As filed with the Securities and Exchange Commission on January 3, 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. 6 [ X ]
----- -----
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 8 [ 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)
_____ on __________ pursuant to paragraph (b) 60 days after filing pursuant to
_____ paragraph (a)(1) on __________ pursuant to paragraph (a)(1) 75 days after
_____ filing pursuant to paragraph (a)(2)
__X__ on March 31, 1997 to paragraph (a)(2)
Registrant has filed a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940 as amended, and filed the notice required by such
rule for its 1996 fiscal year on October 29, 1996.
Neuberger & Berman Equity Assets is a "master/feeder fund." This
Post-Effective Amendment No. 6 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. 6 ON FORM N-1A
This Post-Effective Amendment consists of the following papers and
documents:
Cover Sheet
Contents of Post-Effective Amendment No. 6 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
Part C - Other Information
Signature Pages
No change is intended to be made by this Post-Effective Amendment No. 6
to the prospectus or statement of additional information for Neuberger & Berman
Socially Responsive Trust.
<PAGE>
NEUBERGER & BERMAN EQUITY ASSETS
POST-EFFECTIVE AMENDMENT NO. 6 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;
Information Performance Information
Item 4. General Description of Investment Programs; Description
Registrant of 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 Other Front Cover Page; Dividends,
Securities Other Distributions, and
Taxes; Special Information
Organization, Capitalization,
and Other Matters
Item 7. Purchase of Securities Being Shareholder Services; Share
Offered Prices and Net Asset Value;
Management and Administration
Item 8. Redemption or Repurchase Shareholder Services; Share
Prices and Net Asset Value
Item 9. Pending Legal Proceedings Not Applicable
<PAGE>
CAPTION IN PART B
STATEMENT OF ADDITIONAL
FORM N-1A ITEM NO. INFORMATION
------------------ -----------------------
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History Organization
Item 13. Investment Objectives and Investment Information; Certain
Policies Risk Considerations
Item 14. Management of the Fund Trustees and Officers
Item 15. Control Persons and Principal Control Persons and Principal
Holders of Securities Holders of Securities
Item 16. Investment Advisory and Other Investment Management and
Services Administration Services; Trustees
and Officers; Distribution
Arrangements; Reports To
Shareholders; Custodian and
Transfer Agent; Independent
Auditors/Accountants
Item 17 Brokerage Allocation Portfolio Transactions
Item 18. Capital Stock and Other Investment Information; Additional
Securities Redemption Information;
Dividends and Other Distributions
Item 19. Purchase and Redemption Additional Exchange Information;
Additional Redemption Information;
Distribution Arrangements
Item 20. Tax Status Dividends and Other Distributions;
Additional Tax Information
Item 21. Underwriters Investment Management and
Administration Services;
Distribution Arrangements
Item 22. Calculation of Performance Data Performance Information
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. 6.
<PAGE>
Neuberger&Berman
EQUITY ASSETS
No-Load 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 (EACH AN "INSTITUTION") THAT
PROVIDES ACCOUNTING, RECORDKEEPING, AND OTHER SERVICES TO INVESTORS AND THAT HAS
AN ADMINISTRATIVE SERVICES AGREEMENT AND HAS HAD EXECUTED A DEALER AGREEMENT
WITH NEUBERGER&BERMAN MANAGEMENT INCORPORATED ("N&B MANAGEMENT").
- --------------------------------------------------------------------------------
EACH OF THE ABOVE-NAMED FUNDS (A "FUND") INVESTS ALL OF ITS NET INVESTABLE
ASSETS IN ITS CORRESPONDING PORTFOLIO (A "PORTFOLIO") OF EQUITY MANAGERS TRUST
("MANAGERS TRUST"), AN OPEN-END MANAGEMENT INVESTMENT COMPANY MANAGED BY N&B
MANAGEMENT. EACH PORTFOLIO INVESTS IN SECURITIES IN ACCORDANCE WITH AN
INVESTMENT OBJECTIVE, POLICIES, AND LIMITATIONS IDENTICAL TO THOSE OF ITS
CORRESPONDING FUND. THE INVESTMENT PERFORMANCE OF EACH FUND DIRECTLY CORRESPONDS
WITH THE INVESTMENT PERFORMANCE OF ITS CORRESPONDING PORTFOLIO. THIS
"MASTER/FEEDER FUND" STRUCTURE IS DIFFERENT FROM THAT OF MANY OTHER INVESTMENT
COMPANIES WHICH DIRECTLY ACQUIRE AND MANAGE THEIR OWN PORTFOLIOS OF SECURITIES.
FOR MORE INFORMATION ON THIS UNIQUE STRUCTURE THAT YOU SHOULD CONSIDER, SEE
"SUMMARY" ON PAGE 1, AND "SPECIAL INFORMATION REGARDING ORGANIZATION,
CAPITALIZATION, AND OTHER MATTERS" ON PAGE 18.
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 March 31, 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 MARCH 31, 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 OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
SUMMARY 1
The Funds and Portfolios;
Risk Factors 1
Management 3
The Neuberger&Berman Investment Approach 3
EXPENSE INFORMATION 4
Shareholder Transaction Expenses for Each Fund 4
Annual Fund Operating Expenses 4
Example 5
FINANCIAL HIGHLIGHTS 6
Focus Assets 7
Guardian Assets 8
Manhattan Assets 9
Partners Assets 10
INVESTMENT PROGRAMS 12
Focus Portfolio 12
Genesis Portfolio 13
Guardian Portfolio 14
Manhattan Portfolio 14
Partners Portfolio 14
Short-Term Trading; Portfolio Turnover 15
Borrowings 15
Other Investments 15
PERFORMANCE INFORMATION 16
Total Return Information 17
SPECIAL INFORMATION REGARDING ORGANIZATION,
CAPITALIZATION, AND OTHER MATTERS 18
The Funds 18
The Portfolios 18
SHAREHOLDER SERVICES 21
How to Buy Shares 21
How to Sell Shares 21
Exchanging Shares 22
SHARE PRICES AND NET ASSET VALUE 23
<PAGE>
DIVIDENDS, OTHER DISTRIBUTIONS, AND TAXES 24
Distribution Options 24
Taxes 24
MANAGEMENT AND ADMINISTRATION 26
Trustees and Officers 26
Investment Manager, Administrator, Distributor, and Sub-Adviser 26
Expenses 27
Transfer Agent 28
DESCRIPTION OF INVESTMENTS 29
USE OF JOINT PROSPECTUS AND STATEMENT OF
ADDITIONAL INFORMATION 32
DIRECTORY 32
FUNDS ELIGIBLE FOR EXCHANGE 33
<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 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
"Special Information Regarding Organization, Capitalization, and Other Matters"
on page 18. 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 12 and "Description of Investments" on page 29.
The following table is a summary highlighting features of the Funds and
their corresponding Portfolios. You may want to invest in a variety of Funds to
fit your particular investment needs. Of course, there can be no assurance that
a Fund will meet its investment objective.
<PAGE>
<TABLE>
<CAPTION>
NEUBERGER&BERMAN INVESTMENT PORTFOLIO
EQUITY ASSETS STYLE CHARACTERISTICS
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
GUARDIAN ASSETS Broadly diversified, large-cap A growth and income fund that
value fund. 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, more Invests principally in common
concentrated portfolio than stocks selected from 13
Guardian. multi-industry 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, small-cap Invests primarily in stocks of
value fund. companies with small market
capitalizations (up to $1.5
billion at the time of the
Portfolio's investment).
Portfolio manager seeks 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, small-, Invests in securities believed to have
medium- and large-cap growth the maximum potential for
fund. long-term capital appreciation.
Portfolio manager follows a
"growth at a reasonable price"
philosophy and searches for
financially sound, growing
companies with special
competitive advantages or
products that make their
stocks attractive.
2
<PAGE>
PARTNERS ASSETS Broadly diversified, medium- to Seeks capital growth through an
large-cap value fund. approach 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>
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 26. 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 21,
"Shareholder Services-How to Sell Shares" on page 21, "Shareholder
Services-Exchanging Shares" on page 22, 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
less than their perceived market values. These include stocks that are currently
under-researched or are temporarily out of favor on Wall Street.
Portfolio managers identify value stocks in several ways. One of the
most common identifiers is a low price-to-earnings ratio-that is, stocks selling
at multiples of earnings per share that are lower than that of the market as a
whole. Other criteria are high dividend yield, a strong balance sheet and
financial position, a recent company restructuring with the potential to realize
hidden values, strong management, and low price-to-book value (net value of the
company's assets).
While a value approach concentrates on securities that are undervalued
in relation to their fundamental economic values, a growth approach seeks stocks
of companies that are projected to grow at above-average rates and may appear
poised for a period of accelerated earnings.
The growth portfolio manager is willing to pay a higher share price in
the hope that the stock's earnings momentum will carry its price higher. As a
stock's price increases based on strong earnings, the stock's original price
appears low in relation to the growth rate of its earnings. Sometimes this
happens when a particular company or industry is temporarily out of favor with
the market or under-researched. This strategy is called "growth at a reasonable
price."
Neuberger&Berman believes that, over time, securities that are
undervalued are more likely to appreciate in price and be subject to less risk
of price decline than securities whose market prices have already reached their
perceived economic values. This approach also contemplates selling portfolio
securities when they are considered to have reached their potential.
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 Portfolio places
3
<PAGE>
a greater emphasis on finding securities whose measures of fundamental value are
low in relation to the growth rates of their future earnings and cash flows, as
projected by the portfolio manager. Neuberger&Berman MANHATTAN Portfolio is
therefore willing to invest in securities with prices that have somewhat higher
multiples of earnings than securities purchased by the other Portfolios.
4
<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 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.
Sales Charge Imposed on Purchases NONE
Sales Charge Imposed on Reinvested Dividends NONE
Deferred Sales Charges NONE
Redemption Fees NONE
Exchange Fees NONE
Annual Fund Operating Expenses
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
- --------------------------------------------------------------------------------
The following table shows anticipated annual Total Operating Expenses
for each Fund, which are paid out of the assets of the Fund and which include
the Fund's pro rata portion of the Operating Expenses of its corresponding
Portfolio. Each Fund pays N&B Management an administration fee based on the
Fund's average daily net assets. Each Portfolio pays N&B Management a management
fee based on the Portfolio's average daily net assets; a pro rata portion of
this fee is borne indirectly by the corresponding Fund. Therefore, the table
combines management and administration fees. The Funds and Portfolios also incur
other expenses for things such as accounting and legal fees, maintaining
shareholder records, and furnishing shareholder statements and Fund reports.
"Operating Expenses" exclude interest, taxes, brokerage commissions, and
extraordinary expenses. The Funds' expenses are factored into their share prices
and dividends and are not charged directly to Fund shareholders. For more
information, see "Management and Administration" and the SAI.
<TABLE>
<CAPTION>
NEUBERGER&BERMAN Management and 12b-1 Other Total Operating
EQUITY ASSETS Administration Fees Fees Expenses Expenses
(estimated)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FOCUS ASSETS 0.25%
GENESIS ASSETS+ 0.25%
GUARDIAN ASSETS 0.25%
MANHATTAN ASSETS 0.25%
PARTNERS ASSETS 0.25%
</TABLE>
+ (Reflects N&B Management's waiver of certain management fees, described below)
5
<PAGE>
"Management and Administration Fees" for each Fund are based upon
current administration fees for the Fund and management fees for its
corresponding Portfolio. "Other Expenses" are estimated amounts for the current
fiscal year and assume average daily net assets of $ . There can be no assurance
that the Funds will achieve that asset level. The trustees of the Trust believe
that the aggregate per share expenses of each Fund and its corresponding
Portfolio will be approximately equal to the expenses the Fund would incur if
its assets were invested directly in the type of securities held by its
corresponding Portfolio. The trustees of the Trust also believe that investment
in a Portfolio by investors in addition to a Fund may enable the Portfolio to
achieve economies of scale which could reduce expenses. The expenses and,
accordingly, the returns of other funds that may invest in the Portfolios may
differ from those of the Funds.
N&B Management has voluntarily undertaken until December 31, 1997, to
reimburse each Fund for its Operating Expenses and its pro rata share of its
corresponding Portfolio's Operating Expenses which, in the aggregate, exceed
1.50% per annum of the Fund's average daily net assets. In addition, N&B
Management has voluntarily agreed to waive a portion of the management fee borne
directly by Neuberger&Berman GENESIS Portfolio and indirectly by
Neuberger&Berman GENESIS Assets to reduce that fee by 0.10% per annum of the
average daily net assets of Neuberger&Berman GENESIS Portfolio. Absent the fee
waiver, Management and Administration Fees and Total Operating Expenses would be
___% and ___% per annum, respectively, of the average daily net assets of
Neuberger&Berman GENESIS Assets.
For more information about the current expense reimbursement
undertakings and fee waiver, see "Expenses" on page 27.
Because the Funds pay 12b-1 fees, long-term investors in Fund shares
may pay more in distribution expenses than the economic equivalent of the
maximum front-end sales charge permitted by the National Association of
Securities Dealers ("NASD").
Example
- --------------------------------------------------------------------------------
To illustrate the effect of Operating Expenses, let's assume that each
Fund's annual return is 5% and that it had Total Operating Expenses described in
the table above. For every $1,000 you invested in each Fund, you would have paid
the following amounts of total expenses if you closed your account at the end of
each of the following time periods:
NEUBERGER&BERMAN
EQUITY ASSETS 1 Year 3 Years
- ---------------------------------------------------------------------------
FOCUS ASSETS
GENESIS ASSETS
GUARDIAN ASSETS
MANHATTAN ASSETS
PARTNERS ASSETS
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.
6
<PAGE>
FINANCIAL HIGHLIGHTS
Selected Per Share Data and Ratios
- --------------------------------------------------------------------------------
The financial information in the following tables is for each Fund
(except Neuberger&Berman GENESIS Assets, which had not commenced operations) as
of February 28, 1997 and prior periods, if any. Except as noted below, the
following information is from the Funds' semi-annual report to shareholders and
has not been audited by the Funds' respective independent auditors/accountants.
Information for Neuberger&Berman PARTNERS Assets for the fiscal period ended
August 31, 1996 is from that Fund's annual report to shareholders and has been
audited by the Fund's independent auditors. The auditors' report with respect to
Neuberger&Berman PARTNERS Assets is incorporated in the SAI by reference to the
annual report. You may obtain, at no cost, further information about the
performance of Neuberger&Berman PARTNERS Assets in its annual report and about
the performance of all of the Funds (except Neuberger&Berman GENESIS Assets) in
their semi-annual report. Please call 800-366-6264 for a free copy of the annual
or semi-annual report and for up-to-date information. Also, see "Performance
Information."
7
<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.
PERIOD FROM
SEPTEMBER __, 1996(1)
TO FEBRUARY 28, 1997
- --------------------------------------------------------------------------------
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)
---------------------------------
Total From Investment Operations
---------------------------------
Less Distributions
Dividends (from net investment
income)
Distributions (from capital gains)
---------------------------------
Total Distributions
---------------------------------
Net Asset Value, End of Period
---------------------------------
Total Return+
---------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in millions)
---------------------------------
Ratio of Expenses to Average
Net Assets(4)
---------------------------------
Ratio of Net Income to Average
Net Assets(4)
---------------------------------
SEE NOTES TO FINANCIAL HIGHLIGHTS
8
<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.
PERIOD FROM
SEPTEMBER __, 1996(1)
TO FEBRUARY 28, 1997
- --------------------------------------------------------------------------------
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)
--------------------------------
Total From Investment Operations
--------------------------------
Less Distributions
Dividends (from net investment
income)
Distributions (from capital gains)
--------------------------------
Total Distributions
--------------------------------
Net Asset Value, End of Period
--------------------------------
Total Return+
--------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in millions)
--------------------------------
Ratio of Expenses to Average
Net Assets(4)
--------------------------------
Ratio of Net Income to Average
Net Assets(4)
--------------------------------
SEE NOTES TO FINANCIAL HIGHLIGHTS
9
<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 corresponding Portfolio's Financial Statements and notes thereto.
PERIOD FROM
SEPTEMBER __, 1996(1)
TO FEBRUARY 28, 1997
- --------------------------------------------------------------------------------
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)
-----------------------------------
Total From Investment Operations
-----------------------------------
Less Distributions
Dividends (from net investment
income)
Distributions (from capital gains)
-----------------------------------
Total Distributions
-----------------------------------
Net Asset Value, End of Period
-----------------------------------
Total Return+
-----------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in thousands)
-----------------------------------
Ratio of Expenses to Average
Net Assets(4)
-----------------------------------
Ratio of Net Income to Average
Net Assets(4)
-----------------------------------
SEE NOTES TO FINANCIAL HIGHLIGHTS
10
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
Partners Assets
- --------------------------------------------------------------------------------
The following table includes selected data for a share outstanding
throughout each 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
SIX MONTHS ENDED AUGUST 19, 1996(1)
FEBRUARY 28, 1997 TO AUGUST 31, 1996
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period $10.00
Income From Investment Operations --
Net Investment Income
Net Gains or Losses on Securities
(both realized and unrealized) ( .09)
Total From Investment Operations (.09)
Less Distributions
Dividends (from net investment income)
Distributions (from capital gains)
Total Distributions
Net Asset Value, End of Period $ 9.91
Total Return+ -0.90%(2)
Ratios/Supplemental Data
Net Assets, End of Period (in thousands) $103.5
Ratio of Expenses to Average Net Assets(4) 1.50%(3)
Ratio of Net Income to Average
Net Assets(4) 2.38%(3)
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
11
<PAGE>
NOTES TO FINANCIAL HIGHLIGHTS
1) The date investment operations commenced.
2) Not annualized.
3) Annualized.
4) After reimbursement of expenses by N&B Management. Had N&B Management
not undertaken such action the annualized ratios to average daily net
assets would have been:
NEUBERGER&BERMAN PERIOD FROM AUGUST 19, 1996
PARTNERS ASSETS TO AUGUST 31, 1996
- --------------------------------------------------------------------------------
Expenses 2.50%
Net Investment Income 1.38%
3) 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. For the year ended August 31, 1996, the portfolio turnover
rate for Neuberger&Berman PARTNERS Portfolio was 96%, and the average
commission rate paid by that Portfolio was $0.0494. For the six months
ended February 28, 1997, the portfolio turnover rates for and average
commission rates paid by each Portfolio were as follows:
Portfolio Average
Turnover Rate Commission Rate
------------- ---------------
Neuberger&Berman FOCUS Portfolio
Neuberger&Berman GUARDIAN Portfolio
Neuberger&Berman MANHATTAN Portfolio
Neuberger&Berman PARTNERS Portfolio
For additional information, see the SAI.
+ 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.
12
<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
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 29.
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 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 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 undervalued.
Where a particular industry may fall within more than one sector, N&B Management
uses its judgment and experience to determine the placement of that industry
within a sector. The Portfolio uses the value-oriented investment approach to
identify stocks believed to be undervalued, including stocks that are
temporarily out of favor in the market. The Portfolio then focuses its
investments in the sectors in which the undervalued stocks are clustered. These
sectors are believed to offer the greatest potential for capital growth. This
investment approach is different from that of most other mutual funds that
emphasize sector investment. Those funds either invest in only a single economic
sector or choose a number of sectors by analyzing general economic trends.
