As filed with the Securities and Exchange Commission on August 5, 1998
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. 10 [ X ]
------ -----
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
-----
Amendment No. 12 [ 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)
_X___ 75 days after filing pursuant to paragraph (a)(2)
_____ on to paragraph (a)(2)
Neuberger & Berman Equity Assets is a "master/feeder fund." This
Post-Effective Amendment No. 10 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. 10 ON FORM N-1A
This Post-Effective Amendment consists of the following papers and
documents:
Cover Sheet
Contents of Post-Effective Amendment No. 10 on Form N-1A
Cross Reference Sheet
NEUBERGER & BERMAN SMALL CAP GROWTH ASSETS
Part A - Prospectus
Part B - Statement of Additional Information
Part C - Other Information
Signature Pages
Exhibits
<PAGE>
NEUBERGER & BERMAN EQUITY ASSETS
POST-EFFECTIVE AMENDMENT NO. 10 ON FORM N-1A
Cross Reference Sheet
This cross reference sheet relates to the Prospectus
and Statement of Additional Information for:
NEUBERGER & BERMAN SMALL CAP GROWTH ASSETS
------------------------------------------
<TABLE>
<CAPTION>
FORM N-1A ITEM NO. CAPTION IN PART A PROSPECTUS
------------------ ----------------------------
<S> <C> <C>
Item 1. Cover Page Front Cover Page
Item 2. Synopsis Expense Information; Summary
Item 3. Condensed Financial Information Performance Information
Item 4. General Description of Registrant Investment Programs; Description of Investments;
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, Other Distributions, and
Securities Taxes; Information Organization, Capitalization, and Other
Matters
Item 7. Purchase of Securities Being Shareholder Services; Share Prices and Net Asset Value;
Offered Management and Administration
Item 8. Redemption or Repurchase Shareholder Services; Share Prices and Net Asset Value
Item 9. Pending Legal Proceedings Not Applicable
FORM N-1A ITEM NO. CAPTION IN PART B
------------------ STATEMENT OF ADDITIONAL 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 Risk Considerations
Policies
<PAGE>
Item 14. Management of the Fund Trustees and Officers
Item 15. Control Persons and Principal Not Applicable
Holders of Securities
Item 16. Investment Advisory and Other Investment Management and Administration Services;
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 Redemption Information;
Securities 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 Not Applicable
</TABLE>
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.
10.
<PAGE>
PROSPECTUS
- -----------------------------------------
October 19, 1998
NEUBERGER&BERMAN
EQUITY ASSETS-Registered Trademark-
Neuberger&Berman
SMALL CAP GROWTH ASSETS
No Redemption Fees
<PAGE>
Neuberger&Berman
EQUITY ASSETS
No-Load Equity Fund
- ------------------------------------------------
Neuberger&Berman Small Cap Growth Assets
YOU CAN BUY, OWN AND SELL FUND SHARES ONLY THROUGH AN ACCOUNT WITH AN
ADMINISTRATOR, BROKER-DEALER, OR OTHER INSTITUTION THAT PROVIDES ACCOUNTING,
RECORDKEEPING, AND/OR OTHER SERVICES TO INVESTORS AND THAT HAS AN ADMINISTRATIVE
SERVICES AGREEMENT WITH NEUBERGER&BERMAN MANAGEMENT INCORPORATED ("N&B
MANAGEMENT") AND/OR AN AGREEMENT WITH N&B MANAGEMENT TO MAKE FUND SHARES
AVAILABLE TO ITS CLIENTS (EACH AN "INSTITUTION").
- ------------------------------------------------
The above-named fund (the "Fund") invests all of its net investable assets in
Neuberger&Berman Small Cap Growth Portfolio (the "Portfolio"), a series of
Equity Managers Trust ("Managers Trust"). Managers Trust is an open-end
management investment company managed by N&B Management. The Portfolio invests
in securities in accordance with an investment objective, policies, and
limitations identical to those of the Fund. The investment performance of the
Fund directly corresponds with the investment performance of the Portfolio. This
"master/feeder fund" structure is different from that of many other investment
companies which directly acquire and manage their own portfolios of securities.
For more information on this structure that you should consider, see "Summary"
on page 5, and "Information Regarding Organization, Capitalization, and Other
Matters" on page 18.
Please read this Prospectus before investing in the Fund and keep it for
future reference. It contains information about the Fund that a prospective
investor should know before investing. A Statement of Additional Information
("SAI") about the Fund and Portfolio, dated October 19, 1998, is on file with
the Securities and Exchange Commission ("SEC"). The SAI is incorporated herein
by reference (so it is legally considered a part of this Prospectus). You can
obtain a free copy of the SAI by calling N&B Management at 800-877-9700.
THE SEC MAINTAINS A WEBSITE (HTTP://WWW.SEC.GOV) THAT CONTAINS THE SAI,
MATERIAL INCORPORATED BY REFERENCE, AND OTHER INFORMATION REGARDING THE FUND AND
PORTFOLIO.
PROSPECTUS DATED OCTOBER 19, 1998
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY
BANK OR OTHER DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE
FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK,
INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
2
<PAGE>
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to the registration or qualification under the securities laws of any such
State.
3
<PAGE>
TABLE OF CONTENTS
SUMMARY........................................................................5
The Fund and Portfolio; Risk Factors........................................5
Management..................................................................6
The Neuberger&Berman Investment Approach....................................6
EXPENSE INFORMATION............................................................7
Shareholder Transaction Expenses for The Fund...............................7
Annual Fund Operating Expenses..............................................7
Example....................................................................8
INVESTMENT PROGRAM.............................................................9
Neuberger&Berman Small Cap Growth Portfolio.................................9
Special Considerations of Small............................................10
Cap Company Stocks.........................................................10
Short-Term Trading; Portfolio Turnover.....................................10
Borrowings.................................................................11
Other Investments..........................................................11
PERFORMANCE INFORMATION.......................................................11
SHAREHOLDER SERVICES..........................................................12
How to Buy Shares..........................................................12
How to Sell Shares........................................................12
Exchanging Shares..........................................................13
SHARE PRICES AND NET ASSET VALUE..............................................13
DIVIDENDS, OTHER DISTRIBUTIONS, AND TAXES.....................................14
Distribution Options......................................................14
MANAGEMENT AND ADMINISTRATION.................................................15
Trustees and Officers......................................................15
Investment Manager, Administrator,........................................16
Distributor, and Sub-Adviser..............................................16
Expenses...................................................................17
Transfer Agent.............................................................17
INFORMATION REGARDING ORGANIZATION,
CAPITALIZATION, AND OTHER MATTERS.............................................18
The Fund...................................................................18
The Portfolio.............................................................19
DESCRIPTION OF INVESTMENTS....................................................20
DIRECTORY.....................................................................23
FUNDS ELIGIBLE FOR EXCHANGE...................................................24
4
<PAGE>
SUMMARY
The Fund and Portfolio; Risk Factors
- ------------------------------------------------------
The Fund is a series of Neuberger&Berman Equity Assets (the "Trust") and
invests in the 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 the Fund "feeds" shareholders' investments into the Portfolio, a
"master" fund. The structure looks like this:
-----------------
SHAREHOLDERS
-----------------
BUY SHARES IN
-----------------
THE FUND
-----------------
INVESTS IN
-----------------
THE PORTFOLIO
-----------------
INVESTS IN
-----------------
STOCKS & OTHER SECURITIES
-----------------
The trustees who oversee the Fund believe that this structure may benefit
shareholders; investment in the Portfolio by investors in addition to the Fund
may enable the Portfolio to achieve economies of scale that could reduce
expenses. For more information about the organization of the Fund and the
Portfolio, including certain features of the master/feeder fund structure, see
"Information Regarding Organization, Capitalization, and Other Matters" on page
18. An investment in the Fund involves certain risks, depending upon the types
of investments made by the Portfolio. For more details about the Portfolio, its
investments and their risks, see "Investment Program" on page 9 and "Description
of Investments" on page 20.
The following table is a summary highlighting features of the Fund and the
Portfolio. You may want to combine your investment in the Fund with investments
in other Neuberger&Berman Funds to fit your particular investment needs. Of
course, there can be no assurance that the Fund will meet its investment
objective.
5
<PAGE>
NEUBERGER&BERMAN INVESTMENT PORTFOLIO
EQUITY ASSETS STYLE CHARACTERISTICS
- ---------------------------------------------------
SMALL CAP Broadly diversified, Invests primarily in equity securities
GROWTH ASSETS small cap growth. of small-sized domestic companies
(up to $2.7 billion in market
capitalization at time of
investment). Portfolio managers seek
stocks of companies that are
projected to grow at above-average
rates and that appear to the managers
poised for a period of accelerated
earnings.
Management
- ---------------------------------------------------
N&B Management, with the assistance of Neuberger&Berman, LLC
("Neuberger&Berman") as sub-adviser, selects investments for the Portfolio. N&B
Management also provides administrative services to the Portfolio and the Fund
and acts as distributor of Fund shares. See "Management and Administration" on
page 15. If you want to know how to buy and sell shares of the Fund or exchange
them for shares of other Neuberger&Berman Funds-Registered Trademark- made
available through an Institution, see "Shareholder Services -- How to Buy
Shares" on page 12, "Shareholder Services -- How to Sell Shares" on page 12, and
"Shareholder Services - Exchanging Shares" on page 13, and the policies of the
Institution through which you are purchasing shares.
The Neuberger&Berman Investment Approach
- ---------------------------------------------------
The Portfolio is managed using a growth-oriented investment approach. In
contrast to a value approach, which concentrates on securities that are
undervalued in relation to their fundamental economic values, a growth approach
seeks stocks of companies that N&B Management projects will grow at
above-average rates and faster than others expect. While a growth portfolio
manager may be willing to pay a higher multiple of earnings per share than a
value manager, the multiple tends to be reasonable relative to the manager's
expectation of the company's earnings growth rate.
6
<PAGE>
EXPENSE INFORMATION
This section gives you certain information about the expenses of the Fund and
the Portfolio. See "Performance Information" for important facts about the
investment performance of the Fund, after taking expenses into account.
Shareholder Transaction Expenses for The Fund
---------------------------------------------
As shown by this table, the Fund imposes 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 operating expenses for the 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 the Portfolio ("Total Operating
Expenses"). "Total Operating Expenses" exclude interest, taxes, brokerage
commissions, and extraordinary expenses.
The Fund pays N&B Management an administration fee based on the Fund's
average daily net assets. The 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 Fund. "Management and Administration Fees" in the
following table are based upon current administration fees for the Fund and
current management fees for the Portfolio and the current expense reimbursement
undertaking. For more information, see "Management and Administration" and the
SAI.
7
<PAGE>
The Fund and Portfolio incur other expenses for things such as accounting and
legal fees, transfer agency fees, custodial fees, printing and furnishing
shareholder statements and Fund reports and compensating trustees who are not
affiliated with N&B Management ("Other Expenses"). Other Expenses in the
following table are estimated amounts for the current fiscal year and assume
average daily net assets of $25 million. There can be no assurance that the Fund
will achieve that asset level. All expenses are factored into the Fund's share
price and dividends and are not charged directly to Fund shareholders.
NEUBERGER&BERMAN MANAGEMENT AND 12b-1 OTHER TOTAL
EQUITY ASSETS ADMINISTRATION FEES EXPENSES OPERATING
FEES EXPENSES*
================================================================================
SMALL CAP GROWTH ASSETS 1.25% 0.25% 0.75% 2.00%
*Reflects N&B Management's expense reimbursement undertaking described below.
As set forth in "Expenses" on page 17, N&B Management has voluntarily
undertaken to reimburse the Fund if its Total Operating Expenses exceed certain
limits. Absent the reimbursement, Management and Administration Fees and Total
Operating Expenses would be 1.45% and 2.70%, respectively, of the Fund's average
daily net assets.
For more information, see "Expenses" on page 17.
Example
- ----------------------------------------------
To illustrate the effect of Total Operating Expenses, let's assume that the
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 the 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
- -----------------------------------------------------
SMALL CAP GROWTH ASSETS $ 20 $ 63
The assumption in this example of a 5% annual return is required by
regulations of the SEC applicable to all mutual funds. THE INFORMATION IN THE
PREVIOUS TABLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR RATES OF RETURN; ACTUAL EXPENSES OR RETURNS MAY BE GREATER OR LESS
THAN THOSE SHOWN, AND MAY CHANGE IF EXPENSE REIMBURSEMENTS CHANGE.
8
<PAGE>
INVESTMENT PROGRAM
The investment policies and limitations of the Fund are identical to those of
the Portfolio. The Fund invests only in the Portfolio. Therefore, the following
shows you the kinds of securities in which the Portfolio invests. For an
explanation of some types of investments, see "Description of Investments" on
page 20.
Investment policies and limitations of the Fund and Portfolio 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 Fund and Portfolio are not fundamental.
There can be no assurance that the Fund or Portfolio will achieve their
objectives. The Fund, by itself, does not represent a comprehensive investment
program.
Additional investment techniques, features, and limitations concerning the
Portfolio's investment programs are described in the SAI.
Neuberger&Berman Small Cap Growth Portfolio
- ---------------------------------------------------
The investment objective of Neuberger&Berman Small Cap Growth Portfolio and
Neuberger&Berman Small Cap Growth Fund is to seek capital growth. The Portfolio
is a diversified investment fund that pursues its investment objective by
investing primarily in a portfolio of equity securities of small-sized domestic
companies. The Portfolio intends to invest at least 80% of its total assets in
common stocks or warrants of small companies that the manager believes present
attractive opportunities for capital growth and, under normal market conditions,
will invest at least 65% of its total assets in such securities. The Portfolio
considers a "small" company to be one that has a market capitalization, measured
at the time the Portfolio purchases a security of that company, within the range
of capitalizations of companies represented in the Russell 2000 Index. (As of
January 31, 1998, the Russell 2000 Index included companies with the market
capitalizations between $23.7 million and $2.7 billion.)
Companies whose capitalizations no longer fall within the range of
capitalizations of companies in the Russell 2000 Index after purchase continue
to be considered small companies for purposes of the Portfolio's policy of
investing at least 65% of its assets in small companies. In addition, the
Portfolio has the flexibility to invest in companies with market capitalizations
of any size when the 65% policy is met. As a result of these policies, the
average market capitalization of the issuers whose securities are held by the
Portfolio at any particular time may exceed the maximum market capitalization
included in the Russell 2000 Index, particularly at times when the market values
of small company stocks are rising. The Portfolio will invest primarily in
companies whose securities are traded on domestic stock exchanges or in the
over-the-counter market, but may invest up to 20% of its assets in foreign
securities. Foreign securities are not included within the Portfolio's 65%
policy of investing in the common stocks of small-cap companies described above.
9
<PAGE>
The Portfolio uses a growth-oriented investment approach. When N&B Management
believes that particular securities have greater potential for long-term capital
appreciation, the Portfolio may purchase such securities at prices with
relatively higher multiples to measures of economic value (such as earnings or
cash flow) than securities likely to be purchased using a value-oriented
approach. In selecting stocks, N&B Management considers, among other factors, a
company's financial strength, competitive position, projected future earnings,
management strength and experience, reasonable valuation and other investment
criteria. The Portfolio also diversifies its investments among companies and
industries. Small-cap companies in which the Portfolio may invest may still be
in the developmental stage. They may also be older companies that appear to be
entering a new stage of growth progress owing to factors such as management
changes or development of new technology, products or markets. Other small-cap
companies in which the Portfolio invests may be companies providing products or
services with a high volume growth rate. The Portfolio's investments will be
made on the basis of their equity characteristics and securities ratings
generally will not be a factor in the selection process.
The Portfolio may also invest in securities of emerging growth companies,
which can be either small-or medium-sized companies that have passed their
start-up phase and that show positive earnings momentum and prospects of
achieving significant profit and gain in a relatively short period of time.
Emerging growth companies generally stand to benefit from new products or
services, technological developments, changes in management or other factors.
The Portfolio's growth investment program involves greater risks and share
price volatility than programs that invest in more undervalued securities.
Moreover, the Portfolio does not follow a policy of active trading for
short-term profits. Accordingly, the Portfolio may be more appropriate for
investors with a longer-range perspective.
Special Considerations of Small
Cap Company Stocks
- -----------------------------------------------
Investments in small-cap company stocks may present greater opportunities for
capital appreciation than investments in stocks of large-capitalization
companies ("large-cap companies"). However, small-cap company stocks may have
higher risk and volatility. These stocks generally are not as broadly traded as
large-cap company stocks, and their prices thus may fluctuate more widely and
abruptly. Any such movements in stocks held by the Portfolio would be reflected
in the Fund's net asset value. Small-cap company stocks also are less researched
than large-cap company stocks and are often overlooked in the market.
Accordingly, the Fund is designed for investors who are able to bear the risks
and fluctuations associated with investment in smaller companies.
Short-Term Trading; Portfolio Turnover
- -------------------------------------------------
Although the Portfolio does not purchase securities with the intention of
profiting from short-term trading, the Portfolio may sell portfolio securities
when N&B Management believes that such action is advisable. It is anticipated
that the annual turnover rate of Neuberger&Berman Small Cap Growth Portfolio may
exceed 100% in some fiscal years. Turnover rates in excess of 100% generally
10
<PAGE>
result in higher transaction costs (which are borne directly by the Portfolio
and indirectly by the Fund) and a possible increase in realized short-term
capital gains or losses. See "Dividends, Other Distributions, and Taxes" on page
14 and the SAI.
Borrowings
- --------------------------------------------
The 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).
The Portfolio does not expect to borrow money or to enter into reverse
repurchase agreements. As a non-fundamental policy, the Portfolio may not
purchase portfolio securities if its outstanding borrowings, including reverse
repurchase agreements, exceed 5% of its total assets.
Other Investments
- ------------------------------------------
For temporary defensive purposes, the Portfolio may invest up to 100% of its
total assets in cash and cash equivalents, U.S. Government and Agency
Securities, commercial paper and certain other money market instruments, as well
as repurchase agreements collateralized by the foregoing.
PERFORMANCE INFORMATION
The performance of the Fund is commonly measured as TOTAL RETURN. TOTAL
RETURN is the change in value of an investment in a fund over a particular
period, assuming that all distributions have been reinvested. Thus, total return
reflects dividends, other distributions, and variations in share prices from the
beginning to the end of a period.
