-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RroBuO0BJhI3FyTHUQVVLLwU5jJgfZVbXpboqWtPfwVu7XkrYYjTU0W+3AZ3iC1N QMsrB6749YqqPAOZYA3iFA== 0000898432-00-000306.txt : 20000417 0000898432-00-000306.hdr.sgml : 20000417 ACCESSION NUMBER: 0000898432-00-000306 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20000414 EFFECTIVENESS DATE: 20000414 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEUBERGER BERMAN EQUITY TRUST CENTRAL INDEX KEY: 0000906926 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 033-64368 FILM NUMBER: 602340 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 811-07784 FILM NUMBER: 602341 BUSINESS ADDRESS: STREET 1: 605 THIRD AVE STREET 2: 2ND FLOOR CITY: NEW YORK STATE: NY ZIP: 10158-0006 BUSINESS PHONE: 2124768800 FORMER COMPANY: FORMER CONFORMED NAME: NEUBERGER & BERMAN EQUITY TRUST DATE OF NAME CHANGE: 19930615 485BPOS 1 As filed with the Securities and Exchange Commission on April 14, 2000 1933 Act Registration No. 033-64368 1940 Act Registration No. 811-7784 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. [ 28 ] [ X ] and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ] Amendment No. [ 26 ] [ X ] (Check appropriate box or boxes) NEUBERGER BERMAN EQUITY TRUST ----------------------------- (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 Michael M. Kassen, President Neuberger Berman Equity Trust 605 Third Avenue, 2nd Floor New York, New York 10158-0180 Arthur C. Delibert, Esq. Kirkpatrick & Lockhart LLP 1800 Massachusetts Avenue, N.W., 2nd Floor Washington, D.C. 20036-1800 (Names and Addresses of agents for service) Approximate Date of Proposed Public Offering: Continuous It is proposed that this filing will become effective: [ ] immediately upon filing pursuant to paragraph (b) [X] on April 17, 2000 pursuant to paragraph (b) [ ] 60 days after filing pursuant to paragraph (a)(1) [ ] on ________________pursuant to paragraph (a)(1) [ ] 75 days after filing pursuant to paragraph (a)(2) [ ] on _______________pursuant to paragraph (a)(2) Neuberger Berman Equity Trust is a "master/feeder fund." This Post-Effective Amendment No. 28 includes a signature page for the master fund, Equity Managers Trust, and appropriate officers and trustees thereof. NEUBERGER BERMAN EQUITY TRUST CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 28 ON FORM N-1A This post-effective amendment consists of the following papers and documents: Cover Sheet Contents of Post-Effective Amendment No. 28 on Form N-1A Neuberger Berman Technology Trust Part A - Prospectus Part B - Statement of Additional Information Part C - Other Information Signature Pages Exhibit Index No change is intended to be made by this Post-Effective Amendment No. 28 to the prospectus or statement of additional information for the other series of Neuberger Berman Equity Trust. [LOGO] NEUBERGER BERMAN TECHNOLOGY TRUST - -------------------------------------------------------------------------------- PROSPECTUS APRIL 17, 2000 These securities, like the securities of all mutual funds, have not been approved or disapproved by the Securities and Exchange Commission, and the Securities and Exchange Commission has not determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense. CONTENTS - -------------------------------------------------------------------------------- NEUBERGER BERMAN EQUITY TRUST PAGE 2 ...... Technology Trust YOUR INVESTMENT 6 ...... 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 individual fund name in this prospectus are either service marks or registered trademarks of Neuberger Berman Management Inc. -C- 2000 Neuberger Berman Management Inc. - -------------------------------------------------------------------------------- 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 $55.4 billion in total assets (as of December 31, 1999) and continue an asset management history that began in 1939. RISK INFORMATION This prospectus discusses principal risks of investment in fund shares. These and other risks are discussed in detail in the Statement of Additional Information (see back cover). THIS FUND: - - IS DESIGNED FOR INVESTORS SEEKING LONG-TERM GROWTH OF CAPITAL - - 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 - - IS A MUTUAL FUND, NOT A BANK DEPOSIT, AND IS NOT GUARANTEED OR INSURED BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY 1 NEUBERGER BERMAN TECHNOLOGY TRUST - -------------------------------------------------------------------------------- "WE CONSTANTLY CHALLENGE WHAT WE THOUGHT YESTERDAY," SAYS MANAGEMENT TEAM MEMBER RUDY TORRIJOS, "AND WE REVISE IT FOR WHAT WE BELIEVE IS RIGHT FOR TODAY. RAPID CHANGE AND EVOLUTION ARE PART OF THE OPPORTUNITY IN THE TECHNOLOGY SECTOR. OUR JOB IS NOT TO FIGHT CHANGE, IT'S TO TRY TO TAKE ADVANTAGE OF THAT CHANGE." 2 GOAL AND STRATEGY - -------------------------------------------------------------------------------- TECHNOLOGY STOCKS Technology companies are those whose processes, products or services may be expected to significantly benefit from technological developments and the application of technological advances. Therefore, these companies may be found in virtually any industry. Because the managers seek companies that benefit from innovations, there may be times when a significant portion of the portfolio consists of small- and mid-cap companies. GROWTH INVESTING For growth investors, the aim is to invest in companies that are already successful but could be even more so. In certain rapidly-emerging industries, such as the Internet, success may be measured in market share rather than profits. Often, growth stocks are in emerging or rapidly growing industries and may not yet have reached their full potential. The growth investor looks for indications of continued success. [ICON] THE FUND SEEKS LONG TERM GROWTH OF CAPITAL. To pursue this goal, the fund invests at least 65% of its assets in common stocks of companies substantially engaged in offering, using or developing products, processes or services that provide or that benefit significantly from technological advances, or are expected to do so. The fund may invest in companies of any capitalization size, and may invest up to 20% of its assets in foreign companies. Some of the businesses that are, from time to time, likely to make up a significant portion of the portfolio, either individually or in the aggregate, are: - - computer products, software and electronic components - - computer services - - telecommunications - - networking - - Internet - - biotechnology, pharmaceuticals or medical technology The managers take a growth approach to selecting stocks, looking for new companies that are in the developmental stage as well as older companies that appear poised to grow because of new products, technology or management. Factors in identifying these firms may include surprises in the company's fundamentals relative to the market's expectations, financial strength, a strong position relative to competitors and a stock price that is reasonable relative to its growth rate. The managers follow a disciplined selling strategy and may sell a portfolio stock when it is not likely to exceed the market's expectations, fails to perform as expected, or appears less desirable than another stock. The fund may trade actively at certain times to take advantage of industries that are benefiting from recent innovations or attractive changes in stock prices. The fund has the ability to change its goal without shareholder approval, although it does not currently intend to do so. Technology Trust 3 FOREIGN SECURITIES Although they may add diversification, foreign securities can be riskier, because foreign markets tend to be more volatile and currency exchange rates fluctuate. 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. When the fund anticipates adverse market, economic, political 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 RISKS - -------------------------------------------------------------------------------- [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 behavior, the value of your investment will rise and fall, and you could lose money. By focusing on technology stocks, the fund is subject to their risks, including the risk its holdings may: - - fluctuate more widely and rapidly in price than the market as a whole - - underperform other types of stocks or be difficult to sell when the economy is not robust, during market downturns, or when they are out of favor. - - be subject to the risk that a particular group of stocks of companies in inter-related industries will decline in price due to sector-specific developments - - be affected by obsolete technology, expired patents, short product cycles, price competition, market saturation and new market entrants. To the extent that the fund invests in a type of stock, it takes on the risks associated with that type. For instance, mid-cap and small-cap stocks tend to be less liquid and more volatile than large-cap stocks. Smaller companies tend to be unseasoned issuers with new products and less experienced management. Also, because the prices of most growth stocks are based on future expectations, these stocks tend to be more sensitive than value stocks to bad economic news and negative earnings surprises. Growth stocks in particular may underperform during periods when the market favors value stocks. The fund's performance may also suffer if certain stocks do not perform as the portfolio management team expected. Through active trading, the fund may have a high portfolio turnover rate, which can mean higher taxable distributions and lower performance due to increased brokerage costs. PERFORMANCE -- Because the fund is new it does not have performance to report. 4 Neuberger Berman MANAGEMENT The fund is managed by a team of investment professionals led by Jennifer Silver, Vice President of Neuberger Berman Management and Managing Director of Neuberger Berman, LLC. This team is part of the Growth Equity Group at Neuberger Berman, and has managed the fund's assets since May 2000. NEUBERGER BERMAN MANAGEMENT is the fund's investment manager, administrator, and distributor. It engages Neuberger Berman LLC as sub-adviser to provide management and related services. For management/administration services, the fund will pay Neuberger Berman Management a fee at the annual rate of 1.25% of average net assets. INVESTOR EXPENSES - -------------------------------------------------------------------------------- [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 or 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. Management Fees 1.25 PLUS: Distribution (12b-1) fees 0.10 Other Expenses*** 0.80 .... EQUALS: Total Annual Operating Expenses 2.15 MINUS: Expense Reimbursement 0.15 .... EQUALS: Net Expenses 2.00
** NEUBERGER BERMAN MANAGEMENT HAS CONTRACTUALLY AGREED TO REIMBURSE CERTAIN EXPENSES OF THE FUND THROUGH 12/31/03, SO THAT THE TOTAL ANNUAL OPERATING EXPENSES OF THE FUND ARE LIMITED TO 2.00% OF AVERAGE NET ASSETS. IN ADDITION, THE 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 THE REPAYMENT DOES NOT CAUSE THE FUND'S ANNUAL OPERATING EXPENSES TO EXCEED 2.00% OF ITS AVERAGE NET ASSETS. ANY SUCH REPAYMENT MUST BE 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 you shares or continued to hole them at the end of each period. Actual performance and expenses may be lower or higher.
1 Year 3 Years - ------------------------------------- Expenses $203 $627
FINANCIAL HIGHLIGHTS -- Because the fund is new it does not have financial highlights to report. Technology Trust 5 YOUR INVESTMENT YOUR INVESTMENT PROVIDER The fund shares described in this prospectus are available 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 in addition to those described in this prospectus. MAINTAINING YOUR ACCOUNT - -------------------------------------------------------------------------------- To buy or sell shares of the fund described in this prospectus, 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 - - 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 6 Neuberger Berman - -------------------------------------------------------------------------------- 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. 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 AND SHAREHOLDER SERVICING FEE -- The fund has adopted a plan under which it pays 0.10% of its average net assets every year to support share distribution and shareholder servicing. These fees increase the cost of investing in the fund. If used to support distribution, they could result in higher overall costs over the long term than other types of sales charges. Your Investment 7 SHARE PRICES - -------------------------------------------------------------------------------- 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. Because the fund does not have initial sales charges, the price you pay for each share of the fund is the fund's net asset value per share. Similarly, because there are no fees for selling shares, the fund will pay 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. The Exchange is closed on all national holidays and Good Friday; fund shares will not be priced on those days. 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. 8 Neuberger Berman DISTRIBUTIONS AND TAXES - -------------------------------------------------------------------------------- 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 share 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 share 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. 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 about whether your income and capital gains distributions from the fund will be reinvested in that fund or paid to you in cash. HOW DISTRIBUTIONS ARE TAXED -- Except for tax-advantaged retirement accounts and other tax-exempt investors, 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 these 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 net 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. Your Investment 9 - -------------------------------------------------------------------------------- CONVERSION TO THE EURO 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. At Neuberger Berman, we are taking steps to ensure that our own computer systems are compliant with Euro 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 this issue. At the same time, it is impossible to know whether the ongoing conversion, which could disrupt fund operations and investments if problems arise, has been adequately addressed until the conversion is completed. HOW TRANSACTIONS ARE TAXED -- When you sell or exchange fund shares, you generally realize a taxable gain or loss. 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. 10 Neuberger Berman 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. Your Investment 11 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: questions@nbfunds.com You can also request copies of this information from the SEC for the cost of a duplicating fee by sending an e-mail request to publicinfo@sec.gov or by writing to the SEC's Public Reference Section, Washington DC 20549-0102. They are also available from the EDGAR Database on the SEC's website at www.sec.gov. You may also view and copy the documents at the SEC's Public Reference Room in Washington. Call 207-942-8090 for information about the operation of the Public Reference Room. NEUBERGER BERMAN TECHNOLOGY TRUST - - No load - - No front-end sales charge If you'd like further details about this 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 manager(s) 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 this 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 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 MANAGEMENT INC. 605 Third Avenue 2nd Floor New York, NY 10158-0180 [RECYCLE LOGO] A0578 05/00 SEC file number: 811-7784 - -------------------------------------------------------------------------------- NEUBERGER BERMAN TECHNOLOGY TRUST AND PORTFOLIO STATEMENT OF ADDITIONAL INFORMATION DATED APRIL 17, 2000 NO-LOAD MUTUAL FUND 605 THIRD AVENUE, 2ND FLOOR, NEW YORK, NY 10158-0180 TOLL-FREE 800-877-9700 - -------------------------------------------------------------------------------- Neuberger Berman Technology Trust ("Fund"), a series of Neuberger Berman Equity Trust ("Trust"), is a no-load mutual fund that offers shares pursuant to a Prospectus dated April 17, 2000. The Fund invests all of its net investable assets in Neuberger Berman Technology 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. (each an "Institution"). The Fund's Prospectus provides basic information that an investor should know before investing. You may obtain a free copy of the Prospectus from Neuberger Berman Management Inc. ("NB Management"), Institutional Services, 605 Third Avenue, 2nd Floor, New York, NY 10158-0180, or by calling 800-877-9700. This Statement of Additional Information ("SAI") is not a prospectus and should be read in conjunction with the Prospectus. No person has been authorized to give any information or to make any representations not contained in the Prospectus or in this SAI in connection with the offering made by the Prospectus, and, if given or made, such information or representations must not be relied upon as having been authorized by the Fund or its distributor. The Prospectus and this SAI do not constitute an offering by the Fund or its distributor in any jurisdiction in which such offering may not lawfully be made. 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)2000 Neuberger Berman Management Inc. TABLE OF CONTENTS INVESTMENT INFORMATION.......................................................1 Investment Policies and Limitations....................................1 Investment Insight.....................................................3 Additional Investment Information......................................5 PERFORMANCE INFORMATION.....................................................21 Total Return Computations.............................................21 Comparative Information...............................................21 Other Performance Information.........................................22 CERTAIN RISK CONSIDERATIONS.................................................23 TRUSTEES AND OFFICERS.......................................................23 INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES...........................27 Investment Manager and Administrator..................................28 Management and Administration Fees....................................29 Sub-Adviser...........................................................30 Investment Companies Managed..........................................31 Management and Control of NB Management...............................33 DISTRIBUTION ARRANGEMENTS...................................................33 Rule 12b-1 Plan.......................................................34 ADDITIONAL PURCHASE INFORMATION.............................................35 Share Prices and Net Asset Value......................................35 ADDITIONAL EXCHANGE INFORMATION.............................................35 ADDITIONAL REDEMPTION INFORMATION...........................................38 Suspension of Redemptions.............................................38 Redemptions in Kind...................................................39 DIVIDENDS AND OTHER DISTRIBUTIONS...........................................39 i ADDITIONAL TAX INFORMATION..................................................39 Taxation of the Fund..................................................39 Taxation of the Portfolio.............................................40 Taxation of the Fund's Shareholders...................................43 PORTFOLIO TRANSACTIONS......................................................43 Portfolio Turnover....................................................45 REPORTS TO SHAREHOLDERS.....................................................46 ORGANIZATION, CAPITALIZATION AND OTHER MATTERS..............................46 CUSTODIAN AND TRANSFER AGENT................................................48 INDEPENDENT ACCOUNTANTS.....................................................49 LEGAL COUNSEL...............................................................49 APPENDIX A.................................................................A-1 RATINGS OF CORPORATE BONDS AND COMMERCIAL PAPER......................A-1 ii INVESTMENT INFORMATION The Fund is a separate operating series of the Trust, a Delaware business trust that is registered with the Securities and Exchange Commission ("SEC") as 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. 1 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. 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"). 2 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 20% 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. Although the Portfolio does not have policies limiting its investment in warrants, the Portfolio does not currently intend to invest in warrants unless acquired in units or attached to securities. TEMPORARY DEFENSIVE POSITION. For temporary defensive purposes, the Portfolio may invest up to 100% of its total assets in cash and cash equivalents, U.S. Government and Agency Securities, commercial paper and certain other money market instruments, as well as repurchase agreements collateralized by the foregoing. INVESTMENT INSIGHT Neuberger Berman's commitment to its asset management approach is reflected in the more than $125 million the organization's employees and their families invested in the Neuberger Berman mutual funds. No one knows what the future will look like, but we do know that technological change permeates life in today's world and seems likely to play a huge role in shaping the future. o Computers can read an imprint of your palm or the iris of your eye as security "passwords." Telephone services can recognize your voice and soon, voice operation of computers may be as commonplace as keyboards and mice. 3 o New appliances for the "smart house" - such as robotic vacuum cleaners and interactive kitchen appliances- are reportedly on the way. o Biologists have cloned animals, and they are nearing completion of the human genetic "map." Many scientists and doctors believe that the mapping of the human genome - the entire sequence of 3 billion chemical pairs that constitute human DNA - will reveal to them why certain people are predisposed to certain diseases. Before too long, an individual's genetic sequence may dictate personally tailored remedies for illness and disease, with the potential to greatly extend human life. This knowledge and the potential treatment innovations may introduce a new era of medicine and entire new industries. The current stage of technology's evolution is especially exciting because everything is converging toward a unified system: the INTERNET. Not since Gutenberg invented the printing press in 1450 has there been an innovation with such potential for reshaping so many aspects of our lives. The reach of the Internet is global, and the opportunities, with commensurate risks, are virtually unlimited.1 Yesterday's science fiction is rapidly becoming more science and less fiction. As Jennifer Silver, head of Neuberger Berman's Boston-based Growth Equity Group, says, "Technology has experienced constant change for many decades. But the more you see of the innovations today, the more excited you become." At Neuberger Berman, we believe growth opportunities exist for a wide range of companies - from the smallest start-ups to some of the largest blue chips. Among the perceived trends driving the continuing technology boom are: o Increasing business-to-business e-commerce o Rapid spread of the Internet among consumers o Advances in wireless broadband telecommunications o Proliferation of web-enabled appliances for the home and office o Innovations in medical diagnostic and surgical procedures o Improving biochemical and drug research techniques Neuberger Berman Technology Trust seeks long-term capital growth by investing in the stocks of compelling technology-related companies of all sizes. This all-cap technology fund will invest in companies such as computer products; software; electronic components; computer services; telecommunications; networking; Internet; biotechnology, pharmaceutical and medical technology. - -------------------- 1 The Fund may or may not invest in companies involved with any aspect of the examples of technological change mentioned herein. 