Further information on the Portfolio's securities holdings and their allocation
by sector as of the end of the Fund's most recent fiscal period is included in
the Fund's semi-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, (2) 25% or
more of its total assets would be invested in the securities of companies having
13
<PAGE>
their principal business activities in any one industry (this policy is
fundamental) or (3) more than 5% of its total assets would be invested in the
securities of any one company.
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 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, have a cyclical relationship 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.
Small-cap company stocks generally are considered to offer greater
potential for appreciation than securities of companies with larger market
capitalizations. Most small-cap company stocks pay low or no dividends, and the
Portfolio seeks long-term appreciation, rather than income. Small-cap company
stocks also have higher risk and volatility, because most are not as broadly
traded as stocks of companies with larger capitalizations and their prices thus
may fluctuate more widely and abruptly. Small-cap company securities are also
less researched and often overlooked and undervalued in the market.
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 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.
14
<PAGE>
Neuberger&Berman Guardian Portfolio
- --------------------------------------------------------------------------------
The investment objective of Neuberger&Berman GUARDIAN Portfolio and
Neuberger&Berman GUARDIAN Assets is to seek capital appreciation and,
secondarily, current income.
Neuberger&Berman GUARDIAN Portfolio invests primarily in 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 that also invests all of its net investable assets in
Neuberger&Berman GUARDIAN Portfolio, and its predecessor have paid their
shareholders an income dividend every quarter and a capital gain distribution
every year since the predecessor's inception in 1950. Of course, this past
record does not necessarily predict the Fund's future practices.
Neuberger&Berman Manhattan Portfolio
- --------------------------------------------------------------------------------
The investment objective of Neuberger&Berman MANHATTAN Portfolio and
Neuberger&Berman MANHATTAN Assets is to seek capital appreciation without regard
to income.
Neuberger&Berman MANHATTAN Portfolio generally invests in securities
of small-, medium- and large-capitalization companies believed to have the
maximum potential for long-term capital appreciation. It does not seek to invest
in securities that pay dividends or interest, and any such income is incidental.
The Portfolio uses a "growth at a reasonable price" investment
approach. When N&B Management believes that particular securities have greater
potential for long-term capital appreciation, the Portfolio may purchase such
securities at prices with relatively higher multiples to measures of economic
value (such as earnings or cash flow) than other Portfolios. The Portfolio
focuses on companies with strong balance sheets and reasonable valuations
relative to their growth rates. It also diversifies its investments among many
companies and industries.
The Portfolio's growth investment program involves greater risks and
share price volatility than programs that invest in more undervalued securities.
Small-cap company stocks are subject to the risks described with respect to the
investment program of Neuberger&Berman GENESIS Portfolio. 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.
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 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.
15
<PAGE>
The Portfolio considers additional factors when selecting securities,
including ownership by a company's management of the company's stock and the
dominance of a company in its particular field.
Short-Term Trading; Portfolio Turnover
- --------------------------------------------------------------------------------
Although 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. It is
anticipated that the annual turnover rates of the Portfolios normally will not
exceed 100%. Turnover rates in excess of 100% generally result in higher
transaction costs (which are borne directly by the Portfolio) and a possible
increase in realized short-term capital gains or losses. See "Dividends, Other
Distributions, and Taxes" on page 24 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 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.
16
<PAGE>
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 smooths 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 or September 1996, except for
Neuberger&Berman GENESIS Assets, which has no past performance as of the date of
this Prospectus. 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 table shows the average annual
total returns of each Fund for the 1-year, 5-year, and 10-year periods ended
February 28, 1997. Returns for periods prior to each Fund's inception represent
the performance of the respective Sister Fund and its predecessor. The table
also shows a comparison with the S&P "500" Index for each Fund and its
respective Sister Fund and that Sister Fund's predecessor (except
Neuberger&Berman GENESIS Assets' Sister Fund and its predecessor, which are
compared with the Russell 2000 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 Index, representing about 11% of the Russell
3000's total market capitalization. Please note that indices do not take into
account any fees or expenses of investing in the individual securities they
track. Further information regarding the Funds' performance is presented in
their semi-annual report to shareholders, which is available without change by
calling 800-366-6264.
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS
ENDED FEBRUARY 28, 1997
(INCLUDES PERFORMANCE RESULTS OF THE SISTER FUNDS)
Since Inception
1 Year 5 Years 10 Years Inception Date
- --------------------------------------------------------------------------------
FOCUS 10/19/55
GUARDIAN 6/1/50
MANHATTAN 3/1/79+
PARTNERS 1/20/75+
S&P "500" N/A
17
<PAGE>
Since Inception
1 Year 5 Years 10 Years Inception Date
- --------------------------------------------------------------------------------
GENESIS* 9/27/88
RUSSELL 2000 N/A
+ THE DATES WHEN N&B MANAGEMENT BECAME INVESTMENT ADVISER TO THE
PREDECESSORS OF THE SISTER FUNDS.
* PERFORMANCE RESULTS OF THE SISTER FUND AND ITS PREDECESSOR ONLY.
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' inceptions would have been lower. Prior
to November 1991, the investment policies of the predecessor of Neuberger&Berman
FOCUS Assets' Sister Fund required that a substantial percentage of its assets
be invested in the energy field; accordingly, performance results prior to that
time do not necessarily reflect the level of performance that might have been
achieved had the Fund's current policies been in effect during that period.
The following table lets you take a closer look at how each Sister Fund
and its predecessor performed year by year, in terms of an annual per share
total return for each of the last ten calendar years (ending December 31).
Please note that the previous chart reflects information for periods ended on
February 28, 1997.
<TABLE>
<CAPTION>
TOTAL RETURNS FOR CALENDAR YEARS ENDED DECEMBER 31,
(PERFORMANCE RESULTS OF THE SISTER FUNDS)
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%
GUARDIAN -1.0 +28.0 +21.5 -4.7 +34.3 +19.0 +14.5 +0.6 +32.1
MANHATTAN +0.4 +18.3 +29.1 -8.1 +30.9 +17.8 +10.0 -3.6 +31.0
PARTNERS +4.3 +15.5 +22.8 -5.1 +22.4 +17.5 +16.5 -1.9 +35.2
S&P "500" +5.2 +16.5 +31.6 -3.1 +30.3 +7.6 +10.0 +1.4 +37.5
GENESIS N/A N/A +17.3 -16.2 +41.6 +15.6 +13.9 -1.8 +27.3
RUSSELL 2000 N/A N/A +16.3 -19.5 +46.0 +18.4 +18.9 -1.8 +28.5
</TABLE>
TOTAL RETURN INFORMATION. You can obtain current performance
information about each Fund by calling N&B Management at 800-366-6264.
18
<PAGE>
SPECIAL INFORMATION REGARDING ORGANIZATION,
CAPITALIZATION, AND OTHER MATTERS
The Funds
- --------------------------------------------------------------------------------
Each Fund is a separate series of the Trust, a Delaware business trust
organized pursuant to a Trust Instrument dated as of October 18, 1993. The Trust
is registered under the Investment Company Act of 1940 (the "1940 Act") as a
diversified, open-end management investment company, commonly known as a mutual
fund. The Trust has 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 Trust may establish
additional series or classes of shares without the approval of shareholders. The
assets of each series belong only to that series, and the liabilities of each
series are borne solely by that series and no other.
DESCRIPTION OF SHARES. Each Fund is authorized to issue an unlimited
number of shares of beneficial interest (par value $0.001 per share). Shares of
each Fund represent equal proportionate interests in the assets of that Fund
only and have identical voting, dividend, redemption, liquidation, and other
rights. All shares issued are fully paid and non-assessable, and shareholders
have no preemptive or other 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 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, the Trust Instrument requires
that every written obligation of the Trust or a Fund contain a statement that
such obligation may be enforced only against the assets of the Trust or Fund and
provides for indemnification out of Trust or Fund property of any shareholder
nevertheless held personally liable for Trust or Fund obligations, respectively.
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; its corresponding Fund thus acquires an indirect
interest in those securities. This "master/feeder fund" structure is depicted in
the "Summary" on page 1.
Each Fund's investment in its corresponding Portfolio is in the form of
a non-transferable beneficial interest. Members of the general public may not
purchase a direct interest in a Portfolio. The five Sister Funds that are series
of N&B Equity Funds and five mutual funds that are series of Neuberger&Berman
19
<PAGE>
Equity Trust ("N&B Equity Trust") invest all of their respective net investable
assets in five 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. Each Portfolio may also permit other
investment companies and/or other institutional investors to invest in the
Portfolio. All investors will invest in a Portfolio on the same terms and
conditions as a Fund and will pay a proportionate share of the Portfolio's
expenses. The Trust does not sell its shares directly to members of the general
public. Other investors in a Portfolio (including the series of N&B Equity Funds
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 may invest in a Portfolio in the
future will be available from N&B Management by calling 800-366-6264.
The trustees of the Trust believe that investment in a Portfolio by a
series of N&B Equity Funds or N&B Equity Trust or 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 Trust determine that it is in the
best interests of the Fund and its shareholders to do so. A Fund might withdraw,
for example, if there were other investors in a Portfolio with power to, and who
did by a vote of all investors (including the Fund), change the investment
objective, policies, or limitations of the Portfolio in a manner not acceptable
to the trustees of the Trust. A withdrawal could result in a distribution in
kind of 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
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 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
20
<PAGE>
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.
21
<PAGE>
SHAREHOLDER SERVICES
How to Buy Shares
- --------------------------------------------------------------------------------
YOU CAN BUY AND OWN FUND SHARES ONLY THROUGH AN ACCOUNT WITH AN
INSTITUTION THAT PROVIDES ACCOUNTING, RECORDKEEPING, AND OTHER SERVICES TO
INVESTORS AND THAT HAS AN ADMINISTRATIVE SERVICES AGREEMENT AND HAS HAD EXECUTED
A DEALER AGREEMENT WITH N&B MANAGEMENT. N&B Management and the Funds do not
recommend, endorse, or receive payments from any Institution. N&B Management
compensates Institutions for services they provide under an administrative
services agreement and/or dealer agreement. N&B Management does not provide
investment advice to any Institution or its clients or make decisions regarding
their investments.
Each Institution will establish its own procedures for the purchase of
Fund shares, including minimum initial and additional investments for shares of
each Fund and the acceptable methods of payment for shares. Shares are purchased
at the next price calculated on a day the New York Stock Exchange ("NYSE") is
open, after a purchase order is received and accepted by an Institution. Prices
for shares of all Funds are usually calculated as of 4 p.m. Eastern time. Your
Institution may be closed on days when the NYSE is open. As a result, prices for
Fund shares may be significantly affected on days when you have no access to
your Institution to buy shares.
Other Information:
. An Institution must pay for shares it purchases in U.S.
dollars.
. Each Fund has the right to suspend the offering of its shares
for a period of time. Each Fund also has the right to accept
or reject a purchase order in its sole discretion, including
certain purchase orders using an exchange of shares. See
"Shareholder Services-Exchanging Shares."
. The Funds will not issue a certificate for your 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. Shares are sold at the next price calculated on a
day the NYSE is open, after a sales order is received and accepted by an
Institution. Prices for shares of all Funds are usually calculated as of 4 p.m.
Eastern time. Your Institution may be closed on days when the NYSE is open. As a
result, prices for Fund shares may be significantly affected on days when you
have no access to your Institution to sell shares.
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).
. Each Fund may suspend redemptions or postpone payments on days
when the NYSE is closed (besides weekends and holidays), when
trading on the NYSE is restricted, or as permitted by the SEC.
22
<PAGE>
. 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 Institution advance notice whenever it can
reasonably do so.
23
<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 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. 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.
24
<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), net realized
capital gains, and net realized 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 any, near the end of each
calendar quarter.
Distribution Options
- --------------------------------------------------------------------------------
REINVESTMENT IN SHARES. All dividends and other distributions paid on
shares of a Fund are automatically reinvested in additional shares of that Fund,
unless an Institution elects to receive them in cash. Dividends and other
distributions are reinvested at the Fund's per share NAV, usually as of the date
the dividend or other distribution is payable.
DISTRIBUTIONS IN CASH. An Institution may elect to receive dividends in
cash, with other distributions being reinvested in additional Fund shares, or to
receive all dividends and other distributions in cash.
Taxes
- --------------------------------------------------------------------------------
Each Fund intends to continue to qualify for treatment as a regulated
investment company for federal income tax purposes so that it will be relieved
of federal income tax on that part of its taxable income and realized gains that
it distributes to its shareholders.
An investment has certain tax consequences, depending on the type of
account in which you invest. IF YOU HAVE AN ACCOUNT UNDER A QUALIFIED RETIREMENT
PLAN OR AN INDIVIDUAL RETIREMENT ACCOUNT, TAXES ARE DEFERRED.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax
and may also be subject to state and local income taxes. Distributions are
taxable when they are paid, whether in cash or by reinvestment in additional
Fund shares, except that distributions declared in December to shareholders of
record on a date in that month and paid in the following January are taxable as
if they were paid on December 31 of the year in which the distributions were
declared. 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 a 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 taxed as long-term capital gain, no matter how long you have
owned your shares. Distributions of net capital gain may include gains from the
sale of portfolio securities that appreciated in value before you bought your
shares.
Every January, each Fund will send each Institution that is a
shareholder therein a statement showing the amount of distributions paid (or
25
<PAGE>
deemed paid) in the previous year. Information accompanying that statement will
show the portion, if any, of those distributions that generally are not taxable
in certain states.
TAXES ON REDEMPTIONS. Capital gains realized on redemptions of Fund
shares, including redemptions in connection with exchanges to other Funds, are
subject to tax. A capital gain or loss is the difference between the amount paid
for shares (including the amount of any dividends and other distributions that
were reinvested) and the amount received when shares are sold.
When an Institution sells shares, it will receive a confirmation
statement showing the number of shares sold and the price. Every January,
Institutions will also receive a consolidated transaction statement for the
previous year.
Each Institution is required annually to send investors in its accounts
statements showing distribution and transaction information for the previous
year.
The foregoing is only a summary of some of the important 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.
26
<PAGE>
MANAGEMENT AND ADMINISTRATION
Trustees and Officers
- --------------------------------------------------------------------------------
The trustees of the Trust and the trustees of Managers Trust, who are
currently the same individuals, have oversight responsibility for the operations
of each Fund and each Portfolio, respectively. The SAI contains general
background information about each trustee and officer of the Trust and of
Managers Trust. The trustees and officers of the Trust and of Managers Trust who
are officers and/or directors of N&B Management and/or principals of
Neuberger&Berman serve without compensation from the Funds or the Portfolios.
The trustees of the Trust and of Managers Trust, including a majority of those
trustees who are not "interested persons" (as defined in the 1940 Act) of the
Trust or Managers Trust, have adopted written procedures reasonably appropriate
to deal with potential conflicts of interest between the Trust and Managers
Trust, including, if necessary, creating a separate board of trustees of
Managers Trust.
Investment Manager, Administrator,
Distributor, and Sub-Adviser
- --------------------------------------------------------------------------------
N&B Management serves as the investment manager of each Portfolio, as
administrator of each Fund, and as distributor of the shares of each Fund. N&B
Management and its predecessor firms have specialized in the management of
no-load mutual funds since 1950. In addition to serving the five Portfolios, N&B
Management currently serves as investment manager of other mutual funds.
Neuberger&Berman, which acts as sub-adviser for the Portfolios and other mutual
funds managed by N&B Management, also serves as investment adviser of three
other investment companies. The mutual funds managed by N&B Management and
Neuberger&Berman had aggregate net assets of approximately $____ billion as of
__________, 1997.
As sub-adviser, Neuberger&Berman furnishes N&B Management with
investment recommendations and research without added cost to the Portfolios.
Neuberger&Berman is a member firm of the NYSE and other principal exchanges and
acts as the Portfolios' principal broker in the purchase and sale of their
securities. Neuberger&Berman and its affiliates, including N&B Management,
manage securities accounts that had approximately $_____ billion of assets as of
_________, 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. Mr. Simons is a Vice President of
N&B Management and a principal of Neuberger&Berman. Mr. Simons has had
responsibility for Neuberger&Berman FOCUS Portfolio and Neuberger&Berman FOCUS
Assets' Sister Fund's predecessor since 1988, and for Neuberger&Berman GUARDIAN
Portfolio and Neuberger&Berman GUARDIAN Assets' Sister Fund's predecessor since
1983. Mr. Risen has had those responsibilities since 1996. Mr. Risen is a
principal of Neuberger&Berman and has been an Assistant Vice President of N&B
Management since May 1996 and a portfolio manager for Neuberger&Berman since
1995. He was a research analyst at Neuberger&Berman from 1992 to 1995; from 1990
to 1992, he was a research analyst at another prominent financial services firm.
27
<PAGE>
Neuberger&Berman GENESIS Portfolio-Judith M. Vale. Ms. Vale has been a
member of Neuberger&Berman's Small Cap Group since 1992, a Vice President of N&B
Management since November 1994, and a principal of Neuberger&Berman since July
1996. She has been primarily responsible for the day-to-day management of
Neuberger&Berman GENESIS Portfolio since February 1994. Ms. Vale was a portfolio
manager for another investment management group from 1990 to 1992.
Neuberger&Berman MANHATTAN Portfolio-Mark R. Goldstein and Susan
Switzer. Mr. Goldstein is a Vice President of N&B Management and a principal of
Neuberger&Berman. Previously he was a securities analyst and portfolio manager
with that firm. He has had responsibility for Neuberger&Berman MANHATTAN
Portfolio and Neuberger&Berman MANHATTAN Assets' Sister Fund's predecessor since
June 1992. Ms. Switzer has been an Assistant Vice President of N&B Management
since March 1995 and a portfolio manager for Neuberger&Berman since January
1995. Ms. Switzer was a research analyst and assistant portfolio manager for
another money management firm from 1989 to 1994.
Neuberger&Berman PARTNERS Portfolio-Michael M. Kassen and Robert I.
Gendelman. Mr. Kassen is a Vice President of N&B Management and a principal of
Neuberger&Berman. He has had responsibility for Neuberger&Berman PARTNERS
Portfolio and Neuberger&Berman PARTNERS Assets' Sister Fund's predecessor since
June 1990. Mr. Kassen was an employee of N&B Management from 1990 to December
1992. Mr. Gendelman is a principal of Neuberger&Berman and an Assistant Vice
President of N&B Management. Mr. Gendelman has had responsibility for
Neuberger&Berman PARTNERS Portfolio since October 1994. He was a portfolio
manager for another mutual fund manager from 1992 to 1993 and was managing
partner of an investment partnership from 1988 to 1992.
Neuberger&Berman acts as the principal broker for the Portfolios in the
purchase and sale of portfolio securities and in the sale of covered call
options, and for those services receives brokerage commissions. In effecting
securities transactions, each Portfolio seeks to obtain the best price and
execution of orders. For more information, see the SAI.
