growth. This results in two problems: a) growth tends to be discounted by the
premium valuations, and b) the growth expectations are so high as to be
unsustainable. We believe superior yet more stable returns can be purchased at
significant discounts. They may be found in mundane, perhaps even boring,
industries. Remember, the same glamorous appeal that attracts so many growth
investors also attracts competitors.
In that respect, we're "value" managers. Yet we'd like to make this
point clear: Low price-to-earnings multiples, in and of themselves, cannot
- ----------
1/ Results are on a total return basis and include reinvestment of all dividends
and other distributions. Small-cap stocks are represented by the fifth
capitalization quintile of stocks on the NYSE from 1971 to 1981 and performance
of the Dimensional Fund Advisors (DFA) Small Company Fund from 1982 to 1996.
Larger-cap stocks are represented by the S&P "500" Index, an unmanaged group of
stocks. Please note that indices do not take into account any fees or expenses
of investing in the individual securities that they track. Data about these
indices are prepared or obtained by N&B Management. The Portfolio may invest in
many securities not included in the above-described indices. Source: STOCKS,
BONDS, BILLS AND INFLATION 1997 YEARBOOK(TRADEMARK), Ibbotson Associates,
Chicago (annually updates work by Roger G. Ibbotson and Rex A. Sinquefield).
Used with permission. All rights reserved.
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justify a "buy" decision. When we search for growing, high-quality small-cap
companies selling at what we feel are bargain prices, we ask ourselves: Is the
company cheap for a good reason? Or, does it have the financial muscle and the
management talent to make it into the big leagues?
Q: Let's turn to specifics. What criteria are used to decide which
small-cap companies make the cut -- and which ones don't?
A: Over the years, we've seen hundreds of small-cap companies that
flourished and just as many that failed to deliver on their early promises. What
made the difference? While every case is unique, here are a few important traits
of the winners.
First of all, a successful small-cap company normally produces high
returns. In practice, this means the business has a number of barriers to entry.
Perhaps the company has a technology that's hard to duplicate. Or maybe it can
make a product at a substantially lower cost than anyone else. Unlike most
businesses, it has an advantage that allows it to continue earning above-market
returns.
In addition to having a competitive edge, a successful small-cap
company should generate healthy cash flow. With excess cash, a company has the
ability to finance its own growth without diluting the ownership stake of
existing stockholders by issuing more shares.
No small-cap company can grow without having the right people on
board. That's why we spend so much time meeting the CEOs and CFOs of small-cap
companies. While we question the managers about future plans and strategies, we
spend as much time evaluating them as people. Do they seem honest and capable?
Or do they puff up their case? Making portfolio decisions is a lot about making
character judgments -- who has the stuff to manage a growing company, and who
doesn't.
THE RISKS INVOLVED IN SEEKING CAPITAL APPRECIATION FROM INVESTMENTS
PRIMARILY IN COMPANIES WITH SMALL MARKET CAPITALIZATION ARE SET FORTH IN THE
PROSPECTUS.
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NEUBERGER & BERMAN FOCUS AND NEUBERGER & BERMAN GUARDIAN PORTFOLIOS
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 it focuses its assets in those sectors where
undervalued stocks are clustered. The portfolio co-managers begin by looking for
stocks that are selling for less than the managers think they're worth, a
"bottom-up approach." More often than not, such stocks are in a few economic
sectors that are out of favor and are undervalued as a group. The portfolio
co-managers think most cheap stocks deserve to be cheap and their job is to find
the few that don't.
The portfolio co-managers don't pick sectors for Neuberger & Berman
FOCUS Portfolio based on their perception of what the economy is going to do.
They look for stocks with low valuations; often, these stocks will be found in a
particular sector. If an investment manager rotates the sectors in a portfolio
by buying sectors when they are undervalued and selling them when they become
fully valued, the manager may be able to achieve above-average performance.
Neuberger & Berman GUARDIAN Portfolio subscribes to the same
stock-picking philosophy followed since Roy R. Neuberger founded Neuberger &
Berman GUARDIAN Fund (which, like Neuberger & Berman GUARDIAN Trust, invests all
of its net investable assets in Neuberger & Berman GUARDIAN Portfolio) in 1950.
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 has served
shareholders well and has paid a dividend every quarter and a capital gain
distribution EVERY YEAR since 1950; Neuberger & Berman GUARDIAN Trust has done
so since December 1993. Of course, there can be no assurance that this trend
will continue.
The portfolio co-managers place a high premium on being knowledgeable
about the companies whose stocks they buy. That knowledge is important, because
sometimes it takes courage to buy stocks that the rest of the market has
forsaken. The managers would rather buy an undervalued stock because they expect
it to become fairly valued than buy one fairly valued and hope it becomes
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<PAGE>
overvalued. The managers tend to buy stocks that are out of favor, believing
that an investor is not going to get great companies at great valuations when
the market perception is great.
Investors who switch around a lot are not going to benefit from
Neuberger & Berman GUARDIAN Portfolio's approach. They're following the market
- -- this Portfolio is looking at fundamentals.
NEUBERGER & BERMAN PARTNERS PORTFOLIO
Neuberger & Berman PARTNERS Portfolio's objective is capital growth.
It seeks to make money in good markets and not give up those gains during rough
times.
Investors in Neuberger & Berman PARTNERS Trust typically 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.
The portfolio co-managers look for stocks that are undervalued in the
marketplace either in relation to strong current fundamentals, such as a low
price-to-earnings ratio, consistent cash flow, and support from asset values, or
in relation to their projection of the growth of the company's future earnings.
If the market goes down, those stocks the Portfolio elects to hold,
historically, have gone down less.
The portfolio co-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 are likely to
produce a new product, become an acquisition target, or undergo a financial
restructuring.
What else catches the portfolio co-managers' eyes? Companies whose
managements 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. The managers'
reasoning? Market leaders tend to earn higher levels of profits.
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<PAGE>
NEUBERGER & BERMAN SOCIALLY RESPONSIVE PORTFOLIO
Securities for this Portfolio are selected through a two-phase
process. The first is financial. The portfolio manager analyzes a universe of
companies according to N&B Management's value-oriented philosophy and looks for
stocks which are undervalued for any number of reasons. The manager focuses on
financial fundamentals, including balance sheet ratios and cash flow analysis,
and meets with company management in an effort to understand how those
unrecognized values might be realized in the market.
The second part of the process is social screening. N&B Management's
social research is based on the same kind of philosophy that governs its
financial approach: N&B Management believes that first-hand knowledge and
experience are its most important tools. Utilizing a database, the portfolio
manager does careful, in-depth tracking and analyzes a large number of companies
on some eighty issues in six broad social categories. The manager uses a wide
variety of sources to determine company practices and policies in these areas.
Performance is analyzed in light of knowledge of the issues and of the best
practices in each industry.
The portfolio manager understands that, for many issues and in many
industries, absolute standards are elusive and often counterproductive. Thus, in
addition to quantitative measurements, the manager places value on such
indicators as management commitment, progress, direction, and industry
leadership.
AN INTERVIEW WITH THE PORTFOLIO MANAGER
Q: First things first. How do you begin your stock selection process?
A: Our first question is always: On financial grounds alone, is a
company a smart investment? For a company's stock to meet our financial test, it
must pass a number of hurdles.
We look for bargains, just like the portfolio managers of the other
Portfolios. More specifically, we search for companies that we believe have
terrific products, excellent customer service, and solid balance sheets -- but
because they may have missed quarterly earnings expectations by a few pennies,
because their sectors are currently out of favor, because Wall Street
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<PAGE>
overreacted to a temporary setback, or because the company's merits aren't
widely known, their stocks are selling at a discount.
While we look at the stock's fundamentals carefully, that's not all we
examine. We meet an awful lot of CEOs and CFOs. Top officers of over 400
companies visit Neuberger & Berman each year, and we're also frequently on the
road visiting dozens of corporations. From Neuberger & Berman SOCIALLY
RESPONSIVE Trust's inception, we've met with representatives of every company we
own.
When we're face to face with a CEO, we're searching for answers to two
crucial questions: "Does the company have a vision of where it wants to go?" and
"Can the management team make it happen?" We've analyzed companies for over
three decades, and we always look for companies that have both clear strategies
and management talent.
Q: When you evaluate a company's balance sheet, what matters the most
to you?
A: Definitely a company's "free cash flow." Compare it to your
household's discretionary income -- the money you have left over each month
after you pay off your monthly debt and other expenses. With ample free cash
flow, a company can do any number of things. It can buy back its stock. Make
important acquisitions. Expand its research and development spending. Or
increase its dividend payments.
When a company generates lots of excess cash flow, it has growth
capital at its disposal. It can invest for higher profits down the line and
improve shareholder value. Determining exactly HOW a company intends to spend
its excess cash is an entirely different matter -- and that's where the
information learned in our company meetings comes in. Still, you've got to have
the extra cash in the first place. Which is why we pay so much attention to it.
Q: So you take a hard look at a company's balance sheet and its
management. After a company passes your financial test, what do you do next?
A: After we're convinced of a company's merits on financial grounds
alone, we review its record as a corporate citizen. In particular, we look for
evidence of leadership in three key areas: concern for the environment,
workplace diversity, and enlightened employment practices.
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<PAGE>
It should be clear that our social screening always takes place after
we search far and wide for what we believe are the best investment opportunities
available. This is a crucial point, and an analogy can be used to explain it.
Let's assume you're looking to fill a vital position in your company. What you'd
pay attention to first is the candidate's competence: Can he or she do the job?
So after interviewing a number of candidates, you'd narrow your list to those
that are highly qualified. To choose from this smaller group, you might look at
the candidate's personality: Can he or she get along with everyone in your
group?
Obviously, you wouldn't hire an unqualified person simply because he
or she is likable. What you'd probably do is give the job to a highly qualified
person who is ALSO compatible with your group.
Now, let's turn to the companies that do make our financial cuts. How
do we decide whether they meet our social criteria? Once again, our regular
meetings with CEOs are key. We look for top management's support of programs
that put more women and minorities in the pipeline to be future officers and
board members; that minimize emissions, reduce waste, conserve energy, and
protect natural resources; and that enable employees to balance work and family
life with benefits such as flextime and generous maternal AND paternal leave.
We realize that companies are not all good or all bad. Instead of
looking for ethical perfection, we analyze how a company responds to troublesome
problems. If a company is cited for breaking a pollution law, we evaluate its
reaction. We also ask: Is it the first time? Do its top executives have a plan
for making sure it doesn't happen again -- and how committed are they?
If we're satisfied with the answers, a company makes it into our
portfolio. When all is said and done, we invest in companies that have diverse
work forces, strong CEOs, tough environmental standards, AND terrific balance
sheets. In our judgment, financially strong companies that are also good
corporate citizens are more likely to enjoy a competitive advantage. These days,
more and more people won't buy a product unless they know it's environmentally
friendly. In a similar vein, companies that treat their workers well may be more
productive and profitable.
Q: Why have investors been attracted to Neuberger & Berman SOCIALLY
RESPONSIVE Trust?
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<PAGE>
A: Our shareholders are looking to invest for the future in more ways
than one. While they care deeply about their own financial futures, they're
equally passionate about the world they leave to later generations. They want to
be able to meet their college bills and leave a world where the air is a little
cleaner and where the doors to the executive suite are a little more open.
* * * * *
Each Portfolio invests in a wide array of stocks, and no single stock
makes up more than a small fraction of any Portfolio's total assets. Of course,
each 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). In a repurchase agreement, a
Portfolio purchases securities from a bank that is a member of the Federal
Reserve System or from a securities dealer that agrees to repurchase the
securities from the Portfolio at a higher price on a designated future date.
Repurchase agreements generally are for a short period of time, usually less
than a week. Repurchase agreements with a maturity of more than seven days are
considered to be illiquid securities. No Portfolio may enter into a repurchase
agreement with a maturity of more than seven days if, as a result, more than 15%
of the value of its net assets would then be invested in such repurchase
agreements and other illiquid securities. A Portfolio may enter into a
repurchase agreement only if (1) the underlying securities are of a type that
the Portfolio's investment policies and limitations would allow it to purchase
directly, (2) the market value of the underlying securities, including accrued
interest, at all times equals or exceeds the repurchase price, and (3) payment
for the underlying securities is made only upon satisfactory evidence that the
securities are being held for the Portfolio's account by its custodian or a bank
acting as the Portfolio's agent.
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<PAGE>
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 other institutional investors
judged creditworthy by N&B Management. Borrowers are required continuously to
secure their obligations to return securities on loan from a 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. Before they are registered, such securities may be sold only in a privately
negotiated transaction or pursuant to an exemption from registration. In
recognition of the increased size and liquidity of the institutional market for
unregistered securities and the importance of institutional investors in the
formation of capital, the SEC has adopted Rule 144A under the 1933 Act. Rule
144A is designed to facilitate efficient trading among institutional investors
by permitting the sale of certain unregistered securities to qualified
institutional buyers. To the extent privately placed securities held by a
Portfolio qualify under Rule 144A and an institutional market develops for those
securities, the Portfolio likely will be able to dispose of the securities
without registering them under the 1933 Act. To the extent that institutional
buyers become, for a time, uninterested in purchasing these securities,
investing in Rule 144A securities could increase the level of a Portfolio's
illiquidity. N&B Management, acting under guidelines established by the
Portfolio Trustees, may determine that certain securities qualified for trading
under Rule 144A are liquid. Foreign securities that are freely tradable in their
principal market 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.
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<PAGE>
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 restricted
securities, including Rule 144A securities, are illiquid, purchases thereof will
be subject to each Portfolio's 15% limit on investments in illiquid securities.
Restricted securities for which no market exists are priced by a method that the
Portfolio Trustees believe accurately reflects fair value.
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 each Portfolio's investment policies and limitations concerning
borrowings. While a reverse repurchase agreement is outstanding, a Portfolio
will deposit in a segregated account with its custodian cash or appropriate
liquid securities, marked to market daily, in an amount at least equal to the
Portfolio's obligations under the agreement. There is a risk that the
counter-party to a reverse repurchase agreement will be unable or unwilling to
complete the transaction as scheduled, which may result in losses to the
Portfolio.
FOREIGN SECURITIES (ALL PORTFOLIOS). Each Portfolio may invest in U.S.
dollar-denominated securities of foreign issuers (including banks, governments,
and quasi-governmental organizations) and foreign branches of U.S. banks,
including negotiable certificates of deposit ("CDs"), bankers' acceptances and
commercial paper. These investments are subject to each Portfolio's quality
standards. While investments in foreign securities are intended to reduce risk
by providing further diversification, such investments involve sovereign and
other risks, in addition to the credit and market risks normally associated with
domestic securities. These additional risks include the possibility of adverse
political and economic developments (including political instability,
nationalization, expropriation, or confiscatory taxation) and the potentially
adverse effects of unavailability of public information regarding issuers, less
governmental supervision and regulation of financial markets, reduced liquidity
of certain financial markets, and the lack of uniform accounting, auditing, and
financial reporting standards or the application of standards that are different
or less stringent than those applied in the United States.
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<PAGE>
Each Portfolio also may invest in equity, debt, or other
income-producing securities that are denominated in or indexed to foreign
currencies, including (1) common and preferred stocks, (2) CDs, commercial
paper, fixed time deposits, and bankers' acceptances issued by foreign banks,
(3) obligations of other corporations, and (4) obligations of foreign
governments and their subdivisions, agencies, and instrumentalities,
international agencies, and supranational entities. Investing in foreign
currency denominated securities involves the special risks associated with
investing in non-U.S. issuers, as described in the preceding paragraph, and the
additional risks of (1) adverse changes in foreign exchange rates, and (2)
adverse changes in investment or exchange control regulations (which could
prevent cash from being brought back to the United States). Additionally,
dividends and interest payable on foreign securities 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.
Foreign markets also have different clearance and settlement
procedures. In certain markets, there have been times when settlements have been
unable to keep pace with the volume of securities transactions, making it
difficult to conduct such transactions. Delays in settlement could result in
temporary periods when a portion of the assets of 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 securities or, if the Portfolio has
entered into a contract to sell the securities, could result in possible
liability to the purchaser.
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<PAGE>
Interest rates prevailing in other countries may affect the prices of
foreign securities and exchange rates for foreign currencies. Local factors,
including the strength of the local economy, the demand for borrowing, the
government's fiscal and monetary policies, and the international balance of
payments, often affect interest rates in other countries. Individual foreign
economies may differ favorably or unfavorably from the U.S. economy in such
respects as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency, and balance of payments position.
In order to limit the risks inherent in investing in foreign currency
denominated securities, a Portfolio may not purchase any such security if, as a
result, more than 10% of its total assets (taken at market value) would be
invested in foreign currency denominated securities. Within that limitation,
however, no Portfolio is restricted in the amount it may invest in securities
denominated in any one foreign currency.
FUTURES, OPTIONS ON FUTURES, OPTIONS ON SECURITIES,
FORWARD CONTRACTS, AND OPTIONS ON FOREIGN
CURRENCIES (COLLECTIVELY, "HEDGING INSTRUMENTS")
FUTURES CONTRACTS AND OPTIONS THEREON (NEUBERGER & BERMAN SOCIALLY
RESPONSIVE PORTFOLIO). The Portfolio may purchase and sell interest rate futures
contracts, stock and bond index futures contracts, and foreign currency futures
contracts and may purchase and sell options thereon in an attempt to hedge
against changes in the prices of securities or, in the case of foreign currency
futures and options thereon, to hedge against changes in prevailing currency
exchange rates. Because the futures markets may be more liquid than the cash
markets, the use of futures contracts permits the Portfolio to enhance portfolio
liquidity and maintain a defensive position without having to sell portfolio
securities. The Portfolio does not engage in transactions in futures or options
on futures for speculation. The Portfolio views investment in (i) interest rate
and securities index futures and options thereon as a maturity management device
and/or a device to reduce risk or preserve total return in an adverse
environment for the hedged securities, and (ii) foreign currency futures and
options thereon as a means of establishing more definitely the effective return
on, or the purchase price of, securities denominated in foreign currencies that
are held or intended to be acquired by the Portfolio.
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<PAGE>
A "sale" of a futures contract (or a "short" futures position) entails
the assumption of a contractual obligation to deliver the securities or currency
underlying the contract at a specified price at a specified future time. A
"purchase" of a futures contract (or a "long" futures position) entails the
assumption of a contractual obligation to acquire the securities or currency
underlying the contract at a specified price at a specified future time. Certain
futures, including stock and bond index futures, are settled on a net cash
payment basis rather than by the sale and delivery of the securities underlying
the futures.
U.S. futures contracts (except certain currency futures) are traded on
exchanges that have been designated as "contract markets" by the Commodity
Futures Trading Commission ("CFTC"); futures transactions must be executed
through a futures commission merchant that is a member of the relevant contract
market. The exchange's affiliated clearing organization guarantees performance
of the contracts between the clearing members of the exchange.
Although futures contracts by their terms may require the actual
delivery or acquisition of the underlying securities or currency, in most cases
the contractual obligation is extinguished by being offset before the expiration
of the contract. A futures position is offset by buying (to offset an earlier
sale) or selling (to offset an earlier purchase) an identical futures contract
calling for delivery in the same month. This may result in a profit or loss.
"Margin" with respect to a futures contract is the amount of assets
that must be deposited by the Portfolio with, or for the benefit of, a futures
commission merchant in order to initiate and maintain the Portfolio's futures
positions. The margin deposit made by the Portfolio when it enters into a
futures contract ("initial margin") is intended to assure its performance of the
contract. If the price of the futures contract changes -- increases in the case
of a short (sale) position or decreases in the case of a long (purchase)
position -- so that the unrealized loss on the contract causes the margin
deposit not to satisfy margin requirements, the Portfolio will be required to
make an additional margin deposit ("variation margin"). However, if favorable
price changes in the futures contract cause the margin deposit to exceed the
required margin, the excess will be paid to the Portfolio. In computing its NAV,
the Portfolio marks to market the value of its open futures positions. The
Portfolio also must make margin deposits with respect to options on futures that
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it has written (but not with respect to options on futures that it has
purchased). If the futures commission merchant holding the margin deposit goes
bankrupt, the Portfolio could suffer a delay in recovering its funds and could
ultimately suffer a loss.
An option on a futures contract gives the purchaser the right, in
return for the premium paid, to assume a position in the contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the option exercise period. The
writer of the option is required upon exercise to assume a short futures
position (if the option is a call) or a long futures position (if the option is
a put). Upon exercise of the option, the accumulated cash balance in the
writer's futures margin account is delivered to the holder of the option. That
balance represents the amount by which the market price of the futures contract
at exercise exceeds, in the case of a call, or is less than, in the case of a
put, the exercise price of the option. Options on futures have characteristics
and risks similar to those of securities options, as discussed herein.
Although the Portfolio believes that the use of futures contracts will
benefit it, if N&B Management's judgment about the general direction of the
markets or about interest rate or currency exchange rate trends is incorrect,
the Portfolio's overall return would be lower than if it had not entered into
any such contracts. The prices of futures contracts are volatile and are
influenced by, among other things, actual and anticipated changes in interest or
currency exchange rates, which in turn are affected by fiscal and monetary
policies and by national and international political and economic events. At
best, the correlation between changes in prices of futures contracts and of
securities being hedged can be only approximate due to differences between the
futures and securities markets or differences between the securities or
currencies underlying a Portfolio's futures position and the securities held by
or to be purchased for the Portfolio. The currency futures market may be
dominated by short-term traders seeking to profit from changes in exchange
rates. This would reduce the value of such contracts used for hedging purposes
over a short-term period. Such distortions are generally minor and would
diminish as the contract approaches maturity.
Because of the low margin deposits required, futures trading involves
an extremely high degree of leverage; as a result, a relatively small price
movement in a futures contract may result in immediate and substantial loss, or
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gain, to the investor. Losses that may arise from certain futures transactions
are potentially unlimited.
Most U.S. futures exchanges limit the amount of fluctuation in the
price of a futures contract or option thereon during a single trading day; once
the daily limit has been reached, no trades may be made on that day at a price
beyond that limit. The daily limit governs only price movements during a
particular trading day, however; it thus does not limit potential losses. In
fact, it may increase the risk of loss, because prices can move to the daily
limit for several consecutive trading days with little or no trading, thereby
preventing liquidation of unfavorable futures and options positions and
subjecting traders to substantial losses. If this were to happen with respect to
a position held by the Portfolio, it could (depending on the size of the
position) have an adverse impact on the NAV of the Portfolio.
CALL OPTIONS ON SECURITIES (ALL PORTFOLIOS). Neuberger & Berman
SOCIALLY RESPONSIVE Portfolio may write covered call options and may purchase
call options on securities. Each of the other Portfolios may write covered call
options and may purchase call options in related closing transactions. The
purpose of writing call options is to hedge (i.e., to reduce, at least in part,
the effect of price fluctuations of securities held by the Portfolio on the
Portfolio's and its corresponding Fund's NAVs) or to earn premium income.
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 until a certain date if
the purchaser decides to exercise the option. The Portfolio receives a premium
for writing the call option. So long as the obligation of the call option
continues, the Portfolio may be assigned an exercise notice, requiring it to
deliver the underlying security against payment of the exercise price. The
Portfolio may be obligated to deliver securities underlying an option at less
than the market price.
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
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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. Neuberger & Berman SOCIALLY RESPONSIVE Portfolio also may
purchase a call option to protect against an increase in the price of the
securities it intends to purchase.
PUT OPTIONS ON SECURITIES (NEUBERGER & BERMAN SOCIALLY RESPONSIVE
PORTFOLIO). The Portfolio may write and purchase put options on securities.
Generally, the purpose of writing and purchasing these options is to hedge
(i.e., to reduce, at least in part, the effect of price fluctuations of
securities held by the Portfolio on the Portfolio's and its corresponding Fund's
NAVs).
The Portfolio will receive a premium for writing a put option, which
obligates the Portfolio to acquire a security at a certain price at any time
until a certain date if the purchaser decides to exercise the option. The
Portfolio may be obligated to purchase the underlying security at more than its
current value.
When the Portfolio purchases a put option, it pays a premium to the
writer for the right to sell a security to the writer for a specified amount at
any time until a certain date. The Portfolio would purchase a put option in
order to protect itself against a decline in the market value of a security it
owns.
Portfolio securities on which put options may be written and purchased
by the Portfolio are purchased solely on the basis of investment considerations
consistent with the Portfolio's investment objective. When writing a put option,
the Portfolio, in return for the premium, takes the risk that it must purchase
the underlying security at a price that may be higher than the current market
price of the security. If a put option that the Portfolio has written expires
unexercised, the Portfolio will realize a gain in the amount of the premium.
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GENERAL INFORMATION ABOUT SECURITIES OPTIONS. The exercise price of an
option may be below, equal to, or above the market value of the underlying
security at the time the option is written. Options normally have expiration
dates between three and nine months from the date written. American-style
options are exercisable at any time prior to their expiration date. The
obligation under any option written by a Portfolio terminates upon expiration of
the option or, at an earlier time, when the Portfolio offsets the option by
entering into a "closing purchase transaction" to purchase an option of the same
series. If an option is purchased by a Portfolio and is never exercised or
closed out, the Portfolio will lose the entire amount of the premium paid.
Options are traded both on national securities exchanges and in the
over-the-counter ("OTC") market. Exchange-traded options in the United States
are issued by a clearing organization affiliated with the exchange on which the
option is listed; the clearing organization in effect guarantees completion of
every exchange-traded option. In contrast, OTC options are contracts between a
Portfolio and a counter-party, with no clearing organization guarantee. Thus,
when a Portfolio sells (or purchases) an OTC option, it generally will be able
to "close out" the option prior to its expiration only by entering into a
closing transaction with the dealer to whom (or from whom) the Portfolio
originally sold (or purchased) the option. There can be no assurance that the
Portfolio would be able to liquidate an OTC option at any time prior to
expiration. Unless 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.
The assets used as cover (or held in a segregated account) 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.