4 The Fund may also include companies that are indirectly related to the technology sector, such as service providers to technology companies. Although there are no guarantees, the Fund will endeavor to select only those tech and tech-related stocks which its management team believes have the most merit and potential for growth. The Technology Trust employs quantitative and qualitative research screens to select approximately 60-75 stocks (based on portfolio assets of $25-$50 million) with the most merit. The management team looks for new companies that are in the development stage as well as older companies that appear poised to grow because of new products, technology or management. Factors in identifying these firms may include: o positive fundamental surprises (revenue/earnings surprises, new customer wins, subscribers, etc.) o strong position relative to competitors o new business alliances o multi-industry exposure or applications for products o development or use of technology innovations o financial strength o reasonable relative valuations The fast-paced technology sector compels investors to be open-minded and ready to scrutinize which companies are best - practically on a daily basis. That willingness and objectivity is an important part of the team's management style. "We constantly challenge what we thought yesterday," says management team member Rudy Torrijos, "and we revise it for what we think is right today. Rapid change and evolution are part of the opportunity in the technology sector. Our job is not to fight the change, it's to try to take advantage of that change." An investment concentrated in one area inevitably carries greater risk. With technology companies, any remarkable potential for growth is naturally accompanied by heightened volatility. Neuberger Berman has a time-honored tradition of taking risk seriously. The Technology Trust's management team uses a systematic investment discipline to help identify and control risk. If we think a company or its stock indicates any fundamental weakening, the team will sell it swiftly. Neuberger Berman also believes in staying faithful to its investment style, seeking strong growth companies at reasonable prices. ADDITIONAL INVESTMENT INFORMATION The Portfolio may make the following investments, among others, although it may not buy all of the types of securities or use all of the investment techniques that are described. TECHNOLOGY SECURITIES. These include the securities of companies substantially engaged in offering, using or developing products, processes or services that provide, or that benefit significantly from, technological advances or that are expected to do so. Technology-related businesses include, 5 among others: computer products, software and electronic components; computer services; telecommunications; networking; internet; and biotechnology, pharmaceuticals or medical technology. Although the Portfolio will not invest 25% or more of its total assets in the securities of issuers having their principal business activities in the same industry, the Portfolio may invest in companies in inter-related industries that may react similarly to economic or competitive pressures. The products or services offered by issuers of technology securities quickly may become obsolete in the face of technological developments. The economic outlook of such companies may fluctuate dramatically due to changes in regulatory or competitive environments. In addition, technology companies often progress at an accelerated rate, and these companies may be subject to short product cycles and aggressive pricing which may increase their volatility. Competitive pressures in the technology-related industries also may have a significant effect on the performance of technology securities. The issuers of technology securities also may be smaller or newer companies, which may lack depth of management, be unable to generate funds necessary for growth or potential development, or be developing or marketing new products or services for which markets are not yet established and may never become established. In addition, such companies may be subject to intense competition from larger or more established companies. POLICIES AND LIMITATIONS. The Portfolio normally invests at least 65% of its total assets in technology securities. The Portfolio may not invest 25% or more of its total assets in the securities of issuers having their principal business activities in the same industry. 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. 6 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 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. 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, 7 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 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 8 currency denominated securities involves the special risks associated with investing in non-U.S. issuers, as described in the preceding paragraph, and the additional risks of (1) adverse changes in foreign exchange rates, and (2) adverse changes in investment or exchange control regulations (which could prevent cash from being brought back to the United States). Additionally, dividends and interest payable on foreign securities (and gains realized on 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 20% of its total assets (taken at market value) would be invested in foreign currency denominated securities. Within that limitation, however, the Portfolio is not restricted in the amount it may invest in securities denominated in any one foreign currency. 9 Investments in 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 AND INDICES, FORWARD CONTRACTS, AND OPTIONS ON FOREIGN CURRENCIES (COLLECTIVELY, "HEDGING 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 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. The Portfolio may purchase and sell stock index futures contracts, and may purchase and sell options thereon. For purposes of managing cash flow, the managers may use such futures and options to increase the Portfolio's exposure to the performance of 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 CFTC; futures transactions must be executed through a futures commission merchant that is a member of the relevant contract market. In both U.S. and foreign markets, an exchange's affiliated clearing organization guarantees performance of the contracts between the clearing members of the exchange. Although futures contracts by their terms may require the actual delivery or acquisition of the underlying securities or currency, in most cases the contractual obligation is extinguished by being offset before the expiration of the contract. A futures position is offset by buying (to offset an earlier sale) or selling (to offset an earlier purchase) an identical futures contract calling for delivery in the same month. This may result in a profit or loss. 10 "Margin" with respect to a futures contract is the amount of assets that must be deposited by the Portfolio with, or for the benefit of, a futures commission merchant in order to initiate and maintain the Portfolio's futures positions. The margin deposit made by the Portfolio when it enters into a futures contract ("initial margin") is intended to assure its performance of the contract. If the price of the futures contract changes -- increases in the case of a short (sale) position or decreases in the case of a long (purchase) position -- so that the unrealized loss on the contract causes the margin deposit not to satisfy margin requirements, the Portfolio will be required to make an additional margin deposit ("variation margin"). However, if favorable price changes in the futures contract cause the margin deposit to exceed the required margin, the excess will be paid to the Portfolio. In computing its NAV, the Portfolio marks to market the value of its open futures positions. The Portfolio also must make margin deposits with respect to options on futures that 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. 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 11 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 stock index futures contracts, and may purchase and sell options thereon. For purposes of managing cash flow, the managers may use such futures and options to increase the Portfolio's exposure to the performance of a recognized securities index, such as the S&P "500" Index. The Portfolio may also 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. The Portfolio does not engage in transactions in futures and options on futures for speculation. CALL OPTIONS ON SECURITIES. The Portfolio may write covered call options and may purchase call options on securities. It may also write covered call options and may purchase call options in related closing transactions. The purpose of writing call options is to hedge (i.e., to reduce, at least in part, the effect of price fluctuations of securities held by the Portfolio on the Portfolio's and the Fund's net asset values ("NAVs")) or to earn premium income. Portfolio securities on which call options may be written and purchased by the Portfolio are purchased solely on the basis of investment considerations consistent with the Portfolio's investment objective. When the Portfolio writes a call option, it is obligated to sell a security to a purchaser at a specified price at any time until a certain date if the purchaser decides to exercise the option. The Portfolio receives a premium for writing the call option. So long as the obligation of the call option continues, the Portfolio may be assigned an exercise notice, requiring it to deliver the underlying security against payment of the exercise price. The Portfolio may be obligated to deliver securities underlying an option at less than the market price. The 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. 12 POLICIES AND LIMITATIONS. The Portfolio may write covered call options and may purchase call options on securities. It may also 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 or to protect against an increase in the price of the securities it intends to purchase. 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 would purchase a put option in order to protect itself against a decline in the market value of a security it owns. Portfolio securities on which put options may be written and purchased by the Portfolio are purchased solely on the basis of investment considerations consistent with the Portfolio's investment objective. When writing a put option, the Portfolio, in return for the premium, takes the risk that it must purchase the underlying security at a price that may be higher than the current market price of the security. If a put option that the Portfolio has written expires unexercised, the Portfolio will realize a gain in the amount of the premium. 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 its corresponding Fund's NAVs). GENERAL INFORMATION ABOUT SECURITIES OPTIONS. The exercise price of an option may be below, equal to, or above the market value of the underlying security at the time the option is written. Options normally have expiration dates between three and nine months from the date written. American-style options are exercisable at any time prior to their expiration date. The obligation under any option written by the Portfolio terminates upon expiration of the option or, at an earlier time, when the Portfolio offsets the option by entering into a "closing purchase transaction" to purchase an option of the same series. If an option is purchased by the Portfolio and is never exercised or closed out, the Portfolio will lose the entire amount of the premium paid. Options are traded both on U.S. national securities exchanges and in the over-the-counter ("OTC") market. Exchange-traded options 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 writes an OTC option, it generally will be able to "close out" the option prior to its expiration only by entering into a closing purchase transaction with the dealer to whom the Portfolio originally sold the option. There can be no assurance that the Portfolio would be able to liquidate an OTC option at any time prior to 13 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. 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, 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 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. 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. 14 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. The effectiveness of hedging through the purchase of securities index options will depend upon the extent to which price movements in the securities being hedged correlate with price movements in the selected securities index. Perfect correlation is not possible because the securities held or to be acquired by the Portfolio will not exactly match the composition of the securities indices on which options are available. 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. 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 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. 15 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 but 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 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. 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 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. REGULATORY LIMITATIONS ON USING HEDGING 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 16 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 HEDGING 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 to promptly 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 Hedging Instruments and, if the guidelines so require, set aside in a segregated account with its custodian the prescribed amount of cash or appropriate liquid securities. GENERAL RISKS OF HEDGING INSTRUMENTS. The primary risks in using Hedging Instruments are (1) imperfect correlation or no correlation between changes in market value of the securities or currencies held or to be acquired by the Portfolio and the prices of Hedging Instruments; (2) possible lack of a liquid secondary market for Hedging Instruments and the resulting inability to close out Hedging Instruments when desired; (3) the fact that the skills needed to use Hedging Instruments are different from those needed to select the Portfolio's securities; (4) the fact that, although use of Hedging Instruments for hedging purposes can reduce the risk of loss, they also can reduce the opportunity for gain, or even result in losses, by offsetting favorable price movements in hedged investments; and (5) the possible inability of 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 Hedging Instruments. There can be no assurance that the Portfolio's use of Hedging Instruments will be successful. The Portfolio's use of Hedging Instruments may be limited by the provisions of the Internal Revenue Code of 1986, as amended ("Code"), with which it must comply if the Fund is to continue to qualify as a regulated investment company ("RIC"). See "Additional Tax Information." Hedging Instruments may not 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 Hedging 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 Hedging 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 and in corporate debt securities rated below investment grade. 17 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 Standard & Poor's ("S&P"), Moody's Investors Service, Inc. ("Moody's"), 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 investments is likely to rise. Foreign debt securities are subject to risks similar to those of other foreign securities. Lower-rated securities are more likely to react to developments affecting market and credit risk than are more highly rated securities, which react primarily to movements in the general level of interest rates. Debt securities in the lowest rating categories may involve a substantial risk of default or may be in default. Changes in economic conditions or developments regarding the individual issuer are more likely to cause price volatility and weaken the capacity of the issuer of such securities to make principal and interest payments than is the case for higher-grade debt securities. An economic downturn affecting the issuer may result in an increased incidence of default. The market for lower-rated securities may be thinner and less active than for higher-rated securities. Pricing of thinly traded securities requires greater judgment than pricing of securities for which market transactions are regularly reported. NB Management will invest in lower-rated securities only when it concludes that the anticipated return on such an investment to the Portfolio warrants exposure to the additional level of risk. 18 POLICIES AND LIMITATIONS. The Portfolio normally may invest up to 35% of its total assets in debt securities (including convertible securities). The Portfolio may invest up to 15% of its net assets in corporate debt securities rated below investment grade or Comparable Unrated 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 to the extent necessary to ensure that the Portfolio's holdings of securities rated below investment grade and Comparable Unrated Securities will not exceed 15% of its net assets. 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 has received the highest rating from S&P (A-1) or Moody's (P-1) or 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 income ratably by the Portfolio prior to the receipt of any actual payments. Because the Fund must distribute substantially all of its net income (including its share of the Portfolio's accrued original issue discount) to its shareholders each year for income and excise tax purposes, the Portfolio may have to dispose of portfolio securities under disadvantageous circumstances to generate cash, or may be required to borrow, to satisfy the Fund's distribution requirements. See "Additional Tax Information." The market prices of zero coupon securities generally are more volatile than the prices of securities that pay interest periodically. Zero coupon securities are likely to respond to changes in interest rates to a greater degree than other types of debt securities having a similar maturity and credit quality. CONVERTIBLE SECURITIES. The Portfolio may invest in convertible securities. A convertible security 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 redeemed, converted or exchanged. Before conversion, such securities ordinarily 19 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. 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. SWAP AGREEMENTS The portfolio may enter into swap agreements to manage or gain exposure to particular types of investments (including equity securities or indices of equity securities in which the Portfolio otherwise could not invest efficiently). In a swap agreement, one party agrees to make regular payments equal to a floating rate on a specified amount in exchange for payments equal to a fixed rate, or a different floating rate, on the same amount for a specific period. Swap agreements may involve leverage and may be highly volatile; depending on how they are used, they may have a considerable impact on the Portfolio's performance. The risks of swap agreements depend upon the other party's creditworthiness and ability to perform, as well as the Portfolio's ability to terminate its swap agreements or reduce its exposure through offsetting transactions. Swap agreements may be illiquid. The swap market is relatively new and largely unregulated. POLICIES AND LIMITATIONS. In accordance with SEC staff requirements, the Portfolio will segregate cash or appropriate liquid securities in an amount equal to its obligations under swap agreements; when an agreement provides for netting of the payments by the two parties, the Portfolio will segregate only the amount of its net obligation, if any. 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 20 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. Except as otherwise permitted by an exemptive order obtained by the Trust, 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. PERFORMANCE INFORMATION The Fund's performance figures are based on historical results and are not intended to indicate future performance. The share price and total return of the Fund will vary, and an investment in the Fund, when redeemed, may be worth more or less than an investor's original cost. As of the date of this SAI, the Fund was new and had no performance history. TOTAL RETURN COMPUTATIONS The Fund may advertise certain total return information. An average annual compounded rate of return ("T") may be computed by using the redeemable value at the end of a specified period ("ERV") of a hypothetical initial investment of $1,000 ("P") over a period of time ("n") according to the formula: P(1+T)n = ERV Average annual total return smoothes out year-to-year variations in performance and, in that respect, differs from actual year-to-year results. 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 21 Stock Index, Russell Midcap Value 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 $6.1 billion, with an average of $572 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 investing. The Portfolio may invest in different types of securities from those included in some of the above indices. Evaluations of the Fund's performance, its total returns, and comparisons may be used in advertisements and in information furnished to current and prospective shareholders (collectively, "Advertisements"). The Fund may also be compared to individual asset classes such as common stocks, small-cap stocks, or Treasury bonds, based on information supplied by Ibbotson and Sinquefield. OTHER PERFORMANCE INFORMATION From time to time, information about the Portfolio's portfolio allocation and holdings as of a particular date may be included in Advertisements for the Fund. This information may include the Portfolio's portfolio diversification by asset type. Information used in Advertisements may include statements or illustrations relating to the appropriateness of types of securities and/or mutual funds that may be employed to meet specific financial goals, such as (1) funding retirement, (2) paying for children's education, and (3) financially supporting aging parents. 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 (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. 22 Information relating to inflation and its effects on the dollar also may be included in Advertisements. For example, after ten years, the purchasing power of $25,000 would shrink to $16,621, $14,968, $13,465, and $12,100, respectively, if the annual rates of inflation during that period were 4%, 5%, 6%, and 7%, respectively. (To calculate the purchasing power, the value at the end of each year is reduced by the inflation rate for the ten-year period.) Information regarding the effects of automatic investing 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 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, LLC ("Neuberger Berman").