An average annual total return is a hypothetical rate of return that, if
achieved annually, would result in the same cumulative total return as was
actually achieved for the period. This evens out year-to-year variations in
actual performance. Past result 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.
TOTAL RETURN INFORMATION. As of the date of this prospectus, the Fund was new
and had no performance history. You can obtain current performance information
about the Fund by calling N&B Management at 800-877-9700.
11
<PAGE>
SHAREHOLDER SERVICES
How to Buy Shares
- -----------------------------------------
YOU CAN BUY AND OWN FUND SHARES ONLY THROUGH AN ACCOUNT WITH AN INSTITUTION.
N&B Management and the Fund do not recommend, endorse, or receive payments from
any Institution. N&B Management compensates Institutions for services they
provide in connection with investments in the Fund. N&B Management does not
provide investment advice to any Institution or to 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 the
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. The Fund's
share price is usually calculated as of 4 p.m. Eastern time. An Institution may
be closed on days when the NYSE is open. As a result, the Fund's share price may
be significantly affected on days when an investor has no access to that
Institution to buy shares.
Other Information:
o An Institution must pay for shares it purchases on its clients' behalf in
U.S. dollars.
o The Fund has the right to suspend the offering of its shares for a period
of time. The 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."
o The Fund does not issue certificates for shares.
o Some Institutions may charge their clients a fee in connection with
purchases of shares of the Fund.
How to Sell Shares
- ----------------------------------------------------------------------
You can sell (redeem) all or some of your Fund shares only through an account
with an Institution. Each Institution will establish its own procedures for the
sale of Fund shares and the payment of redemption proceeds. Shares are sold at
the next price calculated on a day when the NYSE is open, after a sales order is
received and accepted by an Institution. The Fund's share price is usually
calculated as of 4 p.m. Eastern time. An Institution may be closed on days when
the NYSE is open. As a result, the Fund's share price may be significantly
affected on days when an investor has no access to that Institution to sell
shares.
Other Information:
o Redemption proceeds will be paid to Institutions as agreed with N&B
Management, but in any case within three business days (under unusual
circumstances the Fund may take longer, as permitted by law). An
Institution may not follow the same procedures for payment of redemption
proceeds to its clients.
o The 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.
12
<PAGE>
o Some Institutions may charge their clients a fee in connection with
redemptions of shares of the Fund.
Exchanging Shares
- ----------------------------------------------
Through an account with an Institution, you may by able to exchange shares of
the Fund for shares in another Neuberger&Berman Fund. Each Institution will
establish its own exchange policy and procedures. Shares are exchanged at the
next price calculated on a day the NYSE is open, after an exchange order is
received and accepted by an Institution.
Other Information:
o Shares can be exchanged ONLY between accounts registered in the same name,
address, and taxpayer ID number of the Institution.
o An exchange order can be made only into a Neuberger&Berman Fund whose
shares are eligible for sale in the state where the Institution is located.
o An exchange may have tax consequences.
o The 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.
o Each Neuberger&Berman Fund may impose other restrictions on the exchange
privilege, or modify or terminate the privilege, but will try to give each
Institution advance notice whenever it can reasonably do so.
SHARE PRICES AND NET ASSET VALUE
The Fund's shares are bought or sold at a price that is the Fund's net asset
value ("NAV") per share. The NAVs for the Fund and the Portfolio are calculated
by subtracting liabilities from total assets (in the case of the Portfolio, the
market value of the securities the Portfolio holds plus cash and other assets;
in the case of the Fund, its percentage interest in the Portfolio, multiplied by
the Portfolio's NAV, plus any other assets). The 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. The Fund and the 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.
The Portfolio values securities (including options) listed on the NYSE, the
American Stock Exchange or other national securities exchanges or quoted on
Nasdaq, and other securities for which market quotations are readily available,
at the last sale price on the day the securities are being valued. If there is
no reported sale of such a security on that day, the security is valued at the
mean between its closing bid and asked prices on that day. The Portfolio values
all other securities and assets, including restricted securities, by a method
that the trustees of Managers Trust believe accurately reflects fair value.
If N&B Management believes that the price of a security obtained under the
Portfolio's valuation procedures (as described above) does not represent the
amount that the Portfolio reasonably expects to receive on a current sale of the
security, the Portfolio will value the security based on a method that the
trustees of Managers Trust believe accurately reflects fair value.
13
<PAGE>
DIVIDENDS, OTHER DISTRIBUTIONS, AND TAXES
The Fund distributes, normally in December, substantially all of its share of
any net investment income (net of the Fund's expenses), any net capital gains
from investment transactions, and any net gains from foreign currency
transactions earned or realized by the Portfolio.
Distribution Options
- ---------------------------------------------------
REINVESTMENT IN SHARES. All dividends and other distributions paid on shares
of the Fund are automatically reinvested in additional shares of the Fund,
unless an Institution elects to receive them in cash. Dividends and other
distributions are reinvested at the Fund's per share NAV, usually as of the date
the dividend or other distribution is payable.
DISTRIBUTIONS IN CASH. An Institution may elect to receive dividends in
cash, with other distributions being reinvested in additional Fund shares, or to
receive all dividends and other distributions in cash.
Taxes
- ---------------------------------------------------
An investment has certain tax consequences, depending on the type of account
through which the investment is made. FOR AN ACCOUNT UNDER A QUALIFIED
RETIREMENT PLAN OR AN INDIVIDUAL RETIREMENT ACCOUNT, TAXES ARE DEFERRED.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax and
generally also are subject to state and local income taxes. Distributions are
taxable when they are paid, whether in cash or by reinvestment in additional
Fund shares, except that distributions declared in December to shareholders of
record on a date in that month and paid in the following January are taxable as
if they were paid on December 31 of the year in which the distributions were
declared. Investors who buy Fund shares just before the 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 near the end of the
calendar year 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 an
investor has owned Fund shares. Distributions of net capital gain may include
gains from the sale of portfolio securities that appreciated in value before an
investor bought Fund shares. Under the Tax Payer Relief Act of 1997, different
maximum tax rates apply to the Fund's distributions of net capital gain
depending on the Portfolio's holding period.
Every January, the Fund will send each Institution that is a shareholder
therein a statement showing the amount of distributions paid in cash or
reinvested in Fund shares for the previous year. Each Institution will also
receive information showing (1) the portion, if any, of those distributions that
14
<PAGE>
generally is not subject to state and local income taxes in certain states and
(2) capital gain distributions broken down in a manner that will enable
investors or their tax advisers to determine the appropriate rate of capital
gains tax on such distributions.
14
<PAGE>
TAXES ON REDEMPTIONS. Capital gains realized on redemptions of Fund shares,
including redemptions in connection with exchanges to other Neuberger&Berman
Funds, are subject to tax. A capital gain or loss generally is the difference
between the amount paid for shares (including the amount of any dividends and
other distributions that were reinvested) and the amount received when shares
are sold. Capital gain on shares held for more than one year will be long-term
capital gain, in which event it will be subject to federal income tax at the
capital gain rate applicable to an investor's holding period and tax bracket.
When an Institution sells Fund shares, it will receive a confirmation
statement showing the number of shares sold and the price.
OTHER. Every January, Institutions will receive a consolidated transaction
statement for the previous year. Each Institution is required annually to send
to each investor in its account a statement showing the investor's distribution
and transaction information for the previous year.
The Fund intends to qualify for treatment as a regulated investment company for
federal income tax purposes so that it will not have to pay federal income tax
on that part of its taxable income and realized gains that it distributes to its
shareholders.
The foregoing is only a summary of some of the important income tax
considerations affecting the Fund and its shareholders. See the SAI for
additional tax information. There may be other federal, state, local, or foreign
tax considerations applicable to a particular investor. Therefore, investors
should consult their tax advisers.
MANAGEMENT AND ADMINISTRATION
Trustees and Officers
- --------------------------------------------
The trustees of the Trust and the trustees of Managers Trust have oversight
responsibility for the operations of the Fund and 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 Fund or the
Portfolio. All trustees of Managers Trust also serve as trustees of the Trust.
Investment Manager, Administrator,
Distributor, and Sub-Adviser
- --------------------------------------------
N&B Management serves as the investment manager of the Portfolio, as
administrator of the Fund, and as distributor of the shares of the Fund. N&B
Management and its predecessor firms have specialized in the management of
15
<PAGE>
no-load mutual funds since 1950. In addition to serving the Portfolio, N&B
Management currently serves as investment manager of other mutual funds.
Neuberger&Berman acts as sub-adviser for the Portfolio and other mutual funds
managed by N&B Management. The mutual funds managed by N&B Management and
Neuberger&Berman had aggregate net assets of approximately $24 billion as of
6/30/98.
As sub-adviser, Neuberger&Berman furnishes N&B Management with investment
recommendations and research without added cost to the Portfolio. N&B Management
compensates Neuberger&Berman for its costs in connection with those services.
Neuberger&Berman is a member firm of the NYSE and other principal exchanges and
may act as the Portfolio's broker in the purchase and sale of their securities.
Neuberger&Berman and its affiliates, including N&B Management, manage securities
accounts that had approximately $59 billion of assets as of 6/30/98. All of the
voting stock of N&B Management is owned by individuals who are principals of
Neuberger&Berman.
Jennifer K. Silver and _________ are co-managers of the Portfolio. Ms. Silver
is Director of the Neuberger&Berman Growth Equity Group, and she is a Vice
President of N&B Management. Ms. Silver is a principal of Neuberger&Berman.
Previously, Ms. Silver was a portfolio manager for several large mutual funds
managed by a prominent investment adviser.
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 the 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.
YEAR 2000. Like other financial and business organizations, the Fund and
Portfolio could be adversely affected if computer systems they rely on do not
properly process date-related information and data involving the years 2000 and
after. N&B Management and Neuberger&Berman are taking steps that they believe
are reasonable to address this problem in their own computer systems and to
obtain assurances that comparable steps are being taken by the Fund's and
Portfolio's other major service providers. N&B Management also attempts to
evaluate the potential impact of this problem on the issuers of investment
securities that the Portfolio purchase. At this time, however, there can be no
assurance that these steps will be sufficient to avoid any adverse impact on the
Fund and Portfolio.
16
<PAGE>
Expenses
- ----------------------------------------------------------------------
N&B Management provides investment management services to the 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, the Portfolio pays N&B Management a fee at the
annual rate of 0.85% of the first $250 million of that 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 $1.0 billion.
N&B Management provides administrative services to the Fund that include
furnishing facilities and personnel for the Fund and performing accounting,
recordkeeping, and other services. For such administrative services, the Fund
pays N&B Management a fee at the annual rate of 0.40% of that Fund's average
daily net assets. With the Fund's consent, N&B Management may subcontract to
Institutions some of its responsibilities to the Fund under the administration
agreement and may compensate each Institution that provides such services at an
annual rate of up to 0.25% of the average net asset value of Fund shares held
through that Institution.
The 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. The
Portfolio bears all expenses of its operations other than those borne by N&B
Management as investment manager of the Portfolio. These expenses include the
"Other Expenses" described on page 7.
N&B Management has voluntarily undertaken to reimburse Neuberger&Berman Small
Cap Growth Assets for its Total Operating Expenses which exceed 2.00% per annum
of the Fund's average daily net assets. The Fund has in turn agreed to repay N&B
Management through December 31, 2000, for the excess Total Operating Expenses
that N&B Management reimbursed to the Fund through December 31, 1999, so long as
the Fund's Total Operating Expenses during that period do not exceed the above
expense limitation. N&B Management may terminate its undertaking by giving at
least sixty days' prior written notice to the Fund. The effect of reimbursement
by N&B Management is to reduce the Fund's expenses and thereby increase its
total return.
Transfer Agent
- -----------------------------------------------------
The Fund's 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
Neuberger&Berman Funds, Institutional Services, 605 Third Avenue, 2nd Floor, New
York, New York, 10158-0180.
17
<PAGE>
INFORMATION REGARDING ORGANIZATION,
CAPITALIZATION, AND OTHER MATTERS
The Fund
- -------------------------------------------
The Fund is a separate operating 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 seven separate operating series. Each series invests
all of its net investable assets in its corresponding portfolio of Managers
Trust, 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. The Fund is authorized to issue an unlimited number
of shares of beneficial interest (par value $0.001 per share). Shares of the
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 Fund. The trustees will call special meetings of
shareholders of the 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 the Fund entitled to vote.
CERTAIN PROVISIONS OF TRUST INSTRUMENT. Under Delaware law, the shareholders
of the Fund will not be personally liable for the obligations of the 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 the Fund contain a statement that such obligation may
be enforced only against the assets of the Trust or Fund and provides for
indemnification out of Trust or Fund property of any shareholder nevertheless
held personally liable for Trust or Fund obligations, respectively.
OTHER. Because Fund shares can be bought, owned and sold only through an
account with an Institution, a client of an Institution may be unable to
purchase additional shares and/or may be required to redeem shares (and possibly
incur a tax liability) if the client no longer has a relationship with the
Institution or if the Institution no longer has a contract with N&B Management
to perform services. Depending on the policies of the Institutions involved, an
investor may be able to transfer an account from one Institution to another.
18
<PAGE>
The Portfolio
- ------------------------------------------
The 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 seven 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.
FUND'S INVESTMENT IN PORTFOLIO. The Fund is a "feeder fund" that seeks to
achieve its investment objective by investing all of its net investable assets
in the Portfolio, which is a "master fund." The Portfolio, which has the same
investment objective, policies, and limitations as the Fund, in turn invests in
securities; the Fund thus acquires an indirect interest in those securities. The
Fund's investment in the Portfolio is in the form of a non-transferable
beneficial interest. Members of the general public may not purchase a direct
interest in the Portfolio.
The Portfolio may also permit other investment companies and/or other
institutional investors to invest in the Portfolio. All investors will invest in
the Portfolio on the same terms and conditions as the Fund and will pay a
proportionate share of the Portfolio's expenses. Other investors in the
Portfolio are not required to sell their shares at the same public offering
price as the Fund, could have a different administration fee and expenses than
the Fund, and might charge a sales commission. Therefore, Fund shareholders may
have different returns than shareholders in another investment company that
invests exclusively in the Portfolio. There is currently no such other
investment company that offers its shares directly to members of the general
public. Information regarding any fund that invests in the Portfolio is
available from N&B Management by calling 800-877-9700.
The trustees of the Trust believe that investment in the Portfolio by other
potential investors in addition to the 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, the Fund's investment
in the Portfolio may be affected by the actions of other large investors in the
Portfolio, if any. For example, if a large investor in the Portfolio (other than
the 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.
The Fund may withdraw its entire investment from the 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. The Fund might withdraw, for example, if
there were other investors in the 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 the Fund
withdrew its investment from the 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
19
<PAGE>
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. The Portfolio normally will not hold meetings
of investors except as required by the 1940 Act. Each investor in the 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, the 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 the 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 the Portfolio, they could have voting control of the
Portfolio.
CERTAIN PROVISIONS. Each investor in the Portfolio, including the Fund, will
be liable for all obligations of the Portfolio. However, the risk of an investor
in the Portfolio incurring financial loss beyond the amount of its investment on
account of such liability would be limited to circumstances in which the
Portfolio had inadequate insurance and was unable to meet its obligations out of
its assets. Upon liquidation of the Portfolio, investors would be entitled to
share pro rata in the net assets of the Portfolio available for distribution to
investors.
DESCRIPTION OF INVESTMENTS
In addition to common stocks and other securities referred to in "Investment
Programs" herein, the 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 Portfolio may make, see the SAI.
ILLIQUID, RESTRICTED AND RULE 144A SECURITIES. The Portfolio may invest up
to 15% of its net assets in illiquid securities, which are securities that
cannot be expected to be sold within seven days at approximately the price at
which they are valued. These may include unregistered or other restricted
securities and repurchase agreements maturing in greater than seven days.
Illiquid securities may also include commercial paper under section 4(2) of the
Securities Act of 1933, as amended, and Rule 144A securities (restricted
securities that may be traded freely among qualified institutional buyers
pursuant to an exemption from the registration requirements of the securities
laws); these securities are considered illiquid unless N&B Management, acting
pursuant to guidelines established by the trustees of Managers Trust, determines
they are liquid. Generally, foreign securities freely tradable in their
principal market are not considered restricted or illiquid. Illiquid securities
may be difficult for the Portfolio to value or dispose of due to the absence of
an active trading market. The sale of some illiquid securities by the Portfolio
may be subject to legal restrictions which could be costly to the Portfolio.
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. The Portfolio may invest up
to 20% of the value of its total assets in foreign securities. The 20%
limitation does not apply to foreign securities that are denominated in U.S.
dollars, including American Depositary Receipts (ADRs). The Portfolio may invest
in European Depositary Receipts (EDRs), Global Depositary Receipts (GDRs) and
International Depositary Receipts (IDRs). ADRs (sponsored or unsponsored) are
receipts typically issued by a U.S. bank or trust company evidencing its
ownership of the underlying foreign securities. Most ADRs are denominated in
20
<PAGE>
U.S. dollars and are traded on a U.S. stock exchange. Issuers of the securities
underlying sponsored ADRs, but not unsponsored ADRs, are contractually obligated
to disclose material information in the United States. Therefore, the market
value of unsponsored ADRs may not reflect the effect of such information. EDRs
and IDRs are receipts typically issued by a European bank or trust company
evidencing its ownership of the underlying foreign securities. GDRs are receipts
issued by either a U.S. or non-U.S. banking institution evidencing its ownership
of the underlying foreign securities and are often denominated in U.S. dollars.
Factors affecting investments in foreign securities include, but are not
limited to, varying custody, brokerage and settlement practices, which may cause
delays and expose the Portfolio to the creditworthiness of a foreign broker;
difficulty in pricing some foreign securities; less public information about
issuers of securities; less governmental regulation and supervision of issuance
and trading of securities; the unavailability of financial information or the
difficulty of interpreting financial information prepared under foreign
accounting standards; less liquidity and more volatility in foreign securities
markets; the possibility of expropriation, nationalization, or confiscatory
taxation; the imposition of foreign withholding and other taxes; potentially
adverse local political, economic, social, or diplomatic developments;
limitations on the movement of funds or other assets of the Portfolio between
different countries; difficulties in invoking legal process and enforcing
contractual obligations abroad; and the difficulty of assessing economic trends
in foreign countries. Investment in foreign securities also may involve higher
brokerage and custodial expenses than investment in domestic securities.
