As filed with the Securities and Exchange Commission on September 24, 1999
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. 14 [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 16 [ X ]
(Check appropriate box or boxes)
NEUBERGER BERMAN EQUITY ASSETS
(Exact Name of the Registrant as Specified in Charter)
605 Third Avenue, 2nd Floor
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 ________________ pursuant to paragraph (a)(2
Neuberger Berman Equity Assets is a "master/feeder fund." This
Post-Effective Amendment No. 14 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. 14 ON FORM N-1A
This Post-Effective Amendment consists of the following papers and
documents:
Cover Sheet
Contents of Post-Effective Amendment No. 14 on Form N-1A
NEUBERGER BERMAN SOCIALLY RESPONSIVE ASSETS
Part A - Prospectus
Part B - Statement of Additional Information
Part C - Other Information
Signature Pages
<PAGE>
<PAGE>
[LOGO] NEUBERGER BERMAN
NEUBERGER BERMAN
SOCIALLY RESPONSIVE ASSETS-SM-
- --------------------------------------------------------------------------------
PROSPECTUS DECEMBER 1, 1999
The Securities and Exchange Commission does not say
whether any mutual fund is a good or bad investment or
whether the information in any prospectus is accurate or
complete. It is unlawful for anyone to indicate
otherwise.
<PAGE>
CONTENTS
- -----------------
NEUBERGER BERMAN EQUITY ASSETS
PAGE 2 ...... Socially Responsive Assets
YOUR INVESTMENT
7 ...... Maintaining Your Account
9 ...... Share Prices
10 ...... Distributions and Taxes
12 ...... Fund Structure
The "Neuberger Berman" name and logo are service
marks of Neuberger Berman, LLC. "Neuberger Berman
Management Inc." and the fund name in this
prospectus are either service marks or registered
trademarks of Neuberger Berman Management Inc.
-C-1999 Neuberger Berman Management Inc.
<PAGE>
- ------------------------------------------------------------
[SIDEBAR]
FUND MANAGEMENT
The fund is managed by Neuberger Berman Management Inc., in conjunction with
Neuberger Berman, LLC, as sub-adviser. Together, the firms manage more than $
billion in total assets (as of September 30, 1999) and continue an asset
management history that began in 1939.
RISK INFORMATION
This prospectus discusses principal risks of investing in fund shares. These and
other risks are discussed in detail in the Statement of Additional Information
(see back cover).
[MAIN TEXT]
THIS FUND:
- - IS DESIGNED FOR INVESTORS WITH LONG-TERM GOALS IN MIND
- - OFFERS YOU THE OPPORTUNITY TO PARTICIPATE IN FINANCIAL MARKETS THROUGH A
PROFESSIONALLY MANAGED STOCK PORTFOLIO
- - USES A MASTER/FEEDER STRUCTURE IN ITS PORTFOLIO; SEE PAGE 12 FOR INFORMATION
ON HOW IT WORKS
- - CARRIES CERTAIN RISKS, INCLUDING THE RISK THAT YOU COULD LOSE MONEY IF FUND
SHARES ARE WORTH LESS THAN WHAT YOU PAID
- - IS A MUTUAL FUND, NOT A BANK DEPOSIT, AND IS NOT GUARANTEED OR INSURED
1
<PAGE>
NEUBERGER BERMAN
SOCIALLY RESPONSIVE ASSETS
- --------------------------------------------------------------------------------
[PHOTO]
ABOVE: PORTFOLIO MANAGER JANET PRINDLE
"WE BELIEVE THAT SOUND PRACTICES IN AREAS LIKE EMPLOYMENT AND THE ENVIRONMENT
CAN HAVE A POSITIVE IMPACT ON A COMPANY'S BOTTOM LINE. WE LOOK FOR COMPANIES
THAT MEET VALUE INVESTING CRITERIA AND ALSO SHOW A COMMITMENT TO UPHOLD OR
IMPROVE THEIR STANDARDS OF CORPORATE CITIZENSHIP."
2
<PAGE>
GOAL & STRATEGY
- ------------------------------------------------------------
[SIDEBAR]
SOCIAL INVESTING
Funds that follow social policies seek something in addition to economic
success. They are designed to allow investors to put their money to work and
also support companies that follow principles of good corporate citizenship.
VALUE INVESTING
At any given time, there are companies whose stock prices are below the market
average, based on earnings, book value, or other financial measures. The value
investor examines these companies, searching for those that may rise in price
when other investors realize their worth.
[MAIN TEXT]
[ICON]
THE FUND SEEKS LONG-TERM GROWTH OF CAPITAL BY INVESTING PRIMARILY IN
SECURITIES OF COMPANIES THAT MEET THE FUND'S FINANCIAL CRITERIA AND
SOCIAL POLICY.
To pursue this goal, the fund invests mainly in common stocks of mid- to
large-capitalization companies. The fund seeks to reduce risk by investing in a
large number of companies across many different industries.
The managers initially screen companies using value investing criteria. They
look for undervalued companies with solid balance sheets, strong management,
consistent cash flows, and other value-related factors. Among companies that
meet these criteria, the managers look for those that show leadership in three
areas:
- - environmental concerns
- - diversity in the work force
- - progressive employment and workplace practices, and community relations
The managers typically also look at a company's record in public health and the
nature of its products. The managers judge firms on their corporate citizenship
overall, considering their accomplishments as well as their goals. While these
judgments are inevitably subjective, the fund endeavors to avoid companies that
derive revenue from alcohol, tobacco, gambling, or weapons, or that are involved
in nuclear power. The fund also does not invest in any company that derives its
total revenue primarily from non-consumer sales to the military.
The fund has the ability to change its goal without shareholder approval,
although it does not currently intend to do so.
Socially Responsive Assets 3
<PAGE>
MAIN RISKS
- ------------------------------------------------------------
[SIDEBAR]
OTHER RISKS
The fund may use certain practices and securities involving additional risks.
Borrowing, securities lending, and derivatives could create leverage, meaning
that certain gains or losses could be amplified, increasing share price
movements. In using certain derivatives to gain stock market exposure for excess
cash holdings, the fund increases its risk of loss. These investments are not
subject to the fund's social policy.
Although they may add diversification, foreign securities can be riskier,
because foreign markets tend to be more volatile and currency exchange rates
fluctuate.
When the fund anticipates unusual market or other conditions, it may temporarily
depart from its goal and invest substantially in high-quality short-term
investments. This could help the fund avoid losses but may mean lost
opportunities.
[MAIN TEXT]
[ICON] Most of the fund's performance depends
on what happens in the stock market. The market's behavior is
unpredictable, particularly in the short term. Because of this, the
value of your investment will rise and fall, and you could lose money.
The fund's social policy could cause it to underperform similar funds that do
not have a social policy. Among the reasons for this are:
- - undervalued stocks that don't meet the social criteria could outperform those
that do
- - economic or political changes could make certain companies less attractive for
investment
- - the social policy could cause the fund to sell or avoid stocks that
subsequently perform well
To the extent that the fund emphasizes mid- or large-cap stocks, it takes on the
associated risks. Mid-cap stocks tend to be more volatile than large-cap stocks;
over time, however, large-cap stocks may perform better or worse than mid-cap
stocks. Mid-cap stocks are usually more sensitive to economic and market
factors. At any given time, one or both groups of stocks may be out of favor
with investors.
With a value approach, there is also the risk that stocks may remain undervalued
during a given period. This may happen because value stocks as a category lose
favor with investors compared to growth stocks or because the managers failed to
anticipate which stocks or industries would benefit from changing market or
economic conditions.
4 Neuberger Berman
<PAGE>
PERFORMANCE
- ------------------------------------------------------------
[SIDEBAR]
PERFORMANCE MEASURES
The information on this page provides different measures of the fund's total
return. Total return includes the effect of distributions as well as changes in
share price. The figures assume that all distributions were reinvested.
As a frame of reference, the table includes a broad-based market index. Fund
performance figures include all expenses; the index does not include costs of
investment.
[MAIN TEXT]
[ICON] The bar chart below shows how
performance has varied from year to year. The table below the chart shows what
the returns would equal if you averaged out actual performance over
various lengths of time. This information is based on past performance;
it's not a prediction of future results.
YEAR-BY-YEAR % RETURNS as of 12/31 each year*
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
1989
90
91
92
93
94
95 38.94%
96 18.50%
97 24.41%
98 15.01%
BEST QUARTER:
WORST QUARTER:
Year-to-date performance as of
9/30/99:
</TABLE>
AVERAGE ANNUAL TOTAL % RETURNS as of 12/31/98*
<TABLE>
<CAPTION>
Since
Inception
1 Year 3/16/94
<S> <C> <C>
- --------------------------------------------------------------
SOCIALLY RESPONSIVE FUND 15.01 18.67
S&P 500 Index 28.52 25.00
</TABLE>
The S&P 500 is an unmanaged index of U.S. stocks.
* THE FUND BEGAN OPERATING IN JUNE 1999. PERFORMANCE RESULTS FROM MARCH 1994 TO
JUNE 1999 ARE ACTUALLY THOSE OF ANOTHER NEUBERGER BERMAN FUND THAT BEGAN
OPERATIONS IN 1994, AND INVESTS IN THE SAME PORTFOLIO OF SECURITIES. BECAUSE
THE OLDER FUND HAD LOWER EXPENSES, ITS PERFORMANCE WAS BETTER THAN SOCIALLY
RESPONSIVE ASSETS WOULD HAVE HAD. THAT OLDER FUND IS NOT OFFERED IN THIS
PROSPECTUS.
Socially Responsive Assets 5
<PAGE>
INVESTOR EXPENSES
- ------------------------------------------------------------
[SIDEBAR]
MANAGEMENT
JANET PRINDLE, a Vice President of Neuberger Berman Management and a principal
of Neuberger Berman, LLC, joined the latter firm in 1977. She has been managing
assets using social criteria since 1990.
ROBERT LADD and INGRID SAUKAITIS are Assistant Vice Presidents of Neuberger
Berman Management and Associate Managers of the fund. Ladd has been a portfolio
manager at the firm since 1992; Saukaitis was project director for a social
research group from 1995 to 1997.
NEUBERGER BERMAN MANAGEMENT is the fund's investment adviser, and in turn
engages Neuberger Berman, LLC to provide management and related services. For
these services, the fund pays NB Management a fee at the annual rate of 0.55% of
the first $250 million of the average daily net assets, 0.525% of the next $250
million, 0.50% of the next $250 million, 0.475% of the next $250 million, 0.45%
of the next $500 million, and 0.425% of average daily net assets in excess of
$1.5 billion.
[MAIN TEXT]
[ICON] The fund does not charge you any fees for
buying, selling, or exchanging shares, or for maintaining your
account. Your only fund cost is your share of annual operating
expenses. The expense example can help you compare costs among funds.
FEE TABLE
SHAREHOLDER FEES None
- -------------------------------------------------------
ANNUAL OPERATING EXPENSES (% of average net assets)*
These are deducted from fund assets, so you pay them indirectly.
<TABLE>
<S> <C> <C>
Management fees 0.95
PLUS: Distribution (12b-1) fees 0.25
Other expenses** 0.52
....
EQUALS: Total annual operating expenses 1.72
MINUS: Expense reimbursement 0.22
....
EQUALS: Net expenses 1.50
</TABLE>
* NEUBERGER BERMAN MANAGEMENT HAS AGREED TO REIMBURSE CERTAIN EXPENSES OF THE
FUND THROUGH 12/31/02, SO THAT THE TOTAL ANNUAL OPERATING EXPENSES OF THE
FUND ARE LIMITED TO 1.50% OF AVERAGE NET ASSETS. THIS ARRANGEMENT DOES NOT
COVER INTEREST, TAXES, BROKERAGE COMMISSIONS, AND EXTRAORDINARY EXPENSES.
THE FUND HAS AGREED TO REPAY NEUBERGER BERMAN MANAGEMENT FOR EXPENSES
REIMBURSED TO THE FUND PROVIDED THAT REPAYMENT DOES NOT CAUSE THE FUND'S
ANNUAL OPERATING EXPENSES IN ANY YEAR TO EXCEED 1.50% OF ITS AVERAGE NET
ASSETS AND THE REPAYMENT IS MADE WITHIN THREE YEARS AFTER THE YEAR IN WHICH
NEUBERGER BERMAN MANAGEMENT INCURRED THE EXPENSE. THE TABLE INCLUDES COSTS
PAID BY THE FUND AND ITS SHARE OF MASTER PORTFOLIO COSTS. FOR MORE
INFORMATION ON MASTER/FEEDER FUNDS, SEE "FUND STRUCTURE" ON PAGE 12.
** OTHER EXPENSES ARE BASED ON ESTIMATED AMOUNTS FOR THE CURRENT FISCAL YEAR.
EXPENSE EXAMPLE
The example assumes that you invested $10,000 for the periods shown, that you
earned a hypothetical 5% total return each year, and that the fund's expenses
were those in the table above. Your costs would be the same whether you sold
your shares or continued to hold them at the end of each period. Actual
performance and expenses may be higher or lower.
<TABLE>
<CAPTION>
1 Year 3 Years
<S> <C> <C>
- --------------------------------------
Expenses $153 $474
</TABLE>
6 Neuberger Berman
<PAGE>
YOUR INVESTMENT
MAINTAINING YOUR
ACCOUNT
- ------------------------------------------------------------
[SIDEBAR]
YOUR INVESTMENT PROVIDER
The fund shares described in this prospectus are available only through
investment providers such as banks, brokerage firms, workplace retirement
programs, and financial advisers.
The fees and policies outlined in this prospectus are set by the fund and by
Neuberger Berman Management. However, most of the information you'll need for
managing your investment will come from your investment provider. This includes
information on how to buy and sell shares, investor services, and additional
policies.
In exchange for the services it offers, your investment provider may charge
fees, which are generally in addition to those described in this prospectus.