Positions Held With Name, Age, and Address(1) the Trusts Principal Occupation(s)(2) - ------------------------- ---------- -------------------------- Claudia A. Brandon (43) Secretary of each Trust Employee of Neuberger Berman since 1999; Vice President of NB Management from 1986 to 1999; Secretary of nine other mutual funds for which NB Management acts as investment manager or administrator. Faith Colish (64) Trustee of each Trust Attorney at Law, Faith Colish, A 63 Wall Street Professional Corporation. 24th Floor New York, NY 10005 Stacy Cooper-Shugrue (36) Assistant Secretary of Employee of Neuberger Berman since each Trust 1999; Assistant Vice President of NB Management from 1993 to 1999; Assistant Secretary of nine other mutual funds for which NB Management acts as investment manager or administrator. 23 Positions Held With Name, Age, and Address(1) the Trusts Principal Occupation(s)(2) - ------------------------- ---------- -------------------------- Barbara DiGiorgio (41) Assistant Treasurer of Employee of NB Management; each Trust Assistant Vice President of NB Management from 1993 to 1999; Assistant Treasurer since 1996 of nine other mutual funds for which NB Management acts as investment manager or administrator. Michael M. Kassen* (46) President and Trustee of Executive Vice President, Chief each Trust Investment Officer and Director of Neuberger Berman, Inc. (holding company); Executive Vice President, Chief Investment Officer and Director of NB Management; President and Trustee of six other mutual funds for which NB Management acts as investment manager or administrator. Howard A. Mileaf (62) Trustee of each Trust Vice President and Special Counsel WHX Corporation to WHX Corporation (holding 110 East 59th Street company) since 1992; Director of 30th Floor Kevlin Corporation (manufacturer of New York, NY 10022 microwave and other products). Edward I. O'Brien* (71) 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. (71) Trustee of each Trust Retired. Formerly, President of 7082 Siena Court SOBRO (South Bronx Overall Economic Boca Raton, FL 33433 Development Corporation). 24 Positions Held With Name, Age, and Address(1) the Trusts Principal Occupation(s)(2) - ------------------------- ---------- -------------------------- John P. Rosenthal (66) Trustee of each Trust Senior Vice President of Burnham Burnham Securities Inc. Securities Inc. (a registered Burnham Asset Management Corp. broker-dealer) since 1991; 1325 Avenue of the Americas Director, Cancer Treatment 17th Floor Holdings, Inc. New York, NY 10019 Richard Russell (53) Treasurer and Principal Employee 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. Cornelius T. Ryan (68) 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 (70) 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. 25 Positions Held With Name, Age, and Address(1) the Trusts Principal Occupation(s)(2) - ------------------------- ---------- -------------------------- Daniel J. Sullivan (60) 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. Peter E. Sundman* (40) Chairman of the Board, Executive Vice President and Chief Executive Officer Director of Neuberger Berman Inc. and Trustee of each Trust (holding company); President and Director of NB Management; Principal of Neuberger Berman from 1997 to 1999; Chairman of the Board, President, Chief Executive Officer and/or Trustee of nine other mutual funds for which NB Management acts as investment manager or administrator. Michael J. Weiner (52) Vice President and Principal of Neuberger Berman from Principal Financial 1998-99; Senior Vice President of Officer of each Trust NB Management since 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. Celeste Wischerth (38) Assistant Treasurer of Employee of NB Management; each Trust Assistant Treasurer since 1996 of nine other mutual funds for which NB Management acts as investment manager or administrator.
- -------------------- (1) Unless otherwise indicated, the business address of each listed person is 605 Third Avenue, New York, New York 10158. (2) Except as otherwise indicated, each individual has held the positions shown for at least the last five years. * Indicates a trustee who is an "interested person" within the meaning of the 1940 Act. Mr. Sundman and Mr. Kassen are interested persons of each Trust by virtue of the fact that they are officers and/or directors of NB Management and 26 Managing Directors of Neuberger Berman. Mr. O'Brien is an interested person of the Trust and Managers Trust 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. 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 has any retirement plan for its trustees.
TABLE OF COMPENSATION FOR FISCAL YEAR ENDED 8/31/99 Aggregate Total Compensation from Investment Compensation Companies in the Neuberger Berman Name and Position With the Trust From the Trust Fund Complex Paid to Trustees - -------------------------------- -------------- ----------------------------- Faith Colish $21,602 $96,500 Trustee (5 other investment companies) Stanley Egener* $ 0 $ 0 Chairman of the Board, Chief (9 other investment Executive Officer, and Trustee companies) Howard A. Mileaf $22,433 $64,250 Trustee (4 other investment companies) Edward I. O'Brien $23,069 $61,750 Trustee (3 other investment companies) John T. Patterson, Jr. $23,341 $66,500 Trustee (4 other investment companies) 27 Aggregate Total Compensation from Investment Compensation Companies in the Neuberger Berman Name and Position With the Trust From the Trust Fund Complex Paid to Trustees - -------------------------------- -------------- ----------------------------- John P. Rosenthal $22,429 $64,250 Trustee (4 other investment companies) Cornelius T. Ryan $19,771 $52,750 Trustee (3 other investment companies) Gustave H. Shubert $22,251 $59,500 Trustee (3 other investment companies) Lawrence Zicklin* $ 0 $ 0 President and Trustee (5 other investment companies) * Retired, October 27, 1999.
At March 31, 2000, the trustees and officers of the Trusts, as a group, owned beneficially or of record less than 1% of the outstanding shares of the Fund. INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES INVESTMENT MANAGER AND ADMINISTRATOR Because all of the Fund's net investable assets are invested in the Portfolio, the Fund does not need an investment manager. NB Management serves as the Portfolio's investment manager pursuant to a management agreement with Managers Trust, dated as of August 2, 1993 ("Management Agreement"). The Portfolio was authorized by the Board of Trustees to become subject to the Management Agreement on January 27, 2000 and became subject to it on April 17, 2000. The Management Agreement was approved by the holders of the interests in the Portfolio on April 17, 2000. 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 28 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 (one of whom is an officer of Neuberger Berman and 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 below. NB Management provides facilities, services, and personnel, as well as accounting, recordkeeping, and other services, to the Fund pursuant to an administration agreement with the Trust, dated August 3, 1993, as amended on August 2, 1996. ("Administration Agreement"). The Fund was authorized to become subject to the Administration Agreement by vote of the Fund Trustees on January 27, 2000, and became subject to it on April 17, 2000. 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. MANAGEMENT AND ADMINISTRATION FEES For investment management services, the Portfolio pays NB Management a fee at the annual rate of 0.85% of the Portfolio's average daily net assets. NB Management provides administrative services to the Fund that includes 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 used for 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 the Trust or of NB Management, and periodic reports to the Board of Trustees on actual expenses. With the Fund's consent NB Management may subcontract some of its responsibilities to the Fund under the Administration Agreement and may compensate each Institution that provides such services at an annual rate of up to 0.35% of the average net asset value of Fund shares held through that Institution. (A portion of this payment may be derived from the Rule 12b-1 fee paid to NB Management by the Fund; see "Rule 12b-1 Plan," below.) NB Management has contractually undertaken to reimburse the Fund for its total operating expenses (excluding interest, taxes, brokerage commissions and extraordinary expenses) which exceed, in the aggregate, 2.00% per annum of the Fund's average daily net assets. This undertaking lasts until December 31, 2003. The Fund has contractually undertaken to reimburse NB Management, until December 31, 2006, for the 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 2.00% of average net assets and the reimbursements are made within three years after the year in which NB Management incurred the expense. 29 The Management Agreement continues until August 2, 2000. The Management Agreement is renewable thereafter from year to year with respect to the Portfolio, so long as its continuance is approved at least annually (1) by the vote of a majority of the Portfolio Trustees who are not "interested persons" of 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 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 Portfolio was authorized to become subject to the Sub-Advisory Agreement on January 27, 2000 and became subject to it on April 17, 2000. The Sub-Advisory Agreement was approved by the holders of the interests in the Portfolio on April 17, 2000. 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 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. 30 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. INVESTMENT COMPANIES MANAGED As of December 31, 1999, the investment companies managed by NB Management had aggregate net assets of approximately $18.7 billion. NB Management currently serves as investment manager of the following investment companies: Approximate Net Assets at Name December 31, 1999 - ---- ----------------- Neuberger Berman Cash Reserves Portfolio.......................$ 1,067,386,621 (investment portfolio for Neuberger Berman Cash Reserves) Neuberger Berman Government Money Portfolio......................$ 496,244,470 (investment portfolio for Neuberger Berman Government Money Fund) Neuberger Berman High Yield Bond Portfolio........................$ 17,717,320 (investment portfolio for Neuberger Berman High Yield Bond Fund) Neuberger Berman Limited Maturity Bond Portfolio.................$ 264,519,644 (investment portfolio for Neuberger Berman Limited Maturity Bond Fund and Neuberger Berman Limited Maturity Bond Trust) Neuberger Berman Municipal Money Portfolio.......................$ 301,713,416 (investment portfolio for Neuberger Berman Municipal Money Fund) Neuberger Berman Municipal Securities Portfolio...................$ 32,652,269 (investment portfolio for Neuberger Berman Municipal Securities Trust) Neuberger Berman Century Portfolio................................$ 12,994,259 (investment portfolio for Neuberger Berman Century Fund and Neuberger Berman Century Trust) Neuberger Berman Focus Portfolio...............................$ 1,772,136,921 (investment portfolio for Neuberger Berman Focus Fund, Neuberger Berman Focus Trust, and Neuberger Berman Focus Assets) Neuberger Berman Genesis Portfolio.............................$ 1,619,248,797 (investment portfolio for Neuberger Berman Genesis Fund, Neuberger Berman Genesis Trust, Neuberger Berman Genesis Assets and Neuberger Berman Genesis Institutional) Neuberger Berman Guardian Portfolio.......................... $ 4,406,419,837 (investment portfolio for Neuberger Berman Guardian Fund, Neuberger Berman Guardian Trust, and Neuberger Berman Guardian Assets) 31 Neuberger Berman International Portfolio.........................$ 195,064,579 (investment portfolio for Neuberger Berman International Fund and Neuberger Berman International Trust) Neuberger Berman Manhattan Portfolio.............................$ 901,991,808 (investment portfolio for Neuberger Berman Manhattan Fund, Neuberger Berman Manhattan Trust, and Neuberger Berman Manhattan Assets) Neuberger Berman Millennium Portfolio............................$ 214,859,495 (investment portfolio for Neuberger Berman Millennium Fund, Neuberger Berman Millennium Trust and Neuberger Berman Millennium Assets) Neuberger Berman Partners Portfolio............................$ 3,489,710,309 (investment portfolio for Neuberger Berman Partners Fund, Neuberger Berman Partners Trust, and Neuberger Berman Partners Assets) Neuberger Berman Regency Portfolio................................$ 33,586,640 (investment portfolio for Neuberger Berman Regency Fund and Neuberger Berman Regency Trust) Neuberger Berman Socially Responsive Portfolio...................$ 146,960,016 (investment portfolio for Neuberger Berman Socially Responsive Fund, Neuberger Berman Socially Responsive Trust, and Neuberger Berman Socially Responsive Assets) Advisers Managers Trust (seven series).........................$ 2,442,187,166 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. 32 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 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, who are deemed "control persons," all of whom have offices at the same address as NB Management, are Richard A. Cantor, Director and Chairman; Robert Matza, Director; Theodore P. Giuliano, Director and Vice President; Michael M. Kassen, Director, Executive Vice President and Chief Investment Officer; Barbara Katersky, Senior Vice President; Irwin Lainoff, Director; Daniel J. Sullivan, Senior Vice President; Philip Ambrosio, Senior Vice President and Chief Financial Officer; Peter E. Sundman, Director and President; Michael J. Weiner, Senior Vice President; and Lawrence Zicklin, Director. The directors and officers of Neuberger Berman, who are deemed "control persons," all of whom have offices at the same address as Neuberger Berman, are Jeffrey B. Lane, President and Chief Executive Officer; Robert Matza, Executive Vice President and Chief Administrative Officer; Michael M. Kassen, Executive Vice President and Chief Investment Officer; Heidi L. Schneider, Executive Vice President; Peter E. Sundman, Executive Vice President; Philip Ambrosio, Senior Vice President and Chief Financial Officer; Kevin Handwerker, Senior Vice President, General Counsel and Secretary; Robert Akeson, Senior Vice President; Salvatore A. Buonocore, Senior Vice President; Seth J. Finkel, Senior Vice President; Robert Firth, Senior Vice President; Brian Gaffney, Senior Vice President; Brian E. Hahn, Senior Vice President; Lawrence J. Cohn, Senior Vice President; Joseph K. Herlihy, Senior Vice President and Treasurer; Barbara R. Katersky, Senior Vice President; Diane E. Lederman, Senior Vice President; Peter B. Phelan, Senior Vice President; Robert H. Splan, Senior Vice President; Andrea Trachtenberg, Senior Vice President; Michael J. Weiner, Senior Vice President; Marvin C. Schwartz, Managing Director. Messrs. Giuliano, Sundman, Sullivan, and Weiner are officers 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 employees of Neuberger Berman. DISTRIBUTION ARRANGEMENTS NB Management serves as the distributor ("Distributor") in connection with the offering of the Fund's shares on a no-load basis to Institutions. In connection with the sale of its shares, the Fund has authorized the Distributor to give only the information, and to make only the statements and representations, contained in the Prospectus and this SAI or that properly may be included in sales literature and advertisements in accordance with the 1933 Act, the 1940 Act, and applicable rules of self-regulatory organizations. Sales may be made only by the Prospectus, which may be delivered personally, through the mails, or by electronic means. The Distributor is the Fund's "principal underwriter" within the meaning of the 1940 Act and, as such, acts as agent in arranging for the sale of the Fund's shares to Institutions without sales commission or other compensation 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 that continues until August 2, 2000. The Distribution Agreement was approved by the Fund Trustees, including a majority of the 33 Independent Fund Trustees and a majority of those Independent Fund Trustees who have no direct or indirect financial interest in the Distribution and Shareholder Services Agreement or the Trust's plan pursuant to Rule 12b-1 under the 1940 Act ("Plan") ("Rule 12b-1 Trustees"), on January 27, 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, cast in person at a meeting called for the purpose of voting on such approval. The Distribution Agreement may be terminated by either party and will terminate automatically on its assignment, in the same manner as the Management Agreement. RULE 12B-1 PLAN The Fund Trustees adopted the Plan with respect to the Fund on January 27, 2000. 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/or ongoing services to investors in the Fund. Under the Plan, NB Management receives from the Fund a fee at the annual rate of 0.10% of the Fund's average daily net assets. NB Management may pay up to the full amount of this fee to Institutions that 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 and its investors. 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 requires that NB Management provide the Fund Trustees for their review a quarterly written report identifying the amounts expended by the Fund and the purposes for which such expenditures were made. 