-----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, Ra2rWVG/H306j0uyRVRf5049CpQYt6UKGqhd1dZshEVwP0eifQB2qnW8nHlxhrK9 9WMU3a3og2JXMEniLJdInQ== 0000898432-95-000393.txt : 19951130 0000898432-95-000393.hdr.sgml : 19951130 ACCESSION NUMBER: 0000898432-95-000393 CONFORMED SUBMISSION TYPE: 485APOS PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19951128 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEUBERGER & BERMAN EQUITY ASSETS CENTRAL INDEX KEY: 0000914228 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 133783592 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485APOS SEC ACT: 1933 Act SEC FILE NUMBER: 033-82568 FILM NUMBER: 95596582 FILING VALUES: FORM TYPE: 485APOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-08106 FILM NUMBER: 95596583 BUSINESS ADDRESS: STREET 1: 605 THIRD AVENUE STREET 2: 2ND FLOOR CITY: NEW YORK STATE: NY ZIP: 10158-0006 BUSINESS PHONE: 2124768800 485APOS 1 As filed with the Securities and Exchange Commission on November 28, 1995 1933 Act Registration No. 33-82568 1940 Act Registration No. 811-8106 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ] Pre-Effective Amendment No. ______ [______] Post-Effective Amendment No. ___1___ [ X ] and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ] Amendment No. 3 [ X ] (Check appropriate box or boxes) NEUBERGER & BERMAN EQUITY ASSETS (Exact Name of the Registrant as Specified in Charter) 605 Third Avenue New York, New York 10158-0180 (Address of Principal Executive Offices) Registrant's Telephone Number, including area code: (212) 476-8800 Lawrence Zicklin, President Neuberger & Berman Equity Assets 605 Third Avenue, 2nd Floor New York, New York 10158-0180 Arthur C. Delibert, Esq. Kirkpatrick & Lockhart LLP South Lobby - 9th Floor 1800 M Street, N.W. Washington, D.C. 20036-5891 (Names and Addresses of agents for service) Approximate Date of Proposed Public Offering: As soon as practicable after the effective date of this registration statement. It is proposed that this filing will become effective: _____ immediately upon filing pursuant to paragraph (b) _____ on __________ pursuant to paragraph (b) _____ 60 days after filing pursuant to paragraph (a)(1) _____ on __________ pursuant to paragraph (a)(1) __X__ 75 days after filing pursuant to paragraph (a)(2) _____ on __________ pursuant to paragraph (a)(2) Registrant has filed a declaration pursuant to Rule 24f-2 under the Investment Company Act of 1940. Neuberger & Berman Equity Assets is a "master/feeder fund." This Post-Effective Amendment No. 1 includes a signature page for the master fund, Equity Managers Trust, and appropriate officers and trustees thereof. Page _______ of _______ Exhibit Index Begins on Page _______ NEUBERGER & BERMAN EQUITY ASSETS CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 1 ON FORM N-1A This Post-Effective Amendment consists of the following papers and documents: Cover Sheet Contents of Post-Effective Amendment No. 1 on Form N-1A Cross Reference Sheet Neuberger & Berman Manhattan Assets, Neuberger & Berman Focus Assets, Neuberger & Berman Guardian Assets and Neuberger & Berman Partners Assets Part A - Prospectus Part B - Statement of Additional Information Part C - Other Information Signature Pages Exhibits No change is intended to be made by this Post-Effective Amendment No. 1 to the prospectus or statement of additional information for Neuberger & Berman Socially Responsive Trust. NEUBERGER & BERMAN EQUITY ASSETS POST-EFFECTIVE AMENDMENT NO. 1 ON FORM N-1A Cross Reference Sheet This cross reference sheet relates to the Prospectus and Statement of Additional Information for: Neuberger & Berman Manhattan Assets Neuberger & Berman Focus Assets Neuberger & Berman Guardian Assets Neuberger & Berman Partners Assets Form N-1A Item No. Caption in Part A Prospectus Item 1. Cover Page Front Cover Page Item 2. Synopsis Expense Information; Summary Item 3. Condensed Financial Performance Information Information Item 4. General Description Investment Program; Description of of Registrant Investments; Special Information Regarding Organization, Capitalization, and Other Matters Item 5. Management of the Management and Administration; Back Fund Cover Page Item 6. Capital Stock and Front Cover Page; Dividends, Other Other Securities Distributions, and Taxes; Special Information Regarding Organization, Capitalization, and Other Matters Item 7. Purchase of Shareholder Services; Share Securities Being Information; Management and Offered Administration Item 8. Redemption or Shareholder Services; Share Repurchase Information Item 9. Pending Legal Not Applicable Proceedings Caption in Part B Form N-1A Item No. Statement of Additional Information Item 10. Cover Page Cover Page Item 11. Table of Contents Table of Contents Item 12. General Information Organization and History Item 13. Investment Investment Information; Certain Objectives and Risk Considerations Policies Item 14. Management of the Trustees and Officers Fund Item 15. Control Persons and Not Applicable Principal Holders of Securities Item 16. Investment Advisory Investment Management and and Other Services Administration Services; Trustees and Officers; Distribution Arrangements; Reports To Shareholders; Custodian and Transfer Agent; Independent Auditors Item 17. Brokerage Allocation Portfolio Transactions Item 18. Capital Stock and Investment Information; Additional Other Securities Redemption Information; Dividends and Other Distributions Item 19. Purchase and Additional Exchange Information; Redemption Additional Redemption Information; Distribution Arrangements Item 20. Tax Status Dividends and Other Distributions; Additional Tax Information Item 21. Underwriters Investment Management and Administration Services; Distribution Arrangements Item 22. Calculation of Performance Information Performance Data Item 23. Financial Statements Not Applicable Part C Information required to be included in Part C is set forth under the appropriate item, so numbered, in Part C to this Post-Effective Amendment No. 1. SUBJECT TO COMPLETION PRELIMINARY PROSPECTUS DATED NOVEMBER 28, 1995 Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there by any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State. Neuberger&Berman EQUITY ASSETS Neuberger&Berman FOCUS ASSETS Neuberger&Berman MANHATTAN ASSETS Neuberger&Berman GUARDIAN ASSETS Neuberger&Berman PARTNERS ASSETS No-Load Equity Funds YOU CAN BUY, OWN, AND SELL FUND SHARES ONLY THROUGH AN ACCOUNT WITH A PENSION PLAN ADMINISTRATOR, BROKER-DEALER, OR OTHER INSTITUTION (EACH AN "INSTITUTION") WHICH PROVIDES ACCOUNTING, RECORDKEEPING, AND OTHER SERVICES TO INVESTORS AND WHICH HAS AN ADMINISTRATIVE SERVICES AGREEMENT WITH NEUBERGER&BERMAN MANAGEMENT INCORPORATED ("N&B MANAGEMENT"). EACH OF THE ABOVE-NAMED FUNDS (A "FUND") INVESTS ALL OF ITS NET INVESTABLE ASSETS IN ITS CORRESPONDING PORTFOLIO (A "PORTFOLIO") OF EQUITY MANAGERS TRUST ("MANAGERS TRUST"), AN OPEN-END MANAGEMENT INVESTMENT COMPANY MANAGED BY N&B MANAGEMENT. EACH PORTFOLIO INVESTS IN SECURITIES IN ACCORDANCE WITH AN INVESTMENT OBJECTIVE, POLICIES, AND LIMITATIONS IDENTICAL TO THOSE OF ITS CORRESPONDING FUND. THE INVESTMENT PERFORMANCE OF EACH FUND DIRECTLY CORRESPONDS WITH THE INVESTMENT PERFORMANCE OF ITS CORRESPONDING PORTFOLIO. THIS "MASTER/FEEDER FUND" STRUCTURE IS DIFFERENT FROM THAT OF MANY OTHER INVESTMENT COMPANIES WHICH DIRECTLY ACQUIRE AND MANAGE THEIR OWN PORTFOLIOS OF SECURITIES. FOR MORE INFORMATION ON THIS UNIQUE STRUCTURE THAT YOU SHOULD CONSIDER, SEE "SUMMARY" ON PAGE 1, AND "SPECIAL INFORMATION REGARDING ORGANIZATION, CAPITALIZATION, AND OTHER MATTERS" ON PAGE 8. Please read this Prospectus before investing in any of the Funds and keep it for future reference. It contains information about the Funds that a prospective investor should know before investing. A Statement of Additional Information ("SAI") about the Funds and Portfolios, dated February 11, 1996, is on file with the Securities and Exchange Commission. The SAI is incorporated herein by reference (so it is legally considered a part of this Prospectus). You can obtain a free copy of the SAI by calling N&B Management at 800-877-9700. Prospectus Dated February 11, 1996 MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY BANK OR OTHER DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. TABLE OF CONTENTS Page SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 The Funds and Portfolios; Risk Factors . . . . . . . . . . 1 Management . . . . . . . . . . . . . . . . . . . . . . . 2 The Neuberger&Berman Investment Approach . . . . . . . . . 2 EXPENSE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 2 Shareholder Transaction Expenses for Each Fund . . . . . . 2 Annual Fund Operating Expenses . . . . . . . . . . . . . . . 3 Example . . . . . . . . . . . . . . . . . . . . . . . . . . 4 INVESTMENT PROGRAMS . . . . . . . . . . . . . . . . . . . . . . . . . 4 Focus Portfolio . . . . . . . . . . . . . . . . . . . . . . 5 Guardian Portfolio . . . . . . . . . . . . . . . . . . . . . 5 Manhattan Portfolio . . . . . . . . . . . . . . . . . . . . 5 Partners Portfolio . . . . . . . . . . . . . . . . . . . . . 6 Short-Term Trading; Portfolio Turnover . . . . . . . . . . . 6 Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . 6 Other Investments . . . . . . . . . . . . . . . . . . . . . 7 PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 7 Total Return Information . . . . . . . . . . . . . . . . . . 8 SPECIAL INFORMATION REGARDING ORGANIZATION, CAPITALIZATION, AND OTHER MATTERS . . . . . . . . . . . . . . . . . . 8 The Funds . . . . . . . . . . . . . . . . . . . . . . . . . 8 The Portfolios . . . . . . . . . . . . . . . . . . . . . . . 9 SHAREHOLDER SERVICES . . . . . . . . . . . . . . . . . . . . . . . . 10 How to Buy Shares . . . . . . . . . . . . . . . . . . . . . 10 How to Sell Shares . . . . . . . . . . . . . . . . . . . . . 11 Exchanging Shares . . . . . . . . . . . . . . . . . . . . . 11 SHARE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Share Prices and Net Asset Value . . . . . . . . . . . . . . 11 DIVIDENDS, OTHER DISTRIBUTIONS, AND TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Distribution Options . . . . . . . . . . . . . . . . . . . . 12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 MANAGEMENT AND ADMINISTRATION . . . . . . . . . . . . . . . . . . . . 13 Trustees and Officers . . . . . . . . . . . . . . . . . . . 13 Investment Manager, Administrator, Distributor, and Sub-Adviser . . . . . . . . . . . . . . . . . . . . 13 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . 15 - i - DESCRIPTION OF INVESTMENTS . . . . . . . . . . . . . . . . . . . . . 15 USE OF JOINT PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . 17 OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Directory . . . . . . . . . . . . . . . . . . . . . . . . . 17 Funds Eligible for Exchange . . . . . . . . . . . . . . . . 18 - ii - SUMMARY The Funds and Portfolios; Risk Factors Each Fund is a series of Neuberger&Berman Equity Assets (the "Trust") and invests in a corresponding Portfolio that, in turn, invests in securities in accordance with an investment objective, policies, and limitations that are identical to those of the Fund. This is sometimes called a master/feeder fund structure, because each Fund "feeds" shareholders' investments into its corresponding Portfolio, a "master" fund. The trustees who oversee the Funds believe that this structure may benefit shareholders; investment in a Portfolio by investors in addition to a Fund may enable the Portfolio to achieve economies of scale that could reduce expenses. For more information about the organization of the Funds and the Portfolios, including certain features of the master/feeder fund structure, see "Special Information Regarding Organization, Capitalization, and Other Matters" on page 8. An investment in any Fund involves certain risks, depending upon the types of investments made by its corresponding Portfolio. For more details about each Portfolio, its investments and their risks, see "Investment Programs" on page 4 and "Description of Investments" on page 15. The following table is a summary highlighting features of the Funds and their corresponding Portfolios. You may want to invest in a variety of Funds to fit your particular investment needs. Of course, there can be no assurance that a Fund will meet its investment objective.
Neuberger&Berman Equity Assets Investment Style Portfolio Characteristics GUARDIAN ASSETS Broadly diversified, large-cap value A growth and income fund that invests in fund. Relatively low portfolio turnover. stocks of established, high-quality companies that are not well followed on Wall Street or are temporarily out of favor. FOCUS ASSETS Large-cap value fund, more concentrated Invests in common stocks selected from 13 portfolio than Guardian. Relatively low multi-industry sectors of the economy. To portfolio turnover. maximize potential return, the Portfolio normally makes at least 90% of its investments in not more than six sectors believed by the portfolio managers to be undervalued. Neuberger&Berman Equity Assets Investment Style Portfolio Characteristics MANHATTAN ASSETS Broadly diversified, medium- to large-cap Invests in securities believed to have the growth fund. Relatively low portfolio maximum potential for long-term capital turnover. appreciation. Portfolio manager follows a "growth at a reasonable price" philosophy and searches for financially sound, growing companies with a special competitive advantage or a product that makes their stocks attractive. PARTNERS ASSETS Broadly diversified, medium- to large-cap Seeks capital growth through an approach that value fund. Moderate portfolio turnover. is intended to increase capital with reasonable risk. Portfolio managers look at fundamentals, focusing particularly on cash flow, return on capital, and asset values.
Management N&B Management, with the assistance of Neuberger&Berman, L.P. ("Neuberger&Berman") as sub-adviser, selects investments for the Portfolios. N&B Management also provides administrative services to the Portfolios and the Funds and acts as distributor of Fund shares. See "Management and Administration" on page 30. If you want to know how to buy and sell shares of the Funds or exchange them for shares of other Neuberger&Berman Funds(SERVICEMARK) made available through an Institution, see "Shareholder Services--How to Buy Shares" on page 26, "Shareholder Services--How to Sell Shares" on page 26, "Shareholder Services-- Exchanging Shares" on page 26, and the policies of the Institution through which you are purchasing shares. The Neuberger&Berman Investment Approach While each Portfolio has its own investment objective, policies, and limitations, each Portfolio is managed using one of two basic investment approaches--value and growth. A value-oriented portfolio manager buys stocks that are selling for less than their perceived market value. These include stocks that are currently under-researched or are temporarily out of favor on Wall Street. Portfolio managers identify value stocks in several ways. One of the most common identifiers is a low price-to-earnings ratio--that is, stocks selling at multiples of earnings per share that are lower than that of the market as a whole. Other criteria are high dividend yield, a strong balance sheet and financial position, a recent company restructuring with - 2 - the potential to realize hidden values, strong management, and low price-to-book value (net value of the company's assets). While a value approach concentrates on undervalued securities in relation to their fundamental economic value, a growth approach seeks out stocks of companies that are projected to grow at above-average rates and may appear poised for a period of accelerated earnings. The growth portfolio manager is willing to pay a higher share price in the hopes that the stock's earnings momentum will carry the stock's price higher. As a stock's price increases based on strong earnings, the stock's original price appears low in relation to the growth rate of its earnings. Sometimes this happens when a particular company or industry is temporarily out of favor with the market or under-researched. This strategy is called "growth at a reasonable price." Neuberger&Berman believes that, over time, securities that are undervalued are more likely to appreciate in price and be subject to less risk of price decline than securities whose market prices have already reached their perceived economic value. This approach also contemplates selling portfolio securities when they are considered to have reached their potential. In general, Neuberger&Berman FOCUS, Neuberger&Berman GUARDIAN, and Neuberger&Berman PARTNERS Portfolios adhere to a value-oriented investment approach. Neuberger&Berman MANHATTAN Portfolio places a greater emphasis on finding securities whose measures of fundamental value are low in relation to the growth rate of their future earnings and cash flow, as projected by the portfolio manager, and that Portfolio is therefore willing to invest in securities with prices that are somewhat higher multiples of earnings. EXPENSE INFORMATION This section gives you certain information about the expenses of each Fund and its corresponding Portfolio. See "Performance Information" for important facts about the investment performance of each Fund. Shareholder Transaction Expenses for Each Fund As shown by this table, there are no transaction charges when you buy or sell Fund shares. Sales Charge Imposed on Purchases NONE Sales Charge Imposed on Reinvested Dividends NONE Deferred Sales Charges NONE Redemption Fees NONE Exchange Fees NONE Annual Fund Operating Expenses (as a percentage of average net assets) - 3 - The following table shows anticipated annual Total Operating Expenses for each Fund, which are paid out of the assets of the Fund and which include the Fund's pro rata portion of the Operating Expenses of its corresponding Portfolio. These expenses are borne indirectly by Fund shareholders. Each Fund pays N&B Management an administration fee, based on the Fund's average daily net assets. Each Portfolio pays N&B Management a management fee, based on the Portfolio's average daily net assets; a pro rata portion of this fee is borne indirectly by the corresponding Fund. Therefore, the table combines management and administration fees. The Funds and Portfolios also incur other expenses for things such as accounting and legal fees, maintaining shareholder records and furnishing shareholder statements and Fund reports. "Operating Expenses" exclude interest, taxes, brokerage commissions, and extraordinary expenses. The Funds' expenses are factored into their share prices and dividends and are not charged directly to Fund shareholders. For more information, see "Management and Administration" and the SAI. Because the Funds pay a 12b-1 fee, long-term investors in Fund shares may pay more in distribution expenses than the economic equivalent of the maximum front-end sales charge permitted by the National Association of Securities Dealers ("NASD"). Management and Other Total Neuberger&Berman Administration 12b-1 Expenses Operating Equity Assets Fees Fees (estimated) Expenses FOCUS ASSETS 0.92% 0.25% 0.10% 1.27% GUARDIAN ASSETS 0.86% 0.25% 0.08% 1.19% MANHATTAN ASSETS 0.93% 0.25% 0.11% 1.29% PARTNERS ASSETS 0.89% 0.25% 0.09% 1.23% Anticipated Total Operating Expenses for each Fund are annualized projections based upon current administration fees for the Fund and management fees for its corresponding Portfolio; "Other Expenses" are estimated amounts for the current fiscal year. The trustees of the Trust believe that the aggregate per share expenses of each Fund and its corresponding Portfolio will be approximately equal to the expenses the Fund would incur if its assets were invested directly in the type of securities held by its corresponding Portfolio. The trustees of the Trust also believe that investment in a Portfolio by investors in addition to a Fund may enable the Portfolio to achieve economies of scale which could reduce expenses. The expenses and returns of other funds that may invest in the Portfolios may differ from those of the Funds. N&B Management has voluntary undertaken until December 31, 1997, to reimburse each Fund for its Operating Expenses and its pro rata share of its corresponding Portfolio's Operating Expenses which, in the aggregate, exceed 1.50% per annum of the Fund's average daily net assets. - 4 - Example To illustrate the effect of Operating Expenses, let's assume that each Fund's annual return is 5% and that it had Total Operating Expenses described in the table above. For every $1,000 you invested in each Fund, you would have paid the following amounts of total expenses if you closed your account at the end of each of the following time periods: NEUBERGER&BERMAN EQUITY ASSETS 1 Year 3 Years FOCUS ASSETS $13 $40 GUARDIAN ASSETS $12 $38 MANHATTAN ASSETS $13 $41 PARTNERS ASSETS $13 $39 The assumption in this example of a 5% annual return is required by regulations of the Securities and Exchange Commission applicable to all mutual funds. THE INFORMATION IN THE TABLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR RATES OF RETURN; ACTUAL EXPENSES OR RETURNS MAY BE GREATER OR LESS THAN THOSE SHOWN AND MAY CHANGE IF EXPENSE REIMBURSEMENTS CHANGE. INVESTMENT PROGRAMS The investment policies and limitations of each Fund and its corresponding Portfolio are identical. Each Fund invests only in its corresponding Portfolio. Therefore, the following shows you the kinds of securities in which each Portfolio invests. For an explanation of some types of investments, see "Description of Investments," on page 15. Investment policies and limitations of the Funds and Portfolios are not fundamental unless otherwise specified in this Prospectus or the SAI. While a non-fundamental policy or limitation may be changed by the trustees of the Trust or of Managers Trust without shareholder approval, the Funds intend to notify shareholders before making any material change to such policies or limitations. Fundamental policies may not be changed without shareholder approval. The investment objectives of the Funds and Portfolios are not fundamental. The Funds have undertaken not to change their investment objective without 30 days' prior notice to shareholders. There can be no assurance that the Funds or Portfolios will achieve their objectives. Each Fund, by itself, does not represent a comprehensive investment program. Additional investment techniques, features, and limitations concerning the Portfolios' investment programs are described in the SAI. - 5 - Neuberger&Berman Focus Portfolio The investment objective of Neuberger&Berman FOCUS Portfolio and Neuberger&Berman FOCUS Assets is to seek long-term capital appreciation. Neuberger&Berman FOCUS Portfolio invests principally in common stocks selected from the following 13 multi-industry sectors of the economy:
Autos & Housing Health Care Technology Consumer Goods & Services Heavy Industry Transportation Defense & Aerospace Machinery & Equipment Utilities Energy Media & Entertainment Financial Services Retailing
To maximize potential return, the Portfolio normally makes at least 90% of its investments in not more than six sectors it identifies as undervalued. Where a particular industry may fall within more than one sector, N&B Management uses its judgment and experience to determine the placement of that industry within a sector. The Portfolio uses the value-oriented investment approach to identify stocks believed to be undervalued, including stocks that are temporarily out of favor in the market. The Portfolio then focuses its investments in the sectors in which the undervalued stocks are clustered. These sectors are believed to offer the greatest potential for capital growth. This investment approach is different from that of most other mutual funds that emphasize sector investment. Those funds either invest in only a single economic sector or choose a number of sectors by analyzing general economic trends. The sectors are more fully described in the SAI. The Portfolio may be affected more by any single economic, political, or regulatory development than a more diversified mutual fund. The risk of decline in the Portfolio's asset value due to an adverse development may be partially offset by the value-oriented investment approach. To further reduce this risk, the Portfolio may not (1) invest more than 50% of its total assets in any one sector, (2) as a fundamental policy, concentrate 25% or more of its total assets in the securities of companies having their principal business activities in any one industry, or (3) invest more than 5% of its total assets in the securities of any one company. Neuberger&Berman Guardian Portfolio The investment objective of Neuberger&Berman GUARDIAN Portfolio and Neuberger&Berman GUARDIAN Assets is to seek capital appreciation and, secondarily, current income. - 6 - Neuberger&Berman GUARDIAN Portfolio invests primarily in a large number of common stocks of long-established, high-quality companies. The Portfolio uses the value-oriented investment approach in selecting securities. Thus, N&B Management looks for such factors as low price-to-earnings ratios, strong balance sheets, solid management, and consistent earnings. The Portfolio diversifies its holdings among many different companies and industries. Neuberger&Berman GUARDIAN Fund, a mutual fund administered by N&B Management that invests all of its net investable assets in Neuberger&Berman GUARDIAN Portfolio, and its predecessor have paid their shareholders an income dividend every quarter and a capital gain distribution every year since the predecessor's inception in 1950. Of course, this past record does not necessarily predict the Fund's future practices. Neuberger&Berman Manhattan Portfolio The investment objective of Neuberger&Berman MANHATTAN Portfolio and Neuberger&Berman MANHATTAN Assets is to seek capital appreciation without regard to income. Neuberger&Berman MANHATTAN Portfolio generally invests in securities of medium- to large-capitalization companies believed to have the maximum potential for long-term capital appreciation. It does not seek to invest in securities that pay dividends or interest, and any such income is incidental. The Portfolio expects to be almost fully invested in common stocks, often of companies that may be temporarily out of favor in the market. The Portfolio's growth investment program involves greater risks and share price volatility than programs that invest in more conservative securities. Moreover, the Portfolio does not follow a policy of active trading for short-term profits. Accordingly, the Portfolio may be more appropriate for investors with a longer-range perspective. The Portfolio uses a "growth at a reasonable price" investment approach. When N&B Management believes that particular securities have greater potential for long-term capital appreciation, the Portfolio may purchase such securities at prices with relatively higher multiples to measures of economic value (such as earnings or cash flow) than other Portfolios. In addition, the Portfolio focuses on companies with strong balance sheets and reasonable valuations relative to their growth rates. It also diversifies its investments into many companies and industries. Neuberger&Berman Partners Portfolio The investment objective of Neuberger&Berman PARTNERS Portfolio and Neuberger&Berman PARTNERS Assets is to seek capital growth. Neuberger&Berman PARTNERS Portfolio invests principally in common stocks of medium- to large-capitalization established companies, using the - 7 - value-oriented investment approach. The Portfolio seeks capital growth through an investment approach that is designed to increase capital with reasonable risk. Its investment program seeks securities believed to be undervalued based on strong fundamentals, including low price-to-earnings ratios, consistent cash flow, and the company's track record through all parts of the market cycle. The Portfolio considers additional factors when selecting securities, including ownership by a company's management of the company's stock and the dominance of a company in its particular field. Short-Term Trading; Portfolio Turnover Although the Portfolios do not purchase securities with the intention of profiting from short-term trading, each Portfolio may sell portfolio securities when N&B Management believes that such action is advisable. It is anticipated that the annual turnover rates of the Portfolios generally will not exceed 100%. Turnover rates in excess of 100% may result in higher transaction costs (which are borne directly by the Portfolio) and a possible increase in short-term capital gains (or losses). See "Dividends, Other Distributions, and Taxes" on page 12 and the SAI. Borrowings Each Portfolio has a fundamental policy that it may not borrow money, except that it may (1) borrow money from banks for temporary or emergency purposes and not for leveraging or investment and (2) enter into reverse repurchase agreements for any purpose, so long as the aggregate amount of borrowings and reverse repurchase agreements does not exceed one-third of the Portfolio's total assets (including the amount borrowed) less liabilities (other than borrowings). None of the Portfolios expects to borrow money. As a non-fundamental policy, none of the Portfolios may purchase portfolio securities if its outstanding borrowings, including reverse repurchase agreements, exceed 5% of its total assets. Other Investments For temporary defensive purposes, each Portfolio may invest up to 100% of its total assets in cash and cash equivalents, U.S. Government and Agency Securities, commercial paper and certain other money market instruments, as well as repurchase agreements collateralized by the foregoing. PERFORMANCE INFORMATION The performance of the Funds is commonly measured as TOTAL RETURN. TOTAL RETURN is the change in value of an investment in a fund over a particular period, assuming that all distributions have been reinvested. Thus, total return reflects dividend income, other - 8 - distributions, and variations in share prices from the beginning to the end of a period. An average annual total return is a hypothetical rate of return that, if achieved annually, would result in the same cumulative total return for the period as if performance had been constant over the entire period. This smooths out variations in performance. Past results do not, of course, guarantee future performance. Share prices may vary, and your shares when redeemed may be worth more or less than your original purchase price. The Funds commenced operations in ______ 1996 and thus have no past performance. However, four mutual funds that are series of Neuberger&Berman Equity Funds ("N&B Equity Funds"), each of which has a name similar to a Fund and the same investment objective, policies, and limitations as that Fund ("Sister Fund"), also invest in the four Portfolios described herein. Each Sister Fund had a predecessor. The following table shows the average annual total returns for the period ended August 31, 1995 (the most recent fiscal year-end of the Sister Funds) of a 1-year, 5-year, and 10-year investment in each Sister Fund and its predecessor. The Sister Funds have a different fee structure than the Funds and do not pay 12b-1 fees. Had these fees been reflected, the total returns shown in the table would have been lower. The table also shows a comparison with the S&P 500 Index for each Sister Fund and its predecessor. The S&P 500 Index is the Standard & Poor's 500 Composite Stock Price Index, an unmanaged index generally considered to be representative of overall stock market activity. Please note that indices do not take into account any fees and expenses of investing in the individual securities they track, and that individuals cannot invest directly in any index. - 9 - AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED AUGUST 31, 1995 Since Inception 1 Year 5 Years 10 Years Inception Date FOCUS 27.47% 18.52% 14.77% 11.97% 10/19/55 GUARDIAN 24.06% 20.14% 15.66% 13.10% 6/1/50 MANHATTAN 26.00% 17.10% 15.01% 17.69% 3/1/79* PARTNERS 21.53% 16.05% 14.43% 17.70% 1/20/75* S&P 500 21.42% 15.13% 15.17% N/A N/A *The dates when N&B Management became investment adviser to the predecessors of the Sister Funds. Prior to November 1991, the investment policies of the predecessor of Neuberger&Berman FOCUS Assets' Sister Fund required that a substantial percentage of its assets be invested in the energy field; accordingly, performance results prior to that time do not necessarily reflect the level of performance that might have been achieved had the Fund's current policies been in effect during that period. The Funds commenced operations in ________ 1996. The following table lets you take a closer look at how each Sister Fund and its predecessor performed year by year, in terms of an annual per share total return for each calendar year (ending December 31). The total returns shown in the table would have been lower had they reflected the higher fees of the Funds, as compared to those of the Sister Funds. Please note that the above chart reflects information for periods ended on the Sister Funds' last fiscal year-end (that is, as of August 31, 1995). - 10 -