[MAIN TEXT]
To buy or sell shares of the fund, contact your investment provider. All
investments must be made in U.S. dollars, and investment checks must be drawn on
a U.S. bank. The fund does not issue certificates for shares.
Most investment providers allow you to take advantage of the Neuberger Berman
fund exchange program, which is designed for moving money from one Neuberger
Berman fund to another through an exchange of shares. However, this privilege
can be withdrawn from any investor that we believe is trying to "time the
market" or is otherwise making exchanges that we judge to be excessive. Frequent
exchanges can interfere with fund management and affect costs and performance
for other shareholders.
Under certain circumstances, the fund reserves the right to:
- - suspend the offering of shares
- - reject any exchange or investment order
- - change, suspend, or revoke the exchange privilege
- - satisfy an order to sell fund shares with securities rather than cash, for
certain very large orders
- - suspend or postpone the redemption of shares on days when trading on the New
York Stock Exchange is restricted, or as otherwise permitted by the SEC
Your Investment 7
<PAGE>
MAINTAINING YOUR
ACCOUNT CONTINUED
- -------------------------------------------------------------------
[SIDEBAR]
BUYING SHARES BEFORE
A DISTRIBUTION
The money the fund earns, either as income or as capital gains, is reflected in
its share price until the fund makes a distribution. At that time, the amount of
the distribution is deducted from the share price. The amount of the
distribution is either reinvested in additional fund shares or paid to
shareholders in cash.
Because of this, if you buy shares just before the fund makes a distribution,
you'll end up getting some of your investment back as a taxable distribution.
You can avoid this situation by waiting to invest until after the distribution
has been made.
Generally, if you're investing in a tax-advantaged account, there are no tax
consequences to you.
[MAIN TEXT]
The proceeds from the shares you sold are generally sent out the next business
day after your order is executed, and nearly always within three business days.
There are two cases in which proceeds may be delayed beyond this time:
- - in unusual circumstances where the law allows additional time if needed
- - if a check you wrote to buy shares hasn't cleared by the time you sell those
shares
If you think you may need to sell shares soon after buying them, you can avoid
the check clearing time (which may be up to 15 days) by investing by wire or
certified check.
DISTRIBUTION FEE -- The fund has adopted a plan under which it pays 0.25% of its
average net assets every year to support share distribution and shareholder
servicing. These fees increase the cost of investing in the fund. Over the long
term, they could result in higher overall costs than other types of sales
charges.
8 Neuberger Berman
<PAGE>
SHARE PRICES
- ------------------------------------------------------------
[SIDEBAR]
SHARE PRICE CALCULATIONS
The fund's share price is the total value of its assets minus its liabilities,
divided by the total number of shares. Because the value of the fund's
securities changes every business day, the share price usually changes as well.
When valuing portfolio securities, the fund uses market prices. However, in rare
cases, events that occur after certain markets have closed may render these
prices unreliable.
When the fund believes a market price does not reflect a security's true value,
the fund may substitute for the market price a fair-value estimate derived
through methods approved by its trustees. The fund may also use these methods to
value certain types of illiquid securities.
[MAIN TEXT]
Because the fund does not have an initial sales charge, the price you pay for
each share of the fund is the fund's net asset value per share. Similarly,
because the fund charges no fee for selling shares, it pays you the full share
price when you sell shares. Remember that your investment provider may charge
fees for its services.
The fund is open for business every day the New York Stock Exchange is open. In
general, every buy or sell order you place will go through at the next share
price to be calculated after your order has been accepted; check with your
investment provider to find out by what time your order must be received in
order to be processed the same day. The fund calculates its share price as of
the end of regular trading on the Exchange on business days, usually 4:00 p.m.
eastern time. Depending on when your investment provider accepts orders, it's
possible that the fund's share price could change on days when you are unable to
buy or sell shares.
Also, because foreign markets may be open on days when U.S. markets are closed,
the value of foreign securities owned by the fund could change on days when you
can't buy or sell fund shares. Remember though, any purchase or sale takes place
at the next share price calculated after your order is received.
Your Investment 9
<PAGE>
DISTRIBUTIONS
AND TAXES
- ------------------------------------------------------------
[SIDEBAR]
TAXES AND YOU
The taxes you actually owe on distributions and transactions can vary with many
factors, such as your tax bracket, how long you held your shares, and whether
you owe alternative minimum tax.
How can you figure out your tax liability on fund distributions and
transactions? One helpful tool is the tax statement that your investment
provider sends you every January. It details the distributions you received
during the past year and shows their tax status. A separate statement covers
your transactions.
Most importantly, consult your tax professional. Everyone's tax situation is
different, and your professional should be able to help you answer any questions
you may have.
[MAIN TEXT]
DISTRIBUTIONS -- The fund pays out to shareholders any net income and net
capital gains. Ordinarily, the fund makes any distributions once a year (in
December).
Consult your investment provider whether your income and capital gains
distributions from the fund will be reinvested in the fund or paid to you in
cash.
HOW DISTRIBUTIONS ARE TAXED -- Except for tax-advantaged retirement accounts,
all fund distributions you receive are generally taxable to you, regardless of
whether you take them in cash or reinvest them. Fund distributions to Roth IRAs,
other individual retirement accounts and qualified retirement plans generally
are tax-free. Eventual withdrawals from a Roth IRA of those amounts also may be
tax-free, while withdrawals from other retirement accounts and plans generally
are subject to tax.
Distributions are taxable in the year you receive them. In some cases,
distributions you receive in January are taxable as if they had been paid the
previous year. Your tax statement (see sidebar) will help clarify this for you.
Income distributions and short-term capital gain distributions are generally
taxed as regular income. Distributions of other capital gains are generally
taxed as long-term capital gains. The tax treatment of capital gain
distributions depends on how long the fund held the securities it sold, not when
you bought your shares of the fund or whether you reinvested your distributions.
10 Neuberger Berman
<PAGE>
- ------------------------------------------------------------
[SIDEBAR]
EURO AND YEAR 2000
ISSUES
Like other mutual funds, the fund could be affected by problems relating to the
conversion of European currencies into the Euro, which extends from 1/1/99 to
7/1/02, and the ability of computer systems to recognize the year 2000.
At Neuberger Berman, we are taking steps to ensure that our own computer systems
are compliant with Euro and Year 2000 issues and to determine that the systems
used by our major service providers are also compliant. We are also making
efforts to determine whether companies in the fund's portfolio will be affected
by either issue.
At the same time, it is impossible to know whether these problems, which could
disrupt fund operations and investments if uncorrected, have been adequately
addressed until the dates in question arrive.
[MAIN TEXT]
HOW TRANSACTIONS ARE TAXED -- When you sell fund shares, you generally realize a
gain or loss. These transactions, which include exchanges between funds, usually
have tax implications. The exception, once again, is tax-advantaged retirement
accounts.
UNCASHED CHECKS -- When you receive a check, you may want to deposit or cash it
right away, as you will not receive interest on uncashed checks.
Your Investment 11
<PAGE>
FUND STRUCTURE
- ------------------------------------------------------------
The fund uses a "master/feeder" structure.
Rather than investing directly in securities, the fund is a "feeder fund,"
meaning that it invests in a corresponding "master portfolio." The master
portfolio in turn invests in securities, using the strategies described in this
prospectus. One potential benefit of this structure is lower costs, since the
expenses of the master portfolio can be shared with any other feeder funds. In
this prospectus we have used the word "fund" to mean the feeder fund and its
master portfolio.
For reasons relating to costs or a change in investment goal, among others, the
feeder fund could switch to another master portfolio or decide to manage its
assets itself. The fund is not currently contemplating such a move.
12 Neuberger Berman
<PAGE>
- ------------------------------------------------------------
[SIDEBAR]
OBTAINING INFORMATION
You can obtain a shareholder report, SAI, and other information from your
investment provider, or from:
NEUBERGER BERMAN
MANAGEMENT INC.
605 Third Avenue 2nd floor
New York, NY 10158-0180
800-877-9700
212-476-8800
Broker/Dealer and
Institutional Services:
800-366-6264
Web site:
www.nbfunds.com
Email:
[email protected]
SECURITIES AND EXCHANGE COMMISSION
Washington, DC
20549-6009
800-SEC-0330 (Public
Reference Section)
Web site:
www.sec.gov
You can request copies of documents from the SEC for the cost of a duplicating
fee, or view documents at the SEC's Public Reference Room in Washington.
[MAIN TEXT]
NEUBERGER BERMAN SOCIALLY RESPONSIVE ASSETS
If you'd like further details on the fund, you can request a free copy of the
following documents:
SHAREHOLDER REPORTS -- Published twice a year, the shareholder reports offer
information about the fund's recent performance, including:
- - a discussion by the portfolio managers about strategies and market conditions
- - fund performance data and financial statements
- - complete portfolio holdings
STATEMENT OF ADDITIONAL INFORMATION -- The SAI contains more comprehensive
information on the fund, including:
- - various types of securities and practices, and their risks
- - investment limitations and additional policies
- - information about the fund's management and business structure
The SAI is hereby incorporated by reference into this prospectus, making it
legally part of the prospectus.
Investment manager:
NEUBERGER BERMAN MANAGEMENT INC.
Sub-adviser:
NEUBERGER BERMAN, LLC
[LOGO] NEUBERGER BERMAN
NEUBERGER BERMAN MANAGEMENT INC.
605 Third Avenue
New York, NY 10158-0180
[RECYCLE LOGO] NMLRX0460999 SEC file number: 811-8106
<PAGE>
- --------------------------------------------------------------------------------
NEUBERGER BERMAN SOCIALLY RESPONSIVE ASSETS
STATEMENT OF ADDITIONAL INFORMATION
DATED DECEMBER 1, 1999
A NO-LOAD MUTUAL FUND
605 THIRD AVENUE, 2ND FLOOR, NEW YORK, NY 10158-0180
- --------------------------------------------------------------------------------
NEUBERGER BERMAN SOCIALLY RESPONSIVE ASSETS ("FUND"), A SERIES OF
NEUBERGER BERMAN EQUITY ASSETS ("TRUST"), IS A NO-LOAD MUTUAL FUND THAT OFFERS
SHARES PURSUANT TO A PROSPECTUS DATED DECEMBER 1, 1999. THE FUND INVESTS ALL OF
ITS NET INVESTABLE ASSETS IN NEUBERGER BERMAN SOCIALLY RESPONSIVE 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 INC. ("NB
MANAGEMENT") AND/OR AN AGREEMENT WITH NB MANAGEMENT TO MAKE FUND SHARES
AVAILABLE TO ITS CLIENTS (EACH AN "INSTITUTION").
The Fund's Prospectus provides basic information that an investor should
know before investing. You can get a free copy of the Prospectus from NB
Management, Institutional Services, 605 Third Avenue, 2nd Floor, New York, NY
10158-0180, or by calling 800-366-6264.
This Statement of Additional Information ("SAI") is not a prospectus and
should be read in conjunction with the Prospectus.
No person has been authorized to give any information or to make any
representations not contained in the Prospectus or in this SAI in connection
with the offering made by the Prospectus, and, if given or made, such
information or representations must not be relied upon as having been authorized
by 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.
The "Neuberger Berman" name and logo are service marks of Neuberger Berman
LLC. "Neuberger Berman Management Inc." and the fund and portfolio names in this
SAI are either service marks or registered trademarks of Neuberger Berman
Management Inc. (C)1999 Neuberger Berman Management Inc.
<PAGE>
TABLE OF CONTENTS
PAGE
INVESTMENT INFORMATION.......................................................1
Investment Policies and Limitations....................................1
Investment Insight.....................................................4
Description of Social Policy...........................................6
PERFORMANCE INFORMATION.....................................................23
Other Performance Information.........................................25
CERTAIN RISK CONSIDERATIONS.................................................26
TRUSTEES AND OFFICERS.......................................................26
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES...........................32
Investment Manager and Administrator..................................32
Management and Administration Fees....................................33
Sub-Adviser...........................................................34
Investment Companies Managed..........................................35
Management and Control of NB Management...............................37
DISTRIBUTION ARRANGEMENTS...................................................37
Distributor...........................................................37
Rule 12b-1 Plan.......................................................38
ADDITIONAL PURCHASE INFORMATION.............................................39
Share Prices and Net Asset Value......................................39
ADDITIONAL EXCHANGE INFORMATION.............................................39
ADDITIONAL REDEMPTION INFORMATION...........................................40
Suspension of Redemptions.............................................40
Redemptions in Kind...................................................40
DIVIDENDS AND OTHER DISTRIBUTIONS...........................................40
ADDITIONAL TAX INFORMATION..................................................41
Taxation of the Fund..................................................41
Taxation of the Portfolio.............................................42
Taxation of the Fund's Shareholders...................................45
PORTFOLIO TRANSACTIONS......................................................45
Portfolio Turnover....................................................48
i
<PAGE>
REPORTS TO SHAREHOLDERS.....................................................48
ORGANIZATION, CAPITALIZATION AND OTHER MATTERS..............................48
The Fund..............................................................48
The Portfolio.........................................................49
CUSTODIAN AND TRANSFER AGENT................................................51
INDEPENDENT ACCOUNTANTS.....................................................51
LEGAL COUNSEL...............................................................51
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.........................51
REGISTRATION STATEMENT......................................................51
FINANCIAL STATEMENTS........................................................52
RATINGS OF CORPORATE BONDS AND COMMERCIAL PAPER.............................53
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INVESTMENT INFORMATION
The Fund is a separate series of the Trust, a Delaware business trust that
is registered with the Securities and Exchange Commission ("SEC") as a
diversified 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 NB 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
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 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 the
investment policies and limitations of the Portfolio, it applies equally to the
Fund.
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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 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.
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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").
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.
6. SOCIAL POLICY. The Portfolio may not purchase securities of issuers who
derive more than 5% of their total revenue from alcohol, tobacco, gambling or
weapons, or that are involved in nuclear power.