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 result in additional sales of Fund shares; this, in turn, may enable the Fund to achieve economies of scale that could reduce expenses. In addition, certain on-going shareholder services may be provided more effectively by Institutions with which shareholders have an existing relationship. The Plan continues until August 2, 2000. The Plan 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 Fund Trustees and (2) by a vote of the majority of the Rule 12b-1 Trustees, cast in person at a meeting called for the purpose of voting on such approval. The Plan may not be amended to increase materially the amount of fees paid by 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 34 at any time by a vote of a majority of the Rule 12b-1 Trustees or by a 1940 Act majority vote of the outstanding shares in the Fund. ADDITIONAL 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 the Portfolio are calculated by subtracting total liabilities from total assets (in the case of the Portfolio, the market value of the securities the Portfolio holds plus cash and other assets; in the case of the Fund, its percentage interest in the Portfolio, multiplied by the Portfolio's NAV, plus any other assets). The Fund's per share NAV is calculated by dividing its NAV by the number of Fund shares outstanding and rounding the result to the nearest full cent. The Fund and the Portfolio calculate their NAVs as of the close of regular trading on the NYSE, usually 4 p.m. Eastern time, on each day the NYSE is open. The Portfolio values securities (including options) listed on the NYSE, the American Stock Exchange or other national securities exchanges or quoted on The Nasdaq Stock Market, and other securities for which market quotations are readily available, at the last reported 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 the 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 the 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," shareholders may redeem at least $1,000 worth of a Fund's shares and invest the proceeds in shares of one or more of the other series of the Trust or the Income and Municipal Funds that are briefly described below, provided that the minimum investment requirements of the other fund(s) are met. 35 EQUITY FUNDS Neuberger Berman Century Fund Invests mainly in common stocks of large-capitalization companies. The manager seeks to buy companies with strong earnings growth and the potential for higher earnings, priced at attractive levels relative to their growth rates. Neuberger Berman Focus Fund Invests principally in common stocks selected from 13 multi-industry sectors of the economy. To maximize potential return, the Portfolio normally makes at least 90% of its investments in not more than six sectors of the economy believed by the portfolio managers to be undervalued. Neuberger Berman Genesis Fund Invests primarily in stocks of companies with small market capitalizations (up to $1.5 billion at the time of the Portfolio's investment). Portfolio managers seek to buy the stocks of strong companies with a history of solid performance and a proven management team, which are selling at attractive prices. Neuberger Berman Guardian Fund A growth and income fund that invests primarily in stocks of established, high-quality companies that are not well followed on Wall Street or are temporarily out of favor. Neuberger Berman Seeks long-term capital appreciation by International Fund investing primarily in foreign stocks of any capitalization, both in developed economies and in emerging markets. Portfolio manager seeks undervalued companies in countries with strong potential for growth. Neuberger Berman Manhattan Invests in securities believed to have the Fund maximum potential for long-term capital appreciation. Portfolio managers seek stocks of companies that are projected to grow at above-average rates and that appear to the managers poised for a period of accelerated earnings. Neuberger Berman Millennium Seeks long-term growth of capital by investing Fund primarily in common stocks of small-capitalization companies, which it defines as those with a total market value of no more than $1.5 billion at the time of initial investment. The portfolio co-managers take a growth approach to stock selection, looking for new companies that are in the developmental stage as well as older companies that appear poised to grow because of new products, markets or management. Factors in identifying these firms may include financial strength, a strong position relative to competitors and a stock price that is reasonable relative to its growth rate. 36 Neuberger Berman Seeks capital growth through an approach that Partners Fund is intended to increase capital with reasonable risk. Portfolio managers look at fundamentals, focusing particularly on cash flow, return on capital, and asset values. Neuberger Berman Seeks long-term growth of capital by investing Regency Fund primarily in common stocks of mid-capitalization companies which the manager believes have solid fundamentals. Neuberger Berman Seeks long-term capital appreciation by Socially Responsive Fund investing in common stocks of companies that meet both financial and social criteria. INCOME FUNDS Neuberger Berman A U.S. Government money market fund seeking Government Money Fund maximum safety and liquidity and the highest available current income. The corresponding portfolio invests only in U.S. Treasury obligations and other money market instruments backed by the full faith and credit of the United States. It seeks to maintain a constant purchase and redemption price of $1.00. Neuberger Berman A money market fund seeking the highest Cash Reserves current income consistent with safety and liquidity. The corresponding portfolio invests in high-quality money market instruments. It seeks to maintain a constant purchase and redemption price of $1.00. Neuberger Berman Seeks the highest current income consistent Limited Maturity Bond Fund with low risk to principal and liquidity and, secondarily, total return. The corresponding portfolio invests in debt securities, primarily investment grade; maximum 10% below investment grade, but no lower than B.*/ Maximum average duration of four years. Neuberger Berman Seeks high current income and, secondarily, High Yield Bond Fund capital growth, by investing primarily in lower-rated debt securities; also invests in investment grade income-producing and non-income-producing debt and equity securities. 37 MUNICIPAL FUNDS Neuberger Berman A money market fund seeking the maximum Municipal Money current Fund income exempt from federal income tax, consistent with safety and liquidity. The corresponding portfolio invests in high-quality, short-term municipal securities. It seeks to maintain a constant purchase and redemption price of $1.00. Neuberger Berman Municipal Seeks high current tax-exempt income with Securities Trust low risk to principal, limited price fluctuation, and liquidity and, secondarily, total return. The corresponding portfolio invests in investment grade municipal securities. Maximum average duration of 10 years. - ----------------- */ As rated by Moody's or S&P or, if unrated by either of those entities, determined by NB Management to be of comparable quality. The Fund described herein, and any of the Neuberger Berman Funds described above, may terminate or modify its exchange privilege in the future. Before effecting an exchange, Fund shareholders must obtain and should review a currently effective prospectus of the fund into which the exchange is to be made. The Neuberger Berman Income and Municipal Funds share a prospectus. An exchange is treated as a sale for federal income tax purposes and, depending on the circumstances, a capital gain or loss may be realized. There can be no assurance that Neuberger Berman Government Money Fund, Neuberger Berman Cash Reserves, or Neuberger Berman Municipal Money Fund, each of which is a money market fund that seeks to maintain a constant purchase and redemption price of $1.00, will be able to maintain that price. An investment in any of the above-referenced funds, as in any other mutual fund, is neither insured nor guaranteed by the U.S. Government. 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. 38 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) 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. 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. If it is determined, however, that the U.S. Postal Service cannot properly deliver Fund mailings to the shareholder for 180 days, the Fund will terminate the shareholder's cash election. ADDITIONAL TAX INFORMATION TAXATION OF THE FUND To qualify for treatment as a RIC under the Code, the Fund must distribute to its shareholders for each taxable year at least 90% of its investment company taxable income (consisting generally of net investment income, net short-term capital gain, and net gains from certain foreign currency transactions) ("Distribution Requirement") and must meet several additional requirements. These requirements include the following: (1) the Fund must derive at least 90% of its gross income each taxable year from dividends, interest, payments with respect to securities loans, and gains from the sale or other disposition of securities or foreign currencies, or other income (including gains from Hedging Instruments) derived with respect to its business of investing in securities or those currencies ("Income Requirement"); and (2) at the close of each quarter of the Fund's taxable year, (i) at least 50% of the 39 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, including the Neuberger Berman Technology Fund, a series of Neuberger Berman Equity Funds that invests in the same Portfolio as the Fund ("Sister Fund"), 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. 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 investment portfolios managed by NB Management have received rulings from the Service to the effect that, among other things, each portfolio will be treated as a separate partnership for federal income tax purposes and will not be a "publicly traded partnership." Although these rulings may not be relied upon 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. 40 Distributions to the Fund from the Portfolio (whether pursuant to a partial or complete withdrawal or otherwise) will not result in the Fund's recognition of any gain or loss for federal income tax purposes, except that (1) gain will be recognized to the extent any cash that is distributed exceeds the Fund's basis for its interest in the Portfolio before the distribution, (2) income or gain will be recognized if the distribution is in liquidation of the Fund's entire interest in the Portfolio and includes a disproportionate share of any unrealized receivables held by the Portfolio, and (3) loss will be recognized if a liquidation distribution consists solely of cash and/or unrealized receivables. The Fund's basis for its interest in the Portfolio generally equals the amount of cash the Fund invests in the Portfolio, increased by the Fund's share of the Portfolio's net income and capital gains and decreased by (1) the amount of cash and the basis of any property the Portfolio distributes to the Fund and (2) the Fund's share of the Portfolio's losses. Dividends and interest received by the Portfolio, and gains realized by the Portfolio, may be subject to income, withholding, or other taxes imposed by foreign countries and U.S. possessions ("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 these foreign taxes, however, and many foreign countries do not impose taxes on capital gains in respect of investments by foreign investors. The Portfolio may invest in the stock of "passive foreign investment companies" ("PFICs"). A PFIC is a foreign corporation -- other than a "controlled foreign corporation" (I.E., a foreign corporation in which, on any day during its taxable year, more than 50% of the total voting power of all voting stock therein or the total value of all stock therein is owned, directly, indirectly, or constructively, by "U.S. shareholders," defined as U.S. persons that individually own, directly, indirectly, or constructively, at least 10% of that voting power) as to which the Portfolio is a U.S. shareholder -- 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 stock over the adjusted basis therein as of the end of that year. Pursuant to 41 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 entering into forward contracts, involves complex rules that will determine for income tax purposes the amount, character and timing of recognition of the gains and losses the Portfolio realizes in connection therewith. Gains from the disposition of foreign currencies (except certain gains that may be excluded by future regulations), and gains from Hedging Instruments derived by the Portfolio with respect to its business of investing in securities or foreign currencies, will qualify as permissible income for the Fund under the Income Requirement. Exchange-traded futures contracts, certain forward contracts and listed options thereon 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 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. A 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 42 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. TAXATION OF THE FUND'S SHAREHOLDERS If Fund shares are sold at a loss after being held for six months or less, the loss will be treated as long-term, instead of short-term, capital loss to the extent of any capital gain distributions received on those shares. PORTFOLIO TRANSACTIONS Neuberger Berman acts as principal broker for the Portfolio in the purchase and sale of its portfolio securities (other than certain securities traded on the OTC market) and in connection with the writing of covered call options on its securities. Portfolio securities may, from time to time, be loaned by the Portfolio to Neuberger Berman in accordance with the terms and conditions of an order issued by the SEC. The order exempts such transactions from provisions of the 1940 Act that would otherwise prohibit such transactions, subject to certain conditions. In accordance with the order, securities loans made by the Portfolio to Neuberger Berman are fully secured by cash collateral. The portion of the income on the cash collateral which may be shared with Neuberger Berman is to be determined by reference to concurrent arrangements between Neuberger Berman and non-affiliated lenders with which it engages in similar transactions. In addition, where Neuberger Berman borrows securities from the Portfolio in order to re-lend them to 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 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. 43 A committee of Independent Portfolio Trustees from time to time reviews, among other things, information relating to securities loans by the Portfolio. In effecting securities transactions, the Portfolio generally seeks to obtain the best price and execution of orders. Commission rates, being a component of price, are considered along with other relevant factors. The Portfolio plans to continue to use Neuberger Berman as its principal broker where, in the judgment of 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 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 44 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 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, and sale of Fund shares effected through, those brokers. A committee comprised of officers of NB Management and employees of Neuberger Berman who are portfolio managers of the Portfolio and 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 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. An investment team is primarily responsible for making decisions as to specific action to be taken with respect to the investment portfolio of the Portfolio. Each of them 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. The team is made up from members of the 45 Neuberger Berman Growth Group, headed by Jennifer Silver, Vice President of Neuberger Berman Management, and Managing Director of Neuberger Berman, LLC. 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 operating series of the Trust, a Delaware business trust organized pursuant to a Trust Instrument dated as of December 23, 1992. The Trust is registered under the 1940 Act as a diversified, open-end management investment company, commonly known as a mutual fund. The Trust has eleven separate operating series. The Fund invests all of its net investable assets in the Portfolio, receiving a beneficial interest in the Portfolio. The trustees of the Trust may establish additional series or classes of shares without the approval of shareholders. The assets of each series belong only to that series, and the liabilities of each series are borne solely by that series and no other. Prior to November 9, 1998, the name of the Trust was "Neuberger & Berman Equity Trust." 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. 46 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 Managers Trust, a New York common law trust organized as of December 1, 1992. Managers Trust is registered under the 1940 Act as a diversified, open-end management investment company. Managers Trust has eleven separate Portfolios. The assets of each Portfolio belong only to that Portfolio, and the liabilities of each Portfolio are borne solely by that Portfolio and no other. FUND'S 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. A series of another investment company, Neuberger Berman Equity Funds ("Equity Funds") invests all of its net assets in the Portfolio. The shares of the series of Equity Funds are available for purchase by 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 any fund that invests in the Portfolio is available from NB Management by calling 800-877-9700. 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 47 its operating expenses, thereby producing higher returns and benefiting all shareholders. However, the Fund's investment in the Portfolio may be affected by the actions of other large investors in the Portfolio, if any. For example, if a large investor in the Portfolio (other than the Fund) redeemed its interest in the Portfolio, the Portfolio's remaining investors (including the Fund) might, as a result, experience higher pro rata operating expenses, thereby producing lower returns. The Fund may withdraw its entire investment from the Portfolio at any time, if the trustees of the Trust determine that it is in the best interests of the Fund and its shareholders to do so. The Fund might withdraw, for example, if there were other investors in the Portfolio with power to, and who did by a vote of all investors (including the Fund), change the investment objective, policies, or limitations of the Portfolio in a manner not acceptable to the trustees of the Trust. A withdrawal could result in a distribution in kind of portfolio securities (as opposed to a cash distribution) by the Portfolio to the Fund. That distribution could result in a less diversified portfolio of investments for the Fund and could affect adversely the liquidity of the Fund's investment portfolio. If the Fund decided to convert those securities to cash, it usually would incur brokerage fees or other transaction costs. If the Fund withdrew its investment from the Portfolio, the trustees of the Trust would consider what actions might be taken, including the investment of all of the Fund's net investable assets in another pooled investment entity having substantially the same investment objective as the Fund or the retention by the Fund of its own investment manager to manage its assets in accordance with its investment objective, policies, and limitations. The inability of the Fund to find a suitable replacement could have a significant impact on shareholders. INVESTOR MEETINGS AND VOTING. The Portfolio normally will not hold meetings of investors except as required by the 1940 Act. Each investor in the Portfolio will be entitled to vote in proportion to its relative beneficial interest in the Portfolio. On most issues subjected to a vote of investors, the Fund will solicit proxies from its shareholders and will vote its interest in the Portfolio in proportion to the votes cast by the Fund's shareholders. If there are other investors in the Portfolio, there can be no assurance that any issue that receives a majority of the votes cast by Fund shareholders will receive a majority of votes cast by all Portfolio investors; indeed, if other investors hold a majority interest in the Portfolio, they could have voting control of the Portfolio. CERTAIN PROVISIONS. Each investor in the Portfolio, including the Fund, will be liable for all obligations of the Portfolio. However, the risk of an investor in the Portfolio incurring financial loss beyond the amount of its investment on account of such liability would be limited to circumstances in which the Portfolio had inadequate insurance and was unable to meet its obligations out of its assets. Upon liquidation of the Portfolio, investors would be entitled to share pro rata in the net assets of the Portfolio available for distribution to investors. CUSTODIAN AND TRANSFER AGENT The Fund and Portfolio have selected State Street Bank and Trust Company ("State Street"), 225 Franklin Street, Boston, MA 02110, as custodian for their respective securities and cash. State Street also serves as the Fund's transfer agent, administering purchases, redemptions, and transfers of Fund shares with respect to Institutions and the payment of dividends and other distributions to Institutions. All correspondence should be mailed to Neuberger Berman Funds, Institutional Services, 605 Third Avenue, 2nd Floor, New York, NY 48 10158-0180. In addition, State Street serves as transfer agent for the Portfolio. INDEPENDENT ACCOUNTANTS The Fund and Portfolio have selected PricewaterhouseCoopers LLP 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. 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. The SEC maintains a Website (http://www.sec.gov) that contains this SAI, material incorporated by reference, and other information regarding the Fund and Portfolio. 