In addition, investing in foreign securities may involve other risks which
are not ordinarily associated with investing in domestic securities. These risks
include changes in currency exchange rates and currency exchange control
regulations (or other foreign or U.S. laws or restrictions applicable to such
investments) and devaluations of foreign currencies. Some foreign currencies may
be volatile. A decline in the exchange rate between the U.S. dollar and another
currency will reduce the value of portfolio securities denominated in that
currency irrespective of the performance of the underlying investment. In
addition, the Portfolio generally will incur costs in connection with conversion
between various currencies. Investments in depositary receipts (whether or not
denominated in U.S. dollars) may be subject to exchange controls and changes in
rates of exchange with the U.S. dollar because the underlying security is
usually denominated in foreign currency. All of the foregoing risks may be
intensified in emerging industrialized and less developed countries.
COVERED CALL OPTIONS. The Portfolio may try to reduce the risk of securities
price changes (hedge) or generate income by writing (selling) covered call
options against portfolio securities and may purchase call options in related
closing transactions. When the Portfolio writes a covered call option against a
security, the Portfolio is obligated to sell that security to the purchaser of
the option at a fixed price at any time during a specified period if the
purchaser decides to exercise the option. The maximum price the Portfolio may
realize on the security during the option period is the fixed price; the
Portfolio continues to bear the risk of a decline in the security's price,
although this risk is reduced, at least in part, by the premium received for
writing the option.
REPURCHASE AGREEMENTS/SECURITIES LOANS. In a repurchase agreement, the
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. The 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.
21
<PAGE>
OTHER INVESTMENTS. Although the 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.
"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 the Portfolio may invest is likely to decline in times of
rising market interest rates. Conversely, when rates fall, the value of the
Portfolio's fixed income investments is likely to rise.
U.S. Government Securities are obligations of the U.S. Treasury backed by the
full faith and credit of the United States. U.S. Government Agency Securities
are issued or guaranteed by U.S. Government agencies or by instrumentalities of
the U.S. Government, such as the Government National Mortgage Association,
Fannie Mae (formerly, Federal National Mortgage Association), Freddie Mac
(formerly, Federal Home Loan Mortgage Corporation), Student Loan Marketing
Association (commonly known as "Sallie Mae"), and Tennessee Valley Authority.
Some U.S. Government Agency Securities are supported by the full faith and
credit of the United States, while others may be supported by the issuer's
ability to borrow from the U.S. Treasury, subject to the Treasury's discretion
in certain cases, or only by the credit of the issuer. U.S. Government Agency
Securities include U.S. Government Agency mortgage-backed securities. The market
prices of U.S. Government and Agency Securities are not guaranteed by the U.S.
Government.
22
<PAGE>
DIRECTORY
INVESTMENT MANAGER, ADMINISTRATOR,
AND DISTRIBUTOR
Neuberger&Berman Management Incorporated
605 Third Avenue 2nd Floor
New York, NY 10158-0180
800-877-9700
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
Boston Service Center
P.O. Box 8403
Boston, MA 02266-8403
LEGAL COUNSEL Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, NW
2nd Floor
Washington, DC 20036-1800
23
<PAGE>
FUNDS ELIGIBLE FOR EXCHANGE
EQUITY ASSETS
Neuberger&Berman Focus Assets
Neuberger&Berman Guardian Assets
Neuberger&Berman International Assets
Neuberger&Berman Manhattan Assets
Neuberger&Berman Partners Assets
Neuberger&Berman, Neuberger&Berman Management Inc., and the above-named Funds
are registered trademarks or service marks of Neuberger&Berman, LLC or
Neuberger&Berman Management Inc. -C- 1998 Neuberger&Berman Management
Incorporated.
NEUBERGER&BERMAN MANAGEMENT INC.-Registered Trademark-
605 THIRD AVENUE 2ND FLOOR
NEW YORK, NY 10158-0180
SHAREHOLDER SERVICES
800.877.9700
www.nbfunds.com
24
<PAGE>
This wrapper is not part of the Prospectus.
[LOGO] PRINTED ON RECYCLED PAPER NBEP00030398
26
<PAGE>
- --------------------------------------------------------------------------------
NEUBERGER & BERMAN SMALL CAP GROWTH ASSETS AND PORTFOLIO
STATEMENT OF ADDITIONAL INFORMATION
DATED October 19, 1998
No-Load Mutual Fund
605 Third Avenue, 2nd Floor, New York, NY 10158-0180
Toll-Free 800-877-9700
- --------------------------------------------------------------------------------
Neuberger & Berman SMALL CAP GROWTH Assets ("Fund"), a series
of Neuberger & Berman Equity Assets ("Trust"), is a no-load mutual fund that
offers shares pursuant to a Prospectus dated October 19, 1998. The Fund invests
all of its net investable assets in Neuberger & Berman SMALL CAP GROWTH
Portfolio ("Portfolio").
AN INVESTOR CAN BUY, OWN, AND SELL FUND SHARES ONLY THROUGH AN
ACCOUNT WITH AN ADMINISTRATOR, BROKER-DEALER, OR OTHER INSTITUTION THAT PROVIDES
ACCOUNTING, RECORDKEEPING, AND OTHER SERVICES TO INVESTORS AND THAT HAS AN
ADMINISTRATIVE SERVICES AGREEMENT WITH NEUBERGER & BERMAN MANAGEMENT
INCORPORATED (EACH AN "INSTITUTION").
The Fund's Prospectus provides basic information that an
investor should know before investing. A copy of the Prospectus may be obtained,
without charge, from Neuberger & Berman Management Incorporated ("N&B
Management"), Institutional Services, 605 Third Avenue, 2nd Floor, New York, NY
10158-0180, or by calling 800-877-9700.
This Statement of Additional Information ("SAI") is not a
prospectus and should be read in conjunction with the Prospectus.
No person has been authorized to give any information or to
make any representations not contained in the Prospectus or in this SAI in
connection with the offering made by the Prospectus, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Fund or its distributor. The Prospectus and this SAI do not constitute an
offering by the Fund or its distributor in any jurisdiction in which such
offering may not lawfully be made.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR
AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD
NOR MAY AN OFFER TO BUY BE ACCEPTED PRIOR TO THE TIME THAT THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS STATEMENT OF ADDITIONAL INFORMATION DOES NOT
CONSTITUTE A PROSPECTUS.
<PAGE>
TABLE OF CONTENTS
PAGE
INVESTMENT INFORMATION.......................................................1
Investment Policies and Limitations.................................1
Investment Insight..........................
Additional Investment Information...................................4
PERFORMANCE INFORMATION......................................................18
Total Return Computations...........................................18
Comparative Information.............................................19
Other Performance Information.......................................20
CERTAIN RISK CONSIDERATIONS..................................................20
TRUSTEES AND OFFICERS........................................................21
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES............................27
Investment Manager and Administrator................................27
Sub-Adviser.........................................................28
Investment Companies Managed........................................29
Management and Control of N&B Management............................32
DISTRIBUTION ARRANGEMENTS....................................................33
ADDITIONAL TAX INFORMATION...................................................37
Taxation of the Fund................................................37
Taxation of the Portfolio...........................................37
Taxation of the Fund's Shareholders.................................40
PORTFOLIO TRANSACTIONS.......................................................41
Portfolio Turnover..................................................44
REPORTS TO SHAREHOLDERS......................................................45
CUSTODIAN AND TRANSFER AGENT.................................................45
INDEPENDENT AUDITORS.........................................................45
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LEGAL COUNSEL................................................................45
REGISTRATION STATEMENT.......................................................45
Appendix A...................................................................43
RATINGS OF CORPORATE BONDS AND COMMERCIAL PAPER.....................43
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INVESTMENT INFORMATION
The Fund is a separate operating series of the Trust, a
Delaware business trust that is registered with the Securities and Exchange
Commission ("SEC") as an open-end management investment company. The Fund seeks
its investment objective by investing all of its net investable assets in the
Portfolio, a series of Equity Managers Trust ("Managers Trust") that has an
investment objective identical to that of the Fund. The Portfolio, in turn,
invests in securities in accordance with an investment objective, policies, and
limitations identical to those of the 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 the Fund
and Portfolio. The investment objective and, unless otherwise specified, the
investment policies and limitations of the Fund and Portfolio are not
fundamental. Any investment objective, policy or limitation that is not
fundamental may be changed by the trustees of the Trust ("Fund Trustees") or of
Managers Trust ("Portfolio Trustees") without shareholder approval. The
fundamental investment policies and limitations of the Fund or the 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 the Fund is called upon to vote on a change in a fundamental investment
policy or limitation of the 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
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The Fund has the following fundamental investment policy, to
enable it to invest in the 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 the Fund are
identical to those of the Portfolio. Therefore, although the following discusses
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the investment policies and limitations of the Portfolio, it applies equally to
the Fund.
Except for the limitation on borrowing, any investment policy
or limitation that involves a maximum percentage of securities or assets will
not be considered to be violated unless the percentage limitation is exceeded
immediately after, and because of, a transaction by the Portfolio.
The Portfolio's fundamental investment policies and
limitations are as follows:
1. BORROWING. The Portfolio may not borrow money, except that
the 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 the Portfolio's total assets, the 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. The Portfolio may not purchase physical
commodities or contracts thereon, unless acquired as a result of the ownership
of securities or instruments, but this restriction shall not prohibit the
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. The Portfolio may not, 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. The Portfolio may not purchase any
security if, as a result, 25% or more of its total assets (taken at current
value) would be invested in the securities of issuers having their principal
business activities in the same industry. This limitation does not apply to
securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities.
5. LENDING. The Portfolio may not lend any security or make
any other loan if, as a result, more than 33-1/3% of its total assets (taken at
current value) would be lent to other parties, except, in accordance with its
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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. The Portfolio may not purchase real estate
unless acquired as a result of the ownership of securities or instruments, but
this restriction shall not prohibit the 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. The Portfolio may not issue senior
securities, except as permitted under the 1940 Act.
8. UNDERWRITING. The Portfolio may not underwrite securities
of other issuers, except to the extent that the Portfolio, in disposing of
portfolio securities, may be deemed to be an underwriter within the meaning of
the Securities Act of 1933 ("1933 Act").
For purposes of the limitation on commodities, the Portfolio
does not consider foreign currencies or forward contracts to be physical
commodities.
The Portfolio's non-fundamental investment policies and
limitations are as follows:
1. BORROWING. The Portfolio may not purchase securities if
outstanding borrowings, including any reverse repurchase agreements, exceed 5%
of its total assets.
2. LENDING. Except for the purchase of debt securities and
engaging in repurchase agreements, the Portfolio may not make any loans other
than securities loans.
3. MARGIN TRANSACTIONS. The Portfolio may not purchase
securities on margin from brokers or other lenders, except that the Portfolio
may obtain such short-term credits as are necessary for the clearance of
securities transactions. Margin payments in connection with transactions in
futures contracts and options on futures contracts shall not constitute the
purchase of securities on margin and shall not be deemed to violate the
foregoing limitation.
4. FOREIGN SECURITIES. The Portfolio may not 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").
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5. ILLIQUID SECURITIES. The Portfolio may not purchase any
security if, as a result, more than 15% of its net assets would be invested in
illiquid securities. Illiquid securities include securities that cannot be sold
within seven days in the ordinary course of business for approximately the
amount at which the Portfolio has valued the securities, such as repurchase
agreements maturing in more than seven days.
ADDITIONAL INVESTMENT INFORMATION
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The Portfolio may make the following investments, among
others, although it may not buy all of the types of securities or use all of the
investment techniques that are described.
REPURCHASE AGREEMENTS. In a repurchase agreement, the
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. The Portfolio may not enter into a
repurchase agreement with a maturity of more than seven days if, as a result,
more than 15% of the value of its net assets would then be invested in such
repurchase agreements and other illiquid securities. The Portfolio may enter
into a repurchase agreement only if (1) the underlying securities are of a type
that the Portfolio's investment policies and limitations would allow it to
purchase directly, (2) the market value of the underlying securities, including
accrued interest, at all times equals or exceeds the repurchase price, and (3)
payment for the underlying securities is made only upon satisfactory evidence
that the securities are being held for the Portfolio's account by its custodian
or a bank acting as the Portfolio's agent.
SECURITIES LOANS. In order to realize income, the 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 the Portfolio by depositing
collateral in a form determined to be satisfactory by the Portfolio Trustees.
The collateral, which must be marked to market daily, must be equal to at least
100% of the market value of the loaned securities, which will also be marked to
market daily. N&B Management believes the risk of loss on these transactions is
slight because, if a borrower were to default for any reason, the collateral
should satisfy the obligation. However, as with other extensions of secured
credit, loans of portfolio securities involve some risk of loss of rights in the
collateral should the borrower fail financially.
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RESTRICTED SECURITIES AND RULE 144A SECURITIES. The 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 the
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 the Portfolio's
illiquidity. N&B Management, acting under guidelines established by the
Portfolio Trustees, may determine that certain securities qualified for trading
under Rule 144A are liquid. Foreign securities that are freely tradable in their
principal market are not considered to be restricted. Regulation S under the
1933 Act permits the sale abroad of securities that are not registered for sale
in the United States.
Where registration is required, the Portfolio may be obligated
to pay all or part of the registration expenses, and a considerable period may
elapse between the decision to sell and the time the Portfolio may be permitted
to sell a security under an effective registration statement. If, during such a
period, adverse market conditions were to develop, the Portfolio might obtain a
less favorable price than prevailed when it decided to sell. To the extent
restricted securities, including Rule 144A securities, are illiquid, purchases
thereof will be subject to the Portfolio's 15% limit on investments in illiquid
securities. Restricted securities for which no market exists are priced by a
method that the Portfolio Trustees believe accurately reflects fair value.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase
agreement, the Portfolio sells portfolio securities subject to its agreement to
repurchase the securities at a later date for a fixed price reflecting a market
rate of interest; these agreements are considered borrowings for purposes of the
Portfolio's investment policies and limitations concerning borrowings. While a
reverse repurchase agreement is outstanding, the 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
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reverse repurchase agreement will be unable or unwilling to complete the
transaction as scheduled, which may result in losses to the Portfolio.
FOREIGN SECURITIES. The 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 the Portfolio's quality
standards. While investments in foreign securities are intended to reduce risk
by providing further diversification, such investments involve sovereign and
other risks, in addition to the credit and market risks normally associated with
domestic securities. These additional risks include the possibility of adverse
political and economic developments (including political instability,
nationalization, expropriation, or confiscatory taxation) and the potentially
adverse effects of unavailability of public information regarding issuers, less
governmental supervision and regulation of financial markets, reduced liquidity
of certain financial markets, and the lack of uniform accounting, auditing, and
financial reporting standards or the application of standards that are different
or less stringent than those applied in the United States.
The Portfolio also may invest in equity, debt, or other
income-producing securities that are denominated in or indexed to foreign
currencies, including (1) common and preferred stocks, (2) CDs, commercial
paper, fixed time deposits, and bankers' acceptances issued by foreign banks,
(3) obligations of other corporations, and (4) obligations of foreign
governments and their subdivisions, agencies, and instrumentalities,
international agencies, and supranational entities. Investing in foreign
currency denominated securities involves the special risks associated with
investing in non-U.S. issuers, as described in the preceding paragraph, and the
additional risks of (1) adverse changes in foreign exchange rates, and (2)
adverse changes in investment or exchange control regulations (which could
prevent cash from being brought back to the United States). Additionally,
dividends and interest payable on foreign securities may be subject to foreign
taxes, including taxes withheld from those payments. Commissions on foreign
securities exchanges are often at fixed rates and are generally higher than
negotiated commissions on U.S. exchanges, although the Portfolio endeavors to
achieve the most favorable net results on portfolio transactions. The 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.
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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 the Portfolio are uninvested
and no return is earned thereon. The inability of the 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 the 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, the Portfolio may not purchase any such
security if, as a result, more than 10% of its total assets (taken at market
value) would be invested in foreign currency denominated securities. Within that
limitation, however, the Portfolio is not restricted in the amount it may invest
in securities denominated in any one foreign currency.
FUTURES, OPTIONS ON FUTURES, OPTIONS ON SECURITIES AND INDICES,
FORWARD CONTRACTS, AND OPTIONS ON FOREIGN
CURRENCIES (COLLECTIVELY, "FINANCIAL INSTRUMENTS")
FUTURES CONTRACTS AND OPTIONS THEREON. The Portfolio may
purchase and sell interest rate futures contracts, stock and bond index futures
contracts, and foreign currency futures contracts and may purchase and sell
options thereon in an attempt to hedge against changes in the prices of
securities or, in the case of foreign currency futures and options thereon, to
hedge against changes in prevailing currency exchange rates. Because the futures
markets may be more liquid than the cash markets, the use of futures contracts
permits the Portfolio to enhance portfolio liquidity and maintain a defensive
position without having to sell portfolio securities. The Portfolio does not
engage in transactions in futures or options on futures for speculation. The
Portfolio views investment in (i) interest rate and securities index futures and
options thereon as a maturity management device and/or a device to reduce risk
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or preserve total return in an adverse environment for the hedged securities,
and (ii) foreign currency futures and options thereon as a means of establishing
more definitely the effective return on, or the purchase price of, securities
denominated in foreign currencies that are held or intended to be acquired by
the Portfolio.
A "sale" of a futures contract (or a "short" futures position)
entails the assumption of a contractual obligation to deliver the securities or
currency underlying the contract at a specified price at a specified future
time. A "purchase" of a futures contract (or a "long" futures position) entails
the assumption of a contractual obligation to acquire the securities or currency
underlying the contract at a specified price at a specified future time. Certain
futures, including stock and bond index futures, are settled on a net cash
payment basis rather than by the sale and delivery of the securities underlying
the futures.
U.S. futures contracts (except certain currency futures) are
traded on exchanges that have been designated as "contract markets" by the CFTC;
futures transactions must be executed through a futures commission merchant that
is a member of the relevant contract market. In both U.S. and foreign markets,
an exchange's affiliated clearing organization guarantees performance of the
contracts between the clearing members of the exchange.
Although futures contracts by their terms may require the
actual delivery or acquisition of the underlying securities or currency, in most
cases the contractual obligation is extinguished by being offset before the
expiration of the contract. A futures position is offset by buying (to offset an
earlier sale) or selling (to offset an earlier purchase) an identical futures
contract calling for delivery in the same month. This may result in a profit or
loss.