In addition, although the Portfolio does not have a policy limiting its
investment in warrants, the Portfolio does not currently intend to invest in
warrants unless acquired in units or attached to securities.
Any part of the Portfolio's assets may be retained temporarily in
investment grade fixed income securities of non-governmental issuers, U.S.
Government and Agency securities, repurchase agreements, money market
instruments, commercial paper, and cash and cash equivalents when NB Management
believes that significant adverse market, economic political, or other
circumstances require prompt action to avoid losses. In addition, the feeder
funds that invest in the Portfolio deal with large institutional investors, and
the Portfolio may hold such instruments pending investment or payout when the
Portfolio has received a large influx of cash due to sales of Fund shares, or
shares of another fund which invests in the Portfolio, or when it anticipates a
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substantial redemption. Generally, the foregoing temporary investments for the
Portfolio are selected with a concern for the social impact of each investment.
INVESTMENT INSIGHT
Securities for the Portfolio are selected through a two-phase process. The
first is financial. The portfolio manager analyzes a universe of companies
according to NB Management's value-oriented philosophy and looks for stocks
which are undervalued for any number of reasons. The manager focuses on
financial fundamentals, including balance sheet ratios and cash flow analysis,
and meets with company management in an effort to understand how those
unrecognized values might be realized in the market.
The second part of the process is social screening. NB Management's social
research is based on the same kind of philosophy that governs its financial
approach: NB Management believes that first-hand knowledge and experience are
its most important tools. Utilizing a database, the portfolio manager does
careful, in-depth tracking and analyzes a large number of companies on some
eighty issues in six broad social categories. The manager uses a wide variety of
sources to determine company practices and policies in these areas. Performance
is analyzed in light of knowledge of the issues and of the best practices in
each industry.
Under normal conditions, at least 65% of the Portfolio's total assets are
invested in accordance with its Social Policy, and at least 65% of its total
assets are invested in equity securities. The Portfolio expects that
substantially all of its equity securities will be selected in accordance with
the Social Policy. On occasion, the portfolio manager may consider deposits with
community banks and credit unions for investment.
The portfolio manager understands that, for many issues and in many
industries, absolute standards are elusive and often counterproductive. Thus, in
addition to quantitative measurements, the manager places value on such
indicators as management commitment, progress, direction, and industry
leadership.
AN INTERVIEW WITH THE PORTFOLIO MANAGER
Q: First things first. How do you begin your stock selection process?
A: Our first question is always: On financial grounds alone, is a company
a smart investment? For a company's stock to meet our financial test, it must
pass a number of hurdles.
We look for bargains, just like the portfolio managers of the other
portfolios managed by NB Management. More specifically, we search for companies
that we believe have terrific products, excellent customer service, and solid
balance sheets -- but because they may have missed quarterly earnings
expectations by a few pennies, because their sectors are currently out of favor,
because Wall Street overreacted to a temporary setback, or because the company's
merits aren't widely known, their stocks are selling at a discount.
While we look at the stock's fundamentals carefully, that's not all we
examine. We meet an awful lot of CEOs and CFOs. Top officers of over 400
companies visit Neuberger Berman each year, and we're also frequently on the
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road visiting dozens of corporations. From Neuberger Berman Socially Responsive
Portfolio's inception, we've met with representatives of every company we own.
When we're face to face with a CEO, we're searching for answers to two
crucial questions: "Does the company have a vision of where it wants to go?" and
"Can the management team make it happen?" We've analyzed companies for over
three decades, and we always look for companies that have both clear strategies
and management talent.
Q: When you evaluate a company's balance sheet, what matters the most to
you?
A: Definitely a company's "free cash flow." Compare it to your household's
discretionary income -- the money you have left over each month after you pay
off your monthly debt and other expenses. With ample free cash flow, a company
can do any number of things. It can buy back its stock. Make important
acquisitions. Expand its research and development spending. Or increase its
dividend payments.
When a company generates lots of excess cash flow, it has growth capital
at its disposal. It can invest for higher profits down the line and improve
shareholder value. Determining exactly how a company intends to spend its excess
cash is an entirely different matter -- and that's where the information learned
in our company meetings comes in. Still, you've got to have the extra cash in
the first place. Which is why we pay so much attention to it.
Q: So you take a hard look at a company's balance sheet and its
management. After a company passes your financial test, what do you do next?
A: After we're convinced of a company's merits on financial grounds alone,
we review its record as a corporate citizen. In particular, we look for evidence
of leadership in three key areas: concern for the environment, workplace
diversity, and enlightened employment practices.
It should be clear that our social screening always takes place after we
search far and wide for what we believe are the best investment opportunities
available. This is a crucial point, and an analogy can be used to explain it.
Let's assume you're looking to fill a vital position in your company. What you'd
pay attention to first is the candidate's competence: Can he or she do the job?
So after interviewing a number of candidates, you'd narrow your list to those
that are highly qualified. To choose from this smaller group, you might look at
the candidate's personality: Can he or she get along with everyone in your
group?
Obviously, you wouldn't hire an unqualified person simply because he or
she is likable. What you'd probably do is give the job to a highly qualified
person who is ALSO compatible with your group.
Now, let's turn to the companies that do make our financial cuts. How do
we decide whether they meet our social criteria? Once again, our regular
meetings with CEOs are key. We look for top management's support of programs
that put more women and minorities in the pipeline to be future officers and
board members; that minimize emissions, reduce waste, conserve energy, and
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protect natural resources; and that enable employees to balance work and family
life with benefits such as flextime and generous maternal AND paternal leave.
We realize that companies are not all good or all bad. Instead of looking
for ethical perfection, we analyze how a company responds to troublesome
problems. If a company is cited for breaking a pollution law, we evaluate its
reaction. We also ask: Is it the first time? Do its top executives have a plan
for making sure it doesn't happen again -- and how committed are they?
If we're satisfied with the answers, a company makes it into our
portfolio. When all is said and done, we invest in companies that have diverse
work forces, strong CEOs, tough environmental standards, AND terrific balance
sheets. In our judgment, financially strong companies that are also good
corporate citizens are more likely to enjoy a competitive advantage. These days,
more and more people won't buy a product unless they know it's environmentally
friendly. In a similar vein, companies that treat their workers well may be more
productive and profitable.
Q: Why have investors been attracted to the Fund?
A: Our shareholders are looking to invest for the future in more ways than
one. While they care deeply about their own financial futures, they're equally
passionate about the world they leave to later generations. They want to be able
to meet their college bills and leave a world where the air is a little cleaner
and where the doors to the executive suite are a little more open.
DESCRIPTION OF SOCIAL POLICY
BACKGROUND INFORMATION ON SOCIALLY RESPONSIVE INVESTING
In an era when many people are concerned about the relationship between
business and society, socially responsive investing ("SRI") is a mechanism for
assuring that investors' social values are reflected in their investment
decisions. As such, SRI is a direct descendent of the successful effort begun in
the early 1970's to encourage companies to divest their South African operations
and subscribe to the Sullivan Principles. Today, a growing number of individuals
and institutions are applying similar strategies to a broad range of problems.
Although there are many strategies available to the socially responsive
investor, including proxy activism, below-market loans to community projects,
and venture capital, the SRI strategies used by the Portfolio generally fall
into two categories:
AVOIDANCE INVESTING. Most socially responsive investors seek to avoid
holding securities of companies whose products or policies are seen as being at
odds with the social good. The most common exclusions historically have involved
tobacco companies and weapons manufacturers.
LEADERSHIP INVESTING. A growing number of investors actively look for
companies with progressive programs that are exemplary or companies which make
it their business to try to solve some of the problems of today's society.
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The marriage of social and financial objectives would not have surprised
Adam Smith, who was, first and foremost, a moral philosopher. THE WEALTH OF
NATIONS is firmly rooted in the Enlightenment conviction that the purpose of
capital is the social good and the related belief that idle capital is both
wasteful and unethical. But, what very likely would have surprised Smith is the
sheer complexity of the social issues we face today and the diversity of our
attitudes toward the social good. War and peace, race and gender, the
distribution of wealth, and the conservation of natural resources -- the social
agenda is long and compelling. It is also something about which reasonable
people differ. What should society's priorities be? What can and should be done
about them? And what is the role of business in addressing them? Since
corporations are on the front lines of so many key issues in today's world, a
growing number of investors feel that a corporation's role cannot be ignored.
This is true of some of the most important issues of the day such as equal
opportunity and the environment.
THE SOCIALLY RESPONSIVE DATABASE
Neuberger Berman, LLC ("Neuberger Berman"), the Portfolio's sub-adviser,
maintains a database of information about the social impact of the companies it
follows. NB Management uses the database to evaluate social issues after it
deems a stock acceptable from a financial standpoint for acquisition by the
Portfolio. The aim of the database is to be as comprehensive as possible, given
that much of the information concerning corporate responsibility comes from
subjective sources. Information for the database is gathered by Neuberger Berman
in many categories and then analyzed by NB Management in the following six
categories of corporate responsibility:
WORKPLACE DIVERSITY AND EMPLOYMENT. NB Management looks for companies that
show leadership in areas such as employee training and promotion policies and
benefits, such as flextime, generous profit sharing, and parental leave. NB
Management looks for active programs to promote women and minorities and takes
into account their representation among the officers of an issuer and members of
its board of directors. As a basis for exclusion, NB Management looks for Equal
Employment Opportunity Act infractions and Occupational Safety and Health Act
violations; examines each case in terms of severity, frequency, and time elapsed
since the incident; and considers actions taken by the company since the
violation. NB Management also monitors companies' progress and attitudes toward
these issues.
ENVIRONMENT. A company's impact on the environment depends largely on the
industry. Therefore, NB Management examines a company's environmental record
vis-a-vis those of its peers in the industry. All companies operating in an
industry with inherently high environmental risks are likely to have had
problems in such areas as toxic chemical emissions, federal and state fines, and
Superfund sites. For these companies, NB Management examines their problems in
terms of severity, frequency, and elapsed time. NB Management then balances the
record against whatever leadership the company may have demonstrated in terms of
environmental policies, procedures, and practices. NB Management defines an
environmental leadership company as one that puts into place strong affirmative
programs to minimize emissions, promote safety, reduce waste at the source,
insure energy conservation, protect natural resources, and incorporate recycling
into its processes and products. NB Management looks for the commitment and
active involvement of senior management in all these areas. Several major
manufacturers which still produce substantial amounts of pollution are among the
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leaders in developing outstanding waste source reduction and remediation
programs.
PRODUCT. NB Management considers company announcements, press reports, and
public interest publications relating to the health, safety, quality, labeling,
advertising, and promotion of both consumer and industrial products. NB
Management takes note of companies with a strong commitment to quality and with
marketing practices which are ethical and consumer-friendly. NB Management pays
particular attention to companies whose products and services promote
progressive solutions to social problems.
PUBLIC HEALTH. NB Management measures the participation of companies in
such industries and markets as alcohol, tobacco, gambling and nuclear power. NB
Management also considers the impact of products and marketing activities
related to those products on nutritional and other health concerns, both
domestically and in foreign markets.
WEAPONS. NB Management keeps track of domestic military sales and,
whenever possible, foreign military sales and categorizes them as nuclear
weapons related, other weapons related, and non-weapon military supplies, such
as micro-chip manufacturers and companies that make uniforms for military
personnel.
CORPORATE CITIZENSHIP. NB Management gathers information about a company's
participation in community affairs, its policies with respect to charitable
contributions, and its support of education and the arts. NB Management looks
for companies with a focus, dealing with issues not just by making financial
contributions, but also by asking the questions: What can we do to help? What do
we have to offer? Volunteerism, high-school mentoring programs, scholarships and
grants, and in-kind donations to specific groups are just a few ways that
companies have responded to these questions.
IMPLEMENTATION OF SOCIAL POLICY
Companies deemed acceptable by NB Management from a financial standpoint
are analyzed using Neuberger Berman's database. The companies are then evaluated
by the portfolio manager to determine if the companies' policies, practices,
products, and services withstand scrutiny in the following major areas of
concern: the environment and workplace diversity and employment. Companies are
then further evaluated to determine their track record in issues and areas of
concern such as public health, weapons, product, and corporate citizenship.
The issues and areas of concern that are tracked lend themselves to
objective analysis in varying degrees. Few, however, can be resolved entirely on
the basis of scientifically demonstrable facts. Moreover, a substantial amount
of important information comes from sources that do not purport to be
disinterested. Thus, the quality and usefulness of the information in the
database depend on Neuberger Berman's ability to tap a wide variety of sources
and on the experience and judgment of the people at NB Management who interpret
the information.
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In applying the information in the database to stock selection for the
Portfolio, NB Management considers several factors. NB Management examines the
severity and frequency of various infractions, as well as the time elapsed since
their occurrence. NB Management also takes into account any remedial action
which has been taken by the company relating to these infractions. NB Management
notes any quality innovations made by the company in its effort to create
positive change and looks at the company's overall approach to social issues.
* * * * *
The Portfolio invests in a wide array of stocks, and no single stock makes
up more than a small fraction of the Portfolio's total assets. Of course, the
Portfolio's holdings are subject to change.
ADDITIONAL INVESTMENT INFORMATION
The Portfolio may make the following investments, among others. It may not
buy all of the types of securities or use all of the investment techniques that
are described.
ILLIQUID SECURITIES. Illiquid securities 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 1933 Act, 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 NB 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.
POLICIES AND LIMITATIONS. The Portfolio may invest up to 15% of its net
assets in illiquid securities.
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. Costs, delays, or losses
could result if the selling party to a repurchase agreement becomes bankrupt or
otherwise defaults. NB Management monitors the creditworthiness of sellers.
POLICIES AND LIMITATIONS. 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
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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. The Portfolio may lend securities to banks, brokerage
firms, and other institutional investors judged creditworthy by NB 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.