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. 49 Appendix A RATINGS OF CORPORATE BONDS AND COMMERCIAL PAPER S&P CORPORATE BOND RATINGS: AAA - BONDS rated AAA have the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong. AA - BONDS rated AA have a very strong capacity to pay interest and repay principal and differ from the higher rated issues only in small degree. A - Bonds RATED A have a strong capacity to pay interest and repay principal, although they are somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than bonds in higher rated categories. BBB - BONDS rated BBB are regarded as having an adequate capacity to pay principal and interest. Whereas they normally exhibit adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay principal and interest for bonds in this category than for bonds in higher rated categories. BB, B, CCC, CC, C - Bonds RATED BB, B, CCC, CC, and C are regarded, on balance, as predominantly speculative with respect to capacity to pay interest and repay principal in accordance with the terms of the obligation. BB indicates the lowest degree of speculation and C the highest degree of speculation. While such bonds will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions. CI - The rating CI is RESERVED for income bonds on which no interest is being paid. D - Bonds rated D are In default, and payment of interest and/or repayment of principal is in arrears. PLUS (+) OR MINUS (-) - The ratings ABOVE may be modified by the addition of a plus or minus sign to show relative standing within the major categories. MOODY'S CORPORATE BOND RATINGS: Aaa - Bonds rated AAA are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edge." Interest payments are protected by a large or an exceptionally stable margin, and principal is secure. Although the various protective elements are likely to change, the changes that can be visualized are most unlikely to impair the fundamentally strong position of the issuer. Aa - Bonds rated Aa are judged to be of high quality by all standards. Together with the Aaa group, they comprise what are generally known as "high-grade bonds." They are rated lower than the best bonds because margins of protection may not be as large as in Aaa-rated securities, fluctuation of protective elements may be of greater amplitude, or there may be other elements present that make the long-term risks appear somewhat larger than in Aaa-rated securities. A - Bonds rated A possess many favorable investment attributes and are to be considered as upper-medium grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present that suggest a susceptibility to impairment sometime in the future. Baa - Bonds which are rated Baa are considered as medium-grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present, but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. These bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. Ba - Bonds rated Ba ARE judged to have speculative elements; their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class. B - Bonds rated B GENERALLY lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small. Caa - Bonds rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest. Ca - Bonds rated Ca represent obligations that are speculative in a high degree. Such issues are often in default or have other marked shortcomings. C - Bonds rated C are the lowest rated class of bonds, and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing. MODIFIERS--Moody's may apply numerical modifiers 1, 2, and 3 in each generic rating classification described above. The modifier 1 indicates that the security ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the issuer ranks in the lower end of its generic rating. S&P commercial PAPER ratings: A-1 - This highest Category indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus sign (+). Moody's COMMERCIAL paper ratings A-2 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. A-3 NEUBERGER BERMAN EQUITY TRUST POST-EFFECTIVE AMENDMENT NO. 28 ON FORM N-1A PART C OTHER INFORMATION Item 23. Exhibits - ------- -------- Exhibit Number Description ------ ----------- (a) (1) Certificate of Trust. Incorporated by Reference to Post-Effective Amendment No. 8 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed December 15, 1995). (2) Restated Certificate of Trust. Incorporated by Reference to Post-Effective Amendment No. 18 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed December 21, 1998). (3) Trust Instrument of Neuberger Berman Equity Trust. Incorporated by Reference to Post-Effective Amendment No. 8 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed December 15, 1995). (4) Schedule A - Current Series of Neuberger Berman Equity Trust. Filed Herewith. (b) By-laws of Neuberger Berman Equity Trust. Incorporated by Reference to Post-Effective Amendment No. 8 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed December 15, 1995). (c) (1) Trust Instrument of Neuberger Berman Equity Trust, Articles IV, V, and VI. Incorporated by Reference to Post-Effective Amendment No. 8 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed December 15, 1995). (2) By-laws of Neuberger Berman Equity Trust, Articles V, VI, and VIII. Incorporated by Reference to Post-Effective Amendment No. 8 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed December 15, 1995). (d) (1) (i) Management Agreement Between Equity Managers Trust and Neuberger Berman Management Inc. Incorporated by Reference to Post-Effective Amendment No. 87 to Registration Statement of Neuberger Berman Equity Funds, File Nos. 2-11357 and 811-582 (Filed October 22, 1999). (ii) Schedule A - Series of Equity Managers Trust Currently Subject to the Management Agreement. Incorporated by Reference to Post-Effective Amendment No. 90 to Registration Statement of Neuberger Berman Equity Funds, File Nos. 2-11357 and 811-582 (Filed April 14, 2000). Exhibit Number Description ------ ----------- (iii) Schedule B - Schedule of Compensation Under the Management Agreement. Incorporated by Reference to Post-Effective Amendment No. 87 to Registration Statement of Neuberger Berman Equity Funds, File Nos. 2-11357 and 811-582 (Filed October 22, 1999). (2) (i) Sub-Advisory Agreement Between Neuberger Berman Management Inc. and Neuberger Berman, LLC 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 (Filed August 30, 1995). (ii) Schedule A - Series of Equity Managers Trust Currently Subject to the Sub-Advisory Agreement. Incorporated by Reference to Post-Effective Amendment No. 90 to Registration Statement of Neuberger Berman Equity Funds, File Nos. 2-11357 and 811-582 (Filed April 14, 2000). (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 (Filed December 24, 1996). (3) (i) Management Agreement Between Global Managers Trust and Neuberger Berman Management Inc. Incorporated by Reference to Post-Effective Amendment No. 74 to Registration Statement of Neuberger Berman Equity Funds, File Nos. 2-11357 and 811-582 (Filed December 15, 1995). (ii) Schedule A - Series of Global Managers Trust Currently Subject to the Management Agreement. Incorporated by Reference to Post-Effective Amendment No. 74 to Registration Statement of Neuberger Berman Equity Funds, File Nos. 2-11357 and 811-582 (Filed December 15, 1995). (iii) Schedule B - Schedule of Compensation Under the Management Agreement. Incorporated by Reference to Post-Effective Amendment No. 74 to Registration Statement of Neuberger Berman Equity Funds, File Nos. 2-11357 and 811-582 (Filed December 15, 1995). (4) (i) Sub-Advisory Agreement Between Neuberger Berman Management Inc. and Neuberger Berman, LLC with Respect to Global Managers Trust. Incorporated by Reference to Post-Effective Amendment No. 74 to Registration Statement of Neuberger Berman Equity Funds, File Nos. 2-11357 and 811-582 (Filed December 15, 1995). Exhibit Number Description ------ ----------- (ii) Schedule A - Series of Global Managers Trust Currently Subject to the Sub-Advisory Agreement. Incorporated by Reference to Post-Effective Amendment No. 74 to Registration Statement of Neuberger Berman Equity Funds, File Nos. 2-11357 and 811-582 (Filed December 15, 1995). (iii) Substitution Agreement among Neuberger Berman Management Inc., Global Managers Trust, Neuberger Berman, L.P. and Neuberger Berman, LLC. Incorporated by Reference to the substantially similar agreement filed in Amendment No. 7 to the Registration Statement of Equity Managers Trust, File No. 811-7910 (the documents differ only with respect to the date of and the master fund party to the subadvisory agreement under which substitution is sought and the name of the executing master fund) (Filed December 24, 1996). (e) (1) Distribution Agreement Between Neuberger Berman Equity Trust and Neuberger Berman Management Inc. Incorporated by Reference to Post-Effective Amendment No. 24 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed November 10, 1999). (2) Schedule A - Series of Neuberger Berman Equity Trust Currently Subject to the Distribution Agreement. Incorporated by Reference to Post-Effective Amendment No. 24 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed November 10, 1999). (3) Distribution and Services Agreement between Neuberger Berman Equity Trust and Neuberger Berman Management Inc. Incorporated by Reference to Post-Effective Amendment No. 24 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed November 10, 1999). (4) Schedule A - Series of Neuberger Berman Equity Trust Currently Subject to the Distribution and Services Agreement. Filed Herewith. (f) Bonus, Profit Sharing or Pension Plans. None. (g) (1) Custodian Contract Between Neuberger Berman Equity Trust and State Street Bank and Trust Company. Incorporated by Reference to Post-Effective Amendment No. 8 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed December 15, 1995). (2) Schedule of Compensation under the Custodian Contract. Incorporated by Reference to Post-Effective Amendment No. 10 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed December 5, 1996). Exhibit Number Description ------ ----------- (h) (1) (i) Transfer Agency and Service Agreement Between Neuberger Berman Equity Trust and State Street Bank and Trust Company. Incorporated by Reference to Post-Effective Amendment No. 8 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed December 15, 1995). (ii) First Amendment to Transfer Agency and Service Agreement between Neuberger Berman Equity Trust and State Street Bank and Trust Company. Incorporated by Reference to Post-Effective Amendment No. 8 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed December 15, 1995). (iii) Schedule of Compensation under the Transfer Agency and Service Agreement. Incorporated by Reference to Post-Effective Amendment No. 10 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed December 5, 1996). (iv) Second Amendment to Transfer Agency and Service Agreement between Neuberger Berman Equity Trust and State Street Bank and Trust Company. Incorporated by reference to Post-Effective Amendment No. 12 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed August 29, 1997). (2) (i) Administration Agreement Between Neuberger Berman Equity Trust and Neuberger Berman Management Inc. Incorporated by Reference to Post-Effective Amendment No. 24 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed November 10, 1999). (ii) Schedule A - Series of Neuberger Berman Equity Trust Currently Subject to the Administration Agreement. Filed Herewith. (iii) Schedule B - Schedule of Compensation Under the Administration Agreement. Incorporated by Reference to Post-Effective Amendment No. 24 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed November 10, 1999). Exhibit Number Description ------ ----------- (i) (1) Opinion and Consent of Kirkpatrick & Lockhart LLP on Securities Matters with Respect to Neuberger Berman Equity Trust and its series Neuberger Berman Focus Trust, Neuberger Berman Guardian Trust, Neuberger Berman Genesis Trust, Neuberger Berman International Trust, Neuberger Berman Manhattan Trust, and Neuberger Berman Partners Trust. Incorporated by Reference to Post-Effective Amendment No. 13 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed December 12, 1997). (2) Opinion and Consent of Kirkpatrick & Lockhart LLP on Securities Matters with Respect to Neuberger Berman Socially Responsive Trust. Incorporated by Reference to Post-Effective Amendment No. 3 to the Registration Statement of Neuberger Berman Equity Assets, File Nos. 33-82568 and 811-8106 (Filed February 9, 1996). (3) Opinion and Consent of Kirkpatrick & Lockhart LLP on Securities Matters with Respect to Neuberger Berman Millennium Trust. Incorporated by Reference to Post-Effective Amendment No. 16 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed October 16, 1998). (4) Opinion and Consent of Kirkpatrick & Lockhart LLP on Securities Matters with Respect to Neuberger Berman Regency Trust. Incorporated by Reference to Post-Effective Amendment No. 22 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed September 27, 1999). (5) Opinion and Consent of Kirkpatrick & Lockhart LLP on Securities Matters with Respect to Neuberger Berman Century Trust. Incorporated by Reference to Post- Effective Amendment No. 24 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed November 10, 1999). (6) Opinion and Consent of Kirkpatrick & Lockhart LLP on Securities Matters with Respect to Neuberger Berman Technology Trust. Filed Herewith. (j) Consent of Independent Auditors. None. (k) Financial Statements Omitted from Prospectus. None. (l) Letter of Investment Intent. None. (m) (1) Distribution and Shareholder Services Plan. Incorporated by Reference to Post-Effective Amendment No. 24 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed November 10, 1999). (2) Schedule A - Series of Neuberger Berman Equity Trust currently subject to the Distribution and Shareholder Services Plan. Filed Herewith. (n) Financial Data Schedule. Not Applicable. (o) Plan Pursuant to Rule 18f-3. None. (p) (1) Code of Ethics for Registrant and Neuberger Berman Management Inc. Filed Herewith. (2) Code of Ethics for Equity Managers Trust, Neuberger Berman Management Inc. and Neuberger Berman, LLC. Incorporated by Reference to Post-Effective Amendment No. 90 to Registration Statement of Neuberger Berman Equity Funds, File Nos. 2-11357 and 811-582 (Filed April 14, 2000). 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 office" ("Disabling Conduct"), or not to have acted in good faith in the reasonable belief that his or her action was in the best interest of the Registrant. In the event of a settlement, no indemnification may be provided unless there has been a determination that the officer or trustee did not engage in Disabling Conduct (i) by the court or other body approving the settlement; (ii) by at least a majority of those trustees who are neither interested persons, as that term is defined in the Investment Company Act of 1940 ("1940 Act"), of the Registrant ("Independent Trustees"), nor are parties to the matter based upon a review of readily available facts; or (iii) by written opinion of independent legal counsel based upon a review of readily available facts. Pursuant to Article IX, Section 3 of the Trust Instrument, if any present or former shareholder of any series ("Series") of the Registrant shall be held personally liable solely by reason of his or her being or having been a shareholder and not because of his or her acts or omissions or for some other reason, the present or former shareholder (or his or her heirs, executors, administrators or other legal representatives or in the case of any entity, its general successor) shall be entitled out of the assets belonging to the applicable Series to be held harmless from and indemnified against all loss and expense arising from such liability. The Registrant, on behalf of the affected Series, shall, upon request by such shareholder, assume the defense of any claim made against such shareholder for any act or obligation of the Series and satisfy any judgment thereon from the assets of the Series. Section 9 of the Management Agreements between Neuberger and Berman Management Incorporated ("NB Management") and Equity Managers Trust and Global Managers Trust (Equity Managers Trust and Global Managers Trust are collectively referred to as the "Managers Trusts") provide that neither NB Management nor any director, officer or employee of NB Management performing services for the series of the Managers Trusts at the direction or request of NB Management in connection with NB Management's discharge of its obligations under the Agreements 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 Agreements relate; provided, that nothing in the Agreements shall be construed (i) to protect NB Management against any liability to the Managers Trusts or any series thereof or their interest holders to which NB Management would otherwise be subject by reason of willful misfeasance, bad faith, or gross negligence in the performance of its duties, or by reason of NB Management's reckless disregard of its obligations and duties under the Agreements, or (ii) to protect any director, officer or employee of NB Management who is or was a trustee or officer of the Managers Trusts against any liability to the Managers Trusts or any series thereof or their 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 the Managers Trusts. Section 1 of the Sub-Advisory Agreements between NB Management and Neuberger Berman, LLC ("Neuberger Berman") with respect to the Managers Trusts 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 Agreements, Neuberger Berman will not be subject to any liability for any act or omission or any loss suffered by any series of the Managers Trusts or their interest holders in connection with the matters to which the Agreements relate. 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 Trustees nor any of the Registrant's officers, employees or agents, whether past, present or future, shall be personally liable therefor. Insofar as indemnification for liabilities arising under the Securities Act of 1933 ("1933 Act") may be permitted to trustees, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the 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 or 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 - ---- ------------------------------ Philip Ambrosio Senior Vice President and Chief Financial Senior Vice President Officer, Neuberger Berman Inc. and Chief Financial Officer, Neuberger Berman Thomas J. Brophy Vice President and Portfolio Manager, Columbus Vice President, Circle Investors.1 NB Management - ------------------------- 1 Until 1998. NAME BUSINESS AND OTHER CONNECTIONS - ---- ------------------------------ Barbara DiGiorgio Assistant Treasurer, Neuberger Berman Advisers Assistant Vice Management Trust; Assistant Treasurer, Advisers President, Managers Trust; Assistant Treasurer, Neuberger NB Management 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. Robert S. Franklin Vice President, High Yield Fixed Income Analyst, Vice President, Prudential Insurance Company.2 NB Management Theodore P. Giuliano President and Trustee, Neuberger Berman Income Vice President and Funds; President and Trustee, Neuberger Berman Director, NB Income Trust; President and Trustee, Income Managers Management; Managing Trust. Director, Neuberger Berman Michael M. Kassen Executive Vice President, Chief Investment Officer and Executive Vice Director, Neuberger Berman Inc. President, Neuberger Berman Kelly M. Landron Assistant Portfolio Manager/Analyst, Neuberger Vice President, Berman.3 NB Management Jeffrey B. Lane President, Chief Executive Officer and Director of President and Chief Neuberger Berman, Inc. Executive Officer, Neuberger Berman Michael F. Malouf Portfolio Manager, Dresdner RCM Global Investors.4 Vice President, NB Management Robert Matza Executive Vice President, Chief Administrative Executive Vice Officer and Director, Neuberger Berman, Inc. President and Chief Administrative Officer, Neuberger Berman; Director, NB Management - ------------------------ 2 Until 1998. 