"Margin" with respect to a futures contract is the amount of
assets that must be deposited by the Portfolio with, or for the benefit of, a
futures commission merchant in order to initiate and maintain the Portfolio's
futures positions. The margin deposit made by the Portfolio when it enters into
a futures contract ("initial margin") is intended to assure its performance of
the contract. If the price of the futures contract changes -- increases in the
case of a short (sale) position or decreases in the case of a long (purchase)
position -- so that the unrealized loss on the contract causes the margin
deposit not to satisfy margin requirements, the Portfolio will be required to
make an additional margin deposit ("variation margin"). However, if favorable
price changes in the futures contract cause the margin deposit to exceed the
required margin, the excess will be paid to the Portfolio. In computing its NAV,
the Portfolio marks to market the value of their open futures positions. The
Portfolio also must make margin deposits with respect to options on futures that
it has written (but not with respect to options on futures that it has
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purchased). If the futures commission merchant holding the margin deposit goes
bankrupt, the Portfolio could suffer a delay in recovering its funds and could
ultimately suffer a loss.
An option on a futures contract gives the purchaser the right,
in return for the premium paid, to assume a position in the contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the option exercise period. The
writer of the option is required upon exercise to assume a short futures
position (if the option is a call) or a long futures position (if the option is
a put). Upon exercise of the option, the accumulated cash balance in the
writer's futures margin account is delivered to the holder of the option. That
balance represents the amount by which the market price of the futures contract
at exercise exceeds, in the case of a call, or is less than, in the case of a
put, the exercise price of the option. Options on futures have characteristics
and risks similar to those of securities options, as discussed herein.
Although the Portfolio believes that the use of futures
contracts will benefit it, if N&B Management's judgment about the general
direction of the markets or about interest rate or currency exchange rate trends
is incorrect, the Portfolio's overall return would be lower than if it had not
entered into any such contracts. The prices of futures contracts are volatile
and are influenced by, among other things, actual and anticipated changes in
interest or currency exchange rates, which in turn are affected by fiscal and
monetary policies and by national and international political and economic
events. At best, the correlation between changes in prices of futures contracts
and of securities being hedged can be only approximate due to differences
between the futures and securities markets or differences between the securities
or currencies underlying the Portfolio's futures position and the securities
held by or to be purchased for the Portfolio. The currency futures market may be
dominated by short-term traders seeking to profit from changes in exchange
rates. This would reduce the value of such contracts used for hedging purposes
over a short-term period. Such distortions are generally minor and would
diminish as the contract approaches maturity.
Because of the low margin deposits required, futures trading
involves an extremely high degree of leverage; as a result, a relatively small
price movement in a futures contract may result in immediate and substantial
loss, or gain, to the investor. Losses that may arise from certain futures
transactions are potentially unlimited.
Most U.S. futures exchanges limit the amount of fluctuation in
the price of a futures contract or option thereon during a single trading day;
once the daily limit has been reached, no trades may be made on that day at a
price beyond that limit. The daily limit governs only price movements during a
particular trading day, however; it thus does not limit potential losses. In
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fact, it may increase the risk of loss, because prices can move to the daily
limit for several consecutive trading days with little or no trading, thereby
preventing liquidation of unfavorable futures and options positions and
subjecting traders to substantial losses. If this were to happen with respect to
a position held by the Portfolio, it could (depending on the size of the
position) have an adverse impact on the Portfolio's NAV.
CALL OPTIONS ON SECURITIES. The Portfolio may write covered
call options and may purchase call options on securities. The purpose of writing
call options is to hedge (I.E., to reduce, at least in part, the effect of price
fluctuations of securities held by the Portfolio on the Portfolio's and the
Fund's NAVs) or to earn premium income. Portfolio securities on which call
options may be written and purchased by the Portfolio are purchased solely on
the basis of investment considerations consistent with the Portfolio's
investment objective.
When the 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.
The 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 Portfolio will not do)
but is capable of enhancing the Portfolio's total return. When writing a covered
call option, the 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 the 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 the 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. The Portfolio would purchase a call option to offset a
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previously written call option. The Portfolio also may purchase a call option to
protect against an increase in the price of securities it intends to purchase.
PUT OPTIONS ON SECURITIES. The Portfolio may write and
purchase put options on securities. Generally, the purpose of writing and
purchasing these options is to hedge (I.E., to reduce, at least in part, the
effect of price fluctuations of securities held by the Portfolio on the
Portfolio's and the Fund's NAVs).
The Portfolio will receive a premium for writing a put option,
which obligates the Portfolio to acquire a security at a certain price at any
time until a certain date if the purchaser decides to exercise the option. The
Portfolio may be obligated to purchase the underlying security at more than its
current value.
When the Portfolio purchases a put option, it pays a premium
to the writer for the right to sell a security to the writer for a specified
amount at any time until a certain date. The Portfolio might purchase a put
option in order to protect itself against a decline in the market value of a
security it owns.
Portfolio securities on which put options may be written and
purchased by the Portfolio are purchased solely on the basis of investment
considerations consistent with the Portfolio's investment objective. When
writing a put option, the Portfolio, in return for the premium, takes the risk
that it must purchase the underlying security at a price that may be higher than
the current market price of the security. If a put option that the Portfolio has
written expires unexercised, the Portfolio will realize a gain in the amount of
the premium.
GENERAL INFORMATION ABOUT SECURITIES OPTIONS. The exercise
price of an option may be below, equal to, or above the market value of the
underlying security at the time the option is written. Options normally have
expiration dates between three and nine months from the date written.
American-style options are exercisable at any time prior to their expiration
date. The obligation under any option written by the Portfolio terminates upon
expiration of the option or, at an earlier time, when the Portfolio offsets the
option by entering into a "closing purchase transaction" to purchase an option
of the same series. If an option is purchased by the Portfolio and is never
exercised or closed out, the Portfolio will lose the entire amount of the
premium paid.
Options are traded both on U.S. national securities exchanges
and in the over-the-counter ("OTC") market. Exchange-traded options are issued
by a clearing organization affiliated with the exchange on which the option is
listed; the clearing organization in effect guarantees completion of every
exchange-traded option. In contrast, OTC options are contracts between the
Portfolio and a counter-party, with no clearing organization guarantee. Thus,
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when the Portfolio sells (or purchases) an OTC option, it generally will be able
to "close out" the option prior to its expiration only by entering into a
closing transaction with the dealer to whom (or from whom) the Portfolio
originally sold (or purchased) the option. There can be no assurance that the
Portfolio would be able to liquidate an OTC option at any time prior to
expiration. Unless the 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, the Portfolio may be unable to liquidate its options position and
the associated cover. N&B Management monitors the creditworthiness of dealers
with which the Portfolio may engage in OTC options transactions.
The assets used as cover (or held in a segregated account) for
OTC options written by the Portfolio will be considered illiquid unless the OTC
options are sold to qualified dealers who agree that the Portfolio may
repurchase any OTC option it writes at a maximum price to be calculated by a
formula set forth in the option agreement. The cover for an OTC call option
written subject to this procedure will be considered illiquid only to the extent
that the maximum repurchase price under the formula exceeds the intrinsic value
of the option.
The premium received (or paid) by the Portfolio when it writes
(or purchases) an option is the amount at which the option is currently traded
on the applicable market. The premium may reflect, among other things, the
current market price of the underlying security, the relationship of the
exercise price to the market price, the historical price volatility of the
underlying security, the length of the option period, the general supply of and
demand for credit, and the interest rate environment. The premium received by
the Portfolio for writing an option is recorded as a liability on the
Portfolio's statement of assets and liabilities. This liability is adjusted
daily to the option's current market value.
Closing transactions are effected in order to realize a profit
(or minimize a loss) on an outstanding option, to prevent an underlying security
from being called, or to permit the sale or the put of the underlying security.
Furthermore, effecting a closing transaction permits the Portfolio to write
another call option on the underlying security with a different exercise price
or expiration date or both. There is, of course, no assurance that the Portfolio
will be able to effect closing transactions at favorable prices. If the
Portfolio cannot enter into such a transaction, it may be required to hold a
security that it might otherwise have sold (or purchase a security that it would
not have otherwise bought), in which case it would continue to be at market risk
on the security.
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The Portfolio will realize a profit or loss from a closing
purchase transaction if the cost of the transaction is less or more than the
premium received from writing the call or put option. Because increases in the
market price of a call option generally reflect increases in the market price of
the underlying security, any loss resulting from the repurchase of a call option
is likely to be offset, in whole or in part, by appreciation of the underlying
security owned by the Portfolio; however, the Portfolio could be in a less
advantageous position than if it had not written the call option.
The Portfolio pays brokerage commissions or spreads in
connection with purchasing or writing options, including those used to close out
existing positions. From time to time, the Portfolio may purchase an underlying
security for delivery in accordance with an exercise notice of a call option
assigned to it, rather than delivering the security from its portfolio. In those
cases, additional brokerage commissions are incurred.
The hours of trading for options may not conform to the hours
during which the underlying securities are traded. To the extent that the
options markets close before the markets for the underlying securities,
significant price and rate movements can take place in the underlying markets
that cannot be reflected in the options markets.
FOREIGN CURRENCY TRANSACTIONS. The Portfolio may enter into
contracts for the purchase or sale of a specific currency at a future date
(usually less than one year from the date of the contract) at a fixed price
("forward contracts"). The Portfolio enters into forward contracts in an attempt
to hedge against changes in prevailing currency exchange rates. The Portfolio
does not engage in transactions in forward contracts for speculation; it views
investments in forward contracts as a means of establishing more definitely the
effective return on, or the purchase price of, securities denominated in foreign
currencies. Forward contract transactions include forward sales or purchases of
foreign currencies for the purpose of protecting the U.S. dollar value of
securities held or to be acquired by the Portfolio or protecting the U.S. dollar
equivalent of dividends, interest, or other payments on those securities.
Forward contracts are traded in the interbank market directly
between dealers (usually large commercial banks) and their customers. A forward
contract generally has no deposit requirement, and no commissions are charged at
any stage for trades; foreign exchange dealers realize a profit based on the
difference (the spread) between the prices at which they are buying and selling
various currencies.
At the consummation of a forward contract to sell currency,
the Portfolio may either make delivery of the foreign currency or terminate its
contractual obligation to deliver by purchasing an offsetting contract. If the
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<PAGE>
Portfolio chooses to make delivery of the foreign currency, it may be required
to obtain such currency through the sale of portfolio securities denominated in
such currency or through conversion of other assets of the Portfolio into such
currency. If the Portfolio engages in an offsetting transaction, it will incur a
gain or a loss to the extent that there has been a change in forward contract
prices. Closing purchase transactions with respect to forward contracts are
usually made with the currency dealer who is a party to the original forward
contract.
N&B Management believes that the use of foreign currency
hedging techniques, including "proxy-hedges," can provide significant protection
of NAV in the event of a general rise in the U.S. dollar against foreign
currencies. For example, the return available from securities denominated in a
particular foreign currency would diminish if the value of the U.S. dollar
increased against that currency. Such a decline could be partially or completely
offset by an increase in value of a hedge involving a forward contract to sell
that foreign currency or a proxy-hedge involving a forward contract to sell a
different foreign currency whose behavior is expected to resemble the currency
in which the securities being hedged are denominated but which is available on
more advantageous terms.
However, a hedge or proxy-hedge cannot protect against
exchange rate risks perfectly, and if N&B Management is incorrect in its
judgment of future exchange rate relationships, the Portfolio could be in a less
advantageous position than if such a hedge had not been established. If the
Portfolio uses proxy-hedging, it may experience losses on both the currency in
which it has invested and the currency used for hedging if the two currencies do
not vary with the expected degree of correlation. Using forward contracts to
protect the value of the Portfolio's securities against a decline in the value
of a currency does not eliminate fluctuations in the prices of underlying
securities. Because forward contracts are not traded on an exchange, the assets
used to cover such contracts may be illiquid. The Portfolio may experience
delays in the settlement of its foreign currency transactions.
OPTIONS ON FOREIGN CURRENCIES. The Portfolio may write and
purchase covered call and put options on foreign currencies. The Portfolio would
engage in such transactions to protect against declines in the U.S. dollar value
of portfolio securities or increases in the U.S. dollar cost of securities to be
acquired or to protect the U.S. dollar equivalent of dividends, interest, or
other payments on those securities. Currency options have characteristics and
risks similar to those of securities options, as discussed herein. Certain
options on foreign currencies are traded on the OTC market and involve liquidity
and credit risks that may not be present in the case of exchange-traded currency
options.
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<PAGE>
REGULATORY LIMITATIONS ON USING FINANCIAL INSTRUMENTS. To the
extent the Portfolio sells or purchases futures contracts or writes options
thereon or options on foreign currencies that are traded on an exchange
regulated by the CFTC other than for BONA FIDE hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums on those positions
(excluding the amount by which options are "in-the-money") may not exceed 5% of
the Portfolio's net assets.
COVER FOR FINANCIAL INSTRUMENTS. The Portfolio will comply
with SEC guidelines regarding "cover" for Financial Instruments and, if the
guidelines so require, set aside in a segregated account with its custodian the
prescribed amount of cash or appropriate liquid securities. Securities held in a
segregated account cannot be sold while the futures, options, or forward
strategy covered by those securities is outstanding, unless they are replaced
with other suitable assets. As a result, segregation of a large percentage of
the Portfolio's assets could impede portfolio management or the Portfolio's
ability to meet current obligations. The Portfolio may be unable promptly to
dispose of assets which cover, or are segregated with respect to, an illiquid
futures, options, or forward position; this inability may result in a loss to
the Portfolio.
GENERAL RISKS OF FINANCIAL INSTRUMENTS. The primary risks in
using Financial Instruments are (1) imperfect correlation or no correlation
between changes in market value of the securities or currencies held or to be
acquired by the Portfolio and the prices of Financial Instruments; (2) possible
lack of a liquid secondary market for Financial Instruments and the resulting
inability to close out Financial Instruments when desired; (3) the fact that the
skills needed to use Financial Instruments are different from those needed to
select the 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 the 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 the 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
Financial Instruments. N&B Management intends to reduce the risk of imperfect
correlation by investing only in Financial Instruments whose behavior is
expected to resemble or offset that of the Portfolio's underlying securities or
currency. N&B Management intends to reduce the risk that the Portfolio will be
unable to close out Financial Instruments by entering into such transactions
only if N&B Management believes there will be an active and liquid secondary
market. There can be no assurance that the Portfolio's use of Financial
Instruments will be successful.
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<PAGE>
The Portfolio's use of Financial Instruments may be limited by
the provisions of the Internal Revenue Code of 1986, as amended ("Code"), with
which it must comply if the Fund is to continue to qualify as a RIC. See
"Additional Tax Information." Hedging instruments may not be available with
respect to some currencies, especially those of so-called emerging market
countries.
FIXED INCOME SECURITIES. While the emphasis of the Portfolio's
investment program is on common stocks and other equity securities, it may also
invest in money market instruments, U.S. Government and Agency Securities, and
other fixed income securities. The Portfolio may invest in corporate bonds and
debentures receiving one of the four highest ratings from Standard & Poor's
("S&P"), Moody's Investors Service, Inc. ("Moody's"), or any other nationally
recognized statistical rating organization ("NRSRO") or, if not rated by any
NRSRO, deemed comparable by N&B Management to such rated securities ("Comparable
Unrated Securities").
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 Portfolio may rely on the ratings of any
NRSRO, the Portfolio primarily refers 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.
Subsequent to its purchase by the 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 the Portfolio. In such a
case, the Portfolio will engage in an orderly disposition of the downgraded
securities.
COMMERCIAL PAPER. Commercial paper is a short-term debt
security issued by a corporation or bank, usually for purposes such as financing
current operations. The Portfolio 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.
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<PAGE>
The 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. The Portfolio may invest in zero
coupon securities, which are debt obligations that do not entitle the holder to
any periodic payment of interest prior to maturity or that specify a future date
when the securities begin to pay current interest. Zero coupon securities are
issued and traded at a discount from their face amount or par value. This
discount varies depending on prevailing interest rates, the time remaining until
cash payments begin, the liquidity of the security, and the perceived credit
quality of the issuer.
The discount on zero coupon securities ("original issue
discount") must be taken into income ratably by the Portfolio prior to the
receipt of any actual payments. Because the Fund must distribute substantially
all of its net income (including its share of the Portfolio's accrued original
issue discount) to its shareholders each year for income and excise tax
purposes, the Portfolio may have to dispose of portfolio securities under
disadvantageous circumstances to generate cash, or may be required to borrow, to
satisfy the Fund's distribution requirements. See "Additional Tax Information."
The market prices of zero coupon securities generally are more
volatile than the prices of securities that pay interest periodically. Zero
coupon securities are likely to respond to changes in interest rates to a
greater degree than other types of debt securities having a similar maturity and
credit quality.
CONVERTIBLE SECURITIES. The Portfolio may invest in
convertible securities. A convertible security entitles the holder to receive
the interest paid or accrued on debt or the dividend paid on preferred stock
until the convertible security matures or is redeemed, converted or exchanged.
Before conversion, such securities ordinarily provide a stream of income with
generally higher yields than common stocks of the same or similar issuers, but
lower than the yield on non-convertible debt. Convertible securities are usually
subordinated to comparable-tier non-convertible securities but rank senior to
common stock in a corporation's capital structure. The value of a convertible
security is a function of (1) its yield in comparison to the yields of other
securities of comparable maturity and quality that do not have a conversion
privilege and (2) its worth if converted into the underlying common stock.
Convertible debt securities are subject to the Portfolio's investment policies
and limitations concerning fixed income securities.
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<PAGE>
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 the Portfolio
is called for redemption, the Portfolio will be required to convert it into the
underlying common stock, sell it to a third party or permit the issuer to redeem
the security. Any of these actions could have an adverse effect on the
Portfolio's and the Fund's ability to achieve their investment objectives.
PREFERRED STOCK. The 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.
PERFORMANCE INFORMATION
The Fund's performance figures are based on historical results
and are not intended to indicate future performance. The share price and total
return of the Fund will vary, and an investment in the Fund, when redeemed, may
be worth more or less than an investor's original cost. As of the date of this
SAI, the Fund was new and had no performance history.