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The premium received (or paid) by a Portfolio when it writes (or
purchases) an option is the amount at which the option is currently traded on
the applicable market. The premium may reflect, among other things, the current
market price of the underlying security, the relationship of the exercise price
to the market price, the historical price volatility of the underlying security,
the length of the option period, the general supply of and demand for credit,
and the interest rate environment. The premium received by a Portfolio for
writing an option is recorded as a liability on the Portfolio's statement of
assets and liabilities. This liability is adjusted daily to the option's current
market value.
Closing transactions are effected in order to realize a profit (or
minimize a loss) on an outstanding option, to prevent an underlying security
from being called, or to permit the sale or the put of the underlying security.
Furthermore, effecting a closing transaction permits Neuberger & Berman SOCIALLY
RESPONSIVE Portfolio to write another call option on the underlying security
with a different exercise price or expiration date or both. 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 (or purchase a
security that it would not have otherwise bought), in which case it would
continue to be at market risk on the security.
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 or put option. Because increases in the market
price of a call option generally reflect increases in the market price of the
underlying security, any loss resulting from the repurchase of a call option is
likely to be offset, in whole or in part, by appreciation of the underlying
security owned by the Portfolio; however, the Portfolio could be in a less
advantageous position than if it had not written the call option.
A Portfolio pays brokerage commissions or spreads in connection with
purchasing or writing options, including those used to close out existing
positions. From time to time, Neuberger & Berman SOCIALLY Responsive Portfolio
may purchase an underlying security for delivery in accordance with an exercise
notice of a call option assigned to it, rather than delivering the security from
its portfolio. In those cases, additional brokerage commissions are incurred.
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The hours of trading for options may not conform to the hours during
which the underlying securities are traded. To the extent that the options
markets close before the markets for the underlying securities, significant
price and rate movements can take place in the underlying markets that cannot be
reflected in the options markets.
FOREIGN CURRENCY TRANSACTIONS (ALL PORTFOLIOS). Each Portfolio may
enter into contracts for the purchase or sale of a specific currency at a future
date (usually less than one year from the date of the contract) at a fixed price
("forward contracts"). The Portfolios enter into forward contracts in an attempt
to hedge against changes in prevailing currency exchange rates. The Portfolios
do not engage in transactions in forward contracts for speculation; they view
investments in forward contracts as a means of establishing more definitely the
effective return on, or the purchase price of, securities denominated in foreign
currencies. Forward contract transactions include forward sales or purchases of
foreign currencies for the purpose of protecting the U.S. dollar value of
securities held or to be acquired by a Portfolio or protecting the U.S. dollar
equivalent of dividends, interest, or other payments on those securities.
Forward contracts are traded in the interbank market directly between
dealers (usually large commercial banks) and their customers. A forward contract
generally has no deposit requirement, and no commissions are charged at any
stage for trades; foreign exchange dealers realize a profit based on the
difference (the spread) between the prices at which they are buying and selling
various currencies.
At the consummation of a forward contract to sell currency, a
Portfolio may either make delivery of the foreign currency or terminate its
contractual obligation to deliver by purchasing an offsetting contract. If the
Portfolio chooses to make delivery of the foreign currency, it may be required
to obtain such currency through the sale of portfolio securities denominated in
such currency or through conversion of other assets of the Portfolio into such
currency. If the Portfolio engages in an offsetting transaction, it will incur a
gain or a loss to the extent that there has been a change in forward contract
prices. Closing purchase transactions with respect to forward contracts are
usually made with the currency dealer who is a party to the original forward
contract.
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N&B Management believes that the use of foreign currency hedging
techniques, including "proxy-hedges," can provide significant protection of NAV
in the event of a general rise in the U.S. dollar against foreign currencies.
For example, the return available from securities denominated in a particular
foreign currency would diminish if the value of the U.S. dollar increased
against that currency. Such a decline could be partially or completely offset by
an increase in value of a hedge involving a forward contract to sell that
foreign currency or a proxy-hedge involving a forward contract to sell a
different foreign currency whose behavior is expected to resemble the currency
in which the securities being hedged are denominated but which is available on
more advantageous terms.
However, a hedge or proxy-hedge cannot protect against exchange rate
risks perfectly, and, if 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. If a Portfolio uses
proxy-hedging, it may experience losses on both the currency in which it has
invested and the currency used for hedging if the two currencies do not vary
with the expected degree of correlation. Using forward contracts to protect the
value of a Portfolio's securities against a decline in the value of a currency
does not eliminate fluctuations in the prices of the underlying securities.
Because forward contracts are not traded on an exchange, the assets used to
cover such contracts may be illiquid. A Portfolio may experience delays in the
settlement of its foreign currency transactions.
OPTIONS ON FOREIGN CURRENCIES (ALL PORTFOLIOS). Each Portfolio may
write and purchase covered call and put options on foreign currencies. 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. Currency options
have characteristics and risks similar to those of securities options, as
discussed herein. Certain options on foreign currencies are traded on the OTC
market and involve liquidity and credit risks that may not be present in the
case of exchange-traded currency options.
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REGULATORY LIMITATIONS ON USING HEDGING INSTRUMENTS. To the extent a
Portfolio sells or purchases futures contracts or writes options thereon or
options on foreign currencies that are traded on an exchange regulated by the
CFTC other than for BONA FIDE hedging purposes (as defined by the CFTC), the
aggregate initial margin and premiums on those positions (excluding the amount
by which options are "in-the-money") may not exceed 5% of the Portfolio's net
assets. The Portfolios (except Neuberger & Berman SOCIALLY RESPONSIVE Portfolio)
do not intend to invest in futures contracts and options thereon during the
coming year.
COVER FOR HEDGING INSTRUMENTS. Each Portfolio will comply with SEC
guidelines regarding "cover" for Hedging Instruments and, if the guidelines so
require, set aside in a segregated account with its custodian the prescribed
amount of cash or appropriate liquid securities. Securities held in a segregated
account cannot be sold while the futures, options, or forward strategy covered
by those securities is outstanding, unless they are replaced with other suitable
assets. As a result, segregation of a large percentage of 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 futures, options, or
forward position; this inability may result in a loss to the Portfolio.
GENERAL RISKS OF HEDGING INSTRUMENTS. The primary risks in using
Hedging Instruments are (1) imperfect correlation or no correlation between
changes in market value of the securities or currencies held or to be acquired
by a Portfolio and the prices of Hedging Instruments; (2) possible lack of a
liquid secondary market for Hedging Instruments and the resulting inability to
close out Hedging Instruments when desired; (3) the fact that the skills needed
to use Hedging Instruments are different from those needed to select a
Portfolio's securities; (4) the fact that, although use of Hedging Instruments
for hedging purposes can reduce the risk of loss, they also can reduce the
opportunity for gain, or even result in losses, by offsetting favorable price
movements in hedged investments; and (5) the possible inability of 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 or offset
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that of a Portfolio's underlying securities or currency. 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. There can be no assurance
that a Portfolio's use of Hedging Instruments will be successful.
Each Portfolio's use of Hedging Instruments may be limited by the
provisions of the Internal Revenue Code of 1986, as amended ("Code"), with which
it must comply if its corresponding Fund is to continue to qualify as a
regulated investment company ("RIC"). See "Additional Tax Information."
FIXED INCOME SECURITIES (ALL PORTFOLIOS). While the emphasis of the
Portfolios' investment programs is on common stocks and other equity securities,
the Portfolios may also invest in money market instruments, U.S. Government and
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. Although the Portfolios may rely on the ratings of any NRSRO,
the Portfolios primarily refer to ratings assigned by S&P and Moody's, which are
described in Appendix A to this SAI.
Fixed income securities are subject to the risk of an issuer's
inability to meet principal and interest payments on its obligations ("credit
risk") and are subject to price volatility due to such factors as interest rate
sensitivity, market perception of the creditworthiness of the issuer, and market
liquidity ("market risk"). 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
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developments regarding the individual issuer are more likely to cause price
volatility and weaken the capacity of the issuer of such securities to make
principal and interest payments than is the case for higher-grade debt
securities. An economic downturn affecting the issuer may result in an increased
incidence of default. The market for lower-rated securities may be thinner and
less active than for higher-rated securities. Pricing of thinly traded
securities requires greater judgment than pricing of securities for which market
transactions are regularly reported. N&B Management will invest in lower-rated
securities only when it concludes that the anticipated return on such an
investment to Neuberger & Berman PARTNERS Portfolio 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
no longer be eligible for purchase by that Portfolio. In such a case, Neuberger
& Berman SOCIALLY RESPONSIVE Portfolio will engage in an orderly disposition of
the downgraded securities. Each other Portfolio will engage in an orderly
disposition of the downgraded securities to the extent necessary to ensure that
the Portfolio's holdings of securities rated below investment grade and
Comparable Unrated Securities will not exceed 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, usually 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 comparable 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 AND NEUBERGER &
BERMAN SOCIALLY RESPONSIVE PORTFOLIOS). Each of these Portfolios may invest in
zero coupon securities, which are debt obligations that do not entitle the
holder to any periodic payment of interest prior to maturity or that specify a
future date when the securities begin to pay current interest. Zero coupon
securities are issued and traded at a discount from their face amount or par
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value. This discount varies depending on prevailing interest rates, the time
remaining until cash payments begin, the liquidity of the security, and the
perceived credit quality of the issuer.
The discount on zero coupon securities ("original issue discount")
must be taken into income ratably by each such Portfolio prior to the receipt of
any actual payments. Because its corresponding Fund must distribute
substantially all of its net income (including its share of the Portfolio's
accrued original issue discount) to its shareholders each year for income and
excise tax purposes, each such Portfolio may have to dispose of portfolio
securities under disadvantageous circumstances to generate cash, or may be
required to borrow, to satisfy its corresponding Fund's distribution
requirements. See "Additional Tax Information."
The market prices of zero coupon securities generally are more
volatile than the prices of securities that pay interest periodically. Zero
coupon securities are likely to respond to changes in interest rates to a
greater degree than other types of debt securities having a similar maturity and
credit quality.
CONVERTIBLE SECURITIES (ALL PORTFOLIOS). Each Portfolio may invest in
convertible securities. A convertible security entitles the holder to receive
the interest paid or accrued on debt or the dividend paid on preferred stock
until the convertible security matures or is redeemed, converted or exchanged.
Before conversion, such securities ordinarily provide a stream of income with
generally higher yields than common stocks of the same or similar issuers, but
lower than the yield on non-convertible debt. Convertible securities are usually
subordinated to comparable-tier non-convertible securities but rank senior to
common stock in a corporation's capital structure. The value of a convertible
security is a function of (1) its yield in comparison to the yields of other
securities of comparable maturity and quality that do not have a conversion
privilege and (2) its worth if converted into the underlying common stock.
Convertible debt securities are subject to each Portfolio's investment policies
and limitations concerning fixed income securities.
The price of a convertible security often reflects variations in the
price of the underlying common stock in a way that non-convertible debt may not.
Convertible securities are typically issued by smaller capitalization companies
whose stock prices may be volatile. A convertible security may be subject to
redemption at the option of the issuer at a price established in the security's
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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 its corresponding Fund's ability to achieve their investment objectives.
PREFERRED STOCK (ALL PORTFOLIOS). Each Portfolio may invest in
preferred stock. Unlike interest payments on debt securities, dividends on
preferred stock are generally payable at the discretion of the issuer's board of
directors. Preferred shareholders may have certain rights if dividends are not
paid but generally have no legal recourse against the issuer. Shareholders may
suffer a loss of value if dividends are not paid. The market prices of preferred
stocks are generally more sensitive to changes in the issuer's creditworthiness
than are the prices of debt securities.
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 making at least 90% of its investments
in not more than six such sectors:
(1) AUTOS AND HOUSING SECTOR: Companies engaged in design, production, or
sale of automobiles, automobile parts, mobile homes, or related products
("automobile industries") or design, construction, renovation, or refurbishing
of residential dwellings. The value of securities of companies in the automobile
industries is affected by, among other things, foreign competition, the level of
consumer confidence and consumer debt, and installment loan rates. The housing
construction industry may be affected by the level of consumer confidence and
consumer debt, mortgage rates, tax laws, and the inflation outlook.
(2) CONSUMER GOODS AND SERVICES SECTOR: Companies engaged in providing
consumer goods or services, including design, processing, production, sale, or
storage of packaged, canned, bottled, or frozen foods and beverages and design,
production, or sale of home furnishings, appliances, clothing, accessories,
cosmetics, or perfumes. Certain of these companies are subject to government
regulation affecting the use of various food additives and production methods,
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which could affect profitability. Also, the success of food- and fashion-related
products may be strongly affected by fads, marketing campaigns, health concerns,
and other factors affecting supply and demand.
(3) DEFENSE AND AEROSPACE SECTOR: Companies engaged in research,
manufacture, or sale of products or services related to the defense or aerospace
industries, including air transport; data processing or computer-related
services; communications systems; military weapons or transportation; general
aviation equipment, missiles, space launch vehicles, or spacecraft; machinery
for guidance, propulsion, or control of flight vehicles; and airborne or
ground-based equipment essential to the test, operation, or maintenance of
flight vehicles. Because these companies rely largely on U.S. (and foreign)
governmental demand for their products and services, their financial conditions
are heavily influenced by defense spending policies.
(4) ENERGY SECTOR: Companies involved in the production, transmission, or
marketing of energy from oil, gas, or coal, as well as nuclear, geothermal, oil
shale, or solar sources of energy (but excluding public utility companies). Also
included are companies that provide component products or services for those
activities. The value of these companies' securities varies based on the price
and supply of energy fuels and may be affected by international politics, energy
conservation, the success of exploration projects, environmental considerations,
and the tax and other regulatory policies of various governments.
(5) FINANCIAL SERVICES SECTOR: Companies providing financial services to
consumers or industry, including commercial banks and savings and loan
associations, consumer and industrial finance companies, securities brokerage
companies, leasing companies, and insurance companies. These companies are
subject to extensive governmental regulations. Their profitability may fluctuate
significantly as a result of volatile interest rates, concerns about particular
banks and savings institutions, and general economic conditions.
(6) HEALTH CARE SECTOR: Companies engaged in design, manufacture, or sale
of products or services used in connection with the provision of health care,
including pharmaceutical companies; firms that design, manufacture, sell, or
supply medical, dental, or optical products, hardware, or services; companies
involved in biotechnology, medical diagnostic, or biochemical research and
development; and companies that operate health care facilities. Many of these
companies are subject to government regulation and potential health care
reforms, which could affect the price and availability of their products and
services. Also, products and services of these companies could quickly become
obsolete.
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(7) HEAVY INDUSTRY SECTOR: Companies engaged in research, development,
manufacture, or marketing of products, processes, or services related to the
agriculture, chemicals, containers, forest products, non-ferrous metals, steel,
or pollution control industries, including synthetic and natural materials (for
example, chemicals, plastics, fertilizers, gases, fibers, flavorings, or
fragrances), paper, wood products, steel, and cement. Certain of these companies
are subject to state and federal regulation, which could require alteration or
cessation of production of a product, payment of fines, or cleaning of a
disposal site. Furthermore, because some of the materials and processes used by
these companies involve hazardous components, there are additional risks
associated with their production, handling, and disposal. The risk of product
obsolescence also is present.
(8) MACHINERY AND EQUIPMENT SECTOR: Companies engaged in the research,
development, or manufacture of products, processes, or services relating to
electrical equipment, machinery, pollution control, or construction services,
including transformers, motors, turbines, hand tools, earth-moving equipment,
and waste disposal services. The profitability of most of these companies may
fluctuate significantly in response to capital spending and general economic
conditions. As is the case for the heavy industry sector, there are risks
associated with the production, handling, and disposal of materials and
processes that involve hazardous components and the risk of product
obsolescence.
(9) MEDIA AND ENTERTAINMENT SECTOR: Companies engaged in design,
production, or distribution of goods or services for the media industries
(including television or radio broadcasting or manufacturing, publishing,
recordings and musical instruments, motion pictures, and photography) and the
entertainment industries (including sports arenas, amusement and theme parks,
gaming casinos, sporting goods, camping and recreational equipment, toys and
games, travel-related services, hotels and motels, and fast food and other
restaurants). Many products produced by companies in this sector -- for example,
video and electronic games -- may become obsolete quickly. Additionally,
companies engaged in television and radio broadcast are subject to government
regulation.
(10) RETAILING SECTOR: Companies engaged in retail distribution of home
furnishings, food products, clothing, pharmaceuticals, leisure products, or
other consumer goods, including department stores, supermarkets, and retail
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<PAGE>
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 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.
NEUBERGER & BERMAN SOCIALLY RESPONSIVE PORTFOLIO - DESCRIPTION OF SOCIAL
POLICY
BACKGROUND INFORMATION ON SOCIALLY RESPONSIVE INVESTING
In an era when many people are concerned about the relationship
between business and society, socially responsive investing ("SRI") is a
mechanism for assuring that investors' social values are reflected in their
investment decisions. As such, SRI is a direct descendent of the successful
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<PAGE>
effort begun in the early 1970's to encourage companies to divest their South
African operations and subscribe to the Sullivan Principles. Today, a growing
number of individuals and institutions are applying similar strategies to a
broad range of problems.
Although there are many strategies available to the socially
responsive investor, including proxy activism, below-market loans to community
projects, and venture capital, the SRI strategies used by the Portfolio
generally fall into two categories:
AVOIDANCE INVESTING. Most socially responsive investors seek to avoid
holding securities of companies whose products or policies are seen as being at
odds with the social good. The most common exclusions historically have involved
tobacco companies and weapons manufacturers.
LEADERSHIP INVESTING. A growing number of investors actively look for
companies with progressive programs that are exemplary or companies which make
it their business to try to solve some of the problems of today's society.
The marriage of social and financial objectives would not have
surprised Adam Smith, who was, first and foremost, a moral philosopher. THE
WEALTH OF NATIONS is firmly rooted in the Enlightenment conviction that the
purpose of capital is the social good and the related belief that idle capital
is both wasteful and unethical. But, what very likely would have surprised Smith
is the sheer complexity of the social issues we face today and the diversity of
our attitudes toward the social good. War and peace, race and gender, the
distribution of wealth, and the conservation of natural resources -- the social
agenda is long and compelling. It is also something about which reasonable
people differ. What should society's priorities be? What can and should be done
about them? And what is the role of business in addressing them? Since
corporations are on the front lines of so many key issues in today's world, a
growing number of investors feel that a corporation's role cannot be ignored.
This is true of some of the most important issues of the day such as equal
opportunity and the environment.
THE SOCIALLY RESPONSIVE DATABASE
Neuberger & Berman, LLC ("Neuberger & Berman"), the Portfolio's
sub-adviser, maintains a database of information about the social impact of the
companies it follows. N&B Management uses the database to evaluate social issues
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<PAGE>
after it deems a stock acceptable from a financial standpoint for acquisition by
the Portfolio. The aim of the database is to be as comprehensive as possible,
given that much of the information concerning corporate responsibility comes
from subjective sources. Information for the database is gathered by Neuberger &
Berman in many categories and then analyzed by N&B Management in the following
six categories of corporate responsibility:
WORKPLACE DIVERSITY AND EMPLOYMENT. N&B Management looks for companies
that show leadership in areas such as employee training and promotion policies
and benefits, such as flextime, generous profit sharing, and parental leave. N&B
Management looks for active programs to promote women and minorities and takes
into account their representation among the officers of an issuer and members of
its board of directors. As a basis for exclusion, N&B Management looks for Equal
Employment Opportunity Act infractions and Occupational Safety and Health Act
violations; examines each case in terms of severity, frequency, and time elapsed
since the incident; and considers actions taken by the company since the
violation. N&B Management also monitors companies' progress and attitudes toward
these issues.
ENVIRONMENT. A company's impact on the environment depends largely on
the industry. Therefore, N&B Management examines a company's environmental
record vis-a-vis those of its peers in the industry. All companies operating in
an industry with inherently high environmental risks are likely to have had
problems in such areas as toxic chemical emissions, federal and state fines, and
Superfund sites. For these companies, N&B Management examines their problems in
terms of severity, frequency, and elapsed time. N&B Management then balances the
record against whatever leadership the company may have demonstrated in terms of
environmental policies, procedures, and practices. N&B Management defines an
environmental leadership company as one that puts into place strong affirmative
programs to minimize emissions, promote safety, reduce waste at the source,
insure energy conservation, protect natural resources, and incorporate recycling
into its processes and products. N&B Management looks for the commitment and
active involvement of senior management in all these areas. Several major
manufacturers which still produce substantial amounts of pollution are among the
leaders in developing outstanding waste source reduction and remediation
programs.
PRODUCT. N&B Management considers company announcements, press
reports, and public interest publications relating to the health, safety,
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<PAGE>
quality, labeling, advertising, and promotion of both consumer and industrial
products. N&B Management takes note of companies with a strong commitment to
quality and with marketing practices which are ethical and consumer-friendly.
N&B Management pays particular attention to companies whose products and
services promote progressive solutions to social problems.
PUBLIC HEALTH. N&B Management measures the participation of companies
in such industries and markets as alcohol, tobacco, gambling and nuclear power.
N&B Management also considers the impact of products and marketing activities
related to those products on nutritional and other health concerns, both
domestically and in foreign markets.
WEAPONS. N&B Management keeps track of domestic military sales and,
whenever possible, foreign military sales and categorizes them as nuclear
weapons related, other weapons related, and non-weapon military supplies, such
as micro-chip manufacturers and companies that make uniforms for military
personnel.
CORPORATE CITIZENSHIP. N&B Management gathers information about a
company's participation in community affairs, its policies with respect to
charitable contributions, and its support of education and the arts. N&B
Management looks for companies with a focus, dealing with issues not just by
making financial contributions, but also by asking the questions: What can we do
to help? What do we have to offer? Volunteerism, high-school mentoring programs,
scholarships and grants, and in-kind donations to specific groups are just a few
ways that companies have responded to these questions.
IMPLEMENTATION OF SOCIAL POLICY
Companies deemed acceptable by N&B Management from a financial
standpoint are analyzed using Neuberger & Berman's database. The companies are
then evaluated by the portfolio manager to determine if the companies' policies,
practices, products, and services withstand scrutiny in the following major
areas of concern: the environment and workplace diversity and employment.
Companies are then further evaluated to determine their track record in issues
and areas of concern such as public health, weapons, product, and corporate
citizenship.
The issues and areas of concern that are tracked lend themselves to
objective analysis in varying degrees. Few, however, can be resolved entirely on
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<PAGE>
the basis of scientifically demonstrable facts. Moreover, a substantial amount
of important information comes from sources that do not purport to be
disinterested. Thus, the quality and usefulness of the information in the
database depend on Neuberger & Berman's ability to tap a wide variety of sources
and on the experience and judgment of the people at N&B Management who interpret
the information.
In applying the information in the database to stock selection for the
Portfolio, N&B Management considers several factors. N&B Management examines the
severity and frequency of various infractions, as well as the time elapsed since
their occurrence. N&B Management also takes into account any remedial action
which has been taken by the company relating to these infractions. N&B
Management notes any quality innovations made by the company in its effort to
create positive change and looks at the company's overall approach to social
issues.
PERFORMANCE INFORMATION
Each Fund's performance figures are based on historical results and
are not intended to indicate future performance. The share price and total
return of each Fund will vary, and an investment in a Fund, when redeemed, may
be worth more or less than an investor's original cost.
TOTAL RETURN COMPUTATIONS
Each Fund may advertise certain total return information. An average
annual compounded rate of return ("T") may be computed by using the redeemable
value at the end of a specified period ("ERV") of a hypothetical initial
investment of $1,000 ("P") over a period of time ("n") according to the formula:
P(1+T)n = ERV
Average annual total return smoothes out year-to-year variations in
performance and, in that respect, differs from actual year-to-year results.
The Funds commenced operations in August 1993 except for Neuberger &
Berman SOCIALLY RESPONSIVE Trust, which commenced operations in March 1997.
However, each Fund's investment objective, policies, and limitations are the
same as those of another mutual fund that is a series of Neuberger & Berman
Equity Funds and that has a name similar to the Fund's and invests in the same
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<PAGE>
Portfolio ("Sister Fund"). Each Sister Fund had a predecessor. The following
total return data is for each Fund since its inception and, for periods prior to
each Fund's inception, its Sister Fund (which, as used herein, includes data for
that Sister Fund's predecessor). The total returns for periods prior to the
Funds' inception would have been lower had they reflected the higher fees of the
Funds, as compared to those of the Sister Funds.
The average annual total returns for Neuberger & Berman MANHATTAN
Trust and its Sister Fund for the one-, five-, and ten-year periods ended August
31, 1997, were +38.84%, +17.56%, and +11.49%, respectively.
The average annual total returns for Neuberger & Berman GENESIS Trust
and its Sister Fund for the one- and five-year periods ended August 31, 1997,
and for the period from September 27, 1988 (commencement of operations), through
August 31, 1997, were +44.31%, +22.35%, and +16.76%, respectively.
The average annual total returns for Neuberger & Berman FOCUS Trust
and its Sister Fund for the one-, five-, and ten-year periods ended August 31,
1997, were +43.93%, +22.58% and +14.70%, respectively.
The average annual total returns for Neuberger & Berman GUARDIAN Trust
and its Sister Fund for the one-, five-, and ten-year periods ended August 31,
1997, were +39.56%, +19.85%, and +14.42%, respectively.
The average annual total returns for Neuberger & Berman PARTNERS Trust
and its Sister Fund for the one-, five-, and ten-year periods ended August 31,
1997, were +47.11%, +22.44%, and +14.33%, respectively.
The average annual total returns for Neuberger & Berman SOCIALLY
RESPONSIVE Trust and its Sister Fund for the one-year period ended August 31,
1997, and for the period from March 16, 1994 (commencement of operations)
through August 31, 1997, were +31.92% and +20.02%, respectively.
Prior to January 5, 1989, the investment policies Neuberger & Berman
FOCUS Trust's 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 Trust may include information reflecting the
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<PAGE>
Sister Fund's performance and expenses for periods before November 1, 1991, in
its advertisements, sales literature, financial statements, and other documents
filed with the SEC and/or provided to current and prospective shareholders.