3 Until 1998. 4 Until 1998. NAME BUSINESS AND OTHER CONNECTIONS - ---- ------------------------------ S. Basu Mullick Portfolio Manager, Ark Asset Management.5 Vice President, NB Management Kevin Handwerker Senior Vice President, Secretary and General Counsel, Senior Vice Neuberger Berman, Inc. President, General Counsel and Secretary, Neuberger Berman Richard Russell Treasurer, Neuberger Berman Advisers Management Trust; Vice President, Treasurer, Advisers Managers Trust; Treasurer, NB Management 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. Heidi L. Schneider Executive Vice President and Director, Neuberger Executive Vice Berman, Inc. President, Neuberger Berman Benjamin E. Segal Assistant Portfolio Manager, GT Global Investment Vice President, NB Management.6 Management, Managing Director, Neuberger Berman - ------------------------ 5 Until 1998. 6 Until 1998. NAME BUSINESS AND OTHER CONNECTIONS - ---- ------------------------------ Daniel J. Sullivan Vice President, Neuberger Berman Advisers Management Senior Vice Trust; Vice President, Advisers Managers Trust; President, Vice President, Neuberger Berman Income Funds; Vice NB Management 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. Peter E. Sundman Executive Vice President and Director, Neuberger Berman President, NB Inc.; President and Chief Executive Officer, Income Management; Managers Trust; President and Chief Executive Officer, Executive Vice Neuberger Berman Income Funds; President and Chief President, Neuberger Executive Officer, Neuberger Berman Income Trust. Berman Catherine Waterworth Managing Director, TCW Group Inc.7 Vice President, NB Management Michael J. Weiner Vice President, Neuberger Berman Advisers Management Senior Vice Trust; Vice President, Advisers Managers Trust; President, Vice President, Neuberger Berman Income Funds; Vice NB Management; President, Neuberger Berman Income Trust; Vice Senior Vice President, Neuberger Berman Equity Funds; Vice President, Neuberger President, Neuberger Berman Equity Trust; Vice Berman 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. - ----------------------- 7 Until 1998. NAME BUSINESS AND OTHER CONNECTIONS - ---- ------------------------------ Allan R. White, III Portfolio Manager, Salomon Asset Management.8 Vice President, NB Management; Managing Director, Neuberger Berman Celeste Wischerth, Assistant Treasurer, Neuberger Berman Advisers NB Management Management Trust; Assistant Treasurer, Advisers Managers Trust; Assistant Treasurer, Neuberger Berman Income Funds; Assistant Treasurer, Neuberger Berman Income Trust; Assistant Treasurer, Neuberger Berman Equity Funds; Assistant Treasurer, Neuberger Berman Equity Trust; Assistant Treasurer, Income Managers Trust; Assistant Treasurer, Equity Managers Trust; Assistant Treasurer, Global Managers Trust; Assistant Treasurer, Neuberger Berman Equity Assets; Assistant Treasurer, 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 Assets Neuberger Berman Equity Funds 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 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. - ---------------------- 8 Until 1998. POSITIONS AND OFFICES POSITIONS AND OFFICES NAME WITH UNDERWRITER WITH REGISTRANT ---- --------------------- --------------------- Ramesh Babu 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 Robert S. Franklin Vice President None Robert I. Gendelman Vice President None Theodore P. Giuliano Vice President and None Director Michael M. Kassen Vice President and President Director Robert L. Ladd Vice President None Josephine Mahaney Vice President None Michael F. Malouf Vice President None Robert Matza Director None Ellen Metzger Secretary None Basu Mullick Vice President None Janet W. Prindle Vice President None Kevin L. Risen Vice President None Ingrid Saukaitis Vice President None Benjamin Segal Vice President None Jennifer K. Silver Vice President None Kent C. Simons Vice President None Daniel J. Sullivan Senior Vice President Vice President Peter E. Sundman President Trustee and Chairman of the Board Judith M. Vale Vice President None Josephine Velez 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 (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. 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 Global Managers Trust are maintained at the offices of State Street Cayman Trust Company, Ltd., Elizabethan Square, P.O. Box 1984, George Town, Grand Cayman, Cayman Islands, BWI. Item 29. Management Services. - ------- ------------------- Other than as set forth in Parts A and B of this Registration Statement, the Registrant is not a party to any management-related service contract. Item 30. Undertakings. - ------- ------------ None. SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, EQUITY MANAGERS TRUST certifies that it meets all of the requirements for effectiveness of Post-Effective Amendment No. 28 to the Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-Effective Amendment to the Registration Statement to be signed on its behalf by the undersigned, thereto duly authorized, in the City and State of New York on the 13th day of April, 2000. EQUITY MANAGERS TRUST By: /s/Michael M. Kassen ---------------------- Michael M. Kassen President Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment No. 28 has been signed below by the following persons in the capacities and on the date indicated. Signature Title Date - --------- ----- ---- /s/Peter E. Sundman Chairman of the Board April 13, 2000 - ------------------------- and Trustee (Chief Peter E. Sundman Executive Officer) /s/Michael M. Kassen President and Trustee April 13, 2000 - ------------------------- Michael M. Kassen /s/Michael J. Weiner Vice President April 13, 2000 - ------------------------- (Principal Financial Michael J. Weiner Officer) /s/Richard Russell Treasurer (Principal April 13, 2000 - ------------------------- Accounting Officer) Richard Russell (signatures continued on next page) Signature Title Date - --------- ----- ---- /s/Faith Colish Trustee April 13, 2000 - ------------------------- Faith Colish /s/Howard A. Mileaf Trustee April 13, 2000 - ------------------------- Howard A. Mileaf /s/Edward I. O'Brien Trustee April 13, 2000 - ------------------------- Edward I. O'Brien Trustee - ------------------------- John T. Patterson, Jr. /s/John P. Rosenthal Trustee April 13, 2000 - ------------------------- John P. Rosenthal /s/Cornelius T. Ryan Trustee April 13, 2000 - ------------------------- Cornelius T. Ryan Trustee - ------------------------- Gustave H. Shubert SIGNATURES ---------- Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant, NEUBERGER BERMAN EQUITY TRUST certifies that it meets all of the requirements for effectiveness of Post-Effective Amendment No. 28 to its Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-Effective Amendment to its Registration Statement to be signed on its behalf by the undersigned, thereto duly authorized, in the City and State of New York on the 13th day of April, 2000. NEUBERGER BERMAN EQUITY TRUST By: /s/Michael M. Kassen ---------------------- Michael M. Kassen President Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment No. 28 has been signed below by the following persons in the capacities and on the date indicated. Signature Title Date - --------- ----- ---- /s/Peter E. Sundman Chairman of the Board April 13, 2000 - ------------------------- and Trustee (Chief Peter E. Sundman Executive Officer) /s/Michael M. Kassen President and Trustee April 13, 2000 - ------------------------- Michael M. Kassen /s/Michael J. Weiner Vice President April 13, 2000 - ------------------------- (Principal Financial Michael J. Weiner Officer) /s/Richard Russell Treasurer (Principal April 13, 2000 - ------------------------- Accounting Officer) Richard Russell (signatures continued on next page) Signature Title Date - --------- ----- ---- /s/Faith Colish Trustee April 13, 2000 - ------------------------- Faith Colish /s/Howard A. Mileaf Trustee April 13, 2000 - ------------------------- Howard A. Mileaf /s/Edward I. O'Brien Trustee April 13, 2000 - ------------------------- Edward I. O'Brien Trustee - ------------------------- John T. Patterson, Jr. /s/ John P. Rosenthal Trustee April 13, 2000 - ------------------------- John P. Rosenthal /s/Cornelius T. Ryan Trustee April 13, 2000 - ------------------------- Cornelius T. Ryan Trustee - ------------------------- Gustave H. Shubert NEUBERGER BERMAN EQUITY TRUST POST-EFFECTIVE AMENDMENT NO. 28 ON FORM N-1A INDEX TO EXHIBITS Exhibit Number Description ------ ----------- (a) (1) Certificate of Trust. Incorporated by Reference to Post-Effective Amendment No. 8 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed December 15, 1995). (2) Restated Certificate of Trust. Incorporated by Reference to Post-Effective Amendment No. 18 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed December 21, 1998). (3) Trust Instrument of Neuberger Berman Equity Trust. Incorporated by Reference to Post-Effective Amendment No. 8 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed December 15, 1995). (4) Schedule A - Current Series of Neuberger Berman Equity Trust. Filed Herewith. (b) By-laws of Neuberger Berman Equity Trust. Incorporated by Reference to Post-Effective Amendment No. 8 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed December 15, 1995). (c) (1) Trust Instrument of Neuberger Berman Equity Trust, Articles IV, V, and VI. Incorporated by Reference to Post-Effective Amendment No. 8 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed December 15, 1995). (2) By-laws of Neuberger Berman Equity Trust, Articles V, VI, and VIII. Incorporated by Reference to Post-Effective Amendment No. 8 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed December 15, 1995). (d) (1) (i) Management Agreement Between Equity Managers Trust and Neuberger Berman Management Inc. Incorporated by Reference to Post-Effective Amendment No. 87 to Registration Statement of Neuberger Berman Equity Funds, File Nos. 2-11357 and 811-582 (Filed October 22, 1999). (ii) Schedule A - Series of Equity Managers Trust Currently Subject to the Management Agreement. Incorporated by Reference to Post-Effective Amendment No. 90 to Registration Statement of Neuberger Berman Equity Funds, File Nos. 2-11357 and 811-582 (Filed April 14, 2000). Exhibit Number Description ------ ----------- (iii) Schedule B - Schedule of Compensation Under the Management Agreement. Incorporated by Reference to Post-Effective Amendment No. 87 to Registration Statement of Neuberger Berman Equity Funds, File Nos. 2-11357 and 811-582 (Filed October 22, 1999). (2) (i) Sub-Advisory Agreement Between Neuberger Berman Management Inc. and Neuberger Berman, LLC 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 (Filed August 30, 1995). (ii) Schedule A - Series of Equity Managers Trust Currently Subject to the Sub-Advisory Agreement. Incorporated by Reference to Post-Effective Amendment No. 90 to Registration Statement of Neuberger Berman Equity Funds, File Nos. 2-11357 and 811-582 (Filed April 14, 2000). (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 (Filed December 24, 1996). (3) (i) Management Agreement Between Global Managers Trust and Neuberger Berman Management Inc. Incorporated by Reference to Post-Effective Amendment No. 74 to Registration Statement of Neuberger Berman Equity Funds, File Nos. 2-11357 and 811-582 (Filed December 15, 1995). (ii) Schedule A - Series of Global Managers Trust Currently Subject to the Management Agreement. Incorporated by Reference to Post-Effective Amendment No. 74 to Registration Statement of Neuberger Berman Equity Funds, File Nos. 2-11357 and 811-582 (Filed December 15, 1995). (iii) Schedule B - Schedule of Compensation Under the Management Agreement. Incorporated by Reference to Post-Effective Amendment No. 74 to Registration Statement of Neuberger Berman Equity Funds, File Nos. 2-11357 and 811-582 (Filed December 15, 1995). (4) (i) Sub-Advisory Agreement Between Neuberger Berman Management Inc. and Neuberger Berman, LLC with Respect to Global Managers Trust. Incorporated by Reference to Post-Effective Amendment No. 74 to Registration Statement of Neuberger Berman Equity Funds, File Nos. 2-11357 and 811-582 (Filed December 15, 1995). Exhibit Number Description ------ ----------- (ii) Schedule A - Series of Global Managers Trust Currently Subject to the Sub-Advisory Agreement. Incorporated by Reference to Post-Effective Amendment No. 74 to Registration Statement of Neuberger Berman Equity Funds, File Nos. 2-11357 and 811-582 (Filed December 15, 1995). (iii) Substitution Agreement among Neuberger Berman Management Inc., Global Managers Trust, Neuberger Berman, L.P. and Neuberger Berman, LLC. Incorporated by Reference to the substantially similar agreement filed in Amendment No. 7 to the Registration Statement of Equity Managers Trust, File No. 811-7910 (the documents differ only with respect to the date of and the master fund party to the subadvisory agreement under which substitution is sought and the name of the executing master fund) (Filed December 24, 1996). (e) (1) Distribution Agreement Between Neuberger Berman Equity Trust and Neuberger Berman Management Inc. Incorporated by Reference to Post-Effective Amendment No. 24 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed November 10, 1999). (2) Schedule A - Series of Neuberger Berman Equity Trust Currently Subject to the Distribution Agreement. Incorporated by Reference to Post-Effective Amendment No. 24 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed November 10, 1999). (3) Distribution and Services Agreement between Neuberger Berman Equity Trust and Neuberger Berman Management Inc. Incorporated by Reference to Post-Effective Amendment No. 24 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed November 10, 1999). (4) Schedule A - Series of Neuberger Berman Equity Trust Currently Subject to the Distribution and Services Agreement. Filed Herewith. (f) Bonus, Profit Sharing or Pension Plans. None. (g) (1) Custodian Contract Between Neuberger Berman Equity Trust and State Street Bank and Trust Company. Incorporated by Reference to Post-Effective Amendment No. 8 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed December 15, 1995). (2) Schedule of Compensation under the Custodian Contract. Incorporated by Reference to Post-Effective Amendment No. 10 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed December 5, 1996). Exhibit Number Description ------ ----------- (h) (1) (i) Transfer Agency and Service Agreement Between Neuberger Berman Equity Trust and State Street Bank and Trust Company. Incorporated by Reference to Post-Effective Amendment No. 8 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed December 15, 1995). (ii) First Amendment to Transfer Agency and Service Agreement between Neuberger Berman Equity Trust and State Street Bank and Trust Company. Incorporated by Reference to Post-Effective Amendment No. 8 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed December 15, 1995). (iii) Schedule of Compensation under the Transfer Agency and Service Agreement. Incorporated by Reference to Post-Effective Amendment No. 10 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed December 5, 1996). (iv) Second Amendment to Transfer Agency and Service Agreement between Neuberger Berman Equity Trust and State Street Bank and Trust Company. Incorporated by reference to Post-Effective Amendment No. 12 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed August 29, 1997). (2) (i) Administration Agreement Between Neuberger Berman Equity Trust and Neuberger Berman Management Inc. Incorporated by Reference to Post-Effective Amendment No. 24 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed November 10, 1999). (ii) Schedule A - Series of Neuberger Berman Equity Trust Currently Subject to the Administration Agreement. Filed Herewith. (iii) Schedule B - Schedule of Compensation Under the Administration Agreement. Incorporated by Reference to Post-Effective Amendment No. 24 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed November 10, 1999). Exhibit Number Description ------ ----------- (i) (1) Opinion and Consent of Kirkpatrick & Lockhart LLP on Securities Matters with Respect to Neuberger Berman Equity Trust and its series Neuberger Berman Focus Trust, Neuberger Berman Guardian Trust, Neuberger Berman Genesis Trust, Neuberger Berman International Trust, Neuberger Berman Manhattan Trust, and Neuberger Berman Partners Trust. Incorporated by Reference to Post-Effective Amendment No. 13 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed December 12, 1997). (2) Opinion and Consent of Kirkpatrick & Lockhart LLP on Securities Matters with Respect to Neuberger Berman Socially Responsive Trust. Incorporated by Reference to Post-Effective Amendment No. 3 to the Registration Statement of Neuberger Berman Equity Assets, File Nos. 33-82568 and 811-8106 (Filed February 9, 1996). (3) Opinion and Consent of Kirkpatrick & Lockhart LLP on Securities Matters with Respect to Neuberger Berman Millennium Trust. Incorporated by Reference to Post-Effective Amendment No. 16 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed October 16, 1998). (4) Opinion and Consent of Kirkpatrick & Lockhart LLP on Securities Matters with Respect to Neuberger Berman Regency Trust. Incorporated by Reference to Post-Effective Amendment No. 22 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed September 27, 1999). (5) Opinion and Consent of Kirkpatrick & Lockhart LLP on Securities Matters with Respect to Neuberger Berman Century Trust. Incorporated by Reference to Post- Effective Amendment No. 24 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed November 10, 1999). (6) Opinion and Consent of Kirkpatrick & Lockhart LLP on Securities Matters with Respect to Neuberger Berman Technology Trust. Filed Herewith. (j) Consent of Independent Auditors. None. (k) Financial Statements Omitted from Prospectus. None. (l) Letter of Investment Intent. None. (m) (1) Distribution and Shareholder Services Plan. Incorporated by Reference to Post-Effective Amendment No. 24 to Registrant's Registration Statement, File Nos. 33-64368 and 811-7784 (Filed November 10, 1999). (2) Schedule A - Series of Neuberger Berman Equity Trust currently subject to the Distribution and Shareholder Services Plan. Filed Herewith. (n) Financial Data Schedule. Not Applicable. (o) Plan Pursuant to Rule 18f-3. None. (p) (1) Code of Ethics for Registrant and Neuberger Berman Management Inc. Filed Herewith. (2) Code of Ethics for Equity Managers Trust, Neuberger Berman Management Inc. and Neuberger Berman, LLC. Incorporated by Reference to Post-Effective Amendment No. 90 to Registration Statement of Neuberger Berman Equity Funds, File Nos. 2-11357 and 811-582 (Filed April 14, 2000). EX-99.(A)(4) 2 NEUBERGER BERMAN EQUITY TRUST TRUST INSTRUMENT SCHEDULE A SERIES - ------ Neuberger Berman Century Trust Neuberger Berman Focus Trust Neuberger Berman Genesis Trust Neuberger Berman Guardian Trust Neuberger Berman Manhattan Trust Neuberger Berman Partners Trust Neuberger Berman International Trust Neuberger Berman Millennium Trust Neuberger Berman Regency Trust Neuberger Berman Socially Responsive Trust Neuberger Berman Technology Trust Dated: April 17, 2000 EX-99.(E)(4) 3 NEUBERGER BERMAN EQUITY TRUST DISTRIBUTION AND SERVICES AGREEMENT SCHEDULE A SERIES DATE MADE PARTY TO AGREEMENT - ------ ---------------------------- Neuberger Berman Century Trust November 17, 1999 Neuberger Berman Focus Trust December 1, 1999 Neuberger Berman Millennium Trust December 1, 1999 Neuberger Berman Regency Trust April 30, 1999 Neuberger Berman Socially Responsive Trust December 1, 1999 Neuberger Berman Technology Trust April 17, 2000 EX-99.