TOTAL RETURN COMPUTATIONS
The Fund may advertise certain total return information. An
average annual compounded rate of return ("T") may be computed by using the
redeemable value at the end of a specified period ("ERV") of a hypothetical
initial investment of $1,000 ("P") over a period of time ("n") according to the
formula:
P(1+T)n = ERV
Average annual total return smoothes out year-to-year
variations in performance and, in that respect, differs from actual year-to-year
results.
N&B Management may from time to time reimburse the Fund for a
portion of its expenses. Such action has the effect of increasing total return.
Actual reimbursements are described in the Prospectus and in "Investment
Management and Administration Services" below.
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<PAGE>
COMPARATIVE INFORMATION
From time to time the Fund's performance may be compared with:
(1) data (that may be expressed as rankings or ratings)
published by independent services or publications (including
newspapers, newsletters, and financial periodicals) that monitor the
performance of mutual funds, such as Lipper Analytical Services, Inc.,
C.D.A. Investment Technologies, Inc., Wiesenberger Investment Companies
Service, Investment Company Data Inc., Morningstar, Inc., Micropal
Incorporated, and quarterly mutual fund rankings by Money, Fortune,
Forbes, Business Week, Personal Investor, and U.S. News & World Report
magazines, The Wall Street Journal, The New York Times, Kiplinger's
Personal Finance, and Barron's Newspaper, or
(2) recognized stock and other indices, such as the S&P "500"
Composite Stock Price Index ("S&P 500 Index"), S&P Small Cap 600 Index
("S&P 600 Index"), S&P Mid Cap 400 Index ("S&P 400 Index"), Russell
2000 Stock Index, Russell Midcap Growth Index, Dow Jones Industrial
Average ("DJIA"), Wilshire 1750 Index, Nasdaq Composite Index,
Montgomery Securities Growth Stock Index, Value Line Index, U.S.
Department of Labor Consumer Price Index ("Consumer Price Index"),
College Board Annual Survey of Colleges, Kanon Bloch's Family
Performance Index, the Barra Growth Index, the Barra Value Index and
various other domestic, international, and global indices. The S&P 500
Index is a broad index of common stock prices, while the DJIA
represents a narrower segment of industrial companies. The S&P 600
Index includes stocks that range in market value from $39 million to
$2.7 billion, with an average of $616 million. The S&P 400 Index
measures mid-sized companies that have an average market capitalization
of $2.2 billion. Each assumes reinvestment of distributions and is
calculated without regard to tax consequences or the costs of
investing. The Portfolio may invest in different types of securities
from those included in some of the above indices.
Evaluations of the Fund's performance, its total returns, and
comparisons may be used in advertisements and in information furnished to
current and prospective shareholders (collectively, "Advertisements"). The Fund
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.
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<PAGE>
OTHER PERFORMANCE INFORMATION
From time to time, information about the Portfolio's portfolio
allocation and holdings as of a particular date may be included in
Advertisements for the 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.
Investors who may find the Fund to be an attractive investment
vehicle also include parents saving to meet college costs for their children.
For instance, the cost of a college education is rapidly approaching the cost of
the average family home. Estimates of total four-year costs (tuition, room and
board, books and other expenses) for students starting college in various years
may be included in Advertisements, based on the College Board Annual Survey of
Colleges.
Information relating to inflation and its effects on the
dollar also may be included in Advertisements. For example, after ten years, the
purchasing power of $25,000 would shrink to $16,621, $14,968, $13,465, and
$12,100, respectively, if the annual rates of inflation during that period were
4%, 5%, 6%, and 7%, respectively. (To calculate the purchasing power, the value
at the end of each year is reduced by the inflation rate for the ten-year
period.)
Information regarding the effects of automatic investing and
systematic withdrawal plans, investing at market highs and/or lows, and
investing early versus late for retirement plans also may be included in
Advertisements, if appropriate.
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CERTAIN RISK CONSIDERATIONS
Although the 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 the Portfolio will achieve its
investment objective.
TRUSTEES AND OFFICERS
The following table sets forth information concerning the
trustees and officers of the Trusts, including their addresses and principal
business experience during the past five years. Some persons named as trustees
and officers also serve in similar capacities for other funds and their
corresponding portfolios administered or managed by N&B Management and Neuberger
& Berman, LLC ("Neuberger & Berman").
<TABLE>
<CAPTION>
Name, Age, and Positions Held
Address(1) With The Trusts Principal Occupation(s)(2)
- -------------- --------------- --------------------------
<S> <C> <C>
Faith Colish (63) Trustee of each Trust Attorney at Law, Faith Colish, A Professional
63 Wall Street Corporation.
24th Floor
New York, NY 10005
Stanley Egener* (64) Chairman of the Board, Chief Principal of Neuberger & Berman; President and
Executive Officer, and Trustee Director of N&B Management; Chairman of
of each Trust Trustee of eight other mutual the Board, Chief
Executive Officer and funds for which N&B
Management acts as investment manager or
administrator.
Howard A. Mileaf (61) Trustee of each Trust Vice President and Special Counsel to WHX
WHX Corporation Corporation (holding company) since 1992;
110 East 59th Street Director of Kevlin Corporation (manufacturer
30th Floor of microwave and other products).
New York, NY 10022
Edward I. O'Brien* (70) Trustee of each Trust Until 1993, President of the Securities
12 Woods Lane Industry Association ("SIA") (securities
Scarsdale, NY 10583 industry's representative in government
relations and regulatory matters at the
federal and state levels); until November
1993, employee of the SIA; Director of Legg
Mason, Inc.
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Name, Age, and Positions Held
Address(1) With The Trusts Principal Occupation(s)(2)
- -------------- --------------- --------------------------
John T. Patterson, Jr. (70) Trustee of each Trust Retired. Formerly, President of SOBRO (South
183 Ledge Drive Bronx Overall Economic Development
Torrington, CT 06790 Corporation).
John P. Rosenthal (65) Trustee of each Trust Senior Vice President of Burnham Securities
Burnham Securities Inc. Inc. (a registered broker-dealer) since 1991;
Burnham Asset Management Corp. Director, Cancer Treatment Holdings, Inc.
1325 Avenue of the Americas
17th Floor
New York, NY 10019
Cornelius T. Ryan (67) Trustee of each Trust General Partner of Oxford Partners and Oxford
Oxford Bioscience Bioscience Partners (venture capital
Partners partnerships) and President of Oxford Venture
315 Post Road West Corporation; Director of Capital Cash
Westport, CT 06880 Management Trust (money market fund) and
Prime Cash Fund.
Gustave H. Shubert (69) Trustee of each Trust Senior Fellow/Corporate Advisor and Advisory
13838 Sunset Boulevard Trustee of Rand (a non-profit public interest
Pacific Palisades, CA 90272 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
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<PAGE>
Name, Age, and Positions Held
Address(1) With The Trusts Principal Occupation(s)(2)
- -------------- --------------- --------------------------
Science, the Counsel on Foreign Relations, and
the Institute for Strategic Studies (London);
advisor to the Program Evaluation and
Methodology Division of the U.S. General
Accounting Office; formerly Senior Vice
President and Trustee of Rand.
Lawrence Zicklin* (62) President and Trustee of each Principal of Neuberger & 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 (58) Vice President of each Trust Senior Vice President of N&B Management since
1992; Vice President of eight other mutual
funds for which N&B Management acts as
investment manager or administrator.
Michael J. Weiner (51) Vice President and Principal Senior Vice President of N&B Management since
Financial Officer of each Trust 1992; Treasurer of N&B Management from 1992
to 1996; Vice President and Principal
Financial Officer of eight other mutual funds
for which N&B Management acts as investment
manager or administrator.
Claudia A. Brandon (42) Secretary of each Trust Vice President of N&B Management; Secretary
of eight other mutual funds for which N&B
Management acts as investment manager or
administrator.
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<PAGE>
Name, Age, and Positions Held
Address(1) With The Trusts Principal Occupation(s)(2)
- -------------- --------------- --------------------------
Richard Russell (51) Treasurer and Principal Vice President of N&B Management since 1993;
Accounting Officer of each prior thereto, Assistant Vice President of
Trust 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 (35) Assistant Secretary of each Assistant Vice President of N&B Management
Trust 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 (61) Assistant Secretary of each Principal of Neuberger & Berman since 1992;
Trust Assistant Secretary of eight other mutual
funds for which N&B Management acts as
investment manager or administrator.
Barbara DiGiorgio (39) Assistant Assistant Vice President of N&B Management
Treasurer of each Trust 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 (37) Assistant Assistant Vice President of N&B Management
Treasurer of each Trust 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 investment manager or
administrator.
</TABLE>
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- --------------------
(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 Portfolio and
other funds for which N&B Management serves as investment manager.
The Trust's Trust Instrument and Managers Trust's Declaration
of Trust provide that each such Trust will indemnify its trustees and officers
against liabilities and expenses reasonably incurred in connection with
litigation in which they may be involved because of their offices with the
Trust, unless it is adjudicated that they (a) engaged in bad faith, willful
misfeasance, gross negligence, or reckless disregard of the duties involved in
the conduct of their offices, or (b) did not act in good faith in the reasonable
belief that their action was in the best interest of the Trust. In the case of
settlement, such indemnification will not be provided unless it has been
determined (by a court or other body approving the settlement or other
disposition, by a majority of disinterested trustees based upon a review of
readily available facts, or in a written opinion of independent counsel) that
such officers or trustees have not engaged in willful misfeasance, bad faith,
gross negligence, or reckless disregard of their duties.
The following table sets forth information concerning the
compensation of the trustees of the Trust. None of the Neuberger & Berman
Funds(R) has any retirement plan for its trustees.
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<PAGE>
TABLE OF COMPENSATION
FOR FISCAL YEAR ENDED 8/31/98
-----------------------------
Aggregate Total Compensation
Compensation from Investment Companies in the
Name and Position from the Neuberger & Berman Fund Complex
With The Trust Trust Paid to Trustees
-------------- ----- ----------------S
Faith Colish $ ________ $ ________
Trustee (5 other investment companies)
Donald M. Cox* $ ________ $ ________
Trustee (3 other investment companies)
Stanley Egener $ 0 $ 0
Chairman of the Board, (9 other investment companies)
Chief Executive
Officer, and Trustee
Alan R. Gruber, Trustee,
and the Estate of Alan R. $ ________ $ ________
Gruber (3 other investment companies)
Howard A. Mileaf $ ________ $ ________
Trustee (4 other investment companies)
Edward I. O'Brien $ ________ $ ________
Trustee (3 other investment companies)
John T. Patterson, Jr. $ ________ $ ________
Trustee (4 other investment companies)
John P. Rosenthal $ ________ $ ________
Trustee (4 other investment companies)
Cornelius T. Ryan $ ________ $ ________
Trustee (3 other investment companies)
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<PAGE>
Aggregate Total Compensation
Compensation from Investment Companies in the
Name and Position from the Neuberger & Berman Fund Complex
With The Trust Trust Paid to Trustees
-------------- ----- ----------------
Gustave H. Shubert $ ________ $ ________
Trustee (3 other investment companies)
Lawrence Zicklin $ 0 $ 0
President and Trustee (5 other investment companies)
*Retired 12/31/97.
At _______________, 1998, the trustees and officers of the
Trusts, as a group, owned beneficially or of record less than 1% of the
outstanding shares of the Fund.
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
INVESTMENT MANAGER AND ADMINISTRATOR
- ------------------------------------
Because all of the Fund's net investable assets are invested
in the Portfolio, the Fund does not need an investment manager. N&B Management
serves as the Portfolio's investment manager pursuant to a management agreement
with Managers Trust, dated as of August 2, 1993 ("Management Agreement"). The
Management Agreement was approved by the holders of the interests in the
Portfolio on _________, 1998.
The Management Agreement provides, in substance, that N&B
Management will make and implement investment decisions for the Portfolio in its
discretion and will continuously develop an investment program for the
Portfolio's assets. The Management Agreement permits N&B Management to effect
securities transactions on behalf of the 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 Portfolio, although N&B
Management has no current plans to pay a material amount of such compensation.
N&B Management provides to the Portfolio, without separate
cost, office space, equipment, and facilities and the personnel necessary to
perform executive, administrative, and clerical functions. N&B Management pays
all salaries, expenses, and fees of the officers, trustees, and employees of
Managers Trust who are officers, directors, or employees of N&B Management. Two
directors of N&B Management (who also are principals of Neuberger & Berman), one
of whom also serves as an officer of N&B Management, presently serve as trustees
-27-
<PAGE>
and officers of the Trusts. See "Trustees and Officers." Each Portfolio pays N&B
Management a management fee based on the Portfolio's average daily net assets,
as described in the Prospectus.
N&B Management provides facilities, services and personnel, as
well as accounting, recordkeeping, and other services, to the Fund pursuant to
an administration agreement with the Trust, dated August 3, 1993, as amended on
August 2, 1996 ("Administration Agreement"). For such administrative services,
the 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 they provide in
connection with investments in the Fund.
Institutions may be subject to federal or state laws that limit their
ability to provide certain administrative or distribution-related services. For
example, the Glass-Steagall Act is generally interpreted to prohibit most banks
from underwriting mutual fund shares. N&B Management intends to contract with
Institutions for only those services they may legally provide. If, due to a
change in the laws governing Institutions or in the interpretation of any such
law, an Institution is prohibited from performing some or all of the
above-described services, N&B Management may be required to find alternative
means of providing those services. Any such change is not expected to impact the
Fund or its shareholders adversely.
N&B Management has voluntarily undertaken to reimburse the
Fund for its Total Operating Expenses (as defined in the Prospectus) so that the
Fund's expense ratio per annum will not exceed the expense ratio of more than
0.10% of the Fund's average daily net assets. This undertaking can be terminated
by N&B Management by giving the Fund at least 60 days' prior written notice.
The Management Agreement continues with respect to the
Portfolio until August 2, 2000. The Management Agreement is renewable thereafter
from year to year with respect to the Portfolio, so long as its continuance is
approved at least annually (1) by the vote of a majority of the Portfolio
Trustees who are not "interested persons" of N&B Management or Managers Trust
("Independent Portfolio Trustees"), cast in person at a meeting called for the
purpose of voting on such approval, and (2) by the vote of a majority of the
Portfolio Trustees or by a 1940 Act majority vote of the outstanding interests
in the Portfolio. The Administration Agreement continues with respect to the
Fund until August 2, 2000. The Administration Agreement is renewable thereafter
from year to year with respect to the 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
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such approval, and (2) by the vote of a majority of the Fund Trustees or by a
1940 Act majority vote of the outstanding shares in the Fund.
The Management Agreement is terminable, without penalty, with
respect to the 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 the 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 the Portfolio pursuant
to a sub-advisory agreement dated August 2, 1993 ("Sub-Advisory Agreement"). The
Sub-Advisory Agreement was approved by the holders of the interests in the
Portfolio on ___________, 1998.
The Sub-Advisory Agreement provides in substance that
Neuberger & Berman will furnish to N&B Management, upon reasonable request, the
same type of investment recommendations and research that Neuberger & Berman,
from time to time, provides to its principals and employees for use in managing
client accounts. In this manner, N&B Management expects to have available to it,
in addition to research from other professional sources, the capability of the
research staff of Neuberger & Berman. This staff consists of numerous investment
analysts, each of whom specializes in studying one or more industries, under the
supervision of the Director of Research, who is also available for consultation
with N&B Management. The Sub-Advisory Agreement provides that N&B Management
will pay for the services rendered by Neuberger & Berman based on the direct and
indirect costs to Neuberger & Berman in connection with those services.
Neuberger & Berman also serves as sub-adviser for all of the other mutual funds
managed by N&B Management.
The Sub-Advisory Agreement continues with respect to the
Portfolio until August 2, 2000 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 the Portfolio by the Portfolio Trustees or a 1940 Act majority vote of the
outstanding interests in the 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 the
Portfolio if it is assigned or if the Management Agreement terminates with
respect to the Portfolio.
Most money managers that come to the Neuberger & Berman
organization have at least fifteen years experience. Neuberger & Berman and N&B
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<PAGE>
Management employ experienced professionals that work in a competitive
environment.
INVESTMENT COMPANIES MANAGED
- ----------------------------
As of _______________, the investment companies managed by N&B
Management had aggregate net assets of approximately $____ billion. N&B
Management currently serves as investment manager of the following investment
companies:
Name Approximate Net Assets at
---- -----------,
1998
----
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)
Neuberger & Berman High Yield Bond Portfolio $ ____________
(investment portfolio for Neuberger & Berman
High Yield Bond Fund)
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<PAGE>
Name Approximate Net Assets at
---- -----------,
1998
----
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 and Neuberger & Berman
International Trust)
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)
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<PAGE>
Name Approximate Net Assets at
---- -----------,
1998
----
Neuberger & Berman Socially Responsive Portfolio $ ____________
(investment portfolio for Neuberger & Berman
Socially Responsive Fund, Neuberger & Berman
Socially Responsive Trust and Neuberger &
Berman NYCDC Socially Responsive Trust)
Advisers Managers Trust $ ____________
(seven series)
The investment decisions concerning the Portfolio 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
Portfolio. Even where the investment objectives are similar, however, the
methods used by the Other N&B Funds and the Portfolio 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 the 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 the
Portfolio, in other cases it is believed that the 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
Portfolio's having its advisory arrangements with N&B Management outweighs any
disadvantages that may result from contemporaneous transactions.
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<PAGE>
The Portfolio is subject to certain limitations imposed on all advisory
clients of Neuberger & Berman (including the Portfolio, the Other N&B Funds, and
other managed accounts) and personnel of Neuberger & Berman and its affiliates.
These include, for example, limits that may be imposed in certain industries or
by certain companies, and policies of Neuberger & Berman that limit the
aggregate purchases, by all accounts under management, of the outstanding shares
of public companies.
MANAGEMENT AND CONTROL OF N&B MANAGEMENT
- ----------------------------------------
The directors and officers of N&B Management, all of whom have offices
at the same address as N&B Management, are Richard A. Cantor, Chairman of the
Board and director; Stanley Egener, President and director; Theodore P.
Giuliano, Vice President and director; Michael M. Kassen, Vice President and
director; Irwin Lainoff, director; Lawrence Zicklin, director; Daniel J.
Sullivan, Senior Vice President; Peter E. Sundman, Senior Vice President;
Michael J. Weiner, Senior Vice President; Claudia A. Brandon, Vice President;
Patrick T. Byrne, Vice President; Brooke A. Cobb, Vice President; Robert W.