The 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 Trust, 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. However, N&B Management has voluntarily agreed to waive a portion of
the management fee borne directly by Neuberger&Berman GENESIS Portfolio and
28
<PAGE>
indirectly by Neuberger&Berman GENESIS Assets to reduce that fee by 0.10% per
annum of the average daily net assets of Neuberger&Berman GENESIS Portfolio.
N&B Management provides administrative services to each Fund that
include furnishing similar facilities and personnel for the Fund and performing
accounting, recordkeeping, and other services. For 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 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 expenses.
The trustees of the Trust have adopted a plan pursuant to Rule 12b-1 under the
1940 Act ("Plan"). The Plan provides that, as compensation for administrative
and other services provided to the Funds, N&B Management's activities and
expenses related to the sale and distribution of Fund shares, and ongoing
services provided to investors in the Funds, N&B Management receives from each
Fund a fee at the annual rate of 0.25% of that Fund's average daily net assets.
N&B Management may pay up to the full amount of this fee to Institutions that
distribute Fund shares and provide services to the Funds and their shareholders,
based on the level of such services provided. Those Institutions may use the
payments for, among other purposes, compensating employees engaged in sales
and/or shareholder servicing. The amount of fees paid by a Fund during any year
may be more or less than the cost of distribution and other services provided to
the Fund. NASD rules limit the amount of annual distribution fees that may be
paid by a mutual fund and impose a ceiling on the cumulative distribution fees
paid. The Trust's Plan complies with those rules.
Each Fund bears all expenses of its operations other than those borne
by N&B Management as administrator of the Fund and as distributor of its shares.
Each Portfolio bears all expenses of its operations other than those borne by
N&B Management as investment manager of the Portfolio. These expenses include,
but are not limited to, for the Funds and Portfolios, legal and accounting fees
and compensation for trustees who are not affiliated with N&B Management; for
the Funds, transfer agent fees and the cost of printing and sending reports and
proxy materials to shareholders; and for the Portfolios, custodial fees for
securities.
See "Expense Information-Annual Fund Operating Expenses" for
information about how these fees and expenses may affect the value of your
investment.
N&B Management has voluntarily undertaken until December 31, 1997, to
reimburse each Fund for its Operating Expenses and its pro rata share of its
corresponding Portfolio's Operating Expenses which, in the aggregate, exceed
1.50% per annum of the Fund's average daily net assets.
The effect of reimbursement or a waiver 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.
29
<PAGE>
DESCRIPTION OF INVESTMENTS
In addition to common stocks and other securities referred to in
"Investment Programs" herein, each Portfolio may make the following investments,
among others, individually or in combination, although it may not necessarily
buy all of the types of securities or use all of the investment techniques that
are described. For additional information on the following investments and on
other types of investments which the Portfolios may make, see the SAI.
ILLIQUID SECURITIES. Each Portfolio may invest up to 10% of its net
assets (5% in the case of Neuberger&Berman GENESIS Portfolio) in illiquid
securities, which are securities that cannot be expected to be sold within seven
days at approximately the price at which they are valued. Due to the absence of
an active trading market, a Portfolio may experience difficulty in valuing or
disposing of illiquid securities. N&B Management determines the liquidity of the
Portfolios' securities, under general supervision of the trustees of Managers
Trust.
RESTRICTED SECURITIES AND RULE 144A SECURITIES. Each Portfolio may
invest in restricted securities and Rule 144A securities. Restricted securities
cannot be sold to the public without registration under the Securities Act of
1933 ("1933 Act"). Unless registered for sale, these securities can be sold only
in privately negotiated transactions or pursuant to an exemption from
registration. Rule 144A securities, although not registered, may be resold to
qualified institutional buyers in accordance with Rule 144A under the 1933 Act.
Unregistered securities may also be sold abroad pursuant to Regulation S under
the 1933 Act. Foreign securities that are freely tradeable in their principal
market are not considered restricted securities even if they are not registered
for sale in the United States. Restricted securities are generally considered
illiquid. N&B Management, acting pursuant to guidelines established by the
trustees of Managers Trust, may determine that some restricted or Rule 144A
securities are liquid.
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 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 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 having a market value not exceeding
10% of its net assets and may purchase call options in related closing
transactions. The purchaser of a call option acquires the right to buy a
portfolio security at a fixed price during a specified period. The maximum price
the 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
30
<PAGE>
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. Options are
considered "derivatives."
SHORT SALES AGAINST-THE-BOX. Each Portfolio may make short sales
against-the-box, in which it sells securities short only if it owns or has the
right to obtain without payment of additional consideration an equal amount of
the same type of securities sold. Short selling against-the-box may defer
recognition of gains or losses to a later tax period.
REPURCHASE AGREEMENTS/SECURITIES LOANS. In a repurchase agreement, a
Portfolio buys a security from a Federal Reserve member bank or a securities
dealer and simultaneously agrees to sell it back at a higher price, at a
specified date, usually less than a week later. The underlying securities must
fall within the Portfolio's investment policies and limitations. Each Portfolio
also may lend portfolio securities to banks, brokerage firms, or institutional
investors to earn income. Costs, delays, or losses could result if the selling
party to a repurchase agreement or the borrower of portfolio securities becomes
bankrupt or otherwise defaults. N&B Management monitors the creditworthiness of
sellers and borrowers.
OTHER INVESTMENTS. Although each Portfolio invests primarily in common
stocks, when market conditions warrant it may invest in preferred stocks,
securities convertible into or exchangeable for common stocks, U.S. Government
and Agency Securities, investment grade debt securities, or money market
instruments, or may retain assets in cash or cash equivalents.
U.S. Government Securities are obligations of the U.S. Treasury backed
by the full faith and credit of the United States. U.S. Government Agency
Securities are issued or guaranteed by U.S. Government agencies or by
instrumentalities of the U.S. Government, such as the Government National
Mortgage Association, Federal National Mortgage Association, Federal Home Loan
Mortgage Corporation, Student Loan Marketing Association, 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 mortgage-backed securities.
The market prices of U.S. Government Securities 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 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
31
<PAGE>
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.
32
<PAGE>
USE OF JOINT PROSPECTUS AND STATEMENT
OF ADDITIONAL INFORMATION
Each Fund and its corresponding Portfolio acknowledges that it is
solely responsible for all information or lack of information about that Fund
and Portfolio in this Prospectus or in the SAI, and no other Fund or Portfolio
is responsible therefor. The trustees of the Trust and of Managers Trust have
considered this factor in approving each Fund's use of a single combined
Prospectus and combined SAI.
DIRECTORY
INVESTMENT MANAGER, ADMINISTRATOR,
AND DISTRIBUTOR
Neuberger&Berman Management Incorporated
605 Third Avenue 2nd Floor
New York, NY 10158-0180
SUB-ADVISER
Neuberger&Berman, 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
33
<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 of Neuberger&Berman Management Inc.
(C) 1997 Neuberger&Berman Management Inc.
34
<PAGE>
- -----------------------------------------------------------------
NEUBERGER & BERMAN EQUITY ASSETS AND PORTFOLIOS
STATEMENT OF ADDITIONAL INFORMATION
DATED MARCH 31, 1997
Neuberger & Berman Neuberger & Berman Focus
Manhattan Assets (and Assets (and Neuberger & Berman
Neuberger & Berman Focus Portfolio)
Manhattan Portfolio)
Neuberger & Berman Guardian Neuberger & Berman Partners
Assets (and Neuberger & Berman Assets (and Neuberger & Berman
Guardian Portfolio) Partners Portfolio)
Neuberger & Berman
Genesis Assets
(and Neuberger & Berman Genesis Portfolio)
No-Load Mutual Funds
605 Third Avenue, 2nd Floor, New York, NY 10158-0180
Toll-Free 800-366-6264
- -------------------------------------------------------------------------------
Neuberger & Berman MANHATTAN Assets, Neuberger & Berman
GENESIS ASSETS, Neuberger & Berman FOCUS Assets, Neuberger & Berman GUARDIAN
Assets, and Neuberger & Berman PARTNERS Assets (each a "Fund") are no-load
mutual funds that offer shares pursuant to a Prospectus dated March 31, 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 A PENSION PLAN ADMINISTRATOR, BROKER-DEALER, OR OTHER INSTITUTION
(EACH AN "INSTITUTION") THAT PROVIDES ACCOUNTING, RECORDKEEPING, AND OTHER
SERVICES TO INVESTORS AND THAT HAS AN ADMINISTRATIVE SERVICES AGREEMENT WITH
NEUBERGER & BERMAN MANAGEMENT INCORPORATED ("N&B MANAGEMENT").
The Funds' Prospectus provides basic information that an
investor should know before investing. A copy of the Prospectus may be obtained,
without charge, from 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
Mark R. Goldstein, Portfolio Manager of Neuberger &
Berman MANHATTAN Portfolio..................................... 6
Judith M. Vale, Portfolio Manager of Neuberger
& Berman GENESIS Portfolio...................................6
Kent C. Simons and Kevin L. Risen, Portfolio Co-Managers of
Neuberger & Berman FOCUS and Neuberger & Berman GUARDIAN
Portfolios................................................................9
Michael M. Kassen and Robert I. Gendelman, Portfolio Co- Managers
of Neuberger & Berman PARTNERS Portfolio....................10
Additional Investment Information........................................11
Neuberger & Berman FOCUS Portfolio - Description of
Economic Sectors...............................................22
PERFORMANCE INFORMATION................................................. 25
Total Return Computations...................................... 25
Comparative Information........................................ 27
Other Performance Information.................................. 28
CERTAIN RISK CONSIDERATIONS............................................. 29
TRUSTEES AND OFFICERS................................................... 29
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES....................... 37
Investment Manager and Administrator........................... 37
Sub-Adviser.................................................... 39
Investment Companies Managed................................... 40
Management and Control of N&B Management....................... 43
DISTRIBUTION ARRANGEMENTS............................................... 44
Distributor.................................................... 44
Rule 12b-1 Plan................................................ 45
ADDITIONAL EXCHANGE INFORMATION......................................... 45
ADDITIONAL REDEMPTION INFORMATION....................................... 46
Suspension of Redemptions...................................... 46
Redemptions in Kind............................................ 46
DIVIDENDS AND OTHER DISTRIBUTIONS....................................... 46
ADDITIONAL TAX INFORMATION.............................................. 47
Taxation of the Funds.......................................... 47
Taxation of the Portfolios..................................... 48
Taxation of the Funds' Shareholders............................ 51
- i -
<PAGE>
PAGE
PORTFOLIO TRANSACTIONS................................................. 51
Portfolio Turnover............................................ 58
REPORTS TO SHAREHOLDERS................................................ 59
ORGANIZATION........................................................... 59
CUSTODIAN AND TRANSFER AGENT........................................... 59
INDEPENDENT AUDITORS/ACCOUNTANTS....................................... 60
LEGAL COUNSEL.......................................................... 60
REGISTRATION STATEMENT................................................. 61
FINANCIAL STATEMENTS................................................... 61
Appendix A............................................................. 62
RATINGS OF CORPORATE BONDS AND COMMERCIAL PAPER............... 62
Appendix B............................................................. 65
THE ART OF INVESTMENT: A CONVERSATION WITH ROY
NEUBERGER............................................ 65
- 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 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.
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
<PAGE>
following discusses the investment policies and limitations of the Portfolios,
it applies equally to their corresponding Funds.
Except for the limitation on borrowing and the limitation on
ownership of portfolio securities by officers and trustees, any investment
policy or limitation that involves a maximum percentage of securities or assets
will not be considered to be violated unless the percentage limitation is
exceeded immediately after, and because of, a transaction by a Portfolio.
The following fundamental investment policies and limitations
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.
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 instrumental-
ities.
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
- 2 -
<PAGE>
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 securi-
ties of other issuers, except to the extent that a Portfolio, in
disposing of portfolio securities, may be deemed to be an under-
writer within the meaning of the Securities Act of 1933 ("1933
Act").
The following non-fundamental investment policies and
limitations apply to all Portfolios:
1. BORROWING. No Portfolio may purchase securities if
outstanding borrowings, including any reverse repurchase agree-
ments, exceed 5% of its total assets.
2. LENDING. Except for the purchase of debt securities
and engaging in repurchase agreements, no Portfolio may make any
loans other than securities loans.
3. INVESTMENTS IN OTHER INVESTMENT COMPANIES. No Portfolio may
purchase securities of other investment companies, except to the extent
permitted by the 1940 Act and in the open market at no more than customary
brokerage commission rates. This limitation does not apply to securities
received or acquired as dividends, through offers of exchange, or as a result of
a reorganization, consolidation, or merger.
4. MARGIN TRANSACTIONS. No Portfolio may purchase securities
on margin from brokers or other lenders, except that a Portfolio may obtain such
short-term credits as are necessary for the clearance of securities
transactions. Margin payments in connection with transactions in futures
contracts and options on futures contracts shall not constitute the purchase of
securities on margin and shall not be deemed to violate the foregoing
limitation.
5. SHORT SALES. No Portfolio may sell securities short
unless it owns, or has the right to obtain without payment of
additional consideration, securities equivalent in kind and amount
- 3 -
<PAGE>
to the securities sold. Transactions in forward contracts, futures
contracts and options shall not constitute selling securities
short.
6. OWNERSHIP OF PORTFOLIO SECURITIES BY OFFICERS AND TRUSTEES.
No Portfolio may purchase or retain the securities of any issuer if, to the
knowledge of N&B Management, those officers and trustees of Managers Trust and
officers and directors of N&B Management who each owns individually more than
1/2 of 1% of the outstanding securities of such issuer, together own more than
5% of such securities.
7. UNSEASONED ISSUERS. No Portfolio may purchase the
securities of any issuer (other than securities issued or guaranteed by domestic
or foreign governments or political subdivisions thereof) if, as a result, more
than 5% of the Portfolio's total assets would be invested in the securities of
business enterprises that, including predecessors, have a record of less than
three years of continuous operation. For purposes of this limitation,
pass-through entities and other special purpose vehicles or pools of financial
assets are not considered to be business enterprises.
8. PUTS, CALLS, STRADDLES, OR SPREADS. No Portfolio may invest
in puts, calls, straddles, spreads, or any combination thereof, except that each
Portfolio may (i) write (sell) covered call options against portfolio securities
having a market value not exceeding 10% of its net assets and (ii) purchase call
options in related closing transactions. The Portfolios do not construe the
foregoing limitation to preclude them from purchasing or writing options on
futures contracts or from purchasing securities with rights to put the
securities to the issuer or a guarantor.
9. ILLIQUID SECURITIES. No Portfolio may purchase any security
if, as a result, more than 10% (5% in the case of Neuberger & Berman GENESIS
Portfolio) of its net assets would be invested in illiquid securities. Illiquid
securities include securities that cannot be sold within seven days in the
ordinary course of business for approximately the amount at which the Portfolio
has valued the securities, such as repurchase agreements maturing in more than
seven days.
10. FOREIGN SECURITIES. No Portfolio may invest more
than 10% of the value of its total assets in securities of foreign
issuers, provided that this limitation shall not apply to foreign
securities denominated in U.S. dollars, including American
Depositary Receipts ("ADRs").
11. OIL AND GAS PROGRAMS. No Portfolio may invest in
participations or other direct interests in oil, gas, or other
mineral leases or exploration or development programs, but each
Portfolio may purchase securities of companies that own interests
in any of the foregoing.
- 4 -
<PAGE>
12. REAL ESTATE. No Portfolio may purchase or sell real
property (including partnership or similar interests in real estate limited
partnerships, but excluding readily marketable interests in real estate
investment trusts and readily marketable securities of companies that invest in
real estate); provided that no Portfolio may purchase any security if, as a
result, more than 10% of its total assets would be invested in securities of
real estate investment trusts.
In addition to the foregoing non-fundamental investment
policies and limitations, which apply to each Portfolio, the following
non-fundamental investment policies and limitations apply to the indicated
Portfolios:
13. INVESTMENTS IN ANY ONE ISSUER (NEUBERGER & BERMAN GENESIS,
NEUBERGER & BERMAN FOCUS, AND NEUBERGER & BERMAN GUARDIAN PORTFOLIOS). Neither
of these Portfolios may purchase the securities of any one issuer (other than
securities issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 5% of the Portfolio's total assets
would be invested in the securities of that issuer.
14. WARRANTS (NEUBERGER & BERMAN GENESIS, NEUBERGER & BERMAN
FOCUS AND NEUBERGER & BERMAN GUARDIAN PORTFOLIOS). Neither of these Portfolios
may invest more than 5% of its net assets in warrants, including warrants that
are listed on the New York Stock Exchange ("NYSE") or American Stock Exchange,
or more than 2% of its net assets in warrants that are not so listed. For
purposes of this limitation, warrants are valued at the lower of cost or market
value, and warrants acquired by a Portfolio in units or attached to securities
may be deemed to be without value.
15. PLEDGING (NEUBERGER & BERMAN GENESIS AND NEUBERGER &
BERMAN GUARDIAN PORTFOLIOS). Neither of these Portfolios may pledge or
hypothecate any of its assets, except that (i) for Neuberger & Berman GENESIS
Portfolio, this limitation does not apply to the deposit of portfolio securities
as collateral in connection with short sales against-the-box, and the 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.
- 5 -
<PAGE>
16. SECTOR CONCENTRATION (NEUBERGER & BERMAN FOCUS
PORTFOLIO). This Portfolio may not invest more than 50% of its
total assets in any one economic sector.
Each Portfolio, as an operating policy, does not intend to
invest in futures contracts and options thereon during the coming year.
MARK R. GOLDSTEIN, PORTFOLIO MANAGER OF NEUBERGER & BERMAN
MANHATTAN PORTFOLIO
Neuberger & Berman MANHATTAN Portfolio's objective is capital
appreciation, without regard to income. "The Portfolio differs from the other
Portfolios in its willingness to invest in stocks with price/earnings ratios or
price-to-cash-flow ratios that are reasonable relative to a company's growth
prospects and that of the general market," says Mark Goldstein, its portfolio
manager. Mr. Goldstein has consistently followed this approach as a portfolio
manager at N&B Management. He looks for stocks of financially sound companies
with a special market capability, a competitive advantage or a product that
makes them particularly attractive over the long term, but likes to purchase
them at a reasonable price relative to their growth rate. Mr. Goldstein calls
this approach "GARP" -- growth at a reasonable price. "An investor shouldn't try
to beat the market by trading funds like stocks. The hardest thing to do -- but
the best thing to do -- is to put in some money when the market is down and keep
it there. That's how one really builds wealth over the long term. A mutual fund
can be a great long-term investment."
"We view value on both a relative and an absolute basis, so we
may buy stocks with somewhat above-market historical growth rates," Mr.
Goldstein explains. "We tend to stay more fully invested when we think the
market is attractive for quality growth companies. But we will get out of stocks
and into cash when we think there are no reasonable values available."
JUDITH M. VALE, PORTFOLIO MANAGER OF NEUBERGER & BERMAN GENESIS
PORTFOLIO
The predecessor of 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 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 the other equity funds managed by N&B Management. "I buy small-cap
stocks with solid earnings today, not just promises for tomorrow," says its
portfolio manager Judith Vale.