Investors should be aware that such information may not necessarily reflect the
level of performance and expenses that would have been experienced had the
Fund's current investment policies been in effect.
N&B Management may from time to time waive a portion of its fees due
from any Fund or Portfolio or reimburse a Fund or Portfolio for a portion of its
expenses. Such action has the effect of increasing total return. Actual
reimbursements and waivers are described in the Prospectus and in "Investment
Management and Administration Services" below.
COMPARATIVE INFORMATION
From time to time each Fund's performance may be compared with:
(1) data (that may be expressed as rankings or ratings) published
by independent services or publications (including newspapers,
newsletters, and financial periodicals) that monitor the performance
of mutual funds, such as Lipper Analytical Services, Inc., C.D.A.
Investment Technologies, Inc., Wiesenberger Investment Companies
Service, Investment Company Data Inc., Morningstar, Inc., Micropal
Incorporated, and quarterly mutual fund rankings by Money, Fortune,
Forbes, Business Week, Personal Investor, and U.S. News & World Report
magazines, The Wall Street Journal, The New York Times, Kiplinger's
Personal Finance, and Barron's Newspaper, or
(2) recognized stock and other indices, such as the S&P "500"
Composite Stock Price Index ("S&P 500 Index"), S&P Small Cap 600 Index
("S&P 600 Index"), S&P Mid Cap 400 Index ("S&P 400 Index"), Russell
2000 Stock Index, Russell Midcap Growth Index, Dow Jones Industrial
Average ("DJIA"), Wilshire 1750 Index, Nasdaq Composite Index,
Montgomery Securities Growth Stock Index, Value Line Index, U.S.
Department of Labor Consumer Price Index ("Consumer Price Index"),
College Board Annual Survey of Colleges, Kanon Bloch's Family
Performance Index, the Barra Growth Index, the Barra Value Index, and
various other domestic, international, and global indices. The S&P 500
- 41 -
<PAGE>
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 $39 million to
$2.7 billion, with an average of $616 million. The S&P 400 Index
measures mid-sized companies that have an average market
capitalization of $2.2 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.
Neuberger & Berman SOCIALLY RESPONSIVE Trust's performance may also be
compared to various socially responsive indices. These include The Domini Social
Index and the indices developed by the quantitative department of Prudential
Securities, such as that department's Large and Mid-Cap portfolio indices for
various breakdowns ("Sin" Stock Free, Cigarette-Stock Free, S&P Composite,
etc.).
Evaluations of the 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 may include the
Portfolio's portfolio diversification by asset type or, in the case of Neuberger
& Berman Socially Responsive Portfolio, by the social characteristics of
companies owned. Information used in Advertisements may include statements or
illustrations relating to the appropriateness of types of securities and/or
mutual funds that may be employed to meet specific financial goals, such as (1)
funding retirement, (2) paying for children's education, and (3) financially
supporting aging parents.
N&B Management believes that many of its common stock funds may be
attractive investment vehicles for conservative investors who are interested in
long-term appreciation from stock investments, but who have a moderate tolerance
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<PAGE>
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 Trust, Neuberger &
Berman GUARDIAN Trust or Neuberger & Berman FOCUS Trust to be an attractive
investment vehicle also include parents saving to meet college costs for their
children. For instance, the cost of a college education is rapidly approaching
the cost of the average family home. Estimates of total four-year costs
(tuition, room and board, books and other expenses) for students starting
college in various years may be included in Advertisements, based on the College
Board Annual Survey of Colleges.
Information relating to inflation and its effects on the dollar also
may be included in Advertisements. For example, after ten years, the purchasing
power of $25,000 would shrink to $16,621, $14,968, $13,465, and $12,100,
respectively, if the annual rates of inflation during that period were 4%, 5%,
6%, and 7%, respectively. (To calculate the purchasing power, the value at the
end of each year is reduced by the inflation rate for the ten-year period.)
CERTAIN RISK CONSIDERATIONS
Although each Portfolio seeks to reduce risk by investing in a
diversified portfolio of securities, diversification does not eliminate all
risk. There can, of course, be no assurance that any Portfolio will achieve its
investment objective.
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<PAGE>
TRUSTEES AND OFFICERS
The following table sets forth information concerning the trustees and
officers of the Trusts and Managers Trust, including their addresses and
principal business experience during the past five years. Some persons named as
trustees and officers also serve in similar capacities for other funds and their
corresponding portfolios administered or managed by N&B Management and Neuberger
& Berman.
Positions Held
With the Trusts
Name, Age, and and Managers
ADDRESS(1) TRUST PRINCIPAL OCCUPATION(S)(2)
- -------------- ------------------- -----------------------
Faith Colish (62) Trustee of each Attorney at Law, Faith Colish,
63 Wall Street Trust and A Professional Corporation.
24th Floor Managers Trust
New York, NY 10005
Donald M. Cox (75) Trustee of each Retired. Formerly Senior Vice
435 East 52nd Street Trust and Managers President and Director of
New York, NY 10022 Trust Exxon Corporation; Director of
Emigrant Savings Bank.
Stanley Egener* (63) Chairman of the Principal of Neuberger &
Board, Chief Berman; President and Director
Executive Officer, of N&B Management; Chairman of
and Trustee of the Board, Chief Executive
each Trust and Officer and Trustee of seven
Managers Trust other mutual funds for which
N&B Management acts as
investment manager or
administrator.
Howard A. Mileaf (60) Trustee of each Vice President and Special
WHX Corporation Trust and Managers Counsel to WHX Corporation
110 East 59th Street Trust (holding company) since 1992;
30th Floor Director of Kevlin Corporation
New York, NY 10022 (manufacturer of microwave and
other products).
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<PAGE>
Positions Held
With the Trusts
Name, Age, and and Managers
ADDRESS(1) TRUST PRINCIPAL OCCUPATION(S)(2)
- -------------- ------------------- -----------------------
Edward I. O'Brien* (69) Trustee of each Until 1993, President of the
12 Woods Lane Trust and Managers Securities Industry
Scarsdale, NY 10583 Trust Association ("SIA")
(securities industry's
representative in government
relations and regulatory
matters at the federal and
state levels); until November
1993, employee of the SIA;
Director of Legg Mason, Inc.
John T. Patterson, Jr. (69) Trustee of each Retired. Formerly, President
183 Ledge Drive Trust and Managers of SOBRO (South Bronx Overall
Torrington, CT 06790 Trust Economic Development
Corporation).
John P. Rosenthal (64) Trustee of each Senior Vice President of
Burnham Securities Inc. Trust and Managers Burnham Securities Inc. (a
Burnham Asset Management Trust registered broker-dealer)
Corp. since 1992; Director, Cancer
1325 Avenue of the Americas Treatment Holdings, Inc.
17th Floor
New York, NY 10019
Cornelius T. Ryan (66) Trustee of each General Partner of Oxford
Oxford Bioscience Partners Trust and Managers Partners and Oxford Bioscience
315 Post Road West Trust Partners (venture capital
Westport, CT 06880 partnerships) and President of
Oxford Venture Corporation;
Director of Capital Cash
Management Trust (money market
fund) and Prime Cash Fund.
Gustave H. Shubert (68) Trustee of each Senior Fellow/Corporate
13838 Sunset Boulevard Trust and Managers Advisor and Advisory Trustee
Pacific Palisades, CA 90272 Trust of Rand (a non-profit public
interest research institution)
since 1989; Honorary Member of
the Board of Overseers of the
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<PAGE>
Positions Held
With the Trusts
Name, Age, and and Managers
ADDRESS(1) TRUST PRINCIPAL OCCUPATION(S)(2)
- -------------- ------------------- -----------------------
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* (61) President and Principal of Neuberger &
Trustee of each Berman; Director of N&B
Trust and Managers Management; President and/or
Trust Trustee of four other mutual
funds for which N&B Management
acts as investment manager or
administrator.
Daniel J. Sullivan (57) Vice President of Senior Vice President of N&B
each Trust and Management since 1992; Vice
Managers Trust President of seven other
mutual funds for which N&B
Management acts as investment
manager or administrator.
Michael J. Weiner (50) Vice President Senior Vice President of N&B
and Principal Management since 1992;
Financial Officer Treasurer of N&B Management
of each Trust and from 1992 to 1996; Vice
Managers Trust President and Principal
Financial Officer of seven
other mutual funds for which
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<PAGE>
Positions Held
With the Trusts
Name, Age, and and Managers
ADDRESS(1) TRUST PRINCIPAL OCCUPATION(S)(2)
- -------------- ------------------- -----------------------
N&B Management acts as
investment manager or
administrator.
Claudia A. Brandon (41) Secretary of each Vice President of N&B
Trust and Managers Management; Secretary of seven
Trust other mutual funds for which
N&B Management acts as
investment manager or
administrator.
Richard Russell (50) Treasurer and Vice President of N&B
Principal Management since 1993; prior
Accounting Officer thereto, Assistant Vice
of each Trust and President of N&B Management;
Managers Trust Treasurer and Principal
Accounting Officer of seven
other mutual funds for which
N&B Management acts as
investment manager or
administrator.
Stacy Cooper-Shugrue (34) Assistant Assistant Vice President of
Secretary of each N&B Management since 1993;
Trust and Manager prior thereto, employee of N&B
Trust Management; Assistant
Secretary of seven other
mutual funds for which N&B
Management acts as investment
manager or administrator.
C. Carl Randolph(60) Assistant Principal of Neuberger &
Secretary of each Berman since 1992; Assistant
Trust and Managers Secretary of seven other
Trust mutual funds for which N&B
Management acts as investment
manager or administrator.
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<PAGE>
Positions Held
With the Trusts
Name, Age, and and Managers
ADDRESS(1) TRUST PRINCIPAL OCCUPATION(S)(2)
- -------------- ------------------- -----------------------
Barbara DiGiorgio (38) Assistant Assistant Vice President of
Treasurer of each N&B Management since 1993;
Trust and Managers thereto, employee of N&B
Trust Management; Assistant
Treasurer since 1996 of seven
other mutual funds for which
N&B Management acts as
investment manager or
administrator.
Celeste Wischerth (36) Assistant Assistant Vice President of
Treasurer of each N&B Management since 1994;
Trust and Managers prior thereto, employee of N&B
Trust Management; Assistant
Treasurer since 1996 of seven
other mutual funds for which
N&B Management acts as
investment manager or
administrator.
- ----------
(1) Unless otherwise indicated, the business address of each listed person is
605 Third Avenue, New York, New York 10158.
(2) Except as otherwise indicated, each individual has held the positions shown
for at least the last five years.
* Indicates a trustee who is an "interested person" of each Trust and Managers
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 principals of Neuberger & Berman. Mr. O'Brien is an
interested person by virtue of the fact that he is a director of Legg Mason,
Inc., a wholly owned subsidiary of which, from time to time, serves as a broker
or dealer to the Portfolios and other funds for which N&B Management serves as
investment manager.
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<PAGE>
The Trusts' Trust Instruments and Managers Trust's Declaration of
Trust provide that each such Trust will indemnify its trustees and officers
against liabilities and expenses reasonably incurred in connection with
litigation in which they may be involved because of their offices with the
Trust, unless it is adjudicated that they (a) engaged in bad faith, willful
misfeasance, gross negligence, or reckless disregard of the duties involved in
the conduct of their offices, or (b) did not act in good faith in the reasonable
belief that their action was in the best interest of the Trust. In the case of
settlement, such indemnification will not be provided unless it has been
determined (by a court or other body approving the settlement or other
disposition, by a majority of disinterested trustees based upon a review of
readily available facts, or in a written opinion of independent counsel) that
such officers or trustees have not engaged in willful misfeasance, bad faith,
gross negligence, or reckless disregard of their duties.
The following table sets forth information concerning the compensation
of the trustees of each Trust. None of the Neuberger & Berman Funds(R) has any
retirement plan for its trustees.
TABLE OF COMPENSATION
FOR FISCAL YEAR ENDED 8/31/97
<TABLE>
<CAPTION>
Aggregate Aggregate
Compensation Compensation Total Compensation from
from Neuberger from Neuberger Investment Companies in the
Name and Position & Berman & Berman Neuberger & Berman Fund
WITH EACH TRUST EQUITY TRUST EQUITY ASSETS COMPLEX PAID TO TRUSTEES
- --------------- ------------ ------------- ------------------------
<S> <C> <C> <C>
Faith Colish $ 2,592 $3 $ 64,000
Trustee (4 other investment
companies)
Donald M. Cox $ 2,952 $3 $ 31,000
Trustee (2 other investment
companies)
Stanley Egener $ 0 $0 $ 0
Chairman of the (8 other investment
Board, Chief companies)
Executive Officer,
and Trustee
- 49 -
<PAGE>
TABLE OF COMPENSATION
FOR FISCAL YEAR ENDED 8/31/97
Aggregate Aggregate
Compensation Compensation Total Compensation from
from Neuberger from Neuberger Investment Companies in the
Name and Position & Berman & Berman Neuberger & Berman Fund
WITH EACH TRUST EQUITY TRUST EQUITY ASSETS COMPLEX PAID TO TRUSTEES
- --------------- ------------ ------------- ------------------------
Alan R. Gruber, $ 1,913 $1 $ 20,000
Trustee, and the (2 other investment
Estate of Alan R. companies)
Gruber
Howard A. Mileaf $ 2,995 $3 $ 33,500
Trustee (3 other investment
companies)
Edward I. O'Brien $ 3,321 $4 $ 34,000
Trustee (2 other investment
companies)
John T. Patterson, Jr. $ 3,321 $4 $ 37,500
Trustee (3 other investment
companies)
John P. Rosenthal $ 2,952 $3 $ 32,500
Trustee (3 other investment
companies)
Cornelius T. Ryan $ 2,995 $3 $ 30,500
Trustee (2 other investment
companies)
Gustave H. Shubert $ 2,995 $3 $ 30,500
Trustee (2 other investment
companies)
Lawrence Zicklin $ 0 $0 $ 0
President and Trustee (4 other investment
companies)
</TABLE>
At November 28, 1997, the trustees and officers of the Trusts and of
Managers Trust, as a group, owned beneficially or of record less than 1% of the
outstanding shares of each Fund.
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<PAGE>
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 investment manager to all the Portfolios pursuant to a
management agreement with Managers Trust, dated as of August 2, 1993
("Management Agreement"). The Management Agreement was approved by the holders
of the interests in all the Portfolios (except Neuberger & Berman SOCIALLY
RESPONSIVE Portfolio) on August 2, 1993, and by the holders of the interests in
Neuberger & Berman SOCIALLY RESPONSIVE Portfolio on March 9, 1994. That
Portfolio was authorized to become subject to the Management Agreement by vote
of the Portfolio Trustees on October 20, 1993, and became subject to it on March
14, 1994.
The Management Agreement provides, in substance, that N&B Management
will make and implement investment decisions for the Portfolios in its
discretion and will continuously develop an investment program for the
Portfolios' assets. The Management Agreement permits N&B Management to effect
securities transactions on behalf of each Portfolio through associated persons
of N&B Management. The Management Agreement also specifically permits N&B
Management to compensate, through higher commissions, brokers and dealers who
provide investment research and analysis to the Portfolios, although N&B
Management has no current plans to pay a material amount of such compensation.
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 principals of Neuberger & Berman), one
of whom also serves as an officer of N&B Management, presently serve as trustees
and officers of the Trusts and of Managers Trust. 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 facilities, services and personnel, as well as
accounting, recordkeeping, and other services, to each Fund (except Neuberger &
Berman SOCIALLY RESPONSIVE Trust) pursuant to an administration agreement with
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Equity Trust, dated August 3, 1993, as amended on August 2, 1996, ("Equity Trust
Administration Agreement"). N&B Management provides facilities, services and
personnel, as well as accounting, recordkeeping, and other services, to
Neuberger & Berman SOCIALLY RESPONSIVE Trust pursuant to an administration
agreement with Equity Assets, dated November 1, 1994, as amended August 2, 1996
("Equity Assets Administration Agreement"). The Equity Trust Administration
Agreement and the Equity Assets Administration Agreement are referred to below
as the "Administration Agreements." 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 Institutions for
accounting, recordkeeping and other services that they provide in connection
with investments in the Funds.
Institutions may be subject to federal or state laws that limit their
ability to provide certain administrative or distribution-related services. For
example, the Glass-Steagall Act is generally interpreted to prohibit most banks
from underwriting mutual fund shares. N&B Management intends to contract with
Institutions for only those services they may legally provide. If, due to a
change in the laws governing Institutions or in the interpretation of any such
law, an Institution is prohibited from performing some or all of the
above-described services, N&B Management may be required to find alternative
means of providing those services. Any such change is not expected to impact the
Funds or their shareholders adversely.
During the fiscal years ended August 31, 1997, 1996 and 1995, each
Fund accrued management and administration fees as follows: Neuberger & Berman
MANHATTAN Trust - $415,355, $420,605 and $202,729; Neuberger & Berman GENESIS
Trust - $1,870,816, $487,514, and $274,709; Neuberger & Berman FOCUS Trust -
$936,458, $329,609, and $43,330; Neuberger & Berman GUARDIAN Trust -
$14,839,636, $8,821,718, and $2,417,586; and Neuberger & Berman PARTNERS Trust -
$2,313,486, $755,623, and $292,161, respectively. From May 1, 1995 to December
15, 1997, N&B Management voluntarily waived a portion of the management fee
borne by Neuberger & Berman GENESIS Portfolio to reduce the fee by 0.10% per
annum of the average daily net assets of that Portfolio. During the fiscal years
ended August 31, 1997 and 1996 and the period from May 1, 1995 to August 31,
1995, N&B Management waived $153,513, $39,014 and $9,217, respectively, of
management fees that otherwise would have been borne indirectly by Neuberger &
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Berman GENESIS Trust. During the period from its commencement of operations
(March 3, 1997) to August 31, 1997, Neuberger & Berman SOCIALLY RESPONSIVE Trust
accrued management and administration fees of $16,656.
N&B Management has voluntarily undertaken to reimburse each Fund for
its Total Operating Expenses (as defined in the Prospectus) so that each Fund's
expense ratio per annum will not exceed the expense ratio of its Sister Fund by
more than 0.10% of the Fund's average daily net assets. Each undertaking can be
terminated by N&B Management by giving a Fund at least 60 days' prior written
notice. During the period from August 1993 (commencement of operations of each
Fund except Neuberger & Berman SOCIALLY RESPONSIVE Trust) to December 31, 1994,
N&B Management voluntarily undertook to reimburse each Fund for its Total
Operating Expenses so that each Fund's expense ratio per annum would not exceed
the expense ratio of its Sister Fund. During the fiscal years ended August 31,
1997, 1996 and 1995, N&B Management reimbursed each Fund the following amounts
of expenses under the above arrangements: Neuberger & Berman MANHATTAN Trust,
$64,448, $78,810 and $87,443, respectively; Neuberger & Berman GENESIS Trust,
$0, $66,139 and $69,047, respectively; Neuberger & Berman FOCUS Trust, $102,407,
$104,689 and $92,687, respectively; Neuberger & Berman GUARDIAN Trust, $0,
$69,266 and $171,796, respectively; and Neuberger & Berman PARTNERS Trust,
$89,923, $109,574, and $102,400, respectively. During the period from Neuberger
& Berman SOCIALLY RESPONSIVE Trust's commencement of operations (March 3, 1997)
to August 31, 1997, N&B Management reimbursed that Fund for expenses in the
amount of $30,470.
The Management Agreement continues until August 2, 1998. 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 Portfolio Trustees who are not "interested
persons" of N&B Management or Managers Trust ("Independent Portfolio Trustees"),
cast in person at a meeting called for the purpose of voting on such approval,
and (2) by the vote of a majority of the Portfolio Trustees or by a 1940 Act
majority vote of the outstanding interests in that Portfolio. The Administration
Agreements continue until August 2, 1998. The Administration Agreements are
renewable from year to year with respect to a Fund, so long as their 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 respective 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 that
Fund.
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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 Agreements are terminable, without penalty, with
respect to a Fund on 60 days' written notice either by N&B Management or by the
respective Trust. Each Agreement terminates automatically if it is assigned.
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 holders of the interests in the
Portfolios (except Neuberger & Berman SOCIALLY RESPONSIVE Portfolio) on August
2, 1993, and by the holders of the interests in Neuberger & Berman SOCIALLY
RESPONSIVE Portfolio on March 9, 1994. That Portfolio was authorized to become
subject to the Sub-Advisory Agreement by vote of the Portfolio Trustees on
October 20, 1993, and became subject to it on March 14, 1994.
The Sub-Advisory Agreement provides in substance that Neuberger &
Berman will furnish to N&B Management, upon reasonable request, the same type of
investment recommendations and research that Neuberger & Berman, from time to
time, provides to its principals and employees for use in managing client
accounts. In this manner, N&B Management expects to have available to it, in
addition to research from other professional sources, the capability of the
research staff of Neuberger & Berman. This staff consists of numerous investment
analysts, each of whom specializes in studying one or more industries, under the
supervision of the Director of Research, who is also available for consultation
with 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 until August 2, 1998 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
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<PAGE>
termination, without penalty, with respect to each Portfolio by the Portfolio
Trustees or a 1940 Act majority vote of the outstanding interests in that
Portfolio, 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
As of September 30, 1997, the investment companies managed by N&B
Management had aggregate net assets of approximately $21.2 billion. N&B
Management currently serves as investment manager of the following investment
companies:
Approximate Net
Assets at
September 30,
NAME 1997
---- ----
Neuberger & Berman Cash Reserves $667,531,894
Portfolio (investment portfolio for
Neuberger & Berman Cash Reserves)
Neuberger & Berman Government Money $248,190,672
Portfolio (investment portfolio for
Neuberger & Berman Government
Money Fund)
Neuberger & Berman Limited Maturity $295,393,823
Bond Portfolio (investment portfolio
for Neuberger & Berman Limited
Maturity Bond Fund and Neuberger
& Berman Limited Maturity Bond Trust)
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<PAGE>
Approximate Net
Assets at
September 30,
NAME 1997
---- ----
Neuberger & Berman Municipal Securities $ 31,573,660
Portfolio (investment portfolio for
Neuberger & Berman Municipal
Securities Trust)
Neuberger & Berman Ultra Short Bond $ 62,627,463
Portfolio (investment portfolio for
Neuberger & Berman Ultra Short Bond
Fund and Neuberger & Berman Ultra
Short Bond Trust)
Neuberger & Berman Focus Portfolio $1,661,565,204
(investment portfolio for Neuberger
& Berman Focus Fund, Neuberger &
Berman Focus Trust and Neuberger &
Berman Focus Assets)
Neuberger & Berman Genesis Portfolio $1,491,048,221
(investment portfolio for Neuberger
& Berman Genesis Fund, Neuberger &
Berman Genesis Trust and Neuberger &
Berman Genesis Assets)
Neuberger & Berman Guardian Portfolio $9,123,101,599
(investment portfolio for Neuberger
& Berman Guardian Fund, Neuberger &
Berman Guardian Trust and Neuberger &
Berman Guardian Assets)
Neuberger & Berman International Portfolio $ 127,016,071
(investment portfolio for Neuberger &
Berman International Fund and Neuberger
& Berman International Trust)
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<PAGE>
Approximate Net
Assets at
September 30,
NAME 1997
---- ----
Neuberger & Berman Manhattan Portfolio $655,156,471
(investment portfolio for Neuberger &
Berman Manhattan Fund, Neuberger & Berman
Manhattan Trust and Neuberger & Berman
Manhattan Assets)
Neuberger & Berman Partners Portfolio $3,783,754,657
(investment portfolio for Neuberger &
Berman Partners Fund, Neuberger & Berman
Partners Trust and Neuberger & Berman
Partners Assets)
Neuberger & Berman Socially Responsive $274,230,723
Portfolio (investment portfolio for
Neuberger & Berman Socially Responsive
Fund, Neuberger & Berman Socially
Responsive Trust and Neuberger & Berman
NYCDC Socially Responsive Trust)
Advisers Managers Trust $2,651,503,613
(seven series)
The investment decisions concerning the Portfolios and the other
mutual funds managed by N&B Management (collectively, "Other N&B Funds") have
been and will continue to be made independently of one another. In terms of
their investment objectives, most of the Other N&B Funds differ from the
Portfolios. Even where the investment objectives are similar, however, the
methods used by the Other N&B Funds and the Portfolios to achieve their
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<PAGE>
objectives may differ. The investment results achieved by all of the mutual
funds managed by N&B Management have varied from one another in the past and are
likely to vary in the future.
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, in
terms of amount, in accordance with a formula considered to be equitable to the
funds involved. Although in some cases this arrangement may have a detrimental
effect on the price or volume of the securities as to 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 Portfolios are subject to certain limitations imposed on all
advisory clients of Neuberger & Berman (including the Portfolios, the Other N&B
Funds, and other managed accounts) and personnel of Neuberger & Berman and its
affiliates. These include, for example, limits that may be imposed in certain
industries or by certain companies, and policies of Neuberger & Berman that
limit the aggregate purchases, by all accounts under management, of the
outstanding shares of public companies.
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; Theodore P.
Giuliano, Vice President and director; Michael M. Kassen, Vice President and
director; Irwin Lainoff, director; Lawrence Zicklin, director; Daniel J.
Sullivan, Senior Vice President; Peter E. Sundman, Senior Vice President;
Michael J. Weiner, Senior Vice President; Claudia A. Brandon, Vice President;
Patrick T. Byrne, Vice President; Brooke A. Cobb, Vice President; Robert W.
D'Alelio, Vice President; Roberta D'Orio, Vice President; Clara Del Villar, Vice
President; Brian J. Gaffney, Vice President; Joseph G. Galli, Vice President;
Robert I. Gendelman, Vice President; Josephine P. Mahaney, Vice President; Ellen
Metzger, Vice President and Secretary; Paul Metzger, Vice President; Janet W.