TOTAL RETURN FOR CALENDAR YEARS ENDED DECEMBER 31 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 FOCUS 4.8% 22.4% 10.1% 0.6% 16.5% 29.8% (5.9%) 24.7% 21.1% 16.3% 0.9% GUARDIAN 7.3% 25.0% 11.9% (1.0%) 28.0% 21.5% (4.7%) 34.3% 19.0% 14.5% 0.6% MANHATTAN 7.1% 37.1% 16.8% 0.4% 18.3% 29.1% (8.1%) 30.9% 17.8% 10.0% (3.6%) PARTNERS 8.0% 29.9% 17.3% 4.3% 15.5% 22.8% (5.1%) 22.4% 17.5% 16.5% (1.9%) S&P 500 6.2% 31.6% 18.6% 5.2% 16.5% 31.6% (3.1%) 30.3% 7.6% 10.0% 1.4%
TOTAL RETURN INFORMATION. You can obtain current performance information about each Fund by calling N&B Management at 800-877-9700. SPECIAL INFORMATION REGARDING ORGANIZATION, CAPITALIZATION, AND OTHER MATTERS The Funds Each Fund is a separate series of the Trust, a Delaware business trust organized pursuant to a Trust Instrument dated as of October 18, 1993. The Trust is registered under the Investment Company Act of 1940 (the "1940 Act") as a diversified, open-end management investment company, commonly known as a mutual fund. The Trust has five separate series. Each Fund described herein commenced operations in ________, 1996. Each Fund invests all of its net investable assets in its corresponding Portfolio, in each case receiving a beneficial interest in that Portfolio. The trustees of the Trust may establish additional series or classes of shares, without the approval of shareholders. The assets of each series belong only to that series, and the liabilities of each series are borne solely by that series and no other. DESCRIPTION OF SHARES. Each Fund is authorized to issue an unlimited number of shares of beneficial interest (par value $0.001 per share). Shares of each Fund represent equal proportionate interests in the assets of that Fund only and have identical voting, dividend, redemption, liquidation, and other rights. All shares issued are fully paid and non-assessable, and shareholders have no preemptive or other right to subscribe to any additional shares. - 11 - SHAREHOLDER MEETINGS. The trustees of the Trust do not intend to hold annual meetings of shareholders of the Funds. The trustees will call special meetings of shareholders of a Fund only if required under the 1940 Act or in their discretion or upon the written request of holders of 10% or more of the outstanding shares of that Fund entitled to vote. CERTAIN PROVISIONS OF TRUST INSTRUMENT. Under Delaware law, the shareholders of a Fund will not be personally liable for the obligations of any Fund; a shareholder is entitled to the same limitation of personal liability extended to shareholders of corporations. To guard against the risk that Delaware law might not be applied in other states, the Trust Instrument requires that every written obligation of the Trust or a Fund contain a statement that such obligation may be enforced only against the assets of the Trust or the Fund and provides for indemnification out of the Trust or Fund property of any shareholder nevertheless held personally liable for Trust or Fund obligations, respectively. The Portfolios Each Portfolio is a separate series of Managers Trust, a New York common law trust organized as of December 1, 1992. Managers Trust is registered under the 1940 Act as a diversified, open-end management investment company. Managers Trust has six separate Portfolios. The assets of each Portfolio belong only to that Portfolio, and the liabilities of each Portfolio are borne solely by that Portfolio and no other. FUNDS' INVESTMENTS IN PORTFOLIOS. Each Fund is a "feeder fund" that seeks to achieve its investment objective by investing all of its net investable assets in its corresponding Portfolio, which is a "master fund." The Portfolio, which has the same investment objective, policies, and limitations as the Fund, in turn invests in securities; its corresponding Fund thus acquires an indirect interest in those securities. Historically, N&B Management, which is the administrator of each Fund and the investment manager of each Portfolio, has sponsored, with Neuberger&Berman, traditionally structured mutual funds since 1950. However, it has operated 12 master funds and 20 feeder funds since August 1993 and now operates 21 master funds and 34 feeder funds. Each Fund's investment in its corresponding Portfolio is in the form of a non-transferable beneficial interest. Members of the general public may not purchase a direct interest in a Portfolio. The four Sister Funds that are series of N&B Equity Funds and four series of Neuberger&Berman Equity Trust ("N&B Equity Trust") invest all of their respective net investable assets in the four Portfolios described herein. The shares of each series of N&B Equity Funds (but not of N&B Equity Trust) are available for purchase by members of the general public. Each Portfolio may also permit other investment companies and/or other institutional investors to invest in the Portfolio. All investors will invest in a Portfolio on the same terms and conditions as a Fund and will pay a proportionate share of the Portfolio's expenses. The Trust does not sell its shares directly to members of the general public. Other investors - 12 - in a Portfolio (including the series of N&B Equity Funds) that might sell shares to members of the general public are not required to sell their shares at the same public offering price as a Fund, could have a different administration fee and expenses than a Fund, and (except N&B Equity Funds) might charge a sales commission. Therefore, Fund shareholders may have different returns than shareholders in another investment company that invests exclusively in the Portfolio. Information regarding any fund that may invest in a Portfolio in the future will be available from N&B Management by calling 800-877-9700. The trustees of the Trust believe that investment in a Portfolio by a series of N&B Equity Funds or N&B Equity Trust or other potential investors in addition to a Fund may enable the Portfolio to realize economies of scale that could reduce its operating expenses, thereby producing higher returns and benefitting all shareholders. However, a Fund's investment in its corresponding Portfolio may be affected by the actions of other large investors in the Portfolio, if any. For example, if a large investor in a Portfolio (other than a Fund) redeemed its interest in the Portfolio, the Portfolio's remaining investors (including the Fund) might, as a result, experience higher pro rata operating expenses, thereby producing lower returns. Each Fund may withdraw its entire investment from its corresponding Portfolio at any time, if the trustees of the Trust determine that it is in the best interests of the Fund and its shareholders to do so. A Fund might withdraw, for example, if there were other investors in a Portfolio with power to, and who did by a vote of all investors (including the Fund), change the investment objective, policies, or limitations of the Portfolio in a manner not acceptable to the trustees of the Trust. A withdrawal could result in a distribution in kind of securities (as opposed to a cash distribution) by the Portfolio. That distribution could result in a less diversified portfolio of investments for the Fund and could affect adversely the liquidity of the Fund's investment portfolio. If the Fund decided to convert those securities to cash, it usually would incur brokerage fees or other transaction costs. If a Fund withdrew its investment from a Portfolio, the trustees would consider what action might be taken, including the investment of all of the Fund's net investable assets in another pooled investment entity having substantially the same investment objective as the Fund or the retention by the Fund of its own investment manager to manage its assets in accordance with its investment objective, policies, and limitations. The inability of the Fund to find a suitable replacement could have a significant impact on shareholders. INVESTOR MEETINGS AND VOTING. Each Portfolio normally will not hold meetings of investors except as required by the 1940 Act. Each investor in a Portfolio will be entitled to vote in proportion to its relative beneficial interest in the Portfolio. On most issues subjected to a vote of investors, a Fund will solicit proxies from its shareholders and will vote its interest in the Portfolio in proportion to the votes cast by the Fund's shareholders. If there are other investors in a Portfolio, there - 13 - can be no assurance that any issue that receives a majority of the votes cast by Fund shareholders will receive a majority of votes cast by all Portfolio investors; indeed, if other investors hold a majority interest in a Portfolio, they could have voting control of the Portfolio. CERTAIN PROVISIONS. Each investor in a Portfolio, including a Fund, will be liable for all obligations of the Portfolio, but not of the other Portfolios. However, the risk of an investor in a Portfolio incurring financial loss on account of such liability would be limited to circumstances in which the Portfolio had inadequate insurance and was unable to meet its obligations out of its assets. Upon liquidation of a Portfolio, investors would be entitled to share pro rata in the net assets of the Portfolio available for distribution to investors. SHAREHOLDER SERVICES How to Buy Shares YOU CAN BUY AND OWN FUND SHARES ONLY THROUGH AN ACCOUNT WITH AN INSTITUTION WHICH PROVIDES ACCOUNTING, RECORDKEEPING, AND OTHER SERVICES TO INVESTORS AND WHICH HAS AN ADMINISTRATIVE SERVICES AGREEMENT WITH N&B MANAGEMENT. N&B Management and the Funds do not recommend, endorse, or receive payments from any Institution. N&B Management compensates Institutions for services they provide under an administrative services agreement and/or dealer agreement. N&B Management does not provide investment advice to any Institution or its clients or make decisions regarding their investments. Each Institution will establish its own procedures for the purchase of Fund shares in its account, including minimum initial and additional investments for shares of each Fund and the acceptable methods of payment for shares. Shares are purchased at the next price calculated on a day the New York Stock Exchange ("NYSE") is open, after a purchase order is received and accepted by an Institution. Prices for Fund shares are usually calculated as of 4 p.m. Eastern time. Your Institution may be closed on days when the NYSE is open. As a result, prices for Fund shares may be significantly affected on days when you have no access to your Institution. The Funds will not issue a certificate for your shares. Other Information: . An Institution must pay for shares it purchases in U.S. dollars. . Each Fund has the right to suspend the offering of its shares for a period of time. Each Fund also has the right to accept or reject a purchase order in its sole discretion, including certain purchase orders using an exchange of shares. See "Shareholder Services-- Exchanging Shares." - 14 - How to Sell Shares You can sell (redeem) all or some of your Fund shares only through an account with an Institution. Each Institution will establish its own procedures for the sale of Fund shares. Shares are sold at the next price calculated on a day the NYSE is open, after a sales order is received and accepted by an Institution. Prices for Fund shares are usually calculated as of 4 p.m. Eastern time. Your Institution may be closed on days when the NYSE is open. As a result, prices for Fund shares may be significantly affected on days when you have no access to your Institution. Each Fund has reserved the right, if conditions exist which make cash payments undesirable, to honor any request for a redemption by making payments in securities valued in the same way as they would be valued for purposes of computing that Fund's net asset value per share. If payment is made in securities, an Institution may 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. Other Information: . Redemption proceeds will be paid to Institutions as agreed with each Fund, but in any case within three calendar days (under unusual circumstances a Fund may take longer, as permitted by law). . Each Fund may suspend redemptions or postpone payments on days when the NYSE is closed (besides weekends and holidays), when trading on the NYSE is restricted, or as permitted by the Securities and Exchange Commission. Exchanging Shares Through an account with an Institution, you may be able to exchange shares of a Fund for shares of another Neuberger&Berman Fund(SERVICEMARK). Each Institution will establish its own exchange policy and procedures for its accounts. An Institution may exchange shares of any Fund for shares of the other Funds described in this Prospectus. Shares are exchanged at the next price calculated on a day the NYSE is open, after an exchange order is received and accepted by an Institution. . Shares can be exchanged only between accounts registered in the same name, address, and taxpayer ID number of the Institution. . An exchange can be made only into a Fund whose shares are eligible for sale in the state where the Institution is located. - 15 - . An exchange may have tax consequences. . Each Fund may refuse any exchange orders from any Institution if for any reason they are not deemed to be in the best interests of the Fund and its shareholders. . Each Fund may impose other restrictions on the exchange privilege, or modify or terminate the privilege, but will try to give each Institution advance notice whenever it can reasonably do so. SHARE INFORMATION Share Prices and Net Asset Value Each Fund's shares are bought or sold at a price that is the Fund's net asset value ("NAV") per share. The NAVs for each Fund and its corresponding Portfolio are calculated by subtracting liabilities from total assets (in the case of a Portfolio, the market value of the securities the Portfolio holds plus cash and other assets; in the case of a Fund, its percentage interest in its corresponding Portfolio, multiplied by the Portfolio's NAV, plus any other assets). Each Fund's per share NAV is calculated by dividing its NAV by the number of Fund shares outstanding and rounding the result to the nearest full cent. Each Fund and its corresponding Portfolio calculate their NAVs as of the close of regular trading on the NYSE, usually 4 p.m. Eastern time, on each day the NYSE is open. Each Portfolio values securities (including options) listed on the NYSE, the American Stock Exchange, or other national securities exchanges or quoted on Nasdaq, and other securities for which market quotations are readily available, at the last sale price on the day the securities are being valued. If there is no sale of such a security on that day, that security is valued at the mean between its closing bid and asked prices. The Portfolios value all other securities and assets, including restricted securities, by a method that the trustees of Managers Trust believe accurately reflects fair value. DIVIDENDS, OTHER DISTRIBUTIONS, AND TAXES Each Fund distributes substantially all of its share of any net investment income (net of the Fund's expenses), net realized capital gains, and net realized gains from foreign currency transactions earned or realized by its corresponding Portfolio, normally in December. Investors who are considering the purchase of Fund shares in December should take this into account because of the tax consequences of such distributions. In addition, Neuberger&Berman GUARDIAN Assets distributes substantially all of its share of Neuberger & Berman GUARDIAN Portfolio's net investment income, if any, at the end of each calendar quarter. - 16 - Distribution Options REINVESTMENT IN SHARES. All dividends and other distributions paid on shares of a Fund are automatically reinvested in additional shares of that Fund, unless an Institution elects to receive them in cash. Dividends and other distributions are reinvested at the Fund's per share NAV, usually as of the date the dividend or other distribution is payable. DISTRIBUTIONS IN CASH. An Institution may elect to receive dividends in cash, with other distributions being reinvested in additional Fund shares, or to receive all dividends and other distributions in cash. Taxes Each Fund intends to continue to qualify for treatment as a regulated investment company for federal income tax purposes so that it will be relieved of federal income tax on that part of its taxable income and realized gains that it distributes to its shareholders. An investment has certain tax consequences, depending on the type of account in which you invest. IF YOU HAVE AN ACCOUNT UNDER A QUALIFIED RETIREMENT PLAN OR AN INDIVIDUAL RETIREMENT ACCOUNT, TAXES ARE DEFERRED. TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax and may also be subject to state and local income taxes. Distributions are taxable when they are paid, whether in cash or by reinvestment in additional Fund shares, except that distributions declared in December to shareholders of record on a date in that month and paid in the following January are taxable as if they were paid on December 31 of the year in which the distributions were declared. For federal income tax purposes, dividends and distributions of net short-term capital gain and net gains from certain foreign currency transactions are taxed as ordinary income. Distributions of net capital gain (the excess of net long-term capital gain over net short-term capital loss), when designated as such, are generally taxed as long-term capital gain, no matter how long you have owned your shares. Distributions of net capital gain may include gains from the sale of portfolio securities that appreciated in value before you bought your shares. Every January, each Fund will send each Institution that is a shareholder therein a statement showing the amount of distributions paid in the previous year. TAXES ON REDEMPTIONS. Capital gains realized on redemptions of Fund shares, including redemptions in connection with exchanges to other Funds, are subject to tax. A capital gain (or loss) is the difference between the amount paid for shares (including the value of any dividends and other distributions that were reinvested) and the amount received when shares are sold. When an Institution sells shares, it will receive a confirmation statement showing the number of shares sold and the price. Every January, - 17 - Institutions will also receive a consolidated transaction statement for the previous year. Each Institution annually will send investors in its accounts statements showing distribution and transaction information for the previous year. The foregoing is only a summary of some of the important tax considerations affecting each Fund and its shareholders. See the SAI for additional tax information. There may be other federal, state, local, or foreign tax considerations applicable to a particular investor. Therefore, investors should consult their tax advisers. MANAGEMENT AND ADMINISTRATION Trustees and Officers The trustees of the Trust and the trustees of Managers Trust, who are currently the same individuals, have oversight responsibility for the operations of each Fund and each Portfolio, respectively. The SAI contains general background information about each trustee and officer of the Trust and of Managers Trust. The trustees and officers of the Trust and of Managers Trust who are officers and/or directors of N&B Management and/or partners of Neuberger&Berman serve without compensation from the Funds or the Portfolios. The trustees of the Trust and of Managers Trust, including a majority of those trustees who are not "interested persons" (as defined in the 1940 Act) of any Fund, have adopted written procedures reasonably appropriate to deal with potential conflicts of interest between the Trust and Managers Trust, including, if necessary, creating a separate board of trustees of Managers Trust. Investment Manager, Administrator, Distributor, and Sub-Adviser N&B Management serves as the investment manager of each Portfolio, as administrator of each Fund, and as distributor of the shares of each Fund. N&B Management and its predecessor firms have specialized in the management of no-load mutual funds since 1950. In addition to serving the four Portfolios, N&B Management currently serves as investment manager of other mutual funds. Neuberger&Berman, which acts as sub-adviser for the Portfolios and other mutual funds managed by N&B Management, also serves as investment adviser of three other investment companies. The mutual funds managed by N&B Management and Neuberger&Berman had aggregate net assets of approximately $11.4 billion as of September 30, 1995. As sub-adviser, Neuberger&Berman furnishes N&B Management with investment recommendations and research without added cost to the Portfolios. Neuberger&Berman is a member firm of the NYSE and other principal exchanges and acts as the Portfolios' principal broker in the purchase and sale of their securities. Neuberger&Berman and its affiliates, including N&B Management, manage securities accounts that had - 18 - approximately $37.6 billion of assets as of September 30, 1995. All of the voting stock of N&B Management is owned by individuals who are general partners of Neuberger&Berman. The following is information about the individuals who are primarily responsible for day-to-day management of the Portfolios: Neuberger&Berman FOCUS Portfolio and Neuberger&Berman GUARDIAN Portfolio--Kent C. Simons and Lawrence Marx III. Mr. Simons and Mr. Marx are Vice Presidents of N&B Management and general partners of Neuberger&Berman. Mr. Simons has had responsibility for Neuberger&Berman FOCUS Portfolio and Neuberger & Berman FOCUS Assets' Sister Fund's predecessor since 1988 and for Neuberger&Berman GUARDIAN Portfolio and Neuberger & Berman GUARDIAN Assets' Sister Fund's predecessor since 1983. Mr. Marx has had those responsibilities since 1988. Neuberger&Berman MANHATTAN Portfolio--Mark R. Goldstein and Susan Switzer. Mr. Goldstein is a Vice President of N&B Management and a general partner of Neuberger&Berman. Previously he was a securities analyst and portfolio manager with that firm. He has had responsibility for Neuberger&Berman MANHATTAN Portfolio and Neuberger & Berman MANHATTAN Assets' Sister Fund's predecessor since June 1992. Ms. Switzer has been an Assistant Vice President of N&B Management since March 1995 and a portfolio manager of Neuberger&Berman since January 1995. Ms. Switzer was a research analyst and assistant portfolio manager for another money management firm from 1989 to 1994. Neuberger&Berman PARTNERS Portfolio--Michael M. Kassen and Robert I. Gendelman. Mr. Kassen is a Vice President of N&B Management and a general partner of Neuberger&Berman. He has had responsibility for Neuberger&Berman PARTNERS Portfolio and Neuberger&Berman PARTNERS Assets' Sister Fund's predecessor since June 1990. Mr. Kassen was an employee of N&B Management from 1990 to December 1992. Mr. Gendelman is a senior portfolio manager for Neuberger&Berman and an Assistant Vice President of N&B Management. Mr. Gendelman has had responsibility for Neuberger&Berman PARTNERS Portfolio since October 1994. He was a portfolio manager for another fund manager from 1992 to 1993 and was managing partner of an investment partnership from 1988 to 1992. Neuberger&Berman acts as the principal broker for the Portfolios in the purchase and sale of portfolio securities and in the sale of covered call options, and for those services receives brokerage commissions. In effecting securities transactions, each Portfolio seeks to obtain the best price and execution of orders. For more information, see the SAI. The partners and employees of Neuberger&Berman and officers and employees of N&B Management, together with their families, have invested over $100 million of their own money in Neuberger&Berman Funds(SERVICEMARK). - 19 - To mitigate the possibility that a Portfolio will be adversely affected by personal trading of employees, the Trust, Managers Trust, N&B Management, and Neuberger&Berman have adopted policies that restrict securities trading in the personal accounts of portfolio managers and others who normally come into possession of information on portfolio transactions. Expenses N&B Management provides investment management services to each Portfolio that include, among other things, making and implementing investment decisions and providing facilities and personnel necessary to operate the Portfolio. N&B Management provides administrative services to each Fund that include furnishing similar facilities and personnel for the Fund and performing accounting, recordkeeping, and other services for Institutions and their accounts. For such administrative services, each Fund pays N&B Management a fee at the annual rate of 0.40% of that Fund's average daily net assets. With a Fund's consent, N&B Management may subcontract to third parties, including Institutions, some of its responsibilities to that Fund under the administration agreement and may compensate third parties that provide such services. For investment management services, each Portfolio pays N&B Management a fee at the annual rate of 0.55% of the first $250 million of that Portfolio's average daily net assets, 0.525% of the next $250 million, 0.50% of the next $250 million, 0.475% of the next $250 million, 0.45% of the next $500 million, and 0.425% of average daily net assets in excess of $1.5 billion. N&B Management acts as agent in arranging for the sale of Fund shares without commission and bears advertising and promotion expenses. The trustees of the Trust have adopted a plan pursuant to Rule 12b-1 under the 1940 Act ("Plan"). The Plan provides that, as compensation for its ongoing services to investors in the Funds, its activities and expenses related to the sale and distribution of Fund shares, and other services provided to the Funds, N&B Management receives from each Fund a fee at the annual rate of 0.25% of that Fund's average daily net assets. N&B Management pays this amount to Institutions that distribute Fund shares and provide services to the Funds and their shareholders. Those Institutions may use the payments for, among other purposes, compensating employees engaged in sales and/or shareholder servicing. The amount of fees paid by a Fund during any year may be more or less than the cost of distribution and other services provided to the Fund. NASD rules limit the amount of annual distribution fees that may be paid by a mutual fund and impose a ceiling on the cumulative distribution fees paid. The Trust's Plan complies with those rules. See "Expense Information -- Annual Fund Operating Expenses" for anticipated fees for the current fiscal year. Each Fund bears all expenses of its operations other than those borne by N&B Management as administrator of the Fund and as distributor of its shares. Each Portfolio bears all expenses of its operations other than - 20 - those borne by N&B Management as investment manager of the Portfolio. These expenses include, but are not limited to, for the Funds and Portfolios, legal and accounting fees and compensation for trustees who are not affiliated with N&B Management; for the Funds, transfer agent fees, and the cost of printing and sending reports and proxy materials to shareholders; and for the Portfolios, custodial fees for securities. N&B Management has voluntarily undertaken until December 31, 1997, to reimburse each Fund for its Operating Expenses and its pro rata share of its corresponding Portfolio's Operating Expenses which, in the aggregate, exceed 1.50% per annum of the Fund's average daily net assets. The effect of reimbursement by N&B Management is to reduce a Fund's expenses and thereby increase its total return. Transfer Agent The Funds' transfer agent is State Street Bank and Trust Company ("State Street"). State Street administers purchases, redemptions, and transfers of Fund shares with respect to Institutions and the payment of dividends and other distributions to Institutions. The main office of State Street is located at 225 Franklin Street, Boston, MA 02110. All correspondence should be addressed to the Neuberger&Berman Funds, Institutional Services, 605 Third Avenue, 2nd Floor, New York, NY 10158. DESCRIPTION OF INVESTMENTS In addition to common stocks and other securities referred to in "Investment Programs" herein, each Portfolio may make the following investments, among others, individually or in combination, although it may not necessarily buy all of the types of securities or use all of the investment techniques that are described. For additional information on the following investments and on other types of investments which the Portfolios may make, see the SAI. ILLIQUID SECURITIES. Each Portfolio may invest up to 10% of its net assets in illiquid