(H)(2)(II) 4 NEUBERGER BERMAN EQUITY TRUST ADMINISTRATION AGREEMENT SCHEDULE A SERIES DATE MADE PARTY TO AGREEMENT - ------ ---------------------------- Neuberger Berman Century Trust November 17, 1999 Neuberger Berman Focus Trust August 3, 1993 Neuberger Berman Guardian Trust August 3, 1993 Neuberger Berman Manhattan Trust August 3, 1993 Neuberger Berman Partners Trust August 3, 1993 Neuberger Berman Genesis Trust August 3, 1993 Neuberger Berman International Trust August 30, 1997 Neuberger Berman Millennium Trust October 19, 1998 Neuberger Berman Regency Trust April 30, 1999 Neuberger Berman Socially Responsive Trust December 1, 1999 Neuberger Berman Technology Trust April 17, 2000 EX-99.(I)(6) 5 Kirkpatrick & Lockhart LLP 1800 Massachusetts Avenue, N.W. 2nd Floor Washington, D.C. 20036-1800 April 14, 2000 Neuberger Berman Equity Trust 605 Third Avenue, Second Floor New York, New York 10158-0180 Ladies and Gentlemen: Neuberger Berman Equity Trust ("Trust") is a business trust organized under the laws of the State of Delaware and governed by a Trust Instrument dated May 6, 1993. You have requested our opinion regarding certain matters in connection with the Trust's issuance of shares of beneficial interest, par value $0.001 per share ("Shares"), in its new series, Neuberger Berman Technology Trust ("Fund"). We have, as counsel, participated in various business and other proceedings relating to the Trust. We have examined copies, either certified or otherwise proved to be genuine, of the Trust Instrument and the By-laws of the Trust, the minutes of meetings of its board of trustees and other documents relating to its organization and operation, and we are generally familiar with its business affairs. Based upon the foregoing, it is our opinion that, when issued in accordance with the Trust's Trust Instrument, By-laws, and prospectus, the Shares will be legally issued, fully paid and non-assessable by the Trust. The Trust is a business trust established pursuant to the Delaware Business Trust Act ("Delaware Act"). The Delaware Act provides that a shareholder of the Trust is entitled to the same limitation of personal liability extended to shareholders of for-profit corporations. To the extent that the Trust or any of its shareholders becomes subject to the jurisdiction of courts in states which do not have statutory or other authority limiting the liability of business trust shareholders, such courts might not apply the Delaware Act and could subject Trust shareholders to liability. To guard against this risk, the Trust Instrument: (i) requires that every written obligation of the Trust contain a statement that such obligation may be enforced only against the assets of the Trust; however, the omission of such a disclaimer will not operate to create personal liability for any shareholder; and (ii) provides for indemnification out of Trust property of any shareholder held personally liable, solely by reason of being a shareholder, for the obligations of the Trust. Thus, the risk of a Trust shareholder incurring financial loss beyond his or her investment simply as a result of being a shareholder is limited to circumstances in which: (i) a court refuses to apply Delaware law; (ii) no contractual limitation of liability is in effect; and (iii) the Trust itself is unable to meet its obligations. Neuberger Berman Equity Trust April 14, 2000 Page 2 We express no opinion as to compliance with the Securities Act of 1933, the Investment Company Act of 1940, or applicable state securities laws in connection with the sale of Shares. We hereby consent to the filing of this opinion in connection with Post-Effective Amendment No. 28 to the Trust's Registration Statement on Form N-1A (File Nos. 33-64368 and 811-07784) to be filed with the Securities and Exchange Commission. We also consent to the reference to our firm in the Statement of Additional Information filed as part of the Registration Statement. Sincerely, KIRKPATRICK & LOCKHART LLP By: /s/ Arthur C. Delibert ----------------------------- Arthur C. Delibert EX-99.(M)(2) 6 NEUBERGER BERMAN EQUITY TRUST DISTRIBUTION AND SHAREHOLDER SERVICES PLAN SCHEDULE A The series of Neuberger Berman Equity Trust subject to the Distribution and Shareholder Services Plan, and the applicable fee rates, are: Fee (as a Percentage of Series Average Daily Net Assets) ------ ------------------------- Neuberger Berman Century Trust 0.10% Neuberger Berman Focus Trust 0.10% Neuberger Berman Millennium Trust 0.10% Neuberger Berman Regency Trust 0.10% Neuberger Berman Socially Responsive Trust 0.10% Neuberger Berman Technology Trust 0.10% Dated: April 17, 2000 EX-99.(P)(1) 7 CODE OF ETHICS - AMENDED AND RESTATED This Code of Ethics ("Code") is adopted by: NEUBERGER BERMAN EQUITY TRUST, a registered investment company ("Trust") on behalf of its series (each series of which is referred to as a "Fund") Neuberger Berman Management Inc., the administrator and distributor of Fund shares ("NB Management") pursuant to Rule 17j-1 promulgated by the Securities and Exchange Commission (the "Rule") under the Investment Company Act of 1940. STATEMENT OF GENERAL PRINCIPLES This Code of Ethics is adopted in recognition of the general fiduciary principles that govern personal investment activities of all individuals associated with the Trust, Fund, NB Management, and NB. It is the duty at all times to place the interests of Fund shareholders first. Priority must be given to Fund trades over personal securities trades. All personal securities transactions must be conducted consistent with this Code of Ethics and in such a manner as to avoid any actual or potential conflict of interest or any abuse of an individual's position of trust and responsibility. Individuals should not take advantage of their positions. Amended and Restated 1/27/00 TABLE OF CONTENTS 1. General Prohibitions.....................................................4 2. Definitions..............................................................5 Access Person............................................................5 Advisory Person..........................................................5 Beneficial Interest......................................................5 Blind Trust..............................................................6 Day......................................................................6 Immediate Family.........................................................6 Investment Company.......................................................6 Investment Personnel.....................................................6 Legal and Compliance Department..........................................6 Portfolio Manager........................................................7 Related Issuer...........................................................7 Security.................................................................7 Trading Desk.............................................................7 3. Required Compliance Procedures...........................................8 3.1 All Securities Transactions through Neuberger Berman.................8 3.2 Preclearance of Securities Transactions by Access Persons............8 3.3 Post-Trade Monitoring of Precleared Transactions.....................9 3.4 Disclosure of Personal Holdings.....................................10 3.5 Certification of Compliance with Code of Ethics.....................10 4. Restrictions and Disclosure Requirements................................11 4.1 Initial Public Offerings............................................11 4.2 Private Placements..................................................11 4.3 Related Issuers.....................................................11 4.4 Blackout Periods....................................................12 4.5 Same Day Price Switch...............................................13 4.6 Short-Term Trading Profits..........................................15 4.7 Gifts...............................................................16 4.8 Service as Director of Publicly Traded Companies....................16 5. Procedures with Regard to Dissemination of Information..................17 Amended and Restated 1/27/00 6. Reporting by Access Persons.............................................18 6.1 General Requirement.................................................18 6.2 Disinterested Trustees..............................................18 6.3 Contents............................................................18 7. Code of Ethics Board....................................................20 8. Annual Report to Board of Trustees......................................21 9. Implementation..........................................................22 9.1 Forms...............................................................22 9.2 Exceptions..........................................................22 Amended and Restated 1/27/00 1. GENERAL PROHIBITIONS No individual associated with the Trust, Fund, NB Management, or NB, in connection with the purchase or sale, directly or indirectly, by such person of a security held or to be acquired by such Trust or Fund, shall: Employ any device, scheme or artifice to defraud such Trust or Fund; Make to such Trust or Fund any untrue statement of a material fact or omit to state to such Trust or Fund a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading; Engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any such Trust or Fund; Engage in any manipulative practice with respect to such Trust or Fund; Engage in any transaction in a security while in possession of material nonpublic information regarding the security or the issuer of the security; or Engage in any transaction intended to raise, lower, or maintain the price of any security or to create a false appearance of active trading. - 4 - Amended and Restated 1/27/00 2. DEFINITIONS The following words have the following meanings, regardless of whether such terms are capitalized or not in this Code: ACCESS PERSON - any principal or employee of NB who is an Advisory Person and all Trustees, directors, officers, or Advisory Persons of the Trust or NB Management. The determination as to whether an individual is an Access Person shall be made by the Legal and Compliance Department. ADVISORY PERSON - any employee of the Fund or NB Management (or of any company in a control relationship to NB, the Fund, or NB Management) or any employee or principal of NB who, in connection with his or her regular functions or duties, makes, participates in, or obtains information regarding the purchase or sale of a security by the Fund, or whose functions relate to the making of any recommendations with respect to such purchases or sales. BENEFICIAL INTEREST - a person has a Beneficial Interest in an account in which he or she may profit or share in the profit from transactions. Without limiting the foregoing, a person has a Beneficial Interest when the securities in the account are held: (i) in his or her name; (ii) in the name of any of his or her Immediate Family; (iii) in his or her name as trustee for himself or herself or for his or her Immediate Family; (iv) in a trust in which he or she has a Beneficial Interest or is the settlor with a power to revoke; (v) by another person and he or she has a contract or an understanding with such person that the securities held in that person's name are for his or her benefit; (vi) in the form of a right to acquisition of such security through the exercise of warrants, options, rights, or conversion rights; (vii) by a partnership of which he or she is a member; (viii) by a corporation which he or she uses as a personal trading medium; (ix) by a holding company which he or she controls; or (x) any other relationship in which a person would have beneficial ownership under Section 16 of the Securities Exchange Act of 1934 and the rules and regulations thereunder, except that the - 5 - Amended and Restated 1/27/00 determination of direct or indirect Beneficial Interest shall apply to all securities which an Access Person has or acquires. Any person who wishes to disclaim a Beneficial Interest in any securities must submit a written request to the Legal and Compliance Department explaining the reasons therefor. Any disclaimers granted by the Legal and Compliance Department must be made in writing. Without limiting the foregoing, if a disclaimer is granted to any person with respect to shares held by a member or members of his or her Immediate Family, the provisions of this Code of Ethics applicable to such person shall not apply to any member or members of his or her Immediate Family for which such disclaimer was granted, except with respect to requirements specifically applicable to members of a person's Immediate Family. BLIND TRUST - a trust in which an Access Person or employee has Beneficial Interest or is the settlor with a power to revoke, with respect to which the Legal and Compliance Department has determined that such Access Person or employee has no direct or indirect influence or control over the selection or disposition of securities and no knowledge of transactions therein, PROVIDED, HOWEVER, that direct or indirect influence or control of such trust is held by a person or entity not associated with Neuberger Berman or any affiliate of Neuberger Berman and not a relative of such Access Person or employee DAY - a calendar day IMMEDIATE FAMILY - any of the following relatives sharing the same household with an individual: child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-law, including adoptive relationships INVESTMENT COMPANY - each registered investment company and series thereof for which NB Management is the investment manager, investment adviser, sub-adviser, administrator or distributor, or for which NB is the investment adviser or sub-adviser. INVESTMENT PERSONNEL - Portfolio Managers, and Access Persons who, in connection with their regular functions or duties, provide information and advice to a Portfolio Manager or who help execute a Portfolio Manager's decisions. Each member of this category is individually referred to as an INVESTMENT PERSON. The determination as to whether an individual is an Investment Person shall be made by the Legal and Compliance Department. LEGAL AND COMPLIANCE DEPARTMENT - NB Legal and Compliance Department PORTFOLIO MANAGER - an Access Person who has or shares principal day-to-day responsibility for managing the portfolio of any Fund. The determination as to whether an individual is a Portfolio Manager shall be made by the Legal and Compliance Department. RELATED ISSUER - an issuer with respect to which an Investment Person or - 6 - Amended and Restated 1/27/00 his or her Immediate Family: (i) has a business relationship with such issuer or any promoter, underwriter, officer, director, or employee of such issuer; or (ii) is related to any officer, director or employee of such issuer. SECURITY - any option, stock or option thereon, instrument, bond, debenture, pre-organization certificate, investment contract, any other interest commonly known as a security, and any security or instrument related to, but not necessarily the same as, those held or to be acquired by a Fund; PROVIDED, HOWEVER, that the following shall not be considered a "security": securities issued by the United States Government, bankers' acceptances, bank certificates of deposit, commercial paper, shares of registered open-end investment companies, commodities, futures, and options on futures. TRADING DESK - NB Trading Desk - 7 - Amended and Restated 1/27/00 3. REQUIRED COMPLIANCE PROCEDURES 3.1 ALL SECURITIES TRANSACTIONS THROUGH NEUBERGER BERMAN. (a) Every Access Person, and every employee of the Fund, NB Management, or NB and principal of NB is required to execute through Neuberger Berman ("NB") all transactions in securities held in his or her own name or in which he or she has a Beneficial Interest; PROVIDED, HOWEVER, that this requirement shall not apply to any Access Person who is a disinterested Trustee of the Trust. Every Portfolio Manager is also required to provide the Legal and Compliance Department with duplicate copies of confirmations of all transactions in securities held in the name of members of his or her Immediate Family or in which such members have a Beneficial Interest. (b) Exceptions will only be granted upon a showing of extenuating circumstances. Any individual seeking an exception to this policy must submit a written request to the Legal and Compliance Department explaining the reasons therefor. Any exceptions granted must be made in writing. (c) Any individual granted an exception is required to direct his or her broker, adviser or trustee, as the case may be, to supply to the Legal and Compliance Department, on a timely basis, duplicate copies of confirmations of all personal securities transactions and copies of periodic statements for all securities accounts in his or her own name or in which he or she has a Beneficial Interest. (d) Individuals are not required to execute through NB transactions in which they are establishing a dividend reinvestment plan directly through an issuer. However, individuals must obtain written approval from the Legal and Compliance Department prior to establishing any such plan and supply to the Legal and Compliance Department, on a timely basis, duplicate copies of all confirmations relating to the plan. 3.2 PRECLEARANCE OF SECURITIES TRANSACTIONS BY ACCESS PERSONS. (a) Every Access Person must obtain prior approval from the Trading Desk before executing any transaction in securities held in his or her own name or in which he or she has a Beneficial Interest. Before executing any such transaction, the Trading Desk shall determine that: (i) No Investment Company has a pending "buy" or "sell" order in that security; (ii) The security does not appear on any "restricted" list of NB; and (iii) Such transaction is not short selling or option trading that is economically opposite any pending transaction for any Investment Company. (b) The following securities are exempt from preclearance requirements: - 8 - Amended and Restated 1/27/00 (i) Securities transactions effected in blind trusts (ii) The acquisition of securities through stock dividends, dividend reinvestments, stock splits, reverse stock splits, mergers, consolidations, spin-offs, or other similar corporate reorganizations or distributions generally applicable to all holders of the same class of securities (iii) The acquisition of securities through the exercise of rights issued by an issuer PRO RATA to all holders of a class of securities, to the extent the rights were acquired in the issue, and sales of such rights so acquired (iv) Repurchase agreements (v) Options on the Standard & Poor's "500" Composite Stock Price Index (vi) Other securities that may from time to time be so designated in writing by the Code of Ethics Board (c) A disinterested Trustee of the Trust must obtain prior written approval from the Legal and Compliance Department regarding a transaction in a security held in his or her own name or in which he or she has a Beneficial Interest only if such Trustee, at the time of that transaction, knew or, in the ordinary course of fulfilling his or her official duties as a Trustee of the Trust, should have known about any security that, during the 15-day period immediately before or after the date of the transaction by that Trustee, was purchased or sold by a Fund or was being considered by NB Management for purchase or sale by a Fund. (d) Obtaining preclearance approval does not constitute a waiver of any prohibitions, restrictions, or disclosure requirements in this Code of Ethics. 