Prindle, Vice President; Kevin L. Risen, Vice President; Richard Russell, Vice
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<PAGE>
President; Jennifer K. Silver, Vice President; Kent C. Simons, Vice President;
Frederic B. Soule, Vice President; Judith M. Vale, Vice President; Susan Walsh,
Vice President; Thomas Wolfe, Vice President; Andrea Trachtenberg, Vice
President of Marketing; Robert Conti, Treasurer; Valerie Chang, Assistant Vice
President; Stacy Cooper-Shugrue, Assistant Vice President; Barbara DiGiorgio,
Assistant Vice President; Michael J. Hanratty, Assistant Vice President; Leslie
Holliday-Soto, Assistant Vice President; Jody L. Irwin, Assistant Vice
President; Robert L. Ladd, Assistant Vice President; Carmen G. Martinez,
Assistant Vice President; Joseph S. Quirk, Assistant Vice President; Ingrid
Saukaitis, Assistant Vice President; Josephine Velez, Assistant Vice President;
Celeste Wischerth, Assistant Vice President; and Loraine Olavarria, Assistant
Secretary. Messrs. Cantor, Egener, Gendelman, Giuliano, Kassen, Lainoff, Risen,
Simons, Sundman and Zicklin and Mmes. Prindle, Silver and Vale are principals of
Neuberger & Berman.
Messrs. Egener and Zicklin are trustees and officers, and Messrs.
Russell, Sullivan and Weiner and Mmes. Brandon, Cooper-Shugrue, DiGiorgio, and
Wischerth are officers, of each Trust and Managers Trust. C. Carl Randolph, a
principal of Neuberger & Berman, also is an officer of each Trust and Managers
Trust.
All of the outstanding voting stock in N&B Management is owned by
persons who are also principals of Neuberger & Berman.
DISTRIBUTION ARRANGEMENTS
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 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 or other compensation and bears all advertising and promotion
expenses incurred in the sale of the Funds' shares.
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<PAGE>
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 Trusts, on behalf of their respective Funds, and the Distributor
are parties to Distribution Agreements that continue until August 2, 1998. The
Distribution Agreements may be renewed annually if specifically approved by (1)
the vote of a majority of the Fund Trustees or a 1940 Act majority vote of the
Fund's outstanding shares and (2) the vote of a majority of the Independent Fund
Trustees, cast in person at a meeting called for the purpose of voting on such
approval. The Distribution Agreements may be terminated by either party and will
terminate automatically on their assignment, in the same manner as the
Management Agreement.
ADDITIONAL EXCHANGE INFORMATION
As more fully set forth in the section of the Prospectus entitled
"Exchanging Shares," an Institution may exchange shares of any Fund for shares
of one or more of the other Funds or the income fund that is briefly described
below ("Income Fund"), if made available through that Institution.
INCOME FUND
Neuberger & Berman Seeks the highest current income consistent with
Limited Maturity Bond low risk to principal and liquidity and,
Trust secondarily, total return. The corresponding
portfolio invests in debt securities, primarily
investment grade; maximum 10% below investment
grade, but no lower than B.*/ Maximum average
duration of four years.
Any Fund described herein, and the Income Fund, may terminate or
modify its exchange privilege in the future.
Fund shareholders who are considering exchanging shares into the
Income Fund should note that it (1) is a series of a Delaware business trust
- ----------
*/ As rated by Moody's or S&P or, if unrated by either of those entities,
determined by N&B Management to be of comparable quality.
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<PAGE>
(named "Neuberger & Berman Income Trust") that is registered with the SEC as an
open-end management investment company, and (2) invests all of its net
investable assets in a corresponding portfolio that has an investment objective,
policies, and limitations identical to those of the fund.
Before effecting an exchange, Fund shareholders must obtain and should
review a currently effective prospectus of the fund into which the exchange is
to be made. The Income Fund has a separate prospectus. An exchange is treated as
a sale for federal income tax purposes and, depending on the circumstances, a
capital gain or loss may be realized.
ADDITIONAL REDEMPTION INFORMATION
SUSPENSION OF REDEMPTIONS
The right to redeem a Fund's shares may be suspended or payment of the
redemption price postponed (1) when the NYSE is closed, (2) when trading on the
NYSE is restricted, (3) when an emergency exists as a result of which it is not
reasonably practicable for its 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 the Fund's
shareholders. Applicable SEC rules and regulations shall govern whether the
conditions prescribed in (2) or (3) exist. If the right of redemption is
suspended, shareholders may withdraw their offers of redemption, or they will
receive 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 (or a combination of requests from the same shareholder
in any 90-day period) exceeding $250,000 or 1% of the net assets of the Fund,
whichever is less, by making payment in whole or in part in securities valued as
described under "Share Prices and Net Asset Value" in the Prospectus. If payment
is made in securities, an Institution generally will incur brokerage expenses or
other transaction costs in converting those securities into cash and will be
subject to fluctuation in the market prices of those securities until they are
sold. The Funds do not redeem in kind under normal circumstances, but would do
so when the Fund Trustees determined that it was in the best interests of a
Fund's shareholders as a whole.
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<PAGE>
DIVIDENDS AND OTHER DISTRIBUTIONS
Each Fund distributes to its shareholders substantially all of its
share of any net investment income (after deducting expenses incurred directly
by the Fund), any net realized capital gains, and any net realized gains from
foreign currency transactions earned or realized by its corresponding Portfolio.
A Portfolio's net investment income consists of all income accrued on portfolio
assets less accrued expenses, but does not include capital and foreign currency
gains and losses. Net investment income and realized gains and losses are
reflected in a Portfolio's NAV (and, hence, its corresponding Fund's NAV) until
they are distributed. 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).
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 Trust distributes
substantially all of its share of Neuberger & Berman GUARDIAN Portfolio's net
investment income (after deducting expenses incurred directly by Neuberger &
Berman GUARDIAN Trust), if any, near the end of each other calendar quarter.
Dividends and other distributions are automatically reinvested in
additional shares of the distributing Fund, unless the Institution elects to
receive them in cash ("cash election"). To the extent dividends and other
distributions are subject to federal, state, or local income taxation, they are
taxable to the shareholders whether received in cash or reinvested in Fund
shares. A cash election with respect to 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
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<PAGE>
income, net short-term capital gain, and net gains from certain foreign currency
transactions) ("Distribution Requirement") and must meet several additional
requirements. With respect to each Fund, these requirements include the
following: (1) the Fund must derive at least 90% of its gross income each
taxable year from dividends, interest, payments with respect to securities
loans, and gains from the sale or other disposition of securities or foreign
currencies, or other income (including gains from Hedging Instruments) derived
with respect to its business of investing in securities or those currencies
("Income Requirement"); and(2) at the close of each quarter of the Fund's
taxable year, (i) at least 50% of the value of its total assets must be
represented by cash and cash items, U.S. Government securities, securities of
other RICs, and other securities limited, in respect of any one issuer, to an
amount that does not exceed 5% of the value of the Fund's total assets and that
does not represent more than 10% of the issuer's outstanding voting securities,
and (ii) not more than 25% of the value of its total assets may be invested in
securities (other than U.S. Government securities or securities of other RICs)
of any one issuer.
Certain funds that invest in portfolios managed by N&B Management,
including most of the Sister Funds, have received rulings from the Internal
Revenue Service ("Service") that each such fund, as an investor in its
corresponding portfolio, will be deemed to own a proportionate share of the
portfolio's assets and income for purposes of determining whether the fund
satisfies all the requirements described above to qualify as a RIC. Although
these rulings may not be relied on as precedent by the Funds, N&B Management
believes that the reasoning thereof and, hence, their conclusion apply to the
Funds as well.
Each Fund will be subject to a nondeductible 4% excise tax ("Excise
Tax") to the extent it fails to distribute by the end of any calendar year
substantially all of its ordinary income for that year and capital gain net
income for the one-year period ended on October 31 of that year, plus certain
other amounts.
See the next section for a discussion of the tax consequences to the
Funds of distributions to them from the Portfolios, investments by the
Portfolios in certain securities, and hedging transactions engaged in by the
Portfolios.
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<PAGE>
TAXATION OF THE PORTFOLIOS
The Portfolios (except Neuberger & Berman SOCIALLY RESPONSIVE
Portfolio) have received rulings from the Service to the effect that, among
other things, each such Portfolio will be treated as a separate partnership for
federal income tax purposes and will not be a "publicly traded partnership."
Although these rulings may not be relied on as precedent by Neuberger & Berman
SOCIALLY RESPONSIVE Portfolio, N&B Management believes the reasoning thereof
and, hence, their conclusion apply to that Portfolio as well. 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
capital gains and decreased by (1) the amount of cash and the basis of any
property the Portfolio distributes to the Fund and (2) the Fund's share of the
Portfolio's losses.
Dividends and interest received by a Portfolio, and gains realized by
a Portfolio, may be subject to income, withholding, or other taxes imposed by
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foreign countries and U.S. possessions that would reduce the yield and/or total
return on its securities. Tax treaties between certain countries and the United
States may reduce or eliminate these foreign taxes, however, and many foreign
countries do not impose taxes on capital gains in respect of investments by
foreign investors.
A Portfolio may invest in the stock of "passive foreign investment
companies" ("PFICs"). A PFIC is a foreign corporation -- other than a
"controlled foreign corporation" (I.E., a foreign corporation in which, on any
day during its taxable year, more than 50% of the total voting power of all
voting stock therein or the total value of all stock therein is owned, directly,
indirectly, or constructively, by "U.S. shareholders," defined as U.S. persons
that individually own, directly, indirectly, or constructively, at least 10% of
that voting power) as to which a Portfolio is a U.S. shareholder (effective for
the taxable year beginning September 1, 1998) -- that, in general, meets either
of the following tests: (1) at least 75% of its gross income is passive or (2)
an average of at least 50% of its assets produce, or are held for the production
of, passive income. Under certain circumstances, if a Portfolio holds stock of a
PFIC, its corresponding Fund (indirectly through its interest in the Portfolio)
will be subject to federal income tax on its share of a portion of any "excess
distribution" received by the Portfolio on the stock or of any gain on the
Portfolio's disposition of the stock (collectively, "PFIC income"), plus
interest thereon, even if the Fund distributes its share of the PFIC income as a
taxable dividend to its shareholders. The balance of the Fund's share of the
PFIC income will be included in its investment company taxable income and,
accordingly, will not be taxable to it to the extent that income is distributed
to its shareholders.
If a Portfolio invests in a PFIC and elects to treat the PFIC as a
"qualified electing fund" ("QEF"), 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 share of the Portfolio's pro rata share of
the QEF's annual ordinary earnings and net capital gain (the excess of net
long-term capital gain over net short-term capital loss) -- which most likely
would have to be distributed by the Fund to satisfy the Distribution Requirement
and avoid imposition of the Excise Tax -- even if those earnings and gain were
not received by the Portfolio from the QEF. In most instances it will be very
difficult, if not impossible, to make this election because of certain
requirements thereof.
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Effective for taxable years beginning after 1997, a holder of stock in
any PFIC may elect to include in ordinary income each taxable year the excess,
if any, of the fair market value of the stock over the adjusted basis therein as
of the end of that year. Pursuant to the election, a deduction (as an ordinary,
not capital, loss) also would be allowed for the excess, if any, of the holder's
adjusted basis in PFIC stock over the fair market value thereof as of the
taxable year-end, but only to the extent of any net mark-to-market gains with
respect to that stock included in income for prior taxable years. The adjusted
basis in each PFIC's stock subject to the election would be adjusted to reflect
the amounts of income included and deductions taken thereunder. Proposed
regulations would provide a similar election with respect to the stock of
certain PFICs.
The Portfolios' use of hedging strategies, such as writing (selling)
and purchasing options and futures contracts and entering into forward
contracts, involves complex rules that will determine for income tax purposes
the amount, character and timing of recognition of the gains and losses the
Portfolios realize in connection therewith. Gains from the disposition of
foreign currencies (except certain gains that may be excluded by future
regulations), and gains from Hedging Instruments derived by the Portfolio with
respect to its business of investing in securities or foreign currencies, will
qualify as permissible income for its corresponding Fund under the Income
Requirement.
Exchange-traded futures contracts, certain forward contracts and
listed options thereon ("Section 1256 contracts") are required to be marked to
market (that is, treated as having been sold at market value) for federal income
tax purposes at the end of a Portfolio's taxable year. Sixty percent of any net
gain or loss recognized as a result of these "deemed sales," and 60% of any net
realized gain or loss from any actual sales, of Section 1256 contracts are
treated as long-term capital gain or loss; the remainder is treated as
short-term capital gain or loss. As of the date of this SAI, it is not entirely
clear whether that 60% portion will qualify for the reduced maximum tax rates on
net capital gain enacted by the Taxpayer Relief Act of 1997 -- 20% (10% for
taxpayers in the 15% marginal tax bracket) for gain recognized on capital assets
held for more than 18 months -- instead of the 28% rate in effect before that
legislation, which now applies to gain recognized on capital assets held for
more than one year but not more than 18 months. However, proposed technical
corrections legislation would clarify that the 20% rate applies.
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Each of Neuberger & Berman PARTNERS and Neuberger & Berman SOCIALLY
RESPONSIVE Portfolios may acquire zero coupon securities or other securities
issued with original issue discount ("OID"). As a holder of those securities,
each such Portfolio (and, through it, its corresponding Fund) must take into
income 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
each such Fund annually must distribute substantially all of its investment
company taxable income (including its share of its corresponding Portfolio's
accrued OID) to satisfy the Distribution Requirement and avoid imposition of the
Excise Tax, the Fund may be required in a particular year to distribute as a
dividend an amount that is greater than its share of the total amount of cash
its corresponding Portfolio actually receives. Those distributions will be made
from a Fund's (or its share of its corresponding Portfolio's) cash assets or, if
necessary, from the proceeds of sales of that Portfolio's securities. A
Portfolio may realize capital gains or losses from those sales, which would
increase or decrease its corresponding Fund's investment company taxable income
and/or net capital gain.
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.
PORTFOLIO TRANSACTIONS
Neuberger & Berman acts as principal broker for each Portfolio in the
purchase and sale of its portfolio securities (other than certain securities
traded on the OTC market) and in connection with the purchase and sale of
options on its securities. A substantial portion of the portfolio transactions
of Neuberger & Berman GENESIS Portfolio involves securities traded on the OTC
market; that Portfolio purchases and sells OTC securities in principal
transactions with dealers who are the principal market makers for such
securities.
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. During the fiscal year ended August 31, 1996,
Neuberger & Berman MANHATTAN Portfolio paid brokerage commissions of $940,324,
of which $543,020 was paid to Neuberger & Berman.
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During the fiscal year ended August 31, 1997, Neuberger & Berman
MANHATTAN Portfolio paid brokerage commissions of $971,026, of which $458,679
was paid to Neuberger & Berman. Transactions in which that Portfolio used
Neuberger & Berman as broker comprised 59.11% of the aggregate dollar amount of
transactions involving the payment of commissions, and 47.24% of the aggregate
brokerage commissions paid by the Portfolio, during the fiscal year ended August
31, 1997. 92.43% of the $512,347 paid to other brokers by that Portfolio during
that fiscal year (representing commissions on transactions involving
approximately $299,598,328) was directed to those brokers because of research
services they provided. During the fiscal year ended August 31, 1997, that
Portfolio acquired securities of the following of its "regular brokers or
dealers" (as defined in the 1940 Act) ("Regular B/Ds"): General Electric Capital
Corp., Merrill, Lynch, Pierce, Fenner & Smith Inc., and State Street Bank and
Trust Company, N.A.; at that date, that Portfolio held the securities of its
Regular B/Ds with an aggregate value as follows: General Electric Capital Corp.,
$18,100,000 and State Street Bank & Trust Company, N.A., $6,987,488.
During the fiscal year ended August 31, 1995, Neuberger & Berman
GENESIS Portfolio paid brokerage commissions of $199,718, of which $118,014 was
paid to Neuberger & Berman. During the fiscal year ended August 31, 1996,
Neuberger & Berman GENESIS Portfolio paid brokerage commissions of $206,150, of
which $95,999 was paid to Neuberger & Berman.
During the fiscal year ended August 31, 1997, Neuberger & Berman
GENESIS Portfolio paid brokerage commissions of $860,097, of which $516,040 was
paid to Neuberger & Berman. Transactions in which that Portfolio used Neuberger
& Berman as broker comprised 62.57% of the aggregate dollar amount of
transactions involving the payment of commissions, and 60.00% of the aggregate
brokerage commissions paid by the Portfolio, during the fiscal year ended August
31, 1997. 89.06% of the $344,057 paid to other brokers by that Portfolio during
that fiscal year (representing commissions on transactions involving
approximately $128,731,955) was directed to those brokers because of research
services they provided. During the fiscal year ended August 31, 1997, that
Portfolio acquired securities of the following of its Regular B/Ds: Chevron Oil
Finance Company, General Electric Capital Corp., and State Street Bank and Trust
Company, N.A.; at that date, that Portfolio held the securities of its Regular
B/Ds with an aggregate value as follows: General Electric Capital Corp.,
$40,000,000.
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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. During the fiscal year ended August 31, 1996, Neuberger &
Berman FOCUS Portfolio paid brokerage commissions of $1,165,851, of which
$583,212 was paid to Neuberger & Berman.
During the fiscal year ended August 31, 1997, Neuberger & Berman FOCUS
Portfolio paid brokerage commissions of $1,825,493, of which $920,202 was paid
to Neuberger & Berman. Transactions in which that Portfolio used Neuberger &
Berman as broker comprised 55.85% of the aggregate dollar amount of transactions
involving the payment of commissions, and 50.41% of the aggregate brokerage
commissions paid by the Portfolio, during the fiscal year ended August 31, 1997.
80.39% of the $905,291 paid to other brokers by that Portfolio during that
fiscal year (representing commissions on transactions involving approximately
$398,888,691) was directed to those brokers because of research services they
provided. During the fiscal year ended August 31, 1997, that Portfolio acquired
securities of the following of its Regular B/Ds: General Electric Capital Corp.,
Merrill, Lynch, Pierce, Fenner & Smith Inc., Morgan Stanley, Dean Witter,
Discover & Co., and State Street Bank and Trust Company, N.A.; at that date,
that Portfolio held the securities of its Regular B/Ds with an aggregate value
as follows: General Electric Capital Corp., $46,120,000; Merrill, Lynch, Pierce,
Fenner & Smith Inc., $35,055,000; and Morgan Stanley, Dean Witter, Discover &
Co., $27,397,563.
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. During the fiscal year ended August 31, 1996,
Neuberger & Berman GUARDIAN Portfolio paid brokerage commissions of $6,886,590,
of which $3,542,127 was paid to Neuberger & Berman.
During the fiscal year ended August 31, 1997, Neuberger & Berman
GUARDIAN Portfolio paid brokerage commissions of $8,540,335, of which $4,806,913
was paid to Neuberger & Berman. Transactions in which that Portfolio used
Neuberger & Berman as broker comprised 60.45% of the aggregate dollar amount of
transactions involving the payment of commissions, and 56.28% of the aggregate
brokerage commissions paid by the Portfolio, during the fiscal year ended August
31, 1997. 87.31% of the $3,733,422 paid to other brokers by that Portfolio
during that fiscal year (representing commissions on transactions involving
approximately $1,958,958,289); was directed to those brokers because of research
services they provided. During the fiscal year ended August 31, 1997, that
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Portfolio acquired securities of the following of its Regular B/Ds: Chevron Oil
Finance Company, General Electric Capital Corp., Merrill, Lynch, Pierce, Fenner
& Smith Inc., Morgan Stanley, Dean Witter, Discover & Co., and State Street Bank
and Trust Company, N.A.; at that date, that Portfolio held the securities of its
Regular B/Ds with an aggregate value as follows: General Electric Capital Corp.,
$36,480,000; Merrill, Lynch, Pierce, Fenner & Smith Inc., $201,720,000; and
Morgan Stanley, Dean Witter, Discover & Co., $178,784,375.
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. During the fiscal year ended August 31, 1996,
Neuberger & Berman PARTNERS Portfolio paid brokerage commissions of $4,697,854,
of which $2,741,666 was paid to Neuberger & Berman.
During the fiscal year ended August 31, 1997, Neuberger & Berman
PARTNERS Portfolio paid brokerage commissions of $5,413,453, of which $3,508,790
was paid to Neuberger & Berman. Transactions in which that Portfolio used
Neuberger & Berman as broker comprised 66.94% of the aggregate dollar amount of
transactions involving the payment of commissions, and 64.82% of the aggregate
brokerage commissions paid by the Portfolio, during the fiscal year ended August
31, 1997. 89.93% of the $1,904,663 paid to other brokers by that Portfolio
during that fiscal year (representing commissions on transactions involving
approximately $1,164,076,407) was directed to those brokers because of research
services they provided. During the fiscal year ended August 31, 1997, that
Portfolio acquired securities of the following of its Regular B/Ds: Chevron Oil
Finance Company, General Electric Capital Corp., and State Street Bank and Trust
Company, N.A.; at that date, that Portfolio held securities of its Regular B/Ds
with an aggregate value as follows: General Electric Capital Corp., $43,550,000.
During the fiscal year ended August 31, 1995, Neuberger & Berman
SOCIALLY RESPONSIVE Portfolio paid brokerage commissions of $138,378, of which
$95,964 was paid to Neuberger & Berman. During the fiscal year ended August 31,
1996, Neuberger & Berman SOCIALLY RESPONSIVE Portfolio paid brokerage
commissions of $208,834, of which $124,879 was paid to Neuberger & Berman.
During the fiscal year ended August 31, 1997, Neuberger & Berman
SOCIALLY RESPONSIVE Portfolio paid brokerage commissions of $305,640, of which
$232,238 was paid to Neuberger & Berman. Transactions in which that Portfolio
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used Neuberger & Berman as broker comprised 80.59% of the aggregate dollar
amount of transactions involving the payment of commissions, and 75.98% of the
aggregate brokerage commissions paid by the Portfolio, during the fiscal year
ended August 31, 1997. 78.58% of the $73,402 paid to other brokers by that
Portfolio during that fiscal year (representing commissions on transactions
involving approximately $30,816,054) was directed to those brokers because of
research services they provided. During the fiscal year ended August 31, 1997,
that Portfolio acquired securities of the following of its Regular B/Ds: State
Street Bank and Trust Company, N.A.; at that date, that Portfolio held none of
the securities of its Regular B/Ds.
Insofar as portfolio transactions of Neuberger & Berman PARTNERS
Portfolio result from active management of equity securities, and insofar as
portfolio transactions of Neuberger & Berman MANHATTAN Portfolio result from
seeking capital appreciation by selling securities whenever sales are deemed
advisable without regard to the length of time the securities may have been
held, it may be expected that the aggregate brokerage commissions paid by those
Portfolios to brokers (including Neuberger & Berman where it acts in that
capacity) may be greater than if securities were selected solely on a long-term
basis.
Portfolio securities are, from time to time, loaned by a Portfolio to
Neuberger & Berman in accordance with the terms and conditions of an order
issued by the SEC. The order exempts such transactions from provisions of the
1940 Act that would otherwise prohibit such transactions, subject to certain
conditions. In accordance with the order, securities loans made by a Portfolio
to Neuberger & Berman are fully secured by cash collateral. The portion of the
income on the cash collateral which may be shared with Neuberger & Berman is to
be determined by reference to concurrent arrangements between Neuberger & Berman
and non-affiliated lenders with which it engages in similar transactions. In
addition, where Neuberger & Berman borrows securities from a Portfolio in order
to re-lend them to others, Neuberger & Berman may be required to pay that
Portfolio, on a quarterly basis, certain of the earnings that Neuberger & Berman
otherwise has derived from the re-lending of the borrowed securities. When
Neuberger & Berman desires to borrow a security that 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, in any month, a Portfolio's expenses exceed
its income in any securities loan transaction with Neuberger & Berman, Neuberger
& Berman must reimburse that Portfolio for such loss.
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During the fiscal years ended August 31, 1997, 1996 and 1995,
Neuberger & Berman MANHATTAN Portfolio earned interest income of $988,931,
$301,788, and $507,239, respectively, from the collateralization of securities
loans, from which Neuberger & Berman was paid $326,403, $186,163 and $270,594,
respectively.
During the fiscal year ended August 31, 1997, Neuberger & Berman
GENESIS Portfolio earned interest income of $168,552, from the collateralization
of securities loans, from which Neuberger & Berman was paid $69,948. During the
fiscal years ended August 31, 1996 and 1995, Neuberger & Berman GENESIS
Portfolio earned no interest income from the collateralization of securities
loans.
During the fiscal years ended August 31, 1997, 1996 and 1995,
Neuberger & Berman GUARDIAN Portfolio earned interest income of $4,005,765,
$2,427,096 and $1,430,672, respectively, from the collateralization of
securities loans, from which Neuberger & Berman was paid $3,523,486, $2,129,341
and $1,252,190, respectively.
During the fiscal years ended August 31, 1997, 1996 and 1995,
Neuberger & Berman FOCUS Portfolio earned interest income of $1,053,272,
$368,663 and $327,447, respectively, from the collateralization of securities
loans, from which Neuberger & Berman was paid $898,127, $330,001 and $291,207,
respectively.
During the fiscal years ended August 31, 1997, 1996 and 1995,
Neuberger & Berman PARTNERS Portfolio earned interest income of $797,133,
$173,908 and $52,410, respectively, from the collateralization of securities
loans, from which Neuberger & Berman was paid $688,624, $118,041 and $48,736,
respectively.
During the fiscal year ended August 31, 1997, Neuberger & Berman
SOCIALLY RESPONSIVE Portfolio earned interest income of $80,484, from the
collateralization of securities loans, from which Neuberger & Berman was paid
$51,639. During the fiscal years ended August 31, 1996 and 1995, Neuberger &
Berman SOCIALLY RESPONSIVE Portfolio earned no interest income from the
collateralization of securities loans.