securities, which are securities that cannot be expected to be sold within seven days at approximately the price at which they are valued. Due to the absence of an active trading market, a Portfolio may experience difficulty in valuing or disposing of illiquid securities. N&B Management determines the liquidity of the Portfolios' securities, under supervision of the trustees of Managers Trust. Securities that are freely tradeable in their country of origin or in their principal market are not considered illiquid securities even if they are not registered for sale in the U.S. RESTRICTED SECURITIES AND RULE 144A SECURITIES. Each Portfolio may invest in restricted securities and Rule 144A securities. Restricted securities cannot be sold to the public without registration under the Securities Act of 1933 ("1933 Act"). Unless registered for sale, these securities can be - 21 - sold only in privately negotiated transactions or pursuant to an exemption from registration. Restricted securities are generally considered illiquid. Rule 144A securities, although not registered, may be resold to qualified institutional buyers in accordance with Rule 144A under the 1933 Act. Unregistered securities may also be sold abroad pursuant to Regulation S under the 1933 Act. N&B Management, acting pursuant to guidelines established by the trustees of Managers Trust, may determine that some restricted securities are liquid. FOREIGN SECURITIES. Each Portfolio may invest up to 10% of the value of its total assets in foreign securities. Foreign securities are those of issuers organized and doing business principally outside the U.S., including non-U.S. governments, their agencies and instrumentalities. The 10% limitation does not apply to foreign securities that are denominated in U.S. dollars, including American Depositary Receipts ("ADRs"). Foreign securities (including those denominated in U.S. dollars and ADRs) are affected by political or economic developments in foreign countries. Foreign companies may not be subject to accounting standards or governmental supervision comparable to U.S. companies, and there may be less public information about their operations. In addition, foreign markets may be less liquid or more volatile than U.S. markets and may offer less protection to investors. Investments in foreign securities that are not denominated in U.S. dollars (including those made through ADRs) may be subject to special risks, such as governmental regulation of foreign exchange transactions and changes in rates of exchange with the U.S. dollar, irrespective of the performance of the underlying investment. COVERED CALL OPTIONS. Each Portfolio may try to reduce the risk of securities price changes (hedge) or generate income by writing (selling) covered call options against securities held in its portfolio having a market value not exceeding 10% of its net assets and may purchase call options in related closing transactions. The purchaser of a call option acquires the right to buy a portfolio security at a fixed price during a specified period. The maximum price the seller may realize on the security during the option period is the fixed price; the seller continues to bear the risk of a decline in the security's price, although this risk is reduced by the premium received for the option. The primary risks in using call options are (1) possible lack of a liquid secondary market for options and the resulting inability to close out options when desired; (2) the fact that the skills needed to use options are different from those needed to select a Portfolio's securities; (3) the fact that, although use of these instruments for hedging purposes can reduce the risk of loss, they also can reduce the opportunity for gain, by offsetting favorable price movements in underlying investments; and (4) the possible inability of a Portfolio to sell a security at a time that would otherwise be favorable for it to do so, or the possible need for a Portfolio to sell a security at a disadvantageous time, due to its need to maintain "cover" in connection with its use of these instruments. Options are considered "derivatives." - 22 - SHORT SALES AGAINST-THE-BOX. Each Portfolio may make short sales against-the-box, in which it sells securities short only if it owns or has the right to obtain without payment of additional consideration an equal amount of the same type of securities sold. Short selling against-the-box may defer recognition of gains or losses to a later tax period. REPURCHASE AGREEMENTS/SECURITIES LOANS. In a repurchase agreement, a Portfolio buys a security from a Federal Reserve member bank or a securities dealer and simultaneously agrees to sell it back at a higher price, at a specified date, usually less than a week later. The underlying securities must fall within the Portfolio's investment policies and limitations. Each Portfolio also may lend portfolio securities to banks, brokerage firms, or institutional investors to earn income. Costs, delays, or losses could result if the selling party to a repurchase agreement or the borrower of portfolio securities becomes bankrupt or otherwise defaults. N&B Management monitors the creditworthiness of sellers and borrowers. OTHER INVESTMENTS. Although each Portfolio invests primarily in common stocks, when market conditions warrant it may invest in preferred stocks, securities convertible into or exchangeable for common stocks, U.S. Government and Agency Securities, investment grade debt securities, or money market instruments, or may retain assets in cash or cash equivalents. U.S. Government securities are obligations of the U.S. Treasury backed by the full faith and credit of the United States. U.S. Government Agency Securities are issued or guaranteed by U.S. Government agencies or instrumentalities; by other U.S. Government-sponsored enterprises, such as the Government National Mortgage Association, Federal National Mortgage Association, Federal Home Loan Mortgage Corporation, Student Loan Marketing Association, and Tennessee Valley Authority; and by various federally chartered or sponsored banks. Some U.S. Government Agency Securities are supported by the full faith and credit of the United States, while others may be supported by the issuer's ability to borrow from the U.S. Treasury, subject to the Treasury's discretion in certain cases, or only by the credit of the issuer. U.S. Government Agency Securities include U.S. Government mortgage-backed securities. The market prices of U.S. Government securities are not guaranteed by the Government and generally fluctuate with changing interest rates. "Investment grade" debt securities are those receiving one of the four highest ratings from Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's ("S&P"), or another nationally recognized statistical rating organization ("NRSRO") or, if unrated by any NRSRO, deemed comparable by N&B Management to such rated securities ("Comparable Unrated Securities") under guidelines established by the trustees of Managers Trust. The value of fixed income securities in which a Portfolio may invest is likely to decline in times of rising interest rates. Conversely, when rates fall, the value of a Portfolio's fixed income investments is likely to rise. - 23 - Neuberger&Berman PARTNERS Portfolio may invest up to 15% of its net assets in debt securities rated below investment grade or Comparable Unrated Securities. Such securities, as well as those rated by Moody's in its fourth highest category (Baa) or Comparable Unrated Securities, may be considered predominantly speculative, although, as debt securities, they generally have priority over equity securities of the same issuer and are generally better secured. Debt securities in the lowest rating categories may involve a substantial risk of default or may be in default. Changes in economic conditions or developments regarding the individual issuer are more likely to cause price volatility and weaken the capacity of the issuer of such securities to make principal and interest payments than is the case for higher grade debt securities. An economic downturn affecting the issuer may result in an increased incidence of default. The market for lower-rated securities may be thinner and less active than for higher- rated securities. Neuberger&Berman PARTNERS Portfolio will invest in such securities only when N&B Management concludes that the anticipated return to the Portfolio on such an investment warrants exposure to the additional level of risk. A further description of Moody's and S&P's ratings in included in the Appendix to the SAI. USE OF JOINT PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION Each Fund and its corresponding Portfolio acknowledges that it is solely responsible for all information or lack of information about that Fund and Portfolio in this Prospectus or in the SAI, and no other Fund or Portfolio is responsible therefor. The trustees of the Trust and of Managers Trust have considered this factor in approving each Fund's use of a single combined Prospectus and combined SAI. OTHER INFORMATION Directory Investment Manager, Administrator, and Distributor Neuberger&Berman Management Incorporated 605 Third Avenue, 2nd Floor New York, NY 10158-0180 Sub-Adviser Neuberger&Berman, L.P. 605 Third Avenue New York, NY 10158-3698 - 24 - Custodian and Transfer Agent State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110 Address correspondence to: Neuberger&Berman Funds Institutional Services 605 Third Avenue 2nd Floor New York, NY 10158-0180 800-877-9700 Legal Counsel Kirkpatrick & Lockhart LLP 1800 Massachusetts Avenue, NW Washington, DC 20036-5891 Funds Eligible for Exchange Equity Assets Neuberger&Berman Focus Assets Neuberger&Berman Guardian Assets Neuberger&Berman Manhattan Assets Neuberger&Berman Partners Assets Neuberger&Berman, Neuberger & Berman Management Inc., and the above named Funds are service marks of Neuberger&Berman Management Inc. (COPYRIGHT)1995 Neuberger&Berman Management Inc. - 25 - SUBJECT TO COMPLETION PRELIMINARY STATEMENT OF ADDITIONAL INFORMATION DATED NOVEMBER 28, 1995 Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may any offers to buy be accepted prior to the time the registration statement becomes effective. This Statement of Additional Information does not constitute a prospectus. _________________________________________________________________ NEUBERGER & BERMAN EQUITY ASSETS AND PORTFOLIOS STATEMENT OF ADDITIONAL INFORMATION DATED FEBRUARY 11, 1996 Neuberger & Berman Neuberger & Berman Focus Assets (and Manhattan Assets (and Neuberger & Berman Focus Portfolio) Neuberger & Berman Manhattan Portfolio) Neuberger & Berman Guardian Neuberger & Berman Partners Assets (and Assets (and Neuberger & Neuberger & Berman Partners Portfolio) Berman Guardian Portfolio) No-Load Mutual Funds 605 Third Avenue, 2nd Floor, New York, NY 10158-0180 Toll-Free 800-877-9700 _________________________________________________________________ Neuberger & Berman MANHATTAN Assets, Neuberger & Berman FOCUS Assets, Neuberger & Berman GUARDIAN Assets, and Neuberger & Berman PARTNERS Assets (each a "Fund") are no-load mutual funds that offer shares pursuant to a Prospectus dated February 11, 1996. The above-named Funds invest all of their net investable assets in Neuberger & Berman MANHATTAN Portfolio, Neuberger & Berman FOCUS Portfolio, Neuberger & Berman GUARDIAN Portfolio, and Neuberger & Berman PARTNERS Portfolio (each a "Portfolio"), respectively. AN INVESTOR CAN BUY, OWN, AND SELL FUND SHARES ONLY THROUGH AN ACCOUNT WITH A BROKER-DEALER, PENSION PLAN ADMINISTRATOR, OR OTHER INSTITUTION (EACH AN "INSTITUTION") THAT PROVIDES ACCOUNTING, RECORDKEEPING, AND OTHER SERVICES TO INVESTORS AND THAT HAS AN ADMINISTRATIVE SERVICES AGREEMENT WITH NEUBERGER & BERMAN MANAGEMENT INCORPORATED ("N&B MANAGEMENT"). The Funds' Prospectus provides basic information that an investor should know before investing. A copy of the Prospectus may be obtained, without charge, from Neuberger & Berman Management Incorporated, Institutional Services, 605 Third Avenue, 2nd Floor, New York, NY 10158- 0180, or by calling 800-877-9700. This Statement of Additional Information ("SAI") is not a prospectus and should be read in conjunction with the Prospectus. No person has been authorized to give any information or to make any representations not contained in the Prospectus or in this SAI in connection with the offering made by the Prospectus, and, if given or made, such information or representations must not be relied upon as having been authorized by a Fund or its distributor. The Prospectus and this SAI do not constitute an offering by a Fund or its distributor in any jurisdiction in which such offering may not lawfully be made. - 2 - TABLE OF CONTENTS Page INVESTMENT INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 1 Investment Policies and Limitations . . . . . . . . . . . . 1 Mark R. Goldstein, Portfolio Manager of Neuberger & Berman MANHATTAN Portfolio . . . . . . . . . . . . . . . . . 5 Kent C. Simons and Lawrence Marx III, Portfolio Managers of Neuberger & Berman FOCUS and Neuberger & Berman GUARDIAN Portfolios . . . . . . . . . . . . . . . . . . . . 6 Michael M. Kassen and Robert I. Gendelman, Portfolio Managers of Neuberger & Berman PARTNERS Portfolio . . . . . 7 Additional Investment Information . . . . . . . . . . . . . 8 Neuberger & Berman FOCUS Portfolio - Description of Economic Sectors. . . . . . . . . . . . . . . . . . . . . . 18 PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 22 Total Return Computations . . . . . . . . . . . . . . . . . 22 Comparative Information . . . . . . . . . . . . . . . . . . 23 Other Performance Information . . . . . . . . . . . . . . . 24 CERTAIN RISK CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . 25 TRUSTEES AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . 25 INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES . . . . . . . . . . 32 Investment Manager and Administrator . . . . . . . . . . . . 32 Sub-Adviser . . . . . . . . . . . . . . . . . . . . . . . . 34 Investment Companies Managed . . . . . . . . . . . . . . . . 35 Management and Control of N&B Management . . . . . . . . . . 38 DISTRIBUTION ARRANGEMENTS . . . . . . . . . . . . . . . . . . . . . . 39 Distributor . . . . . . . . . . . . . . . . . . . . . . . . 39 Rule 12b-1 Plan . . . . . . . . . . . . . . . . . . . . . . 40 ADDITIONAL EXCHANGE INFORMATION . . . . . . . . . . . . . . . . . . . 40 ADDITIONAL REDEMPTION INFORMATION . . . . . . . . . . . . . . . . . . 41 DIVIDENDS AND OTHER DISTRIBUTIONS . . . . . . . . . . . . . . . . . . 41 ADDITIONAL TAX INFORMATION . . . . . . . . . . . . . . . . . . . . . 42 Taxation of the Funds . . . . . . . . . . . . . . . . . . . 42 Taxation of the Portfolios . . . . . . . . . . . . . . . . . 43 Taxation of the Funds' Shareholders . . . . . . . . . . . . 46 PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . 46 Portfolio Turnover . . . . . . . . . . . . . . . . . . . . . 53 REPORTS TO SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . 53 - i - Page ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 CUSTODIAN AND TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . 53 INDEPENDENT AUDITORS/ACCOUNTANTS . . . . . . . . . . . . . . . . . . 54 LEGAL COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 REGISTRATION STATEMENT . . . . . . . . . . . . . . . . . . . . . . . 54 Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 RATINGS OF CORPORATE BONDS AND COMMERCIAL PAPER . . . . . . 55 Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 THE ART OF INVESTMENT: A CONVERSATION WITH ROY NEUBERGER . 58 - ii - INVESTMENT INFORMATION Each Fund is a separate series of Neuberger & Berman Equity Assets ("Trust"), a Delaware business trust that is registered with the Securities and Exchange Commission ("SEC") as an open-end management investment company. Each Fund seeks its investment objective by investing all of its net investable assets in a Portfolio of Equity Managers Trust ("Managers Trust") that has an investment objective identical to, and a name similar to, that of the Fund. Each Portfolio, in turn, invests in accordance with an investment objective, policies, and limitations identical to those of its corresponding Fund. (The Trust and Managers Trust, which is an open-end management investment company managed by N&B Management, are together referred to below as the "Trusts.") Prior to January 1, 1995, the name of Neuberger & Berman FOCUS Portfolio was Neuberger & Berman Selected Sectors Portfolio. The following information supplements the discussion in the Prospectus of the investment objective, policies, and limitations of each Fund and Portfolio. The investment objective and, unless otherwise specified, the investment policies and limitations of each Fund and Portfolio are not fundamental. However, although any investment policy or limitation that is not fundamental may be changed by the trustees of the Trust ("Fund Trustees") or of Managers Trust ("Portfolio Trustees") without shareholder approval, each Fund intends to notify its shareholders before changing its investment objective or implementing any material change in any non-fundamental policy or limitation. The fundamental investment policies and limitations of a Fund or a Portfolio may not be changed without the approval of the lesser of (1) 67% of the total units of beneficial interest ("shares") of the Fund or Portfolio represented at a meeting at which more than 50% of the outstanding Fund or Portfolio shares are represented or (2) a majority of the outstanding shares of the Fund or Portfolio. This vote is required by the Investment Company Act of 1940 ("1940 Act") and is referred to in this SAI as a "1940 Act majority vote." Whenever a Fund is called upon to vote on a change in a fundamental investment policy or limitation of its corresponding Portfolio, the Fund casts its votes thereon in proportion to the votes of its shareholders at a meeting thereof called for that purpose. Investment Policies and Limitations Each Fund has the following fundamental investment policy, to enable it to invest in its corresponding Portfolio: Notwithstanding any other investment policy of the Fund, the Fund may invest all of its net investable assets (cash, securities, and receivables relating to securi- ties) in an open-end management investment company having substantially the same investment objective, policies, and limitations as the Fund. All other fundamental investment policies and limitations and the non-fundamental investment policies and limitations of each Fund - 1 - and its corresponding Portfolio are identical. Therefore, although the following discusses the investment policies and limitations of the Portfolios, it applies equally to their corresponding Funds. Except for the limitation on borrowing and the limitation on ownership of portfolio securities by officers and trustees, any investment policy or limitation that involves a maximum percentage of securities or assets will not be considered to be violated unless the percentage limitation is exceeded immediately after, and because of, a transaction by a Portfolio. The Portfolios' fundamental investment policies and limitations are as follows: 1. Borrowing. No Portfolio may borrow money, except that a Portfolio may (i) borrow money from banks for temporary or emergency purposes and not for leveraging or investment and (ii) enter into reverse repurchase agreements for any purpose; provided that (i) and (ii) in combination do not exceed 33-1/3% of the value of its total assets (including the amount borrowed) less liabilities (other than borrowings). If at any time borrowings exceed 33-1/3% of the value of a Portfolio's total assets, that Portfolio will reduce its borrowings within three days (excluding Sundays and holidays) to the extent necessary to comply with the 33-1/3% limitation. 2. Commodities. No Portfolio may purchase physical commodities or contracts thereon, unless acquired as a result of the ownership of securities or instruments, but this restriction shall not prohibit a Portfolio from purchasing futures contracts or options (including options on futures contracts, but excluding options or futures contracts on physical commodities) or from investing in securities of any kind. 3. Diversification. No Portfolio may, with respect to 75% of the value of its total assets, purchase the securities of any issuer (other than securities issued or guaranteed by the U.S. Government or any of its agencies or instrumentalities) if, as a result, (i) more than 5% of the value of the Portfolio's total assets would be invested in the securities of that issuer or (ii) the Portfolio would hold more than 10% of the outstanding voting securities of that issuer. 4. Industry Concentration. No Portfolio may purchase any security if, as a result, 25% or more of its total assets (taken at current value) would be invested in the securities of issuers having their principal business activities in the same industry. This limitation does not apply to securities issued or guaranteed by the U.S. Government or its agencies or instrumentalities. 5. Lending. No Portfolio may lend any security or make any other loan if, as a result, more than 33-1/3% of its total assets (taken at current value) would be lent to other parties, except, in accordance with its investment objective, policies, and limitations, (i) - 2 - through the purchase of a portion of an issue of debt securities or (ii) by engaging in repurchase agreements. 6. Real Estate. No Portfolio may purchase real estate unless acquired as a result of the ownership of securities or instruments, but this restriction shall not prohibit a Portfolio from purchasing securities issued by entities or investment vehicles that own or deal in real estate or interests therein or instruments secured by real estate or interests therein. 7. Senior Securities. No Portfolio may issue senior securities, except as permitted under the 1940 Act. 8. Underwriting. No Portfolio may underwrite securities of other issuers, except to the extent that a Portfolio, in disposing of portfolio securities, may be deemed to be an underwriter within the meaning of the Securities Act of 1933 ("1933 Act"). The following non-fundamental investment policies and limitations apply to all Portfolios: 1. Borrowing. No Portfolio may purchase securities if outstanding borrowings, including any reverse repurchase agreements, exceed 5% of its total assets. 2. Lending. Except for the purchase of debt securities and engaging in repurchase agreements, no Portfolio may make any loans other than securities loans. 3. Investments in Other Investment Companies. No Portfolio may purchase securities of other investment companies, except to the extent permitted by the 1940 Act and in the open market at no more than customary brokerage commission rates. This limitation does not apply to securities received or acquired as dividends, through offers of exchange, or as a result of a reorganization, consolidation, or merger. 4. Margin Transactions. No Portfolio may purchase securities on margin from brokers or other lenders, except that a Portfolio may obtain such short-term credits as are necessary for the clearance of securities transactions. Margin payments in connection with transactions in futures contracts and options on futures contracts shall not constitute the purchase of securities on margin and shall not be deemed to violate the foregoing limitation. 5. Short Sales. No Portfolio may sell securities short unless it owns, or has the right to obtain without payment of additional consideration, securities equivalent in kind and amount to the securities sold. Transactions in forward contracts, futures contracts and options shall not constitute selling securities short. 6. Ownership of Portfolio Securities by Officers and Trustees. No Portfolio may purchase or retain the securities of any - 3 - issuer if, to the knowledge of N&B Management, those officers and trustees of the Trusts and officers and directors of N&B Management who each owns individually more than 1/2 of 1% of the outstanding securities of such issuer, together own more than 5% of such securities. 7. Unseasoned Issuers. No Portfolio may purchase the securities of any issuer (other than securities issued or guaranteed by domestic or foreign governments or political subdivisions thereof) if, as a result, more than 5% of the Portfolio's total assets would be invested in the securities of business enterprises that, including predecessors, have a record of less than three years of continuous operation. 8. Puts, Calls, Straddles, or Spreads. No Portfolio may invest in puts, calls, straddles, spreads, or any combination thereof, except that each Portfolio may (i) write (sell) covered call options against portfolio securities having a market value not exceeding 10% of its net assets and (ii) purchase call options in related closing transac- tions. The Portfolios do not construe the foregoing limitation to pre- clude them from purchasing or writing options on futures contracts or from purchasing securities with rights to put the securities to the issuer or a guarantor. 9. Illiquid Securities. No Portfolio may purchase any security if, as a result, more than 10% of its net assets would be in- vested in illiquid securities. Illiquid securities include securities that cannot be sold within seven days in the ordinary course of business for approximately the amount at which the Portfolio has valued the securities, such as repurchase agreements maturing in more than seven days. 10. Foreign Securities. No Portfolio may invest more than 10% of the value of its total assets in securities of foreign issuers, provided that this limitation shall not apply to foreign securities denominated in U.S. dollars, including American Depositary Receipts ("ADRs"). 11. Oil and Gas Programs. No Portfolio may invest in participations or other direct interests in oil, gas, or other mineral leases or exploration or development programs, but each Portfolio may purchase securities of companies that own interests in any of the foregoing. 12. Real Estate. No Portfolio may purchase or sell real property (including interests in real estate limited partnerships, but excluding readily marketable interests in real estate investment trusts and readily marketable securities of companies that invest in real estate); provided that no Portfolio may purchase any security if, as a result, more than 10% of its total assets would be invested in securities of real estate investment trusts. - 4 - In addition to the foregoing non-fundamental investment policies and limitations, which apply to each Portfolio, the following non-fundamental investment policies and limitations apply to the indicated Portfolios: 13. Investments in Any One Issuer (Neuberger & Berman FOCUS and Neuberger & Berman GUARDIAN Portfolios). Neither of these Port- folios may purchase the securities of any one issuer (other than securities issued or guaranteed by the U.S. Government or any of its agencies or instrumentalities) if, as a result, more than 5% of the Portfolio's total assets would be invested in the securities of that issuer. 14. Warrants (Neuberger & Berman FOCUS and Neuberger & Berman GUARDIAN Portfolios). Neither of these Portfolios may invest more than 5% of its net assets in warrants, including warrants that are not listed on the New York Stock Exchange ("NYSE") or American Stock Exchange ("AmEx"), or more than 2% of its net assets in such unlisted warrants. For purposes of this limitation, warrants are valued at the lower of cost or market value and warrants acquired by a Portfolio in units or attached to securities may be deemed to be without value. 15. Pledging (Neuberger & Berman GUARDIAN Portfolio). The Portfolio may not pledge or hypothecate any of its assets, except that the Portfolio may pledge or hypothecate up to 5% of its total assets in connection with its entry into any agreement or arrangement pursuant to which a bank furnishes a letter of credit to collateralize a capital commitment made by the Portfolio to a mutual insurance company of which the Portfolio is a member. 