NB 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.
POLICIES AND LIMITATIONS. 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 NB 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. Securities lending by the
Portfolio is not subject to the Social Policy.
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. NB Management, acting
under guidelines established by the Portfolio Trustees, may determine that
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certain securities qualified for trading under Rule 144A are liquid. 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. Restricted securities
for which no market exists are priced by a method that the Portfolio Trustees
believe accurately reflects fair value.
POLICIES AND LIMITATIONS. 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.
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. There is a risk that the counter-party to a reverse repurchase
agreement will be unable or unwilling to complete the transaction as scheduled,
which may result in losses to the Portfolio.
POLICIES AND LIMITATIONS. Reverse repurchase 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.
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. 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
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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 (and
gains realized on the disposition thereof) 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.
Foreign securities often trade with less frequency and in less volume than
domestic securities and therefore may exhibit greater price volatility.
Additional costs associated with an investment in foreign securities may include
higher custodial fees than apply to domestic custody arrangements and
transaction costs of foreign currency conversions.
Foreign markets also have different clearance and settlement procedures.
In certain markets, there have been times when settlements have been unable to
keep pace with the volume of securities transactions, making it difficult to
conduct such transactions. Delays in settlement could result in temporary
periods when a portion of the assets of 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.
The Portfolio may invest in ADRs, EDRs, GDRs, and 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 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.
POLICIES AND LIMITATIONS. 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
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the amount it may invest in securities denominated in any one foreign currency.
Investments in the securities of foreign issuers are subject to the Portfolio's
quality standards. The Portfolio may invest only in securities of issuers in
countries whose governments are considered stable by NB Management.
FUTURES, OPTIONS ON FUTURES, OPTIONS ON SECURITIES, 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 views investment in (i) interest
rate and securities index futures and options thereon as a maturity management
device and/or a device to reduce risk or preserve total return in an adverse
environment for the hedged securities, and (ii) foreign currency futures and
options thereon as a means of establishing more definitely the effective return
on, or the purchase price of, securities denominated in foreign currencies that
are held or intended to be acquired by the Portfolio. In addition, for purposes
of managing cash flow, the Portfolio may purchase and sell stock index futures
contracts and may purchase and sell options thereon to increase the Portfolio's
exposure to a recognized securities index, such as the S&P 500 Index.
A "sale" of a futures contract (or a "short" futures position) entails the
assumption of a contractual obligation to deliver the securities or currency
underlying the contract at a specified price at a specified future time. A
"purchase" of a futures contract (or a "long" futures position) entails the
assumption of a contractual obligation to acquire the securities or currency
underlying the contract at a specified price at a specified future time. Certain
futures, including stock and bond index futures, are settled on a net cash
payment basis rather than by the sale and delivery of the securities underlying
the futures.
U.S. futures contracts (except certain currency futures) are traded on
exchanges that have been designated as "contract markets" by the Commodity
Futures Trading Commission ("CFTC"); futures transactions must be executed
through a futures commission merchant that is a member of the relevant contract
market. The exchange's affiliated clearing organization guarantees performance
of the contracts between the clearing members of the exchange.
Although futures contracts by their terms may require the actual delivery
or acquisition of the underlying securities or currency, in most cases the
contractual obligation is extinguished by being offset before the expiration of
the contract. A futures position is offset by buying (to offset an earlier sale)
or selling (to offset an earlier purchase) an identical futures contract calling
for delivery in the same month.
This may result in a profit or a loss.
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"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
daily net asset value ("NAV"), the Portfolio marks to market the value of its
open futures positions. The Portfolio also must make margin deposits with
respect to options on futures that it has written (but not with respect to
options on futures that it has purchased). If the futures commission merchant
holding the margin deposit goes bankrupt, the Portfolio could suffer a delay in
recovering its funds and could ultimately suffer a loss.
An option on a futures contract gives the purchaser the right, in return
for the premium paid, to assume a position in the contract (a long position if
the option is a call and a short position if the option is a put) at a specified
exercise price at any time during the option exercise period. The writer of the
option is required upon exercise to assume a short futures position (if the
option is a call) or a long futures position (if the option is a put). Upon
exercise of the option, the accumulated cash balance in the writer's futures
margin account is delivered to the holder of the option. That balance represents
the amount by which the market price of the futures contract at exercise
exceeds, in the case of a call, or is less than, in the case of a put, the
exercise price of the option. Options on futures have characteristics and risks
similar to those of securities options, as discussed herein.
Although the Portfolio believes that the use of futures contracts will
benefit it, if NB 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.
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Most U.S. futures exchanges limit the amount of fluctuation in the price
of a futures contract or option thereon during a single trading day; once the
daily limit has been reached, no trades may be made on that day at a price
beyond that limit. The daily limit governs only price movements during a
particular trading day, however; it thus does not limit potential losses. In
fact, it may increase the risk of loss, because prices can move to the daily
limit for several consecutive trading days with little or no trading, thereby
preventing liquidation of unfavorable futures and options positions and
subjecting traders to substantial losses. If this were to happen with respect to
a position held by the Portfolio, it could (depending on the size of the
position) have an adverse impact on the NAV of the Portfolio.
POLICIES AND LIMITATIONS. The Portfolio may purchase and sell 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 prevailing currency exchange
rates. In addition, for purposes of managing cash flow, the Portfolio may
purchase and sell stock index futures contracts and may purchase and sell
options thereon to increase the Portfolio's exposure to a recognized securities
index, such as the S&P 500 Index. The use of futures and options on futures by
the Portfolio is not subject to the Social Policy.
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 a call option at
less than the market price.
The writing of covered call options is a conservative investment technique
that is believed to involve relatively little risk 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.
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POLICIES AND LIMITATIONS. The Portfolio may write covered call options and
may purchase call options in related closing transactions. The Portfolio writes
only "covered" call options on securities it owns (in contrast to the writing of
"naked" or uncovered call options, which the Portfolio will not do).
The Portfolio would purchase a call option to offset a 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. The use of call
options on securities by the Portfolio is not subject to the Social Policy.
PUT OPTIONS ON SECURITIES. The Portfolio may write and purchase put
options on securities. 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.
POLICIES AND LIMITATIONS. The Portfolio generally writes and purchases put
options on securities for hedging purposes (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 use of put options on securities by the
Portfolio is not subject to the Social Policy.
PUT AND CALL OPTIONS ON SECURITIES INDICES. For purposes of managing cash
flow, the Portfolio may purchase put and call options on securities indices to
increase the Portfolio's exposure to the performance of a recognized securities
index, such as the S&P 500 Index.
Unlike a securities option, which gives the holder the right to purchase
or sell a specified security at a specified price, an option on a securities
index gives the holder the right to receive a cash "exercise settlement amount"
equal to (1) the difference between the exercise price of the option and the
value of the underlying securities index on the exercise date (2) multiplied by
a fixed "index multiplier." A securities index fluctuates with changes in the
market values of the securities included in the index. Options on stock indices
are currently traded on the Chicago Board Options Exchange, the New York Stock
Exchange ("NYSE"), the American Stock Exchange, and other U.S. and foreign
exchanges.
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Securities index options have characteristics and risks similar to those
of securities options, as discussed herein.
POLICIES AND LIMITATIONS. For purposes of managing cash flow, the
Portfolio may purchase put and call options on securities indices to increase
the Portfolio's exposure to the performance of a recognized securities index,
such as the S&P 500 Index. All securities index options purchased by the
Portfolio will be listed and traded on an exchange.
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 national securities exchanges and in the
over-the-counter ("OTC") market. Exchange-traded options in the United States
are issued by a clearing organization affiliated with the exchange on which the
option is listed; the clearing organization in effect guarantees completion of
every exchange-traded option. In contrast, OTC options are contracts between the
Portfolio and a counter-party, with no clearing organization guarantee. Thus,
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. NB Management monitors the creditworthiness of dealers
with which the Portfolio may engage in OTC options transactions.
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
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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.
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.
POLICIES AND LIMITATIONS. The Portfolio may use American-style options.
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 use of put and call options by the Portfolio is not subject to the Social
Policy.
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 also may engage in foreign currency exchange transactions on a
spot (I.E., cash) basis at the spot rate prevailing in the foreign currency
exchange market.
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
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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 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.
NB Management believes that the use of foreign currency hedging
techniques, including "proxy-hedges," can provide significant protection of NAV
in the event of a general rise in the U.S. dollar against foreign currencies.
For example, the return available from securities denominated in a particular
foreign currency would diminish if the value of the U.S. dollar increased
against that currency. Such a decline could be partially or completely offset by
an increase in value of a hedge involving a forward contract to sell that
foreign currency or a proxy-hedge involving a forward contract to sell a
different foreign currency whose behavior is expected to resemble the currency
in which the securities being hedged are denominated and which is available on
more advantageous terms.
However, a hedge or proxy-hedge cannot protect against exchange rate risks
perfectly, and, if NB 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 the 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.
POLICIES AND LIMITATIONS. The Portfolio may enter into forward contracts
for the purpose of hedging and not for speculation. The use of forward contracts
by the Portfolio is not subject to the Social Policy.
OPTIONS ON FOREIGN CURRENCIES. The Portfolio may write and purchase
covered call and put options on foreign currencies. Currency options have
characteristics and risks similar to those of securities options, as discussed
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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.
POLICIES AND LIMITATIONS. The Portfolio would use options on foreign
currencies 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. The use of options on currencies by the Portfolio is not
subject to the Social Policy.
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. 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.
POLICIES AND LIMITATIONS. 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.
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.
There can be no assurance that the Portfolio's use of Financial Instruments will
be successful.
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 regulated investment
company ("RIC"). See "Additional Tax Information." Financial Instruments may not
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be available with respect to some currencies, especially those of so-called
emerging market countries.
POLICIES AND LIMITATIONS. NB 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. NB Management intends to reduce the risk that the Portfolio will be
unable to close out Financial Instruments by entering into such transactions
only if NB Management believes there will be an active and liquid secondary
market.
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 investment grade corporate bonds
and debentures.
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 (also known as Federal National Mortgage
Association), Freddie Mac (also known as Federal Home Loan Mortgage
Corporation), Student Loan Marketing Association (commonly known as "Sallie
Mae"), and the Tennessee Valley Authority. Some U.S. Government Agency
Securities are supported by the full faith and credit of the United States,
while others may by 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 Government.
"Investment grade" debt securities are those receiving one of the four
highest ratings from Moody's Investors Service, Inc. ("Moody's"), Standard &
Poor's ("S&P"), or another nationally recognized statistical rating organization
("NRSRO") or, if unrated by any NRSRO, deemed by NB Management to be comparable
to such rated securities ("Comparable Unrated Securities"). Securities rated by
Moody's in its fourth highest rating category (Baa) or Comparable Unrated
Securities may be deemed to have speculative characteristics.
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"). 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
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investments is likely to rise. Foreign debt securities are subject to risks
similar to those of other foreign securities.
POLICIES AND LIMITATIONS. The Portfolio normally may invest up to 35% of
its total assets in debt securities. 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 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, NB Management may
in certain cases determine that such paper is liquid, pursuant to guidelines
established by the Portfolio Trustees.
POLICIES AND LIMITATIONS. The Portfolio may invest in commercial paper
only if it receives the highest rating from S&P (A-1) or Moody's (P-1) or is
deemed by NB Management to be of comparable quality.
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 account 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
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 is a bond, debenture, note, preferred stock,
or other security that may be converted into or exchanged for a prescribed
amount of common stock of the same or a different issuer within a particular
period of time at a specified price or formula. Convertible securities generally
have features of both common stocks and debt 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
22
<PAGE>
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.
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.
POLICIES AND LIMITATIONS. The Portfolio may invest up to 20% of its net
assets in convertible securities. The Portfolio does not intend to purchase any
convertible securities that are not investment grade. Convertible debt
securities are subject to the Portfolio's investment policies and limitations
concerning fixed income securities.
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.
OTHER INVESTMENT COMPANIES. The Portfolio at times may invest in
instruments structured as investment companies to gain exposure to the
performance of a recognized securities index, such as the S&P 500 Index.
As a shareholder in an investment company, the Portfolio would bear its
pro rata share of that investment company's expenses. Investment in other funds
may involve the payment of substantial premiums above the value of such issuer's
portfolio securities. The Portfolio does not intend to invest in such funds
unless, in the judgment of NB Management, the potential benefits of such
investment justify the payment of any applicable premium or sales charge.
POLICIES AND LIMITATIONS. The Portfolio's investment in such securities is
limited to (i) 3% of the total voting stock of any one investment company, (ii)
5% of the Portfolio's total assets with respect to any one investment company
and (iii) 10% of the Portfolio's total assets in the aggregate.
23
<PAGE>
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.
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.
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 $35 million to $3.2 billion, with an average of $514 million. The S&P
400 Index measures mid-sized companies that have an average market
capitalization of $2.1 billion. Each assumes reinvestment of distributions
and is calculated without regard to tax consequences or the costs of
24
<PAGE>
investing. The Portfolio may invest in different types of securities from
those included in some of the above indices.
The Fund's performance may also be compared to various socially responsive
indices. These include The Domini Social Index and the indices developed by the
quantitative department of Prudential Securities, such as that department's
Large and Mid-Cap portfolio indices for various breakdowns ("Sin" Stock Free,
Cigarette-Stock Free, S&P Composite, etc.).
Evaluations of the Fund's performance, its total return 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.
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. This
information may include the Portfolio's portfolio diversification by asset type
or by the social characteristics of companies owned. Information used in
Advertisements may include statements or illustrations relating to the
appropriateness of types of securities and/or mutual funds that may be employed
to meet specific financial goals, such as (1) funding retirement, (2) paying for
children's education, and (3) financially supporting aging parents.
NB 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 (including tuition, room
and board, books and other expenses) for students starting college in various
years may be included in Advertisements, based on the College Board Annual
Survey of Colleges.