Each Portfolio may also lend securities to unaffiliated entities,
including banks, brokerage firms, and other institutional investors judged
creditworthy by N&B Management, provided that cash or equivalent collateral,
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equal to at least 100% of the market value of the loaned securities, is
continuously maintained by the borrower with the Portfolio. The Portfolio may
invest the cash collateral and earn income, or it may receive an agreed upon
amount of interest income from a borrower who has delivered equivalent
collateral. During the time securities are on loan, the borrower will pay the
Portfolio an amount equivalent to any dividends or interest paid on such
securities. These loans are subject to termination at the option of the
Portfolio or the borrower. The Portfolio may pay reasonable administrative and
custodial fees in connection with a loan and may pay a negotiated portion of the
interest earned on the cash or equivalent collateral to the borrower or placing
broker. The Portfolio does not have the right to vote securities on loan, but
would terminate the loan and regain the right to vote if that were considered
important with respect to the investment.
A committee of Independent Portfolio Trustees from time to time
reviews, among other things, information relating to securities loans by the
Portfolios.
In effecting securities transactions, each Portfolio generally seeks
to obtain the best price and execution of orders. Commission rates, being a
component of price, are considered along with other relevant factors. Each
Portfolio plans to continue to use Neuberger & Berman as its principal broker
where, in the judgment of N&B Management, that firm is able to obtain a price
and execution at least as favorable as other qualified brokers. To the
Portfolios' knowledge, no affiliate of any Portfolio receives give-ups or
reciprocal business in connection with their securities transactions.
The use of Neuberger & Berman as a broker for each Portfolio is
subject to the requirements of Section 11(a) of the Securities Exchange Act of
1934. Section 11(a) prohibits members of national securities exchanges from
retaining compensation for executing exchange transactions for accounts which
they or their affiliates manage, except where they have the authorization of the
persons authorized to transact business for the account and comply with certain
annual reporting requirements. Managers Trust and N&B Management have expressly
authorized Neuberger & Berman to retain such compensation, and Neuberger &
Berman has agreed to comply with the reporting requirements of Section 11(a).
Under the 1940 Act, commissions paid by 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.
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Accordingly, it is each Portfolio's policy that the commissions paid to
Neuberger & Berman must, in N&B Management's judgment, be (1) at least as
favorable as those charged by other brokers having comparable execution
capability and (2) at least as favorable as commissions contemporaneously
charged by Neuberger & Berman on comparable transactions for its most favored
unaffiliated customers, except for accounts for which Neuberger & Berman acts as
a clearing broker for another brokerage firm and customers of Neuberger & Berman
considered by a majority of the Independent Portfolio Trustees not to be
comparable to the Portfolio. The Portfolios do not deem it practicable and in
their best interests to solicit competitive bids for commissions on each
transaction effected by Neuberger & Berman. However, consideration regularly is
given to information concerning the prevailing level of commissions charged by
other brokers on comparable transactions during comparable periods of time. The
1940 Act generally prohibits Neuberger & Berman from acting as principal in the
purchase of portfolio securities from, or the sale of portfolio securities to, a
Portfolio unless an appropriate exemption is available.
A committee of Independent Portfolio Trustees from time to time
reviews, among other things, information relating to the commissions charged by
Neuberger & Berman to the Portfolios and to its other customers and information
concerning the prevailing level of commissions charged by other brokers having
comparable execution capability. In addition, the procedures pursuant to which
Neuberger & Berman effects brokerage transactions for the Portfolios must be
reviewed and approved no less often than annually by a majority of the
Independent Portfolio Trustees.
To ensure that accounts of all investment clients, including a
Portfolio, are treated fairly in the event that Neuberger & Berman receives
transaction instructions regarding a security for more than one investment
account at or about the same time, Neuberger & Berman may combine orders placed
on behalf of clients, including advisory accounts in which affiliated persons
have an investment interest, for the purpose of negotiating brokerage
commissions or obtaining a more favorable price. Where appropriate, securities
purchased or sold may be allocated, in terms of amount, to a client according to
the proportion that the size of the order placed by that account bears to the
aggregate size of orders contemporaneously placed by the other accounts, subject
to de minimis exceptions. All participating accounts will pay or receive the
same price.
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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.
A committee comprised of officers of N&B Management and principals of
Neuberger & Berman who are portfolio managers of some of the Portfolios and
Other N&B Funds (collectively, "N&B Funds") and some of Neuberger & Berman's
managed accounts ("Managed Accounts") evaluates semi-annually the nature and
quality of the brokerage and research services provided by other brokers. Based
on this evaluation, the committee establishes a list and projected rankings of
preferred brokers for use in determining the relative amounts of commissions to
be allocated to those brokers. Ordinarily, the brokers on the list effect a
large portion of the brokerage transactions for the N&B Funds and the Managed
Accounts that are not effected by Neuberger & Berman. However, in any
semi-annual period, brokers not on the list may be used, and the relative
amounts of brokerage commissions paid to the brokers on the list may vary
substantially from the projected rankings. These variations reflect the
following factors, among others: (1) brokers not on the list or ranking below
other brokers on the list may be selected for particular transactions because
they provide better price and/or execution, which is the primary consideration
in allocating brokerage; (2) adjustments may be required because of periodic
changes in the execution capabilities of or research provided by 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 paid to 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 information 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
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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.
Kent C. Simons and Kevin L. Risen; Judith M. Vale and Robert W.
D'Alelio; Jennifer K. Silver and Brooke A. Cobb; Michael M. Kassen and Robert I.
Gendelman; and Janet W. Prindle, each of whom is a Vice President of N&B
Management and a principal of Neuberger & Berman (except for Mr. D'Alelio and
Mr. Cobb), are the persons primarily responsible for making decisions as to
specific action to be taken with respect to the investment portfolios of
Neuberger & Berman FOCUS and Neuberger & Berman GUARDIAN, Neuberger & Berman
GENESIS, Neuberger & Berman MANHATTAN, Neuberger & Berman PARTNERS, and
Neuberger & Berman SOCIALLY RESPONSIVE 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 Ms. Prindle is unavailable to perform her responsibilities, Robert
Ladd and/or Ingrid Saukaitis, each of whom is an Assistant Vice President of N&B
Management, will assume responsibility for the portfolio of Neuberger & Berman
SOCIALLY RESPONSIVE Portfolio.
PORTFOLIO TURNOVER
A Portfolio's portfolio turnover rate is calculated by dividing (1)
the lesser of the cost of the securities purchased or the proceeds from the
securities sold by the Portfolio during the fiscal year (other than securities,
including options, whose maturity or expiration date at the time of acquisition
was one year or less) by (2) the month-end average of the value of such
securities owned by the Portfolio during the fiscal year.
REPORTS TO SHAREHOLDERS
Shareholders of 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.
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ORGANIZATION
Prior to January 1, 1995, the names of Neuberger and Berman FOCUS
Trust and Neuberger & Berman FOCUS Portfolio were Neuberger & Berman Selected
Sectors Trust and Neuberger & Berman Selected Sectors Portfolio, respectively.
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. 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. All correspondence should be mailed to Neuberger & Berman Funds,
Institutional Services, 605 Third Avenue, 2nd Floor, New York, NY 10158-0180. In
addition, State Street serves as transfer agent for each Portfolio.
INDEPENDENT AUDITORS/ACCOUNTANTS
Each Fund and Portfolio (other than Neuberger & Berman MANHATTAN Trust
and Portfolio and Neuberger & Berman SOCIALLY RESPONSIVE Trust 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 Trust and Portfolio and Neuberger & Berman SOCIALLY RESPONSIVE Trust
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., 2nd Floor, Washington, D.C. 20036-1800, as its legal
counsel.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
The following table sets forth the name, address, and percentage of
ownership of each person who was known by each Fund to own beneficially or of
record 5% or more of that Fund's outstanding shares at December 1, 1997:
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- --------------------------------------------------------------------------------
Percentage of
Ownership at
NAME AND ADDRESS DECEMBER 1, 1997
- --------------------------------------------------------------------------------
Neuberger & Berman MAC & Co. 39.50%
MANHATTAN Trust A/C 195-643
AEOF 1956432
Mutual Fund Operations
P.O. Box 3198
Pittsburgh, PA 15230-3198
The Northern Trust Co., Trustee 38.25%
FBO Case Corporation
22-75833
P.O. Box 92956
Chicago, IL 60675-2956
Puig Perfumes 5.27%
Salary Deferral Plan
9 Skyline Drive
Hawthorne, NY 10532-2100
Neuberger & Berman Nationwide Life Insurance 19.40%
PARTNERS Trust QPVA
c/o IPO Portfolio Accounting
P.O. Box 182029
Columbus, OH 43218-2029
National Financial Services Corp.* 15.75%
P.O. Box 3908
Church Street Station
New York, NY 10008-3908
PRC Inc.
c/o T. Rowe Price Financial 12.83%
Attn: Asset Recon.
P.O. Box 17215
Baltimore, MD 21297-0354
- --------------------------------------------------------------------------------
- 78 -
<PAGE>
- --------------------------------------------------------------------------------
Percentage of
Ownership at
NAME AND ADDRESS DECEMBER 1, 1997
- --------------------------------------------------------------------------------
Connecticut General Life
Insurance Company 10.94%
350 Church St.
P.O. Box 2975 M-110
Hartford, CT 06103-1106
Northern Trust Co.,
Trustee 7.31%
FBO Phycor Savings Plan DV
P.O. Box 92956
Chicago, IL 60675-2956
Fidelity Investments Institutional
Oper. Co. 5.20%
Agent for certain benefit pln
100 Magellan Way
Mailzone KWIC
Covington, KY 41015-1987
- --------------------------------------------------------------------------------
Neuberger & Berman The Northern Trust Co., Trustee 13.37%
GUARDIAN Trust Digital Equipment Corp.
DTD 1-3-95
P.O. Box 92956
Chicago, IL 60675-2956
MAC & Co.
A/C 195-643 11.14%
AEOF 1956432
P.O. Box 3198
Mutual Fund Operations
Pittsburgh, PA 15230-3198
National Financial Services Corp.*
P.O. Box 3908 8.30%
Church Street Station
New York, NY 100008-3908
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<PAGE>
- --------------------------------------------------------------------------------
Percentage of
Ownership at
NAME AND ADDRESS DECEMBER 1, 1997
- --------------------------------------------------------------------------------
Fidelity Investments
Institutional Ops Co.
Agent for certain EE benefit plans 5.07%
Mailzone KWIC
Covington, KY 41015
Neuberger & Berman National Financial Services 19.05%
FOCUS Trust Corp.*
P.O. Box 3908
Church Street Station
New York, NY 10008-3908
American Express Trust Co. 16.58%
Benefit of American Express
Trust Retirement Service Plans
1200 Northstar West
P.O. Box 534
Minneapolis, MN 55440-0534
Smith Barney Inc.
00109801250 12.71%
388 Greenwich Street
New York, NY 10013-2375
Emjayco
Omnibus Account 11.03%
P.O. Box 17909
Milwaukee, WI 53217-0909
Aetna Life Insurance & Annuity Co.
ACES - Separate Account F 8.60%
15 Farmington Ave.
Hartford, CT 06156-0001
MAC & Co.
A/C 195-643
AEOF 1956432 6.25%
P.O. Box 3198
Mutual Fund Operations
Pittsburgh, PA 15230-3198
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<PAGE>
- --------------------------------------------------------------------------------
Percentage of
Ownership at
NAME AND ADDRESS DECEMBER 1, 1997
- --------------------------------------------------------------------------------
Neuberger & Berman National Financial Services Corp.* 27.34%
GENESIS Trust P.O. Box 3908
Church Street Station
New York, NY 10008-3908
Profit Sharing Plan for Partners
& Principals of Price Waterhouse 19.40%
3109 W. Dr. Martin Luther King
Drive
Tampa, FL 33607
Merrill Lynch, Pierce, Fenner &
Smith, Inc.
Fund Administration 12.43%
4800 Deer Lake Drive East, 3rd
Floor
Jacksonville, FL 32246-6484
Smith Barney, Inc.
00109801250
388 Greenwich Street 11.37%
New York, NY 10013-2375
MAC & Co.
A/C 195-643
AEOF 1956432 7.15%
P.O. Box 3198
Mutual Fund Operations
Pittsburgh, PA 15230-3198
Neuberger & Berman ICMA Retirement Trust 92.94%
SOCIALLY RESPONSIVE 777 N. Capitol St., N.E.
Trust Washington, D.C. 20002-4239
* National Financial Services Corp. holds these shares of record for the account
of certain of its clients and has informed the Funds of its policy to maintain
the confidentiality of holdings in its client accounts unless disclosure is
expressly required by law.
- 81 -
<PAGE>
REGISTRATION STATEMENT
This SAI and the Prospectus do not contain all the information included in
the Trusts' registration statements filed with the SEC under the 1933 Act with
respect to the securities offered by the Prospectus. The registration
statements, 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. In
each instance where reference is made to the copy of any contract or other
document filed as an exhibit to a registration statement, each such statement is
qualified in all respects by such reference.
FINANCIAL STATEMENTS
The following financial statements and related documents are incorporated
herein by reference from the Funds' Annual Report to shareholders for the fiscal
year ended August 31, 1997:
The audited financial statements of the Funds and Portfolios and notes
thereto for the fiscal year ended August 31, 1997, and the reports of
Ernst & Young LLP, independent auditors, with respect to such audited
financial statements of Neuberger & Berman GENESIS Trust and
Portfolio, Neuberger & Berman FOCUS Trust and Portfolio, Neuberger &
Berman GUARDIAN Trust and Portfolio, and Neuberger & Berman PARTNERS
Trust and Portfolio, and the report of Coopers & Lybrand L.L.P.,
independent accountants, with respect to such audited financial
statements of Neuberger & Berman MANHATTAN Trust and Portfolio and
Neuberger & Berman SOCIALLY RESPONSIVE Trust and Portfolio.
- 82 -
<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.
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<PAGE>
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.
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.
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<PAGE>
Caa - Bonds rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
Ca - Bonds rated Ca represent obligations that are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
C - Bonds rated C are the lowest rated class of bonds, and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.
MODIFIERS--Moody's may apply numerical modifiers 1, 2, and 3 in each generic
rating classification described above. The modifier 1 indicates that the
security ranks in the higher end of its generic rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the issuer
ranks in the lower end of its generic rating.
S&P COMMERCIAL PAPER RATINGS:
A-1 - This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus sign (+).
MOODY'S COMMERCIAL PAPER RATINGS
Issuers rated PRIME-1 (or related supporting institutions), also known as
P-1, have a superior capacity for repayment of short-term promissory
obligations. PRIME-1 repayment capacity will normally be evidenced by the
following characteristics:
- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structures with moderate reliance on debt
and ample asset protection.
- Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
- Well-established access to a range of financial markets and assured
sources of alternate liquidity.
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<PAGE>
NEUBERGER & BERMAN EQUITY ASSETS
POST-EFFECTIVE AMENDMENT NO. 9 ON FORM N-1A
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
- -------- ---------------------------------
(a) Financial Statements:
The audited financial statements contained in the Annual Reports to
Shareholders of the Registrant for the fiscal year ended August 31,
1997, for Neuberger & Berman Equity Assets (with respect to
Neuberger & Berman Focus Assets, Neuberger & Berman Genesis Assets,
Neuberger & Berman Guardian Assets, Neuberger & Berman Manhattan
Assets, Neuberger & Berman Partners Assets and Neuberger & Berman
Socially Responsive Trust), and Equity Managers Trust (with respect
to Neuberger & Berman Focus Portfolio, Neuberger & Berman Genesis
Portfolio, Neuberger & Berman Guardian Portfolio, Neuberger & Berman
Manhattan Portfolio, Neuberger & Berman Partners Portfolio and
Neuberger & Berman Socially Responsive Portfolio) and the reports of
the independent auditors/accountants are incorporated into the
Statement of Additional Information by Reference.
Included in Part A of this Post-Effective Amendment:
FINANCIAL HIGHLIGHTS for Neuberger & Berman Focus Assets, Neuberger
& Berman Guardian Assets, Neuberger & Berman Manhattan Assets,
Neuberger & Berman Partners Assets and Neuberger & Berman Socially
Responsive Trust for the period indicated therein.
(b) Exhibits:
Exhibit
Number Description
------ -----------
(1) (a) Certificate of Trust. Incorporated by Reference to
Post-Effective Amendment No. 1 to Registrant's
Registration Statement, File Nos. 33-82568 and 811-8106,
EDGAR Accession No. 0000898432-95-000393.
(b) Trust Instrument of Neuberger & Berman Equity Assets.
Incorporated by Reference to Post-Effective Amendment
No. 1 to Registrant's Registration Statement, File Nos.
33-82568 and 811-8106, EDGAR Accession No.
0000898432-95-000393.
(c) Schedule A - Current Series of Neuberger & Berman Equity
Assets. Incorporated by Reference to Post-Effective
Amendment No. 8 to Registrant's Registration Statement,
File Nos. 33-82568 and 811-8106, EDGAR Accession No.
0000898432-97-000221.
(2) By-Laws of Neuberger & Berman Equity Assets.
Incorporated by Reference to Post-Effective Amendment
No. 1 to Registrant's Registration Statement, File Nos.
C-1
<PAGE>
33-82568 and 811-8106, EDGAR Accession No.
0000898432-95-000393.
(3) Voting Trust Agreement. None.
(4) (a) Trust Instrument of Neuberger & Berman Equity Assets,
Articles IV, V, and VI. Incorporated by Reference to
Post-Effective Amendment No. 1 to Registrant's
Registration Statement, File Nos. 33-82568 and 811-8106,
EDGAR Accession No. 0000898432-95-000393.
(b) By-Laws of Neuberger & Berman Equity Assets, Articles V,
VI, and VIII. Incorporated by Reference to
Post-Effective Amendment No. 1 to Registrant's
Registration Statement, File Nos. 33-82568 and 811-8106,
EDGAR Accession No. 0000898432-95-000393.
(5) (a) (i) Management Agreement Between Equity Managers
Trust and Neuberger & Berman Management
Incorporated. Incorporated by Reference to
Post-Effective Amendment No. 70 to Registration
Statement of Neuberger & Berman Equity Funds,
File Nos. 2-11357 and 811-582, EDGAR Accession
No. 0000898432-95-000314.
(ii) Schedule A - Series of Neuberger & Berman
Equity Managers Trust Currently Subject to the
Management Agreement. Incorporated by
Reference to Post-Effective Amendment No. 70 to
Registration Statement of Neuberger & Berman
Equity Funds, File Nos. 2-11357 and 811-582,
EDGAR Accession No. 0000898432-95-000314.
(iii) Schedule B - Schedule of Compensation Under the
Management Agreement. Incorporated by Reference to
Post-Effective Amendment No. 70 to Registration
Statement of Neuberger & Berman Equity Funds, File
Nos. 2-11357 and 811-582, EDGAR Accession No.
0000898432-95-000314.
(b) (i) Sub-Advisory Agreement Between Neuberger &
Berman Management Incorporated and Neuberger &
Berman with Respect to Equity Managers Trust.
Incorporated by Reference to Post-Effective
Amendment No. 70 to Registration Statement of
Neuberger & Berman Equity Funds, File Nos.
2-11357 and 811-582, EDGAR Accession No.
0000898432-95-000314.
(ii) Schedule A - Series of Equity Managers Trust
Currently Subject to the Sub-Advisory
Agreement. Incorporated by Reference to
Post-Effective Amendment No. 70 to Registration
Statement of Neuberger & Berman Equity Funds,
File Nos. 2-11357 and 811-582, EDGAR Accession
No. 0000898432-95-000314.
(iii) Substitution Agreement Among Neuberger & Berman
Management Incorporated, Equity Managers Trust,
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<PAGE>
Neuberger & Berman, L.P., and Neuberger & Berman,
LLC. Incorporated by Reference to Amendment No. 7
to Registration Statement of Equity Managers
Trust, File No. 811-7910, Edgar Accession No.
0000898432-96-000557.
(6) (a) (i) Distribution Agreement Between Neuberger & Berman
Equity Assets and Neuberger & Berman Management
Incorporated with Respect to Neuberger & Berman
Socially Responsive Trust. Filed Herewith.
(ii) Schedule A - Series of Neuberger & Berman
Equity Assets Currently Subject to the
Distribution Agreement. Filed Herewith.
(b) (i) Distribution and Services Agreement Between
Neuberger & Berman Equity Assets and Neuberger
& Berman Management Incorporated with Respect
to Other Series. Filed Herewith.
(ii) Schedule A - Series of Neuberger & Berman
Equity Assets Currently Subject to Distribution
and Services Agreement. Filed Herewith.
(7) Bonus, Profit Sharing or Pension Plans. None.
(8) (a) Custodian Contract Between Neuberger & Berman Equity
Assets and State Street Bank and Trust Company.
Incorporated by Reference to Post-Effective Amendment
No. 3 to Registrant's Registration Statement, File Nos.
33-82568 and 811-8106, Edgar Accession No.
0000898432-96-000048.
(b) Schedule of Compensation under the Custodian Contract.
Incorporated by Reference to Post-Effective Amendment
No. 4 to Registrant's Registration Statement, File Nos.
33-82568 and 811-8106, Edgar Accession No.
0000898432-96-000558.
(c) Agreement Between Neuberger & Berman Equity Assets
and State Street Bank and Trust Company Adding
Neuberger & Berman Focus Assets, Neuberger & Berman
Guardian Assets, Neuberger & Berman Manhattan Assets
and Neuberger & Berman Partners Assets as Portfolios
Governed by the Custodian Contract. Incorporated by
Reference to Post-Effective Amendment No. 8 to
Registrant's Registration Statement, File Nos.
33-82568 and 811-8106, EDGAR Accession No.
0000898432-97-000221.
(d) Agreement Between Neuberger & Berman Equity Assets and
State Street Bank and Trust Company Adding Neuberger &
C-3
<PAGE>
Berman Genesis Assets as a Portfolio Governed by the
Custodian Contract. Filed Herewith.
(9) (a) (i) Transfer Agency Agreement Between Neuberger &
Berman Equity Assets and State Street Bank and
Trust Company. Incorporated by Reference to
Post-Effective Amendment No. 3 to Registrant's
Registration Statement, File Nos. 33-82568 and
811-8106, Edgar Accession
No. 0000898432-96-000048.
(ii) First Amendment to the Transfer Agency
Agreement Between Neuberger & Berman Equity
Assets and State Street Bank and Trust
Company. Filed Herewith.
(iii) Schedule of Compensation under the Transfer Agency
Agreement. Incorporated by Reference to
Post-Effective Amendment No. 4 to Registrant's
Registration Statement, File Nos. 33-82568 and
811-8106, Edgar Accession No.
0000898432-96-000558.
(iv) Agreement Between Neuberger & Berman Equity
Assets and State Street Bank and Trust Company
Adding Neuberger & Berman Focus Assets,
Neuberger & Berman Guardian Assets, Neuberger &
Berman Manhattan Assets and Neuberger & Berman
Partners Assets as Portfolios Governed by the
Transfer Agency Agreement. Incorporated by
Reference to Post-Effective Amendment No. 8 to
Registrant's Registration Statement, File Nos.
33-82568 and 811-8106, EDGAR Accession No.
0000898432-97-000221.
(v) Agreement Between Neuberger & Berman Equity Assets
and State Street Bank and Trust Company Adding
Neuberger & Berman Genesis Assets as a Portfolio
Governed by the Transfer Agency Agreement. 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. Incorporated by
Reference to Post-Effective Amendment No. 3 to
Registrant's Registration Statement, File Nos.
33-82568 and 811-8106, Edgar Accession No.
0000898432-96-000048.
(10) (a) Opinion and Consent of Kirkpatrick & Lockhart LLP on
Securities Matters with Respect to Neuberger & Berman
Equity Assets and Neuberger & Berman Socially Responsive
Trust. Filed Herewith.
(b) Opinion and Consent of Kirkpatrick & Lockhart LLP on
Securities Matters with Respect to Neuberger & Berman
Focus Assets, Neuberger & Berman Guardian Assets,
Neuberger & Berman Manhattan Assets, and Neuberger &
Berman Partners Assets. Incorporated by Reference to
Post-Effective Amendment No. 3 to Registrant's
Registration Statement, File Nos. 33-82568 and 811-8106,
EDGAR Accession No. 0000898432-96-000048.
(c) Opinion and Consent of Kirkpatrick & Lockhart LLP on
Securities Matters with Respect to Neuberger & Berman
Genesis Assets. Filed Herewith.
C-4
<PAGE>
(11) (a) Consent of Ernst & Young LLP, Independent Auditors.
Filed Herewith.
(b) Consent of Coopers & Lybrand L.L.P., Independent
Accountants. Filed Herewith.
(12) Financial Statements Omitted from Prospectus. None.
(13) Letter of Investment Intent. None.
(14) Prototype Retirement Plan. None.
(15) (a) Plan Pursuant to Rule 12b-1. Filed Herewith.
(b) Schedule A - Series of Neuberger & Berman Equity Assets
Currently Subject to Plan Pursuant to Rule 12b-1. Filed
Herewith.
(16) Schedule of Computation of Performance Quotations.
None.
(17) Financial Data Schedule. Filed Herewith.
(18) Plan Pursuant to Rule 18f-3. None.
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 October 31, 1997:
Number of
Title of Class Record Holders
-------------- --------------
Shares of beneficial
interest, $0.001 par value, of:
Neuberger & Berman Focus Assets 6
Neuberger & Berman Genesis Assets 7
Neuberger & Berman Guardian Assets 8
Neuberger & Berman Manhattan Assets 6
Neuberger & Berman Partners Assets 7
Neuberger & Berman Socially Responsive Trust 15
Item 27. Indemnification.
- -------- ----------------
A Delaware business trust may provide in its governing instrument
for indemnification of its officers and trustees from and against any and all
claims and demands whatsoever. Article IX, Section 2 of the Trust Instrument
provides that the Registrant shall indemnify any present or former trustee,
officer, employee or agent of the Registrant ("Covered Person") to the fullest
extent permitted by law against liability and all expenses reasonably incurred
or paid by him or her in connection with any claim, action, suit or proceeding
("Action") in which he or she becomes involved as a party or otherwise by virtue
of his or her being or having been a Covered Person and against amounts paid or
incurred by him or her in settlement thereof. Indemnification will not be
provided to a person adjudged by a court or other body to be liable to the
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<PAGE>
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.