16. Sector Concentration (Neuberger & Berman FOCUS Portfolio). This Portfolio may not invest more than 50% of its total assets in any one economic sector. Each Portfolio, as an operating policy, does not intend to invest in futures contracts and options thereon during the coming year. MARK R. GOLDSTEIN, PORTFOLIO MANAGER OF NEUBERGER & BERMAN MANHATTAN PORTFOLIO Neuberger & Berman MANHATTAN Portfolio's objective is capital appreciation, without regard to income. "The Portfolio differs from the other Portfolios in its willingness to invest in stocks with price/earnings ratios or price-to-cash-flow ratios that are reasonable relative to a company's growth prospects and that of the general market," says Mark Goldstein, its portfolio manager. Mr. Goldstein has consistently followed this approach as a portfolio manager at N&B Management. He looks for stocks of financially sound companies with a special market capability, a competitive advantage or a product that makes them particularly attractive over the long term, but likes to purchase them at a reasonable price relative to their growth rates. Mr. Goldstein calls this approach "GARP" -- growth at a reasonable price. "An investor - 5 - shouldn't try to beat the market by trading funds like stocks. The hardest thing to do -- but the best thing to do -- is to put in some money when the market is down and keep it there. That's how one really builds wealth over the long term -- a mutual fund is a great long-term investment." "We view value both on a relative and an absolute basis, so we may buy stocks with somewhat above-market historical growth rates," Mr. Goldstein explains. "We also tend to stay more fully invested when we think the market is attractive for quality growth companies. But we will get out of stocks and into cash when we think there are no reasonable values available." KENT C. SIMONS AND LAWRENCE MARX III, PORTFOLIO MANAGERS OF NEUBERGER & BERMAN FOCUS AND NEUBERGER & BERMAN GUARDIAN PORTFOLIOS These Portfolios are managed by two veterans of N&B Man- agement who have consistently followed their value-oriented philosophy over many years: Kent Simons and Larry Marx. Neuberger & Berman FOCUS Portfolio's investment objective is long-term capital appreciation. Like the other Portfolios that use a value-oriented investment approach, it seeks to buy undervalued securities that offer opportunities for growth, but then focuses its assets in those sectors where undervalued stocks are clustered. "We begin by looking for stocks that are selling for less than we think they're worth, a 'bottom-up approach'" says Mr. Simons. "More often than not, such stocks are in a few economic sectors that are out of favor and are undervalued as a group. I think 90% of cheap stocks deserve to be cheap. My job is to find the 10% that don't." "We don't pick sectors for Neuberger & Berman FOCUS Portfolio based on our perception of how the economy is going to do. Nor do we engage in making economic or currency predictions. We look for stocks with either low relative or low absolute valuations," explains Mr. Marx. "Often, these stocks will be found in a particular sector, but we didn't start out being bullish on that sector. It's just where we happened to find the values. We find that if one company comes under a cloud, it tends to happen to its whole industry. If an investment manager rotated the sectors in a portfolio by buying sectors when they are undervalued and selling them when they become fully valued, the manager would be able to achieve above-average performance." Neuberger & Berman GUARDIAN Portfolio subscribes to the same stock-picking philosophy followed since 1950, when Roy R. Neuberger founded the predecessor of Neuberger & Berman GUARDIAN Fund, which, like Neuberger & Berman GUARDIAN Assets, invests all its net investable assets in Neuberger & Berman GUARDIAN Portfolio. It's no great trick for a mutual fund to make money when the market is rising. The tide that lifts stock values will carry most funds along. The true test of management is its ability to make money - 6 - even when the market is flat or declining. By that measure, Neuberger & Berman GUARDIAN Fund and its predecessor have served shareholders well and have paid a dividend every quarter and a capital gain distribution every year since 1950. Of course, there can be no assurance that this trend will continue. Both Mr. Simons and Mr. Marx place a high premium on being knowledgeable about the companies whose stocks they buy for Neuberger & Berman GUARDIAN Portfolio. That knowledge is important, because sometimes it takes courage to buy stocks that the rest of the market has forsaken. Says Mr. Marx, "We're usually early in and early out. We'd rather buy an undervalued stock because we expect it to become fairly valued than buy one fairly valued and hope it becomes overvalued. We like a stock 'under a rock' or with a cloud over it; you are not going to get great companies at great valuations when the market perception is great." "People who switch around a lot are not going to benefit from our approach. They're following the market -- we're looking at fundamentals." MICHAEL M. KASSEN AND ROBERT I. GENDELMAN, PORTFOLIO MANAGERS OF NEUBERGER & BERMAN PARTNERS PORTFOLIO "Neuberger & Berman PARTNERS Portfolio's objective is capital growth," say its portfolio managers Michael Kassen and Robert Gendelman. "We want to make money in good markets and not give up those gains during rough times." "Our investors seek consistent performance and have a moderate risk tolerance. They do know, however, that stock investments can provide the long-term upside potential essential to meeting their long-term investment goals, particularly a comfortable retirement and planning for a college education." "We look for stocks that are undervalued in the market- place either in relation to strong current fundamentals, such as low price-to-earnings ratios, consistent cash flow, and support from asset values, or in relation to the growth of their future earnings, as projected by N&B Management. If the market goes down, those stocks we elect to hold, historically, go down less." The co-portfolio managers monitor stocks of medium- to large-sized companies that often are not closely scrutinized by other investors. The managers research these companies in order to determine if they will produce a new product, become an acquisition target, or undergo a financial restructuring. What else catches Mr. Kassen's and Mr. Gendelman's eyes? "We like managements that own their own stock. These companies usually seek to build shareholder wealth by buying back shares or making acquisitions that have a swift and positive impact on the bottom line." - 7 - To increase the upside potential, the managers zero in on companies that dominate their industries or their specialized niches. Their reasoning? "Market leaders tend to earn higher levels of profits." Neuberger & Berman PARTNERS Portfolio invests in a wide array of stocks, and no single stock makes up more than a small fraction of the Portfolio's total assets. Of course, the Portfolio's holdings are subject to change. Additional Investment Information Some or all of the Portfolios, as indicated below, may make the following investments, among others, although they may not buy all of the types of securities, or use all of the investment techniques, that are described. Repurchase Agreements (All Portfolios). Repurchase agreements are agreements under which a Portfolio purchases securities from a bank that is a member of the Federal Reserve System or from a securities dealer that agrees to repurchase the securities from the Portfolio at a higher price on a designated future date. Repurchase agreements generally are for a short period of time, usually less than a week. No Portfolio may enter into a repurchase agreement with a maturity of more than seven days if, as a result, more than 10% of the value of its net assets would then be invested in such repurchase agreements and other illiquid securities. A Portfolio may enter into a repurchase agreement only if (1) the underlying securities are of the 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 value of the repurchase agreement, 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 the custodian or a bank acting as the Portfolio's agent. Securities Loans (All Portfolios). In order to realize income, each Portfolio may lend portfolio securities with a value not exceeding 33-1/3% of its total assets to banks, brokerage firms, or institutional investors judged creditworthy by N&B Management. Borrowers are required continuously to secure their obligations to return securities on loan from the Portfolio by depositing collateral, which must be marked to market daily, in a form determined to be satisfactory by the Portfolio Trustees and equal to at least 100% of the market value of the loaned securities, which will also be marked to market daily. N&B Management be- lieves the risk of loss on these transactions is slight because, if a borrower were to default for any reason, the collateral should satisfy the obligation. However, as with other extensions of secured credit, loans of portfolio securities involve some risk of loss of rights in the collateral should the borrower fail financially. Restricted Securities and Rule 144A Securities (All Portfolios). Each Portfolio may invest in restricted securities, which - 8 - are securities that may not be sold to the public without an effective registration statement under the 1933 Act or, if they are unregistered, 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 further to facilitate efficient trading among institutional investors by permitting the sale of certain unregistered securities to qualified institutional buyers. To the extent privately placed securities held by a Portfolio qualify under Rule 144A, and an institutional market develops for those securities, the Portfolio likely will be able to dispose of the securities without registering them under the 1933 Act. To the extent that institutional buyers become, for a time, uninterested in purchasing these securities, investing in Rule 144A securities could increase the level of a Portfolio's illiquidity. N&B Management, acting under guide- lines established by the Portfolio Trustees, may determine that certain securities qualified for trading under Rule 144A are liquid. Where registration is required, a Portfolio may be obligated to pay all or part of the registration expenses, and a considerable period may elapse between the decision to sell and the time the Portfolio may be permitted to sell a security under an effective registration statement. If, during such a period, adverse market conditions were to develop, the Portfolio might obtain a less favorable price than prevailed when it decided to sell. To the extent privately placed securities, including Rule 144A securities, are illiquid, purchases thereof will be subject to each Portfolio's 10% limit on investments in illiquid securities. Restricted securities for which no market exists are priced at fair value as determined in accordance with procedures approved and periodically reviewed by the Portfolio Trustees. Reverse Repurchase Agreements (All Portfolios). A reverse repurchase agreement involves a Portfolio's sale of portfolio securities subject to its agreement to repurchase the securities at a later date for a fixed price reflecting a market rate of interest; these agreements are considered borrowings for purposes of the Portfolios' investment policies and limitations concerning borrowings. While a reverse repurchase agreement is outstanding, a Portfolio will maintain with its custodian in a segregated account cash, U.S. Government or Agency Securities, or other liquid, high-grade debt securities, marked to market daily, in an amount at least equal to the Portfolio's obligations under the agreement. There is a risk that the contra-party to a reverse repurchase agreement will be unable or unwilling to complete the transaction as scheduled, which may result in losses to the Portfolio. Foreign Securities (All Portfolios). Each Portfolio may invest in U.S. dollar-denominated securities issued by foreign issuers (including banks, governments, and quasi-governmental organizations) and foreign branches of U.S. banks, including negotiable certificates of depo- sit ("CDs"), bankers' acceptances and commercial paper. These investments are subject to each Portfolio's quality standards. While investments in - 9 - foreign securities are intended to reduce risk by providing further diver- sification, such investments involve sovereign and other risks, in addition to the credit and market risks normally associated with domestic securities. These additional risks include the possibility of adverse political and economic developments (including political instability) and the potentially adverse effects of unavailability of public information regarding issuers, less governmental supervision and regulation of financial markets, reduced liquidity of certain financial markets, and the lack of uniform accounting, auditing, and financial standards or the application of standards that are different or less stringent than those applied in the United States. Each Portfolio also may invest in equity, debt, or other income-producing securities (of issuers in countries whose governments are considered stable by N&B Management) 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 or their subdivisions, agencies, and instrumentali- ties, international agencies, and supranational entities. Investing in foreign currency denominated securities includes the special risks asso- ciated with investing in non-U.S. issuers described in the preceding paragraph and the additional risks of (1) adverse changes in foreign exchange rates, (2) nationalization, expropriation, or confiscatory taxa- tion, (3) adverse changes in investment or exchange control regulations (which could prevent cash from being brought back to the United States), and (4) expropriation or nationalization of foreign portfolio companies. Additionally, dividends and interest payable on foreign securities may be subject to foreign taxes, including taxes withheld from those payments, and there are generally higher commission rates on foreign 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. In order to limit the risk inherent in investing in foreign currency denominated securities, a Portfolio may not purchase any such security if, after such purchase, more than 10% of its total assets (taken at market value) would be invested in foreign currency denominated securities. Within that limitation, however, no Portfolio is restricted in the amount it may invest in securities denominated in any one foreign currency. Covered Call Options (All Portfolios). Each Portfolio may write or purchase covered call options on securities it owns valued at up to 10% of its net assets. Generally, the purpose of writing and purchasing these options is to reduce the effect of price fluctuations of securities held by the Portfolio on the Portfolio's and its corresponding - 10 - Fund's net asset values ("NAVs"). Portfolio securities on which call options may be written and purchased by a Portfolio are purchased solely on the basis of investment considerations consistent with the Portfolio's investment objective. When a Portfolio writes a call option, it is obligated to sell a security to a purchaser at a specified price at any time the purchaser requests until a certain date, and receives a premium for writing the call option. So long as the obligation of the call option continues, the Portfolio may be assigned an exercise notice, requiring it to deliver the underlying security against payment of the exercise price. The Portfolio may be obligated to deliver securities underlying an option at less than the market price, thereby giving up any additional gain on the security. Each Portfolio writes only "covered" call options on securities it owns. The writing of covered call options is a conservative investment technique that is believed to involve relatively little risk (in contrast to the writing of "naked" or uncovered call options, which the Portfolios will not do), but is capable of enhancing the Portfolios' total return. When writing a covered call option, a Portfolio, in return for the premium, gives up the opportunity for profit from a price increase in the underlying security above the exercise price, but conversely retains the risk of loss should the price of the security decline. If a call option that a Portfolio has written expires unexercised, the Portfolio will realize a gain in the amount of the premium; however, that gain may be offset by a decline in the market value of the underlying security during the option period. If the call option is exercised, the Portfolio will realize a gain or loss from the sale of the underlying security. When a Portfolio purchases a call option, it pays a premium for the right to purchase a security from the writer at a specified price until a specified date. A Portfolio would purchase a call option to offset a previously written call option. The obligation under any option terminates upon expiration of the option or, at an earlier time, when the writer offsets the option by entering into a "closing purchase transaction" to purchase an option of the same series. If an option is purchased by the Portfolio and is never exercised, the Portfolio will lose the entire amount of the premium paid. Options are traded both on national securities exchanges and in the over-the-counter ("OTC") market. Exchange-traded options in the United States are issued by a clearing organization affiliated with the exchange on which the option is listed; the clearing organization in effect guarantees completion of every exchange-traded option. In contrast, OTC options are contracts between the Portfolio and its 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 - 11 - prior to its expiration only by entering into a closing purchase transaction with the dealer to whom the Portfolio originally sold the option. There can be no assurance that the Portfolio would be able to liquidate an OTC option at any time prior to expiration. Unless a Portfolio is able to effect a closing purchase transaction in a covered OTC call option it has written, it will not be able to liquidate securities used as cover until the option expires or is exercised or until different cover is substituted. In the event of the counter-party's insolvency, a Portfolio may be unable to liquidate its options position and the associated cover. N&B Management monitors the creditworthiness of dealers with which a Portfolio may engage in OTC options transactions, and limits the Portfolios' counter-parties in such transactions to dealers with a net worth of at least $20 million as reported in their latest financial statements. The assets used as cover for OTC options written by a Portfolio will be considered illiquid unless the OTC options are sold to qualified dealers who agree that the Portfolio may repurchase any OTC option it writes at a maximum price to be calculated by a formula set forth in the option agreement. The cover for an OTC call option written subject to this procedure will be considered illiquid only to the extent that the maximum repurchase price under the formula exceeds the intrinsic value of the option. The premium received (or paid) by the Portfolio when it writes (or purchases) an option is the amount at which the option is currently traded on the applicable exchange, less (or plus) a commission. The premium may reflect, among other things, the current market price of the underlying security, the relationship of the exercise price to the market price, the historical price volatility of the underlying security, the length of the option period, the general supply of and demand for credit, and the general 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, which is the sales price on the option's last reported trade on that day before the time the Portfolio's NAV is computed or, in the absence of any trades thereof on that day, the mean between the closing bid and ask prices. Closing transactions are effected in order to realize a profit on an outstanding option, to prevent an underlying security from being called, or to permit the sale or the put of the underlying security. If any Portfolio desires to sell a security on which it has written a call option, it will seek to effect a closing transaction prior to, or concurrently with, the sale of the security. There is, of course, no assurance that a Portfolio will be able to effect closing transactions at favorable prices. If a Portfolio cannot enter into such a transaction, it may be required to hold a security that it might otherwise have sold, in which case it would continue to be at market risk on the security. A Portfolio will realize a profit or loss from a closing purchase transaction if the cost of the transaction is less or more than - 12 - the premium received from writing the call or put option. However, 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. Each Portfolio pays the brokerage commissions in connection with purchasing or writing options, including those used to close out existing positions. These brokerage commissions normally are higher than those applicable to purchases and sales of portfolio securities. Options normally have expiration dates between three and nine months from the date written. 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. Forward Foreign Currency Contracts (All Portfolios). Each Portfolio may enter into contracts for the purchase or sale of a specific currency at a future date at a fixed price ("Forward Contracts") in amounts not exceeding 5% of its net assets. The Portfolios enter into Forward Contracts in an attempt to hedge against expected changes in prevailing currency exchange rates. The Portfolios do not engage in transactions in Forward Contracts for speculation; they view investments in Forward Contracts as a means of establishing more definitely the effec- tive return on securities denominated in foreign currencies that are held or intended to be acquired by them. Forward Contract transactions include forward sales or purchases of foreign currencies for the purpose of pro- tecting the U.S. dollar value of securities held or to be acquired by a Portfolio or protecting the U.S. dollar equivalent of dividends, interest, or other payments on those securities. N&B Management believes that the use of foreign currency hedging techniques, including "cross-hedges," can help protect against declines in the U.S. dollar value of income available for distribution and declines in a Portfolio's NAV resulting from adverse changes in currency exchange rates. For example, the return available from securities denomi- nated 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 cross-hedge involving a Forward Contract to sell a different foreign currency, where the contract is available on terms more advantageous to a Portfolio than a contract to sell the currency in which the securities being hedged are denominated. N&B Management believes that hedges and cross-hedges can, therefore, provide significant protection of NAV in the event of a general rise in the U.S. dollar against foreign currencies. However, a hedge or cross-hedge cannot protect against exchange rate risks perfectly, and, if N&B Management is incorrect in its judgment of future exchange rate relationships, a Portfolio could be in a less advantageous position than if such a hedge had not been established. In addition, because Forward - 13 - Contracts are not traded on an exchange, the assets used to cover such contracts may be illiquid. Options on Foreign Currencies (All Portfolios). Each Portfolio may write and purchase covered call and put options on foreign currencies, in amounts not exceeding 5% of its net assets, for the purpose of protecting 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 protecting the U.S. dollar equivalent of dividends, interest, or other payments on those securities. As with other types of options, however, writing an option on foreign currency constitutes only a partial hedge, up to the amount of the premium received, and a Portfolio could be required to purchase or sell foreign currencies at disadvantageous exchange rates, thereby incurring losses. 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. The risks of currency options are similar to the risks of other options, discussed herein. To the extent a Portfolio writes options on foreign currencies that are traded on an exchange regulated by the Commodity Futures Trading Commission ("CFTC") other than for bona fide hedging purposes (as defined by the CFTC), the aggregate initial margin and premiums on those positions (excluding the amount by which options are "in-the-money") may not exceed 5% of the Portfolio's net assets. GENERAL CONSIDERATIONS INVOLVING OPTIONS AND FORWARD CONTRACTS (COLLECTIVELY, "HEDGING INSTRUMENTS") Risks Involved in Using Hedging Instruments. The primary risks in using Hedging Instruments are (1) imperfect correlation or no correlation between changes in market value of the securities held or to be acquired by a Portfolio and changes in market value 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 Instru- ments are different from those needed to select a Portfolio's securities; (4) the fact that, although use of these instruments for hedging purposes can reduce the risk of loss, they also can reduce the opportunity for gain, or even result in losses, by offsetting favorable price movements in hedged investments; and (5) the possible inability of a Portfolio to purchase or sell a portfolio security at a time that would otherwise be favorable for it to do so, or the possible need for a Portfolio to sell a portfolio security at a disadvantageous time, due to its need to maintain "cover" or to segregate securities in connection with its use of Hedging Instruments. N&B Management intends to reduce the risk of imperfect correlation by investing only in Hedging Instruments whose behavior is expected to resemble that of a Portfolio's underlying securities. N&B Management intends to reduce the risk that a Portfolio will be unable to close out Hedging Instruments by entering into such transactions only if N&B Management believes there will be an active and liquid secondary market. Hedging Instruments used by the Portfolios are generally considered "derivatives." There can be no assurance that a Portfolio's use of Hedging Instruments will be successful. - 14 - The Portfolios' use of Hedging Instruments may be limited by the requirements of the Internal Revenue Code of 1986, as amended ("Code"), that apply to each Fund for qualification as a regulated investment company ("RIC"). See "Additional Tax Information." Cover for Hedging Instruments. Each Portfolio will com- ply with SEC guidelines regarding cover for Hedging Instruments and, if the guidelines so require, set aside in a segregated account with its custodian cash, U.S. Government or Agency Securities, or other liquid, high-grade debt securities in the prescribed amount. Securities held in a segregated account cannot be sold while the option or forward strategy covered by those securities is outstanding, unless they are replaced with other suitable assets. As a result, segregation of a large percentage of a Portfolio's assets could impede portfolio management or the Portfolio's ability to meet current obligations. A Portfolio may be unable promptly to dispose of assets which cover, or are segregated with respect to, an illiquid option or forward position, which may result in a loss to the Portfolio. Fixed Income Securities (All Portfolios). While the emphasis of the Portfolios' investment programs is on common stocks and other equity securities (including preferred stocks and securities convertible into or exchangeable for common stocks), the Portfolios may also invest in money market instruments, U.S. Government or Agency Securities, and other fixed income securities. Each Portfolio may invest in corporate bonds and debentures receiving one of the four highest ratings from Standard & Poor's ("S&P"), Moody's Investors Service, Inc. ("Moody's"), or any other nationally recognized statistical rating organization ("NRSRO"), or, if not rated by any NRSRO, deemed comparable by N&B Management to such rated securities ("Comparable Unrated Securities"). In addition, Neuberger & Berman PARTNERS Portfolio may invest up to 15% of its net assets in corporate debt securities rated below investment grade or Comparable Unrated Securities. The ratings of an NRSRO represent its opinion as to the quality of securities it undertakes to rate. Ratings are not absolute standards of quality; consequently, securities with the same maturity, coupon, and rating may have different yields. The Portfolios rely primarily on 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 general market liquidity ("market risk"). Lower-rated securities are more likely to react to developments affecting market and credit risk than are more highly rated securities, which react primarily to movements in the general level of interest rates. Debt securities in the lowest rating categories may involve a substantial risk of default or may be in default. Changes in economic conditions or developments regarding the individual issuer are more likely to cause price volatility and weaken the capacity of the issuer of such securities to make principal and interest payments than is the case for higher-grade - 15 - debt securities. An economic downturn affecting the issuer may result in an increased incidence of default. The market for lower-rated securities may be thinner and less active than for higher-rated securities. Pricing of thinly traded securities requires greater judgment than pricing of securities for which market transactions are regularly reported. N&B Management will invest in such securities only when it concludes that the anticipated return to Neuberger & Berman Partners Portfolio and its corresponding Fund on such an investment warrants exposure to the additional level of risk. Subsequent to its purchase by a Portfolio, an issue of debt securities may cease to be rated or its rating may be reduced, so that the securities would not be eligible for purchase by the Portfolio. In such a case, N&B Management will engage in an orderly disposition of the downgraded securities to the extent necessary to ensure that the Portfolio's holdings of such securities will not exceed 5% of its net assets. Commercial Paper (All Portfolios). Commercial paper is a short-term debt security issued by a corporation or bank for purposes such as financing current operations. The Portfolios may invest only in commercial paper receiving the highest rating from S&P (A-1) or Moody's (P-1), or deemed by N&B Management to be of equivalent quality. Each Portfolio may invest in commercial paper that cannot be resold to the public without an effective registration statement under the 1933 Act. While restricted commercial paper normally is deemed illiquid, N&B Management may in certain cases determine that such paper is liquid, pursuant to guidelines established by the Portfolio Trustees. Zero Coupon Securities (Neuberger & Berman PARTNERS Portfolio). This Portfolio may invest up to 5% of its net assets in zero coupon securities, which are debt obligations that do not entitle the holder to any periodic payment of interest prior to maturity or that specify a future date when the securities begin to pay current interest. Zero coupon securities are issued and traded at a discount from their face amount or par value. This discount varies depending on prevailing interest rates, the time remaining until cash payments begin, the liquidity of the security, and the perceived credit quality of the issuer. The discount on zero coupon securities ("original issue discount") is taken into account by the Portfolio prior to the receipt of any actual payments. Because Neuberger & Berman PARTNERS Assets must distribute substantially all of its income (including its pro rata share of the Portfolio's original issue discount) to its shareholders each year for income and excise tax purposes (see "Additional Tax Information - Taxation of the Funds"), the Portfolio may have to dispose of portfolio securities under disadvantageous circumstances to generate cash, or may be required to borrow, to satisfy the corresponding Fund's distribution requirements. - 16 - The market prices of zero coupon securities generally are more volatile than the prices of securities that pay interest periodi- cally. Zero coupon securities are likely to respond to changes in interest rates to a greater degree than other types of debt securities having similar maturities and credit quality. Convertible Securities (All Portfolios). The Portfolios may invest in convertible securities. A convertible security entitles the holder to receive 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, convertible securities ordinarily provide a stream of income with generally higher yields than those of common stocks of the same or similar issuers, but lower than the yield on non-convertible debt. Convertible securities are usually subordinated to comparable-tier non-convertible securities but rank senior to common stock in a corporation's capital structure. The value of a convertible security is a function of (1) its yield in comparison to the yields of other securities of comparable maturity and quality that do not have a conversion privilege and (2) its worth if converted into the underlying common stock. Convertible securities are typically issued by smaller capitalized companies whose stock prices may be volatile. The price of a convertible security often reflects variations in the price of the underlying common stock in a way that