Information relating to inflation and its effects on the dollar also may
be included in Advertisements. For example, after ten years, the purchasing
power of $25,000 would shrink to $16,621, $14,968, $13,465, and $12,100,
respectively, if the annual rates of inflation during that period were 4%, 5%,
6%, and 7%, respectively. (To calculate the purchasing power, the value at the
end of each year is reduced by the inflation rate for the ten-year period.)
25
<PAGE>
Information regarding the effects of investing at market highs and/or
lows, and investing early versus late for retirement plans also may be included
in Advertisements, if appropriate.
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 that 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 NB Management and Neuberger
Berman.
26
<PAGE>
<TABLE>
<CAPTION>
Positions Held with the
Name, Age, and Address(1) Trusts Principal Occupation(s)(2)
- ------------------------- ------ --------------------------
<S> <C> <C>
Faith Colish (63) Trustee of each Trust Attorney at Law, Faith Colish, A
63 Wall Street Professional Corporation.
24th Floor
New York, NY 10005
Stanley Egener* (64) Chairman of the Board, Principal of Neuberger Berman;
Chief Executive President and Director of NB
Officer, and Trustee of Management; Chairman of the Board,
each Trust Chief Executive Officer and Trustee
of nine other mutual funds for which
NB Management acts as investment
manager or administrator.
Howard A. Mileaf (61) Trustee of each Trust Vice President and Special Counsel to
WHX Corporation WHX Corporation (holding company)
110 East 59th Street since 1992; Director of Kevlin
30th Floor Corporation (manufacturer of
New York, NY 10022 microwave and other products).
Edward I. O'Brien* (70) Trustee of each Trust Until 1993, President of the
12 Woods Lane Securities Industry Association
Scarsdale, NY 10583 ("SIA") (securities industry's
representative in government
relations and regulatory matters at
the federal and state levels); until
November 1993, employee of the SIA;
Director of Legg Mason, Inc.
John T. Patterson, Jr. (70) Trustee of each Trust Retired. Formerly, President of
7082 Siena Court SOBRO (South Bronx Overall Economic
Boca Raton, FL 33433 Development Corporation).
27
<PAGE>
Positions Held with the
Name, Age, and Address(1) Trusts Principal Occupation(s)(2)
- ------------------------- ------ --------------------------
John P. Rosenthal (66) Trustee of each Trust Senior Vice President of Burnham
Burnham Securities Securities Inc. (a registered
Inc. broker-dealer) since 1991; Director,
Burnham Asset Management Corp. 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
Oxford Bioscience Partners and Oxford Bioscience Partners
315 Post Road West (venture capital partnerships) and
Westport, CT 06880 President of Oxford Venture
Corporation; Director of Capital Cash
Management Trust (money market fund)
and Prime Cash Fund.
Gustave H. Shubert (69) Trustee of each Trust Senior Fellow/Corporate Advisor and
13838 Sunset Boulevard Advisory Trustee of Rand (a
Pacific Palisades, CA 90272 non-profit public interest research
institution) since 1989; Honorary
Member of the Board of Overseers of
the Institute for Civil Justice, the
Policy Advisory Committee of the
Clinical Scholars Program at the
University of California, the
American Association for the
Advancement of Science, the Counsel
on Foreign Relations, and the
Institute for Strategic Studies
(London); advisor to the Program
Evaluation and Methodology Division
of the U.S. General Accounting
Office; formerly Senior Vice
President and Trustee of Rand.
28
<PAGE>
Positions Held with the
Name, Age, and Address(1) Trusts Principal Occupation(s)(2)
- ------------------------- ------ --------------------------
Lawrence Zicklin* (62) President and Trustee Principal of Neuberger Berman;
of each Trust Director of NB Management; President
and/or Trustee of six other mutual
funds for which NB Management acts as
investment manager or administrator.
Daniel J. Sullivan (59) Vice President of each Senior Vice President of NB
Trust Management since 1992; Vice President
of nine other mutual funds for which
NB Management acts as investment
manager or administrator.
Michael J. Weiner (51) Vice President and Principal of Neuberger Berman; Senior
Principal Financial Vice President of NB Management since
Officer of each Trust 1992; Treasurer of NB Management from
1992 to 1996; Vice President and
Principal Financial Officer of nine
other mutual funds for which NB
Management acts as investment manager
or administrator.
Claudia A. Brandon (42) Secretary of each Trust Vice President of NB Management;
Secretary of nine other mutual funds
for which NB Management acts as
investment manager or administrator.
Richard Russell (52) Treasurer and Principal Vice President of NB Management since
Accounting Officer of 1993; Treasurer and Principal
each Trust Accounting Officer of nine other
mutual funds for which NB Management
acts as investment manager or
administrator.
29
<PAGE>
Positions Held with the
Name, Age, and Address(1) Trusts Principal Occupation(s)(2)
- ------------------------- ------ --------------------------
Stacy Cooper-Shugrue (35) Assistant Secretary of Assistant Vice President of NB
each Trust Management since 1993; Assistant
Secretary of nine other mutual funds
for which NB Management acts as
investment manager or administrator.
C. Carl Randolph (61) Assistant Secretary of Principal of Neuberger Berman since
each Trust 1992; Assistant Secretary of nine
other mutual funds for which NB
Management acts as investment manager
or administrator.
Barbara DiGiorgio (40) Assistant Treasurer of Assistant Vice President of NB
each Trust Management since 1993; Assistant
Treasurer since 1996 of nine other
mutual funds for which NB Management
acts as investment manager or
administrator.
Celeste Wischerth (37) Assistant Treasurer of Assistant Vice President of NB
each Trust Management since 1994; Assistant
Treasurer since 1996 of nine other
mutual funds for which NB Management
acts as investment manager or
administrator.
</TABLE>
- --------------------
(1) Unless otherwise indicated, the business address of each listed person is
605 Third Avenue, New York, New York 10158.
(2) Except as otherwise indicated, each individual has held the positions shown
for at least the last five years.
* Indicates a trustee who is an "interested person" of each Trust within the
meaning of the 1940 Act. Messrs. Egener and Zicklin are interested persons by
virtue of the fact that they are officers and/or directors of NB 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 NB Management serves as investment manager.
30
<PAGE>
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.
Name and Position with Aggregate Total Compensation
the Trust Compensation from Investment Companies in
- --------- From the Trust the Neuberger Berman Fund
-------------- Complex Paid to Trustees
------------------------
Faith Colish $ $
Trustee (5 other investment
companies)
Stanley Egener $ 0 $ 0
Chairman of the Board, Chief (9 other investment
Executive Officer, and companies)
Trustee
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)
Cornelius T. Ryan $ $
Trustee (3 other investment
companies)
Gustave H. Shubert $ $
Trustee (3 other investment
companies)
Lawrence Zicklin $ 0 $
President and Trustee (5 other investment
companies)
31
<PAGE>
At ____________, 1999, the trustees and officers of the Trusts, as a
group, owned beneficially or of record no 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. NB Management serves as
the investment manager to the Portfolio pursuant to a management agreement with
Managers Trust, on behalf of the Portfolio, dated as of August 2, 1993
("Management Agreement").
The Management Agreement was approved by the holders of the interests in
the Portfolio on March 9, 1994. The Portfolio was authorized to become subject
to the Management Agreement by vote of the Portfolio Trustees on October 20,
1993, and became subject to it on March 14, 1994.
The Management Agreement provides, in substance, that NB 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 NB Management to effect securities transactions on
behalf of the Portfolio through associated persons of NB Management. The
Management Agreement also specifically permits NB Management to compensate,
through higher commissions, brokers and dealers who provide investment research
and analysis to the Portfolio, although NB Management has no current plans to
pay a material amount of such compensation.
NB Management provides to the Portfolio, without separate cost, office
space, equipment, and facilities and the personnel necessary to perform
executive, administrative, and clerical functions. NB Management pays all
salaries, expenses, and fees of the officers, trustees, and employees of
Managers Trust who are officers, directors, or employees of NB Management. Two
directors of NB Management (who also are principals of Neuberger Berman), one of
whom also serves as an officer of NB Management, presently serve as trustees and
officers of the Trusts. See "Trustees and Officers." The Portfolio pays NB
Management a management fee based on the Portfolio's average daily net assets,
as described in the Prospectus.
NB Management provides facilities, services, and personnel to the Fund
pursuant to an administration agreement with the Trust, dated November 1, 1994,
and amended as of August 2, 1996 and January 1, 1999 ("Administration
Agreement"). For such administrative services, the Fund pays NB Management a fee
based on the Fund's average daily net assets, as described below.
NB Management enters into administrative services agreements with
Institutions, pursuant to which it compensates Institutions for accounting,
recordkeeping and other services that they provide in connection with
investments in the Fund.
From time to time, NB Management or the Fund may enter into arrangements
with registered broker-dealers or other third parties pursuant to which it pays
the broker-dealer or third party a per account fee or a fee based on a
32
<PAGE>
percentage of the aggregate net asset value of Fund shares purchased by the
broker-dealer or third party on behalf of its customers, in payment for
administrative and other services rendered to such customers.
MANAGEMENT AND ADMINISTRATION FEES
NB Management provides investment management services to each Portfolio
that include, among other things, making and implementing investment decisions
and providing facilities and personnel necessary to operate the Portfolio. For
investment management services, the Portfolio pays NB Management a fee at the
annual rate of 0.55% of the first $250 million of the Portfolio's average daily
net assets, 0.525% of the next $250 million, 0.50% of the next $250 million,
0.475% of the next $250 million, 0.45% of the next $500 million, and 0.425% of
average daily net assets in excess of $1.5 billion.
NB 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 NB Management a fee at the annual rate of 0.40% of the Fund's average daily
net assets, plus certain out-of-pocket expenses for technology and shareholder
servicing and shareholder communications subject to the prior approval of an
annual budget by the Trust's Board of Trustees, including a majority of those
Trustees who are not interested persons of NB Management, and periodic reports
to the Board of Trustees on actual expenses. With the Fund's consent NB
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 0.25% of the average net asset value
of Fund shares held through that Institution.
NB Management has contractually undertaken to reimburse the Fund for its
total operating expenses (other than interest, taxes, brokerage and
extraordinary expenses) which exceed, in the aggregate, 1.50% per annum of the
Fund's average daily net assets. This undertaking lasts until December 31, 2002.
The Fund has contractually undertaken to reimburse NB Management, until December
31, 2005, for excess expenses paid by NB Management, provided the reimbursements
do not cause the Fund's total operating expenses (exclusive of taxes, interest,
brokerage commissions and extraordinary expenses) to exceed an annual rate of
1.50% of average net assets, and provided that no amount will be reimbursed more
than 3 years after the year in which it was incurred by NB Management.
The Management Agreement continues until August 2, 2000 and is renewable
thereafter from year to year, 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 NB 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 until August 2, 2000. The Administration
Agreement is renewable 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 NB Management or the Trust
("Independent Fund Trustees"), cast in person at a meeting called for the
33
<PAGE>
purpose of voting on such approval, and (2) by the vote of a majority of the
Fund Trustees or by a 1940 Act majority vote of the outstanding shares in the
Fund.
The Management Agreement is terminable, without penalty, with respect to
the Portfolio on 60 days' written notice either by Managers Trust or by NB
Management. The Administration Agreement is terminable, without penalty, with
respect to the Fund on 60 days' written notice either by NB Management or by the
Trust. Each Agreement terminates automatically if it is assigned.
SUB-ADVISER
NB 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 March 9, 1994.
The Sub-Advisory Agreement provides in substance that Neuberger Berman
will furnish to NB 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, NB 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 NB Management. The Sub-Advisory Agreement provides that NB 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
NB Management.
The Sub-Advisory Agreement continues 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 NB
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 NB Management employ
experienced professionals that work in a competitive environment.
34
<PAGE>
INVESTMENT COMPANIES MANAGED
As of September 30, 1999, the investment companies managed by NB
Management had aggregate net assets of approximately $____ billion. NB
Management currently serves as investment manager of the following investment
companies:
Approximate
Net Assets at
NAME SEPTEMBER 30, 1999
Neuberger Berman Cash Reserves Portfolio.....................................$
(investment portfolio for Neuberger Berman Cash Reserves)
Neuberger Berman Government Money Portfolio..................................$
(investment portfolio for Neuberger Berman Government Money Fund)
Neuberger Berman High Yield Bond Portfolio...................................$
(investment portfolio for Neuberger Berman High Yield Bond 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 Securities Portfolio..............................$
(investment portfolio for Neuberger Berman Municipal Securities Trust)
Neuberger Berman Municipal Money Portfolio...................................$
(investment portfolio for Neuberger Berman Municipal Money Fund)
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)
35
<PAGE>
Neuberger Berman Manhattan Portfolio.........................................$
(investment portfolio for Neuberger Berman Manhattan Fund, Neuberger
Berman Manhattan Trust and Neuberger Berman Manhattan Assets)
Neuberger Berman Millennium Portfolio........................................$
(investment portfolio for Neuberger Berman Millennium Fund and Neuberger
Berman Millennium Trust)
Neuberger Berman Partners Portfolio..........................................$
(investment portfolio for Neuberger Berman Partners Fund, Neuberger Berman
Partners Trust and Neuberger Berman Partners Assets)
Neuberger Berman Regency Portfolio...........................................$
(investment portfolio for Neuberger Berman Regency Fund and Neuberger
Berman Regency Trust)
Neuberger Berman Socially Responsive Portfolio...............................$
(investment portfolio for the Fund, 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 NB Management (collectively, "Other NB Funds") have been and
will continue to be made independently of one another. In terms of their
investment objectives, most of the Other NB Funds differ from the Portfolio.
Even where the investment objectives are similar, however, the methods used by
the Other NB Funds and the Portfolio to achieve their objectives may differ. The
investment results achieved by all of the mutual funds managed by NB 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 NB
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 NB Management outweighs any disadvantages
that may result from contemporaneous transactions.