Section 1 of the Sub-Advisory Agreement between N&B Management and
Neuberger & Berman, LLC ("Neuberger & Berman") with respect to Managers Trust
provides that in the absence of willful misfeasance, bad faith or gross
negligence in the performance of its duties, or of reckless disregard of its
duties and obligations under the Agreement, Neuberger & Berman will not be
subject to liability for any act or omission or any loss suffered by any series
of Managers Trust or its interest holders in connection with the matters to
which the Agreement relates.
Section 8 of the Administration Agreement between the Registrant
and N&B Management provides that N&B Management shall look only to the assets of
each Series for performance of the Agreement by the Registrant on behalf of such
C-6
<PAGE>
Series, and neither the Shareholders of the Registrant, its Trustees nor any of
the Registrant's officers, employees or agents, whether past, present or future
shall be personally liable therefor. Section 9 of the Agreement provides that
each Series shall indemnify N&B Management and hold it harmless from and against
any and all losses, damages and expenses, including reasonable attorneys' fees
and expenses, incurred by N&B Management that result from: (i) any claim,
action, suit or proceeding in connection with N&B Management's entry into or
performance of the Agreement with respect to such Series; or (ii) any action
taken or omission to act committed by N&B Management in the performance of its
obligations under the Agreement with respect to such Series; or (iii) any action
of N&B Management upon instructions believed in good faith by it to have been
executed by a duly authorized officer or representative of the Registrant with
respect to such Series; provided, that N&B Management shall not be entitled to
such indemnification in respect of actions or omissions constituting negligence
or misconduct on the part of N&B Management, or its employees, agents or
contractors. Section 10 of the Agreement provides that N&B Management shall
indemnify each Series and hold it harmless from and against any and all losses,
damages and expenses, including reasonable attorneys' fees and expenses,
incurred by such Series which result from: (i) N&B Management's failure to
comply with the terms of the Agreement with respect to such Series; or (ii) N&B
Management's lack of good faith in performing its obligations under the
Agreement with respect to such Series; or (iii) the negligence or misconduct of
N&B Management, or its employees, agents or contractors in connection with the
Agreement with respect to such Series. A Series shall not be entitled to such
indemnification in respect of actions or omissions constituting negligence or
misconduct on the part of that Series or its employees, agents or contractors
other than N&B Management, unless such negligence or misconduct results from or
is accompanied by negligence or misconduct on the part of N&B Management, any
affiliated person of N&B Management, or any affiliated person of an affiliated
person of N&B Management.
Section 11 of the Distribution Agreement between the Registrant and
N&B Management provides that N&B Management shall look only to the assets of a
Series for the Registrant's performance of the Agreement by the Registrant on
behalf of such Series, and neither the Shareholders, the Trustees nor any of the
Registrant's officers, employees or agents, whether past, present or future,
shall be personally liable therefor.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 ("1933 Act") may be permitted to trustees, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the 1933 Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the 1933 Act and will be governed by the final adjudication of such
issue.
Item 28. Business and Other Connections of Adviser and Sub-Adviser.
- -------- ----------------------------------------------------------
There is set forth below information as to any other business,
profession, vocation or employment of a substantial nature in which each
director or officer of N&B Management and each principal of Neuberger & Berman
C-7
<PAGE>
is, or at any time during the past two years has been, engaged for his or her
own account or in the capacity of director, officer, employee, partner or
trustee.
NAME BUSINESS AND OTHER CONNECTIONS
- ---- ------------------------------
Claudia A. Brandon Secretary, Neuberger & Berman Advisers
Vice President, N&B Management Trust; Secretary, Advisers
Management Managers Trust; 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
Brooke A. Cobb Chief Investment Officer, Bainco
Vice President, N&B International Investors.(1) Senior Vice
Management President and Senior Portfolio Manager,
Putnam Investments.(2)
Stacy Cooper-Surge Assistant Secretary, Neuberger & Berman
Assistant Vice President, Advisers Management Trust; Assistant
N&B Management Secretary, Advisers Managers Trust;
Assistant Secretary, Neuberger & Berman
Income Funds; Assistant Secretary, Neuberger
& Berman Income Trust; Assistant Secretary,
Neuberger & Berman Equity Funds; Assistant
Secretary, Neuberger & Berman Equity Trust;
Assistant Secretary, Income Managers Trust;
Assistant Secretary, Equity Managers Trust;
Assistant Secretary, Global Managers Trust;
Assistant Secretary, Neuberger & Berman
Equity Assets.
Robert W. D'Alelio Senior Portfolio Manager, Putnam
Vice President, N&B Investments.(3)
Management
Barbara DiGiorgio, Assistant Treasurer, Neuberger & Berman
Assistant Vice President, Advisers Management Trust; Assistant
N&B Management Treasurer, Advisers Managers Trust;
Assistant Treasurer, Neuberger & Berman
Income Funds; Assistant Treasurer, Neuberger
& Berman Income Trust; Assistant Treasurer,
Neuberger & Berman Equity Funds; Assistant
Treasurer, Neuberger & Berman Equity Trust;
Assistant Treasurer, Income Managers Trust;
Assistant Treasurer, Equity Managers Trust;
Assistant Treasurer, Global Managers Trust;
Assistant Treasurer, Neuberger & Berman
Equity Assets.
C-8
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
- ---- ------------------------------
Stanley Egener Chairman of the Board and Trustee,
President and Director, Neuberger & Berman Advisers Management
N&B Management; Principal, Trust; Chairman of the Board and Trustee,
Neuberger & Berman Advisers Managers Trust; Chairman of the
Board and Trustee, Neuberger & Berman Income
Funds; Chairman of the Board and Trustee,
Neuberger & Berman Income Trust; Chairman of
the Board and Trustee, Neuberger & Berman
Equity Funds; Chairman of the Board and
Trustee, Neuberger & Berman Equity Trust;
Chairman of the Board and Trustee, Income
Managers Trust; Chairman of the Board and
Trustee, Equity Managers Trust; Chairman of
the Board and Trustee, Global Managers
Trust; Chairman of the Board and Trustee,
Neuberger & Berman Equity Assets.
Theodore P. Giuliano President and Trustee, Neuberger & Berman
Vice President and Income Funds; President and Trustee,
Director, N&B Management; Neuberger & Berman Income Trust; President
Principal, Neuberger & Berman and Trustee, Income Managers Trust.
C. Carl Randolph Assistant Secretary, Neuberger & Berman
Principal, Neuberger & Berman Advisers Management Trust; Assistant
Secretary, Advisers Managers Trust;
Assistant Secretary, Neuberger & Berman
Income Funds; Assistant Secretary, Neuberger
& Berman Income Trust; Assistant Secretary,
Neuberger & Berman Equity Funds; Assistant
Secretary, Neuberger & Berman Equity Trust;
Assistant Secretary, Income Managers Trust;
Assistant Secretary, Equity Managers Trust;
Assistant Secretary, Global Managers Trust;
Assistant Secretary, Neuberger & Berman
Equity Assets.
Richard Russell Treasurer, Neuberger & Berman Advisers
Vice President, Management Trust; Treasurer, Advisers
N&B Management Managers Trust; 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.
Ingrid Saukaitis Project Director, Council on Economic
Assistant Vice President, Priorities.(4)
N&B Management
Jennifer K. Silver Portfolio Manager and Director, Putnam
Vice President, N&B Investments.(5)
Management; Principal,
Neuberger & Berman
C-9
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
- ---- ------------------------------
Daniel J. Sullivan Vice President, Neuberger & Berman Advisers
Senior Vice President, Management Trust; Vice President, Advisers
N&B Management Managers Trust; Vice President, Neuberger &
Berman Income Funds; Vice President,
Neuberger & Berman Income Trust; Vice
President, Neuberger & Berman Equity Funds;
Vice President, Neuberger & Berman Equity
Trust; Vice President, Income Managers
Trust; Vice President, Equity Managers
Trust; Vice President, Global Managers
Trust; Vice President, Neuberger & Berman
Equity Assets.
Michael J. Weiner Vice President, Neuberger & Berman Advisers
Senior Vice President, Management Trust; Vice President, Advisers
N&B Management Managers Trust; Vice President, Neuberger &
Berman Income Funds; Vice President,
Neuberger & Berman Income Trust; Vice
President, Neuberger & Berman Equity Funds;
Vice President, Neuberger & Berman Equity
Trust; Vice President, Income Managers
Trust; Vice President, Equity Managers
Trust; Vice President, Global Managers
Trust; Vice President, Neuberger & Berman
Equity Assets.
Celeste Wischerth, Assistant Treasurer, Neuberger & Berman
Assistant Vice President, Advisers Management Trust; Assistant
N&B Management Treasurer, Advisers Managers Trust;
Assistant Treasurer, Neuberger & Berman
Income Funds; Assistant Treasurer, Neuberger
& Berman Income Trust; Assistant Treasurer,
Neuberger & Berman Equity Funds; Assistant
Treasurer, Neuberger & Berman Equity Trust;
Assistant Treasurer, Income Managers Trust;
Assistant Treasurer, Equity Managers Trust;
Assistant Treasurer, Global Managers Trust;
Assistant Treasurer, Neuberger & Berman
Equity Assets.
Lawrence Zicklin President and Trustee, Neuberger & Berman
Director, N&B Management; Advisers Management Trust; President and
Principal, Neuberger & Berman Trustee, Advisers Managers Trust; 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.
- -------------------
1 Until 1997.
2 Until 1995.
3 Until 1996.
4 Until 1997.
5 Until 1997.
The principal address of N&B Management, Neuberger & Berman, and of each
of the investment companies named above, is 605 Third Avenue, New York, New York
10158.
C-10
<PAGE>
Item 29. Principal Underwriters.
- -------- -----------------------
(a) N&B Management, the principal underwriter distributing
securities of the Registrant, is also the principal underwriter and distributor
for each of the following investment companies:
Neuberger & Berman Advisers Management Trust
Neuberger & Berman Equity Funds
Neuberger & Berman Equity Trust
Neuberger & Berman Income Funds
Neuberger & Berman Income Trust
N&B Management is also the investment manager to the master funds
in which the above-named investment companies invest.
(b) Set forth below is information concerning the directors and
officers of the Registrant's principal underwriter. The principal business
address of each of the persons listed is 605 Third Avenue, New York, New York
10158-0180, which is also the address of the Registrant's principal underwriter.
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- ---- ---------------- ---------------
Claudia A. Brandon Vice President Secretary
Patrick T. Byrne Vice President None
Richard A. Cantor Chairman of the Board None
Valerie Chang Assistant Vice President None
Brooke A. Cobb Vice President None
Robert Conti Treasurer None
Stacy Cooper-Shugrue Assistant Vice President Assistant Secretary
Robert W. D'Alelio Vice President None
Clara Del Villar Vice President None
Barbara DiGiorgio Assistant Vice President Assistant Treasurer
Roberta D'Orio Assistant Vice President None
Stanley Egener President and Director Chairman of the
Board, Chief
Executive Officer,
and Trustee
Brian Gaffney Vice President None
Joseph G. Galli Assistant Vice President None
Robert I. Gendelman Vice President None
Theodore P. Giuliano Vice President and Director None
Michael J. Hanratty Assistant Vice President None
Leslie Holliday-Soto Assistant Vice President None
Jody L. Irwin Assistant Vice President None
C-11
<PAGE>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- ---- ---------------- ---------------
Michael M. Kassen Vice President and Director None
Robert L. Ladd Assistant Vice President None
Irwin Lainoff Director None
Josephine Mahaney Vice President None
Carmen G. Martinez Assistant Vice President None
Ellen Metzger Vice President and Secretary None
Paul Metzger Vice President None
Loraine Olavarria Assistant Secretary None
Janet W. Prindle Vice President None
Joseph S. Quirk Assistant Vice President None
Kevin L. Risen Vice President None
Richard Russell Vice President Treasurer and
Principal Accounting
Officer
Ingrid Saukaitis Assistant Vice President None
Jennifer K. Silver Vice President None
Kent C. Simons Vice President None
Frederick B. Soule Vice President None
Daniel J. Sullivan Senior Vice President Vice President
Peter E. Sundman Senior Vice President None
Andrea Trachtenberg Vice President of Marketing None
Judith M. Vale Vice President None
Josephine Velez Assistant Vice President None
Susan Walsh Vice President None
Michael J. Weiner Senior Vice President Vice President and
Principal Financial
Officer
Celeste Wischerth Assistant Vice President Assistant Treasurer
Thomas Wolfe Vice President None
Lawrence Zicklin Director Trustee and President
(c) No commissions or other compensation were received directly or
indirectly from the Registrant by any principal underwriter who was not an
affiliated person of the Registrant.
C-12
<PAGE>
Item 30. Location of Accounts and Records.
- -------- ---------------------------------
All accounts, books and other documents required to be maintained
by Section 31(a) of the 1940 Act, as amended, and the rules promulgated
thereunder with respect to the Registrant are maintained at the offices of State
Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110,
except for the Registrant's Trust Instrument and By-Laws, minutes of meetings of
the Registrant's Trustees and shareholders and the Registrant's policies and
contracts, which are maintained at the offices of the Registrant, 605 Third
Avenue, New York, New York 10158.
All accounts, books and other documents required to be maintained
by Section 31(a) of the 1940 Act, as amended, and the rules promulgated
thereunder with respect to Equity Managers Trust are maintained at the offices
of State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, except for the Equity Managers Trust's Declaration of Trust
and By-laws, minutes of meetings of Equity Managers Trust's Trustees and
interest holders and Equity Managers Trust's policies and contracts, which are
maintained at the offices of the Equity Managers Trust, 605 Third Avenue, New
York, New York 10158.
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 undertakes to furnish each person to whom a prospectus
is delivered with a copy of Registrant's latest annual report to shareholders of
Neuberger & Berman Equity Assets, upon request and without charge.
C-13
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, NEUBERGER & BERMAN EQUITY ASSETS
certifies that it meets all of the requirements for effectiveness of this
Post-Effective Amendment No. 9 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
10th day of December 1997.
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. 9 has been signed below by the following persons in
the capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/ Faith Colish Trustee December 10, 1997
- -------------------------
Faith Colish*
/s/ Donald M. Cox Trustee December 10, 1997
- -------------------------
Donald M. Cox*
/s/ Stanley Egener Chairman of the Board December 10, 1997
- ------------------------- and Trustee (Chief
Stanley Egener* Executive Officer)
/s/ Howard A. Mileaf Trustee December 10, 1997
- -------------------------
Howard A. Mileaf*
/s/ Edward I. O'Brien Trustee December 10, 1997
- -------------------------
Edward I. O'Brien*
(signatures continued on next page)
<PAGE>
Signature Title Date
- --------- ----- ----
/s/ John T. Patterson, Jr. Trustee December 10, 1997
- --------------------------
John T. Patterson, Jr.*
/s/ John P. Rosenthal Trustee December 10, 1997
- --------------------------
John P. Rosenthal*
/s/ Cornelius T. Ryan Trustee Decmeber 10, 1997
- --------------------------
Cornelius T. Ryan*
/s/ Gustave H. Shubert Trustee December 10, 1997
- --------------------------
Gustave H. Shubert*
/s/ Lawrence Zicklin President and Trustee December 10, 1997
- --------------------------
Lawrence Zicklin*
/s/ Michael J. Weiner Vice President December 10, 1997
- -------------------------- (Principal Financial
Michael J. Weiner* Officer)
/s/ Richard Russell Treasurer (Principal December 10, 1997
- -------------------------- Accounting Officer)
Richard Russell*
* Signatures affixed by Beth A. Stekler pursuant to a Power of Attorney
dated October 24, 1996, and filed herewith.
<PAGE>
POWER OF ATTORNEY
-----------------
NEUBERGER & BERMAN EQUITY ASSETS, a Delaware business trust ("Trust"),
and each of its undersigned officers and trustees hereby nominates, constitutes
and appoints Lawrence Zicklin, Michael J. Weiner, Richard M. Phillips, Arthur C.
Delibert, Dana L. Platt, Susan M. Casey and Beth A. Stekler (with full power to
each of them to act alone) its/his/her true and lawful attorney-in-fact and
agent, for it/him/her and on its/his/her behalf and in its/his/her name, place
and stead in any and all capacities, to make, execute and sign the Trust's
Registration Statement on Form N-1A under the Securities Act of 1933 and/or the
Investment Company Act of 1940, any registration statements on Form N-14, and
any and all amendments to such registration statements on Form N-1A or Form
N-14, and to file with the Securities and Exchange Commission, and any other
regulatory authority having jurisdiction over the offer and sale of shares of
the Beneficial Interest of the Trust, any such registration statement or
amendment, and any and all supplements thereto or to any prospectus or statement
of additional information forming a part thereof, and any and all exhibits and
other documents requisite in connection therewith, granting unto said attorneys,
and each of them, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises as fully
to all intents and purposes as the Trust and the undersigned officers and
trustees itself/themselves might or could do.
IN WITNESS WHEREOF, NEUBERGER & BERMAN EQUITY ASSETS has caused this
power of attorney to be executed in its name by its President, and attested by
its Secretary, and the undersigned officers and trustees have hereunto set their
hands and seals this 24th day of October, 1996.
NEUBERGER & BERMAN EQUITY ASSETS
By: /s/ Lawrence Zicklin
---------------------------------
Lawrence Zicklin, President
[SEAL]
ATTEST:
/s/ Claudia A. Brandon
- ------------------------------
Claudia A. Brandon,
Secretary
<PAGE>
Signature Title
--------- -----
/s/ Stanley Egener Chairman of the Board, Chief
- ---------------------------- Executive Officer, and Trustee
Stanley Egener
/s/ Lawrence Zicklin President and Trustee
- ----------------------------
Lawrence Zicklin
/s/ Michael J. Weiner Vice President and Principal
- ---------------------------- Financial Officer
Michael J. Weiner
/s/ Richard Russell Treasurer and Principal
- ---------------------------- Accounting Officer
Richard Russell
/s/ Faith Colish Trustee
- ----------------------------
Faith Colish
/s/ Donald M. Cox
- ---------------------------- Trustee
Donald M. Cox
/s/ Alan R. Gruber Trustee
- ----------------------------
Alan R. Gruber
/s/ Howard A. Mileaf Trustee
- ----------------------------
Howard A. Mileaf
/s/ Edward I. O'Brien Trustee
- ----------------------------
Edward I. O'Brien
[signatures continued on next page]
- 2 -
<PAGE>
Signature Title
--------- -----
/s/ John T. Patterson, Jr. Trustee
- ------------------------------
John T. Patterson, Jr.
/s/ John P. Rosenthal Trustee
- ------------------------------
John P. Rosenthal
/s/ Cornelius T. Ryan Trustee
- ------------------------------
Cornelius T. Ryan
/s/ Gustave H. Shubert Trustee
- ------------------------------
Gustave H. Shubert
- 3 -
<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. 9
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 10th day of December 1997.
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. 9 as been signed below by the following persons in
the capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/ Faith Colish Trustee December 10, 1997
- -------------------------
Faith Colish*
/s/ Donald M. Cox Trustee December 10, 1997
- -------------------------
Donald M. Cox*
/s/ Stanley Egener Chairman of the Board December 10, 1997
- ------------------------- and Trustee (Chief
Stanley Egener* Executive Officer)
/s/ Howard A. Mileaf Trustee December 10, 1997
- -------------------------
Howard A. Mileaf*
/s/ Edward I. O'Brien Trustee December 10, 1997
- -------------------------
Edward I. O'Brien*
(signatures continued on next page)
<PAGE>
Signature Title Date
- --------- ----- ----
/s/ John T. Patterson, Jr. Trustee December 10, 1997
- --------------------------
John T. Patterson, Jr.*
/s/ John P. Rosenthal Trustee December 10, 1997
- --------------------------
John P. Rosenthal*
/s/ Cornelius T. Ryan Trustee Decmeber 10, 1997
- --------------------------
Cornelius T. Ryan*
/s/ Gustave H. Shubert Trustee December 10, 1997
- --------------------------
Gustave H. Shubert*
/s/ Lawrence Zicklin President and Trustee December 10, 1997
- --------------------------
Lawrence Zicklin*
/s/ Michael J. Weiner Vice President December 10, 1997
- -------------------------- (Principal Financial
Michael J. Weiner* Officer)
/s/ Richard Russell Treasurer (Principal December 10, 1997
- -------------------------- Accounting Officer)
Richard Russell*
* Signatures affixed by Beth A. Stekler pursuant to a Power of Attorney
dated October 24, 1996, and filed herewith.
<PAGE>
POWER OF ATTORNEY
EQUITY MANAGERS TRUST, a New York trust (the "Trust"), and each of its
undersigned officers and trustees hereby nominates, constitutes and appoints
Lawrence Zicklin, Michael J. Weiner, Richard M. Phillips, Arthur C. Delibert,
Susan M. Casey, Dana L. Platt and Beth A. Stekler (with full power to each of
them to act alone) its/his/her true and lawful attorney-in-fact and agent, for
it/him/her and on its/his/her behalf and in its/his/her name, place and stead in
any and all capacities, to make, execute and sign any feeder fund Registration
Statements on Form N-1A under the Securities Act of 1933 and/or the Investment
Company Act of 1940 and any amendments thereto, any amendments to the Trust's
Registration Statement on Form N-1A under the Investment Company Act of 1940,
any registration statements on Form N-14 and any amendments thereto, and to file
with the Securities and Exchange Commission, and any other regulatory authority
having jurisdiction over the offer and sale of shares of such feeder fund, any
such registration statement or amendments, and any and all supplements thereto
or to any prospectus or statement of additional information forming a part
thereof, and any and all exhibits and other documents requisite in connection
therewith, granting unto said attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises as fully to all intents and purposes as the
Trust and the undersigned officers and trustees itself/themselves might or could
do.
IN WITNESS WHEREOF, EQUITY MANAGERS TRUST has caused this power of
attorney to be executed in its name by its President, and attested by its
Secretary, and the undersigned officers and trustees have hereunto set their
hands this 24th day of October, 1996.
EQUITY MANAGERS TRUST
By: /s/ Lawrence Zicklin
------------------------------
Lawrence Zicklin, President
[SEAL]
ATTEST:
/s/ Claudia A. Brandon
- ------------------------------
Claudia A. Brandon,
Secretary
[Signatures Continued on Next Page]
<PAGE>
Signature Title
--------- -----
/s/ Stanley Egener
- ---------------------------------- Chairman of the Board, Chief
Stanley Egener Executive Officer, and Trustee
/s/ Lawrence Zicklin
- ---------------------------------- President and Trustee
Lawrence Zicklin
/s/ Michael J. Weiner
- ---------------------------------- Vice President and Principal
Michael J. Weiner Financial Officer
/s/ Richard Russell
- ---------------------------------- Treasurer and Principal
Richard Russell Accounting Officer
/s/ Faith Colish
- ---------------------------------- Trustee
Faith Colish
/s/ Donald M. Cox
- ---------------------------------- Trustee
Donald M. Cox
/s/ Alan R. Gruber
- ---------------------------------- Trustee
Alan R. Gruber
/s/ Howard A. Mileaf
- ---------------------------------- Trustee
Howard A. Mileaf
/s/ Edward I. O'Brien
- ---------------------------------- Trustee
Edward I. O'Brien
[signatures continued on next page]
- 2 -
<PAGE>
Signature Title
--------- -----
/s/ John T. Patterson, Jr.
- ---------------------------------- Trustee
John T. Patterson, Jr.
/s/ John P. Rosenthal
- ---------------------------------- Trustee
John P. Rosenthal
/s/ Cornelius T. Ryan
- ---------------------------------- Trustee
Cornelius T. Ryan
/s/ Gustave H. Shubert
- ---------------------------------- Trustee
Gustave H. Shubert
- 3 -
<PAGE>
NEUBERGER & BERMAN EQUITY ASSETS
POST-EFFECTIVE AMENDMENT NO. 9 ON FORM N-1A
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Description Page
- ------ ----------- ----
(1) (a) Certificate of Trust. Incorporated by N.A.
Reference to Post-Effective Amendment No. 1
to Registrant's Registration Statement, File
Nos. 33-82568 and 811-8106, EDGAR Accession
No. 0000898432-95-000393.
(b) Trust Instrument of Neuberger & Berman N.A.
Equity Assets. Incorporated by Reference to
Post-Effective Amendment No. 1 to
Registrant's Registration Statement, File
Nos. 33-82568 and 811-8106, EDGAR Accession
No. 0000898432-95-000393.
(c) Schedule A - Current Series of Neuberger & N.A.
Berman Equity Assets. Incorporated by
Reference to Post-Effective Amendment No. 8
to Registrant's Registration Statement, File
Nos. 33-82568 and 811-8106, EDGAR Accession
No. 0000898432-97-000221.
(2) By-Laws of Neuberger & Berman Equity Assets. N.A.
Incorporated by Reference to Post-Effective
Amendment No. 1 to Registrant's Registration
Statement, File Nos. 33-82568 and 811-8106, EDGAR
Accession No. 0000898432-95-000393.
(3) Voting Trust Agreement. None. N.A.
(4) (a) Trust Instrument of Neuberger & Berman N.A.
Equity Assets, Articles IV, V, and VI.
Incorporated by Reference to Post-Effective
Amendment No. 1 to Registrant's Registration
Statement, File Nos. 33-82568 and 811-8106,
EDGAR Accession No. 0000898432-95-000393.
(b) By-Laws of Neuberger & Berman Equity Assets, N.A.
Articles V, VI, and VIII. Incorporated by
Reference to Post-Effective Amendment No. 1
to Registrant's Registration Statement, File
Nos. 33-82568 and 811-8106, EDGAR Accession
No. 0000898432-95-000393.
<PAGE>
(5) (a) (i) Management Agreement Between Equity N.A.
Managers Trust and Neuberger & Berman
Management Incorporated.
Incorporated by Reference to
Post-Effective Amendment No. 70 to
Registration Statement of Neuberger &
Berman Equity Funds, File Nos. N.A.
2-11357 and 811-582, EDGAR Accession
No. 0000898432-95-000314.
(ii) Schedule A - Series of Neuberger &
Berman Equity Managers Trust
Currently Subject to the Management
Agreement. Incorporated by Reference
to Post-Effective Amendment No. 70 to
Registration Statement of Neuberger &
Berman Equity Funds, File Nos.