non-convertible debt does not. A convertible security may be subject to redemption at the option of the issuer at a price established in the security's governing instrument. If a convertible security held by a Portfolio is called for redemption, the Portfolio will be required to convert it into the underlying common stock, sell it to a third party or permit the issuer to redeem the security. Any of these actions could have an adverse effect on the Portfolio's and the corresponding Fund's ability to achieve their investment objectives. Preferred Stock (All Portfolios). The Portfolios 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, although preferred shareholders may have certain rights if dividends are not paid. Shareholders may suffer a loss of value if dividends are not paid and generally have no legal recourse against the issuer. The market prices of preferred stocks are generally more sensitive to changes in the issuer's creditworthiness than are the prices of debt securities. Neuberger & Berman FOCUS Portfolio - Description of Economic Sectors. Neuberger & Berman FOCUS Portfolio seeks to achieve its investment objective by investing principally in common stocks in the following thirteen multi-industry economic sectors, normally concentrating at least 90% of its investments in common stocks selected from not more than six such sectors: - 17 - (1) Autos and Housing Sector: Companies engaged in design, production, or sale of automobiles, automobile parts, mobile homes, or related products ("automobile industries") or design, construction, renovation, or refurbishing of residential dwellings. The value of securities of companies in the automobile industries is affected by, among other things, foreign competition, the level of consumer confidence and consumer debt, and installment loan rates. The housing construction industry may be affected by the level of consumer confidence and consumer debt, mortgage rates, tax laws, and the inflation outlook. (2) Consumer Goods and Services Sector: Companies engaged in providing consumer goods or services, including design, processing, production, sale, or storage of packaged, canned, bottled, or frozen foods and beverages and design, production, or sale of home furnishings, appliances, clothing, accessories, cosmetics, or perfumes. Certain of these companies are subject to government regulation affecting the use of various food additives and production methods, which could affect profitability. Also, the success of food- and fashion-related products may be strongly affected by fads, marketing campaigns, health concerns, and other factors affecting supply and demand. (3) Defense and Aerospace Sector: Companies engaged in re- search, manufacture, or sale of products or services related to the defense or aerospace industries, including air transport; data processing or computer-related services; communications systems; military weapons or transportation; general aviation equipment, missiles, space launch vehicles, or spacecraft; machinery for guidance, propulsion, or control of flight vehicles; and airborne or ground-based equipment essential to the test, operation, or maintenance of flight vehicles. Because these companies rely largely on U.S. (and foreign) governmental demand for their products and services, their financial conditions are heavily influenced by defense spending policies. (4) Energy Sector: Companies involved in the production, transmission, or marketing of energy from oil, gas, or coal, as well as nuclear, geothermal, oil shale, or solar sources of energy (but excluding public utility companies). Also included are companies that provide component products or services for those activities. The value of these companies' securities varies based on the price and supply of energy fuels and may be affected by international politics, energy conservation, the success of exploration projects, environmental considerations, and the tax and other regulatory policies of various governments. (5) Financial Services Sector: Companies providing financial services to consumers or industry, including commercial banks and savings and loan associations, consumer and industrial finance companies, securities brokerage companies, leasing companies, and insurance companies. These companies are subject to extensive governmental regulations. Their profitability may fluctuate significantly as a result of volatile interest rates, concerns about particular banks and savings institutions, and general economic conditions. - 18 - (6) Health Care Sector: Companies engaged in design, manu- facture, or sale of products or services used in connection with the provision of health care, including pharmaceutical companies; firms that design, manufacture, sell, or supply medical, dental, or optical products, hardware, or services; companies involved in biotechnology, medical diagnostic, or biochemical research and development; and companies that operate health care facilities. Many of these companies are subject to government regulation and potential health care reforms, which could affect the price and availability of their products and services. Also, products and services of these companies could quickly become obsolete. (7) Heavy Industry Sector: Companies engaged in research, development, manufacture, or marketing of products, processes, or services related to the agriculture, chemicals, containers, forest products, non-ferrous metals, steel, or pollution control industries, including synthetic and natural materials (for example, chemicals, plastics, fertilizers, gases, fibers, flavorings, or fragrances), paper, wood products, steel, and cement. Certain of these companies are subject to state and federal regulation, which could require alteration or cessation of production of a product, payment of fines, or cleaning of a disposal site. Furthermore, because some of the materials and processes used by these companies involve hazardous components, there are additional risks associated with their production, handling, and disposal. The risk of product obsolescence also is present. (8) Machinery and Equipment Sector: Companies engaged in the research, development, or manufacture of products, processes, or services relating to electrical equipment, machinery, pollution control, or construction services, including transformers, motors, turbines, hand tools, earth-moving equipment, and waste disposal services. The profitability of most of these companies may fluctuate significantly in response to capital spending and general economic conditions. As is the case for the heavy industry sector, there are risks associated with the production, handling, and disposal of materials and processes that involve hazardous components and the risk of product obsolescence. (9) Media and Entertainment Sector: Companies engaged in design, production, or distribution of goods or services for the media industries (including television or radio broadcasting or manufacturing, publishing, recordings and musical instruments, motion pictures, and photography) and the entertainment industries (including sports arenas, amusement and theme parks, gaming casinos, sporting goods, camping and recreational equipment, toys and games, travel-related services, hotels and motels, and fast food and other restaurants). Many products produced by companies in this sector -- for example, video and electronic games -- may become obsolete quickly. Additionally, companies engaged in tele- vision and radio broadcast are subject to government regulation. (10) Retailing Sector: Companies engaged in retail distribu- tion of home furnishings, food products, clothing, pharmaceuticals, leisure products, or other consumer goods, including department stores, supermarkets, and retail chains specializing in particular items such as - 19 - shoes, toys, or pharmaceuticals. The value of these companies' securities fluctuates based on consumer spending patterns, which depend on inflation and interest rates, the level of consumer debt, and seasonal shopping habits. The success or failure of a company in this highly competitive sector depends on its ability to predict rapidly changing consumer tastes. (11) Technology Sector: Companies that are expected to have or develop products, processes, or services that will provide, or will benefit significantly from, technological advances and improvements or future automation trends, including semiconductors, computers and peripheral equipment, scientific instruments, computer software, telecommunications equipment, and electronic components, instruments, and systems. These companies are sensitive to foreign competition and import tariffs. Also, many of their products may become obsolete quickly. (12) Transportation Sector: Companies involved in providing transportation of people and products, including airlines, railroads, and trucking firms. Revenues of these companies are affected by fluctuations in fuel prices and government regulation of fares. (13) Utilities Sector: Companies in the public utilities industry and companies that derive a substantial majority of their revenues through supplying public utilities (including companies engaged in the manufacture, production, generation, transmission, or sale of gas and electric energy) and that provide telephone, telegraph, satellite, microwave, and other communication facilities to the public. The gas and electric public utilities industries are subject to various uncertainties, including the outcome of political issues concerning the environment, prices of fuel for electric generation, availability of natural gas, and risks associated with the construction and operation of nuclear power facilities. PERFORMANCE INFORMATION Each Fund's performance figures are based on historical earnings and are not intended to indicate future performance. The share price and total return of each Fund will vary, and an investment in a Fund, when redeemed, may be worth more or less than an investor's original cost. Total Return Computations Each Fund may advertise certain total return information. An average annual compounded rate of return ("T") may be computed by using the redeemable value at the end of a specified period ("ERV") of a hypothetical initial investment of $1,000 ("P") over a period of time ("n") according to the formula: P(1+T)n = ERV - 20 - Average annual total return smooths out year-to-year variations and, in that respect, differs from actual year-to-year results. The Funds commenced operations on __________, 1996 and, as of the date of this SAI, have no past performance. However, four mutual funds that are series of Neuberger & Berman Equity Funds ("N&B Equity Funds"), each of which has a name similar to a Fund and the same investment objective, policies, and limitations as that Fund ("Sister Fund"), also invest in the four Portfolios described herein. Each Sister Fund had a predecessor. The following data shows the total return for each Sister Fund and that Sister Fund's predecessor. The Sister Funds have a different fee structure than the Funds (and do not pay 12b-1 fees). Had these fees been reflected, the total returns shown below would have been lower. The average annual total returns for Neuberger & Berman MANHATTAN Assets' Sister Fund and its predecessor for the one-, five-, and ten-year periods ended August 31, 1995, were $26.00%, 17.10%, and 15.01% respectively. If an investor had invested $10,000 in that predecessor's shares on March 1, 1979 and had reinvested all distributions and income dividends, the NAV of that investor's holdings would have been [$_______] on August 31, 1995. The average annual total returns for Neuberger & Berman FOCUS Assets' Sister Fund and its predecessor for the one-, five-, and ten-year periods ended August 31, 1995, were 27.47%, 18.52%, and 14.77%, respectively. If an investor had invested $10,000 in that predecessor's shares on October 19, 1955 and had reinvested all distributions and income dividends, the NAV of that investor's holdings would have been $[_______] on August 31, 1995. The average annual total returns for Neuberger & Berman GUARDIAN Assets' Sister Fund and its predecessor for the one-, five-, and ten-year periods ended August 31, 1995, were 24.06%, 20.14%, and 15.66%, respectively. If an investor had invested $10,000 in that predecessor's shares on June 1, 1950 and had reinvested all distributions and income dividends, the NAV of that investor's holdings would have been [$_________] on August 31, 1995. The average annual total returns for Neuberger & Berman PARTNERS Assets' Sister Fund and its predecessor for the one-, five-, and ten-year periods ended August 31, 1995, were 21.53%, 16.05%, and 14.43%, respectively. If an investor had invested $10,000 in that predecessor's shares on January 20, 1975 and had reinvested all distributions and income dividends, the NAV of that investor's holdings would have been [$_______] on August 31, 1995. Comparative Information Prior to January 5, 1989, the investment policies of the predecessor of Neuberger & Berman FOCUS Assets' Sister Fund required that at least 80% of its investments normally be in energy-related investments; - 21 - prior to November 1, 1991, those investment policies required that at least 25% of its investments normally be in the energy sector. Neuberger & Berman FOCUS Assets may be required, under applicable law, to include information reflecting the Sister Fund's predecessor's performance and expenses before November 1, 1991, in its advertisements, sales literature, financial statements, and other documents filed with the SEC and/or provided to current and prospective shareholders. Investors should be aware that such information may not accurately reflect the level of performance and expenses that would have been experienced had the Sister Fund's predecessor been operating under the Fund's current investment policies. From time to time each Fund's performance may be compared with: (1) data (that may be expressed as rankings or ratings) published by independent services or publications (including newspapers, newsletters, and financial periodicals) that monitor the performance of mutual funds, such as Lipper Analytical Services, Inc., C.D.A. Investment Technologies, Inc., Wiesenberger Investment Companies Service, Investment Company Data Inc., Morningstar, Inc., Micropal Incorporated, and quarterly mutual fund rankings by Money, Fortune, Forbes, Business Week, Personal Investor, and U.S. News & World Report magazines, The Wall Street Journal, New York Times, Kiplingers Personal Finance, and Barron's News- paper, or (2) recognized stock and other indices, such as the S&P 500 Composite Stock Price Index ("S&P 500 Index"), S&P Small Cap 600 Index ("S&P 600 Index"), S&P Mid Cap 400 Index ("S&P 400 Index"), Russell 2000 Stock Index, Dow Jones Industrial Average ("DJIA"), Wilshire 1750, Nasdaq Composite Index, Value Line Index, U.S. Department of Labor Consumer Price Index ("Consumer Price Index"), College Board Survey of Colleges Annual Increases of College Costs, 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 $27 million to $880 million, with an average of $302 million. The S&P 400 Index measures mid-sized companies with an average market capitalization of $1.2 billion. Each assumes reinvestment of distributions and is calculated without regard to tax consequences or the costs of investing. Each Portfolio may invest in different types of securities from those included in some of the above indices. - 22 - Evaluations of the Funds' performance, their total returns, and comparisons may be used in advertisements and in information furnished to current and prospective shareholders (collectively, "Advertisements"). The Neuberger & Berman Funds may also be compared to individual asset classes such as common stocks, small-cap stocks, or Treasury bonds, based on information supplied by Ibbotson and Sinquefield. Other Performance Information From time to time, information about a Portfolio's portfolio allocation and holdings as of a particular date may be included in Advertisements for the corresponding Fund. This information, for example, may include the Portfolio's portfolio diversification by asset type. Information used in Advertisements may include statements or illustrations relating to the appropriateness of types of securities and/or mutual funds that may be employed to meet specific financial goals, such as (1) funding retirement, (2) paying for children's education, and (3) financially supporting aging parents. N&B Management believes that many of its common stock funds may be attractive investment vehicles for conservative investors who are interested in long-term appreciation from stock investments, but who have a moderate tolerance for risk. Such investors may include, for example, individuals (1) planning for or facing retirement, (2) receiving or expecting to receive lump-sum distributions from individual retirement accounts ("IRAs"), self-employed individual retirement plans ("Keogh plans"), or other retirement plans, (3) anticipating rollovers of CDs or IRAs, Keogh plans, or other retirement plans, and (4) receiving a significant amount of money as a result of inheritance, sale of a business, or termination of employment. Investors who may find Neuberger & Berman PARTNERS Assets, Neuberger & Berman GUARDIAN Assets or Neuberger & Berman FOCUS Assets to be an attractive investment vehicle also include parents saving to meet college costs for their children. For instance, the cost of a college education is rapidly approaching the cost of the average family home. Four years' tuition, room and board at a top private institution can already cost over $80,000. If college expenses continue to increase at current rates, by the time today's pre-schooler enters the ivy-covered halls in 2009, four years at a private college may easily cost $200,000! 1/ ________________________________ Source: College Board, 1994, 1995 Annual Survey of Colleges, Princeton, NJ, assuming an average 6% increase in annual expenses. - 23 - Information relating to inflation and its effects on the dollar also may be included in Advertisements. For example, after ten years, the purchasing power of $25,000 would shrink to $16,621, $14,968, $13,465, and $12,100, respectively, if the annual rates of inflation during that period were 4%, 5%, 6%, and 7%, respectively. (To calculate the purchasing power, the value at the end of each year is reduced by the inflation rate for the ten-year period.) From time to time the investment philosophy of N&B Man- agement's founder, Roy R. Neuberger, may be included in the Funds' Advertisements. This philosophy is described in further detail in "The Art of Investing: A Conversation with Roy Neuberger," attached as Appendix B to this SAI. CERTAIN RISK CONSIDERATIONS Although each Portfolio seeks to reduce risk by investing in a diversified portfolio, diversification does not eliminate all risk. There can, of course, be no assurance that any Portfolio will achieve its investment objective, and an investment in a Fund involves certain risks that are described in the sections entitled "Investment Programs" and "Description of Investments" in the Prospectus and "Investment Information -- Additional Investment Information" in this SAI. 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 (where applicable) their corresponding portfolios, advised by N&B Management and Neuberger & Berman, L.P. ("Neuberger & Berman").
Name, Age, and Positions Held Address(1) With the Trusts Principal Occupation(s)(2) Faith Colish (60) Trustee of each Trust Attorney at Law, Faith Colish, A 63 Wall Street Professional Corporation. 24th Floor New York, NY 10005 Donald M. Cox (73) Trustee of each Trust Retired. Formerly Senior Vice 435 East 52nd Street President and Director of Exxon New York, NY 10022 Corporation; Director of Emigrant Savings Bank. - 24 - Name, Age, and Positions Held Address(1) With the Trusts Principal Occupation(s)(2) Stanley Egener* (61) Chairman of the Board, Partner of Neuberger & Berman; Chief Executive Offi- President and Director of N&B Man- cer, and Trustee of agement; Chairman of the Board, each Trust Chief Executive Officer, and Trustee of eight other mutual funds for which N&B Management acts as investment manager or administrator. Alan R. Gruber (68) Trustee of each Trust Chairman and Chief Executive Officer Orion Capital of Orion Capital Corporation (prop- Corporation erty and casualty insurance); 600 Fifth Avenue Director of Trenwick Group, Inc. 24th Floor (property and casualty reinsurance); New York, NY 10020 Chairman of the Board and Director of Guaranty National Corporation (property and casualty insurance); formerly Director of Ketema, Inc. (diversified manufac-turer). Howard A. Mileaf (57) Trustee of each Trust Vice President and Special Counsel Wheeling Pittsburgh to Wheeling Pittsburgh Corporation Corporation (holding company) since 1992; 110 East 59th Street formerly Vice President and General New York, NY 10022 Counsel of Keene Corporation (manu- facturer of industrial products); Director of Kevlin Corporation (manufacturer of microwave and other products). Edward I. O'Brien* (67) 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. Trustee of each Trust President of SOBRO (South Bronx (67) Overall Economic Development 90 Riverside Drive Corporation). Apartment 1B New York, NY 10024 - 25 - Name, Age, and Positions Held Address(1) With the Trusts Principal Occupation(s)(2) John P. Rosenthal (63) Trustee of each Trust Senior Vice President of Burnham Burnham Securities Securities Inc. (a registered Inc. broker-dealer) since 1991; formerly Burnham Asset Partner of Silberberg, Rosenthal & Management Corp. Co. (member of National Association 1325 Avenue of the of Securities Dealers, Inc.); Americas Director, Cancer Treatment Holdings, 17th Floor Inc. New York, NY 10019 Cornelius T. Ryan (64) Trustee of each Trust General Partner of Oxford Partners Oxford Bioscience and Oxford Bioscience Partners Partners (venture capital partnerships) and Soundview Plaza President of Oxford Venture 315 Post Road West Corporation; Director of Capital Westport, CT 06880 Cash Management Trust (money market fund) and Prime Cash Fund. Gustave H. Shubert (67) Trustee of each Trust Senior Fellow/Corporate Advisor and 13838 Sunset Boulevard Advisory Trustee of Rand (a non- Pacific Palisades, CA profit public interest research 90272 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 Ameri- can Association for the Advancement of Science, the Counsel on Foreign Relations, and the Institute for Strategic Studies (London); advisor to the Program Evaluation and Methodology Division of the U.S. General Accounting Office; formerly Senior Vice President and Trustee of Rand. Lawrence Zicklin* (59) President and Trustee Partner of Neuberger & Berman; of each Trust Director of N&B Management; President and/or Trustee of five other mutual funds for which N&B Management acts as investment manager or administrator. - 26 - Name, Age, and Positions Held Address(1) With the Trusts Principal Occupation(s)(2) Daniel J. Sullivan (55) Vice President of each Senior Vice President of N&B Trust Management since 1992; prior thereto, Vice President of N&B Management; Vice President of eight other mutual funds for which N&B Management acts as investment manager or administrator. Michael J. Weiner (48) Vice President and Senior Vice President and Treasurer Principal Financial of N&B Management since 1992; prior Officer of each Trust thereto, Vice President and Treasurer of N&B Management and Treasurer of certain mutual funds for which N&B Management acted as investment adviser; Vice President and Principal Financial Officer of eight other mutual funds for which N&B Management acts as investment manager or administrator. Claudia A. Brandon (38) Secretary of each Vice President of N&B Management; Trust Secretary of eight other mutual funds for which N&B Management acts as investment manager or administrator. Richard Russell (49) Treasurer and Princi- Vice President of N&B Management pal Accounting Officer since 1993; prior thereto, Assistant of each Trust Vice President of N&B Management; Treasurer and Principal Accounting Officer of eight other mutual funds for which N&B Management acts as investment manager or administrator. Stacy Cooper-Shugrue Assistant Secretary of Assistant Vice President of N&B (32) each Trust Management since 1993; employee of N&B Management since 1989; Assistant Secretary of eight other mutual funds for which N&B Management acts as investment manager or administrator. - 27 - Name, Age, and Positions Held Address(1) With the Trusts Principal Occupation(s)(2) C. Carl Randolph (57) Assistant Secretary of Partner of Neuberger & Berman since each Trust 1992; employee thereof since 1971; Assistant Secretary of eight other mutual funds for which N&B M a n a g e m e n t a c t s a s 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 an "interested person" of each Trust within the meaning of the 1940 Act. Messrs. Egener and Zicklin are interested persons by virtue of the fact that they are officers and/or directors of N&B Management and partners of Neuberger & Berman. Mr. O'Brien is an interested person by virtue of the fact that he is a director of Legg Mason, Inc., a wholly owned subsidiary of which, from time to time, serves as a broker or dealer to the Portfolios and other funds for which N&B Management serves as investment manager. The Trust's Trust Instrument and Managers Trust's Declaration of Trust each provides that it 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 engaged in bad faith, willful misfeasance, gross negligence, or reckless disregard of the duties involved in the conduct of their offices. 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, or 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 and officers of the Trust. None of the Neuberger & Berman Funds(SERVICE MARK) has any retirement plan for its trustees or officers. - 28 - TABLE OF COMPENSATION FOR FISCAL YEAR ENDED 8/31/95 Aggregate Total Compensation from the Compensation Neuberger & Berman Fund Name and Position with from the Trust Complex Paid to Trustees the Trust Faith Colish $0 $39,000 Trustee (5 other investment companies) Donald M. Cox $0 $31,000 Trustee (3 other investment companies) Stanley Egener $0 $0 Chairman of the Board, (9 other investment Chief Executive companies) Officer, and Trustee Alan R. Gruber $0 $31,000 Trustee (3 other investment companies) Howard A. Mileaf $0 $36,500 Trustee (4 other investment companies) Edward I. O'Brien $0 $31,500 Trustee (3 other investment companies) John T. Patterson, Jr. $0 $34,500 Trustee (4 other investment companies) John P. Rosenthal $0 $33,000 Trustee (4 other investment companies) Cornelius T. Ryan $0 $33,500 Trustee (3 other investment companies) Gustave H. Shubert $0 $30,000 Trustee (3 other investment companies) - 29 - Lawrence Zicklin $0 $0 President and Trustee (5 other investment companies) INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES Investment Manager and Administrator Because all of the Funds' net investable assets are invested in their corresponding Portfolios, the Funds do not need an investment manager. N&B Management serves as the Portfolios' investment manager pursuant to a management agreement with Managers Trust, dated as of August 2, 1993 ("Management Agreement"). The Management Agreement was approved for each Portfolio by the Portfolio Trustees, including a majority of the Portfolio Trustees who are not "interested persons" of N&B Management or Managers Trust ("Independent Portfolio Trustees"), on July 15, 1993, and was approved by the holders of the interests in all the Portfolios on August 2, 1993. The Management Agreement provides, in substance, that N&B Management will make and implement investment decisions for the Portfolios in its discretion and will continuously develop an investment program for the Portfolios' assets. The Management Agreement permits N&B Management to effect securities transactions on behalf of each Portfolio through associated persons of N&B Management. The Management Agreement also specifically permits N&B Management to compensate, through higher commissions, brokers and dealers who provide investment research and analysis to the Portfolios, although N&B Management has no current plans to do so. N&B Management provides to each Portfolio, without separate cost, office space, equipment, and facilities and the personnel necessary to perform executive, administrative, and clerical functions. N&B Management pays all salaries, expenses, and fees of the officers, trustees, and employees of Managers Trust who are officers, directors, or employees of N&B Management. Two directors of N&B Management (who also are partners of Neuberger & Berman), one of whom also serves as an officer of N&B Management, presently serve as trustees and officers of both Trusts. See "Trustees and Officers." Each Portfolio pays N&B Management a management fee based on the Portfolio's average daily net assets, as described in the Prospectus. N&B Management provides similar facilities, services and personnel, as well as shareholder accounting, recordkeeping, and other shareholder services, to each Fund pursuant to an administration agreement dated November 1, 1994 ("Administration Agreement"). Each Fund was authorized to become subject to the Administration Agreement by vote of the Fund Trustees on October 25, 1995, and became subject to it on ___________. For such administrative services, each Fund pays N&B Management a fee based on the Fund's average daily net assets, as described in the Prospectus. With a Fund's consent, N&B Management may - 30 - subcontract to third parties, including Institutions, some of its responsibilities to that Fund under an administration agreement and may compensate third parties that provide such services. N&B Management compensates Institutions for services they provide under an administrative services agreement and/or dealer agreement and, from time to time, may make other payments to Institutions. N&B Management has voluntarily undertaken until December 31, 1997, to reimburse each Fund for its Operating Expenses and its pro rata share of its corresponding Portfolio's Operating Expenses which, in the aggregate, exceed 1.50% per annum of the Fund's average daily net assets. "Operating Expenses" exclude interest, taxes, brokerage commissions, and extraordinary expenses. The Management Agreement continues with respect to each Portfolio for a period of two years after the date the Portfolio became subject thereto. The Management Agreement is renewable thereafter from year to year with respect to each Portfolio, so long as its continuance is approved at least annually (1) by the vote of a majority of the Independent Portfolio Trustees, cast in person at a meeting called for the purpose of voting on such approval, and (2) by the vote of a majority of the Portfolio Trustees or by a 1940 Act majority vote of the outstanding shares in that Portfolio. The Administration Agreement