The Portfolio is subject to certain limitations imposed on all advisory
clients of Neuberger Berman (including the Portfolio, the Other NB 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
36
<PAGE>
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 NB MANAGEMENT
The directors and officers of NB Management, all of whom have offices at
the same address as NB 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; Andrea Trachtenberg, 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; Michael F. Malouf, Vice President; Ellen Metzger, Vice
President and Secretary; Paul Metzger, Vice President; S. Basu Mullick, 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; Allan R. White, III, Vice President;
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, Weiner 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.
Neuberger Berman and NB Management are wholly owned subsidiaries of
Neuberger Berman, Inc., a publicly owned holding company owned primarily by the
principals of Neuberger Berman.
DISTRIBUTION ARRANGEMENTS
DISTRIBUTOR
NB 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
37
<PAGE>
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 all
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, and amended as of
August 2, 1996 and January 1, 1999 ("Distribution Agreement"). The Distribution
Agreement was approved by the Fund Trustees, including a majority of the
Independent Fund Trustees and a majority of those Independent Fund Trustees who
have no direct or indirect financial interest in the Distribution Agreement or
the Trust's plan pursuant to Rule 12b-1 under the 1940 Act ("Plan") ("Rule 12b-1
Trustees"), on October 25, 1995. The Distribution Agreement continues until
August 2, 2000. The Distribution Agreement may be renewed annually if
specifically approved by (1) the vote of a majority of the Fund Trustees or a
1940 Act majority vote of the Fund's outstanding shares and (2) the vote of a
majority of the Independent Fund Trustees and a majority of the Rule 12b-1
Trustees, cast in person at a meeting called for the purpose of voting on such
approval. The Distribution Agreement may be terminated by either party and will
terminate automatically on its assignment, in the same manner as the Management
Agreement.
RULE 12B-1 PLAN
The Plan was adopted by the Trustees on October 25, 1995, and executed on
April 2, 1996. The Plan provides that the Fund will compensate NB Management for
administrative and other services provided to the Fund, its activities and
expenses related to the sale and distribution of Fund shares, and ongoing
services to investors in the Fund. Under the Plan, NB Management receives from
the Fund a fee at the annual rate of 0.25% of the Fund's average daily net
assts. NB 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. NASD rules limit
the amount of annual distribution and service fees that may be paid by a mutual
fund and impose a ceiling on the cumulative distribution fees paid. The Trust's
plan complies with these rules.
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 Fund Trustees for their review at least quarterly.
Prior to approving the Plan, the Fund Trustees considered various factors
relating to the implementation of the Plan and determined that there is a
reasonable likelihood that the Plan will benefit the Fund and its shareholders.
The Fund Trustees noted that the purpose of the master/feeder fund structure is
to permit access to a variety of markets. To the extent the Plan allows the Fund
to penetrate markets to which it would not otherwise have access, the Plan may
38
<PAGE>
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 December 30, 2000. 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
Fund Trustees and (2) by a vote of the majority of 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 Fund 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 of the Fund.
ADDITIONAL PURCHASE INFORMATION
SHARE PRICES AND NET ASSET VALUE
The Fund's shares are bought or sold at a price that is the Fund's NAV per
share. The NAVs for the Fund and its 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 its 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 its 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 exchange or quoted on
The Nasdaq Stock Market, 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 Equity Managers Trust believe
accurately reflects fair value.
If NB 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.
ADDITIONAL EXCHANGE INFORMATION
As more fully set forth in the section of the Prospectus entitled
"Maintaining Your Account," an Institution may exchange shares of the Fund for
shares of one or more of the other Funds, if made available through the
Institution. The Fund may terminate or modify its exchange privilege in the
future.
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<PAGE>
Before effecting an exchange, Fund shareholders must obtain and should
review a currently effective Prospectus of the Fund into which the exchange is
to be made. An exchange is treated as a sale for federal income tax purposes
and, depending on the circumstances, a 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 in "Share Prices and Net Asset Value," above. 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 Fund Trustees determined that it was in the best interests of the Fund's
shareholders as a whole.
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.
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<PAGE>
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
To continue 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 Financial Instruments) derived with respect to its business of
investing in securities or those currencies ("Income Requirement"); and (2) at
the close of each quarter of the Fund's taxable year, (i) at least 50% of the
value of its total assets must be represented by cash and cash items, U.S.
Government securities, securities of other RICs, and other securities limited,
in respect of any one issuer, to an amount that does not exceed 5% of the value
of the Fund's total assets and that does not represent more than 10% of the
issuer's outstanding voting securities, and (ii) not more than 25% of the value
of its total assets may be invested in securities (other than U.S. Government
securities or securities of other RICs) of any one issuer. If the Fund failed to
qualify as a RIC for any taxable year, it would be taxed on the full amount of
its taxable income for that year without being able to deduct the distributions
it makes to its shareholders and the shareholders would treat all those
distributions, including distributions of net capital gain (the excess of net
long-term capital gain over net short-term capital loss), as dividends (that is,
ordinary income) to the extent of the Fund's earnings and profits.
Certain funds that invest in portfolios managed by NB 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, NB 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.
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<PAGE>
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 NB Management, including the other
portfolios of Managers Trust, have received rulings from the Service to the
effect that, among other things, each such portfolio will be treated as a
separate partnership for federal income tax purposes and will not be a "publicly
traded partnership." Although these rulings may not be relied on as precedent by
the Portfolio, NB Management believes the reasoning thereof and, hence, their
conclusion apply to the Portfolio as well. As a result, the Portfolio is not
subject to federal income tax; instead, each investor in the Portfolio, such as
the 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 Portfolio also is not subject to Delaware or New York income
or franchise tax.
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.
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 and the basis of any property 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 ("foreign taxes") that would reduce the
yield and/or total return on its securities. Tax treaties between certain
countries and the United States may reduce or eliminate foreign taxes, however,
and many foreign countries do not impose taxes on capital gains in respect of
investments by foreign investors.
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
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<PAGE>
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 -- 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.
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 the Fund most likely would have to
distribute to satisfy the Distribution Requirement and avoid imposition of the
Excise Tax -- even if the Portfolio did not receive those earnings and gain from
the QEF. In most instances it will be very difficult, if not impossible, to make
this election because of certain requirements thereof.
A holder of stock in any PFIC may elect to include in ordinary income each
taxable year the excess, if any, of the fair market value of the PFIC's stock
over the adjusted basis therein as of the end of that year. Pursuant to the
election, a deduction (as an ordinary, not capital, loss) also would be allowed
for the excess, if any, of the holder's adjusted basis in PFIC stock over the
fair market value thereof as of the taxable year-end, but only to the extent of
any net mark-to-market gains with respect to that stock included in income for
prior taxable years. The adjusted basis in each PFIC's stock subject to the
election would be adjusted to reflect the amounts of income included and
deductions taken thereunder (and under regulations proposed in 1992 that
provided 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 futures contracts and entering into forward contracts,
involves complex rules that will determine for income tax purposes the amount,
character and timing of recognition of the gains and losses the 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 Financial 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 subject to Section 1256 of the Code ("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. Section 1256
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<PAGE>
contracts also may be marked-to-market for purposes of the Excise Tax. These
rules may operate to increase the amount that a Fund must distribute to satisfy
the Distribution Requirement, which will be taxable to the shareholders as
ordinary income, and to increase the net capital gain recognized by the Fund,
without in either case increasing the cash available to the Fund. The Fund may
elect to exclude certain transactions from the operation of section 1256,
although doing so may have the effect of increasing the relative proportion of
net short-term capital gain (taxable as ordinary income) and/or increasing the
amount of dividends that must be distributed to meet the Distribution
Requirement and avoid imposition of the Excise Tax.
If the Fund has an "appreciated financial position" -- generally, an
interest (including an interest through an option, futures or forward contract,
or short sale) with respect to any stock, debt instrument (other than "straight
debt"), or partnership interest the fair market value of which exceeds its
adjusted basis -- and enters into a "constructive sale" of the same or
substantially similar property, the Fund will be treated as having made an
actual sale thereof, with the result that gain will be recognized at that time.
A constructive sale generally consists of a short sale, an offsetting notional
principal contract, or a futures or forward contract entered into by the Fund or
a related person with respect to the same or substantially similar property. In
addition, if the appreciated financial position is itself a short sale or such a
contract, acquisition of the underlying property or substantially similar
property will be deemed a constructive sale. The foregoing will not apply,
however, to any transaction during any taxable year that otherwise would be
treated as a constructive sale if the transaction is closed within 30 days after
the end of that year and the Fund holds the appreciated financial position
unhedged for 60 days after that closing (I.E., at no time during that 60-day
period is the Fund's risk of loss regarding that position reduced by reason of
certain specified transactions with respect to substantially similar or related
property, such as having an option to sell, being contractually obligated to
sell, making a short sale, or granting an option to buy substantially identical
stock or securities).
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 them 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.
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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 the Portfolio's principal broker in the purchase
and sale of its portfolio securities (other than certain securities traded on
the OTC market) and in connection with the purchase and sale of options on its
securities.
During the last three fiscal years, the Portfolio paid the following
brokerage commissions:
<TABLE>
<CAPTION>
Total Brokerage % of all
Brokerage Commissions Paid to Commission Trades % of Commissions
Fiscal Year Commissions Neuberger Berman Done Through Paid to
ending Paid ---------------- Neuberger Berman Neuberger Berman
August 31, ----------- ---------------- ----------------
----------
<S> <C> <C> <C> <C>
1997 $305,640 $232,238 80.59% 75.98%
1998 401,601 296,353 76.50 73.79
1999
</TABLE>
_____% of the $_______ paid to other brokers by the Portfolio during the
1999 fiscal year (representing commissions on transactions involving
approximately $__________) was directed to those brokers because of research
services they provided. During the fiscal year ended August 31, 1999, the
Portfolio acquired securities of the following of its "regular brokers or
dealers" (as defined in the 1940 Act): ________________________________________;
at that date, that Portfolio held none of the securities of its regular brokers
or dealers.
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 other Neuberger Berman Portfolios, Neuberger Berman may be
required to pay the Portfolio, on a quarterly basis, certain of the earnings
that Neuberger Berman otherwise has derived from the re-lending of the borrowed
securities. When Neuberger Berman desires to borrow a security that 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
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<PAGE>
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.
A committee of Independent Portfolio Trustees from time to time reviews,
among other things, information relating to securities loans by the Portfolio.
The following information reflects interest income earned by the Portfolio from
the cash collateralization of securities loans during the fiscal years ended
1999, 1998, and 1997. As reflected below, Neuberger Berman received a portion of
the interest income from the cash collateral.
Fiscal Year ending Interest Amount Paid to Neuberger
August 31, Earned Berman
---------- ------ ------
1997 $80,484 $51,639
1998 $20,023 $10,803
1999 $_____ $_____
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 NB 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 annual
reporting requirements. Managers Trust and NB 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 NB
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
46
<PAGE>
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
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 continue to execute a portion of its
transactions through brokers other than Neuberger Berman. In selecting those
brokers, NB 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 those brokers.
A committee comprised of officers of NB Management and principals of
Neuberger Berman who are portfolio managers of the Portfolio and/or Other NB
Funds (collectively, "NB 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 NB 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 NB Funds and/or the Managed Accounts; and (3) the
47
<PAGE>
aggregate amount of brokerage commissions generated by transactions for the NB
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 NB 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. NB
Management believes that those research services benefit the Portfolio by
supplementing the information otherwise available to NB Management. That
research may be used by NB Management in servicing Other NB Funds and, in some
cases, by Neuberger Berman in servicing the Managed Accounts. On the other hand,
research received by NB Management from brokers effecting portfolio transactions
on behalf of the Other NB Funds and by Neuberger Berman from brokers effecting
portfolio transactions on behalf of the Managed Accounts may be used for the
Portfolio's benefit.
Janet W. Prindle, a Vice President of NB Management and a principal of
Neuberger Berman is the person primarily responsible for making decisions as to
specific action to be taken with respect to the investment portfolio of the
Portfolio. She has full authority to take action with respect to portfolio
transactions and may or may not consult with other personnel of NB Management
prior to taking such action. If Ms. Prindle is unavailable to perform her
responsibilities, Robert Ladd and/or Ingrid Saukaitis, each of whom is an
Assistant Vice President of NB Management, will assume responsibility for the
Portfolio.
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
accountants 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.
ORGANIZATION, CAPITALIZATION AND OTHER MATTERS
THE FUND
The Fund is a separate ongoing series of Equity Assets, 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 as a
diversified, open-end management investment company, commonly known as a mutual
fund. Equity Assets has six separate series. The Fund invests all of net
investable assets in the Portfolio, in each case receiving a beneficial interest
48
<PAGE>
in the Portfolio. The trustees of the Trust may establish additional series or
classes of shares without the approval of shareholders. The assets of the series
belong only to that series, and the liabilities of each series are borne solely
by that series and no other.
Prior to _____________, 1999, the Fund was a series of Neuberger Berman
Equity Series.
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 the 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 NB Management to
perform services. Depending on the policies of the Institution involved, an
investor may be able to transfer an account from one Institution to another.
THE PORTFOLIO
The Portfolio is a separate operating series of Equity Managers Trust, a
New York common law trust organized as of December 1, 1992. Equity Managers
Trust has seven separate Portfolios. The assets of the Portfolio belong only to
the Portfolio, and the liabilities of the Portfolio are borne solely by the
Portfolio and no other.
FUND INVESTMENTS IN THE 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 Sister Funds that are series of
Neuberger Berman Equity Funds(R) ("Equity Funds") and the other mutual funds
that are series of other trusts invest all of their respective net assets in
corresponding Portfolios of Equity Managers Trust. The shares of each series of
49
<PAGE>
Equity Funds are available for purchase by members of the general public. The
Trusts do not sell their shares directly to members of the general public.