2-11357 and 811-582, EDGAR Accession
No. 0000898432-95-000314.
(iii) Schedule B - Schedule of Compensation N.A.
Under the Management Agreement.
Incorporated by Reference to
Post-Effective Amendment No. 70 to
Registration Statement of Neuberger &
Berman Equity Funds, File Nos.
2-11357 and 811-582, EDGAR Accession
No. 0000898432-95-000314.
(b) (i) Sub-Advisory Agreement Between N.A.
Neuberger & Berman Management
Incorporated and Neuberger & Berman
with respect to Equity Managers
Trust. Incorporated by Reference to
Post-Effective Amendment No. 70 to
Registration Statement of Neuberger &
Berman Equity Funds, File Nos.
2-11357 and 811-582, EDGAR Accession
No. 0000898432-95-000314.
(ii) Schedule A - Series of Equity N.A.
Managers Trust Currently Subject to
the Sub-Advisory Agreement.
Incorporated by Reference to
Post-Effective Amendment No. 70 to
Registration Statement of Neuberger &
Berman Equity Funds, File Nos.
2-11357 and 811-582, EDGAR Accession
No. 0000898432-95-000314.
<PAGE>
(iii) Substitution Agreement Among N.A.
Neuberger & Berman Management
Incorporated, Equity Managers Trust,
Neuberger & Berman, L.P., and
Neuberger & Berman, LLC.
Incorporated by Reference to
Amendment No. 7 to Registration
Statement of Equity Managers Trust,
File No. 811-7910, Edgar Accession
No. 0000898432-96-000557.
(6) (a) (i) Distribution Agreement Between _____
Neuberger & Berman Equity Assets and
Neuberger & Berman Management
Incorporated with Respect to
Neuberger & Berman Socially
Responsive Trust. Filed Herewith.
(ii) Schedule A - Series of Neuberger & _____
Berman Equity Assets Currently
Subject to the Distribution
Agreement. Filed Herewith.
(b) (i) Distribution and Services Agreement _____
Between Neuberger & Berman Equity
Assets and Neuberger & Berman
Management Incorporated With Respect
to Other Series. Filed Herewith.
(ii) Schedule A - Series of Neuberger & _____
Berman Equity Assets Currently
Subject to Distribution and Services
Agreement. Filed Herewith.
(7) Bonus, Profit Sharing or Pension Plans. None. N.A.
(8) (a) Custodian Contract Between Neuberger & N.A.
Berman Equity Assets and State Street Bank
and Trust Company. Incorporated by
Reference to Post-Effective Amendment No. 3
to Registrant's Registration Statement, File
Nos. 33-82568 and 811-8106, Edgar Accession
No. 0000898432-96-000048.
<PAGE>
(b) Schedule of Compensation under the Custodian N.A.
Contract. Incorporated by Reference to
Post-Effective Amendment No. 4 to
Registrant's Registration Statement, File
Nos. 33-82568 and 811-8106, Edgar Accession
No.0000898432-96-000558.
(c) Agreement Between Neuberger & Berman Equity N.A.
Assets and State Street Bank and Trust
Company Adding Neuberger & Berman Focus
Assets, Neuberger & Berman Guardian Assets,
Neuberger & Berman Manhattan Assets and
Neuberger & Berman Partners Assets as
Portfolios Governed by the Custodian
Contract. Incorporated by Reference to
Post-Effective Amendment No. 8 to
Registrant's Registration Statement, File
Nos. 33-82568 and 811-8106, EDGAR Accession
No. 0000898432-97-000221.
(d) Agreement Between Neuberger & Berman Equity ____
Assets and State Street Bank and Trust
Company Adding Neuberger & Berman Genesis
Assets as a Portfolio Governed by the
Custodian Contract. Filed Herewith.
(9) (a) (i) Transfer Agency Agreement Between N.A.
Neuberger & Berman Equity Assets and
State Street Bank and Trust Company.
Incorporated by Reference to
Post-Effective Amendment No. 3 to
Registrant's Registration Statement,
File Nos. 33-82568 and 811-8106, Edgar
Accession No. 0000898432-96-000048.
(ii) First Amendment to the Transfer Agency ______
Agreement Between Neuberger & Berman
Equity Assets and State Street Bank
and Trust Company. Filed Herewith.
(iii) Schedule of Compensation under the N.A.
Transfer Agency Agreement.
Incorporated by Reference to
Post-Effective Amendment No. 4 to
Registrant's Registration Statement,
File Nos. 33-82568 and 811-8106, Edgar
Accession No. 0000898432-96-000558.
<PAGE>
(iv) Agreement Between Neuberger & Berman N.A.
Equity Assets and State Street Bank
and Trust Company Adding Neuberger &
Berman Focus Assets, Neuberger &
Berman Guardian Assets, Neuberger &
Berman Manhattan Assets and Neuberger
& Berman Partners Assets as
Portfolios Governed by the Transfer
Agency Agreement. Incorporated by
Reference to Post-Effective Amendment
No. 8 to Registrant's Registration
Statement, File Nos. 33-82568 and
811-8106, EDGAR Accession No.
0000898432-97-000221.
(v) Agreement Between Neuberger & Berman ____
Equity Assets and State Street Bank
and Trust Company Adding Neuberger &
Berman Genesis Assets as a Portfolio
Governed by the Transfer Agency
Agreement. 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 N.A.
Under the Administration Agreement.
Incorporated by Reference to
Post-Effective Amendment No. 3 to
Registrant's Registration Statement,
File Nos. 33-82568 and 811-8106,
Edgar Accession
No. 0000898432-96-000048.
(10) (a) Opinion and Consent of Kirkpatrick & Lockhart ____
LLP on Securities Matters with Respect to
Neuberger & Berman Equity Assets and
Neuberger & Berman Socially Responsive Trust.
Filed Herewith.
(b) Opinion and Consent of Kirkpatrick & Lockhart N.A.
LLP on Securities Matters with Respect to
Neuberger & Berman Focus Assets, Neuberger &
Berman Guardian Assets, Neuberger & Berman
Manhattan Assets, and Neuberger & Berman
Partners Assets. Incorporated by Reference to
Post-Effective Amendment No. 3 to
Registrant's Registration Statement, File
Nos. 33-82568 and 811-8106, EDGAR Accession
No. 0000898432-96-000048.
(c) Opinion and Consent of Kirkpatrick & Lockhart ____
LLP on Securities Matters with Respect to
Neuberger & Berman Genesis Assets. 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.
<PAGE>
(13) Letter of Investment Intent. None. N.A.
(14) Prototype Retirement Plan. None. N.A.
(15) (a) Plan Pursuant to Rule 12b-1. Filed ____
Herewith.
(b) Schedule A - Series of Neuberger & Berman ____
Equity Assets Currently Subject to Plan
Pursuant to Rule 12b-1. Filed Herewith.
(16) Schedule of Computation of Performance Quotations. N.A.
None.
(17) Financial Data Schedule. Filed Herewith. ____
(18) Plan Pursuant to Rule 18f-3. None. N.A.
DISTRIBUTION AGREEMENT
This Agreement is made as of November 1, 1994, between Neuberger &
Berman Equity Assets, a Delaware business trust ("Trust"), and Neuberger &
Berman Management Incorporated, a New York corporation (the "Distributor"), and
is amended as of August 2, 1996.
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended ("1940 Act"), as an open-end, diversified management investment
company and has the power to establish several separate series of shares
("Series"), with each Series having its own assets and investment policies; and
WHEREAS, the Trust desires to retain the Distributor to furnish
distribution services to each Series listed in Schedule A attached hereto, and
to such other Series of the Trust hereinafter established as agreed to from time
to time by the parties, evidenced by an addendum to Schedule A (hereinafter
"Series" shall refer to each Series which is subject to this Agreement and all
agreements and actions described herein to be made or taken by a Series shall be
made or taken by the Trust on behalf of the Series), and the Distributor is
willing to furnish such services,
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties agree as follows:
1. The Trust hereby appoints the Distributor as agent to sell the
shares of beneficial interest of each Series (the "Shares") and the Distributor
hereby accepts such appointment. All sales by the Distributor shall be expressly
subject to acceptance by the Trust, acting on behalf of the Series. The Trust
may suspend sales of the Shares of any one or more Series at any time, and may
resume sales at any later time.
<PAGE>
2. (a) The Distributor agrees that (i) all Shares sold by the
Distributor shall be sold at the net asset value ("NAV") thereof as described in
Section 3 hereof, and (ii) the Series shall receive 100% of such NAV.
(b) The Distributor may enter into agreements, in form and substance
satisfactory to the Trust, with dealers selected by the Distributor, providing
for the sale to such dealers and resale by such dealers of Shares at their NAV.
3. The Trust agrees to supply to the Distributor, promptly after the
time or times at which NAV is determined, on each day on which the New York
Stock Exchange is open for unrestricted trading and on such other days as the
Board of Trustees of the Trust ("Trustees") may from time to time determine
(each such day being hereinafter called a "business day"), a statement of the
NAV of each Series having been determined in the manner set forth in the
then-current Prospectus and Statement of Additional Information ("SAI") of each
Series. Each determination of NAV shall take effect as of such time or times on
each business day as set forth in the then-current Prospectus of each Series.
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.
- 2 -
<PAGE>
5. (a) All sales literature and advertisements used by the
Distributor in connection with sales of Shares shall be subject to approval by
the Trust. The Trust authorizes the Distributor, in connection with the sale or
arranging for the sale of Shares of any Series, to provide only such information
and to make only such statements or representations as are contained in the
Series's then-current Prospectus and SAI or in such financial and other
statements furnished to the Distributor pursuant to the next paragraph or as may
properly be included in sales literature or advertisements in accordance with
the provisions of the Securities Act of 1933 (the "1933 Act"), the 1940 Act and
applicable rules of self-regulatory organizations. Neither the Trust nor any
Series shall be responsible in any way for any information provided or
statements or representations made by the Distributor or its representatives or
agents other than the information, statements and representations described in
the preceding sentence.
(b) Each Series shall keep the Distributor fully informed with
regard to its affairs, shall furnish the Distributor with a certified copy of
all of its financial statements and a signed copy of each report prepared for it
by its independent auditors, and shall cooperate fully in the efforts of the
Distributor to negotiate and sell Shares of such Series and in the Distributor's
performance of all its duties under this Agreement.
6. The Distributor, as agent of each Series and for the account and
risk of each Series, is authorized, subject to the direction of the Trust, to
redeem outstanding Shares of such Series when properly tendered by shareholders
pursuant to the redemption right granted to such Series's shareholders by the
Trust Instrument of the Trust, as from time to time in effect, at a redemption
price equal to the NAV per Share of such Series next determined after proper
- 3 -
<PAGE>
tender and acceptance. The Trust has delivered to the Distributor a copy of the
Trust's Trust Instrument as currently in effect and agrees to deliver to the
Distributor any amendments thereto promptly upon filing thereof with the Office
of the Secretary of State of the State of Delaware.
7. The Distributor shall assume and pay or reimburse each Series for
the following expenses of such Series: (i) costs of printing and distributing
reports, prospectuses and SAIs 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.
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.
- 4 -
<PAGE>
9. (a) This Agreement, as amended, shall become effective on August
2, 1996 and shall remain in full force and effect until August 2, 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"). This Agreement may be amended as to any
Series with the approval of the Trustees or of a majority of the outstanding
voting securities of such Series; PROVIDED, that in either case, such amendment
also shall be approved by a majority of the Disinterested Trustees.
(b) Either party may terminate this Agreement without the
payment of any penalty, upon not more than sixty days' nor less than thirty
days' written notice delivered personally or mailed by registered mail, postage
prepaid, to the other party; PROVIDED, that in the case of termination by any
Series, such action shall have been authorized (i) by resolution of the
Trustees, or (ii) by vote of a majority of the outstanding voting securities of
such Series, or (iii) by written consent of a majority of the Disinterested
Trustees.
(c) This Agreement shall automatically terminate if it is
assigned by the Distributor.
(d) Any question of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived from a term or
provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretation thereof, if any, by the United
States courts or, in the absence of any controlling decision of any such court,
by rules, regulations or orders of the SEC validly issued pursuant to the 1940
- 5 -
<PAGE>
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 provision of
this Agreement is modified, interpreted or relaxed by a rule, regulation or
order of the SEC, whether of special or of general application, such provision
shall be deemed to incorporate the effect of such rule, regulation or order. The
Trust and the Distributor may from time to time agree on such provisions
interpreting or clarifying the provisions of this Agreement as, in their joint
opinion, are consistent with the general tenor of this Agreement and with the
specific provisions of this Section 9(d). Any such interpretations or
clarifications shall be in writing signed by the parties and annexed hereto, but
no such interpretation or clarification shall be effective if in contravention
of any applicable federal or state law or regulations, and no such
interpretation or clarification shall be deemed to be an amendment of this
Agreement.
No term or provision of this Agreement shall be construed to
require the Distributor to provide distribution services to any series of the
Trust other than the Series, or to require any Series to pay any compensation or
expenses that are properly allocable, in a manner approved by the Trustees, to a
series of the Trust other than such Series.
(e) This Agreement is made and to be principally performed in
the State of New York, and except insofar as the 1940 Act or other federal laws
and regulations may be controlling, this Agreement shall be governed by, and
construed and enforced in accordance with, the internal laws of the State of New
York.
(f) This Agreement is made by the Trust solely with respect to
the Series, and the obligations created hereby with respect to one Series bind
only assets belonging to that Series and are not binding on any other series of
the Trust.
- 6 -
<PAGE>
10. The Distributor or one of its affiliates may from time to time
deem it desirable to offer to the list of shareholders of each Series the shares
of other mutual funds for which it acts as Distributor, including other series
of the Trust or other products or services; however, any such use of the list of
shareholders of any Series shall be made subject to such terms and conditions,
if any, as shall be approved by a majority of the Disinterested Trustees.
11. The Distributor shall look only to the assets of a Series for
the performance of this Agreement by the Trust on behalf of such Series, and
neither the shareholders, the Trustees nor any of the Trust's officers,
employees or agents, whether past, present or future, shall be personally liable
therefor.
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
By: /s/ Michael J. Weiner
------------------------
Title: Vice President
---------------------
NEUBERGER & BERMAN
MANAGEMENT INCORPORATED
By: /s/ Stanley Egener
------------------------
Title: President
---------------------
- 7 -
DISTRIBUTION AGREEMENT
SCHEDULE A
The Series of Neuberger & Berman Equity Assets currently subject to this
Agreement are as follows:
Neuberger & Berman Socially Responsive Trust
Dated: November 1, 1994
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"), and is
amended as of August 2, 1996.
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
<PAGE>
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 the New York
Stock Exchange is open for unrestricted trading and on such other days as the
Board of Trustees of the Trust ("Trustees") may from time to time determine
(each such day being hereinafter called a "business day"), a statement of the
NAV of each Series, 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,
- 2 -
<PAGE>
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
- 3 -
<PAGE>
determined after proper tender and acceptance. The Trust has delivered to the
Distributor a copy of the Trust's Trust Instrument as currently in effect and
agrees to deliver to the Distributor any amendments thereto promptly upon filing
thereof with the Office of the Secretary of State of the State of Delaware.
7. The Distributor shall assume and pay or reimburse each Series
for the following expenses of such Series: (i) costs of printing and
distributing reports, prospectuses and SAIs 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
- 4 -
<PAGE>
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 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
- 5 -
<PAGE>
ensure compliance with the applicable requirements of the SEC and the National
Association of Securities Dealers.
12. (a) This Agreement, as amended, shall become effective on
August 2, 1996 and shall remain in full force and effect until August 2, 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
- 6 -
<PAGE>
Trustees, (ii) by vote of a majority of the outstanding voting securities of
such Series or (iii) by written consent of a majority of the Disinterested
Trustees 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 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.
- 7 -
<PAGE>
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.
- 8 -
<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
By: /s/ Michael J. Weiner
-------------------------
Vice President
-------------------------
Title
NEUBERGER & BERMAN
MANAGEMENT INCORPORATED
By: /s/ Stanley Egener
------------------------
President
------------------------
Title
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DISTRIBUTION AND SERVICES AGREEMENT
SCHEDULE A
SERIES DATE MADE PARTY TO AGREEMENT
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Neuberger & Berman Focus Assets February 12, 1996
Neuberger & Berman Guardian Assets February 12, 1996
Neuberger & Berman Manhattan Assets February 12, 1996
Neuberger & Berman Partners Assets February 12, 1996
Sharon Baker Morin, Esq.
State Street Bank and Trust Company
1776 Heritage Drive
Mail Stop A4N
North Quincy, Massachusetts 02171-2197
Dear Ms. Morin,
Pursuant to section 17 of the custody contract between State Street Bank &
Trust Company ("State Street") and Neuberger & Berman Equity Assets dated as of
August 19, 1994, we request that Neuberger & Berman Genesis Assets be added as a
Portfolio governed by that custody contract. The addition of this series is
effective as of March 31, 1997. Please indicate State Street's acceptance of
this request by having a duly authorized officer of State Street sign in the
space indicated below.
Sincerely,
/s/ Michael J. Weiner
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Name: Michael J. Weiner
Title: Vice President
Neuberger & Berman Equity Assets
Accepted by State Street
Bank and Trust Company
/s/ Ronald E. Logue
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Name: Ronald E. Logue
Title: Executive Vice President
FIRST AMENDMENT TO THE
TRANSFER AGENCY AND SERVICE AGREEMENT
This Amendment dated as of January 23, 1997 between Neuberger
& Berman Equity Assets, a Delaware business trust, having its principal office
and place of business at 605 Third Avenue, 2nd Floor, New York, NY 10158-0180
(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, MA 02110 (the "Bank") is made to the Transfer Agency and Service
Agreement dated as of August 19, 1994 between the Fund and the Bank (the
"Transfer Agency Agreement").
WHEREAS, Neuberger & Berman Management, Inc. ("NBMI"), acting
in its own name on its own behalf and on behalf of the Fund and its Portfolios,
to which it serves as distributor and investment manager, has contracted with
National Securities Clearing Corporation (the "NSCC") for the use of certain
mutual fund processing systems called Fund/SERV and Networking;
WHEREAS, Fund/SERV is an automated trading and settlement
system and Networking is an automated electronic recordkeeping and dividend
settlement system through which customer-level accounts ("Networking Accounts")
are established with the Fund by institutions such as recordkeepers or
broker-dealers ("Institutions");
WHEREAS, the NSCC will transmit orders for Fund shares placed
by Institutions via Fund/SERV to the Bank's agent, Boston Financial Data
Services, Inc. ("BFDS") on the DST System ("DST");
WHEREAS, NBMI has appointed the Bank as its settling bank for
purposes of performing same day funds settlement under an agreement dated
January 26, 1996;
WHEREAS, NBMI will enter into agreements with Institutions
which will set forth details about Networking or Fund/SERV, including
establishing subaccounts in lieu of omnibus accounts, the transmission of orders
for Fund shares via Fund/SERV, and each parties responsibilities under
Networking matrix levels;
WHEREAS, the matrix levels chosen by NBMI and the Institutions
will determine which services to the Networked Accounts will be performed by the
Institutions and which will be performed by the Fund or the Bank;
WHEREAS, the Transfer Agency Agreement covers only omnibus
accounts opened with the Fund and not sub-accounts, such as Networked Accounts;
WHEREAS, in instances where Networked Accounts are established
and the Institutions will be providing services to the Networked Accounts, the
fees charged per Networking Account by the Bank or BFDS will be paid by NBMI, in
lieu of the Fund;
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WHEREAS, in lieu of having the Bank or BFDS be a party to
NBMI's agreements with the NSCC and with each Institution, the Bank and the Fund
desire to amend the Transfer Agency Agreement to provide for changes related to
the use of Fund/SERV and or Networking by the Fund and the payment by NBMI in
lieu of the Funds, for any fees based on Networked Accounts;
NOW, THEREFORE, in consideration of the promises and mutual
covenants hereinafter contained, the parties agree as follows:
Article 1. Fund/SERV and Networking
(a) The parties hereto agree that with respect to all
Networked Accounts, Networking and Fund/SERV transactions, the parties and/or
their agents shall be bound by the By-Laws and the Rules and Procedures of the
NSCC.
(b) The Bank or BFDS may only take instructions from NBMI or
the Fund regarding the conversion to, implementation of or day-to-day operations
of Fund/SERV and Networking with respect to Networked Accounts with the Fund.
Article 2. Fees and Expenses; Fee Schedule
The Bank or BFDS shall not charge the Fund for any fees or
expenses in connection with Networked Accounts. The fee schedule to the Transfer
Agency Agreement shall be amended to include that there shall be no fees or
expenses for Networked Accounts.
Article 3. Duties of the Bank Relating to Orders Placed on DST
The parties hereto agree that the Agreement is amended to add
Section 1.2(f) as follows:
Net orders may be transmitted to the Bank on DST or by facsimile or
telephone. The Bank is not authorized to receive orders transmitted on
DST from any party other than (i) NBMI and (ii) those parties set forth
on Schedule A attached hereto, which shall be updated from time to time
by the Fund (the "Designated Parties").
The Bank shall receive written approval from the Fund prior to
authorizing any additional Designated Parties to use DST to place
orders for Fund Shares. A Designated Party shall only be authorized to
use DST to (i) transmit net orders for the purchase and redemption of
Shares and (ii) review the account of that Designated Party's
historical transactions. NBMI and the Designated Parties are authorized
to place orders for trades received before 4:00 p.m. EST on a business
day the New York Stock Exchange is open for business ("Business Day"),
up to 9:30 p.m. EST that Business Day. No transactions occurring on a
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given Business Day are authorized to be transmitted on DST on the next
Business Day.
Article 4. Miscellaneous
(a) All other terms and conditions of the Transfer Agency
Agreement remain in full force and effect.
(b) Terms used herein but not defined herein shall have the
meanings set forth in the Transfer Agency Agreement.
(c) This Amendment may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same Amendment.
NEUBERGER & BERMAN EQUITY STATE STREET BANK AND TRUST
ASSETS COMPANY
By: /s/ Daniel J. Sullivan By: /s/ Ronald E. Logue
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Daniel J. Sullivan Executive Vice President
Vice President Ronald E. Logue
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SCHEDULE A
DESIGNATED PARTIES
NATIONAL SECURITIES CLEARING CORPORATION
(on behalf of certain Institutions)
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Sharon Baker Morin, Esq.
State Street Bank and Trust Company
1776 Heritage Drive
Mail Stop A4N
North Quincy, Massachusetts 02171-2197
Dear Ms. Morin,
Pursuant to section 9 of the transfer agency and service contract between
State Street Bank & Trust Company ("State Street") and Neuberger & Berman Equity
Assets dated as of August 19, 1994, we request that Neuberger & Berman Genesis
Assets be added as a Portfolio governed by that contract. The addition of this
series is effective as of March 31, 1997. Please indicate State Street's
acceptance of this request by having a duly authorized officer of State Street
sign in the space indicated below.
Sincerely,
/s/ Michael J. Weiner
--------------------------------
Name: Michael J. Weiner
Title: Vice President
Neuberger & Berman Equity Assets
Accepted by State Street
Bank and Trust Company
/s/ Ronald E. Logue
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Name: Ronald E. Logue
Title: Executive Vice President
cc: Paul Alfama, BFDS
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"), and is
amended as of August 2, 1996.
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 established 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, including shareholder accounting, recordkeeping, and
other services to shareholders, 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,
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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
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acting in some other capacity pursuant to a separate agreement or arrangement
with the Series;
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; and
1.1.6 REPORTS AND FILINGS. Assist in the preparation of (but not
pay for) 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.
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1.2 SHAREHOLDER AND RELATED SERVICES. The Administrator shall provide
each of the following services as may be required by any Series, its
shareholders (each of which must be either a broker-dealer, pension plan
administrator, or other institution that provides certain accounting,
recordkeeping and other services to its accounts ("Accounts") and which has
entered into an administrative services agreement with the Administrator (each,
an "Institution"), or the Accounts, as specified; PROVIDED, that the
Administrator's obligation to furnish any service to Accounts or Account holders
of any Institution shall be dependent upon receipt of all necessary information
from that Institution:
1.2.1 PURCHASE ORDERS. Receive for acceptance, as agent for the
Series, orders from Institutions and Accounts for the purchase of Series shares
transmitted or delivered to the office of the Administrator, note the time and
date of each order when received, promptly deliver payment for such purchases to
the Series' custodian ("Custodian"), and coordinate with the Series or its
designees for the issuance of the appropriate number of shares so purchased to
the appropriate Institution or Account;
1.2.2 RECORDS. Maintain records of the number of shares of each
Series attributable to each Account (including name, address and taxpayer
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identification number), record all changes to such shares held in each Account
on a daily basis, and furnish to each Series each business day the total number
of shares of such Series attributable to all Accounts;
1.2.3 REDEMPTION REQUESTS. Receive for acceptance requests and
directions from Institutions and Accounts for the redemption of Series shares
transmitted or delivered to the office of the Administrator, note the time and
date of each request when received, process such requests and directions in
accordance with the redemption procedures set forth in the then current
Prospectus and Statement of Additional Information ("SAI") of the Series, and
deliver the appropriate documentation to the Custodian;
1.2.4 WIRE TRANSFERS. Coordinate and implement bank-to-bank wire
transfers in connection with Series share purchases and redemptions by
Institutions;
1.2.5 REDEMPTION PAYMENTS. Upon receipt of monies paid to it by
the Custodian with respect to any redemption of Series shares, pay or cause such
monies to be paid pursuant to instructions by the appropriate Account or
Institution.