continues with respect to each Fund for a period of two years after the date the Fund became subject thereto. The Administration Agreement is renewable from year to year with respect to a Fund, so long as its continuance is approved at least annually (1) by the vote of a majority of the Fund Trustees who are not "interested persons" of N&B Management or the Trust ("Independent Fund Trustees"), cast in person at a meeting called for the purpose of voting on such approval, and (2) by the vote of a majority of the Fund Trustees or by a 1940 Act majority vote of the outstanding shares in the Fund. The Management Agreement is terminable with respect to a Portfolio without penalty on 60 days' written notice either by Managers Trust or by N&B Management. The Administration Agreement is terminable with respect to a Fund without penalty on 60 days' written notice either by N&B Management or by the Trust if authorized by the Fund Trustees, including a majority of the Independent Fund Trustees. Each Agreement terminates automatically if it is assigned. In addition to the voluntary expense reimbursements described in the Prospectus under "Management and Administration-- Expenses," N&B Management has agreed in the Management Agreement to reimburse each Fund's expenses, as follows. If, in any fiscal year, a Fund's Aggregate Operating Expenses (as defined below) exceed the most restrictive expense limitation imposed under the securities laws of the states in which that Fund's shares are qualified for sale ("State Expense Limitation"), then N&B Management will pay the Fund the amount of that excess, less the amount of any reduction of the administration fee payable by the Fund under a similar State Expense Limitation contained in the Administration Agreement. N&B Management will have no obligation to pay a - 31 - Fund, however, for any expenses that exceed the pro rata portion of the management fees attributable to that Fund's interest in its corresponding Portfolio. At the date of this SAI, the most restrictive State Expense Limitation to which any Fund expects to be subject is 2 1/2% of the first $30 million of average net assets, 2% of the next $70 million of average net assets, and 1-1/2% of average net assets over $100 million. For purposes of the State Expense Limitation, the term "Aggregate Operating Expenses" means a Fund's operating expenses plus its pro rata portion of its corresponding Portfolio's operating expenses (including any fees or expense reimbursements payable to N&B Management and any compensation payable thereto pursuant to (1) the Administration Agreement or (2) any other agreement or arrangement with Managers Trust in regard to the Portfolio; but excluding (with respect to both the Fund and the Portfolio) interest, taxes, brokerage commissions, litigation and indemnification expenses, and other extraordinary expenses not incurred in the ordinary course of business). Sub-Adviser N&B Management retains Neuberger & Berman, 605 Third Avenue, New York, NY 10158, as sub-adviser with respect to each Portfolio pursuant to a sub-advisory agreement dated August 2, 1993 ("Sub-Advisory Agreement"). The Sub-Advisory Agreement was authorized by the Portfolio Trustees, including a majority of the Independent Portfolio Trustees, on July 15, 1993 and was approved by the holders of the interests in the Portfolios on August 2, 1993. The Sub-Advisory Agreement provides in substance that Neuberger & Berman will furnish to N&B Management, upon reasonable request, the same type of investment recommendations and research that Neuberger & Berman, from time to time, provides to its partners and employees for use in managing client accounts. In this manner, N&B Management expects to have available to it, in addition to research from other professional sources, the capability of the research staff of Neuberger & Berman. This staff consists of approximately fourteen investment analysts, each of whom specializes in studying one or more industries, under the supervision of the Director of Research, who is also available for consultation with N&B Management. The Sub-Advisory Agreement provides that the services rendered by Neuberger & Berman will be paid for by N&B Management on the basis of the direct and indirect costs to Neuberger & Berman in connection with those services. Neuberger & Berman also serves as sub-adviser for all of the other mutual funds managed by N&B Management. The Sub-Advisory Agreement continues with respect to each Portfolio for a period of two years after the date the Portfolio became subject thereto, and is renewable from year to year, subject to approval of its continuance in the same manner as the Management Agreement. The Sub-Advisory Agreement is subject to termination, without penalty, with respect to each Portfolio by the Portfolio Trustees, by a 1940 Act majority vote of the outstanding Portfolio shares, by N&B Management, or - 32 - by Neuberger & Berman on not less than 30 nor more than 60 days' written notice. The Sub-Advisory Agreement also terminates automatically with respect to each Portfolio if it is assigned or if the Management Agreement terminates with respect to that Portfolio. Most money managers that come to the Neuberger & Berman organization have at least fifteen years experience. Neuberger & Berman and N&B Management employ experienced professionals that work in a competitive environment. Investment Companies Managed N&B Management currently serves as investment manager of the following investment companies. As of September 30, 1995, these companies, along with three investment companies advised by Neuberger & Berman, had aggregate net assets of approximately $11.4 billion, as shown in the following list: Approximate Net Assets at September 30, Name 1995 Neuberger & Berman Cash Reserves Portfolio $ 377,608,619 (investment portfolio for Neuberger & Berman Cash Reserves) Neuberger & Berman Government Income $ 12,053,656 Portfolio (investment portfolio for Neuberger & Berman Government Income Fund and Neuberger & Berman Government Income Trust) Neuberger & Berman Government Money $ 346,898,132 Portfolio (investment portfolio for Neuberger & Berman Government Money Fund) Neuberger & Berman Limited Maturity Bond $ 309,540,451 Portfolio (investment portfolio for Neuberger & Berman Limited Maturity Bond Fund and Neuberger & Berman Limited Maturity Bond Trust) - 33 - Approximate Net Assets at September 30, Name 1995 Neuberger & Berman Municipal Money $ 149,657,613 Portfolio (investment portfolio for Neuberger & Berman Municipal Money Fund) Neuberger & Berman Municipal Securities $ 44,568,635 Portfolio (investment portfolio for Neuberger & Berman Municipal Securities Trust) Neuberger & Berman New York Insured $ 10,679,324 Intermediate Portfolio (investment portfolio for Neuberger & Berman New York Insured Intermediate Fund) Neuberger & Berman Ultra Short Bond $ 102,903,312 Portfolio (investment portfolio for Neuberger & Berman Ultra Short Bond Fund and Neuberger & Berman Ultra Short Bond Trust) Neuberger & Berman Focus Portfolio $1,031,915,664 (investment portfolio for Neuberger & Berman Focus Fund, Neuberger & Berman Focus Trust and Neuberger & Berman Focus Assets) Neuberger & Berman Genesis Portfolio $ 145,188,783 (investment portfolio for Neuberger & Berman Genesis Fund and Neuberger & Berman Genesis Trust) Neuberger & Berman Guardian Portfolio $4,943,764,830 (investment portfolio for Neuberger & Berman Guardian Fund, Neuberger & Berman Guardian Trust and Neuberger & Berman Guardian Assets) - 34 - Approximate Net Assets at September 30, Name 1995 Neuberger & Berman International Portfolio $ 29,990,616 (investment portfolio for Neuberger & Berman International Fund) Neuberger & Berman Manhattan Portfolio $ 670,916,038 (investment portfolio for Neuberger & Berman Manhattan Fund, Neuberger & Berman Manhattan Trust and Neuberger & Berman Manhattan Assets) Neuberger & Berman Partners Portfolio $1,664,460,688 (investment portfolio for Neuberger & Berman Partners Fund, Neuberger & Berman Partners Trust and Neuberger & Berman Partners Assets) Neuberger & Berman Socially Responsive $ 102,675,093 Portfolio (investment portfolio for Neuberger & Berman Socially Responsive Fund, Neuberger & Berman Socially Responsive Trust, and Neuberger & Berman NYCDC Socially Responsive Trust) Neuberger & Berman Advisers $1,257,506,124 Managers Trust (six series) In addition, Neuberger & Berman serves as investment adviser to three investment companies, Plan Investment Fund, Inc., AHA Investment Fund, Inc., and AHA Full Maturity, with assets of $85,110,472, $110,683,193, and $23,891,472, respectively, at September 30, 1995. The investment decisions concerning the Portfolios and the other funds and portfolios referred to above (collectively, "Other N&B Funds") have been and will continue to be made independently of one another. In terms of their investment objectives, most of the Other N&B Funds differ from the Portfolios. Even where the investment objectives are similar, however, the methods used by the Other N&B Funds and the Portfolios to achieve their objectives may differ. - 35 - There may be occasions when a Portfolio and one or more of the Other N&B Funds or other accounts managed by Neuberger & Berman are contemporaneously engaged in purchasing or selling the same securities from or to third parties. When this occurs, the transactions are averaged as to price and allocated as to amounts in accordance with a formula considered to be equitable to the funds involved. Although in some cases this arrangement may have a detrimental effect on the price or volume of the securities as to a Portfolio, in other cases it is believed that a Portfolio's ability to participate in volume transactions may produce better executions for it. In any case, it is the judgment of the Portfolio Trustees that the desirability of the Portfolios' having their advisory arrangements with N&B Management outweighs any disadvantages that may result from contemporaneous transactions. The investment results achieved by all of the funds managed by N&B Management have varied from one another in the past and are likely to vary in the future. Management and Control of N&B Management The directors and officers of N&B Management, all of whom have offices at the same address as N&B Management, are Richard A. Cantor, Chairman of the Board and director; Stanley Egener, President and director; Theresa A. Havell, Vice President and director; Irwin Lainoff, director; Marvin C. Schwartz, director; Lawrence Zicklin, director; Daniel J. Sullivan, Senior Vice President; Michael J. Weiner, Senior Vice President and Treasurer; Claudia A. Brandon, Vice President; Clara Del Villar, Vice President; Mark R. Goldstein, Vice President; Farha-Joyce Haboucha, Vice President; Michael M. Kassen, Vice President; Michael Lamberti, Vice President; Josephine P. Mahaney, Vice President; Lawrence Marx III, Vice President; Ellen Metzger, Vice President and Secretary; Janet W. Prindle, Vice President; Felix Rovelli, Vice President; Richard Russell, Vice President; Kent C. Simons, Vice President; Frederick B. Soule, Vice President; Judith M. Vale, Vice President; Margaret Didi Weinblatt, Vice President; Stephen A. White, Vice President; Andrea Trachtenberg, Vice President of Marketing; Patrick T. Byrne, Assistant Vice President; Robert Conti, Assistant Vice President; Stacy Cooper- Shugrue, Assistant Vice President; Robert Cresci, Assistant Vice President; Barbara DiGiorgio, Assistant Vice President; Roberta D'Orio, Assistant Vice President; Robert I. Gendelman, Assistant Vice President; Leslie Holliday-Soto, Assistant Vice President; Carmen G. Martinez, Assistant Vice President; Paul Metzger, Assistant Vice President; Susan Switzer, Assistant Vice President; Susan Walsh, Assistant Vice President; and Celeste Wischerth, Assistant Vice President. Messrs. Cantor, Egener, Lainoff, Schwartz, Zicklin, Goldstein, Kassen, Marx, and Simons and Mmes. Havell and Prindle are general partners of Neuberger & Berman. Messrs. Egener and Zicklin are trustees and officers, and Messrs. Sullivan, Weiner, and Russell and Mmes. Brandon and Cooper-Shugrue are officers, of each Trust. C. Carl Randolph, a general partner of Neuberger & Berman, also is an officer of each Trust. All of the outstanding voting stock in N&B Management is owned by persons who are also general partners of Neuberger & Berman. - 36 - DISTRIBUTION ARRANGEMENTS Distributor N&B Management serves as the distributor ("Distributor") in connection with the offering of each Fund's shares on a no-load basis to Institutions. In connection with the sale of its shares, each Fund has authorized the Distributor to give only the information, and to make only the statements and representations, contained in the Prospectus and this SAI or that properly may be included in sales literature and advertisements in accordance with the 1933 Act, the 1940 Act, and applicable rules of self-regulatory organizations. Sales may be made only by the Prospectus, which may be delivered either personally, through the mails, or by electronic means. The Distributor is the Funds' "principal underwriter" within the meaning of the 1940 Act and, as such, acts as agent in arranging for the sale of each Fund's shares to Institutions without sales commission and bears all advertising and promotion expenses incurred in the sale of the Funds' shares. The Distributor or one of its affiliates may from time to time deem it desirable to offer to a Fund's shareholders, through use of its shareholder list, the shares of other mutual funds for which the Distributor acts as distributor or other products or services. Any such use of the Funds' shareholder lists, however, will be made subject to terms and conditions, if any, approved by a majority of the Independent Fund Trustees. These lists will not be used to offer the Funds' shareholders any investment products or services other than those managed or distributed by N&B Management or Neuberger & Berman. The Trust, on behalf of each Fund, and the Distributor are parties to a Distribution Agreement dated ________________ that was approved by the Fund Trustees, including a majority of the Independent Fund Trustees who have no direct or indirect financial interest in the Distribution Agreement, on October 25, 1995. The Distribution Agreement continues until ___________________. 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 automatically terminate on its assignment, in the same manner as the Management Agreement. Rule 12b-1 Plan The Fund Trustees adopted a plan pursuant to Rule 12b-1 under the 1940 Act ("Plan") on October 25, 1995. The Plan was approved by N&B Management as sole initial shareholder of each Fund on _____________, and became effective on ________, 1996. - 37 - The Plan provides that, as compensation for its ongoing services to investors in the Funds, its activities and expenses related to the sale and distribution of Fund shares, and other services provided to the Funds, N&B Management receives from each Fund a fee at the annual rate of 0.25% of that Fund's average daily net assets. N&B Management pays this amount to Institutions that distribute Fund shares and provide services to the Funds and their shareholders. Those Institutions may use the payments for, among other purposes, compensating employees engaged in sales and/or shareholder servicing. The amount of fees paid by a Fund during any year may be more or less than the cost of distribution and other services provided to the Fund. The Plan provides that a written report identifying the amounts expended by each Fund and the purposes for which such expenditures were made must be provided to the Fund Trustees for their review at least quarterly. The Plan continues in effect until ________. The Plan is renewable thereafter from year to year with respect to each Fund, so long as its continuance is approved at least annually (1) by the vote of a majority of the Fund Trustees and (2) by a vote of the majority of the Independent Fund Trustees who have no direct or indirect financial interest in the operation of the Plan ("Rule 12b-1 Trustees"), cast in person at a meeting called for the purpose of voting on such approval. The Plan may not be amended to increase materially the amount of fees paid by any Fund thereunder unless such amendment is approved by a 1940 Act majority vote of the outstanding shares of the Fund and by the Fund Trustees in the manner described above. The Plan is terminable with respect to a Fund at any time by a vote of a majority of the Rule 12b-1 Trustees or by a 1940 Act majority vote of the outstanding shares in the Fund. ADDITIONAL EXCHANGE INFORMATION As more fully set forth in the section of the Prospectus entitled "Exchanging Shares," an Institution may exchange shares of any Fund for shares of one or more of the other Funds described in the Prospectus. Any Fund may terminate or modify its exchange privilege in the future. Before effecting an exchange, Fund shareholders must obtain and should review a currently effective Prospectus of the Fund into which the exchange is to be made. An exchange is treated as a sale for federal income tax purposes and, depending on the circumstances, a short- or long-term capital gain or loss may be realized. ADDITIONAL REDEMPTION INFORMATION Suspension of Redemptions - 38 - The right to redeem a Fund's shares may be suspended or payment of the redemption price postponed (1) when the NYSE is closed (other than weekend and holiday closings), (2) when trading on the NYSE is restricted, (3) when an emergency exists as a result of which it is not reasonably practicable for the corresponding Portfolio to dispose of securities it owns or fairly to determine the value of its net assets, or (4) for such other period as the SEC may by order permit for the protection of a Fund's shareholders; provided that applicable SEC rules and regulations shall govern whether the conditions prescribed in (2) or (3) exist. If the right of redemption is suspended, shareholders may withdraw their offers of redemption, or they will receive payment at the NAV per share in effect at the close of business on the first day the NYSE is open ("Business Day") after termination of the suspension. Redemptions in Kind Each Fund reserves the right, under certain conditions, to honor any request for redemption by making payment in whole or in part in securities valued as described under "Share Information -- Share Prices and Net Asset Value" in the Prospectus. If payment is made in securities, a shareholder generally will incur brokerage expenses in converting those securities into cash and will be subject to fluctuations in the market price of those securities until they are sold. The Funds do not redeem in kind under normal circumstances, but would do so when the Fund Trustees determine that it is in the best interests of a Fund's shareholders as a whole. Redemptions in kind will be made with readily marketable securities to the extent possible. DIVIDENDS AND OTHER DISTRIBUTIONS Each Fund distributes to its shareholders amounts equal to substantially all of its proportionate share of any net investment income (after deducting expenses incurred directly by the Fund), net capital gains (both long-term and short-term), and net gains from foreign currency transactions earned or realized by its corresponding Portfolio. Each Fund calculates its net investment income and NAV per share as of the close of regular trading on the NYSE on each Business Day (usually 4:00 p.m. Eastern time). A Portfolio's net investment income consists of all income accrued on portfolio assets less accrued expenses, but does not include realized gains and losses. Net investment income and realized gains and losses are reflected in a Portfolio's NAV (and, hence, its corresponding Fund's NAV) until they are distributed. Dividends from net investment income and distributions of net realized capital and foreign currency gains, if any, normally are paid once annually, in December, except that Neuberger & Berman GUARDIAN Assets distributes substantially all of its share of Neuberger & Berman GUARDIAN Portfolio's net investment income, if any, at the end of each calendar quarter. - 39 - Dividends and/or other distributions are automatically reinvested in additional shares of the distributing Fund, unless and until the Institution elects to receive them in cash ("cash election"). To the extent dividends and other distributions are subject to federal, state, or local income taxation, they are taxable to the shareholders whether received in cash or reinvested in Fund shares. A cash election with respect to any Fund remains in effect until the Institution notifies the Fund in writing to discontinue the election. ADDITIONAL TAX INFORMATION Taxation of the Funds In order to continue to qualify for treatment as a RIC under the Code, each Fund must distribute to its shareholders for each taxable year at least 90% of its investment company taxable income (consisting generally of net investment income, net short-term capital gain, and net gains from certain foreign currency transactions) ("Distribution Requirement") and must meet several additional requirements. With respect to each Fund, these 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 secu- rities or those currencies ("Income Requirement"); (2) the Fund must derive less than 30% of its gross income each taxable year from the sale or other disposition of securities, or any of the following, that were held for less than three months -- (i) options (other than those on foreign currencies), or (ii) foreign currencies or Hedging Instruments thereon that are not directly related to the Fund's principal business of investing in securities (or options with respect thereto) ("Short-Short Limitation"); and (3) at the close of each quarter of the Fund's taxable year, (i) at least 50% of the value of its total assets must be represented by cash and cash items, U.S. Government securities, 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 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) of any one issuer. Certain funds managed by N&B Management, including the Sister Funds, have received a ruling from the Internal Revenue Service ("Service") that each such fund, as an investor in a corresponding portfolio of Managers Trust or Income Managers Trust, will be deemed to own a proportionate share of the portfolio's assets and income for pur- poses of determining whether the fund satisfies all the requirements described above to qualify as a RIC. Although that ruling may not be relied on as precedent by the Funds, N&B Management believes that the reasoning thereof and, hence, its conclusion apply to the Funds as well. - 40 - Each Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the extent it fails to distribute by the end of any calendar year substantially all of its ordinary income for that year and capital gain net income for the one-year period ended on October 31 of that year, plus certain other amounts. See the next section for a discussion of the tax conse- quences to the Funds of distributions to them from the Portfolios, investments by the Portfolios in certain securities, and hedging trans- actions engaged in by the Portfolios. Taxation of the Portfolios The Portfolios have received a ruling from the Service to the effect that, among other things, each Portfolio will be treated as a separate partnership for federal income tax purposes and will not be a "publicly traded partnership." As a result, no Portfolio is subject to federal income tax; instead, each investor in a Portfolio, such as a Fund, is required to take into account in determining its federal income tax liability its share of the Portfolio's income, gains, losses, deductions, and credits, without regard to whether it has received any cash distributions from the Portfolio. Each Portfolio also is not subject to Delaware or New York income or franchise tax. Because each Fund is deemed to own a proportionate share of its corresponding Portfolio's assets and income for purposes of determining whether the Fund satisfies the requirements to qualify as a RIC, each Portfolio intends to continue to conduct its operations so that its corresponding Fund will be able to continue to satisfy all those requirements. Distributions to a Fund from its corresponding Portfolio (whether pursuant to a partial or complete withdrawal or otherwise) will not result in the Fund's recognition of any gain or loss for federal income tax purposes, except that (1) gain will be recognized to the extent any cash that is distributed exceeds the Fund's basis for its interest in the Portfolio before the distribution, (2) income or gain will be recognized if the distribution is in liquidation of the Fund's entire interest in the Portfolio and includes a disproportionate share of any unrealized receivables held by the Portfolio, and (3) loss will be recognized if a liquidation distribution consists solely of cash and/or unrealized receivables. A Fund's basis for its interest in its corresponding Portfolio generally equals the amount of cash the Fund invests in the Portfolio, increased by the Fund's share of the Portfolio's net income and gains and decreased by (1) the amount of cash and the basis of any property the Portfolio distributes to the Fund and (2) the Fund's share of the Portfolio's losses. Dividends and interest received by a Portfolio may be subject to income, withholding, or other taxes imposed by foreign countries and U.S. possessions that would reduce the yield on its securities. Tax conventions between certain countries and the United - 41 - States may reduce or eliminate these foreign taxes, however, and many foreign countries do not impose taxes on capital gains in respect of investments by foreign investors. A Portfolio may invest in the stock of "passive foreign investment companies" ("PFICs"). A PFIC is a foreign corporation that, in general, meets either of the following tests: (1) at least 75% of its gross income is passive or (2) an average of at least 50% of its assets produce, or are held for the production of, passive income. Under certain circumstances, if a Portfolio holds stock of a PFIC, its corresponding Fund (indirectly through its interest in the Portfolio) will be subject to federal income tax on a portion of any "excess distribution" received on the stock or of any gain on disposition of the stock (collectively, "PFIC income"), plus interest thereon, even if the Fund distributes the PFIC income as a taxable dividend to its shareholders. The balance of the PFIC income will be included in the Fund's investment company taxable income and, accordingly, will not be taxable to it to the extent that income is distributed to its shareholders. If a Portfolio invests in a PFIC and elects to treat the PFIC as a "qualified electing fund," then in lieu of its corresponding Fund's incurring the foregoing tax and interest obligation, the Fund would be required to include in income each year its pro rata share of the Portfolio's pro rata share of the qualified electing fund's annual ordinary earnings and net capital gain (the excess of net long-term capital gain over net short-term capital loss) -- which most likely would have to be distributed by the Fund to satisfy the Distribution Requirement and to avoid imposition of the Excise Tax -- even if those earnings and gain were not received by the Portfolio. In most instances it will be very difficult, if not impossible, to make this election because of certain requirements thereof. Pursuant to proposed regulations, open-end RICs, such as the Funds, would be entitled to elect to mark to market their stock in certain PFICs. Marking to market in this context means recognizing as gain for each taxable year the excess, as of the end of that year, of the fair market value of each such PFIC's stock over the adjusted basis in that stock (including mark to market gain for each prior year for which an election was in effect). The Portfolios' use of hedging strategies, such as writ- ing (selling) and purchasing options and entering into Forward Contracts, involves complex rules that will determine for income tax purposes the character and timing of recognition of the gains and losses the Portfolios realize in connection therewith. Income from foreign currencies (except certain gains therefrom that may be excluded by future regulations), and income from transactions in Hedging Instruments derived by the Portfolio with respect to its business of investing in securities or foreign cur- rencies, will qualify as permissible income for its corresponding Fund under the Income Requirement. However, income from the disposition by a Portfolio of options (other than those on foreign currencies) will be subject to the Short-Short Limitation for its corresponding Fund if they - 42 - are held for less than three months. Income from the disposition of foreign currencies, and Hedging Instruments on foreign currencies, that are not directly related to a Portfolio's principal business of investing in securities (or options with respect thereto) also will be subject to the Short-Short Limitation for its corresponding Fund if they are held for less than three months. If a Portfolio satisfies certain requirements, any in- crease in value of a position that is part of a "designated hedge" will be offset by any decrease in value (whether realized or not) of the offsetting hedging position during the period of the hedge for purposes of determining whether its corresponding Fund satisfies the Short-Short Limitation. Thus, only the net gain (if any) from the designated hedge will be included in gross income for purposes of that limitation. Each Portfolio will consider whether it should seek to qualify for this treatment for its hedging transactions. To the extent a Portfolio does not so qualify, it may be forced to defer the closing out of certain Hedging Instruments beyond the time when it otherwise would be advantageous to do so, in order for its corresponding Fund to continue to qualify as a RIC. Neuberger & Berman PARTNERS Portfolio may acquire zero coupon securities or other securities issued with original issue discount ("OID"). As a holder of those securities, that Portfolio (and, through it, its corresponding Fund) must take into account the OID that accrues on the securities during the taxable year, even if it receives no corresponding payment on the securities during the year. Because Neuberger & Berman PARTNERS Assets annually must distribute substantially all of its investment company taxable income (including its share of the Portfolio's accrued OID) to satisfy the Distribution Requirement and to avoid imposition of the Excise Tax, that Fund may be required in a parti- cular year to distribute as a dividend an amount that is greater than its proportionate share of the total amount of cash Neuberger & Berman PARTNERS Portfolio actually receives. Those distributions will be made from that Fund's (or its proportionate share of that Portfolio's) cash assets or from the proceeds of sales of that Portfolio's securities, if necessary. That Portfolio may realize capital gains or losses from those sales, which would increase or decrease Neuberger & Berman PARTNERS Assets' investment company taxable income and/or net capital gain. In addition, any such gains may be realized on the disposition of securities held for less than three months. Because of the Short-Short Limitation, any such gains would reduce Neuberger & Berman PARTNERS Portfolio's ability to sell other securities, or certain Hedging Instruments, held for less than three months that it might wish to sell in the ordinary course of its portfolio management. Taxation of the Funds' Shareholders If Fund shares are sold at a loss after being held for six months or less, the loss will be treated as long-term, instead of short-term, capital loss to the extent of any capital gain distributions received on those shares. Investors also should be aware that if shares - 43 - of any Fund are purchased shortly before the record date for a dividend or other distribution, the purchaser will receive some portion of the purchase price back as a taxable distribution. PORTFOLIO TRANSACTIONS Neuberger & Berman acts as each Portfolio's principal broker in the purchase and sale of portfolio securities and in connection with the writing of covered call options on its securities. Transactions in portfolio securities for which Neuberger & Berman serves as broker will be effected in accordance with Rule 17e-1 under the 1940 Act. During the period August 3 to August 31, 1993, Neuberger & Berman MANHATTAN Portfolio paid brokerage commissions of $42,780, of which $32,922 was paid to Neuberger & Berman. During the fiscal year ended August 31, 1994, that Portfolio paid brokerage commissions of $655,640, of which $525,610 was paid to Neuberger & Berman. During the fiscal year ended August 31, 1995, Neuberger & Berman MANHATTAN Portfolio paid brokerage commissions of $654,982, of which $436,568 was paid to Neuberger & Berman. Transactions in which that Portfolio used Neuberger & Berman as broker comprised 73.70% of the aggregate dollar amount of transactions involving the payment of commissions, and 66.65% of the aggregate brokerage commissions paid by it, during the fiscal year ended August 31, 1995. 