D'Alelio, Vice President; Roberta D'Orio, Vice President; Clara Del Villar, Vice
President; Brian J. Gaffney, Vice President; Joseph G. Galli, Vice President;
Robert I. Gendelman, Vice President; Josephine P. Mahaney, Vice President; Ellen
Metzger, Vice President and Secretary; Paul Metzger, Vice President; Janet W.
Prindle, Vice President; Kevin L. Risen, Vice President; Richard Russell, Vice
President; Jennifer K. Silver, Vice President; Kent C. Simons, Vice President;
Frederic B. Soule, Vice President; Judith M. Vale, Vice President; Susan Walsh,
Vice President; Thomas G. Wolfe, Vice President; Andrea Trachtenberg, Vice
President of Marketing; Robert Conti, Treasurer; Ramesh Babu, Assistant Vice
President; Valerie Chang, Assistant Vice President; Stacy Cooper-Shugrue,
Assistant Vice President; Barbara DiGiorgio, Assistant Vice President; Michael
J. Hanratty, Assistant Vice President; Leslie Holliday-Soto, Assistant Vice
President; Robert L. Ladd, Assistant Vice President; Carmen G. Martinez,
Assistant Vice President; Joseph S. Quirk, Assistant Vice President; Ingrid
Saukaitis, Assistant Vice President; Josephine Velez, Assistant Vice President;
Celeste Wischerth, Assistant Vice President; and Loraine Olavarria, Assistant
Secretary. Messrs. Cantor, Egener, Gendelman, Giuliano, Kassen, Lainoff, Risen,
Simons, Sundman and Zicklin and Mmes. Prindle, Silver and Vale are principals of
Neuberger & Berman.
Messrs. Egener and Zicklin are trustees and officers, and Messrs.
Russell, Sullivan and Weiner and Mmes. Brandon, Cooper-Shugrue, DiGiorgio, and
Wischerth are officers, of each Trust. C. Carl Randolph, a principal of
Neuberger & Berman, also is an officer of each Trust.
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<PAGE>
All of the outstanding voting stock in N&B Management is owned
by persons who are also principals of Neuberger & Berman.
DISTRIBUTION ARRANGEMENTS
DISTRIBUTOR
- -----------
N&B Management serves as the distributor ("Distributor") in
connection with the offering of the Fund's shares to Institutions. In connection
with the sale of its shares, the 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 Fund's "principal underwriter"
within the meaning of the 1940 Act and, as such, acts as agent in arranging for
the sale of the Fund's shares to Institutions without sales commission and bears
advertising and promotion expenses incurred in the sale of the Fund's shares.
The Trust, on behalf of the Fund, and the Distributor are
parties to a Distribution and Services Agreement dated February 12, 1996, as
amended August 2, 1996 ("Distribution Agreement"). The Distribution Agreement
was approved by the Trustees, including a majority of the Independent Trustees
and a majority of those Independent Fund Trustees who have no direct or indirect
financial interest in the Distribution Agreement or the Trust's plan pursuant to
Rule 12b-1 under the 1940 Act ("Plan") ("Rule 12b-1 Trustees"), on October 25,
1995. The Distribution Agreement continues until August 2, 1999. 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
Trustees and a majority of the Rule 12b-1 Trustees, cast in person at a meeting
called for the purpose of voting on such approval. The Distribution Agreement
may be terminated by either party and will terminate automatically on its
assignment, in the same manner as the Management Agreement.
RULE 12B-1 PLAN
- ---------------
The Trustees adopted the Plan on October 25, 1995, as amended
on January 31, 1996 and August 2, 1996. Neuberger & Berman SMALL CAP GROWTH
Assets was authorized to become subject to the Plan by vote of the Fund Trustees
on _________________, and became subject to it on ___________________. The Plan
provides that the Fund will compensate N&B Management for administrative and
other services provided to the Fund, its activities and expenses related to the
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<PAGE>
sale and distribution of Fund shares, and ongoing services to investors in the
Fund. Under the Plan, N&B Management receives from the Fund a fee at the annual
rate of 0.25% of that Fund's average daily net assets. N&B Management may pay up
to the full amount of this fee to Institutions that distribute or make available
Fund shares and/or provide services to the Fund and its shareholders. The fee
paid to an Institution is based on the level of such services provided.
Institutions may use the payments for, among other purposes, compensating
employees engaged in sales and/or shareholder servicing. The amount of fees paid
by the 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 the Fund and the purposes for which such expenditures were
made must be provided to the Trustees for their review at least quarterly.
Prior to approving the Plan, the Fund Trustees considered
various factors relating to the implementation of the Plan and determined that
there is a reasonable likelihood that the Plan will benefit the Fund and its
shareholders. The Trustees noted that the purpose of the master/feeder fund
structure is to permit access to a variety of markets. To the extent the Plan
allows the Fund to penetrate markets to which it would not otherwise have
access, the Plan may result in additional sales of Fund shares; this, in turn,
may enable the Fund to achieve economies of scale that could reduce expenses. In
addition, certain on-going shareholder services may be provided more effectively
by Institutions with which shareholders have an existing relationship.
The Plan continues until August 2, 1999. The Plan is renewable
thereafter from year to year with respect to the Fund, so long as its
continuance is approved at least annually (1) by the vote of a majority of the
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 the Fund
thereunder unless such amendment is approved by a 1940 Act majority vote of the
outstanding shares of the Fund and by the Trustees in the manner described
above. The Plan is terminable with respect to the 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.
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<PAGE>
ADDITIONAL EXCHANGE INFORMATION
As more fully set forth in the section of the Prospectus
entitled "Exchanging Shares," an Institution may exchange shares of the Fund for
shares of one or more of the other Funds, if made available through that
Institution. The Fund may terminate or modify its exchange privilege in the
future.
Before effecting an exchange, Fund shareholders must obtain
and should review a currently effective Prospectus of the Fund into which the
exchange is to be made. An exchange is treated as a sale for federal income tax
purposes and, depending on the circumstances, a capital gain or loss may be
realized.
ADDITIONAL REDEMPTION INFORMATION
SUSPENSION OF REDEMPTIONS
- -------------------------
The right to redeem the Fund's shares may be suspended or
payment of the redemption price postponed (1) when the NYSE is closed, (2) when
trading on the NYSE is restricted, (3) when an emergency exists as a result of
which it is not reasonably practicable for the 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
- -------------------
The 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 Fund does not redeem in kind under normal circumstances, but
would do so when the Trustees determined that it was in the best interests of
the Fund's shareholders as a whole.
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<PAGE>
DIVIDENDS AND OTHER DISTRIBUTIONS
The Fund distributes to its shareholders substantially all of
its share of any net investment income (after deducting expenses incurred
directly by the Fund), any net realized capital gains, and any net realized
gains from foreign currency transactions earned or realized by the Portfolio.
The 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 the Portfolio's NAV (and, hence, the Fund's NAV) until they are
distributed. The Fund calculates its net investment income and NAV per share as
of the close of regular trading on the NYSE on each Business Day (usually 4:00
p.m. Eastern time).
Dividends from net investment income and distributions of net
realized capital and foreign currency gains, if any, normally are paid once
annually, in December.
Dividends and other distributions are automatically reinvested
in additional shares of the 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 the Fund remains in effect until the Institution
notifies the Fund in writing to discontinue the election.
ADDITIONAL TAX INFORMATION
TAXATION OF THE FUND
- --------------------
In order to qualify for treatment as a RIC under the Code, the
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. These requirements include the following: (1) the Fund must derive
at least 90% of its gross income each taxable year from dividends, interest,
payments with respect to securities loans, and gains from the sale or other
disposition of securities or foreign currencies, or other income (including
gains from Hedging Instruments) derived with respect to its business of
investing in securities or those currencies ("Income Requirement"); and (2) at
the close of each quarter of the Fund's taxable year, (i) at least 50% of the
value of its total assets must be represented by cash and cash items, U.S.
Government securities, securities of other RICs, and other securities limited,
in respect of any one issuer, to an amount that does not exceed 5% of the value
of the Fund's total assets and that does not represent more than 10% of the
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<PAGE>
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 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 Fund, N&B Management believes that the reasoning thereof
and, hence, their conclusion apply to the Fund as well.
The 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 Fund of distributions to it from the Portfolio, investments by the
Portfolio in certain securities, and hedging transactions engaged in by the
Portfolio.
TAXATION OF THE PORTFOLIO
- -------------------------
Certain portfolios managed by N&B Management have received
rulings from the Service to the effect that, among other things, each such
portfolio will be treated as a separate partnership for federal income tax
purposes and will not be a "publicly traded partnership." As a result, the
portfolio is not subject to federal income tax; instead, each investor in the
portfolio (such as its corresponding fund) is required to take into account in
determining its federal income tax liability its share of the portfolio's
income, gains, losses, deductions, and credits, without regard to whether it has
received any cash distributions from the portfolio. The portfolios also are not
subject to Delaware or New York income or franchise tax. Although these rulings
may not be relied on as precedent by the Portfolio and the Fund, N&B Management
believes the reasoning thereof and, hence, their conclusion apply to the
Portfolio and the Fund as well.
Because the Fund is deemed to own a proportionate share of the
Portfolio's assets and income for purposes of determining whether the Fund
satisfies the requirements to qualify as a RIC, the Portfolio intends to
continue to conduct its operations so that the Fund will be able to continue to
satisfy all those requirements.
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<PAGE>
Distributions to the Fund from the 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. The Fund's basis for its interest in the 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 the Portfolio, and gains
realized by the Portfolio, may be subject to income, withholding, or other taxes
imposed by foreign countries and U.S. possessions that would reduce the yield
and/or total return on its securities. Tax treaties between certain countries
and the United States may reduce or eliminate these foreign taxes, however, and
many foreign countries do not impose taxes on capital gains in respect of
investments by foreign investors.
The Portfolio may invest in the stock of "passive foreign
investment companies" ("PFICs"). A PFIC is a foreign corporation -- other than a
"controlled foreign corporation" (I.E., a foreign corporation in which, on any
day during its taxable year, more than 50% of the total voting power of all
voting stock therein or the total value of all stock therein is owned, directly,
indirectly, or constructively, by "U.S. shareholders," defined as U.S. persons
that individually own, directly, indirectly, or constructively, at least 10% of
that voting power) as to which the Portfolio is a U.S. shareholder (effective
for the taxable year beginning September 1, 1998) -- that, in general, meets
either of the following tests: (1) at least 75% of its gross income is passive
or (2) an average of at least 50% of its assets produce, or are held for the
production of, passive income. Under certain circumstances, if the Portfolio
holds stock of a PFIC, the 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.
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<PAGE>
If the Portfolio invests in a PFIC and elects to treat the
PFIC as a "qualified electing fund" ("QEF"), then in lieu of the Fund's
incurring the foregoing tax and interest obligation, the Fund would be required
to include in income each year its share of the Portfolio's pro rata share of
the QEF's annual ordinary earnings and net capital gain (the excess of net
long-term capital gain over net short-term capital loss) -- which most likely
would have to be distributed by the Fund to satisfy the Distribution Requirement
and avoid imposition of the Excise Tax -- even if those earnings and gain were
not received by the Portfolio from the QEF. In most instances it will be very
difficult, if not impossible, to make this election because of certain
requirements thereof.
Effective for taxable years beginning after 1997, a holder of
stock in any PFIC may elect to include in ordinary income each taxable year the
excess, if any, of the fair market value of the stock over the adjusted basis
therein as of the end of that year. Pursuant to the election, a deduction (as an
ordinary, not capital, loss) also would be allowed for the excess, if any, of
the holder's adjusted basis in PFIC stock over the fair market value thereof as
of the taxable year-end, but only to the extent of any net mark-to-market gains
with respect to that stock included in income for prior taxable years. The
adjusted basis in each PFIC's stock subject to the election would be adjusted to
reflect the amounts of income included and deductions taken thereunder. Proposed
regulations would provide a similar election with respect to the stock of
certain PFICs.
The Portfolio's use of hedging strategies, such as writing
(selling) and purchasing options and entering into forward contracts, involves
complex rules that will determine for income tax purposes the amount, character
and timing of recognition of the gains and losses the Portfolio realizes 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 the Fund under the Income Requirement.
Exchange-traded futures contracts, certain forward contracts
and listed options thereon ("Section 1256 contracts") are required to be marked
to market (that is, treated as having been sold at market value) for federal
income tax purposes at the end of the Portfolio's taxable year. Sixty percent of
any net gain or loss recognized as a result of these "deemed sales," and 60% of
any net realized gain or loss from any actual sales, of Section 1256 contracts
are treated as long-term capital gain or loss; the remainder is treated as
short-term capital gain or loss. As of the date of this SAI, it is not entirely
clear whether that 60% portion will qualify for the reduced maximum tax rates on
net capital gain enacted by the Tax Act -- 20% (10% for taxpayers in the 15%
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<PAGE>
marginal tax bracket) for gain recognized on capital assets held for more than
18 months -- instead of the 28% rate in effect before that legislation, which
now applies to gain recognized on capital assets held for more than one year but
not more than 18 months. However, proposed technical corrections legislation
would clarify that the 20% rate applies.
The 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, the Fund) must take into income the
OID that accrues on the securities during the taxable year, even if it receives
no corresponding payment on the securities during the year. Because the Fund
annually must distribute substantially all of its investment company taxable
income (including its share of the Portfolio's accrued OID) to satisfy the
Distribution Requirement and avoid imposition of the Excise Tax, the Fund may be
required in a particular year to distribute as a dividend an amount that is
greater than its share of the total amount of cash the 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 the Fund's investment company
taxable income and/or net capital gain.
TAXATION OF THE FUND'S SHAREHOLDERS
- -----------------------------------
If Fund shares are sold at a loss after being held for six
months or less, the loss will be treated as long-term, instead of short-term,
capital loss to the extent of any capital gain distributions received on those
shares.
PORTFOLIO TRANSACTIONS
Neuberger & Berman acts as principal broker for the Portfolio
in the purchase and sale of its portfolio securities and in connection with the
writing of covered call options on its securities.
Portfolio securities may, from time to time, be loaned by the
Portfolio to Neuberger & Berman in accordance with the terms and conditions of
an order issued by the SEC. The order exempts such transactions from provisions
of the 1940 Act that would otherwise prohibit such transactions, subject to
certain conditions. In accordance with the order, securities loans made by the
Portfolio to Neuberger & Berman are fully secured by cash collateral. The
portion of the income on the cash collateral which may be shared with Neuberger
& Berman is to be determined by reference to concurrent arrangements between
Neuberger & Berman and non-affiliated lenders with which it engages in similar
transactions. In addition, where Neuberger & Berman borrows securities from the
Portfolio in order to re-lend them to others, Neuberger & Berman may be required
to pay the Portfolio, on a quarterly basis, certain of the earnings that
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Neuberger & Berman otherwise has derived from the re-lending of the borrowed
securities. When Neuberger & Berman desires to borrow a security that the
Portfolio has indicated a willingness to lend, Neuberger & Berman must borrow
such security from the 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 the Portfolio. If, in any
month, the Portfolio's expenses exceed its income in any securities loan
transaction with Neuberger & Berman, Neuberger & Berman must reimburse the
Portfolio for such loss. The Portfolio has no current intention of loaning
securities to Neuberger & Berman.
The Portfolio may also lend securities to unaffiliated
entities, including banks, brokerage firms, and other institutional investors
judged creditworthy by N&B Management, provided that cash or equivalent
collateral, equal to at least 100% of the market value of the loaned securities,
is continuously maintained by the borrower with the Portfolio. The Portfolio may
invest the cash collateral and earn income, or it may receive an agreed upon
amount of interest income from a borrower who has delivered equivalent
collateral. During the time securities are on loan, the borrower will pay the
Portfolio an amount equivalent to any dividends or interest paid on such
securities. These loans are subject to termination at the option of the
Portfolio or the borrower. The Portfolio may pay reasonable administrative and
custodial fees in connection with a loan and may pay a negotiated portion of the
interest earned on the cash or equivalent collateral to the borrower or placing
broker. The Portfolio does not have the right to vote securities on loan, but
would terminate the loan and regain the right to vote if that were considered
important with respect to the investment.
A committee of Independent Portfolio Trustees from time to
time reviews, among other things, information relating to securities loans by
the Portfolio.
In effecting securities transactions, the 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. The
Portfolio plans to continue to use Neuberger & Berman as its principal broker
where, in the judgment of N&B Management, that firm is able to obtain a price
and execution at least as favorable as other qualified brokers. To the
Portfolio's knowledge, no affiliate of the Portfolio receives give-ups or
reciprocal business in connection with its securities transactions.
The use of Neuberger & Berman as a broker for the 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
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<PAGE>
annual reporting requirements. Managers Trust and N&B Management have expressly
authorized Neuberger & Berman to retain such compensation, and Neuberger &
Berman has agreed to comply with the reporting requirements of Section 11(a).
Under the 1940 Act, commissions paid by the 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 the 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 Portfolio does not deem it practicable and in its 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, the
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 Portfolio and to its other customers and
information concerning the prevailing level of commissions charged by other
brokers having comparable execution capability. In addition, the procedures
pursuant to which Neuberger & Berman effects brokerage transactions for the
Portfolio 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
the 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
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aggregate size of orders contemporaneously placed by the other accounts, subject
to de minimis exceptions. All participating accounts will pay or receive the
same price.
The Portfolio expects that it will 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 the Portfolio and
Other N&B Funds (collectively, "N&B Funds") and some of Neuberger & Berman's
managed accounts ("Managed Accounts") evaluates semi-annually the nature and
quality of the brokerage and research services provided by other brokers. Based
on this evaluation, the committee establishes a list and projected rankings of
preferred brokers for use in determining the relative amounts of commissions to
be allocated to those brokers. Ordinarily, the brokers on the list effect a
large portion of the brokerage transactions for the N&B Funds and the Managed
Accounts that are not effected by Neuberger & Berman. However, in any
semi-annual period, brokers not on the list may be used, and the relative
amounts of brokerage commissions paid to the brokers on the list may vary
substantially from the projected rankings. These variations reflect the
following factors, among others: (1) brokers not on the list or ranking below
other brokers on the list may be selected for particular transactions because
they provide better price and/or execution, which is the primary consideration
in allocating brokerage; (2) adjustments may be required because of periodic
changes in the execution capabilities of or research provided by particular
brokers or in the execution or research needs of the N&B Funds and/or the
Managed Accounts; and (3) the aggregate amount of brokerage commissions
generated by transactions for the N&B Funds and the Managed Accounts may change
substantially from one semi-annual period to the next.