- 6 -
<PAGE>
"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 our other funds look for in stocks of larger
companies. We stick to the areas we understand. I'm looking for the most
persistent earnings growth at the lowest multiple." Ms. Vale looks for
well-established companies with entrepreneurial management and sound finances.
She also looks for 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.
"Our motto is 'boring is beautiful,'" explains Ms. Vale.
"Instead of investing in trendy, high-priced stocks that tend to
hurt shareholders on the downside, we look for little-known, solid,
growing companies whose stocks we believe are wonderful bargains."
AN INTERVIEW WITH JUDITH VALE
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, I'm not advocating investing in a portfolio consisting only
of small-cap stock funds. It pays to diversify. Let's look back 25
years. While past performance cannot indicate future performance,
small-cap stocks have outperformed larger-cap stocks 16 out of the 25
years. Which means larger-cap stocks have done better the rest of the
time.*
--------------------
* Results are on a total return basis and include reinvestment of all
dividends and capital gain 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 present. 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, BILL AND INFLATION 1996 YEARBOOKTM,
Ibbotson Associates, Chicago (annually updates work by Roger G.
Ibbotson and Rex A. Sinquefield). Used with permission. All rights
reserved.
- 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: I 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, I'm 100%
behind finding GROWING small-cap companies -- what I believe
are highly profitable companies with solid records and
promising futures. So where do I 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. In my
opinion, 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, I'm a "value" manager. Yet I'd like to make this point
clear: Low price-to-earnings multiples, in and of themselves, cannot
justify a "buy" decision. When I search for growing, high-quality
small-cap companies selling at what I feel are bargain prices, I ask
myself: 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 do you use to decide
which small-cap companies make the cut -- and which ones
don't?
A: Over the course of my involvement with small-cap companies for 16
years, I've seen hundreds 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.
- 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 I spend so much time meeting the CEOs and CFOs of small-cap
companies. While I question the managers about future plans and
strategies, I 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.
KENT C. SIMONS AND KEVIN L. RISEN, PORTFOLIO CO-MANAGERS OF
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. "We begin by looking for stocks that are
selling for less than we think they're worth, a 'bottom-up approach'" says Mr.
Simons. "More often than not, such stocks are in a few economic sectors that are
out of favor and are undervalued as a group. We think 90% of cheap stocks
deserve to be cheap. Our job is to find the 10% that don't."
"We don't pick sectors for Neuberger & Berman FOCUS Portfolio
based on our perception of how the economy is going to do. Nor do we engage in
making economic or currency predictions. We look for stocks with either low
relative or low absolute valuations," explains Mr. Risen. "Often, these stocks
will be found in a particular sector, but we didn't start out being bullish on
that sector. It's just where we happened to find the values. We find that if one
company comes under a cloud, it tends to happen to its whole industry. If an
investment manager rotates the sectors in a portfolio by buying sectors when
- 9 -
<PAGE>
they are undervalued and selling them when they become fully valued, the manager
would be able to achieve above-average performance."
Neuberger & Berman GUARDIAN Portfolio subscribes to the same
stock-picking philosophy followed since 1950, when Roy R. Neuberger founded the
predecessor of Neuberger & Berman GUARDIAN Fund, which, like Neuberger & Berman
GUARDIAN Assets, invests all of its net investable assets in Neuberger & Berman
GUARDIAN Portfolio.
It's no great trick for a mutual fund to make money when the
market is rising. The tide that lifts stock values will carry most funds along.
The true test of management is its ability to make money even when the market is
flat or declining. By that measure, Neuberger & Berman GUARDIAN Fund and its
predecessor have served shareholders well and have paid a dividend every quarter
and a capital gain distribution EVERY YEAR since 1950. Of course, there can be
no assurance that this trend will continue.
Mr. Simons and Mr. Risen 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. Says Mr. Risen, "We're usually early in and early out. We'd
rather buy an undervalued stock because we expect it to become fairly valued
than buy one fairly valued and hope it becomes overvalued. We like a stock
'under a rock' or with a cloud over it; you are not going to get great companies
at great valuations when the market perception is great."
"People who switch around a lot are not going to benefit
from our approach. They're following the market -- we're looking
at fundamentals."
MICHAEL M. KASSEN AND ROBERT I. GENDELMAN, PORTFOLIO CO-MANAGERS OF
NEUBERGER & BERMAN PARTNERS PORTFOLIO
"Neuberger & Berman PARTNERS Portfolio's objective is capital
growth," say its portfolio co-managers Michael Kassen and Robert Gendelman. "We
want to make money in good markets and not give up those gains during rough
times."
"Our investors seek consistent performance and have a moderate
risk tolerance. They do know, however, that stock investments can provide the
long-term upside potential essential to meeting their long-term investment
goals, particularly a comfortable retirement and planning for a college
education."
"We look for stocks that are undervalued in the market-place
either in relation to strong current fundamentals, such as a low
price-to-earnings ratio, consistent cash flow, and support from asset values, or
in relation to our projection of the growth of their future earnings. If the
- 10 -
<PAGE>
market goes down, those stocks we elect to hold, historically, go 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 Mr. Kassen's and Mr. Gendelman's eyes?
"We like managements that own their own stock. These companies
usually seek to build shareholder wealth by buying back shares or
making acquisitions that have a swift and positive impact on the
bottom line."
To increase the upside potential, the managers zero in on
companies that dominate their industries or their specialized niches. The
managers' reasoning? "Market leaders tend to earn higher levels of profits."
Neuberger & Berman PARTNERS Portfolio invests in a wide array
of stocks, and no single stock makes up more than a small fraction of the
Portfolio's total assets. Of course, the Portfolio's holdings are subject to
change.
ADDITIONAL INVESTMENT INFORMATION
Some or all of the Portfolios, as indicated below, may make
the following investments, among others, although they may not buy all of the
types of securities or use all of the investment techniques that are described.
REPURCHASE AGREEMENTS (ALL PORTFOLIOS). 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 such a
repurchase agreement if, as a result, more than 10% (5% in the case of Neuberger
& Berman GENESIS Portfolio) 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.
- 11 -
<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 tradeable
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
- 12 -
<PAGE>
thereof will be subject to each Portfolio's 10% (5% in the case of Neuberger &
Berman GENESIS Portfolio) 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) 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,
- 13 -
<PAGE>
(2) nationalization, expropriation, or confiscatory taxation, and (3) 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.
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,
- 14 -
<PAGE>
however, no Portfolio is restricted in the amount it may invest in securities
denominated in any one foreign currency.
COVERED CALL OPTIONS (ALL PORTFOLIOS). Each Portfolio may
write covered call options on portfolio securities valued at up to 10% of its
net assets and may purchase call options in related closing transactions.
Generally, the purpose of writing and purchasing these options is 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"). 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, thereby giving up any additional gain on the security.
Each Portfolio writes only "covered" call options on
securities it owns. The writing of covered call options is a conservative
investment technique that is believed to involve relatively little risk (in
contrast to the writing of "naked" or uncovered call options, which the
Portfolios will not do) but is capable of enhancing the Portfolios' total
return. When writing a covered call option, a Portfolio, in return for the
premium, gives up the opportunity for profit from a price increase in the
underlying security above the exercise price, but conversely retains the risk of
loss should the price of the security decline.
If a call option that a Portfolio has written expires
unexercised, the Portfolio will realize a gain in the amount of the premium;
however, that gain may be offset by a decline in the market value of the
underlying security during the option period. If the call option is exercised,
the Portfolio will realize a gain or loss from the sale of the underlying
security.
When a Portfolio purchases a call option, it pays a premium
for the right to purchase a security from the writer at a specified price until
a specified date. A Portfolio would purchase a call option to offset a
previously written call option.
The 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
- 15 -
<PAGE>
from the date written. The obligation under any option terminates upon
expiration of the option or, at an earlier time, when the writer offsets the
option by entering into a "closing purchase transaction" to purchase an option
of the same series. If an option is purchased by a Portfolio and is never
exercised, the Portfolio will lose the entire amount of the premium paid.
Options are traded both on national securities exchanges and
in the over-the-counter ("OTC") market. Exchange-traded options in the United
States are issued by a clearing organization affiliated with the exchange on
which the option is listed; the clearing organization in effect guarantees
completion of every exchange-traded option. In contrast, OTC options are
contracts between 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, and limits the Portfolios' counter-parties in such transactions to
dealers with a net worth of at least $20 million as reported in their latest
financial statements.
The assets used as cover for OTC options written by a
Portfolio will be considered illiquid unless the OTC options are sold to
qualified dealers who agree that the Portfolio may repurchase any OTC option it
writes at a maximum price to be calculated by a formula set forth in the option
agreement. The cover for an OTC call option written subject to this procedure
will be considered illiquid only to the extent that the maximum repurchase price
under the formula exceeds the intrinsic value of the option.
The premium received (or paid) by a Portfolio when it writes
(or purchases) an option is the amount at which the option is currently traded
on the applicable exchange, less (or plus) a commission. The premium may
reflect, among other things, the current market price of the underlying
security, the relationship of the exercise price to the market price, the
historical price volatility of the underlying security, the length of the option
period, the general supply of and demand for credit, and the interest rate
environment. The premium received by a Portfolio for writing an option is
- 16 -
<PAGE>
recorded as a liability on the Portfolio's statement of assets and
liabilities. This liability is adjusted daily to the option's current market
value, which is the last sales price on the day the option is being valued or,
in the absence of any trades thereof on that day, the mean between the closing
bid and asked prices.
Closing transactions are effected in order to realize a profit
on an outstanding option, to prevent an underlying security from being called,
or to permit the sale or the put of the underlying security. If a Portfolio
desires to sell a security on which it has written a call option, it will seek
to effect a closing transaction prior to, or concurrently with, the sale of the
security. There is, of course, no assurance that a Portfolio will be able to
effect closing transactions at favorable prices. If a Portfolio cannot enter
into such a transaction, it may be required to hold a security that it might
otherwise have sold, in which case it would continue to be at market risk on the
security.
A Portfolio will realize a profit or loss from a closing
purchase transaction if the cost of the transaction is less or more than the
premium received from writing the call option. 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 in connection with
purchasing or writing options, including those used to close out existing
positions. These brokerage commissions normally are higher than those applicable
to purchases and sales of portfolio securities.
FORWARD FOREIGN CURRENCY CONTRACTS (ALL PORTFOLIOS). Each
Portfolio may enter into contracts for the purchase or sale of a specific
currency at a future date at a fixed price ("forward contracts") in amounts not
exceeding 5% of its net assets. The Portfolios enter into forward contracts in
an attempt to hedge against 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 that are held or intended to be acquired by
them. Forward contract transactions include forward sales or purchases of
foreign currencies for the purpose of protecting the U.S. dollar value of
securities held or to be acquired by a Portfolio or protecting the U.S. dollar
equivalent of dividends, interest, or other payments on those securities.
- 17 -
<PAGE>
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 and 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. Because forward contracts are
not traded on an exchange, the assets used to cover such contracts may be
illiquid.
OPTIONS ON FOREIGN CURRENCIES (ALL PORTFOLIOS). Each Portfolio
may write and purchase covered call and put options on foreign currencies in
amounts not exceeding 5% of its net assets. A Portfolio would engage in such
transactions to protect against declines in the U.S. dollar value of portfolio
securities or increases in the U.S. dollar cost of securities to be acquired, or
to protect the U.S. dollar equivalent of dividends, interest, or other payments
on those securities. As with other types of options, however, writing an option
on foreign currency constitutes only a partial hedge, up to the amount of the
premium received. A Portfolio could be required to purchase or sell foreign
currencies at disadvantageous exchange rates, thereby incurring losses. The
risks of currency options are similar to the risks of other options, are
discussed herein. Certain options on foreign currencies are traded on the OTC
market and involve liquidity and credit risks that may not be present in the
case of exchange-traded currency options. To the extent a Portfolio writes
options on foreign currencies that are traded on an exchange regulated by the
Commodity Futures Trading Commission ("CFTC") other than for BONA FIDE hedging
purposes (as defined by the CFTC), the aggregate initial margin and premiums on
those positions (excluding the amount by which options are "in-the-money") may
not exceed 5% of the Portfolio's net assets.
COVER FOR OPTIONS AND FORWARD CONTRACTS (COLLECTIVELY "HEDGING
INSTRUMENTS")(All Portfolios). 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 cash or
- 18 -
<PAGE>
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(All Portfolios). 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
these instruments for hedging purposes can reduce the risk of loss, they also
can reduce the opportunity for gain, or even result in losses, by offsetting
favorable price movements in hedged investments; and (5) the possible inability
of a Portfolio to purchase or sell a portfolio security at a time that would
otherwise be favorable for it to do so, or the possible need for a Portfolio to
sell a portfolio security at a disadvantageous time, due to its need to maintain
cover or to segregate securities in connection with its use of Hedging
Instruments. N&B Management intends to reduce the risk of imperfect correlation
by investing only in Hedging Instruments whose behavior is expected to resemble
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. Hedging
Instruments used by the Portfolios are generally considered "derivatives." There
can be no assurance that a Portfolio's use of Hedging Instruments will be
successful.
Each Portfolio's use of Hedging Instruments may be
limited by 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,
- 19 -
<PAGE>
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
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
- 20 -
<PAGE>
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 up to 5% of its net assets in zero coupon
securities, which are debt obligations that do not entitle the holder to any
periodic payment of interest prior to maturity or that specify a future date
when the securities begin to pay current interest. Zero coupon securities are
issued and traded at a discount from their face amount or par value. This
discount varies depending on prevailing interest rates, the time remaining until
cash payments begin, the liquidity of the security, and the perceived credit
quality of the issuer.
The discount on zero coupon securities ("original issue
discount") is taken into account ratably by the Portfolio prior to the receipt
of any actual payments. Because Neuberger & Berman PARTNERS Assets must
distribute substantially all of its net income (including its share of the
Portfolio's 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 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 yields 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
- 21 -
<PAGE>
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 its investment
objective.
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.
- 22 -
<PAGE>
(2) CONSUMER GOODS AND SERVICES SECTOR: Companies engaged in providing
consumer goods or services, including design, processing, production, sale, or
storage of packaged, canned, bottled, or frozen foods and beverages and design,
production, or sale of home furnishings, appliances, clothing, accessories,
cosmetics, or perfumes. Certain of these companies are subject to government
regulation affecting the use of various food additives and production methods,
which could affect profitability. Also, the success of food- and fashion-related
products may be strongly affected by fads, marketing campaigns, health concerns,
and other factors affecting supply and demand.
(3) DEFENSE AND AEROSPACE SECTOR: Companies engaged in 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
- 23 -
<PAGE>
development; and companies that operate health care facilities. Many of these
companies are subject to government regulation and potential health care
reforms, which could affect the price and availability of their products and
services. Also, products and services of these companies could quickly become
obsolete.
(7) HEAVY INDUSTRY SECTOR: Companies engaged in research, development,
manufacture, or marketing of products, processes, or services related to the
agriculture, chemicals, containers, forest products, non-ferrous metals, steel,
or pollution control industries, including synthetic and natural materials (for
example, chemicals, plastics, fertilizers, gases, fibers, flavorings, or
fragrances), paper, wood products, steel, and cement. Certain of these companies
are subject to state and federal regulation, which could require alteration or
cessation of production of a product, payment of fines, or cleaning of a
disposal site. Furthermore, because some of the materials and processes used by
these companies involve hazardous components, there are additional risks
associated with their production, handling, and disposal. The risk of product
obsolescence also is present.
(8) MACHINERY AND EQUIPMENT SECTOR: Companies engaged in the research,
development, or manufacture of products, processes, or services relating to
electrical equipment, machinery, pollution control, or construction services,
including transformers, motors, turbines, hand tools, earth-moving equipment,
and waste disposal services. The profitability of most of these companies may
fluctuate significantly in response to capital spending and general economic
conditions. As is the case for the heavy industry sector, there are risks
associated with the production, handling, and disposal of materials and
processes that involve hazardous components and the risk of product
obsolescence.
(9) MEDIA AND ENTERTAINMENT SECTOR: Companies engaged in design,
production, or distribution of goods or services for the media industries
(including television or radio broadcasting or manufacturing, publishing,
recordings and musical instruments, motion pictures, and photography) and the
entertainment industries (including sports arenas, amusement and theme parks,
gaming casi-nos, sporting goods, camping and recreational equipment, toys and
games, travel-related services, hotels and motels, and fast food and other
restaurants). Many products produced by companies in this sector -- for example,
video and electronic games -- may become obsolete quickly. Additionally,
companies engaged in television and radio broadcast are subject to government
regulation.
(10) RETAILING SECTOR: Companies engaged in retail distribution of home
furnishings, food products, clothing, pharmaceuticals, leisure products, or
other consumer goods, including department stores, supermarkets, and retail
chains specializing in particular items such as shoes, toys, or pharmaceuticals.
The value of these companies' securities fluctuates based on consumer spending
- 24 -
<PAGE>
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, rail-
roads, 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.
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
- 25 -
<PAGE>
Average annual total return smooths 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 has not commenced operations
as of the date of this SAI and, therefore, has no past performance. 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 (except Neuberger
& Berman GENESIS Assets) since its inception and, for periods prior to each
Fund's inception, its Sister Fund and that Sister Fund's predecessor. The Sister
Funds have a different fee structure than the Funds and do not pay 12b-1 fees.
Had 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, its Sister Fund and that Sister Fund's predecessor for the
one-, five-, and ten-year periods ended February 28, 1997, were _____%, _____%,
and _____%, respectively. If an investor had invested $10,000 in that
predecessor's shares on March 1, 1979 and had reinvested all income dividends
and other distributions, the NAV of that investor's holdings would have been
$_______ on February 28, 1997.
The average annual total returns for Neuberger & Berman
GENESIS Assets' Sister Fund and its predecessor for the one- and five-year
periods ended February 28, 1997 and for the period from September 27, 1988
(commencement of operations) through February 28, 1997, were ______%, ______%,
and ______%, respectively. If an investor had invested $10,000 in that
predecessor's shares on Sep-tember 27, 1988 and had reinvested all income
dividends and other distributions, the NAV of that investor's holdings would
have been $_____________ on February 28, 1997.
The average annual total returns for Neuberger & Berman FOCUS
Assets, its Sister Fund and that Sister Fund's predecessor for the one-, five-,
and ten-year periods ended February 28, 1997, were _____%, _____%, and _____%,
respectively. If an investor had invested $10,000 in that predecessor's shares
on October 19, 1955 and had reinvested all income dividends and other
distributions, the NAV of that investor's holdings would have been $_______ on
February 28, 1997.
The average annual total returns for Neuberger & Berman
GUARDIAN Assets, its Sister Fund and that Sister Fund's predecessor for the
one-, five-, and ten-year periods ended February 28, 1997, were _____%, _____%,
and _____%, respectively. If an investor had invested $10,000 in that
- 26 -
<PAGE>
predecessor's shares on June 1, 1950 and had reinvested all income dividends and
other distributions, the NAV of that investor's holdings would have been
$___________ on February 28, 1997.