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 (including the series of Equity Funds) 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 (except Equity Funds) might
charge a sales commission. Therefore, Fund shareholders may have different
returns than shareholders in another investment company that invests exclusively
in the Portfolio. Information regarding the Funds that invest in the Portfolio
is available from NB Management by calling 800-366-6264.
The trustees of the Trust believe that investment in the Portfolio by a
series of Equity Funds or 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 benefiting all
shareholders. However, the Fund's investment in its corresponding Portfolio may
be affected by the actions of other large investors in the Portfolio, if any.
For example, if a large investor in 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 its corresponding
Portfolio at any time, if the trustees of the respective Trust determine that it
is in the best interests of the Fund and its shareholders to do so. 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 respective Trust. A withdrawal could
result in a distribution in kind of portfolio securities (as opposed to a cash
distribution) by the Portfolio to the Fund. That distribution could result in a
less diversified portfolio of investments for the Fund and could affect
adversely the liquidity of the Fund's investment portfolio. If the Fund decided
to convert those securities to cash, it usually would incur brokerage fees or
other transaction costs. If 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 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.
50
<PAGE>
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.
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
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 ACCOUNTANTS
The Fund and Portfolio have selected PricewaterhouseCoopers LLP, One Post
Office Square, Boston, MA 02109, as the independent accountants 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.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
[ ]
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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<PAGE>
FINANCIAL STATEMENTS
The following financial statements and related documents are incorporated
herein by reference from the Annual Report to shareholders of Neuberger Berman
Equity Assets for the fiscal year ended August 31, 1999:
The audited financial statements of the Portfolio and notes thereto for
the fiscal year ended August 31, 1999, and the reports of PricewaterhouseCoopers
LLP, independent accountants, with respect to such audited financial statements
of the Portfolio.
Because the Fund commenced operations in June 1999, it does not have
audited financial statements.
52
<PAGE>
Appendix A
RATINGS OF CORPORATE BONDS AND COMMERCIAL PAPER
S&P CORPORATE BOND RATINGS:
AAA - Bonds rated AAA have the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA - Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the higher rated issues only in small degree.
A - Bonds rated A have a strong capacity to pay interest and repay
principal, although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher rated
categories.
BBB - Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in higher rated categories.
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 categories.
MOODY'S CORPORATE BOND RATINGS:
Aaa - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt edge."
Interest payments are protected by a large or an exceptionally stable margin,
and principal is secure. Although the various protective elements are likely to
change, the changes that can be visualized are most unlikely to impair the
fundamentally strong position of the issue.
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
considered to be 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
53
<PAGE>
unreliable over any great length of time. These bonds lack outstanding
investment characteristics and in fact have speculative characteristics as well.
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 category.
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 (+).
A-2 - This designation denotes satisfactory capacity for timely payment.
However, the relative degree of safety is not as high as for issues designated
A-1.
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.
Issuers rated PRIME-2 (or related supporting institutions), also known as
P-2, have a strong capacity for repayment of short-term promissory obligations.
This will normally be evidenced by many of the characteristics cited above, but
to a lesser degree. Earnings trends and coverage ratios, while sound, will be
more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions.
Ample alternate liquidity is maintained.
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<PAGE>
NEUBERGER BERMAN EQUITY ASSETS
POST-EFFECTIVE AMENDMENT NO. 14 ON FORM N-1A
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS
Exhibit Description
Number -----------
------
(a) (1) 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.
(2) Restated Certificate of Trust. Incorporated by
Reference to Post-Effective Amendment No. 13 to
Registrant's Registration Statement, File Nos.
33-82568 and 811-8106.
(3) 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.
(4) Schedule A - Current Series of Neuberger Berman
Equity Assets. To Be Filed.
(b) By-Laws of Neuberger Berman Equity Assets.
Incorporated by Reference to Post-Effective
Amendment No. 1 to Registrant's Registration
Statement, File Nos. 33-82568 and 811-8106, EDGAR
Accession No. 0000898432-95-000393.
(c) (1) 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.
(2) 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.
(d) (1) (i) Management Agreement Between Equity Managers
Trust and Neuberger Berman Management Inc.
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.
C-1
<PAGE>
Exhibit Description
Number -----------
------
(ii) Schedule A - Series of Neuberger Berman
Equity Managers Trust Currently Subject to
the Management Agreement. Incorporated by
Reference to Post-Effective Amendment No. 11
to Registrant's Registration Statement, File
Nos. 33-82568 and 811-8106, EDGAR Accession
No. 0000898432-98-000682.
(iii) Schedule B - Schedule of Compensation Under
the Management Agreement. Incorporated by
Reference to Post-Effective Amendment No. 11
to Registrant's Registration Statement, File
Nos. 33-82568 and 811-8106, EDGAR Accession
No. 0000898432-98-000682.
(2) (i) Sub-Advisory Agreement Between Neuberger
Berman Management Inc. 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. 11 to
Registrant's Registration Statement, File
Nos. 33-82568 and 811-8106, EDGAR Accession
No. 0000898432-98-000682.
(iii) Substitution Agreement Among Neuberger Berman
Management Inc., 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.
(e) (1) (i) Distribution and Services Agreement Between
Neuberger Berman Equity Assets and Neuberger
Berman Management Inc. 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. To Be
Filed.
(f) Bonus, Profit Sharing or Pension Plans. None.
(g) (1) 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.
C-2
<PAGE>
Exhibit Description
Number -----------
------
(2) 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.
(h) (1) (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.
(2) (i) Administration Agreement Between Neuberger
Berman Equity Assets and Neuberger Berman
Management Inc. 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. To Be Filed.
(iii) Schedule B - Schedule of Compensation Under
the Administration Agreement. To Be Filed.
(i) (a) Opinion and Consent of Kirkpatrick & Lockhart
LLP on Securities Matters with Respect to
Neuberger Berman Focus Assets, Neuberger
Berman Guardian Assets, Neuberger Berman
Manhattan Assets, and Neuberger Berman
Partners Assets. Incorporated by Reference
to Post- Effective Amendment No. 3 to
Registrant's Statement, File Nos. 33-82568
and 811-8106, EDGAR Accession No.
0000898432-96-000048.
(b) Opinion and Consent of Kirkpatrick & Lockhart
LLP on Securities Matters with Respect to
Neuberger Berman Genesis Assets. Incorporated
by Reference to Post-Effective Amendment No.
9 to Registrant's Statement, File Nos.
33-82568 and 811-8106, EDGAR Accession No.
0000898432-97-000518.
C-3
<PAGE>
Exhibit Description
Number -----------
------
(c) Opinion and Consent of Kirkpatrick & Lockhart
LLP on Securities Matters with Respect to
Neuberger Berman Socially Responsive Assets.
To Be Filed.
(j) Consent of Independent Auditors. To Be Filed.
(k) Financial Statements Omitted from Prospectus. None.
(l) Letter of Investment Intent. None.
(m) (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. To Be Filed.
(n) Financial Data Schedule. Not Applicable.
(o) Plan Pursuant to Rule 18f-3. None.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
No person is controlled by or under common control with the
Registrant.
ITEM 25. 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
C-4
<PAGE>
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. ("NB Management")
provides that neither NB Management nor any director, officer or employee of NB
Management performing services for the series of Managers Trust at the direction
or request of NB Management in connection with NB 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 NB Management against any liability to
Managers Trust or any series thereof or its interest holders to which NB
Management would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of NB Management's duties, or by
reason of NB Management's reckless disregard of its obligations and duties under
the Agreement, or (ii) to protect any director, officer or employee of NB
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 NB 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 NB Management provides that NB 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 NB Management and hold it harmless from and against
any and all losses, damages and expenses, including reasonable attorneys' fees
and expenses, incurred by NB Management that result from: (i) any claim, action,
suit or proceeding in connection with NB 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 NB Management in the performance of its obligations
under the Agreement with respect to such Series; or (iii) any action of NB
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 NB Management shall not be entitled to such
indemnification in respect of actions or omissions constituting negligence or
misconduct on the part of NB Management, or its employees, agents or
contractors. Section 10 of the Agreement provides that NB 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) NB Management's failure to comply
with the terms of the Agreement with respect to such Series; or (ii) NB
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
NB 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 NB Management, unless such negligence or misconduct results from or
is accompanied by negligence or misconduct on the part of NB Management, any
affiliated person of NB Management, or any affiliated person of an affiliated
person of NB Management.
Section 11 of the Distribution Agreement between the Registrant and
NB Management provides that NB 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.
C-5
<PAGE>
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 ("1933 Act") may be permitted to trustees, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the 1933 Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the 1933 Act and will be governed by the final adjudication of such
issue.
ITEM 26. 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 NB Management and each principal of Neuberger Berman is,
or at any time during the past two years has been, engaged for his or her own
account or in the capacity of director, officer, employee, partner or trustee.
NAME BUSINESS AND OTHER CONNECTIONS
- ---- ------------------------------
Brooke A. Cobb Chief Investment Officer, Bainco
Vice President, International Investors. Senior
NB Management Vice President and Senior
Portfolio Manager, Putnam
Investments.1
Barbara DiGiorgio, Assistant Treasurer, Neuberger
Assistant Vice Berman Advisers Management Trust;
President, Assistant Treasurer, Advisers
NB Management Managers Trust; Assistant
Treasurer, Neuberger Berman Income
Funds; Assistant Treasurer,
Neuberger Berman Income Trust;
Assistant Treasurer, Neuberger
Berman Equity Funds; Assistant
Treasurer, Neuberger Berman Equity
Trust; Assistant Treasurer, Income
Managers Trust; Assistant
Treasurer, Equity Managers Trust;
Assistant Treasurer, Global
Managers Trust; Assistant
Treasurer, Neuberger Berman Equity
Assets; Assistant Treasurer,
Neuberger Berman Equity Series.
- ----------------
1 Until 1997.
C-6
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
- ---- ------------------------------
Stanley Egener Chairman of the Board and Trustee,
President and Director, Neuberger Berman Advisers
NB Management; Management Trust; Chairman of the
Principal, Neuberger Board and Trustee, Advisers
Berman Managers Trust; Chairman of the
Board and Trustee, Neuberger
Berman Income Funds; Chairman of
the Board and Trustee, Neuberger
Berman Income Trust; Chairman of
the Board and Trustee, Neuberger
Berman Equity Funds; Chairman of
the Board and Trustee, Neuberger
Berman Equity Trust; Chairman of
the Board and Trustee, Income
Managers Trust; Chairman of the
Board and Trustee, Equity Managers
Trust; Chairman of the Board and
Trustee, Global Managers Trust;
Chairman of the Board and Trustee,
Neuberger Berman Equity Assets;
Chairman of the Board and Trustee,
Neuberger Berman Equity Series.
Theodore P. Giuliano President and Trustee, Neuberger
Vice President and Berman Income Funds; President
Director, NB Management; and Trustee, Neuberger Berman
Principal, Neuberger Income Trust; President and
Berman Trustee, Income Managers Trust.
Michael F. Malouf Portfolio Manager, Dresdner RCM
Vice President Global Investors.2
NB Management
S. Basu Mullick Portfolio Manager, Ark Asset
Vice President Management.3
NB Management
C. Carl Randolph Assistant Secretary, Neuberger
Principal Berman Advisers Management Trust;
Neuberger Berman 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; Assistant Secretary,
Neuberger Berman Equity Series.
- -----------------
2 Until 1998.
3 Until 1998.
C-7
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
- ---- ------------------------------
Richard Russell Treasurer, Neuberger Berman
Vice President, Advisers Management Trust;
NB Management Treasurer, Advisers Managers
Trust; Treasurer, Neuberger Berman
Income Funds; Treasurer, Neuberger
Berman Income Trust; Treasurer,
Neuberger Berman Equity Funds;
Treasurer, Neuberger Berman Equity
Trust; Treasurer, Income Managers
Trust; Treasurer, Equity Managers
Trust; Treasurer, Global Managers
Trust; Treasurer, Neuberger Berman
Equity Assets; Treasurer,
Neuberger Berman Equity Series.
Ingrid Saukaitis Project Director, Council on
Assistant Vice Economic Priorities.4
President, NB Management
Jennifer K. Silver Portfolio Manager and Director,
Vice President, NB Putnum Investments.5
Management, Principal
Neuberger Berman
Daniel J. Sullivan Vice President, Neuberger Berman
Senior Vice President Advisers Management Trust; Vice
NB Management President, Advisers Managers
Trust; Vice President, Neuberger
Berman Income Funds; Vice
President, Neuberger Berman Income
Trust; Vice President, Neuberger
Berman Equity Funds; Vice
President, Neuberger Berman Equity
Trust; Vice President, Income
Managers Trust; Vice President,
Equity Managers Trust; Vice
President, Global Managers Trust;
Vice President, Neuberger Berman
Equity Assets; Vice President,
Neuberger Berman Equity Series.
Michael J. Weiner Vice President, Neuberger Berman
Senior Vice President, Advisers Management Trust; Vice
NB Management; President, Advisers Managers
Principal, Neuberger Trust; Vice President, Neuberger
Berman 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; Vice President,
Neuberger Berman Equity Series.
- ------------------
4 Until 1997.
5 Until 1997.
C-8
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
- ---- ------------------------------
Allan R. White Portfolio Manager, Salomon Asset
Vice President, NB Management.6
Management; Principal,
Neuberger Berman
Celeste Wischerth, Assistant Treasurer, Neuberger
Assistant Vice Berman Advisers Management Trust;
President, Assistant Treasurer, Advisers
NB Management Managers Trust; Assistant
Treasurer, Neuberger Berman Income
Funds; Assistant Treasurer,
Neuberger Berman Income Trust;
Assistant Treasurer, Neuberger
Berman Equity Funds; Assistant
Treasurer, Neuberger Berman Equity
Trust; Assistant Treasurer, Income
Managers Trust; Assistant
Treasurer, Equity Managers Trust;
Assistant Treasurer, Global
Managers Trust; Assistant
Treasurer, Neuberger Berman Equity
Assets; Assistant Treasurer,
Neuberger Berman Equity Series.