The commissions paid to a broker other than Neuberger & Berman
may be higher than the amount another firm might charge if N&B Management
determines in good faith that the amount of those commissions is reasonable in
relation to the value of the brokerage and research services provided by the
broker. N&B Management believes that those research services benefit the
Portfolio 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 Portfolio's benefit.
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__________________________ is primarily responsible for making
decisions as to specific action to be taken with respect to the investment
portfolio of the Portfolio. _____________________ has full authority to take
action with respect to portfolio transactions and may or may not consult with
other personnel of N&B Management prior to taking such action.
PORTFOLIO TURNOVER
- ------------------
The Portfolio's portfolio turnover rate is calculated by
dividing (1) the lesser of the cost of the securities purchased or the proceeds
from the securities sold by the Portfolio during the fiscal year (other than
securities, including options, whose maturity or expiration date at the time of
acquisition was one year or less) by (2) the month-end average of the value of
such securities owned by the Portfolio during the fiscal year.
REPORTS TO SHAREHOLDERS
Shareholders of the Fund receive unaudited semi-annual
financial statements, as well as year-end financial statements audited by the
independent auditors for the Fund and Portfolio. The Fund's statements show the
investments owned by the Portfolio and the market values thereof and provide
other information about the Fund and its operations, including the Fund's
beneficial interest in the Portfolio.
CUSTODIAN AND TRANSFER AGENT
The Fund and Portfolio have selected State Street Bank and
Trust Company ("State Street"), 225 Franklin Street, Boston, MA 02110, as
custodian for their respective securities and cash. State Street also serves as
the Fund's transfer agent, administering purchases, redemptions, and transfers
of Fund shares with respect to Institutions and the payment of dividends and
other distributions to Institutions. All correspondence should be mailed to
Neuberger & Berman Funds, Institutional Services, 605 Third Avenue, 2nd Floor,
New York, NY 10158-0180. In addition, State Street serves as transfer agent for
the Portfolio.
INDEPENDENT AUDITORS
The Fund and Portfolio have selected Ernst & Young LLP, 200
Clarendon Street, Boston, MA 02116, as the independent auditors who will audit
their financial statements.
LEGAL COUNSEL
The Fund and Portfolio have selected Kirkpatrick & Lockhart
LLP, 1800 Massachusetts Avenue, N.W., 2nd Floor, Washington, D.C. 20036-1800, as
their legal counsel.
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<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.
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Appendix A
RATINGS OF CORPORATE BONDS AND COMMERCIAL PAPER
S&P CORPORATE BOND RATINGS:
---------------------------
AAA - Bonds rated AAA have the highest rating assigned by S&P.
Capacity to pay interest and repay principal is extremely strong.
AA - Bonds rated AA have a very strong capacity to pay
interest and repay principal and differ from the higher rated issues only in
small degree.
A - Bonds rated A have a strong capacity to pay interest and
repay principal, although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than bonds in higher
rated categories.
BBB - Bonds rated BBB are regarded as having an adequate
capacity to pay principal and interest. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay principal and interest for
bonds in this category than for bonds in higher rated categories.
BB, B, CCC, CC, C - Bonds rated BB, B, CCC, CC, and C are
regarded, on balance, as predominantly speculative with respect to capacity to
pay interest and repay principal in accordance with the terms of the obligation.
BB indicates the lowest degree of speculation and C the highest degree of
speculation. While such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
CI - The rating CI is reserved for income bonds on which no
interest is being paid.
D - Bonds rated D are in default, and payment of interest
and/or repayment of principal is in arrears.
PLUS (+) OR MINUS (-) - The ratings above may be modified by
the addition of a plus or minus sign to show relative standing within the major
rating categories.
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MOODY'S CORPORATE BOND RATINGS:
-------------------------------
Aaa - Bonds rated AAA are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or an exceptionally
stable margin, and principal is secure. Although the various protective elements
are likely to change, the changes that can be visualized are most unlikely to
impair the fundamentally strong position of the issuer.
Aa - Bonds rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally known
as "high-grade bonds." They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa-rated securities, fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present that make the long-term risks appear somewhat larger than in Aaa-rated
securities.
A - Bonds rated A possess many favorable investment attributes
and are to be considered as upper-medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present that suggest a susceptibility to impairment sometime in the future.
Baa - Bonds which are rated Baa are considered as medium-grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present, but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. These bonds lack outstanding
investment characteristics and in fact have speculative characteristics as well.
Ba - Bonds rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B - Bonds rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
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.
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C - Bonds rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
MODIFIERS--Moody's may apply numerical modifiers 1, 2, and 3 in each generic
rating classification described above. The modifier 1 indicates that the
security ranks in the higher end of its generic rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the issuer
ranks in the lower end of its generic rating.
S&P COMMERCIAL PAPER RATINGS:
A-1 - This highest category indicates that the degree of
safety regarding timely payment is strong. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus sign (+).
MOODY'S COMMERCIAL PAPER RATINGS
Issuers rated PRIME-1 (or related supporting institutions),
also known as P-1, have a superior capacity for repayment of short-term
promissory obligations. PRIME-1 repayment capacity will normally be evidenced by
the following characteristics:
- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structures with moderate
reliance on debt and ample asset protection.
- Broad margins in earnings coverage of fixed financial
charges and high internal cash generation.
- Well-established access to a range of financial markets
and assured sources of alternate liquidity.
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NEUBERGER & BERMAN EQUITY ASSETS
POST-EFFECTIVE AMENDMENT NO. 10 ON FORM N-1A
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
- ------------------------------------------
(a) Financial Statements: None.
(b) Exhibits:
Exhibit
Number Description
------ -----------
(1) (a) Certificate of Trust. Incorporated by
Reference to Post-Effective Amendment No. 1
to Registrant's Registration Statement, File
Nos. 33-82568 and 811-8106, EDGAR Accession
No. 0000898432-95-000393.
(b) Trust Instrument of Neuberger & Berman
Equity Assets. Incorporated by Reference to
Post-Effective Amendment No. 1 to
Registrant's Registration Statement, File
Nos. 33-82568 and 811-8106, EDGAR Accession
No. 0000898432-95-000393.
(c) Schedule A - Current Series of Neuberger &
Berman Equity Assets. Incorporated by
Reference to Post-Effective Amendment No. 8
to Registrant's Registration Statement, File
Nos. 33-82568 and 811-8106, EDGAR Accession
No. 0000898432-97-000221.
(2) By-Laws of Neuberger & Berman Equity Assets.
Incorporated by Reference to Post-Effective
Amendment No. 1 to Registrant's Registration
Statement, File Nos. 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.
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<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 Management
Agreement. Incorporated by Reference
to Post-Effective Amendment No. 70
to Registration Statement of
Neuberger & Berman Equity Funds,
File Nos. 2-11357 and 811-582, EDGAR
Accession No. 0000898432-95-000314.
(b) (i) Sub-Advisory Agreement Between
Neuberger & Berman Management
Incorporated and Neuberger & Berman
with Respect to Equity Managers
Trust. Incorporated by Reference to
Post-Effective Amendment No. 70 to
Registration Statement of Neuberger
& Berman Equity Funds, File Nos.
2-11357 and 811-582, EDGAR Accession
No. 0000898432-95-000314.
(ii) Schedule A - Series of Equity
Managers Trust Currently Subject to
the Sub-Advisory Agreement.
Incorporated by Reference to
Post-Effective Amendment No. 70 to
Registration Statement of Neuberger
& Berman Equity Funds, File Nos.
2-11357 and 811-582, EDGAR Accession
No. 0000898432-95-000314.
(iii) Substitution Agreement Among
Neuberger & Berman Management
Incorporated, Equity Managers Trust,
Neuberger & Berman, L.P., and
Neuberger & Berman, LLC.
Incorporated by Reference to
Amendment No. 7 to Registration
Statement of Equity Managers Trust,
File No. 811-7910, Edgar Accession
No. 0000898432-96-000557.
(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. 9 to
Registrant's Registration Statement, File
Nos. 33-82568 and 811-08106, Edgar Accession
No. 0000898432-97-000518.
(ii) Schedule A - Series of Neuberger &
Berman Equity Assets Currently
Subject to the Distribution
Agreement. Incorporated by Reference
to Post-Effective Amendment No. 9 to
Registrant's Registration Statement,
File Nos. 33-82568 and 811-08106,
Edgar Accession No.
0000898432-97-000518.
(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. 9 to Registrant's
Registration Statement, File Nos.
33-82568 and 811-08106, Edgar
Accession No. 0000898432-97-000518.
(ii) Schedule A - Series of Neuberger &
Berman Equity Assets Currently
Subject to Distribution and Services
Agreement. Incorporated by Reference
to Post-Effective Amendment No. 9 to
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<PAGE>
Registrant's Registration Statement,
File Nos. 33-82568 and 811-08106,
Edgar Accession No.
0000898432-97-000518.
(7) Bonus, Profit Sharing or Pension Plans.
None.
(8) (a) Custodian Contract Between Neuberger &
Berman Equity Assets and State Street Bank
and Trust Company. Incorporated by Reference
to Post-Effective Amendment No. 3 to
Registrant's Registration Statement, File
Nos. 33-82568 and 811-8106, Edgar Accession
No. 0000898432-96-000048.
(b) Schedule of Compensation under the Custodian
Contract. Incorporated by Reference to
Post-Effective Amendment No. 4 to
Registrant's Registration Statement, File
Nos. 33-82568 and 811-8106, Edgar Accession
No. 0000898432-96-000558.
(c) Agreement Between Neuberger & Berman Equity
Assets and State Street Bank and Trust
Company Adding Neuberger & Berman Focus
Assets, Neuberger & Berman Guardian Assets,
Neuberger & Berman Manhattan Assets and
Neuberger & Berman Partners Assets as
Portfolios Governed by the Custodian
Contract. Incorporated by Reference to
Post-Effective Amendment No. 8 to
Registrant's Registration Statement, File
Nos. 33-82568 and 811-8106, EDGAR Accession
No. 0000898432-97-000221.
(d) Agreement Between Neuberger & Berman Equity
Assets and State Street Bank and Trust
Company Adding Neuberger & Berman Genesis
Assets as a Portfolio Governed by the
Custodian Contract. Incorporated by
Reference to Post-Effective Amendment No. 9
to Registrant's Registration Statement, File
Nos. 33-82568 and 811-08106, Edgar Accession
No. 0000898432-97-000518.
(9) (a) (i) Transfer Agency Agreement Between
Neuberger & Berman Equity Assets and
State Street Bank and Trust Company.
Incorporated by Reference to
Post-Effective Amendment No. 3 to
Registrant's Registration Statement,
File Nos. 33-82568 and 811-8106,
Edgar Accession No.
0000898432-96-000048.
(ii) First Amendment to the Transfer
Agency Agreement Between Neuberger &
Berman Equity Assets and State
Street Bank and Trust Company.
Incorporated by Reference to
Post-Effective Amendment No. 9 to
Registrant's Registration Statement,
File Nos. 33-82568 and 811-08106,
Edgar Accession No.
0000898432-97-000518.
(iii) Schedule of Compensation under the
Transfer Agency Agreement.
Incorporated by Reference to
Post-Effective Amendment No. 4 to
Registrant's Registration Statement,
File Nos. 33-82568 and 811-8106,
Edgar Accession No.
0000898432-96-000558.
(iv) Agreement Between Neuberger & Berman
Equity Assets and State Street Bank
and Trust Company Adding Neuberger &
Berman Focus Assets, Neuberger &
Berman Guardian Assets, Neuberger &
Berman Manhattan Assets and
Neuberger & Berman Partners Assets
as Portfolios Governed by the
Transfer Agency Agreement.
Incorporated by Reference to
Post-Effective Amendment No. 8 to
Registrant's Registration Statement,
File Nos. 33-82568 and 811-8106,
EDGAR Accession No.
0000898432-97-000221.
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(v) Agreement Between Neuberger & Berman
Equity Assets and State Street Bank
and Trust Company Adding Neuberger &
Berman Genesis Assets as a Portfolio
Governed by the Transfer Agency
Agreement. Incorporated by Reference
to Post-Effective Amendment No. 9 to
Registrant's Registration Statement,
File Nos. 33-82568 and 811-08106,
Edgar Accession No.
0000898432-97-000518.
(b) (i) Administration Agreement Between
Neuberger & Berman Equity Assets and
Neuberger & Berman Management
Incorporated. Incorporated by
Reference to Post-Effective
Amendment No. 9 to Registrant's
Registration Statement, File Nos.
33-82568 and 811-08106, Edgar
Accession No. 0000898432-97-000518.
(ii) Schedule A - Series of Neuberger &
Berman Equity Assets Currently
Subject to the Administration
Agreement. Incorporated by Reference
to Post-Effective Amendment No. 9 to
Registrant's Registration Statement,
File Nos. 33-82568 and 811-08106,
Edgar Accession No.
0000898432-97-000518.
(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. To Be
Filed by Amendment.
(11) Consent of Independent Auditors. None.
(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. 9
to Registrant's Registration Statement, File
Nos. 33-82568 and 811-08106, Edgar Accession
No. 0000898432-97-000518.
(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. 9
to Registrant's Registration Statement, File
Nos. 33-82568 and 811-08106, Edgar Accession
No. 0000898432-97-000518.
(16) Schedule of Computation of Performance
Quotations. None.
(17) Financial Data Schedule. None.
(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.
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ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
- -------- --------------------------------
The following information is given as of June 30, 1998:
Number of
Title Of Class Record Holders
-------------- --------------
Shares of beneficial interest, $0.001 par value, of:
Neuberger & Berman Focus Assets 10
Neuberger & Berman Genesis 67
Assets Neuberger & Berman Guardian Assets 10
Neuberger & Berman Manhattan Assets 07
Neuberger & Berman Partners Assets 12
Neuberger & Berman Small Cap Growth Assets 0
Neuberger & Berman Socially Responsive Trust 28
ITEM 27. INDEMNIFICATION.
- -------- ----------------
A Delaware business trust may provide in its governing
instrument for indemnification of its officers and trustees from and against any
and all claims and demands whatsoever. Article IX, Section 2 of the Trust
Instrument provides that the Registrant shall indemnify any present or former
trustee, officer, employee or agent of the Registrant ("Covered Person") to the
fullest extent permitted by law against liability and all expenses reasonably
incurred or paid by him or her in connection with any claim, action, suit or
proceeding ("Action") in which he or she becomes involved as a party or
otherwise by virtue of his or her being or having been a Covered Person and
against amounts paid or incurred by him or her in settlement thereof.
Indemnification will not be provided to a person adjudged by a court or other
body to be liable to the Registrant or its shareholders by reason of "willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office" ("Disabling Conduct"), or not to
have acted in good faith in the reasonable belief that his or her action was in
the best interest of the Registrant. In the event of a settlement, no
indemnification may be provided unless there has been a determination that the
officer or trustee did not engage in Disabling Conduct (i) by the court or other
body approving the settlement; (ii) by at least a majority of those trustees who
are neither interested persons, as that term is defined in the Investment
Company Act of 1940 ("1940 Act"), of the Registrant ("Independent Trustees"),
nor are parties to the matter based upon a review of readily available facts; or
(iii) by written opinion of independent legal counsel based upon a review of
readily available facts.
Pursuant to Article IX, Section 3 of the Trust Instrument, if
any present or former shareholder of any series ("Series") of the Registrant
shall be held personally liable solely by reason of his or her being or having
been a shareholder and not because of his or her acts or omissions or for some
other reason, the present or former shareholder (or his or her heirs, executors,
administrators or other legal representatives or in the case of any entity, its
general successor) shall be entitled out of the assets belonging to the
applicable Series to be held harmless from and indemnified against all loss and
expense arising from such liability. The Registrant, on behalf of the affected
Series, shall, upon request by such shareholder, assume the defense of any claim
made against such shareholder for any act or obligation of the Series and
satisfy any judgment thereon from the assets of the Series.
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
C-5
<PAGE>
obligations and duties under the Agreement, or (ii) to protect any director,
officer or employee of N&B Management who is or was a trustee or officer of
Managers Trust against any liability to Managers Trust or any series thereof or
its interest holders to which such person would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such person's office with Managers Trust.
Section 1 of the Sub-Advisory Agreement between N&B Management
and Neuberger & Berman, LLC ("Neuberger & Berman") with respect to Managers
Trust provides that in the absence of willful misfeasance, bad faith or gross
negligence in the performance of its duties, or of reckless disregard of its
duties and obligations under the Agreement, Neuberger & Berman will not be
subject to liability for any act or omission or any loss suffered by any series
of Managers Trust or its interest holders in connection with the matters to
which the Agreement relates.
Section 8 of the Administration Agreement between the
Registrant and N&B Management provides that N&B Management shall look only to
the assets of each Series for performance of the Agreement by the Registrant on
behalf of such Series, and neither the Shareholders of the Registrant, its
Trustees nor any of the Registrant's officers, employees or agents, whether
past, present or future shall be personally liable therefor. Section 9 of the
Agreement provides that each Series shall indemnify N&B Management and hold it
harmless from and against any and all losses, damages and expenses, including
reasonable attorneys' fees and expenses, incurred by N&B Management that result
from: (i) any claim, action, suit or proceeding in connection with N&B
Management's entry into or performance of the Agreement with respect to such
Series; or (ii) any action taken or omission to act committed by N&B Management
in the performance of its obligations under the Agreement with respect to such
Series; or (iii) any action of N&B Management upon instructions believed in good
faith by it to have been executed by a duly authorized officer or representative
of the Registrant with respect to such Series; provided, that N&B Management
shall not be entitled to such indemnification in respect of actions or omissions
constituting negligence or misconduct on the part of N&B Management, or its
employees, agents or contractors. Section 10 of the Agreement provides that N&B
Management shall indemnify each Series and hold it harmless from and against any
and all losses, damages and expenses, including reasonable attorneys' fees and
expenses, incurred by such Series which result from: (i) N&B Management's
failure to comply with the terms of the Agreement with respect to such Series;
or (ii) N&B Management's lack of good faith in performing its obligations under
the Agreement with respect to such Series; or (iii) the negligence or misconduct
of N&B Management, or its employees, agents or contractors in connection with
the Agreement with respect to such Series. A Series shall not be entitled to
such indemnification in respect of actions or omissions constituting negligence
or misconduct on the part of that Series or its employees, agents or contractors
other than N&B Management, unless such negligence or misconduct results from or
is accompanied by negligence or misconduct on the part of N&B Management, any
affiliated person of N&B Management, or any affiliated person of an affiliated
person of N&B Management.