The average annual total returns for Neuberger & Berman
PARTNERS Assets, its Sister Fund and that Sister Fund's predecessor for the
one-, five-, and ten-year periods ended February 28, 1997, were _____%, _____%,
and _____%, respectively. If an investor had invested $10,000 in that
predecessor's shares on January 20, 1975 and had reinvested all income dividends
and other distributions, the NAV of that investor's holdings would have been
$_______ on February 28, 1997.
Prior to January 5, 1989, the investment policies of the
predecessor of Neuberger & Berman FOCUS Assets' Sister Fund required that at
least 80% of its investments normally be in energy-related investments; prior to
November 1, 1991, those investment policies required that at least 25% of its
investments normally be in the energy sector. Neuberger & Berman FOCUS Assets
may include information reflecting the Sister Fund's predecessor's performance
and expenses for periods before November 1, 1991, in its advertisements, sales
literature, financial statements, and other documents filed with the SEC and/or
provided to current and prospective shareholders. Investors should be aware that
such information may not necessarily reflect the level of performance and
expenses that would have been experienced had the Sister Fund's predecessor been
operating under the Fund's current investment policies.
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
- 27 -
<PAGE>
2000 Stock Index, Dow Jones Industrial Average ("DJIA"), Wilshire
1750 Index, Nasdaq Composite 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 $40 million to $2.3 billion,
with an average of $451 million. The S&P 400 Index measures mid-sized
companies that have an average market capitalization of $1.6
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 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.
- 28 -
<PAGE>
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.)
From time to time the investment philosophy of N&B
Management's founder, Roy R. Neuberger, may be included in the Funds'
Advertisements. This philosophy is described in further detail in "The Art of
Investing: A Conversation with Roy Neuberger," attached as Appendix B to this
SAI.
CERTAIN RISK CONSIDERATIONS
Although each Portfolio seeks to reduce risk by investing in a
diversified portfolio of securities, diversification does not eliminate all
risk. There can, of course, be no assurance 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").
- 29 -
<PAGE>
Name, Age, and Positions Held Principal
ADDRESS(1) WITH THE TRUSTS OCCUPATION(S)(2)
---------- --------------- ----------------
Faith Colish (61) Trustee of each Attorney at Law, Faith
63 Wall Street Trust Colish, A Professional
24th Floor Corporation.
New York, NY 10005
Donald M. Cox (74) 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* (62) 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.
Alan R. Gruber (69) Trustee of each Chairman and Chief
Orion Capital Trust Executive Officer of
Corporation Orion Capital
600 Fifth Avenue Corporation (property
24th Floor and casualty insur-
New York, NY 10020 ance); Director of
Trenwick Group, Inc.
(property and casualty
reinsurance); Chairman
of the Board and
Director of Guaranty
National Corporation
(property and casualty
insurance); formerly
Director of Ketema,
Inc. (diversified
manufacturer).
- 30 -
<PAGE>
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 formerly Vice President
and General Counsel
of Keene Corporation
(manufacturer of
industrial products);
Director of Kevlin
Corporation
(manufacturer of
microwave and other
products).
Edward I. O'Brien* (68) Trustee of each Until 1993, President
12 Woods Lane Trust of the Securities
Scarsdale, NY 10583 Industry Association
("SIA") (securities
industry's representa-
tive in government
relations and
regulatory matters at
the federal and state
levels); until November
1993, employee of the
SIA; Director of Legg
Mason, Inc.
John T. Patterson, Jr. Trustee of each Retired. Formerly,
(68) Trust President of SOBRO
183 Ledge Drive (South Bronx Overall
Torrington, CT 06790 Economic Development
Corporation).
John P. Rosenthal (64) Trustee of each Senior Vice President
Burnham Securities Inc. Trust of Burnham Securities
Burnham Asset Inc. (a registered
Management Corp. broker-dealer) since
1325 Avenue of the 1991; formerly Partner
Americas of Silberberg,
17th Floor Rosenthal & Co.
New York, NY 10019 (member of National
Association of
Securities Dealers,
Inc.); Director,
Cancer Treatment
Holdings, Inc.
- 31 -
<PAGE>
Cornelius T. Ryan (65) 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)
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.
- 32 -
<PAGE>
Lawrence Zicklin* (60) President and Principal of Neuberger
Trustee of each & Berman; Director of
Trust N&B Management;
President and/or
Trustee of five
other mutual funds
for which N&B
Management acts
as investment manager
or administrator.
Daniel J. Sullivan (57) Vice President of Senior Vice President
each Trust of N&B Management
since 1992; prior
thereto, Vice President
of N&B Management; Vice
President of eight
other mutual funds
for which N&B Management
acts as investment
manager or
administrator.
Michael J. Weiner (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; prior
thereto, Vice
President and
Treasurer of
N&B Management
and Treasurer
of certain mutual
funds for which
N&B Management
acted as investment
adviser; Vice President
and Principal
Financial Officer
of eight other
mutual funds for
which N&B Management
acts as investment
manager or
administrator.
- 33 -
<PAGE>
Claudia A. Brandon (40) Secretary of each Vice President of N&B
Trust Management; Secretary
of 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
Accounting Officer of
eight other mutual
funds for which N&B
Management acts as
investment manager or
administrator.
Stacy Cooper-Shugrue Assistant Secretary Assistant Vice
(34) 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 (59) Assistant Secretary Principal of Neuberger
of each Trust & Berman since 1992;
prior thereto,
employee of Neuberger
& Berman; Assistant
Secretary of eight
other mutual funds
for which N&B
Management acts
as investment manager
or administrator.
- 34 -
<PAGE>
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; prior thereto,
employee of N&B
Management; Assistant
Treasurer since
1996 of eight other
mutual funds for
which N&B Management
acts as 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 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
- 35 -
<PAGE>
Trust, unless it is adjudicated that they (a) engaged in bad faith, willful
mis-feasance, 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 the Trust. None of the Neuberger & Berman
Funds(REGISTERED TRADEMARK) has any retirement plan for its trustees or
officers.
TABLE OF COMPENSATION
FOR FISCAL YEAR ENDED 8/31/96
AGGREGATE TOTAL COMPENSATION FROM
COMPENSATION TRUSTS IN THE NEUBERGER &
NAME AND POSITION WITH FROM THE BERMAN FUND COMPLEX PAID
THE TRUST TRUST TO TRUSTEES
- ---------------------- ----------- -------------------------
Faith Colish $0 $38,500
Trustee (5 other investment
companies)
Donald M. Cox $0 $31,000
Trustee (3 other investment
companies)
Stanley Egener $0 $0
Chairman of the Board, (9 other investment
Chief Executive companies)
Officer, and Trustee
Alan R. Gruber $0 $28,000
Trustee (3 other investment
companies)
Howard A. Mileaf $0 $37,000
Trustee (4 other investment
companies)
Edward I. O'Brien $0 $31,500
Trustee (3 other investment
companies)
John T. Patterson, Jr. $0 $40,500
Trustee (4 other investment
companies)
- 36 -
<PAGE>
John P. Rosenthal $0 $36,500
Trustee (4 other investment
companies)
Cornelius T. Ryan $0 $30,500
Trustee (3 other investment
companies)
Gustave H. Shubert $0 $30,500
Trustee (3 other investment
companies)
Lawrence Zicklin $0 $0
President and Trustee (5 other investment
companies)
At __________, 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
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
- 37 -
<PAGE>
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 similar 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 __, 1996, and became subject to it on ____________, 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.
During the period from August 19, 1996 (commencement of operations) to
August 31, 1996, Neuberger & Berman PARTNERS Assets accrued management and
administration fees of $4. As of August 31, 1996, none of the other Funds had
commenced operations and, therefore, had not accrued any management or
administration fees.
N&B Management has voluntarily undertaken until December 31, 1997, to
reimburse each Fund for its Operating Expenses and its pro rata share of its
corresponding Portfolio's Operating Expenses which, in the aggregate, exceed
1.50% per annum of the Fund's average daily net assets. "Operating Expenses"
exclude interest, taxes, brokerage commissions, and extraordinary expenses.
During the period from August 19, 1996 (commencement of operations) to August
31, 1996, N&B Management reimbursed Neuberger & Berman PARTNERS Assets for
$13,840 of expenses.
The Management Agreement continues until August 2, 1997.
The Management Agreement is renewable thereafter from year to year
with respect to each Portfolio, so long as its continuance is
approved at least annually (1) by the vote of a majority of the
Independent Portfolio Trustees, cast in person at a meeting called
for the purpose of voting on such approval, and (2) by the vote of
a majority of the Portfolio Trustees or by a 1940 Act majority vote
of the outstanding interests in that Portfolio. The Administration
- 38 -
<PAGE>
Agreement continues until August 2, 1997. 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 Portfolio Trustees, including a
majority of the Independent Portfolio Trustees, on July 15, 1993 and was
approved by the holders of the interests in the Portfolios on August 2, 1993.
The Sub-Advisory Agreement provides in substance that
Neuberger & Berman will furnish to N&B Management, upon reasonable request, the
same type of investment recommendations and research that Neuberger & Berman,
from time to time, provides to its 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 approximately
fourteen investment analysts, each of whom specializes in studying one or more
industries, under the supervision of the Director of Research, who is also
available for consultation with N&B Management. The Sub-Advisory Agreement
provides that N&B Management will pay for the services rendered by Neuberger &
Berman based on the direct and indirect costs to Neuberger & Berman in
connection with those services. Neuberger & Berman also serves as sub-adviser
for all of the other mutual funds managed by N&B Management.
The Sub-Advisory Agreement continues until August 2, 1997 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
- 39 -
<PAGE>
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
- ----------------------------
N&B Management currently serves as investment manager of the
following investment companies. As of _____________, 1997, these companies,
along with three other investment companies advised by Neuberger & Berman, had
aggregate net assets of approximately $_____ billion, as shown in the following
list:
Approximate
Net Assets at
------------,
NAME 1997
---- ------------
Neuberger & Berman Cash Reserves Portfolio $
(investment portfolio for Neuberger &
Berman Cash Reserves)
Neuberger & Berman Government Money Portfolio $
(investment portfolio for Neuberger &
Berman Government Money Fund)
Neuberger & Berman Limited Maturity Bond $
Portfolio
(investment portfolio for Neuberger &
Berman Limited Maturity Bond Fund and
Neuberger & Berman Limited Maturity Bond
Trust)
Neuberger & Berman Municipal Money Portfolio $
(investment portfolio for Neuberger &
Berman Municipal Money Fund)
Neuberger & Berman Municipal Securities $
Portfolio
(investment portfolio for Neuberger &
Berman Municipal Securities Trust)
- 40 -
<PAGE>
Neuberger & Berman New York Insured $
Intermediate Portfolio
(investment portfolio for Neuberger &
Berman New York Insured Intermediate Fund)
Neuberger & Berman Ultra Short Bond Portfolio $
(investment portfolio for Neuberger &
Berman Ultra Short Bond Fund and Neuberger
& Berman Ultra Short Bond Trust)
Neuberger & Berman Focus Portfolio $
(investment portfolio for Neuberger &
Berman Focus Fund, Neuberger & Berman
Focus Trust and Neuberger & Berman Focus
Assets)
Neuberger & Berman Genesis Portfolio $
(investment portfolio for Neuberger &
Berman Genesis Fund, Neuberger & Berman
Genesis Trust and Neuberger & Berman
Genesis Assets)
Neuberger & Berman Guardian Portfolio $
(investment portfolio for Neuberger &
Berman Guardian Fund, Neuberger & Berman
Guardian Trust and Neuberger & Berman
Guardian Assets)
Neuberger & Berman International Portfolio $
(investment portfolio for Neuberger &
Berman International Fund)
Neuberger & Berman Manhattan Portfolio $
(investment portfolio for Neuberger &
Berman Manhattan Fund, Neuberger & Berman
Manhattan Trust and Neuberger & Berman
Manhattan Assets)
Neuberger & Berman Partners Portfolio $
(investment portfolio for Neuberger &
Berman Partners Fund, Neuberger & Berman
Partners Trust and Neuberger & Berman
Partners Assets)
- 41 -
<PAGE>
Neuberger & Berman Socially Responsive $
Portfolio
(investment portfolio for Neuberger &
Berman Socially Responsive Fund and
Neuberger & Berman NYCDC Socially
Responsive Trust)
Advisers Managers Trust $
(six series)
In addition, Neuberger & Berman serves as investment adviser
to three investment companies, Plan Investment Fund, Inc., AHA Investment Fund,
Inc., and AHA Full Maturity, with assets of $__________, $__________, and
$_________, respectively, at _____________, 1997.
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
- 42 -
<PAGE>
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, Presi- dent 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;
William Cunningham, Vice President; Clara Del Villar, Vice President; Mark R.
Goldstein, Vice President; Michael Lamberti, Vice President; Josephine
P. Mahaney, Vice President; Lawrence Marx III, Vice President; Ellen Metzger,
Vice President and Secretary; Janet W. Prindle, Vice President; Felix Rovelli,
Vice President; Richard Russell, Vice President; Kent C. Simons, Vice President;
Frederick B. Soule, Vice President; Judith M. Vale, Vice President; Susan Walsh,
Vice President; Thomas Wolfe, Vice President; Andrea Trachtenberg, Vice
President of Marketing; Robert Conti, Treasurer; Stacy Cooper-Shugrue, Assistant
Vice President; Robert Cresci, Assistant Vice President; Barbara DiGiorgio,
Assistant Vice President; Roberta D'Orio, Assistant Vice President; Joseph G.
Galli, Assistant Vice President; Robert I. Gendelman, Assistant Vice President;
Leslie Holliday-Soto, Assistant Vice President; Jody L. Irwin, Assistant Vice
President; Carmen G. Martinez, Assistant Vice President; Paul Metzger, Assistant
Vice President; Joseph S. Quirk, Assistant Vice President; Kevin L. Risen,
Assistant Vice President; Susan Switzer, Assistant Vice President; Celeste
Wischerth, Assistant Vice President; KimMarie Zamot, Assistant Vice President;
and Loraine Olavarria, Assistant Secretary. Messrs. Cantor, Egener, Giuliano,
Lainoff, Zicklin, Sundman, Goldstein, Kassen, Marx, Simons, Gendelman and Risen
and Mmes. Prindle and Vale are principals of Neuberger & Berman.
Messrs. Egener and Zicklin are trustees and officers, and
Messrs. Sullivan, Weiner, and Russell 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.
- 43 -
<PAGE>
DISTRIBUTION ARRANGEMENTS
DISTRIBUTOR
- -----------
N&B Management serves as the distributor ("Distributor") in
connection with the offering of each Fund's shares on a no-load basis to
Institutions. In connection with the sale of its shares, each Fund has
authorized the Distributor to give only the information, and to make only the
statements and representations, contained in the Prospectus and this SAI or that
properly may be included in sales literature and advertisements in accordance
with the 1933 Act, the 1940 Act, and applicable rules of self-regulatory
organizations. Sales may be made only by the Prospectus, which may be delivered
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 Distributor or one of its affiliates may, from time to
time, deem it desirable to offer to shareholders of the Funds, through use of
their shareholder lists, the shares of other mutual funds for which the
Distributor acts as distributor or other products or services. Any such use of
the Funds' shareholder lists, however, will be made subject to terms and
conditions, if any, approved by a majority of the Independent Fund Trustees.
These lists will not be used to offer the Funds' shareholders any investment
products or services other than those managed or distributed by N&B Management
or Neuberger & Berman.
From time to time, N&B Management may enter into arrangements
pursuant to which it compensates a registered broker-dealer or other third party
for services in connection with the distribution of Fund shares.
The Trust, on behalf of each Fund, and the Distributor are
parties to a Distribution and Services Agreement dated February 12, 1996, as
amended August 2, 1996 ("Distribution Agreement"), that was approved by the Fund
Trustees, including a majority of the Independent Fund Trustees who have no
direct or indirect financial interest in the Distribution Agreement, on October
25, 1995. The Distribution Agreement continues until August 2, 1997. The
Distribution Agreement may be renewed annually if specifically approved by (1)
the vote of a majority of the Fund Trustees or a 1940 Act majority vote of the
Fund's outstanding shares and (2) the vote of a majority of the Independent Fund
Trustees and a majority of those Independent Fund Trustees who have no direct or
indirect financial interest in the Distribution Agreement or the Trust's plan
pursuant to Rule 12b-1 under the 1940 Act ("Plan") ("Rule 12b- 1 Trustees"),
cast in person at a meeting called for the purpose of voting on such approval.
- 44 -
<PAGE>
The Distribution Agreement may be erminated 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. The Plan was approved by N&B
Management as sole initial shareholder of each Fund (except Neuberger & Berman
GENESIS Assets) on April 1, 1996. Neuberger & Berman GENESIS Assets was
authorized to become subject to the Plan by vote of the Fund Trustees on October
__, 1996, and became subject to it on ___________, 1997. The Plan provides that,
as compensation for administrative and other services provided to the Funds, N&B
Management's activities and expenses related to the sale and distribution of
Fund shares, and ongoing services to investors in the Funds, N&B Management
receives from each Fund a fee at the annual rate of 0.25% of that Fund's average
daily net assets. N&B Management may pay up to the full amount of this fee to
Institutions that distribute Fund shares and provide services to the Funds and
their shareholders, based on the level of such services provided. Those
Institutions may use the payments for, among other purposes, compensating
employees engaged in sales and/or shareholder servicing. The amount of fees paid
by a Fund during any year may be more or less than the cost of distribution and
other services provided to the Fund.
The Plan provides that a written report identifying the
amounts expended by each Fund and the purposes for which such expenditures were
made must be provided to the Fund Trustees for their review at least quarterly.
The Plan continues until August 2, 1997. The Plan is renewable
thereafter from year to year with respect to each Fund, so long as its
continuance is approved at least annually (1) by the vote of a majority of the
Fund Trustees and (2) by a vote of the majority of the Rule 12b-1 Trustees, cast
in person at a meeting called for the purpose of voting on such approval. The
Plan may not be amended to increase materially the amount of fees paid by any
Fund thereunder unless such amendment is approved by a 1940 Act majority vote of
the outstanding shares of the Fund and by the Fund Trustees in the manner
described above. The Plan is terminable with respect to a Fund at any time by a
vote of a majority of the Rule 12b-1 Trustees or by a 1940 Act majority vote of
the outstanding shares in the Fund.
ADDITIONAL EXCHANGE INFORMATION
As more fully set forth in the section of the Prospectus
entitled "Exchanging Shares," an Institution may exchange shares of any Fund for
shares of one or more of the other Funds described in the Prospectus. Any Fund
may terminate or modify its exchange privilege in the future.
- 45 -
<PAGE>
Before effecting an exchange, Fund shareholders must obtain
and should review a currently effective Prospectus of the Fund into which the
exchange is to be made. An exchange is treated as a sale for federal income tax
purposes and, depending on the circumstances, a short- or long-term capital gain
or loss may be realized.