3.3 POST-TRADE MONITORING OF PRECLEARED TRANSACTIONS. After the Trading Desk has granted preclearance to an Access Person with respect to any personal securities transaction, the investment activity of such Access Person shall be monitored by the Legal and Compliance Department to ascertain that such activity conforms to the preclearance so granted and the provisions of this Code. - 9 - Amended and Restated 1/27/00 3.4 DISCLOSURE OF PERSONAL HOLDINGS. All Access Persons (except disinterested Trustees of the Trust) are required to disclose all holdings in securities held in their own names or in which they have a Beneficial Interest to the Legal and Compliance Department upon commencement of employment and thereafter on an annual basis. 3.5 CERTIFICATION OF COMPLIANCE WITH CODE OF ETHICS. All Access Persons are required to certify annually in writing that they have: (a) read and understand the Code of Ethics and recognize that they are subject thereto; (b) complied with the requirements of the Code of Ethics; (c) disclosed or reported all personal securities transactions required to be disclosed or reported pursuant to the requirements of the Code; and (d) with respect to any blind trusts in which such person has a Beneficial Interest, that such person has no direct or indirect influence or control and no knowledge of any transactions therein. - 10 - Amended and Restated 1/27/00 4. RESTRICTIONS AND DISCLOSURE REQUIREMENTS 4.1 INITIAL PUBLIC OFFERINGS. All Investment Personnel are prohibited from acquiring a Beneficial Interest in any securities in an initial public offering, in order to preclude any possibility of their profiting improperly from their positions on behalf of a Fund. No member of an Immediate Family of an Investment Person may acquire a Beneficial Interest in an initial public offering without the prior written consent of the Legal and Compliance Department. 4.2 PRIVATE PLACEMENTS. (a) No Investment Person or member of his or her Immediate Family may acquire a Beneficial Interest in any securities in private placements without prior written approval by the Legal and Compliance Department. (b) Prior approval shall take into account, among other factors, whether the investment opportunity should be reserved for a Trust or Fund and its shareholders and whether the opportunity is being offered to an individual by virtue of his or her position or relationship to the Trust or Fund. (c) An Investment Person who has (or a member of whose Immediate Family has) acquired a Beneficial Interest in securities in a private placement is required to disclose that investment to the Portfolio Manager when such Investment Person plays a part in any subsequent consideration of an investment in the issuer for any Trust or Fund; PROVIDED, HOWEVER, that if any such Investment Person is the Portfolio Manager, such Investment Person shall make such disclosure to the Legal and Compliance Department. In any such circumstances, the decision to purchase securities of the issuer for a Trust or Fund is subject to an independent review by Investment Personnel with no personal interest in the issuer. Such independent review shall be made in writing and furnished to the Legal and Compliance Department. 4.3 RELATED ISSUERS. Investment Personnel are required to disclose to the Portfolio Manager when they play a part in any consideration of an investment by a Trust or Fund in a Related Issuer; PROVIDED, HOWEVER, that if any such Investment Person is the Portfolio Manager, such Investment Person shall make such disclosure to the Legal and Compliance Department. In any such circumstances, the decision to purchase securities of the Related Issuer for a Trust or Fund is subject to an independent review by Investment Personnel with no personal interest in the Related Issuer. Such independent review shall be made in writing and furnished to the Legal and Compliance Department. 4.4 BLACKOUT PERIODS. (a) No Access Person may execute a securities transaction in securities held in his or her own name or in which he or she has a Beneficial Interest on a - 11 - Amended and Restated 1/27/00 day during which any Investment Company has a pending "buy" or "sell" order in that same security until that order is executed or withdrawn; PROVIDED, HOWEVER, that this prohibition shall apply to a disinterested Trustee only if such Trustee, at the time of that transaction, knew or, in the ordinary course of fulfilling his or her official duties as a Trustee of the Trust, should have known about any security that, during the 15-day period immediately preceding the date of the transaction by that Trustee, was purchased or sold by a Fund or was being considered by NB Management for purchase or sale by a Fund. (b) No Portfolio Manager or member of his or her Immediate Family may buy or sell a security held in his or her own name or in which he or she has a Beneficial Interest within seven (7) Days before or after a Fund that such Portfolio Manager manages trades in that security, PROVIDED, HOWEVER, that this prohibition shall not apply to: (i) Securities transactions effected in blind trusts (ii) Securities transactions that are non-volitional on the part of either the Access Person or the Fund (iii) The acquisition of securities through stock dividends, dividend reinvestments, stock splits, reverse stock splits, mergers, consolidations, spin-offs, or other similar corporate reorganizations or distributions generally applicable to all holders of the same class of securities (iv) The acquisition of securities through the exercise of rights issued by an issuer PRO RATA to all holders of a class of securities, to the extent the rights were acquired in the issue, and sales of such rights so acquired (v) Repurchase agreements (vi) Options on the Standard & Poor's "500" Composite Stock Price Index (vii) Other securities that may from time to time be so designated in writing by the Code of Ethics Board - 12 - Amended and Restated 1/27/00 (c) Any securities position established in violation of Section 4.4(b) shall be closed out as soon as possible consistent with applicable law. Any profits on trades within the proscribed periods shall be disgorged to the Fund. (d) The foregoing blackout periods should not operate to the detriment of any Investment Company. Without limiting the scope or meaning of this statement, the following procedure is to be implemented under extraordinary situations: (i) If a Portfolio Manager of a Fund or member of his or her Immediate Family has executed a transaction in a security and within seven (7) Days thereafter such security is considered for purchase or sale by such Fund, such Portfolio Manager shall submit a written memorandum to the Legal and Compliance Department prior to the entering of the purchase or sale order for the Fund. Such memorandum shall describe the circumstances underlying the consideration of such transaction for the Fund. (ii) Based on such memorandum and other factors it deems relevant under the specific circumstances, the Legal and Compliance Department shall have authority to determine that the prior transaction by the Portfolio Manager or member of his or her Immediate Family shall not be considered a violation of the provisions of paragraph (b) of this section. (iii) The Legal and Compliance Department shall make a written record of any determination made under paragraph (d)(ii) of this section, including the reasons therefor. The Legal and Compliance Department shall maintain records of any such memoranda and determinations and provide copies thereof as part of its monthly reports to the Board of Trustees of the Trust. 4.5 SAME DAY PRICE SWITCH. (a) If any employee of a Fund, NB Management, or any employee or principal of NB purchases a security (other than a fixed income security) held, or by reason of such transaction held, in his or her own name or in which he or she has a Beneficial Interest and subsequent thereto a Fund purchases the same security during the same day, then, to the extent that the price paid per share by the Fund for such purchase is less favorable than the price paid per share by such principal or employee, the Fund shall have the benefit of the more favorable price per share. (b) If any such principal or employee sells a security (other than a fixed income security) held in his or her own name or in which he or she has a Beneficial Interest and subsequent thereto a Fund sells the same security during the same day, then, to the extent that the price per share received by the Fund for such sale is less favorable than the price per share received by the principal or employee, the Fund shall have the benefit of the more favorable price per share. - 13 - Amended and Restated 1/27/00 (c) An amount of money necessary to effectuate the price adjustment shall be transferred from the account of the principal or employee subject to the price adjustment policies, to the Fund's account. The price adjustment shall be limited to the number of shares purchased or sold by the principal or employee or the number of shares purchased or sold by the Fund, whichever is smaller. (d) Notwithstanding the foregoing, price switching shall not apply to: (i) Securities transactions effected in blind trusts (ii) Securities transactions that are non-volitional on the part of either the Access Person or the Fund (iii) The acquisition of securities through stock dividends, dividend reinvestments, stock splits, reverse stock splits, mergers, consolidations, spin-offs, or other similar corporate reorganizations or distributions generally applicable to all holders of the same class of securities (iv) The acquisition of securities through the exercise of rights issued by an issuer PRO RATA to all holders of a class of securities, to the extent the rights were acquired in the issue, and sales of such rights so acquired (v) Repurchase agreements (vi) Options on the Standard & Poor's "500" Composite Stock Price Index (vii) Transactions in which the adjustment resulting from the price switch is less than Five Hundred Dollars ($ 500.00) (viii) Transactions arising through arbitrage, market making activities or hedged options trading (ix) Transactions in the NB ERISA Profit Sharing and Retirement Plan (x) Transactions involving odd lots (xi) Other securities that may from time to time be so designated in writing by the Code of Ethics Board - 14 - Amended and Restated 1/27/00 4.6 SHORT-TERM TRADING PROFITS. (a) No Investment Person may profit in the purchase and sale, or sale and purchase, of the same (or equivalent) securities held in his or her own name or in which he or she has a Beneficial Interest within sixty (60) Days, PROVIDED, HOWEVER, that this prohibition shall not apply to: (i) Any security that was neither held, purchased, nor sold by any Investment Company during such sixty (60) Day period (ii) Securities transactions effected in blind trusts (iii) Securities transactions that are non-volitional on the part of either the Access Person or the Fund (iv) The acquisition of securities through stock dividends, dividend reinvestments, stock splits, reverse stock splits, mergers, consolidations, spin-offs, or other similar corporate reorganizations or distributions generally applicable to all holders of the same class of securities (v) The acquisition of securities through the exercise of rights issued by an issuer PRO RATA to all holders of a class of securities, to the extent the rights were acquired in the issue, and sales of such rights so acquired (vi) Repurchase agreements (vii) Options on the Standard & Poor's "500" Composite Stock Price Index (viii) Other securities that may from time to time be so designated in writing by the Code of Ethics Board (b) Any profits on trades within the proscribed periods shall be disgorged to a charity to be determined by the Legal and Compliance Department. (c) In determining the applicability of this section, determinations shall be made based upon a last-in, first-out ("LIFO") calculation; provided, however, that such determinations shall be solely for purposes of this Code of Ethics and shall not have any applicability for tax or other purposes. - 15 - Amended and Restated 1/27/00 4.7 GIFTS. All Access Persons and employees are prohibited from giving or receiving any gift or other thing of more than One Hundred Dollars ($ 100) in value to or from any person or entity that does business with or on behalf of the Fund in any one year. 4.8 SERVICE AS DIRECTOR OF PUBLICLY TRADED COMPANIES. Investment Personnel are prohibited from serving on the Boards of Directors of publicly traded companies. Amended and Restated 1/27/00 - 16 - 5. PROCEDURES WITH REGARD TO DISSEMINATION OF INFORMATION (a) NB, NB Management, and the Trust, and their officers, principals and employees, shall not disclose to any disinterested Trustee of the Trust information regarding the consideration or decision to purchase or sell a particular security when it is contemplated that such action will be taken within the next 15 days, unless it is (i) requested in writing by a disinterested Trustee of the Trust or requested through a formal action of the Board of the Trust or any committee thereof; (ii) given because it is determined that the disinterested Trustee should have the information so that he or she may effectively carry out his or her duties; or (iii) given so that NB or NB Management may carry out its duties as administrator or sub-adviser of a Fund. (b) If any information regarding transactions contemplated by the Fund is given to a disinterested Trustee, such disinterested Trustee shall be advised at that time that he or she and any other Fund Trustee receiving such information will be considered a Portfolio Manager with respect to any security held or to be acquired by the Fund, as indicated in the information which has been disclosed, for the next succeeding 22 days, and NB Management shall so notify the Legal and Compliance Department. At such time, the Trustee shall be reminded by NB Management of the provisions of Sections 3.2, 4.4, and 6.2 of this Code. (c) Subject to Sections 5(a) and 5(b), Access Persons and principals and employees of NB Management, NB, or the Trust are prohibited from revealing information relating to current or anticipated investment intentions, portfolio transactions or activities of Funds except to persons whose responsibilities require knowledge of the information. - 17 - Amended and Restated 1/27/00 6. REPORTING BY ACCESS PERSONS 6.1 GENERAL REQUIREMENT. Every Access Person shall report, or cause to be reported, to the Trust and Legal and Compliance Department the information described in Section 6.3 with respect to transactions in any security in which such Access Person has, or by reason of such transaction acquires, any direct or indirect Beneficial Interest; PROVIDED, HOWEVER, that no report is required with respect to transactions where such report would duplicate information recorded by NB or NB Management pursuant to Rules 204-2(a)(12) or 204-2(a)(13) under the Investment Advisers Act of 1940. For purposes of the foregoing (b), the Legal and Compliance Department maintains (i) electronic records of all securities transactions effected through NB, and (ii) copies of any duplicate confirmations that have been provided to the Legal and Compliance Department under this Code of Ethics with respect to securities transactions that, pursuant to exceptions granted by the Legal and Compliance Department, have not been effected through NB; accordingly, no report is required with respect to such transactions. 6.2 DISINTERESTED TRUSTEES. (a) A disinterested Trustee of the Trust need only report a transaction in a security if such Trustee, at the time of that transaction, knew or, in the ordinary course of fulfilling his or her official duties as a Trustee, should have known that, during the 15-day period immediately preceding the date of the transaction by that Trustee, such security was purchased or sold by a Fund or was being considered for purchase or sale by NB Management. (b) Notwithstanding the foregoing, disinterested Trustees are required to report to the Legal and Compliance Department in writing whenever they own individually more than 1/2 of 1% of the outstanding shares of any issuer, together with the number of shares so owned. 6.3 CONTENTS. Every report shall be made not later than 10 days after the end of the calendar quarter in which the transaction to which the report relates was effected, and shall contain the following information: (i) The date of the transaction, the title and the number of shares, and the principal amount of each security involved; (ii) The nature of the transaction (I.E., purchase, sale or any other type of acquisition or disposition); (iii) The price at which the transaction was effected; and (iv) The name of the broker, dealer or bank with or through whom the transaction was effected. - 18 - Amended and Restated 1/27/00 Unless otherwise stated, no report shall be construed as an admission by the person making such report that he or she has any direct or indirect Beneficial Interest in the security to which the report relates. Amended and Restated 1/27/00 - 19 - 7. CODE OF ETHICS BOARD. A Code of Ethics Board shall be created by NB Management and the Trust, composed of three members, two of whom shall be disinterested Trustees selected by the Board of Trustees of the Trust and one of whom shall be selected by NB Management. Any person who has knowledge of any violation of this Code shall report said violation to the Code of Ethics Board. The Code of Ethics Board shall consult regularly and meet no less frequently than annually with the Legal and Compliance Department regarding the implementation of this Code. The Legal and Compliance Department shall provide the Code of Ethics Board with such reports as are required herein or as are requested by the Code of Ethics Board. A monthly report shall be provided to the Trustees of the Trust certifying that except as specifically disclosed to the Code of Ethics Board, the Legal and Compliance Department knows of no violation of this Code. A representative of the Legal and Compliance Department shall attend all regular meetings of the Trustees to report on the implementation of this Code. NB Management, NB, and the Trustees of the Trust shall have authority to impose sanctions for violations of this Code. The Code of Ethics Board shall make recommendations regarding sanctions to be imposed on Access Persons who violate this Code. Such recommendations may include a letter of censure, suspension or termination of the employment of the violator, forfeiture of profits, forfeiture of personal trading privileges, forfeiture of gifts, or any other penalty the Code of Ethics Board deems to be appropriate. All such recommendations shall be submitted to NB Management and the Board of Trustees of the Trust. - 20 - Amended and Restated 1/27/00 8. ANNUAL REPORT TO BOARD OF TRUSTEES. NB Management shall prepare an annual report to the Board of Trustees of the Trust that: (i) summarizes existing procedures concerning personal investing and any changes in the procedures made during the past year; (ii) identifies any violations requiring significant remedial action during the past year; and (iii) identifies any recommended changes in existing restrictions or procedures based upon the Fund's experience under the Code of Ethics, evolving industry practices, or developments in applicable laws or regulations. - 21 - Amended and Restated 1/27/00 9. IMPLEMENTATION. 9.1 FORMS. The Legal and Compliance Department is authorized, with the advice of counsel, to prepare written forms for use in implementing this Code. Such forms shall be attached as an Appendix to this Code and shall be disseminated to all individuals subject to the Code. 9.2 EXCEPTIONS. Exceptions to the requirements of this Code shall rarely, if ever, be granted. However, the Legal and Compliance Department shall have authority to grant exceptions on a case-by-case basis. Any exceptions granted must be in writing and reported to the Code of Ethics Board. - 22 - Amended and Restated 1/27/00 -----END PRIVACY-ENHANCED MESSAGE-----