Section 11 of the Distribution Agreement between the
Registrant and N&B Management provides that N&B Management shall look only to
the assets of a Series for the Registrant's performance of the Agreement by the
Registrant on behalf of such Series, and neither the Shareholders, the Trustees
nor any of the Registrant's officers, employees or agents, whether past, present
or future, shall be personally liable therefor.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 ("1933 Act") may be permitted to trustees, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the 1933 Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the 1933 Act and will be governed by the final adjudication of such
issue.
C-6
<PAGE>
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.
<TABLE>
<CAPTION>
NAME BUSINESS AND OTHER CONNECTIONS
- ---- ------------------------------
<S> <C>
Claudia A. Brandon Secretary, Neuberger & Berman Advisers Management Trust;
Vice President, N&B Secretary, Advisers Managers Trust; Secretary, Neuberger & Berman
Management 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.
Valerie Chang Senior Securities Analyst, TIAA/CREF.1
Vice President, N&B
Management
Brooke A. Cobb
Vice President, N&B Chief Investment Officer, Bainco International Investors.1
Management Senior Vice President and Senior Portfolio Manager, Putnam
Investments.2
Stacy Cooper-Surge Assistant Secretary, Neuberger & Berman Advisers Management
Assistant Vice President, Trust; Assistant Secretary, Advisers Managers Trust; Assistant
N&B Management Secretary, Neuberger & Berman Income Funds; Assistant Secretary,
Neuberger & Berman Income Trust; Assistant Secretary, Neuberger
& Berman Equity Funds; Assistant Secretary, Neuberger & Berman
Equity Trust; Assistant Secretary, Income Managers Trust;
Assistant Secretary, Equity Managers Trust; Assistant
Secretary, Global Managers Trust; Assistant Secretary,
Neuberger & Berman Equity Assets.
Robert W. D'Alelio Senior Portfolio Manager, Putnam Investments.3
Vice President, N&B
Management
Barbara DiGiorgio, Assistant Treasurer, Neuberger & Berman Advisers Management
Assistant Vice President, Trust; Assistant Treasurer, Advisers Managers Trust; Assistant
N&B Management 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 & Berman Advisers
President and Director, Management Trust; Chairman of the Board and Trustee, Advisers
N&B Management; Principal, Managers Trust; Chairman of the Board and Trustee, Neuberger &
Neuberger & Berman Berman Income Funds; Chairman of the Board and Trustee,
- ------------------
1 Until 1997.
2 Until 1995.
3 Until 1996.
C-7
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
- ---- ------------------------------
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 Funds; President
Vice President and and Trustee, Neuberger & Berman Income Trust; President and
Director, N&B Management; Trustee, Income Managers Trust.
Principal, Neuberger & Berman
C. Carl Randolph Assistant Secretary, Neuberger & Berman Advisers Management
Principal, Neuberger & Berman Trust; Assistant Secretary, Advisers Managers Trust; Assistant
Secretary, Neuberger & Berman Income Funds; Assistant
Secretary, Neuberger & Berman Income Trust; Assistant
Secretary, Neuberger & Berman Equity Funds; Assistant
Secretary, Neuberger & Berman Equity Trust; Assistant
Secretary, Income Managers Trust; Assistant Secretary, Equity
Managers Trust; Assistant Secretary, Global Managers Trust;
Assistant Secretary, Neuberger & Berman Equity Assets.
Richard Russell Treasurer, Neuberger & Berman Advisers Management Trust;
Vice President, Treasurer, Advisers Managers Trust; Treasurer, Neuberger & Berman
N&B Management Income Funds; Treasurer, Neuberger & Berman Income Trust;
Treasurer, Neuberger & Berman Equity Funds; Treasurer,
Neuberger & Berman Equity Trust; Treasurer, Income Managers
Trust; Treasurer, Equity Managers Trust; Treasurer, Global
Managers Trust; Treasurer, Neuberger & Berman Equity Assets.
Ingrid Saukaitis Project Director, Council on Economic Priorities.4
Assistant Vice President,
N&B Management
Jennifer K. Silver Portfolio Manager and Director, Putnam Investments.5
Vice President, N&B
Management; Principal,
Neuberger & Berman
Daniel J. Sullivan Vice President, Neuberger & Berman Advisers Management Trust;
Senior Vice President, Vice President, Advisers Managers Trust; Vice President,
N&B Management 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.
- ---------------
4 Until 1997.
5 Until 1997.
C-8
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
- ---- ------------------------------
Michael J. Weiner Vice President, Neuberger & Berman Advisers Management Trust;
Senior Vice President, Vice President, Advisers Managers Trust; Vice President,
N&B Management 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 Management
Assistant Vice President, Trust; Assistant Treasurer, Advisers Managers Trust; Assistant
N&B Management 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 Advisers Management
Director, N&B Management; Trust; President and Trustee, Advisers Managers Trust; President
Principal, Neuberger & Berman and Trustee, Neuberger & Berman Equity Funds; President and
Trustee, Neuberger & Berman Equity Trust; President and
Trustee, Equity Managers Trust; President, Global Managers
Trust; President and Trustee, Neuberger & Berman Equity Assets.
</TABLE>
The principal address of N&B Management, Neuberger & Berman, and of
each of the investment companies named above, is 605 Third Avenue, New York, New
York 10158.
C-9
<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.
<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- ---- ---------------- ---------------------
<S> <C> <C>
Ramesh Babu Assistant Vice President None
Claudia A. Brandon Vice President Secretary
Patrick T. Byrne Vice President None
Richard A. Cantor Chairman of the Board None
Valerie Chang Assistant Vice President None
Brooke A. Cobb Vice President None
Robert Conti Treasurer None
Stacy Cooper-Shugrue Assistant Vice President Assistant Secretary
Robert W. D'Alelio Vice President None
Clara Del Villar Vice President None
Barbara DiGiorgio Assistant Vice President Assistant Treasurer
Roberta D'Orio Assistant Vice President None
Stanley Egener President and Director Chairman of the Board, Chief
Executive Officer, and Trustee
Brian Gaffney Vice President None
Joseph G. Galli Assistant Vice President None
Robert I. Gendelman Vice President None
Theodore P. Giuliano Vice President and Director None
Michael J. Hanratty Assistant Vice President None
Leslie Holliday-Soto Assistant Vice President None
C-10
<PAGE>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- ---- ---------------- ---------------------
Michael M. Kassen Vice President and Director None
Robert L. Ladd Assistant Vice President None
Irwin Lainoff Director None
Josephine Mahaney Vice President None
Carmen G. Martinez Assistant Vice President None
Ellen Metzger Vice President and Secretary None
Paul Metzger Vice President None
Loraine Olavarria Assistant Secretary None
Janet W. Prindle Vice President None
Joseph S. Quirk Assistant Vice President None
Kevin L. Risen Vice President None
Richard Russell Vice President Treasurer and Principal
Accounting Officer
Ingrid Saukaitis Assistant Vice President None
Jennifer K. Silver Vice President None
Kent C. Simons Vice President None
Frederick B. Soule Vice President None
Daniel J. Sullivan Senior Vice President Vice President
Peter E. Sundman Senior Vice President None
Andrea Trachtenberg Vice President of Marketing None
Judith M. Vale Vice President None
Josephine Velez Assistant Vice President None
Susan Walsh Vice President None
Michael J. Weiner Senior Vice President Vice President and Principal
Financial Officer
Celeste Wischerth Assistant Vice President Assistant Treasurer
Thomas G. Wolfe Vice President None
Lawrence Zicklin Director Trustee and President
</TABLE>
(c) No commissions or other compensation were received directly or
indirectly from the Registrant by any principal underwriter who was not an
affiliated person of the Registrant.
C-11
<PAGE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
- ------------------------------------------
All accounts, books and other documents required to be
maintained by Section 31(a) of the 1940 Act, as amended, and the rules
promulgated thereunder with respect to the Registrant are maintained at the
offices of State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, except for the Registrant's Trust Instrument and By-Laws,
minutes of meetings of the Registrant's Trustees and shareholders and the
Registrant's policies and contracts, which are maintained at the offices of the
Registrant, 605 Third Avenue, New York, New York 10158.
All accounts, books and other documents required to be
maintained by Section 31(a) of the 1940 Act, as amended, and the rules
promulgated thereunder with respect to Equity Managers Trust are maintained at
the offices of State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, except for the Equity Managers Trust's Declaration of Trust
and By-laws, minutes of meetings of Equity Managers Trust's Trustees and
interest holders and Equity Managers Trust's policies and contracts, which are
maintained at the offices of the Equity Managers Trust, 605 Third Avenue, New
York, New York 10158.
ITEM 31. MANAGEMENT SERVICES
- ----------------------------
Other than as set forth in Parts A and B of this
Post-Effective Amendment, the Registrant is not a party to any
management-related service contract.
ITEM 32. UNDERTAKINGS
- -------- ------------
None.
C-12
<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. 10 to be signed on its behalf by the undersigned,
thereto duly authorized, in the City and State of New York on the 4th day of
August, 1998.
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. 10 has been signed below by the following persons
in the capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/ Faith Colish Trustee August 4, 1998
- --------------------------
Faith Colish
/s/ Stanley Egener Chairman of the Board August 4, 1998
- -------------------------- and Trustee (Chief
Stanley Egener Executive Officer)
/s/ Howard A. Mileaf Trustee August 4, 1998
- --------------------------
Howard A. Mileaf
/s/ Edward O'Brien Trustee August 4, 1998
- --------------------------
Edward I. O'Brien
/s/ John T. Patterson, Jr. Trustee August 4, 1998
- --------------------------
John T. Patterson, Jr.
/s/ John P. Rosenthal Trustee August 4, 1998
- --------------------------
John P. Rosenthal
(signatures continued on next page)
<PAGE>
Signature Title Date
- --------- ----- ----
/s/ Cornelius T. Ryan Trustee August 4, 1998
- --------------------------
Cornelius T. Ryan
/s/ Gustave H. Shubert Trustee August 4, 1998
- --------------------------
Gustave H. Shubert
/s/ Lawrence Zicklin President and Trustee August 4, 1998
- --------------------------
Lawrence Zicklin
/s/ Michael J. Weiner Vice President (Principal August 4, 1998
- -------------------------- Financial Officer)
Michael J. Weiner
/s/ Richard Russell Treasurer (Principal August 4, 1998
- -------------------------- 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 the Post-Effective Amendment No. 10 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 4th day of August, 1998.
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. 10 has been signed below by the following persons
in the capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/ Faith Colish Trustee August 4, 1998
- --------------------------
Faith Colish
/s/ Stanley Egener Chairman of the Board August 4, 1998
- -------------------------- and Trustee (Chief
Stanley Egener Executive Officer)
/s/ Howard A. Mileaf Trustee August 4, 1998
- --------------------------
Howard A. Mileaf
/s/ Edward O'Brien Trustee August 4, 1998
- --------------------------
Edward I. O'Brien
/s/ John T. Patterson, Jr. Trustee August 4, 1998
- --------------------------
John T. Patterson, Jr.
(signatures continued on next page)
<PAGE>
Signature Title Date
- --------- ----- ----
/s/ John P. Rosenthal Trustee August 4, 1998
- --------------------------
John P. Rosenthal
/s/ Cornelius T. Ryan Trustee August 4, 1998
- --------------------------
Cornelius T. Ryan
/s/ Gustave H. Shubert Trustee August 4, 1998
- --------------------------
Gustave H. Shubert
/s/ Lawrence Zicklin President and Trustee August 4, 1998
- --------------------------
Lawrence Zicklin
/s/ Michael J. Weiner Vice President (Principal August 4, 1998
- -------------------------- Financial Officer)
Michael J. Weiner
/s/ Richard Russell Treasurer (Principal August 4, 1998
- -------------------------- Accounting Officer)
Richard Russell
<PAGE>
NEUBERGER & BERMAN EQUITY ASSETS
POST-EFFECTIVE AMENDMENT NO. 10 ON FORM N-1A
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------ ----------- ----
<S> <C> <C> <C>
(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 Assets. N.A.
Incorporated by Reference to Post-Effective Amendment No. 8 to
Registrant's Registration Statement, File Nos. 33-82568 and
811-8106, EDGAR Accession No. 0000898432-97-000221.
(2) By-Laws of Neuberger & Berman Equity Assets. Incorporated by Reference N.A.
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 N.A.
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 N.A.
VIII. Incorporated by Reference to Post-Effective Amendment No.
1 to Registrant's Registration Statement, File Nos. 33-82568 and
811-8106, EDGAR Accession No. 0000898432-95-000393.
<PAGE>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------ ----------- ----
(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.
(ii) Schedule A - Series of Neuberger & Berman Equity N.A.
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 Neuberger & Berman Equity
Funds, File Nos. 2-11357 and 811-582, EDGAR Accession
No. 0000898432-95-000314.
(iii) Substitution Agreement Among Neuberger & Berman N.A.
Management Incorporated, Equity Managers Trust,
Neuberger & Berman, L.P., and Neuberger & Berman, LLC.
Incorporated by Reference to Amendment No. 7 to
Registration Statement of Equity Managers Trust, File
No. 811-7910, Edgar Accession No. 0000898432-96-000557.
<PAGE>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------ ----------- ----
<S> <C> <C> <C> <C>
(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. 9 to Registrant's
Registration Statement, File Nos. 33-82568 and
811-08106, Edgar Accession No. 0000898432-97-000518.
(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. 9 to Registrant's Registration Statement, File
Nos. 33-82568 and 811-08106, Edgar Accession No.
0000898432-97-000518.
(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. 9 to
Registrant's Registration Statement, File Nos. 33-82568
and 811-08106, Edgar Accession No. 0000898432-97-000518.
(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. 9 to Registrant's Registration
Statement, File Nos. 33-82568 and 811-08106, Edgar
Accession No. 0000898432-97-000518.
(7) Bonus, Profit Sharing or Pension Plans. None. N.A.
(8) (a) Custodian Contract Between Neuberger & Berman Equity Assets and N.A.
State Street Bank and Trust Company. Incorporated by Reference
to Post-Effective Amendment No. 3 to Registrant's Registration
Statement, File Nos. 33-82568 and 811-8106, Edgar Accession
No. 0000898432-96-000048.
(b) Schedule of Compensation under the Custodian Contract. N.A.
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>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------ ----------- ----
(c) Agreement Between Neuberger & Berman Equity Assets and State N.A.
Street Bank and Trust Company Adding Neuberger & Berman Focus
Assets, Neuberger & Berman Guardian Assets, Neuberger & Berman
Manhattan Assets and Neuberger & Berman Partners Assets as
Portfolios Governed by the Custodian Contract. Incorporated by
Reference to Post-Effective Amendment No. 8 to Registrant's
Registration Statement, File Nos. 33-82568 and 811-8106, EDGAR
Accession No. 0000898432-97-000221.
(d) Agreement Between Neuberger & Berman Equity Assets and State N.A.
Street Bank and Trust Company Adding Neuberger & Berman Genesis
Assets as a Portfolio Governed by the Custodian Contract.
Incorporated by Reference to Post-Effective Amendment No. 9 to
Registrant's Registration Statement, File Nos. 33-82568 and
811-08106, Edgar Accession No. 0000898432-97-000518.
(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) First Amendment to the Transfer Agency N.A.
Agreement Between Neuberger & Berman Equity Assets and
State Street Bank and Trust Company. Incorporated by
Reference to Post-Effective Amendment No. 9 to
Registrant's Registration Statement, File Nos. 33-82568
and 811-08106, Edgar Accession No. 0000898432-97-000518.
(iii) Schedule of Compensation under the Transfer Agency N.A.
Agreement. Incorporated by Reference to Post-Effective
Amendment No. 4 to Registrant's Registration Statement,
File Nos. 33-82568 and 811-8106, Edgar Accession
No. 0000898432-96-000558.
(iv) Agreement Between Neuberger & Berman Equity Assets and N.A.
State Street Bank and Trust Company Adding Neuberger &
Berman Focus Assets, Neuberger & Berman Guardian
Assets, Neuberger & Berman Manhattan Assets and
Neuberger & Berman Partners Assets as Portfolios
Governed by the Transfer Agency Agreement.
Incorporated by Reference to Post-Effective Amendment
No. 8 to Registrant's Registration Statement, File
Nos. 33-82568 and 811-8106, EDGAR Accession No.
0000898432-97-000221.
<PAGE>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------ ----------- ----
(v) Agreement Between Neuberger & Berman Equity Assets and N.A.
State Street Bank and Trust Company Adding Neuberger &
Berman Genesis Assets as a Portfolio Governed by the
Transfer Agency Agreement. Incorporated by Reference
to Post-Effective Amendment No. 9 to Registrant's
Registration Statement, File Nos. 33-82568 and
811-08106, Edgar Accession No. 0000898432-97-000518.
(b) (i) Administration Agreement Between Neuberger & Berman N.A.
Equity Assets and Neuberger & Berman Management
Incorporated. Incorporated by Reference to
Post-Effective Amendment No. 9 to Registrant's
Registration Statement, File Nos. 33-82568 and
811-08106, Edgar Accession No. 0000898432-97-000518.
(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. 9 to Registrant's Registration Statement, File
Nos. 33-82568 and 811-08106, Edgar Accession No.
0000898432-97-000518.
(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 N.A.
Matters. To Be Filed by Amendment.
(11) (a) Consent of Independent Auditors. None. N.A.
(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 Reference to N.A.
Post-Effective Amendment No. 9 to Registrant's Registration
Statement, File Nos. 33-82568 and 811-08106, Edgar Accession No.
0000898432-97-000518.
<PAGE>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------ ----------- ----
(b) Schedule A - Series of Neuberger & Berman Equity Assets N.A.
Currently Subject to Plan Pursuant to Rule 12b-1. Incorporated
by Reference to Post-Effective Amendment No. 9 to Registrant's
Registration Statement, File Nos. 33-82568 and 811-08106, Edgar
Accession No. 0000898432-97-000518.
(16) Schedule of Computation of Performance Quotations. None. N.A.
(17) Financial Data Schedule. None. N.A.
(18) Plan Pursuant to Rule 18f-3. None. N.A.
</TABLE>