ADDITIONAL REDEMPTION INFORMATION
SUSPENSION OF REDEMPTIONS
- -------------------------
The right to redeem a Fund's shares may be suspended or
payment of the redemption price postponed (1) when the NYSE is closed (other
than weekend and holiday closings), (2) when trading on the NYSE is restricted,
(3) when an emergency exists as a result of which it is not reasonably
practicable for 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.
DIVIDENDS AND OTHER DISTRIBUTIONS
Each Fund distributes to its shareholders amounts equal to
substantially all of its share of any net investment income (after deducting
expenses incurred directly by the Fund), any net realized capital gains (both
long-term and short-term), and any net realized gains from foreign currency
transactions earned or realized by its corresponding Portfolio. Each Fund
calculates its net investment income and NAV per share as of the close of
- 46 -
<PAGE>
regular trading on the NYSE on each Business Day (usually 4:00 p.m. Eastern
time).
A Portfolio's net investment income consists of all income
accrued on portfolio assets less accrued expenses, but does not include 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. Dividends from net investment income and
distributions of net realized capital and foreign currency gains, if any,
normally are paid once annually, in December, except that Neuberger & Berman
GUARDIAN Assets distributes substantially all of its share of Neuberger & Berman
GUARDIAN Portfolio's net investment income, if any, near the end of each
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 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 require-
ments include the following: (1) the Fund must derive at least 90%
of its gross income each taxable year from dividends, interest,
payments with respect to securities loans, and gains from the sale
or other disposition of securities or foreign currencies, or other
income (including gains from Hedging Instruments) derived with
respect to its business of investing in securities or those
currencies ("Income Requirement"); (2) the Fund must derive less
than 30% of its gross income each taxable year from the sale or
other disposition of securities, or any of the following, that were
held for less than three months -- (i) options (other than those on
foreign currencies), or (ii) foreign currencies or Hedging
Instruments thereon that are not directly related to the Fund's
principal business of investing in securities (or options with
respect thereto) ("Short-Short Limitation"); and (3) at the close
of each quarter of the Fund's taxable year, (i) at least 50% of the
- 47 -
<PAGE>
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.
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
Port-folio'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 qualifies 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.
- 48 -
<PAGE>
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 may be subject
to income, withholding, or other taxes imposed by foreign countries and U.S.
possessions that would reduce the yield on its securities. Tax treaties between
certain countries and the United States may reduce or eliminate these foreign
taxes, however, and many foreign countries do not impose taxes on capital gains
in respect of investments by foreign investors.
A Portfolio may invest in the stock of "passive foreign
investment companies" ("PFICs"). A PFIC is a foreign corporation that, in
general, meets either of the following tests: (1) at least 75% of its gross
income is passive or (2) an average of at least 50% of its assets produce, or
are held for the production of, passive income. Under certain circumstances, if
a Portfolio holds stock of a PFIC, its corresponding Fund (indirectly through
its interest in the 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," 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 qualified electing fund's annual ordinary earnings and net capital gain (the
excess of net long-term capital gain over net short-term capital loss) -- which
most likely would have to be distributed by the Fund to satisfy the Distribution
- 49 -
<PAGE>
Requirement and to avoid imposition of the Excise Tax -- even if those earnings
and gain were not received by the Portfolio. In most instances it will be very
difficult, if not impossible, to make this election because of certain
requirements thereof.
Pursuant to proposed regulations, open-end RICs, such as the
Funds, would be entitled to elect to mark-to-market their stock in certain
PFICs. Marking to market in this context means recognizing as gain for each
taxable year the excess, as of the end of that year, of the fair market value of
each such PFIC's stock over the adjusted basis in that stock (including
mark-to-market gain for each prior year for which an election was in effect).
The Portfolios' use of hedging strategies, such as writing
(selling) and purchasing options and entering into forward contracts, involves
complex rules that will determine for income tax purposes the character and
timing of recognition of the gains and losses the Portfolios realize in
connection therewith. 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. However, income
from the disposition by a Portfolio of options (other than those on foreign
currencies) will be subject to the Short-Short Limitation for its corresponding
Fund if they are held for less than three months. Income from the disposition of
foreign currencies, and Hedging Instruments on foreign currencies, that are not
directly related to a Portfolio's principal business of investing in securities
(or options with respect thereto) also will be subject to the Short-Short
Limitation for its corresponding Fund if they are held for less than three
months.
If a Portfolio satisfies certain requirements, any increase in
value of a position that is part of a "designated hedge" will be offset by any
decrease in value (whether realized or not) of the offsetting hedging position
during the period of the hedge for purposes of determining whether its
corresponding Fund satisfies the Short-Short Limitation. Thus, only the net gain
(if any) from the designated hedge will be included in gross income for purposes
of that limitation. Each Portfolio will consider whether it should seek to
satisfy those requirements to enable its corresponding Fund to qualify for this
treatment for hedging transactions. To the extent a Portfolio does not do so, it
may be forced to defer the closing out of certain Hedging Instruments or foreign
currency positions beyond the time when it otherwise would be advantageous to do
so, in order for its corresponding Fund to continue to qualify as a RIC.
- 50 -
<PAGE>
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 account the OID that accrues on the securities
during the taxable year, even if it receives no corresponding payment on the
securities during the year. Because the Fund annually must distribute
substantially all of its investment company taxable income (including its share
of the Portfolio's accrued OID) to satisfy the Distribution Requirement and to
avoid imposition of the Excise Tax, the Fund may be required in a particular
year to distribute as a dividend an amount that is greater than its 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. In addition,
any such gains may be realized on the disposition of securities held for less
than three months. Because of the Short-Short Limitation, any such gains would
reduce Neuberger & Berman PARTNERS Portfolio's ability to sell other securities,
or certain Hedging Instruments or foreign currency positions, held for less than
three months that it might wish to sell in the ordinary course of its portfolio
management.
TAXATION OF THE FUNDS' SHAREHOLDERS
- -----------------------------------
If Fund shares are sold at a loss after being held for six
months or less, the loss will be treated as long-term, instead of short-term,
capital loss to the extent of any capital gain distributions received on those
shares.
PORTFOLIO TRANSACTIONS
Neuberger & Berman acts as each Portfolio's principal broker
in the purchase and sale of its portfolio securities (other than the substantial
portion of the portfolio transactions of Neuberger & Berman GENESIS Portfolio
that 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) and in connection with the writing
of covered call options on its securities.
During the fiscal year ended August 31, 1994, Neuberger &
Berman MANHATTAN Portfolio paid brokerage commissions of $655,640, of which
$525,610 was paid to Neuberger & Berman. During the fiscal year ended August 31,
1995, that Portfolio paid brokerage commissions of $654,982, of which $436,568
was paid to Neuberger & Berman.
- 51 -
<PAGE>
During the fiscal year ended August 31, 1996,
Neuberger & Berman MANHATTAN Portfolio paid brokerage commissions of $940,324,
of which $543,020 was paid to Neuberger & Berman. Transactions in which that
Portfolio used Neuberger & Berman as broker comprised 65.36% of the aggregate
dollar amount of transactions involving the payment of commissions, and 57.75%
of the aggregate brokerage commissions paid by the Portfolio, during the fiscal
year ended August 31, 1996. 85.38% of the $397,304 paid to other brokers by that
Portfolio during that fiscal year (representing commissions on transactions
involving approximately $144,595,529) was directed to those brokers because of
research services they provided. During the fiscal year ended August 31, 1996,
that Portfolio acquired securities of the following of its "regular brokers or
dealers" (as defined in the 1940 Act) ("Regular B/Ds"): Bear Stearns & Co. Inc.,
Exxon Credit Corp., General Electric Capital Corp., and Morgan Stanley & Co.,
Inc.; at that date, that Portfolio held the securities of its Regular B/Ds with
an aggregate value as follows: Bear Stearns & Co. Inc., $5,142,500 and Morgan
Stanley & Co., Inc., $10,266,250.
During the fiscal year ended August 31, 1994, Neuberger &
Berman GENESIS Portfolio paid brokerage commissions of $287,587, of which
$170,883 was paid to Neuberger & Berman. During the fiscal year ended August 31,
1995, that 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. Transactions in which that Portfolio
used Neuberger & Berman as broker comprised 47.65% of the aggregate dollar
amount of transactions involving the payment of commissions, and 46.57% of the
aggregate brokerage commissions paid by the Portfolio, during the fiscal year
ended August 31, 1996. 85.22% of the $110,151 paid to other brokers by that
Portfolio during that fiscal year (representing commissions on transactions
involving approximately $32,575,132) was directed to those brokers because of
research services they provided. During the fiscal year ended August 31, 1996,
that Portfolio acquired securities of the following of its Regular B/Ds: Exxon
Credit Corp., General Electric Capital Corp., and State Street Bank and Trust
Company, N.A.; at that date, that Portfolio held the securities of its Regular
B/Ds with an aggregate value as follows:
General Electric Capital Corp., $2,200,000.
During the fiscal year ended August 31, 1994, Neuberger &
Berman FOCUS Portfolio paid brokerage commissions of $719,994, of which $567,972
was paid to Neuberger & Berman. During the fiscal year ended August 31, 1995,
that Portfolio paid brokerage commissions of $1,031,245, of which $617,957 was
paid to Neuberger & Berman.
- 52 -
<PAGE>
During the fiscal year ended August 31, 1996, Neuberger &
Berman FOCUS Portfolio paid brokerage commissions of $1,165,851, of which
$583,212 was paid to Neuberger & Berman. Transactions in which that Portfolio
used Neuberger & Berman as broker comprised 56.27% of the aggregate dollar
amount of transactions involving the payment of commissions, and 50.02% of the
aggregate brokerage commissions paid by the Portfolio, during the fiscal year
ended August 31, 1996. 89.49% of the $582,639 paid to other brokers by that
Portfolio during that fiscal year (representing commissions on transactions
involving approximately $257,981,759) was directed to those brokers because of
research services they provided. During the fiscal year ended August 31, 1996,
that Portfolio acquired securities of the following of its Regular B/Ds: Exxon
Credit Corp., General Electric Capital Corp., and State Street Bank and Trust
Company, N.A.; at that date, that Portfolio held the securities of its Regular
B/Ds with an aggregate value as follows: Merrill Lynch, Pierce, Fenner & Smith,
Inc., $15,312,000 and General Electric Capital Corp., $29,400,000.
During the fiscal year ended August 31, 1994, Neuberger &
Berman GUARDIAN Portfolio paid brokerage commissions of $2,207,401, of which
$1,647,807 was paid to Neuberger & Berman. During the fiscal year ended August
31, 1995, that 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. Transactions in which that Portfolio
used Neuberger & Berman as broker comprised 54.13% of the aggregate dollar
amount of transactions involving the payment of commissions, and 51.44% of the
aggregate brokerage commissions paid by the Portfolio, during the fiscal year
ended August 31, 1996. 83.78% of the $3,344,463 paid to other brokers by that
Portfolio during that fiscal year (representing commissions on transactions
involving approximately $1,568,004,886) was directed to those brokers because of
research services they provided. During the fiscal year ended August 31, 1996,
that Portfolio acquired securities of the following of its Regular B/Ds: General
Electric Capital Corp., Merrill Lynch, Pierce, Fenner & Smith, Inc., and State
Street Bank and Trust Company, N.A.; at that date, that Portfolio held the
securities of its Regular B/Ds with an aggregate value as follows: Merrill
Lynch, Pierce, Fenner & Smith, Inc., $76,562,500.
During the fiscal year ended August 31, 1994, Neuberger &
Berman PARTNERS Portfolio paid brokerage commissions of $2,994,540, of which
$2,031,570 was paid to Neuberger & Berman. During the fiscal year ended August
31, 1995, that Portfolio paid brokerage commissions of $4,608,156, of which
$3,092,789 was paid to Neuberger & Berman.
- 53 -
<PAGE>
During the fiscal year ended August 31, 1996, Neuberger &
Berman PARTNERS Portfolio paid brokerage commissions of $4,697,854, of which
$2,741,666 was paid to Neuberger & Berman. Transactions in which that Portfolio
used Neuberger & Berman as broker comprised 61.16% of the aggregate dollar
amount of transactions involving the payment of commissions, and 58.36% of the
aggregate brokerage commissions paid by the Portfolio, during the fiscal year
ended August 31, 1996. 93.84% of the $1,956,188 paid to other brokers by that
Portfolio during that fiscal year (representing commissions on transactions
involving approximately $1,078,447,908) was directed to those brokers because of
research services they provided. During the fiscal year ended August 31, 1996,
that Portfolio acquired securities of the following of its Regular B/Ds: Exxon
Credit Corp., General Electric Capital Corp., and State Street Bank and Trust
Company, N.A.; at that date, that Portfolio held the securities of its Regular
B/Ds with an aggregate value as follows: General Electric Capital Corp.,
$30,000,000.
Insofar as portfolio transactions of Neuberger & Berman
PARTNERS Portfolio result from active management of equity securities, and
insofar as portfolio transactions of Neuberger & Berman MANHATTAN Portfolio
result from seeking capital appreciation by selling securities whenever sales
are deemed advisable without regard to the length of time the securities may
have been held, it may be expected that the aggregate brokerage commissions paid
by those Portfolios to brokers (including Neuberger & Berman where it acts in
that capacity) may be greater than if securities were selected solely on a
long-term basis.
Portfolio securities are, from time to time, loaned by a
Portfolio to Neuberger & Berman in accordance with the terms and conditions of
an order issued by the SEC. The order exempts such transactions from provisions
of the 1940 Act that would otherwise prohibit such transactions, subject to
certain conditions. Among the conditions of the order, securities loans made by
a Portfolio to Neuberger & Berman must be fully secured by cash collateral. The
portion of the income on the cash collateral which may be shared with Neuberger
& Berman is 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 is required to
pay that Portfolio, on a quarterly basis, certain "excess 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 a
- 54 -
<PAGE>
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, 1996, 1995 and 1994,
the Portfolios earned the following amounts of interest income from the
collateralization of securities loans, from which Neuberger & Berman was paid
the indicated amounts:
Neuberger & Berman
---------------------------------------------------------
GUARDIAN FOCUS PARTNERS GENESIS Manhattan
Portfolio Portfolio Portfolio Portfolio Portfolio
1994
- ----
Interest $ 147,103 $ 38,627 $ 16,085 $ 0 $ 0
Payment to N&B $ 119,620 $ 33,225 $ 13,880 $ 0 $ 0
1995
- ----
Interest $1,430,672 $327,447 $ 52,410 $ 0 $507,239
Payment to N&B $1,252,190 $291,207 $ 48,736 $ 0 $270,594
1996
- ----
Interest $2,427,096 $368,663 $173,908 $ 0 $301,788
Payment to N&B $2,129,341 $330,001 $118,041 $ 0 $186,163
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
- 55 -
<PAGE>
would terminate the loan and regain the right to vote if that were considered
important with respect to the investment.
A committee of Independent Portfolio Trustees from time to
time reviews, among other things, information relating to securities loans by
the Portfolios.
In effecting securities transactions, each Portfolio generally
seeks to obtain the best price and execution of orders. Commission rates, being
a component of price, are considered along with other relevant factors. Each
Portfolio plans to continue to use Neuberger & Berman as its principal broker
where, in the judgment of N&B Management (the Portfolio's investment manager and
an affiliate of Neuberger & Berman), that firm is able to obtain a price and
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. The Portfolio Trustees have expressly authorized
Neuberger & Berman to retain such compensation, and Neuberger & Berman complies
with the reporting requirements of Section 11(a).
Under the 1940 Act, commissions paid by a Portfolio to
Neuberger & Berman in connection with a purchase or sale of securities on a
securities exchange may not exceed the usual and customary broker's commission.
Accordingly, it is each Portfolio's policy that the commissions paid to
Neuberger & Berman must, in N&B Management's judgment, be (1) at least as
favorable as those charged by other brokers having comparable execution
capability and (2) at least as favorable as commissions contemporaneously
charged by Neuberger & Berman on comparable transactions for its most favored
unaffiliated customers, except for accounts for which Neuberger & Berman acts as
a clearing broker for another brokerage firm and customers of Neuberger & Berman
considered by a majority of the Independent Portfolio Trustees not to be
comparable to the Portfolio. The Portfolios do not deem it practicable and in
their best interests to solicit competitive bids for commissions on each
transaction effected by Neuberger & Berman. However, consideration regularly is
given to information concerning the prevailing level of commissions charged by
other brokers on comparable transactions during comparable periods of time. The
1940 Act generally prohibits Neuberger & Berman from acting as principal in the
purchase of portfolio securities from, or the sale of portfolio securities to,
- 56 -
<PAGE>
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 Neuber-ger & 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 simultaneously 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 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
- 57 -
<PAGE>
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.
Mark R. Goldstein; Judith M. Vale; Kent C. Simons and Kevin L.
Risen; and Michael M. Kassen and Robert I. Gendelman, each of whom is a Vice
President of N&B Management (except for Mr. Risen and Mr. Gendelman, who are
Assistant Vice Presidents) and a principal of Neuberger & Berman, are the
persons primarily responsible for making decisions as to specific action to be
taken with respect to the investment portfolios of Neuberger & Berman
MAN-HATTAN, Neuberger & Berman GENESIS, Neuberger & Berman FOCUS and Neuberger &
Berman GUARDIAN, and Neuberger & Berman PARTNERS Portfolios, respectively. Each
of them has full authority to take action with respect to portfolio transactions
and may or may not consult with other personnel of N&B Management prior to
taking such action. If Mr. Goldstein is unavailable to perform his
responsibilities, Susan Switzer, who is an Assistant Vice President of N&B
Management, will assume responsibility for the portfolio of Neuberger & Berman
MANHATTAN Portfolio.
PORTFOLIO TURNOVER
- ------------------
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.
- 58 -
<PAGE>
The portfolio turnover rates for each Portfolio were as follows:
Year Ended August 31,
1996 1995
- ------------------------------------------------------------------------------
Neuberger & Berman FOCUS Portfolio 39% 36%
Neuberger & Berman GENESIS Portfolio 21% 37%
Neuberger & Berman GUARDIAN Portfolio 37% 26%
Neuberger & Berman MANHATTAN Portfolio 53% 44%
Neuberger & Berman PARTNERS Portfolio 96% 98%
The average commission rates paid by each Portfolio were as follows:
Year Ended
August 31, 1996
- ------------------------------------------------------------------------------
Neuberger & Berman FOCUS Portfolio $0.0578
Neuberger & Berman GENESIS Portfolio $0.0576
Neuberger & Berman GUARDIAN Portfolio $0.0580
Neuberger & Berman MANHATTAN Portfolio $0.0373
Neuberger & Berman PARTNERS Portfolio $0.0494
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, Institutional Services, 605 Third Avenue, 2nd Floor,
- 59 -
<PAGE>
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
___________, 1997.
Percentage of
Ownership at
---------,
NAME AND ADDRESS 1997
---------------- ----
Neuberger & Berman
MANHATTAN Assets ______%
Neuberger & Berman
FOCUS Assets ______%
Neuberger & Berman
GUARDIAN Assets ______%
Neuberger & Berman
PARTNERS Assets ______%
- 60 -
<PAGE>
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 PARTNERS Assets for the fiscal year ended August 31, 1996:
[To be filed by Amendment to the Trust's
registration statement.]