Lawrence Zicklin President and Trustee, Neuberger
Director, NB Management; Berman Advisers Management Trust;
Principal, Neuberger President and Trustee, Advisers
Berman Managers Trust; President and
Trustee, Neuberger Berman Equity
Funds; President and Trustee,
Neuberger Berman Equity Trust;
President and Trustee, Equity
Managers Trust; President, Global
Managers Trust; President and
Trustee, Neuberger Berman Equity
Assets; President and Trustee,
Neuberger Berman Equity Series.
The principal address of NB Management, Neuberger Berman, and of each of
the investment companies named above, is 605 Third Avenue, New York, New York
10158.
ITEM 27. PRINCIPAL UNDERWRITERS.
(a) NB 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 Equity Series
Neuberger Berman Income Funds
Neuberger Berman Income Trust
NB 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
- --------------
6 Until 1998.
C-9
<PAGE>
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.
NAME POSITIONS AND OFFICES POSITIONS AND
WITH UNDERWRITER OFFICES
---- --------------------- WITH REGISTRANT
---------------------
Ramesh Babu Assistant Vice None
President
Patrick T. Byrne Vice President None
Richard A. Cantor Chairman of the Board None
Valerie Chang Vice President None
Brooke A. Cobb Vice President None
Robert Conti Treasurer None
Robert W. D'Alelio Vice President None
Clara Del Villar Vice President None
Barbara DiGiorgio Assistant Vice Assistant Treasurer
President
Stanley Egener President and Director Chairman of the
Board, Chief
Executive Officer,
and Trustee
Robert S. Franklin Vice President None
Brian J. Gaffney Vice President None
Joseph G. Galli Vice President None
Robert I. Gendelman Vice President None
Theodore P. Giuliano Vice President and None
Director
Michael M. Kassen Vice President and None
Director
Robert L. Ladd Assistant Vice None
President
Irwin Lainoff Director None
Josephine Mahaney Vice President None
Michael F. Malouf Vice President None
Carmen G. Martinez Assistant Vice None
President
Ellen Metzger Secretary None
Paul Metzger Vice President None
S. Basu Mullick Vice President None
Janet W. Prindle Vice President None
Joseph S. Quirk Assistant Vice None
President
Kevin L. Risen Vice President None
Richard Russell Vice President Treasurer and
Principal
Accounting Officer
Ingrid Saukaitis Assistant Vice None
President
C-10
<PAGE>
Benjamin Segal Assistant Vice None
President
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 Senior Vice President None
Judith M. Vale Vice President None
Josephine Velez Assistant Vice None
President
Susan Walsh Vice President None
Catherine Waterworth Vice President None
Michael J. Weiner Senior Vice President Vice President and
Principal
Financial Officer
Allan R. White, III Vice President None
Celeste Wischerth Assistant Vice Assistant Treasurer
President
Lawrence Zicklin Director Trustee and
President
(c) No commissions or other compensation were received directly or
indirectly from the Registrant by any principal underwriter who was not an
affiliated person of the Registrant.
ITEM 28. 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 29. 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.
C-11
<PAGE>
ITEM 30. UNDERTAKINGS
None.
C-12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, NEUBERGER BERMAN EQUITY ASSETS,
has duly caused this Post-Effective Amendment No. 14 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 22nd day of September,
1999.
NEUBERGER BERMAN EQUITY ASSETS
By: /s/ Lawrence Zicklin
---------------------
Lawrence Zicklin
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 14 has been signed below by the following persons
in the capacities and on the date indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ Faith Colish Trustee September 22, 1999
- -------------------------
Faith Colish
/s/ Stanley Egener Chairman of the Board September 22, 1999
- ------------------------- and Trustee (Chief
Stanley Egener Executive Officer)
/s/ Howard A. Mileaf Trustee September 22, 1999
- -------------------------
Howard A. Mileaf
/s/ Edward I. O'Brien Trustee September 22, 1999
- -------------------------
Edward I. O'Brien
/s/ John T. Patterson, Jr. Trustee September 22, 1999
- -------------------------
John T. Patterson, Jr.
(signatures continued on next page)
<PAGE>
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ Johm P. Rosenthal Trustee September 22, 1999
- -------------------------
John P. Rosenthal
/s/ Cornelius T. Ryan Trustee September 22, 1999
- -------------------------
Cornelius T. Ryan
/s/ Gustave H. Shubert Trustee September 22, 1999
- -------------------------
Gustave H. Shubert
/s/ Lawrence Zicklin President and Trustee September 22, 1999
- -------------------------
Lawrence Zicklin
/s/ Michael J. Weiner Vice President (Principal September 22, 1999
- ------------------------- Fianncial Officer)
Michael J. Weiner
/s/ Richard Russell Treasurer (Principal September 22, 1999
- ------------------------- Accounting Officer)
Richard Russell
-2-
<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 this
Post-Effective Amendment No. 14 to the Registration Statement to be signed on
its behalf by the undersigned, thereto duly authorized, in the City and State of
New York on the 22nd day of September, 1999.
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. has been signed below by the following persons in
the capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/ Faith Colish Trustee September 22, 1999
- ---------------------
Faith Colish
/s/ Stanley Egener Chairman of the Board September 22, 1999
- --------------------- and Trustee (Chief
Stanley Egener Executive Officer)
/s/ Howard A. Mileaf Trustee September 22, 1999
- ---------------------
Howard A. Mileaf
/s/ Edward I. O'Brien Trustee September 22, 1999
- ---------------------
Edward I. O'Brien
(signatures continued on next page)
<PAGE>
Signature Title Date
- --------- ----- ----
/s/ John T. Patterson, Jr. Trustee September 22, 1999
- -------------------------
John T. Patterson, Jr.
/s/ John P. Rosenthal Trustee September 22, 1999
- -------------------------
John P. Rosenthal
/s/Cornelius T. Ryan Trustee September 22, 1999
- -------------------------
Cornelius T. Ryan
/s/ Gustave H. Shubert Trustee September 22, 1999
- -------------------------
Gustave H. Shubert
/s/ Lawrence Zicklin President and Trustee September 22, 1999
- -------------------------
Lawrence Zicklin
/s/ Michael J. Weiner Vice President September 22, 1999
- -------------------------- (Principal Financial
Michael J. Weiner Officer)
/s/ Richard Russell Treasurer (Principal September 22, 1999
- -------------------------- Accounting Officer)
Richard Russell
<PAGE>
NEUBERGER BERMAN EQUITY ASSETS
POST-EFFECTIVE AMENDMENT NO. 14 ON FORM N-1A
INDEX TO EXHIBITS
Exhibit Description
Number -----------
------
(a) (1) 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.
(2) Restated Certificate of Trust. Incorporated by
Reference to Post-Effective Amendment No. 13 to
Registrant's Registration Statement, File Nos.
33-82568 and 811-8106.
(3) 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.
(4) Schedule A - Current Series of Neuberger Berman
Equity Assets. To Be Filed.
(b) By-Laws of Neuberger Berman Equity Assets.
Incorporated by Reference to Post-Effective
Amendment No. 1 to Registrant's Registration
Statement, File Nos. 33-82568 and 811-8106, EDGAR
Accession No. 0000898432-95-000393.
(c) (1) 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.
(2) 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.
(d) (1) (i) Management Agreement Between Equity Managers
Trust and Neuberger Berman Management Inc.
Incorporated by Reference to Post-Effective
Amendment No. 70 to Registration Statement
of Neuberger Berman Equity Funds, File Nos.
2-11357 and 811-582, EDGAR Accession No.
0000898432-95-000314.
(ii) Schedule A - Series of Neuberger Berman
Equity Managers Trust Currently Subject to
the Management Agreement. Incorporated by
Reference to Post-Effective Amendment No. 11
to Registrant's Registration Statement, File
Nos. 33-82568 and 811-8106, EDGAR Accession
No. 0000898432-98-000682.
<PAGE>
Exhibit Description
Number -----------
------
(iii) Schedule B - Schedule of Compensation Under
the Management Agreement. Incorporated by
Reference to Post-Effective Amendment No. 11
to Registrant's Registration Statement, File
Nos. 33-82568 and 811-8106, EDGAR Accession
No. 0000898432-98-000682.
(2) (i) Sub-Advisory Agreement Between Neuberger
Berman Management Inc. 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. 11 to
Registrant's Registration Statement, File
Nos. 33-82568 and 811-8106, EDGAR Accession
No. 0000898432-98-000682.
(iii) Substitution Agreement Among Neuberger Berman
Management Inc., 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.
(e) (1) (i) Distribution Agreement Between Neuberger
Berman Equity Assets and Neuberger Berman
Management Inc. 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. To Be Filed.
(2) (i) Distribution and Services Agreement Between
Neuberger Berman Equity Assets and Neuberger
Berman Management Inc. 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. To Be
Filed.
(f) Bonus, Profit Sharing or Pension Plans. None.
<PAGE>
Exhibit Description
Number -----------
------
(g) (1) 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.
(2) 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.
(h) (1) (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.
(2) (i) Administration Agreement Between Neuberger
Berman Equity Assets and Neuberger Berman
Management Inc. 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. To Be Filed.
(iii) Schedule B - Schedule of Compensation Under
the Administration Agreement. To Be Filed.
(i) (a) Opinion and Consent of Kirkpatrick & Lockhart
LLP on Securities Matters with Respect to
Neuberger Berman Focus Assets, Neuberger
Berman Guardian Assets, Neuberger Berman
Manhattan Assets, and Neuberger Berman
Partners Assets. Incorporated by Reference
to Post- Effective Amendment No. 3 to
Registrant's Statement, File Nos. 33-82568
and 811-8106, EDGAR Accession No.
0000898432-96-000048.
<PAGE>
(b) Opinion and Consent of Kirkpatrick & Lockhart
LLP on Securities Matters with Respect to
Neuberger Berman Genesis Assets. Incorporated
by Reference to Post-Effective Amendment No.
9 to Registrant's Statement, File Nos.
33-82568 and 811-8106, EDGAR Accession No.
0000898432-97-000518.
(c) Opinion and Consent of Kirkpatrick & Lockhart
LLP on Securities Matters with Respect to
Neuberger Berman Socially Responsive Assets.
To Be Filed.
(j) Consent of Independent Auditors. To Be Filed.
(k) Financial Statements Omitted from Prospectus. None.
(l) Letter of Investment Intent. None.
(m) (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. To Be Filed.
(n) Financial Data Schedule. Not Applicable.
(o) Plan Pursuant to Rule 18f-3. None.
<PAGE>
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036-1800
September 24, 1999
EDGAR FILING
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Neuberger Berman Equity Assets
-- Neuberger Berman Socially Responsive Assets ("Fund")
1933 Act File No. 33-82568
1940 Act File No. 811-8106
Post-Effective Amendment No. 14
-------------------------------
Dear Sir or Madam:
Transmitted herewith for filing pursuant to the Securities Act of 1933, as
amended, and Rule 485(a) of Regulation C thereunder, and the Investment Company
Act of 1940, as amended, and the regulations thereunder, is Post-Effective
Amendment No. 14 to the registration statement on Form N-1A of Neuberger Berman
Equity Assets ("Registrant"). The Fund is a feeder fund that invests all of its
net investable assets in Neuberger Berman Socially Responsive Portfolio
("Portfolio"), a series of Equity Managers Trust. This transmission contains
conformed signature pages for the Registrant, as well as for Equity Managers
Trust. The Registrant maintains manually signed originals of these signature
pages at its offices.
The primary purpose of this filing is to add a series, Neuberger Berman
Socially Responsive Assets, to the Registrant. This new series is being added
solely to carry out a realignment of Socially Responsive feeder funds in the
Neuberger Berman fund complex. The Fund is presently organized as a series of
Neuberger Berman Equity Series, another investment company in the Neuberger
Berman fund complex. The proposed addition of the Fund to the Registrant will
have no material effect on shareholder accounts or on the trustees, officers,
operations or management of the Fund. The Fund will continue to invest its
assets in the Portfolio. The realignment will simply make administration of the
Fund easier.1
- -----------------------
1 The realignment of the Fund to become a series of the Registrant is the
subject of a proxy vote that will take place at a shareholder meeting on October
15, 1999.
<PAGE>
U.S. Securities and Exchange Commission
September 24, 1999
Page 2
Consequently, the prospectus and statement of additional information filed
herewith are identical in every material respect to those currently in effect
for the Fund, which were the subject of an extensive staff review in December
1998. The only significant difference is that the Fund is described as a series
of the Registrant and not of Neuberger Berman Equity Series.
Because this filing is technically made to add a new series, Registrant
has specified a 75-day automatic effective date, in accordance with Rule
485(a)(2) under the 1933 Act. However, the Registrant is requesting that
effectiveness of this amendment be accelerated to December 1, 1999. The letters
requesting acceleration are included in this filing. We have previously
discussed our intention to request acceleration with Commission staff member Joy
Kemppainen; after discussing the matter with Frank Donaty, she stated that she
understood that this request would be met favorably. The Registrant expects to
file an amendment pursuant to Rule 485(b) prior to December 1, 1999 to respond
to staff comments on the present filing, and to add certain exhibits and make
other nonmaterial changes.
This filing is not intended to affect the prospectus or statement of
additional information of any other series of the Registrant.
We would appreciate receiving any staff comments on this filing by Monday,
November 1, 1999.
Please contact me at (202) 778-9223 or Arthur C. Delibert at (202)
778-9042 with any questions or comments you may have on this filing. Thank you
for your attention.
Sincerely,
/s/ Fatima Sulaiman
-------------------
Fatima Sulaiman
Enclosures