94.53% of the $218,414 paid to other brokers by that Portfolio during that fiscal year (representing commissions on transactions involving approximately $81,737,328) was directed to those brokers because of research services they provided. During the fiscal year ended August 31, 1995, that Portfolio acquired securities of the following of its "regular brokers or dealers" (as defined in the 1940 Act) ("Regular B/Ds"): Bear Stearns & Co. Inc., and Morgan Stanley & Co., Inc.; at that date, that Portfolio held the securities of its Regular B/Ds with an aggregate value as follows: Bear Stearns & Co. Inc., $6,187,500, and Morgan Stanley & Co., Inc. $10,859,370. During the period August 3 to August 31, 1993, Neuberger & Berman FOCUS Portfolio paid brokerage commissions of $46,296, of which $42,606 was paid to Neuberger & Berman. During the fiscal year ended August 31, 1994, that Portfolio paid brokerage commissions of $719,994, of which $567,972 was paid to Neuberger & Berman. During the fiscal year ended August 31, 1995, Neuberger & Berman FOCUS Portfolio paid brokerage commissions of $1,031,245, of which $617,957 was paid to Neuberger & Berman. Transactions in which that Portfolio used Neuberger & Berman as broker comprised 66.83% of the aggregate dollar amount of transactions involving the payment of commissions, and 59.92% of the aggregate brokerage commissions paid by it, during the fiscal year ended August 31, 1995. 89.62% of the $413,288 paid to other brokers by that Portfolio during that fiscal year (representing commissions on transactions involving approximately $160,855,610) was - 44 - directed to those brokers because of research services they provided. During the fiscal year ended August 31, 1995, that Portfolio acquired securities of the following of its Regular B/Ds: EXXON Credit Corp., General Electric Capital Corp., and Merrill Lynch, Pierce, Fenner & Smith, Inc.; at that date, that Portfolio held the securities of its Regular B/Ds with an aggregate value as follows: General Electric Capital Corp., $2,300,000, and Merrill Lynch, Pierce, Fenner & Smith, Inc., $14,406,250. During the period August 3 to August 31, 1993, Neuberger & Berman GUARDIAN Portfolio paid brokerage commissions of $201,981, of which $149,496 was paid to Neuberger & Berman. During the fiscal year ended August 31, 1994, that Portfolio paid brokerage commissions of $2,207,401, of which $1,647,807 was paid to Neuberger & Berman. During the fiscal year ended August 31, 1995, Neuberger & Berman GUARDIAN Portfolio paid brokerage commissions of $3,751,206, of which $2,521,523 was paid to Neuberger & Berman. Transactions in which that Portfolio used Neuberger & Berman as broker comprised 70.49% of the aggregate dollar amount of transactions involving the payment of commissions, and 67.22% of the aggregate brokerage commissions paid by it, during the fiscal year ended August 31, 1995. 82.78% of the $1,229,683 paid to other brokers by that Portfolio during that fiscal year (representing commissions on transactions involving approximately $509,609,733) was directed to those brokers because of research services they provided. During the fiscal year ended August 31, 1995, that Portfolio acquired securities of the following of its Regular B/Ds: EXXON Credit Corp., General Electric Capital Corp., and Merrill Lynch, Pierce, Fenner & Smith, Inc.; at that date, that Portfolio held the securities of its Regular B/Ds with an aggregate value as follows: General Electric Capital Corp., $1,500,000, and Merrill Lynch, Pierce, Fenner & Smith, Inc., $48,116,875. During the period August 3 to August 31, 1993, Neuberger & Berman PARTNERS Portfolio paid brokerage commissions of $373,486, of which $272,542 was paid to Neuberger & Berman. During the fiscal year ended August 31, 1994, that Portfolio paid brokerage commissions of $2,994,540, of which $2,031,570 was paid to Neuberger & Berman. During the fiscal year ended August 31, 1995, Neuberger & Berman PARTMERS Portfolio paid brokerage commissions of $4,608,156, of which $3,092,789 was paid to Neuberger & Berman. Transactions in which that Portfolio used Neuberger & Berman as broker comprised 71.83% of the aggregate dollar amount of transactions involving the payment of commissions, and 67.12% of the aggregate brokerage commissions paid by it, during the fiscal year ended August 31, 1995. 95.02% of the $1,515,367 paid to other brokers by that Portfolio during that fiscal year (representing commissions on transactions involving approximately $600,676,631) was directed to those brokers because of research services they provided. During the fiscal year ended August 31, 1995, that Portfolio acquired securities of the following of its Regular B/Ds: Salomon Brothers, Inc., EXXON Credit Corp., and General Electric Capital - 45 - Corp.; at that date, that Portfolio held the securities of its Regular B/Ds with an aggregate value as follows: General Electric Capital Corp., $7,600,000. Insofar as portfolio transactions of Neuberger & Berman PARTNERS Portfolio result from active management of equity securities, and insofar as portfolio transactions of Neuberger & Berman MANHATTAN Portfolio result from seeking capital appreciation by selling securities whenever sales are deemed advisable without regard to the length of time the securities may have been held, it may be expected that the aggregate brokerage commissions paid by those Portfolios to brokers (including Neuberger & Berman where it acts in that capacity) may be greater than if securities were selected solely on a long-term basis. Portfolio securities are, from time to time, loaned by a Portfolio to Neuberger & Berman in accordance with the terms and conditions of an order issued by the SEC. The order exempts such transactions from provisions of the 1940 Act that would otherwise prohibit such transactions, subject to certain conditions. Among the conditions of the order, securities loans made by a Portfolio to Neuberger & Berman must be fully secured by cash collateral. Under the order, the portion of the income on the cash collateral which may be shared with Neuberger & Berman is determined with reference to concurrent arrangements between Neuberger & Berman and non-affiliated lenders with which it engages in similar transactions. In addition, where Neuberger & Berman borrows securities from a Portfolio in order to relend them to others, Neuberger & Berman is required to pay that Portfolio, on a quarterly basis, certain "excess earnings" that Neuberger & Berman otherwise has derived from the relending of the borrowed securities. When Neuberger & Berman desires to borrow a security that a Portfolio has indicated a willingness to lend, Neuberger & Berman must borrow such security from that Portfolio, rather than from an unaffiliated lender, unless the unaffiliated lender is willing to lend such security on more favorable terms (as specified in the order) than that Portfolio. If a Portfolio's expenses exceed its income in any securities loan transaction with Neuberger & Berman, Neuberger & Berman must reimburse that Portfolio for such loss. During the fiscal years ended August 31, 1995 and 1994, the Portfolios earned the following amounts of interest from the collateralization of securities loans, from which Neuberger & Berman was paid the indicated amounts: 1994 1995 Payment to Payment to Neuberger Neuberger Portfolio Interest & Berman Interest & Berman Neuberger & Berman $147,103 $119,620 $1,430,672 $1,252,190 GUARDIAN Portfolio - 46 - Neuberger & Berman 38,627 33,225 327,447 291,207 FOCUS Portfolio Neuberger & Berman 16,085 13,880 52,410 48,736 PARTNERS Portfolio Neuberger & Berman 0 0 507,239 270,594 MANHATTAN Portfolio During the period August 3 to August 31, 1993, Neuberger & Berman GUARDIAN Portfolio earned interest income of $3,164 from the collateralization of securities loans, from which Neuberger & Berman was paid $2,881. During the same period, none of the other Portfolios earned interest income from the collateralization of securities loans. Each Portfolio may also lend securities to unaffiliated entities, including brokers or dealers, banks and other recognized institutional borrowers of securities, provided that cash or equivalent collateral, equal to at least 100% of the market value of the securities loaned, is continuously maintained by the borrower with the Portfolio. 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. 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. These loans are subject to termination at the option of the Portfolio or the borrower. The Portfolio may pay reasonable administrative and custodial fees in connection with a loan and may pay a negotiated portion of the interest earned on the cash or equivalent collateral to the borrower or placing broker. The Portfolio does not have the right to vote securities on loan, but would terminate the loan and regain the right to vote if that were considered important with respect to the investment. A committee of Independent Portfolio Trustees from time to time reviews, among other things, information relating to securities loans by the Portfolios. In effecting securities transactions, each Portfolio gen- erally seeks to obtain the best price and execution of orders. Commission rates, being a component of price, are considered along with other relevant factors. Each Portfolio plans to continue to use Neuberger & Berman as its principal broker where, in the judgment of N&B Management (the Portfolio's investment manager and an affiliate of Neuberger & Berman), that firm is able to obtain a price and execution at least as favorable as other qualified brokers. To the Portfolios' knowledge, however, no affiliate of any Portfolio receives give-ups or reciprocal business in connection with their securities transactions. The use of Neuberger & Berman as a broker for each Port- folio is subject to the requirements of Section 11(a) of the Securities - 47 - Exchange Act of 1934. Section 11(a) prohibits members of national securities exchanges from retaining compensation for executing exchange transactions for accounts which they or their affiliates manage, except where they have the authorization of the persons authorized to transact business for the account and comply with certain annual reporting requirements. The Portfolio Trustees have expressly authorized Neuberger & Berman to retain such compensation, and Neuberger & Berman complies with the reporting requirements of Section 11(a). Under the 1940 Act, commissions paid by a Portfolio to Neuberger & Berman in connection with a purchase or sale of securities on a securities exchange may not exceed the usual and customary broker's commission. Accordingly, it is each Portfolio's policy that the commissions paid to Neuberger & Berman must, in N&B Management's judgment, be (1) at least as favorable as those charged by other brokers having comparable execution capability and (2) at least as favorable as commissions contemporaneously charged by Neuberger & Berman on comparable transactions for its most favored unaffiliated customers, except for accounts for which Neuberger & Berman acts as a clearing broker for another brokerage firm and customers of Neuberger & Berman considered by a majority of the Independent Portfolio Trustees not to be comparable to the Portfolio. The Portfolios do not deem it practicable and in their best interests to solicit competitive bids for commissions on each transaction effected by Neuberger & Berman. However, consideration regularly is given to information concerning the prevailing level of commissions charged by other brokers on comparable transactions during comparable periods of time. The 1940 Act generally prohibits Neuberger & Berman from acting as principal in the purchase or sale of securities for a Portfolio's account, unless an appropriate exemption is available. A committee of Independent Portfolio Trustees from time to time reviews, among other things, information relating to the commissions charged by Neuberger & Berman to the Portfolios and to its other customers and information concerning the prevailing level of commissions charged by other brokers having comparable execution capability. In addition, the procedures pursuant to which Neuberger & Berman effects brokerage transactions for the Portfolios must be reviewed and approved no less often than annually by a majority of the Independent Portfolio Trustees. Each Portfolio expects that it will continue to execute a portion of its transactions through brokers other than Neuberger & Berman. In selecting those brokers, N&B Management will consider the quality and reliability of brokerage services, including execution capability, performance, and financial responsibility, and may consider research and other investment information provided by, and sale of Fund shares effected through, those brokers. A committee comprised of officers of N&B Management and partners of Neuberger & Berman who are portfolio managers of some of the Portfolios and Other N&B Funds (collectively, "N&B Funds") and some of Neuberger & Berman's managed accounts ("Managed Accounts") evaluates semi- - 48 - 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 ranking of preferred brokers for use in determining the relative amounts of commissions to be allocated to those brokers. Ordinarily, the brokers on the list effect a large portion of the brokerage transactions for the N&B Funds and the Managed Accounts that are not effected by Neuberger & Berman. However, in any semi-annual period, brokers not on the list may be used, and the relative amounts of brokerage commissions paid to the brokers on the list may vary substantially from the projected rankings. These variations reflect the following factors, among others: (1) brokers not on the list or ranking below other brokers on the list may be selected for particular transac- tions 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 or research capabilities of particular brokers, or in the execution or research needs of the N&B Funds and/or the Managed Accounts; and (3) the aggregate amount of brokerage commissions generated by transactions for the N&B Funds and the Managed Accounts may change substantially from one semi-annual period to the next. The commissions charged by a broker other than Neuberger & Berman may be greater than the amount another firm might charge if N&B Management determines in good faith that the amount of those commissions is reasonable in relation to the value of the brokerage and research services provided by the broker. N&B Management believes that those research services benefit the Portfolios by supplementing the research otherwise available to N&B Management. That research may be used by N&B Management in servicing Other N&B Funds and, in some cases, by Neuberger & Berman in servicing the Managed Accounts. On the other hand, research received by N&B Management from brokers effecting portfolio transactions on behalf of the Other N&B Funds and by Neuberger & Berman from brokers executing portfolio transactions on behalf of the Managed Accounts may be used for the Portfolios' benefit. Mark R. Goldstein, Lawrence Marx III and Kent C. Simons, and Michael M. Kassen and Robert I. Gendelman, each of whom is a Vice President of N&B Management (except for Mr. Gendelman, who is an Assistant Vice President) and a general partner of Neuberger & Berman (except for Mr. Gendelman), are the persons primarily responsible for making decisions as to specific action to be taken with respect to the investment portfo- lios of Neuberger & Berman MANHATTAN, Neuberger & Berman FOCUS and Neuberger & Berman GUARDIAN, and Neuberger & Berman PARTNERS Portfolios, respectively. Each of them has full authority to take action with respect to portfolio transactions and may or may not consult with other personnel of N&B Management prior to taking such action. If Mr. Goldstein is unavailable to perform his responsibilities, Susan Switzer, who is an Assistant Vice President of N&B Management, will assume responsibility for the portfolio of Neuberger & Berman MANHATTAN Portfolio. - 49 - Portfolio Turnover The portfolio turnover rate is the lesser of the cost of the securities purchased or the value of the securities sold, excluding all securities, including options, whose maturity or expiration date at the time of acquisition was one year or less, divided by the average monthly value of such securities owned during the year. REPORTS TO SHAREHOLDERS Shareholders of each Fund receive unaudited semi-annual financial statements, as well as year-end financial statements audited by the independent auditors or independent accountants for the Fund and its corresponding Portfolio. Each Fund's statements show the investments owned by its corresponding Portfolio and the market values thereof and provide other information about the Fund and its operations, including the Fund's beneficial interest in its corresponding Portfolio. ORGANIZATION Prior to January 1, 1995, the name of Neuberger & Berman Focus Portfolio was Neuberger & Berman Selected Sectors Portfolio. CUSTODIAN AND TRANSFER AGENT Each Fund and Portfolio has selected State Street Bank and Trust Company ("State Street"), 225 Franklin Street, Boston, MA 02110, as custodian for its securities and cash. All correspondence should be mailed to Neuberger & Berman Funds, Institutional Services, 605 Third Avenue, 2nd Floor, New York, NY 10158-0180. State Street also serves as each Fund's transfer agent, administering purchases, redemptions, and transfers of Fund shares with respect to Institutions and the payment of dividends and other distributions to Institutions. INDEPENDENT AUDITORS/ACCOUNTANTS Each Fund and Portfolio (other than Neuberger & Berman MANHATTAN Assets and Portfolio) has selected Ernst & Young LLP, 200 Clarendon Street, Boston, MA 02116, as the independent auditors who will audit its financial statements. Neuberger & Berman MANHATTAN Assets and Portfolio have selected Coopers & Lybrand L.L.P., One Post Office Square, Boston, MA 02109, as the independent accountants who will audit their financial statements. LEGAL COUNSEL - 50 - Each Fund and Portfolio has selected Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue, N.W., Washington, D.C. 20036, as its legal counsel. REGISTRATION STATEMENT This SAI and the Prospectus do not contain all the infor- mation included in the Trust's registration statement filed with the SEC under the 1933 Act with respect to the securities offered by the Prospectus. Certain portions of the registration statement have been omitted pursuant to SEC rules and regulations. The registration statement, including the exhibits filed therewith, may be examined at the SEC's offices in Washington, D.C. Statements contained in this SAI and in the Prospectus as to the contents of any contract or other document referred to are not necessarily complete, and in each instance reference is made to the copy of the contract or other document filed as an exhibit to the registration statement, each such statement being qualified in all respects by such reference. - 51 - Appendix A RATINGS OF CORPORATE BONDS AND COMMERCIAL PAPER S&P corporate bond ratings: AAA - Bonds rated AAA have the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong. AA - Bonds rated AA have a very strong capacity to pay interest and repay principal and differ from the higher rated issues only in small degree. A - Bonds rated A have a strong capacity to pay interest and repay principal, although they are somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than bonds in higher rated categories. BBB - Bonds rated BBB are regarded as having an adequate capacity to pay principal and interest. Whereas they normally exhibit adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay principal and interest for bonds in this category than for bonds in higher rated categories. BB, B, CCC, CC, C - Bonds rated BB, B, CCC, CC, and C are regarded, on balance, as predominantly speculative with respect to capacity to pay interest and repay principal in accordance with the terms of the obligation. BB indicates the lowest degree of speculation and C the highest degree of speculation. While such bonds will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions. CI - The rating CI is reserved for income bonds on which no interest is being paid. D - Bonds rated D are in default, and payment of interest and/or repayment of principal is in arrears. Plus (+) or Minus (-) - The ratings above may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories. Moody's corporate bond ratings: Aaa - Bonds rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edge." Interest payments are protected by a large or an exceptionally stable margin, and principal 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. - 52 - 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. - 53 - S&P commercial paper ratings: A-1 - This highest category indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus sign (+). Moody's commercial paper ratings Issuers rated Prime-1 (or related supporting institutions), also known as P-1, have a superior capacity for repayment of short-term promissory obligations. Prime-1 repayment capacity will normally be evidenced by the following characteristics: - Leading market positions in well-established industries. - High rates of return on funds employed. - Conservative capitalization structures with moderate reliance on debt and ample asset protection. - Broad margins in earnings coverage of fixed financial charges and high internal cash generation. - Well-established access to a range of financial markets and assured sources of alternate liquidity. - 54 - APPENDIX B [PICTURE OF ROY NEUBERGER] The Art of Investing: A Conversation with Roy Neuberger "I firmly believe that if you want to manage your own money, you must be a student of the market. If you are unwilling or unable to do that, find someone else to manage your money for you." NEUBERGER & BERMAN [THIS PAGE IS BLANK - IT IS AN INSIDE PAGE OF THIS BROCHURE] - 56 - [PICTURE OF ROY NEUBERGER] During my more than sixty-five years of buying and selling securities, I've been asked many questions about my approach to investing. On the pages that follow are a variety of my thoughts, ideas and investment principles which have served me well over the years. If you gain useful knowledge in the pursuit of profit as well as enjoyment from these comments, I shall be more than content. \s\ Roy R. Neuberger - 1 -
YOU'VE BEEN ABLE TO CONDENSE SOME OF THE CHARACTERISTICS OF SUCCESSFUL INVESTING INTO FIVE "RULES." WHAT ARE THEY? Rule #1: Be flexible. My philosophy has necessarily changed from time to time because of events and because of mistakes. My views change as economic, political, and technological changes occur both on and sometimes off our planet. It is imperative that you be willing to change your thoughts to meet new conditions. Rule #2: Take your temperament into account. Recognize whether you are by nature very speculative or just the opposite - fearful, timid of taking risks. But in any event -- Diversify your investments, Rule #3: Be broad-gauged. Diversify your make sure that some of your investments, make sure that some of your principal is kept safe, and principal is kept safe, and try to increase try to increase your income your income as well as your capital. as well as your capital. [PICTURE OF ROY NEUBERGER] Rule #4: Always remember there are many ways to skin a cat! Ben Graham and David Dodd did it by understanding basic values. Warren Buffet invested his portfolio in a handful of long- term holdings, while staying involved with the companies' managements. Peter Lynch chose to understand, first-hand, the products of many hundreds of the companies he invested in. George Soros showed his genius as a hedge fund investor who could decipher world currency trends. Each has been successful in his own way. But to be successful, remember to - 2 - Rule #5: Be skeptical. To repeat a few well- worn useful phrases: A. Dig for yourself. B. Be from Missouri. C. If it sounds too good to be true, it probably is. IN YOUR 65 YEARS OF INVESTING ARE THERE ANY GENERAL PATTERNS YOU'VE OBSERVED AS TO HOW THE MARKET BEHAVES? Every decade that I've been involved with Wall Street has a nuance of its own, an economic and social climate that influences investors. But generally, bull markets tend to be longer than bear markets, and stock prices tend to go up more slowly and erratically than they go down. Bear markets tend to be shorter and of greater intensity. The market rarely rises or declines concurrently with business cycles longer than six months. AS A LEGENDARY "VALUE INVESTOR," HOW DO YOU DEFINE VALUE INVESTING? Value investing means finding the best values - - either absolute or relative. Absolute means a stock has a low market price relative to its own fundamentals. Relative value means the price is attractive relative to the market as a whole. COULD YOU DESCRIBE A STOCK WITH "GOOD VALUE"? A classic example is a company that has a low price to earnings ratio, a low price to book ratio, free cash flow, a strong balance sheet, undervalued corporate assets, unrecognized earnings turnaround and is selling at a discount to private market value. These characteristics usually lead to companies that are under-researched and have a high degree of inside ownership and entrepreneurial management. - 3 - One of my colleagues at Neuberger & Berman says he finds his value stocks either "under a cloud" or "under a rock." "Under a cloud" stocks are those Wall Street in general doesn't like, because an entire industry is out of favor and even the good stocks are being dropped. "Under a rock" stocks are those Wall Street is ignoring, so you have to uncover them on your own. ARE THERE OTHER KEY CRITERIA YOU USE TO JUDGE STOCKS? I'm more interested in longer-term trends in earnings than short-term trends. Earnings gains should be the product of long-term strategies, superior management, taking advantage of business opportunities and so on. If these factors are in their proper place, short-term earnings should not be of major concern. Dividends are an important extra because, if they're stable, they help support the price of the stock. WHAT ABOUT SELLING STOCKS? Most individual investors should invest for the long term but not mindlessly. A sell discipline, often neglected by investors, is vitally important. "One should fall in love One should fall in love with ideas, with with ideas, with people or people, or with idealism. But in my book, the with idealism. But in my last thing to fall in love with is a particular book, the last thing to security. It is after all just a sheet of paper fall in love with is a indicating a part ownership in a corporation particular security." and its use is purely mercenary. If you must love a security, stay in love with it until it gets overvalued; then let somebody else fall in love. [PICTURE OF ROY NEUBERGER] - 4 - ANY OTHER ADVICE FOR INVESTORS? I firmly believe that if you want to manage your own money, you must be a student of the market. If you're unwilling or unable to do that, find someone else to manage your money for you. Two options are a well-managed no- load mutual fund or, if you have enough assets for separate account management, a money manager you trust with a good record. HOW WOULD YOU DESCRIBE YOUR PERSONAL INVESTING STYLE? Every stock I buy is bought to be sold. The market is a daily event, and I continually review my holdings looking for selling opportunities. I take a profit occasionally on something that has gone up in price over what was expected and simultaneously take losses whenever misjudgment seems evident. This creates a reservoir of buying power that can be used to make fresh judgments on what are the best values in the market at that time. My active investing style has worked well for me over the years, but for most investors I recommend a longer-term approach. I tend not to worry very must about the day to day swings of the market, which are very hard to comprehend. Instead, I try to be rather clever in diagnosing values and trying to win 70 to 80 percent of the time. YOU BEGAN INVESTING IN 1929. WHAT WAS YOUR EXPERIENCE WITH THE "GREAT CRASH"? - 5 - The only money I managed in the Panic of 1929 was my own. My portfolio was down about 12 percent, and I had an uneasy feeling about the market and conditions in general. Those were the days of 10 percent margin. I studied the lists carefully for a stock that was overvalued in my opinion and which I could sell short as a hedge. I came across RCA at about $100 per share. It had recently split 5 for 1 and appeared overvalued. There were no dividends, little income, a low net worth and a weak financial position. I sold RCA short