1.2.6 EXCHANGES. Receive and execute orders from Accounts and
Institutions to exchange shares by concurrent purchases and redemptions of
shares of a Series and shares of other Series or of other investment companies
or series thereof pursuant to each Series's then current Prospectus and SAI;
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1.2.7 DIVIDENDS. Based upon information received from a Series
regarding dividends or other distributions on Series shares, calculate the
dividend or distribution attributable to each Account; if such dividend or
distribution is payable in shares or by reinvestment in shares, calculate such
shares for each Account and record same in the share records for each Account,
and if such dividend or distribution is payable in cash, upon receipt of monies
therefor from the Custodian, pay or cause such monies to be paid to the
appropriate Account or as such Account may direct;
1.2.8 INQUIRIES. Respond to telephonic, mail, and in-person
inquiries from Institutions, Account holders, or their representatives
requesting information regarding matters such as shareholder account or
transaction status, net asset value ("NAV") of Series shares, Series
performance, Series services, plans and options, Series investment policies,
Series portfolio holdings, and Series distributions and taxation thereof;
1.2.9 COMPLAINTS. Deal with complaints and correspondence of
Institutions and Account holders directed to or brought to the attention of the
Administrator;
1.2.10 REPORTS; PROXIES. Distribute as appropriate to all Account
holders all Series reports, dividend and distribution notices, and proxy
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material relating to any meeting of Series shareholders, and soliciting,
processing and tabulating proxies for such meetings;
1.2.11 SPECIAL REPORTS. Generate or develop and distribute
special data, notices, reports, programs and literature required by Institutions
or by Account holders generally in light of developments, such as changes in tax
laws; and
1.2.12 AGENTS. Assist any institutional servicing agent ("Agent")
engaged by the Series in the development, implementation and maintenance of the
following special programs and systems to enhance each Series's capability to
service its shareholders and Account holders servicing capability:
(a) Training programs for personnel of such Agent;
(b) Joint programs with such Agent for the development of
systems software, shareholder information reports, and other special reports;
(c) Automatic data exchange facilities with shareholders and
such Agent;
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(d) Automated clearing house transfer procedures between
shareholders and such Agent; and
(e) Touch-tone telephone information and transaction systems
for shareholders.
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. If 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
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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;
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 (other
than the Administrator hereunder) 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 SAI and any supplements thereto and of supplying them to shareholders of the
Series and Account holders;
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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;
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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 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;
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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
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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; and
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.
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
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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
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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.
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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. OWNERSHIP OF SOFTWARE AND RELATED MATERIALS. All computer programs,
written procedures and similar items developed or acquired and used by the
Administrator in performing its obligations under this Agreement shall be the
property of the Administrator, and no Series will acquire any ownership interest
therein or property rights with respect thereto.
8. CONFIDENTIALITY. The Administrator agrees, on its own behalf and on
behalf of its employees, agents and contractors, to keep confidential any and
all records maintained and other information obtained hereunder which relates to
any Series or to any of a Series's former, current or prospective shareholders,
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EXCEPT that the Administrator may deliver records or divulge information (a)
when requested to do so by duly constituted authorities after prior notification
to and approval in writing by such Series (which approval will not be
unreasonably withheld and may not be withheld by such Series where the
Administrator advises such Series that it may be exposed to civil or criminal
contempt proceedings or other penalties for failure to comply with such request)
or (b) whenever requested in writing to do so by such Series.
9. THE ADMINISTRATOR'S ACTIONS IN RELIANCE ON SERIES' INSTRUCTIONS, LEGAL
OPINIONS, ETC.; SERIES' COMPLIANCE WITH LAWS.
9.1 The Administrator may at any time apply to an officer of the Trust
for instructions, and may consult with legal counsel for a Series or with the
Administrator's own legal counsel, in respect of any matter arising in
connection with this Agreement; and the Administrator shall not be liable for
any action taken or omitted to be taken in good faith in and with due care in
accordance with such instructions or with the advice or opinion of such legal
counsel. The Administrator shall be protected in acting upon any such
instructions, advice or opinion and upon any other paper or document delivered
by a Series or such legal counsel which the Administrator believes to be genuine
and to have been signed by the proper person or persons, and the Administrator
shall not be held to have notice of any change of status or authority of any
officer or representative of the Trust, until receipt of written notice thereof
from the Series.
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9.2 Except as otherwise provided in this Agreement or in any separate
agreement between the parties and except for the accuracy of information
furnished to each Series by the Administrator, each Series assumes full
responsibility for the preparation, contents, filing and distribution of its
Prospectus and SAI, and full responsibility for other documents or actions
required for compliance with all applicable requirements of the 1940 Act, the
Securities Exchange Act of 1934, the 1933 Act, and any other applicable laws,
rules and regulations of governmental authorities having jurisdiction over such
Series.
10. SERVICES TO OTHER CLIENTS. Nothing herein contained shall limit the
freedom of the Administrator or any affiliated person of the Administrator to
render administrative or shareholder services to other investment companies, to
act as administrator to other persons, firms, or corporations, or to engage in
other business activities.
11. LIMITATION OF LIABILITY REGARDING THE TRUST. 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 Trustees of the Trust
("Trustees") nor any of the Trust's officers, employees or agents, whether past,
present or future shall be personally liable therefor.
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12. 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.
13. 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
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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 Administrator's negligence or misconduct 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 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.
14. 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 By-laws 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.
- 20 -
<PAGE>
15. TERM OF AGREEMENT. The term of this Agreement, as amended, shall begin
on August 2, 1996 with respect to each Series and, unless sooner terminated as
hereinafter provided, this Agreement shall remain in effect through August 2,
1997. Thereafter, 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.
16. 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
- 21 -
<PAGE>
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.
17. TERMINATION OF AGREEMENT. This Agreement may be terminated at any time
by either party hereto, without the payment of any penalty, upon at least sixty
days' prior written notice 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, 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.
18. 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.
- 22 -
<PAGE>
19. 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 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.
20. CHOICE OF LAW. This Agreement is made and to be principally performed
in the State of New York, and except insofar as the 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.
- 23 -
<PAGE>
21. 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.
22. 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.
NEUBERGER & BERMAN EQUITY ASSETS
By /s/ Michael J. Weiner
------------------------------------
Vice President
------------------------------------
Title
NEUBERGER & BERMAN
MANAGEMENT INCORPORATED
By /s/ Stanley Egener
------------------------------------
President
------------------------------------
Title
- 24 -
NEUBERGER & BERMAN EQUITY ASSETS
ADMINISTRATION AGREEMENT
SCHEDULE A
SERIES DATE MADE A PARTY TO AGREEMENT
- ------ ------------------------------
Neuberger & Berman Socially November 1, 1994
Responsive Trust
Neuberger & Berman Focus Assets February 12, 1996
Neuberger & Berman Guardian Assets February 12, 1996
Neuberger & Berman Manhattan Assets February 12, 1996
Neuberger & Berman Partners Assets February 12, 1996
KIRKPATRICK & LOCKHART
SOUTH LOBBY - 9TH FLOOR
1800 M STREET, N.W.
WASHINGTON, D.C. 20036-5891
October 27, 1994
Neuberger & Berman Equity Assets
605 Third Avenue, Second Floor
New York, New York 10158-0006
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 its series, Neuberger & Berman Socially
Responsive Trust.
We have, as counsel, participated in various corporate 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, the minutes of meetings of the trustees of
the Trust, and other documents relating to the organization and operation of the
Trust, and we are generally familiar with its business affairs. Based upon the
foregoing, it is our opinion that the unissued Shares designated as Neuberger &
Berman Socially Responsive Trust, 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 nonassessable 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.
<PAGE>
Neuberger & Berman Equity Assets
October 27, 1994
Page 2
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 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 was in effect; and (iii) the Trust
itself would be 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
Pre-Effective Amendment No. 2 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
By: /s/ Arthur C. Delibert
----------------------------
Arthur C. Delibert
KIRKPATRICK & LOCKHART LLP
1800 MASSACHUSETTS AVENUE, N.W.
WASHINGTON, D.C. 20036-1800
TELEPHONE: (202) 778-9000
FACSIMILE: (202) 778-9100
December 12, 1997
Neuberger & Berman Equity Assets
605 Third Avenue
New York, New York 10158
Dear Sir or Madam:
Neuberger & Berman Equity Assets 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 the certain matters
in connection with the Trust's issuance of shares of beneficial interest
("Shares") in one of its series, Neuberger & Berman Genesis Assets ("Fund").
We have, as counsel, participated in various business and other
proceedings relating to the Trust. We have examined copies, either certified or
otherwise proved to be genuine, of the Trust Instrument and the By-laws of the
Trust, the minutes of meetings of its board of trustees and other documents
relating to its organization and operation, and we are generally familiar with
its business affairs. Based upon the foregoing, it is our opinion that the
Shares of the Fund may be legally and validly issued in accordance with the
Trust's Trust Instrument and By-laws and subject to compliance with the
Securities Act of 1933, the Investment Company Act of 1940 and applicable state
laws regulating the offer and sale of securities; and when so issued, the Shares
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 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
<PAGE>
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. 9 to the Trust's Registration Statement on Form
N-1A (File Nos. 33-82568 and 811-8106) to be filed with the Securities and
Exchange Commission. 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
By: /s/ Arthur C.Delibert
--------------------------
Arthur C. Delibert
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "Financial
Highlights" in the Prospectus and "Reports to Shareholders", "Independent
Auditors/Accountants" and "Financial Statements" in the Statement of Additional
Information in Post-Effective Amendment Number 9 to the Registration Statement
(Form N-1A No. 33-82568) of Neuberger & Berman Equity Assets, and to the
incorporation by reference of our reports dated October 3, 1997 on Neuberger &
Berman Focus Assets, Neuberger & Berman Genesis Assets, Neuberger & Berman
Guardian Assets, and Neuberger & Berman Partners Assets, four of the series
comprising Neuberger & Berman Equity Assets, and on Neuberger & Berman Focus
Portfolio, Neuberger & Berman Genesis Portfolio, Neuberger & Berman Guardian
Portfolio, and Neuberger & Berman Partners Portfolio, four of the series
comprising Equity Managers Trust, included in the 1997 Annual Report to
Shareholders of Neuberger & Berman Equity Assets.
/s/ Ernst & Young LLP
--------------------------
ERNST & YOUNG LLP
Boston, Massachusetts
December 8, 1997
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
Neuberger & Berman Equity Assets and Equity Managers Trust
We consent to the incorporation by reference in Part B. Statement of
Additional Information in Post-Effective Amendment No. 9 to the Registration
Statement on Form N-1A of Neuberger & Berman Equity Assets (File #33-82658)
(811-8106) of our reports dated October 3, 1997 on our audits of the financial
statements and financial highlights of Neuberger & Berman Manhattan Assets and
Portfolio and Neuberger & Berman Socially Responsive Trust and Portfolio, which
reports are included in the Annual Reports to Shareholders for the fiscal year
ended August 31, 1997.
We also consent to the reference to our Firm with respect to Neuberger &
Berman Manhattan Assets and Portfolio and Neuberger & Berman Socially Responsive
Trust and Portfolio under the captions "Independent Auditors/Accountants" and
"Financial Statements" in Part B of the Registration Statement.
By: /s/ Coopers & Lybrand L.L.P.
----------------------------
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
December 8, 1997
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, as amended, shall take effect on August 2, 1996 and shall
continue in effect with respect to each Fund for successive periods of one year
from that date 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.
- 2 -
<PAGE>
8. While this Plan is in effect, the selection and nomination of Trustees
who are not interested persons of the Trust, as defined in the 1940 Act, shall
be committed to the discretion of Trustees who are themselves not interested
persons.
9. The Trust shall preserve copies of this Plan and any related agreements
for a period of not less than six years from the date of expiration of the Plan
or agreement, as the case may be, the first two years in an easily accessible
place; and shall preserve copies of each report made pursuant to Paragraph 5
hereof for a period of not less than six years from the date of such report, the
first two years in an easily accessible place.
IN WITNESS WHEREOF, the Trust has executed this Plan pursuant to Rule
12b-1 as of the day and year set forth below.
Date: August 2, 1997 NEUBERGER & BERMAN EQUITY ASSETS
--------------
By: /s/ Michael J. Weiner
-------------------------
Agreed and assented to by
NEUBERGER & BERMAN MANAGEMENT INCORPORATED
By: /s/ Stanley Egener
---------------------
- 3 -
NEUBERGER & BERMAN EQUITY ASSETS PLAN
PURSUANT TO RULE 12B-1
SCHEDULE A
FEE (AS A PERCENTAGE DATE MADE
OF AVERAGE DAILY A PARTY
SERIES NET ASSETS) TO PLAN
------ -------------------- ---------
Neuberger & Berman Focus Assets 0.25% April 1, 1996
Neuberger & Berman Guardian Assets 0.25% April 1, 1996
Neuberger & Berman Manhattan Assets 0.25% April 1, 1996
Neuberger & Berman Partners Assets 0.25% April 1, 1996
- 4 -
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from
the Neuberger&Berman Focus Assets Annual Report and is qualified
in its entirety by reference to such document.
</LEGEND>
<SERIES>
<NUMBER> 02
<NAME> NEUBERGER&BERMAN FOCUS ASSETS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 144
<RECEIVABLES> 91
<ASSETS-OTHER> 47
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 282
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 139
<TOTAL-LIABILITIES> 139
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 99
<SHARES-COMMON-STOCK> 10
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 38
<NET-ASSETS> 143
<DIVIDEND-INCOME> 1
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (2)
<NET-INVESTMENT-INCOME> (1)
<REALIZED-GAINS-CURRENT> 6
<APPREC-INCREASE-CURRENT> 38
<NET-CHANGE-FROM-OPS> 43
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 143
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 93
<AVERAGE-NET-ASSETS> 122
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (.05)
<PER-SHARE-GAIN-APPREC> 4.39
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.34
<EXPENSE-RATIO> 1.50<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Annualized.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from
the Neuberger&Berman Guardian Assets Annual Report and is qualified in
its entirety by reference to such document.
</LEGEND>
<SERIES>
<NUMBER> 03
<NAME> NEUBERGER&BERMAN GUARDIAN ASSETS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 9,297
<RECEIVABLES> 129
<ASSETS-OTHER> 47
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 9,473
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 166
<TOTAL-LIABILITIES> 166
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 8,465
<SHARES-COMMON-STOCK> 671
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 116
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 726
<NET-ASSETS> 9,307
<DIVIDEND-INCOME> 24
<INTEREST-INCOME> 9
<OTHER-INCOME> 0
<EXPENSES-NET> 36
<NET-INVESTMENT-INCOME> (3)
<REALIZED-GAINS-CURRENT> 116
<APPREC-INCREASE-CURRENT> 726
<NET-CHANGE-FROM-OPS> 839
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 747
<NUMBER-OF-SHARES-REDEEMED> (76)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 9,307
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 136
<AVERAGE-NET-ASSETS> 2,424
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .01
<PER-SHARE-GAIN-APPREC> 3.88
<PER-SHARE-DIVIDEND> (.01)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.88
<EXPENSE-RATIO> 1.50<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Annualized.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from
the Neuberger&Berman Manhattan Assets Annual Report and is qualified
in its entirety by reference to such document.
</LEGEND>
<SERIES>
<NUMBER> 04
<NAME> NEUBERGER&BERMAN MANHATTAN ASSETS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 140
<RECEIVABLES> 90
<ASSETS-OTHER> 47
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 277
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 138
<TOTAL-LIABILITIES> 138
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 99
<SHARES-COMMON-STOCK> 10
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 23
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 17
<NET-ASSETS> 139
<DIVIDEND-INCOME> 1
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (2)
<NET-INVESTMENT-INCOME> (1)
<REALIZED-GAINS-CURRENT> 23
<APPREC-INCREASE-CURRENT> 17
<NET-CHANGE-FROM-OPS> 39
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (1)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 139
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 92
<AVERAGE-NET-ASSETS> 120
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (.08)
<PER-SHARE-GAIN-APPREC> 3.94
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.11)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.75
<EXPENSE-RATIO> 1.50<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Annualized.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from
the Neuberger&Berman Partners Assets Annual Report and is qualified
in its entirety by reference to such document.
</LEGEND>
<SERIES>
<NUMBER> 05
<NAME> NEUBERGER&BERMAN PARTNERS ASSETS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 5,793
<RECEIVABLES> 147
<ASSETS-OTHER> 46
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,986
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 167
<TOTAL-LIABILITIES> 167
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,362
<SHARES-COMMON-STOCK> 404
<SHARES-COMMON-PRIOR> 10
<ACCUMULATED-NII-CURRENT> 1
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 136
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 320
<NET-ASSETS> 5,819
<DIVIDEND-INCOME> 18
<INTEREST-INCOME> 3
<OTHER-INCOME> 0
<EXPENSES-NET> (20)
<NET-INVESTMENT-INCOME> 1
<REALIZED-GAINS-CURRENT> 131
<APPREC-INCREASE-CURRENT> 322
<NET-CHANGE-FROM-OPS> 454
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (1)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 406
<NUMBER-OF-SHARES-REDEEMED> (14)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5,716
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 116
<AVERAGE-NET-ASSETS> 1,331
<PER-SHARE-NAV-BEGIN> 9.91
<PER-SHARE-NII> .01
<PER-SHARE-GAIN-APPREC> 4.56
<PER-SHARE-DIVIDEND> (.01)
<PER-SHARE-DISTRIBUTIONS> (.05)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.42
<EXPENSE-RATIO> 1.50<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Annualized.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from
the Neuberger&Berman Socially Responsive Trust Annual Report and is
qualified in its entirety by reference to such document.
</LEGEND>
<SERIES>
<NUMBER> 01
<NAME> NEUBERGER&BERMAN SOCIALLY RESPONSIVE TRUST
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 7,707
<RECEIVABLES> 72
<ASSETS-OTHER> 102
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,881
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 149
<TOTAL-LIABILITIES> 149
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,199
<SHARES-COMMON-STOCK> 676
<SHARES-COMMON-PRIOR> 10
<ACCUMULATED-NII-CURRENT> 1
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 70
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 462
<NET-ASSETS> 7,732
<DIVIDEND-INCOME> 23
<INTEREST-INCOME> 6
<OTHER-INCOME> 0
<EXPENSES-NET> 28
<NET-INVESTMENT-INCOME> 1
<REALIZED-GAINS-CURRENT> 69
<APPREC-INCREASE-CURRENT> 462
<NET-CHANGE-FROM-OPS> 532
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 680
<NUMBER-OF-SHARES-REDEEMED> (14)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 7,632
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 58
<AVERAGE-NET-ASSETS> 3,492
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 1.43
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.43
<EXPENSE-RATIO> 1.58<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Annualized.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from
the Neuberger&Berman Genesis Assets Annual Report and is qualified
in its entirety by reference to such document.
</LEGEND>
<SERIES>
<NUMBER> 06
<NAME> NEUBERGER&BERMAN GENESIS ASSETS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 731
<RECEIVABLES> 23
<ASSETS-OTHER> 56
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 810
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 80
<TOTAL-LIABILITIES> 80
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 674
<SHARES-COMMON-STOCK> 55
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 54
<NET-ASSETS> 730
<DIVIDEND-INCOME> 1
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (1)
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 2
<APPREC-INCREASE-CURRENT> 54
<NET-CHANGE-FROM-OPS> 56
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 55
<NUMBER-OF-SHARES-REDEEMED> (2)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 730
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 24
<AVERAGE-NET-ASSETS> 223
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (.01)
<PER-SHARE-GAIN-APPREC> 3.22
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.21
<EXPENSE-RATIO> 1.50<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Annualized.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from
the Neuberger&Berman Focus Portfolio Annual Report and is qualified
in its entirety by reference to such document.
</LEGEND>
<SERIES>
<NUMBER> 04
<NAME> NEUBERGER&BERMAN FOCUS PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 1,001,253
<INVESTMENTS-AT-VALUE> 1,588,776
<RECEIVABLES> 14,751
<ASSETS-OTHER> 41
<OTHER-ITEMS-ASSETS> 8
<TOTAL-ASSETS> 1,603,576
<PAYABLE-FOR-SECURITIES> 20,629
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,506
<TOTAL-LIABILITIES> 30,135
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 639,085
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 33,648
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 316,481
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 584,227
<NET-ASSETS> 1,573,441
<DIVIDEND-INCOME> 12,943
<INTEREST-INCOME> 1,187
<OTHER-INCOME> 0
<EXPENSES-NET> (7,011)
<NET-INVESTMENT-INCOME> 7,119
<REALIZED-GAINS-CURRENT> 176,471
<APPREC-INCREASE-CURRENT> 298,137
<NET-CHANGE-FROM-OPS> 481,727
<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> 451,070
<ACCUMULATED-NII-PRIOR> 26,529
<ACCUMULATED-GAINS-PRIOR> 140,010
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6,610
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7,011
<AVERAGE-NET-ASSETS> 1,330,064
<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> .53
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from
the Neuberger&Berman Guardian Portfolio Annual Report and is qualified
in its entirety by reference to such document.
</LEGEND>
<SERIES>
<NUMBER> 01
<NAME> NEUBERGER&BERMAN GUARDIAN PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 6,199,099
<INVESTMENTS-AT-VALUE> 8,801,318
<RECEIVABLES> 23,202
<ASSETS-OTHER> 198
<OTHER-ITEMS-ASSETS> 13
<TOTAL-ASSETS> 8,824,731
<PAYABLE-FOR-SECURITIES> 49,050
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 17,474
<TOTAL-LIABILITIES> 66,524
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,580,149
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 256,517
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,326,183
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,595,358
<NET-ASSETS> 8,758,207
<DIVIDEND-INCOME> 80,759
<INTEREST-INCOME> 20,405
<OTHER-INCOME> 0
<EXPENSES-NET> (34,306)
<NET-INVESTMENT-INCOME> 66,858
<REALIZED-GAINS-CURRENT> 871,150
<APPREC-INCREASE-CURRENT> 1,570,338
<NET-CHANGE-FROM-OPS> 2,508,346
<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> 2,525,665
<ACCUMULATED-NII-PRIOR> 189,659
<ACCUMULATED-GAINS-PRIOR> 455,033
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 32,887
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 34,306
<AVERAGE-NET-ASSETS> 7,502,735
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .46
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from
the Neuberger&Berman Manhattan Portfolio Annual Report and is
qualified in its entirety by reference to such document.
</LEGEND>
<SERIES>
<NUMBER> 02
<NAME> NEUBERGER&BERMAN MANHATTAN PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 522,622
<INVESTMENTS-AT-VALUE> 615,904
<RECEIVABLES> 20,770
<ASSETS-OTHER> 27
<OTHER-ITEMS-ASSETS> 12
<TOTAL-ASSETS> 636,713
<PAYABLE-FOR-SECURITIES> 14,593
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 377
<TOTAL-LIABILITIES> 14,970
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 204,678
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 7,173
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 316,610
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 93,282
<NET-ASSETS> 621,743
<DIVIDEND-INCOME> 3,638
<INTEREST-INCOME> 934
<OTHER-INCOME> 0
<EXPENSES-NET> (3,418)
<NET-INVESTMENT-INCOME> 1,154
<REALIZED-GAINS-CURRENT> 180,525
<APPREC-INCREASE-CURRENT> 10,646
<NET-CHANGE-FROM-OPS> 192,325
<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> 54,317
<ACCUMULATED-NII-PRIOR> 6,019
<ACCUMULATED-GAINS-PRIOR> 136,085
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,093
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,418
<AVERAGE-NET-ASSETS> 581,060
<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
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from
the Neuberger&Berman Partners Portfolio Annual Report and is
qualified in its entirety by reference to such document.
</LEGEND>
<SERIES>
<NUMBER> 05
<NAME> NEUBERGER&BERMAN PARTNERS PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 2,882,508
<INVESTMENTS-AT-VALUE> 3,584,061
<RECEIVABLES> 30,758
<ASSETS-OTHER> 94
<OTHER-ITEMS-ASSETS> 19
<TOTAL-ASSETS> 3,614,932
<PAYABLE-FOR-SECURITIES> 32,033
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7,326
<TOTAL-LIABILITIES> 39,359
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,754,354
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 77,754
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,041,912
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 701,553
<NET-ASSETS> 3,575,573
<DIVIDEND-INCOME> 35,022
<INTEREST-INCOME> 6,410
<OTHER-INCOME> 0
<EXPENSES-NET> (13,116)
<NET-INVESTMENT-INCOME> 28,316
<REALIZED-GAINS-CURRENT> 531,668
<APPREC-INCREASE-CURRENT> 473,597
<NET-CHANGE-FROM-OPS> 1,033,581
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,575,970
<ACCUMULATED-NII-PRIOR> 49,438
<ACCUMULATED-GAINS-PRIOR> 510,244
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 12,498
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 13,116
<AVERAGE-NET-ASSETS> 2,705,496
<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
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from
the Neuberger&Berman Socially Responsive Portfolio Annual Report
and is qualified in its entirety by reference to such document.
</LEGEND>
<SERIES>
<NUMBER> 06
<NAME> NEUBERGER&BERMAN SOCIALLY RESPONSIVE PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 188,564
<INVESTMENTS-AT-VALUE> 255,850
<RECEIVABLES> 3,248
<ASSETS-OTHER> 14
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 259,113
<PAYABLE-FOR-SECURITIES> 2,668
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 164
<TOTAL-LIABILITIES> 2,832
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 160,218
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 4,851
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 23,926
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 67,286
<NET-ASSETS> 256,281
<DIVIDEND-INCOME> 2,881
<INTEREST-INCOME> 612
<OTHER-INCOME> 0
<EXPENSES-NET> (1,279)
<NET-INVESTMENT-INCOME> 2,214
<REALIZED-GAINS-CURRENT> 11,478
<APPREC-INCREASE-CURRENT> 44,043
<NET-CHANGE-FROM-OPS> 57,735
<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> 97,796
<ACCUMULATED-NII-PRIOR> 2,637
<ACCUMULATED-GAINS-PRIOR> 12,448
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,123
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,279
<AVERAGE-NET-ASSETS> 204,186
<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> .63
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from
the Neuberger&Berman Genesis Portfolio Annual Report and is
qualified in its entirety by reference to such document.
</LEGEND>
<SERIES>
<NUMBER> 03
<NAME> NEUBERGER&BERMAN GENESIS PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 858,349
<INVESTMENTS-AT-VALUE> 1,130,629
<RECEIVABLES> 551
<ASSETS-OTHER> 19
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</TABLE>