The following financial statements and related documents are
incorporated herein by reference from the Semi-Annual Report to Shareholders of
Neuberger & Berman Equity Assets for the period ended February 28, 1997:
[To be filed by Amendment to the Trust's
registration statement.]
- 61 -
<PAGE>
Appendix A
RATINGS OF CORPORATE BONDS AND COMMERCIAL PAPER
S&P CORPORATE BOND RATINGS:
AAA - Bonds rated AAA have the highest rating assigned by S&P.
Capacity to pay interest and repay principal is extremely strong.
AA - Bonds rated AA have a very strong capacity to pay
interest and repay principal and differ from the higher rated issues only in
small degree.
A - Bonds rated A have a strong capacity to pay interest and
repay principal, although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than bonds in higher
rated categories.
BBB - Bonds rated BBB are regarded as having an adequate
capacity to pay principal and interest. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay principal and interest for
bonds in this category than for bonds in higher rated categories.
BB, B, CCC, CC, C - Bonds rated BB, B, CCC, CC, and C are
regarded, on balance, as predominantly speculative with respect to capacity to
pay interest and repay principal in accordance with the terms of the obligation.
BB indicates the lowest degree of speculation and C the highest degree of
speculation. While such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
CI - The rating CI is reserved for income bonds on which no
interest is being paid.
D - Bonds rated D are in default, and payment of interest
and/or repayment of principal is in arrears.
PLUS (+) OR MINUS (-) - The ratings above may be modified by
the addition of a plus or minus sign to show relative standing within the major
rating categories.
MOODY'S CORPORATE BOND RATINGS:
AAA - Bonds rated AAA are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or an exceptionally
stable margin, and principal
- 62 -
<PAGE>
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.
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.
- 63 -
<PAGE>
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.
- 64 -
<PAGE>
Appendix B
THE ART OF INVESTMENT:
A CONVERSATION WITH ROY NEUBERGER
[To be filed by Amendment to the Trust's
registration statement.]
- 65 -
<PAGE>
<PAGE>
NEUBERGER & BERMAN EQUITY ASSETS
POST-EFFECTIVE AMENDMENT NO. 6 ON FORM N-1A
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
- -------- ---------------------------------
(a) Financial Statements:
The audited financial statements contained in the Annual
Report to Shareholders of Neuberger & Berman Partners Assets
for the fiscal year ended August 31, 1996, with respect to
Neuberger & Berman Partners Assets and Portfolio (series of
Neuberger & Berman Equity Assets and Equity Managers Trust,
respectively); and the unaudited financial statements
contained in the Semi-Annual Report to Shareholders of
Neuberger & Berman Equity Assets for the six-month period
ended February 28, 1997, with respect to Neuberger & Berman
Focus Assets, Neuberger & Berman Guardian Assets, Neuberger &
Berman Manhattan Assets, and Neuberger & Berman Partners
Assets (each a series of Neuberger & Berman Equity Assets) and
Neuberger & Berman Focus Portfolio, Neuberger & Berman
Guardian Portfolio, Neuberger & Berman Manhattan Portfolio,
and Neuberger & Berman Partners Portfolio (each a series of
Equity Managers Trust) will be filed by amendment to
Registrant's registration statement.
Included in Part A of this Post-Effective Amendment:
Form of FINANCIAL HIGHLIGHTS for Neuberger & Berman Focus
Assets, Neuberger & Berman Guardian Assets, Neuberger & Berman
Manhattan Assets, and Neuberger & Berman Partners Assets for
the period indicated therein, to be filed by amendment to
Registrant's registration statement.
(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.
<PAGE>
(c) Schedule A - Current Series of Neuberger & Berman
Equity Assets. Incorporated by Reference to
Post-Effective Amendment No. 1 to Registrant's
Registration Statement, File Nos. 33-82568 and
811-8106, EDGAR Accession No. 0000898432-95-000393.
(2) By-Laws of Neuberger & Berman Equity Assets.
Incorporated by Reference to Post-Effective
Amendment No. 1 to Registrant's Registration
Statement, File Nos. 33-82568 and 811-8106, EDGAR
Accession No. 0000898432-95-000393.
(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.
<PAGE>
(b) (i) Sub-Advisory Agreement Between Neuberger &
Berman Management Incorporated and Neuberger
& Berman with Respect to Equity Managers
Trust. Incorporated by Reference to Post-
Effective Amendment No. 70 to Registration
Statement of Neuberger & Berman Equity Funds,
File Nos. 2-11357 and 811-582, EDGAR
Accession No. 0000898432-95-000314.
(ii) Schedule A - Series of Equity Managers Trust
Currently Subject to the Sub-Advisory
Agreement. Incorporated by Reference to Post-
Effective Amendment No. 70 to Registration
Statement of Neuberger & Berman Equity Funds,
File Nos. 2-11357 and 811-582, EDGAR
Accession No. 0000898432-95-000314.
(iii) Substitution Agreement Among Neuberger &
Berman Management Incorporated, Equity
Managers Trust, Neuberger & Berman, L.P., and
Neuberger & Berman, LLC. Incorporated by
Reference to Amendment No. 7 to Registration
Statement of Equity Managers Trust, File No.
811-7910, Edgar Accession No.
0000898432-96-000557.
(6) (a) (i) Distribution Agreement Between Neuberger &
Berman Equity Assets and Neuberger & Berman
Management Incorporated with Respect to
Neuberger & Berman Socially Responsive Trust.
Incorporated by Reference to Post-Effective
Amendment No. 1 to Registrant's Registration
Statement, File Nos. 33-82568 and 811-8106,
EDGAR Accession No. 0000898432-95-000393.
(ii) Schedule A - Series of Neuberger & Berman
Equity Assets Currently Subject to the
Distribution Agreement. Incorporated by
Reference to Post-Effective Amendment No. 1
to Registrant's Registration Statement, File
Nos. 33-82568 and 811-8106, EDGAR Accession
No. 0000898432-95-000393.
(b) (i) Distribution and Services Agreement Between
Neuberger & Berman Equity Assets and
Neuberger & Berman Management Incorporated
with Respect to Other Series. Incorporated
by Reference to Post-Effective Amendment
No. 5 to Registrant's Registration Statement,
File Nos. 33-82568 and 811-8106, Edgar
Accession No. 0000898432-96-000576.
<PAGE>
(ii) Schedule A - Series of Neuberger & Berman
Equity Assets Currently Subject to
Distribution and Services Agreement.
Incorporated by Reference to Post-Effective
Amendment No. 5 to Registrant's
Registration Statement, File Nos. 33-82568
and 811-8106, Edgar Accession No.
0000898432-96-000576.
(7) Bonus, Profit Sharing or Pension Plans. None.
(8) (a) Custodian Contract Between Neuberger & Berman
Equity Assets and State Street Bank and Trust
Company. Incorporated by Reference to Post-
Effective Amendment No. 3 to Registrant's
Registration Statement, File Nos. 33-82568 and
811-8106, Edgar Accession No. 0000898432-96-000048.
(b) Schedule A - Approved Foreign Banking Institutions
and Securities Depositories Under the Custodian
Contract. Incorporated by Reference to Post-
Effective Amendment No. 3 to Registrant's
Registration Statement, File Nos. 33-82568 and
811-8106, Edgar Accession No. 0000898432-96-000048.
(c) Schedule of Compensation under the Custodian
Contract. Incorporated by Reference to Post-
Effective Amendment No. 4 to Registrant's
Registration Statement, File Nos. 33-82568 and
811-8106, Edgar Accession No. 0000898432-96-000558.
<PAGE>
(9) (a) (i) Transfer Agency Agreement Between Neuberger &
Berman Equity Assets and State Street Bank and
Trust Company. Incorporated by Reference to
Post-Effective Amendment No. 3 to Registrant's
Registration Statement, File Nos. 33-82568 and
811-8106, Edgar Accession No.
0000898432-96-000048.
(ii) Schedule of Compensation under the Transfer
Agency Agreement. Incorporated by Reference to
Post-Effective Amendment No. 4 to Registrant's
Registration Statement, File Nos. 33-82568 and
811-8106, Edgar Accession No.
0000898432-96-000558.
(b) (i) Administration Agreement Between Neuberger &
Berman Equity Assets and Neuberger & Berman
Management Incorporated. Incorporated by
Reference to Post-Effective Amendment No. 3 to
Registrant's Registration Statement, File Nos.
33-82568 and 811-8106, Edgar Accession No.
0000898432-96-000048.
(ii) Schedule A - Series of Neuberger & Berman
Equity Assets Currently Subject to the
Administration Agreement. Incorporated by
Reference to Post-Effective Amendment No. 3 to
Registrant's Registration Statement, File Nos.
33-82568 and 811-8106, Edgar Accession
No. Incorporated by Reference to Post-
Effective Amendment No. 3 to Registrant's
Registration Statement, File Nos. 33-82568 and
811-8106, Edgar Accession No.
0000898432-96-000048.
(iii) Schedule B - Schedule of Compensation Under
the Administration Agreement. Incorporated
by Reference to Post-Effective Amendment No.
3 to Registrant's Registration Statement,
File Nos. 33-82568 and 811-8106, Edgar
Accession No. 0000898432-96-000048.
(10) Opinion and Consent of Kirkpatrick & Lockhart LLP
on Securities Matters. Incorporated by Reference to
Registrant's Rule 24f-2 Notice for the Fiscal Year
Ended August 31, 1996, File Nos. 33-82568 and
811-8106, Edgar Accession No. 0000898432-96-000463.
(11) (a) Consent of Ernst & Young LLP, Independent Auditors.
To Be Filed by Amendment.
(b) Consent of Coopers & Lybrand L.L.P., Independent
Accountants. To Be Filed by Amendment.
(12) Financial Statements Omitted from Prospectus.
None.
(13) Letter of Investment Intent. None.
(14) Prototype Retirement Plan. None.
(15) (a) Plan Pursuant to Rule 12b-1. Incorporated by
Reference to Post-Effective Amendment No. 5 to
Registrant's Registration Statement, File Nos.
33-82568 and 811-8106, Edgar Accession No.
0000898432-96-000576.
<PAGE>
(b) Schedule A - Series of Neuberger & Berman Equity
Assets Currently Subject to Plan Pursuant to Rule
12b-1. Incorporated by Reference to Post-Effective
Amendment No. 5 to Registrant's Registration
Statement, File Nos. 33-82568 and 811-8106, Edgar
Accession No. 0000898432-96-000576.
(16) Schedule of Computation of Performance Quotations.
None.
(17) Financial Data Schedule. To Be Filed by Amendment.
(18) Plan Pursuant to Rule 18f-3. None.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
No person is controlled by or under common control with the
Registrant.
<PAGE>
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
The following information is given as of December 16, 1996:
NUMBER OF
TITLE OF CLASS RECORD HOLDERS
-------------- --------------
Shares of beneficial
interest, $0.001 par value, of:
Neuberger & Berman Focus Assets 1
Neuberger & Berman Genesis Assets 0
Neuberger & Berman Guardian Assets 2
Neuberger & Berman Manhattan Assets 1
Neuberger & Berman Partners Assets 3
Neuberger & Berman Socially Responsive Trust 2
ITEM 27. INDEMNIFICATION.
A Delaware business trust may provide in its governing
instrument for indemnification of its officers and trustees from and against any
and all claims and demands whatsoever. Article IX, Section 2 of the Trust
Instrument provides that the Registrant shall indemnify any present or former
trustee, officer, employee or agent of the Registrant ("Covered Person") to the
fullest extent permitted by law against liability and all expenses reasonably
incurred or paid by him or her in connection with any claim, action, suit or
proceeding ("Action") in which he or she becomes involved as a party or
otherwise by virtue of his or her being or having been a Covered Person and
against amounts paid or incurred by him or her in settlement thereof.
Indemnification will not be provided to a person adjudged by a court or other
body to be liable to the Registrant or its shareholders by reason of "willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office" ("Disabling Conduct"), or not to
have acted in good faith in the reasonable belief that his or her action was in
the best interest of the Registrant. In the event of a settlement, no
indemnification may be provided unless there has been a determination that the
officer or trustee did not engage in Disabling Conduct (i) by the court or other
body approving the settlement; (ii) by at least a majority of those trustees who
are neither interested persons, as that term is defined in the Investment
Company Act of 1940 ("1940 Act"), of the Registrant ("Independent Trustees"),
nor are parties to the matter based upon a review of readily available facts; or
(iii) by written opinion of independent legal counsel based upon a review of
readily available facts.
<PAGE>
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.
<PAGE>
Section 8 of the Administration Agreement between the
Registrant and N&B Management provides that N&B Management shall look only to
the assets of each Series for performance of the Agreement by the Registrant on
behalf of such Series, and neither the Shareholders of the Registrant, its
Trustees nor any of the Registrant's officers, employees or agents, whether
past, present or future shall be personally liable therefor. Section 9 of the
Agreement provides that each Series shall indemnify N&B Management and hold it
harmless from and against any and all losses, damages and expenses, including
reasonable attorneys' fees and expenses, incurred by N&B Management that result
from: (i) any claim, action, suit or proceeding in connection with N&B
Management's entry into or performance of the Agreement with respect to such
Series; or (ii) any action taken or omission to act committed by N&B Management
in the performance of its obligations under the Agreement with respect to such
Series; or (iii) any action of N&B Management upon instructions believed in good
faith by it to have been executed by a duly authorized officer or representative
of the Registrant with respect to such Series; provided, that N&B Management
shall not be entitled to such indemnification in respect of actions or omissions
constituting negligence or misconduct on the part of N&B Management, or its
employees, agents or contractors. Section 10 of the Agreement provides that N&B
Management shall indemnify each Series and hold it harmless from and against any
and all losses, damages and expenses, including reasonable attorneys' fees and
expenses, incurred by such Series which result from: (i) N&B Management's
failure to comply with the terms of the Agreement with respect to such Series;
or (ii) N&B Management's lack of good faith in performing its obligations under
the Agreement with respect to such Series; or (iii) the negligence or misconduct
of N&B Management, or its employees, agents or contractors in connection with
the Agreement with respect to such Series. A Series shall not be entitled to
such indemnification in respect of actions or omissions constituting negligence
or misconduct on the part of that Series or its employees, agents or contractors
other than N&B Management, unless such negligence or misconduct results from or
is accompanied by negligence or misconduct on the part of N&B Management, any
affiliated person of N&B Management, or any affiliated person of an affiliated
person of N&B Management.
Section 11 of the Distribution Agreement between the
Registrant and N&B Management provides that N&B Management shall look only to
the assets of a Series for the Registrant's performance of the Agreement by the
Registrant on behalf of such Series, and neither the Shareholders, the Trustees
nor any of the Registrant's officers, employees or agents, whether past, present
or future, shall be personally liable therefor.
<PAGE>
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 ("1933 Act") may be permitted to trustees, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the 1933 Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the 1933 Act and will be governed by the final adjudication of such
issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF ADVISER AND SUB-ADVISER.
- -------- ----------------------------------------------------------
There is set forth below information as to any other business,
profession, vocation or employment of a substantial nature in which each
director or officer of N&B Management and each principal of Neuberger & Berman
is, or at any time during the past two years has been, engaged for his or her
own account or in the capacity of director, officer, employee, partner or
trustee.
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
---- ------------------------------
Claudia A. Brandon Secretary, Neuberger & Berman Advisers Management
Vice President, Trust (Delaware business trust); Secretary, Advisers
N&B Management Managers Trust; Secretary, Neuberger & Berman
Advisers Management Trust (Massachusetts
business trust) (1); Secretary, Neuberger
& Berman Income Funds; Secretary, Neuberger & Berman
Income Trust; Secretary, Neuberger & Berman Equity
Funds; Secretary, Neuberger & Berman Equity Trust;
Secretary, Income Managers Trust; Secretary, Equity
Managers Trust; Secretary, Global Managers Trust;
Secretary, Neuberger & Berman Equity Assets.
Stacy Cooper-Shugrue Assistant Secretary, Neuberger & Berman Advisers
Assistant Vice President, Management Trust (Delaware business trust);
N&B Management Assistant Secretary, Advisers Managers Trust;
Assistant Secretary, Neuberger & Berman Advisers
Management Trust (Massachusetts business trust)
(1); Assistant Secretary, Neuberger & Berman
Income Funds; Assistant Secretary, Neuberger &
Berman Income Trust; Assistant Secretary, Neuberger
& Berman Equity Funds; Assistant Secretary,
Neuberger & Berman Equity Trust; Assistant
Secretary, Income Managers Trust; Assistant
Secretary, Equity Managers Trust; Assistant
Secretary, Global Managers Trust; Assistant
Secretary, Neuberger & Berman Equity Assets.
Robert Cresci Assistant Portfolio Manager, BNP-N&B Global Asset
Assistant Vice President, Management L.P. (joint venture of Neuberger & Berman
N&B Management and Banque Nationale de Paris) (2).
<PAGE>
Barbara DiGiorgio, Assistant Treasurer, Neuberger & Berman Advisers
Assistant Vice President, Management Trust (Delaware business trust);
N&B Management Assistant Treasurer, Advisers Managers Trust;
Assistant Treasurer, Neuberger & Berman Income
Funds; Assistant Treasurer, Neuberger & Berman
Income Trust; Assistant Treasurer, Neuberger
& Berman Equity Funds; Assistant Treasurer,
Neuberger & Berman Equity Trust; Assistant
Treasurer, Income Managers Trust; Assistant
Treasurer, Equity Managers Trust; Assistant
Treasurer, Global Managers Trust; Assistant
Treasurer, Neuberger & Berman Equity Assets.
Stanley Egener Chairman of the Board and Trustee, Neuberger &
President and Director, Berman Advisers Management Trust (Delaware business
N&B Management; Principal, trust); Chairman of the Board and Trustee, Advisers
Neuberger & Berman Managers Trust; Chairman of the Board and Trustee,
Neuberger & Berman Advisers Management Trust
(Massachusetts business trust) (1); Chairman of the
Board and Trustee, Neuberger & Berman Income Funds;
Chairman of the Board and Trustee, Neuberger &
Berman Income Trust; Chairman of the Board
and Trustee, Neuberger & Berman Equity Funds;
Chairman of the Board and Trustee, Neuberger &
Berman Equity Trust; Chairman of the Board and
Trustee, Income Managers Trust; Chairman of the
Board and Trustee, Equity Managers Trust; Chairman
of the Board and Trustee, Global Managers Trust;
Chairman of the Board and Trustee, Neuberger &
Berman Equity Assets.
Theodore P. Giuliano President and Trustee, Neuberger & Berman Income
Vice President and Funds; President and Trustee, Neuberger & Berman
Director, N&B Income Trust; President and Trustee, Income
Management; Principal, Managers Trust.
Neuberger & Berman
<PAGE>
C. Carl Randolph Assistant Secretary, Neuberger & Berman Advisers
Principal, Management Trust (Delaware business trust); Assistant
Neuberger & Berman Secretary, Advisers Managers Trust; Assistant
Secretary, Neuberger & Berman Advisers Management
Trust (Massachusetts business trust) (1); Assistant
Secretary, Neuberger & Berman Income Funds;
Assistant Secretary, Neuberger & Berman Income
Trust; Assistant Secretary, Neuberger & Berman
Equity Funds; Assistant Secretary, Neuberger & Berman
Equity Trust; Assistant Secretary, Income Managers
Trust; Assistant Secretary, Equity Managers Trust;
Assistant Secretary, Global Managers Trust; Assistant
Secretary, Neuberger & Berman Equity Assets.
Felix Rovelli Senior Vice President-Senior Equity Portfolio
Vice President, Manager, BNP-N&B Global Asset Management L.P
N&B Management (joint venture of Neuberger & Berman and Banque
Nationale de Paris) (2).
Richard Russell Treasurer, Neuberger & Berman Advisers Management
Vice President, Trust (Delaware business trust); Treasurer, Advisers
N&B Management Manager Trust; Treasurer, Neuberger & Berman Advisers
Management Trust (Massachusetts business trust)
(1); Treasurer, Neuberger & Berman Income Funds;
Treasurer, Neuberger & Berman Income Trust;
Treasurer, Neuberger & Berman Equity Funds;
Treasurer, Neuberger & Berman Equity Trust;
Treasurer, Income Managers Trust; Treasurer, Equity
Managers Trust; Treasurer, Global Managers Trust;
Treasurer, Neuberger & Berman Equity Assets.
Daniel J. Sullivan Vice President, Neuberger & Berman Advisers
Senior Vice President, Management Trust (Delaware business trust); Vice
N&B Management Presidewnt, Advisers Managers Trust; Vice President,
Neuberger & Berman Advisers Management Trust
(Massachusetts business trust) (1); Vice President,
Neuberger & Berman Income Funds; Vice President,
Neuberger & Berman Income Trust; Vice President,
Neuberger & Berman Equity Funds; Vice President,
Neuberger & Berman Equity Trust; Vice President,
Income Managers Trust; Vice President, Equity
Managers Trust; Vice President, Global Managers
Trust; Vice President, Neuberger & Berman Equity
Assets.
<PAGE>
Michael J. Weiner Vice President, Neuberger & Berman Advisers
Senior Vice President, Management Trust (Delaware business trust); Vice
N&B Management President, Advisers Managers Trust; Vice President,
Neuberger & Berman Advisers Management Trust
(Massachusetts business trust) (1); Vice President,
Neuberger & Berman Income Funds; Vice President,
Neuberger & Berman Income Trust; Vice President,
Neuberger & Berman Equity Funds; Vice President,
Neuberger & Berman Equity Trust; Vice President,
Income Managers Trust; Vice President, Equity
Managers Trust; Vice President, Global Managers
Trust; Vice President, Neuberger & Berman Equity
Assets.
Celeste Wischerth, Assistant Treasurer, Neuberger & Berman Advisers
Assistant Vice President, Management Trust (Delaware business 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 (Delaware business
Principal, Neuberger trust); President and Trustee, Advisers Managers
& Berman Trust; President and Trustee, Neuberger &
Berman Advisers Management Trust (Massachusetts
business trust) (1); President and Trustee,
Neuberger & Berman Equity Funds; President and
Trustee, Neuberger & Berman Equity Trust;
President and Trustee, Equity Managers Trust;
President, Global Managers Trust; President and
Trustee, Neuberger & Berman Equity Assets
The principal address of N&B Management, Neuberger & Berman,
LLC, and of each of the investment companies named above, is 605 Third Avenue,
New York, New York 10158.
- --------------------------
(1) Until April 30, 1995.
(2) Until October 31, 1995.
<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 OFFICER
NAME WITH UNDERWRITER WITH REGISTRANT
Claudia A. Brandon Vice President Secretary
Patrick T. Byrne Vice President None
Richard A. Cantor Chairman of the Board and None
Director
Robert Conti Treasurer None
Stacy Cooper-Shugrue Assistant Vice President Assistant Secretary
Robert Cresci Assistant Vice President None
<PAGE>
William Cunningham Vice President None
Clara Del Villar Vice President None
Barbara DiGiorgio Assistant Vice President Assistant Treasurer
Roberta D'Orio Assistant Vice President None
Stanley Egener President and Director Chairman of the Board
of Trustees (Chief
Executive Officer)
Joseph G. Galli Assistant Vice President None
Robert I. Gendelman Assistant Vice President None
Mark R. Goldstein Vice President None
Theodore P. Giuliano Vice President and Director None
Leslie Holliday-Soto Assistant Vice President None
Jody L. Irwin Assistant Vice President None
Michael M. Kassen Vice President and Director None
Irwin Lainoff Director None
Michael Lamberti Vice President None
Josephine Mahaney Vice President None
Carmen G. Martinez Assistant Vice President None
Lawrence Marx III Vice President None
Ellen Metzger Vice President and Secretary None
Paul Metzger Assistant Vice President None
<PAGE>
Loraine Olavarria Assistant Secretary None
Janet W. Prindle Vice President None
Joseph S. Quirk Assistant Vice President None
Kevin L. Risen Assistant Vice President None
Felix Rovelli Vice President None
Richard Russell Vice President Treasurer (Principal
Accounting Officer)
Kent C. Simons Vice President None
Frederick B. Soule Vice President None
Daniel J. Sullivan Senior Vice President Vice President
Peter E. Sundman Senior Vice President None
Susan Switzer Assistant Vice President None
Andrea Trachtenberg Vice President of Marketing None
Judith M. Vale Vice President None
Susan Walsh Vice President None
Michael J. Weiner Senior Vice President Vice President
(Principal Financial
Officer)
Celeste Wischerth Assistant Vice President Assistant Treasurer
Thomas Wolfe Vice President None
KimMarie Zamot Assistant Vice President None
<PAGE>
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.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
- ------- ----------------------------------
All accounts, books and other documents required to be
maintained by Section 31(a) of the 1940 Act, as amended, and the rules
promulgated thereunder with respect to the Registrant are maintained at the
offices of State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, except for the Registrant's Trust Instrument and By-Laws,
minutes of meetings of the Registrant's Trustees and shareholders and the
Registrant's policies and contracts, which are maintained at the offices of the
Registrant, 605 Third Avenue, New York, New York 10158.
ITEM 31. MANAGEMENT SERVICES
- -------- --------------------
Other than as set forth in Parts A and B of this Post-
Effective Amendment, the Registrant is not a party to any
management-related service contract.
ITEM 32. UNDERTAKINGS
- -------- ------------
Registrant hereby undertakes to file a Post-Effective
Amendment to its Registration Statement, containing financial statements with
respect to Neuberger & Berman Focus Assets, Neuberger & Berman Genesis Assets,
Neuberger & Berman Guardian Assets, Neuberger & Berman Manhattan Assets, and
Neuberger & Berman Partners Assets, which need not be certified, within four to
six months from the date of each respective Fund's commencement of operations.
<PAGE>
Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of Registrant's latest annual report to
shareholders of Neuberger & Berman Partners Assets, upon request and without
charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, EQUITY MANAGERS TRUST has duly caused the
Post-Effective Amendment No. 6 to be signed on its behalf by the undersigned,
thereto duly authorized, in the City and State of New York on the 2nd day of
January, 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. 6 has been signed below by the following persons in
the capacities and on the date indicated.
SIGNATURE TITLE DATE
/s/ Faith Colish Trustee January 2, 1997
- ---------------------
Faith Colish
/s/ Donald M. Cox Trustee January 2, 1997
- ---------------------
Donald M. Cox
/s/ Stanley Egener Chairman of the Board January 2, 1997
- --------------------- and Trustee (Chief
Stanley Egener Executive Officer)
/s/ Howard A. Mileaf Trustee January 2, 1997
- ---------------------
Howard A. Mileaf
/s/ Edward I. O'Brien Trustee January 2, 1997
- ----------------------
Edward I. O'Brien
(signatures continued on next page)
<PAGE>
SIGNATURE TITLE DATE
/s/ John T. Patterson, Jr. Trustee January 2, 1997
- --------------------------
John T. Patterson, Jr.
/s/ John P. Rosenthal Trustee January 2, 1997
- --------------------------
John P. Rosenthal
/s/ Cornelius T. Ryan Trustee January 2, 1997
- --------------------------
Cornelius T. Ryan
/s/ Gustave H. Shubert Trustee January 2, 1997
- --------------------------
Gustave H. Shubert
/s/ Alan R. Gruber Trustee January 2, 1997
- --------------------------
Alan R. Gruber
/s/ Lawrence Zicklin President and January 2, 1997
- -------------------------- Trustee
Lawrence Zicklin
/s/ Michael J. Weiner Vice President January 2, 1997
- -------------------------- (Principal Financial
Michael J. Weiner Officer)
/s/ Richard Russell Treasurer (Principal January 2, 1997
- -------------------------- Accounting Officer)
Richard Russell
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, NEUBERGER & BERMAN EQUITY ASSETS
has duly caused this Post-Effective Amendment No. 6 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 2nd day of January, 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. 6 has been signed below by the following persons in
the capacities and on the date indicated.
SIGNATURE TITLE DATE
/s/ Faith Colish Trustee January 2, 1997
- ---------------------
Faith Colish
/s/ Donald M. Cox Trustee January 2, 1997
- ---------------------
Donald M. Cox
/s/ Stanley Egener Chairman of the Board January 2, 1997
- --------------------- and Trustee (Chief
Stanley Egener Executive Officer)
/s/ Howard A. Mileaf Trustee January 2, 1997
- ---------------------
Howard A. Mileaf
/s/ Edward I. O'Brien Trustee January 2, 1997
- ----------------------
Edward I. O'Brien
(signatures continued on next page)
<PAGE>
SIGNATURE TITLE DATE
/s/ John T. Patterson, Jr. Trustee January 2, 1997
- --------------------------
John T. Patterson, Jr.
/s/ John P. Rosenthal Trustee January 2, 1997
- --------------------------
John P. Rosenthal
/s/ Cornelius T. Ryan Trustee January 2, 1997
- --------------------------
Cornelius T. Ryan
/s/ Gustave H. Shubert Trustee January 2, 1997
- --------------------------
Gustave H. Shubert
/s/ Alan R. Gruber Trustee January 2, 1997
- --------------------------
Alan R. Gruber
/s/ Lawrence Zicklin President and January 2, 1997
- -------------------------- Trustee
Lawrence Zicklin
/s/ Michael J. Weiner Vice President January 2, 1997
- -------------------------- (Principal Financial
Michael J. Weiner Officer)
/s/ Richard Russell Treasurer (Principal January 2, 1997
- -------------------------- Accounting Officer)
Richard Russell
<PAGE>
NEUBERGER & BERMAN EQUITY ASSETS
POST-EFFECTIVE AMENDMENT NO. 6 ON FORM N-1A
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
NUMBER DESCRIPTION PAGE
(1) (a) Certificate of Trust. Incorporated by Reference to N.A.
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. 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.
(c) Schedule A - Current Series of Neuberger & Berman Equity N.A.
Assets. Incorporated by Reference to Post-Effective
Amendment No. 1 to Registrant's Registration Statement,
File Nos. 33-82568 and 811-106, EDGAR Accession No.
0000898432-95-000393.
(2) By-Laws of Neuberger & Berman Equity Assets. Incorporated N.A.
by reference to Post-Effective Amendment No. 1 to Registrant's
Registration Statement, File Nos. 33-82568 and 811-8106,
EDGAR Accession No. 0000898432-95-000393.
(3) Voting Trust Agreement. None. N.A.
(4) (a) Trust Instrument of Neuberger & Berman Equity Assets,
Articles IV, V, and VI. Incorporated by Reference to
Post-Effective Amendment No. 1 to Registrant's Registration
Statement, File Nos. 33-82568 and 811-8106, EDGAR Accession
No. 0000898432-95-000393.
(b) By-Laws of Neuberger & Berman Equity Assets, Articles V, VI,
and VIII. Incorporated by Reference to Post-Effective
Amendment No. 1 to Registrant's Registration Statement, File
Nos. 33-82568 and 811-8106, EDGAR Accession No.
0000898432-95-000393.
(5) (a) (i) Management Agreement Between Equity Managers Trust and N.A.
Neuberger & Berman Management Incorporated.
Incorporated by Reference to Post-Effective Amendment
No. 70 to Registration Statement of Neuberger & Berman
Equity Funds, File Nos. 2-11357 and 811-582, EDGAR
Accession No. 0000898432-95-000314.
<PAGE>
(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 N.A.
Management Agreement. Incorporated by Reference to
Post-Effective Amendment No. 70 to Registration
Statement of Neuberger & Berman Equity Funds, File Nos.
2-11357 and 811-582, EDGAR Accession No.
0000898432-95-000314.
(b) (i) Sub-Advisory Agreement Between Neuberger & Berman N.A.
Management Incorporated and Neuberger & Berman with
respect to Equity Managers Trust. Incorporated by
Reference to Post-Effective Amendment No. 70 to
registration statement of Neuberger & Berman Equity
Funds, File Nos. 2-11357 and 811-582, EDGAR Accession
No. 0000898432-95-000314.
(ii) Schedule A - Series of Equity Managers Trust Currently N.A.
Subject to the Sub-Advisory Agreement. Incorporated by
Reference to Post-Effective Amendment No. 70 to
Registration Statement of Equity Managers Trust, File
Nos. 2-11357 and 811-582, EDGAR Accession No.
0000898432-95-000314.
(iii) Substitution Agreement Among Neuberger & Berman
Management Incorporated, Equity Managers Trust,
Neuberger & Berman, L.P., and Neuberger & Berman, LLC.
Incorporated by Reference to Amendment No. 7 to
Registration Statement of Equity Managers Trust, File
No. 811-7910, Edgar Accession No. 0000898432-96-000557.
<PAGE>
(6) (a) (i) Distribution Agreement Between Neuberger & Berman N.A.
Equity Assets and Neuberger & Berman Management
Incorporated with Respect to Neuberger & Berman
Socially Responsive Trust. Incorporated by Reference
to Post-Effective Amendment No. 1 to Registrant's
Registration Statement, File Nos. 33-82568 and
811-8106, EDGAR Accession No. 0000898432-95-000393.
(ii) Schedule A - Series of Neuberger & Berman Equity Assets N.A.
Currently Subject to the Distribution Agreement.
Incorporated by Reference to Post-Effective Amendment
No. 1 to Registrant's Registration Statement, File Nos.
33-82568 and 811-8106, EDGAR Accession No.
0000898432-95-000393.
(b) (i) Distribution and Services Agreement Between Neuberger & N.A.
Berman Equity Assets and Neuberger & Berman Management
Incorporated With Respect to Other Series.
Incorporated by Reference to Post-Effective Amendment
No. 5 to Registrant's Registration Statement, File Nos.
33-82568 and 811-8106, Edgar Accession No.
0000898432-96-000576.
(ii) Schedule A - Series of Neuberger & Berman Equity Assets N.A.
Currently Subject to Distribution and Services
Agreement. Incorporated by Reference to Post-Effective
Amendment No. 5 to Registrant's Registration Statement,
File Nos. 33-82568 and 811-8106, Edgar Accession No.
0000898432-96-000576.
(7) Bonus, Profit Sharing or Pension Plans. None. N.A.
(8) (a) Custodian Contract Between Neuberger & Berman Equity N.A.
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 A - Approved Foreign Banking Institutions N.A.
and Securities Depositories Under the Custodian
Contract. Incorporated by Reference to Post-Effective
Amendment No. 3 to Registrant's Registration Statement,
File Nos. 33-82568 and 811-8106, Edgar Accession No.
0000898432-96-000048.
(c) Schedule of Compensation under the Custodian Contract.
Incorporated by Reference to Post-Effective Amendment
No. 4 to Registrant's Registration Statement, File Nos.
33-82568 and 811-8106, Edgar Accession No.
0000898432-96-000558.
(9) (a) (i) Transfer Agency Agreement Between Neuberger & Berman N.A.
Equity Assets and State Street Bank and Trust Company.
Incorporated by Reference to Post-Effective Amendment
No. 3 to Registrant's Registration Statement, File
Nos. 33-82568 and 811-8106, Edgar
Accession No. 0000898432-96-000048.
(ii) Schedule of Compensation under the Transfer Agency
Agreement. Incorporated by Reference to
Post-Effective Amendment No. 4 to Registrant's
Registration Statement, File Nos. 33-82568 and
811-8106, Edgar Accession No. 0000898432-96-000558.
(b) (i) Administration Agreement Between Neuberger & Berman N.A.
Equity Assets and Neuberger & Berman Management
Incorporated. Incorporated by Reference to
Post-Effective Amendment No. 3 to Registrant's
Registration Statement, File Nos. 33-82568 and
811-8106, Edgar Accession No. 0000898432-96-000048.
(ii) Schedule A - Series of Neuberger & Berman Equity Assets N.A.
Currently Subject to the Administration Agreement.
Incorporated by Reference to Post-Effective Amendment
No. 3 to Registrant's Registration Statement, File
Nos. 33-82568 and 811-8106, Edgar Accession No.
0000898432-96-000048.
<PAGE>
(iii) Schedule B - Schedule of Compensation Under the N.A.
Administration Agreement. Incorporated by Reference to
Post-Effective Amendment No. 3 to Registrant's
Registration Statement, File Nos. 33-82568 and
811-8106, Edgar Accession No. 0000898432-96-000048.
(10) Opinion and Consent of Kirkpatrick & Lockhart LLP on ____
Securities Matters. Incorporated by Reference to Registrant's
Rule 24f-2 Notice for the Fiscal Year Ended August 31, 1996,
File Nos. 33-82568 and 811-8106, Edgar Accession No.
0000898432-96-000463.
(11) (a) Consent of Ernst & Young LLP, Independent Auditors. ____
To Be Filed by Amendment.
(b) Consent of Coopers & Lybrand L.L.P., Independent ____
Accountants. To Be Filed by Amendment.
(12) Financial Statements Omitted from Prospectus. None. N.A.
(13) Letter of Investment Intent. None. N.A.
(14) Prototype Retirement Plan. None. N.A.
(15) (a) Plan Pursuant to Rule 12b-1. Incorporated by N.A.
Reference to Post-Effective Amendment No. 5 to
Registrant's Registration Statement, File Nos.
33-82568 and 811-8106, Edgar Accession No.
0000898432-96-000576.
<PAGE>
(b) Schedule A - Series of Neuberger & Berman Equity Assets
Currently Subject to Plan Pursuant to Rule 12b-1.
Plan Pursuant to Rule 12b-1. Incorporated by Reference
to Post-Effective Amendment No. 5 to Registrant's
Registration Statement, File Nos. 33-82568 and 811-8106,
Edgar Accession No. 0000898432-96-000576.
(16) Schedule of Computation of Performance Quotations. None. N.A.
(17) Financial Data Schedule. To Be Filed by Amendment. ____
(18) Plan Pursuant to Rule 18f-3. None. N.A.