in the amount equal to the dollar value of my long portfolio. It proved to be a timely and profitable move. HOW DID THE CRASH OF 1929 AFFECT YOUR INVESTING STYLE? I am prematurely bearish when the market goes up for a long time and everybody is happy because they are richer. I am very bullish when the market has gone down perceptibly and I feel it has discounted any troubles we are going to have. HOW IMPORTANT ARE PSYCHOLOGICAL FACTORS TO MARKET BEHAVIOR? There are many factors in addition to economic statistics or security analysis in a buy or sell decision. I believe psychology plays an important role in the Market. Some people follow the crowd in hopes they'll be swept along in the right direction, but if the crowd is late in acting, this can be a bad move. I like to be contrary. When things look bad, I become optimistic. When everything looks rosy, and the crowd is optimistic, I like to be a seller. Sometimes I'm too early, but I generally profit. AS A RENOWNED ART COLLECTOR, DO YOU FIND SIMILARITIES BETWEEN SELECTING STOCKS AND SELECTING WORKS OF ART? - 6 - Both are an art, although picking stocks is a minor art compared with painting, sculpture or "When things look bad, I literature. I started buying art in the 30s, become optimistic. When and in the 40s it was a daily, almost hourly everything looks rosy, and occurrence. My inclination to buy the works of the crowd is optimistic, I living artists comes from Van Gogh, who sold like to be a seller." only one painting during his lifetime. He died in poverty, only then to become a legend and have his work sold for millions of dollars. [PICTURE OF ROY NEUBERGER] There are more variables to consider now in both buying art and picking stocks. In the modern stock markets, the heavy use of futures and options has changed the nature of the investment world. In past times, the stock market was much less complicated, as was the art world. Artists rose and fell on their own merits without a lot of publicity and attention. As more and more dealers are involved with artists, the price of their work becomes inflated. So I almost always buy works of unknown, relatively undiscovered artists, which, I suppose is similar to value investing. But the big difference in my view of art and stocks is that I buy a stock to sell it and make money. I never bought paintings or sculptures for investment in my life. The objective is to enjoy their beauty. - 7 - WHAT DO YOU CONSIDER THE BUSINESS MILESTONES IN YOUR LIFE? Being a founder of Neuberger & Berman and creating one of the first no-load mutual funds. I started on Wall Street in 1929, and during the depression I managed my own money and that of my clientele. We all prospered, but I wanted to have my own firm. In 1939 I became a founder of Neuberger & Berman, and for about 10 years we managed money for individuals with substantial financial assets. But I also wanted to offer the smaller investor the benefits of professional money management, so in 1950 I created the Guardian Mutual Fund (now known as the Neuberger & Berman Guardian Fund). The Fund was kind of an innovation in its time because it didn't charge a sales commission. I thought the public was being overcharged for mutual funds, so I wanted to create a fund that would be offered directly to the public without a sales charge. Now of course the "no-load" fund business is a huge industry. I managed the Fund myself for over 28 years. [PICTURE OF ROY NEUBERGER] YOU'RE IN YOUR NINETIES AND STILL YOU GO INTO THE OFFICE EVERY DAY TO MANAGE YOUR INVESTMENTS. WHY? I like the fun of being nimble in the stock market, and I'm addicted to the market's fascinations. WHAT CLOSING WORDS OF ADVICE DO YOU HAVE ABOUT INVESTING? Realize that there are opportunities at all times for the adventuresome investor. And stay in good physical condition. It's a strange thing. You do not dissipate your energies by using them. Exercise your body and your brain every day, and you'll do better in investments and in life. - 8 - ROY NEUBERGER: A BRIEF BIOGRAPHY Roy Neuberger is a founder of the investment management firm Neuberger & Berman, and a renowned value investor. He is also a recognized collector of contemporary American art, much of which he has given away to museums and colleges across the country. During the 1920s, Roy studied art in Paris. When he realized he didn't possess the talent to become an artist, he decided to collect art, and to support this passion, Roy turned to investing -- a pursuit for which his talents have proven more than adequate. A TALENT FOR INVESTING Roy began his investment career by joining a brokerage firm in 1929, seven months before the "Great Crash." Just weeks before "Black Monday," he shorted the stock of RCA, thinking it was overvalued. He profited from the falling market and gained a reputation for market prescience and stock selection that has lasted his entire career. NEUBERGER & BERMAN'S FOUNDING Roy's investing acumen attracted many people who wished to have him manage their money. In 1939, at the age of 36, after purchasing a seat on the New York Stock Exchange, Roy founded Neuberger & Berman to provide money management services to people who lacked the time, interest or expertise to manage their own assets. - 9 - NEUBERGER & BERMAN -- OVER FIVE DECADES OF GROWTH Neuberger & Berman has grown through the years and now manages approximately $30 billion of equity and fixed income assets, both domestic and international, for individuals, institutions, and its family of no-load mutual funds. Today, as when the firm was founded, Neuberger & Berman follows a value approach to investing, designed to enable clients to advance in good markets and minimize losses when conditions are less favorable. For more complete information about the Neuberger & Berman Guardian Fund, including fees and expenses, call Neuberger & Berman Management at 800- 877-9700 for a free prospectus. Please read it carefully, before you invest or send money. - 10 - Neuberger & Berman Management Inc.[SERVICE MARK] 605 Third Avenue, 2nd Floor New York, NY 10158- 0006 Shareholder Services (800) 877-9700 [COPYRIGHT SYMBOL]1995 Neuberger & Berman PRINTED ON RECYCLED PAPER WITH SOY BASED INKS
- 11 - NEUBERGER & BERMAN EQUITY ASSETS POST-EFFECTIVE AMENDMENT NO. 1 ON FORM N-1A PART C OTHER INFORMATION Item 24. Financial Statements and Exhibits (a) Financial Statements: Financial statements for Neuberger & Berman Focus Assets and Portfolio, Neuberger & Berman Guardian Assets and Portfolio, Neuberger & Berman Manhattan Assets and Portfolio, and Neuberger & Berman Partners Assets and Portfolio will be filed by amendment to Registrant's Registration Statement. (b) Exhibits: Exhibit Number Description (1) (a) Certificate of Trust. Filed herewith. (b) Trust Instrument of Neuberger & Berman Equity Assets. Filed herewith. (c) Schedule A - Current Series of Neuberger & Berman Equity Assets. Filed herewith. (2) By-Laws of Neuberger & Berman Equity Assets. Filed herewith. (3) Voting Trust Agreement. None. (4) (a) Specimen Share Certificate for Neuberger & Berman Socially Responsive Trust. Incorporated by Reference to Pre-Effective Amendment No. 2 to Registrant's Registration Statement, File Nos. 33-82568 and 811-8106. (b) Specimen Share Certificate for Neuberger & Berman Focus Assets. To be Filed by Amendment. (c) Specimen Share Certificate for Neuberger & Berman Guardian Assets. To be Filed by Amendment. C-1 (d) Specimen Share Certificate for Neuberger & Berman Manhattan Assets. To be Filed by Amendment. (e) Specimen Share Certificate for Neuberger & Berman Partners Assets. To be Filed by Amendment. (5) (a) (i) Management Agreement Between Equity Managers Trust and Neuberger & Berman Management Incorporated. Incorporated by Reference to Post-Effective Amendment No. 70 to Registration Statement of Neuberger & Berman Equity Funds, File Nos. 2-11357 and 811-582, EDGAR Accession No. 0000898342-95- 000314. (ii) Schedule A - Series of Neuberger & Berman Equity Managers Trust Currently Subject to the Management Agreement. Incorporated by Reference to Post- Effective Amendment No. 70 to Registration Statement of Neuberger & Berman Equity Funds, File Nos. 2-11357 and 811-582, EDGAR Accession No. 0000898342-95-000314. (iii) Schedule B - Schedule of Compensation Under the Management Agreement. Incorporated by Reference to Post- Effective Amendment No. 70 to Registration Statement of Neuberger & Berman Equity Funds, File Nos. 2-11357 and 811-582, EDGAR Accession No. 0000898342-95-000314. (b) (i) Sub-Advisory Agreement Between Neuberger & Berman Management Incorporated and Neuberger & Berman with Respect to Equity Managers Trust. Incorporated by Reference to Post- Effective Amendment No. 70 to Registration Statement of Neuberger & Berman Equity Funds, File Nos. 2-11357 and 811-582, EDGAR Accession No. 0000898342-95-000314. C-2 (ii) Schedule A - Series of Equity Managers Trust Currently Subject to the Sub- Advisory Agreement. Incorporated by Reference to Post-Effective Amendment No. 70 to Registration Statement of Neuberger & Berman Equity Funds, File Nos. 2-11357 and 811-582, EDGAR Accession No. 0000898342-95-000314. (6) (a) (i) Distribution Agreement Between Neuberger & Berman Equity Assets and Neuberger & Berman Management Incorporated with Respect to Neuberger & Berman Socially Responsive Trust. Filed herewith. (ii) Schedule A - Series of Neuberger & Berman Equity Assets Currently Subject to the Distribution Agreement. Filed herewith. (b) (i) Form of Distribution Agreement between Neuberger & Berman Equity Assets and Neuberger & Berman Management Incorporated with Respect to Other Series. To be Filed by Amendment. (ii) Schedule A - Series of Neuberger & Berman Equity Assets Currently Subject to Distribution Agreement. To be Filed by Amendment. (7) Bonus, Profit Sharing or Pension Plans. None. (8) (a) Custodian Contract Between Neuberger & Berman Equity Assets and State Street Bank and Trust Company. Incorporated by Reference to Pre- Effective Amendment No. 1 to Registrant's Registration Statement, File Nos. 33-82568 and 811-8106. (b) Schedule A - Approved Foreign Banking Institutions and Securities Depositories Under the Custodian Contract. Incorporated by Reference to Pre-Effective Amendment No. 1 to Registrant's Registration Statement, File Nos. 33-82568 and 811-8106. C-3 (9) (a) (i) Transfer Agency Agreement Between Neuberger & Berman Equity Assets and State Street Bank and Trust Company. Incorporated by Reference to Pre- Effective Amendment No. 2 to Registrant's Registration Statement, File Nos. 33-82568 and 811-8106. (ii) Schedule A - Series of Neuberger & Berman Equity Assets Currently Subject to the Transfer Agency Agreement. To be Filed by Amendment. (b) (i) Administration Agreement Between Neuberger & Berman Equity Assets and Neuberger & Berman Management Incorporated. To be Filed by Amendment. (ii) Schedule A - Series of Neuberger & Berman Equity Assets Currently Subject to the Administration Agreement. To be Filed by Amendment. (iii) Schedule B - Schedule of Compensation Under the Administration Agreement. To be Filed by Amendment. (10) Opinion and Consent of Kirkpatrick & Lockhart LLP on Securities Matters. To be Filed by Amendment. (11) (a) Consent of Ernst & Young LLP, Independent Auditors. To be Filed by Amendment. (b) Consent of Coopers & Lybrand L.L.P., Independent Accountants. To be Filed by Amendment. (12) Financial Statements Omitted from Prospectus. None. (13) Letter of Investment Intent. None. (14) Prototype Retirement Plan. None. (15) Plan Pursuant to Rule 12b-1. To be Filed by Amendment. (16) Schedule of Computation of Performance Quotations. None. C-4 (17) Financial Data Schedule. To be Filed by Amendment. (18) Plan Pursuant to Rule 18f-3. None. Item 25. Persons Controlled By or Under Common Control with Registrant. No person is controlled by or under common control with the Registrant. Item 26. Number of Holders of Securities. The following information is given as of November 3, 1995: Number of Title of Class Record Holders Shares of beneficial interest, $0.001 par value, of: Neuberger & Berman Focus Assets 0 Neuberger & Berman Guardian Assets 0 Neuberger & Berman Manhattan Assets 0 Neuberger & Berman Partners Assets 0 Neuberger & Berman Socially Responsive Trust 1 Item 27. Indemnification. A Delaware business trust may provide in its governing instrument for indemnification of its officers and trustees from and against any and all claims and demands whatsoever. Article IX, Section 2 of the Trust Instrument provides that the Registrant shall indemnify any present or former trustee, officer, employee or agent of the Registrant ("Covered Person") to the fullest extent permitted by law against liability and all expenses reasonably incurred or paid by him or her in connection with any claim, action, suit or proceeding ("Action") in which he or she becomes involved as a party or otherwise by virtue of his or her being or having been a Covered Person and against amounts paid or incurred by him or her in settlement thereof. Indemnification will not be provided to a person adjudged by a court or other body to be liable to the Registrant or its shareholders by reason of "willful misfeasance, bad faith, gross C-5 negligence or reckless disregard of the duties involved in the conduct of his or her office" ("Disabling Conduct"), or not to have acted in good faith in the reasonable belief that his or her action was in the best interest of the Registrant. In the event of a settlement, no indemnification may be provided unless there has been a determination that the officer or trustee did not engage in Disabling Conduct (i) by the court or other body approving the settlement; (ii) by at least a majority of those trustees who are neither interested persons, as that term is defined in the Investment Company Act of 1940 ("1940 Act"), of the Registrant ("Independent Trustees"), nor are parties to the matter based upon a review of readily available facts; or (iii) by written opinion of independent legal counsel based upon a review of readily available facts. Pursuant to Article IX, Section 3 of the Trust Instrument, if any present or former shareholder of any series ("Series") of the Registrant shall be held personally liable solely by reason of his or her being or having been a shareholder and not because of his or her acts or omissions or for some other reason, the present or former shareholder (or his or her heirs, executors, administrators or other legal representatives or in the case of any entity, its general successor) shall be entitled out of the assets belonging to the applicable Series to be held harmless from and indemnified against all loss and expense arising from such liability. The Registrant, on behalf of the affected Series, shall, upon request by such shareholder, assume the defense of any claim made against such shareholder for any act or obligation of the Series and satisfy any judgment thereon from the assets of the Series. Section 9 of the Management Agreement between Equity Managers Trust ("Managers Trust") and Neuberger & Berman Management Inc. ("N&B Management") provides that neither N&B Management nor any director, officer or employee of N&B Management performing services for the series of Managers Trust at the direction or request of N&B Management in connection with N&B Management's discharge of its obligations under the Agreement shall be liable for any error of judgment or mistake of law or for any loss suffered by a series in connection with any matter to which the Agreement relates; provided, that nothing in the Agreement shall be construed (i) to protect N&B Management against any liability to Managers Trust or any series thereof or its interest holders to which N&B Management would otherwise be subject by reason of willful misfeasance, bad faith, or gross negligence in the performance of N&B Management's duties, or by reason of N&B Management's reckless disregard of its obligations and duties under the Agreement, or (ii) to protect any director, officer or employee of N&B Management who is or was a trustee or officer of Managers Trust against any liability to Managers Trust or any series thereof or its interest holders to which such person would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such person's office with Managers Trust. Section 1 of the Sub-Advisory Agreement between N&B Management and Neuberger & Berman, L.P. ("Neuberger & Berman")with respect to Managers Trust provides that in the absence of willful misfeasance, bad C-6 faith or gross negligence in the performance of its duties, or of reckless disregard of its duties and obligations under the Agreement, Neuberger & Berman will not be subject to liability for any act or omission or any loss suffered by any series of Managers Trust or its interest holders in connection with the matters to which the Agreement relates. Section 8 of the Administration Agreement between the Registrant and N&B Management provides that N&B Management shall look only to the assets of each Series for performance of the Agreement by the Registrant on behalf of such Series, and neither the Shareholders of the Registrant, its Trustees nor any of the Registrant's officers, employees or agents, whether past, present or future shall be personally liable therefor. Section 9 of the Agreement provides that each Series shall indemnify N&B Management and hold it harmless from and against any and all losses, damages and expenses, including reasonable attorneys' fees and expenses, incurred by N&B Management that result from: (i) any claim, action, suit or proceeding in connection with N&B Management's entry into or performance of the Agreement with respect to such Series; or (ii) any action taken or omission to act committed by N&B Management in the performance of its obligations under the Agreement with respect to such Series; or (iii) any action of N&B Management upon instructions believed in good faith by it to have been executed by a duly authorized officer or representative of the Registrant with respect to such Series; provided, that N&B Management shall not be entitled to such indemnification in respect of actions or omissions constituting negligence or misconduct on the part of N&B Management, or its employees, agents or contractors. Section 10 of the Agreement provides that N&B Management shall indemnify each Series and hold it harmless from and against any and all losses, damages and expenses, including reasonable attorneys' fees and expenses, incurred by such Series which result from: (i) N&B Management's failure to comply with the terms of the Agreement with respect to such Series; or (ii) N&B Management's lack of good faith in performing its obligations under the Agreement with respect to such Series; or (iii) the negligence or misconduct of N&B Management, or its employees, agents or contractors in connection with the Agreement with respect to such Series. A Series shall not be entitled to such indemnification in respect of actions or omissions constituting negligence or misconduct on the part of that Series or its employees, agents or contractors other than N&B Management, unless such negligence or misconduct results from or is accompanied by negligence or misconduct on the part of N&B Management, any affiliated person of N&B Management, or any affiliated person of an affiliated person of N&B Management. Section 11 of the Distribution Agreement between the Registrant and N&B Management provides that N&B Management shall look only to the assets of a Series for the Registrant's performance of the Agreement by the Registrant on behalf of such Series, and neither the Shareholders, the Trustees nor any of the Registrant's officers, employees or agents, whether past, present or future, shall be personally liable therefor. Insofar as indemnification for liabilities arising under the Securities Act of 1933 ("1933 Act") may be permitted to trustees, officers C-7 and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the 1933 Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a trustee, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such trustee, officer or controlling person, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the 1933 Act and will be governed by the final adjudication of such issue. Item 28. Business and Other Connections of Adviser and Sub-Adviser. There is set forth below information as to any other business, profession, vocation or employment of a substantial nature in which each director or officer of N&B Management and each partner of Neuberger & Berman is, or at any time during the past two years has been, engaged for his or her own account or in the capacity of director, officer, employee, partner or trustee.
NAME BUSINESS AND OTHER CONNECTIONS Claudia A. Brandon Secretary, Neuberger & Berman Advisers Management Vice President, N&B Trust (Delaware business trust); Secretary, Advisers Management Managers Trust; Secretary, Neuberger & Berman Advisers Management Trust (Massachusetts business trust) (1); Secretary, Neuberger & Berman Income Funds; Secretary, Neuberger & Berman Income Trust; Secretary, Neuberger & Berman Equity Funds; Secretary, Neuberger & Berman Equity Trust; Secretary, Income Managers Trust; Secretary, Equity Managers Trust; Secretary, Global Managers Trust; Secretary, Neuberger & Berman Equity Assets. C-8 NAME BUSINESS AND OTHER CONNECTIONS Stacy Cooper-Shugrue Assistant Secretary, Neuberger & Berman Advisers Assistant Vice President, Management Trust (Delaware business trust); N&B Management Assistant Secretary, Advisers Managers Trust; Assistant Secretary, Neuberger & Berman Advisers Management Trust (Massachusetts business trust) (1); Assistant Secretary, Neuberger & Berman Income Funds; Assistant Secretary, Neuberger & Berman Income Trust; Assistant Secretary, Neuberger & Berman Equity Funds; Assistant Secretary, Neuberger & Berman Equity Trust; Assistant Secretary, Income Managers Trust; Assistant Secretary, Equity Managers Trust; Assistant Secretary, Global Managers Trust; Assistant Secretary, Neuberger & Berman Equity Assets. Robert Cresci Assistant Portfolio Manager, BNP-N&B Global Asset Assistant Vice President, Management L.P. (joint venture of Neuberger & Berman N&B Management and Banque Nationale de Paris) (2); Assistant Portfolio Manager, Vontobel (Swiss bank) (3). Stanley Egener Chairman of the Board and Trustee, Neuberger & President and Director, Berman Advisers Management Trust (Delaware business N&B Management; General trust); Chairman of the Board and Trustee, Advisers Partner, Neuberger & Managers Trust; Chairman of the Board and Trustee, Berman Neuberger & Berman Advisers Management Trust (Massachusetts business trust) (1); Chairman of the Board and Trustee, Neuberger & Berman Income Funds; Chairman of the Board and Trustee, Neuberger & Berman Income Trust; Chairman of the Board and Trustee, Neuberger & Berman Equity Funds; Chairman of the Board and Trustee, Neuberger & Berman Equity Trust; Chairman of the Board and Trustee, Income Managers Trust; Chairman of the Board and Trustee, Equity Managers Trust; Chairman of the Board and Trustee, Global Managers Trust; Chairman of the Board and Trustee, Neuberger & Berman Equity Assets. Robert I. Gendelman Senior Portfolio Manager, Harpel Advisors (4). Assistant Vice President, N&B Management Theodore P. Giuliano Vice President, Neuberger & Berman Advisers Vice President, N&B Management Trust (Massachusetts business trust) (6); Management (5); General Executive Vice President and Trustee, Neuberger & Partner, Neuberger & Berman Income Funds (7); Executive Vice President Berman and Trustee, Neuberger & Berman Income Trust (7); Executive Vice President and Trustee, Income Managers Trust (7). C-9 NAME BUSINESS AND OTHER CONNECTIONS Mark R. Goldstein Vice President, Neuberger & Berman Advisers Vice President, N&B Management Trust (Massachusetts Business Trust) (6). Management; General Partner, Neuberger & Berman Theresa A. Havell Vice President, Neuberger & Berman Advisers Vice President and Management Trust (Massachusetts business trust) (6); Director, N&B Management; President and Trustee, Neuberger & Berman Income General Partner, Funds; President and Trustee, Neuberger & Berman Neuberger & Berman Income Trust; President and Trustee, Income Managers Trust Josephine Mahaney Assistant Vice President, Neuberger & Berman Assistant Vice President Advisers Management Trust (Massachusetts business (5), trust) (6) Vice President, N&B Management C. Carl Randolph Assistant Secretary, Neuberger & Berman Advisers General Partner, Management Trust (Delaware business trust); Neuberger & Berman Assistant Secretary, Advisers Managers Trust; Assistant Secretary, Neuberger & Berman Advisers Management Trust (Massachusetts business trust) (1); Assistant Secretary, Neuberger & Berman Income Funds; Assistant Secretary, Neuberger & Berman Income Trust; Assistant Secretary, Neuberger & Berman Equity Funds; Assistant Secretary, Neuberger & Berman Equity Trust; Assistant Secretary, Income Managers Trust; Assistant Secretary, Equity Managers Trust; Assistant Secretary, Global Managers Trust; Assistant Secretary, Neuberger & Berman Equity Assets. Felix Rovelli Senior Vice President-Senior Equity Portfolio Vice President, Manager, BNP-N&B Global Asset Management L.P. (joint N&B Management venture of Neuberger & Berman and Banque Nationale de Paris) (2); Portfolio Manager, Vontobel (Swiss bank) (8). C-10 NAME BUSINESS AND OTHER CONNECTIONS Richard Russell Treasurer, Neuberger & Berman Advisers Management Vice President, Trust (Delaware business trust); Treasurer, Advisers N&B Management Managers Trust; Assistant Treasurer (6), Treasurer, Neuberger & Berman Advisers Management Trust (Massachusetts business trust) (1); Treasurer, Neuberger & Berman Income Funds; Treasurer, Neuberger & Berman Income Trust; Treasurer, Neuberger & Berman Equity Funds; Treasurer, Neuberger & Berman Equity Trust; Treasurer, Income Managers Trust; Treasurer, Equity Managers Trust; Treasurer, Global Managers Trust; Treasurer, Neuberger & Berman Equity Assets. Susan Switzer Portfolio Manager, Mitchell Hutchins Asset Assistant Vice President, Management Inc. (9). N&B Management Daniel J. Sullivan Vice President, Neuberger & Berman Advisers Senior Vice President, Management Trust (Delaware business trust); Vice N&B Management President, Advisers Managers Trust; Vice President, Neuberger & Berman Advisers Management Trust (Massachusetts business trust) (1); Vice President, Neuberger & Berman Income Funds; Vice President, Neuberger & Berman Income Trust; Vice President, Neuberger & Berman Equity Funds; Vice President, Neuberger & Berman Equity Trust; Vice President, Income Managers Trust; Vice President, Equity Managers Trust; Vice President, Global Managers Trust; Vice President, Neuberger & Berman Equity Assets. Michael J. Weiner Vice President, Neuberger & Berman Advisers Senior Vice President and Management Trust (Delaware business trust); Vice Treasurer, N&B Management President, Advisers Managers Trust; Treasurer (6), Vice President, Neuberger & Berman Advisers Management Trust (Massachusetts business trust) (1); Vice President, Neuberger & Berman Income Funds; Vice President, Neuberger & Berman Income Trust; Vice President, Neuberger & Berman Equity Funds; Vice President, Neuberger & Berman Equity Trust; Vice President, Income Managers Trust; Vice President, Equity Managers Trust; Vice President, Global Managers Trust; Vice President, Neuberger & Berman Equity Assets. C-11 NAME BUSINESS AND OTHER CONNECTIONS Lawrence Zicklin President and Trustee, Neuberger & Berman Advisers Director, N&B Management; Management Trust (Delaware business trust); General Partner, President and Trustee, Advisers Managers Trust; Neuberger & Berman President and Trustee, Neuberger & Berman Advisers Management Trust (Massachusetts business trust) (1); President and Trustee, Neuberger & Berman Equity Funds; President and Trustee, Neuberger & Berman Equity Trust; President and Trustee, Equity Managers Trust; President, Global Managers Trust; President and Trustee, Neuberger & Berman Equity Assets
The principal address of N&B Management, Neuberger & Berman, BNP- N&B Global Asset Management L.P. and of each of the investment companies named above, is 605 Third Avenue, New York, New York 10158. Other addresses to be provided by amendment. __________________________________ (1) Until April 30, 1995. (2) Until October 31, 1995. (3) Until May 1994. (4) Until 1993. (5) Until November 4, 1994. (6) Until December 2, 1993. (7) Until June 22, 1994. (8) Until April 1994. (9) Until 1994. Item 29. Principal Underwriters. (a) N&B Management, the principal underwriter distributing securities of the Registrant, is also the principal underwriter and distributor for each of the following investment companies: Neuberger & Berman Advisers Management Trust Neuberger & Berman Equity Funds Neuberger & Berman Equity Trust Neuberger & Berman Income Funds Neuberger & Berman Income Trust N&B Management Incorporated is also the investment manager to the master funds in which the above-named investment companies invest. C-12 (b) Set forth below is information concerning the directors and officers of the Registrant's principal underwriter. The principal business address of each of the persons listed is 605 Third Avenue, New York, New York 10158-0180, which is also the address of the Registrant's principal underwriter.
POSITIONS AND OFFICES POSITIONS AND NAME WITH UNDERWRITER OFFICES WITH REGISTRANT Claudia A. Brandon Vice President Secretary Patrick T. Byrne Assistant Vice President None Richard A. Cantor Chairman of the Board and None Director Robert Conti Assistant Vice President None Stacy Cooper-Shugrue Assistant Vice President Assistant Secretary Robert Cresci Assistant Vice President None Barbara DiGiorgio Assistant Vice President None Roberta D'Orio Assistant Vice President None Stanley Egener President and Director Chairman of the Board of Trustees (Chief Executive Officer) Robert I. Gendelman Assistant Vice President None Mark R. Goldstein Vice President None Farha-Joyce Haboucha Vice President None Theresa A. Havell Vice President and Director None Leslie Holliday-Soto Assistant Vice President None Michael M. Kassen Vice President None Irwin Lainoff Director None C-13 POSITIONS AND OFFICES POSITIONS AND NAME WITH UNDERWRITER OFFICES WITH REGISTRANT Michael Lamberti Vice President None Josephine Mahaney Vice President None Carmen G. Martinez Assistant Vice President None Lawrence Marx III Vice President None Ellen Metzger Vice President and Secretary None Paul Metzger Assistant Vice President None Janet W. Prindle Vice President None Felix Rovelli Vice President None Richard Russell Vice President Treasurer (Principal Accounting Officer) Marvin C. Schwartz Director None Kent C. Simons Vice President None Frederick B. Soule Vice President None Susan Switzer Assistant Vice President None Daniel J. Sullivan Senior Vice President Vice President Andrea Trachtenberg Vice President of Marketing None Judith M. Vale Vice President None Clara Del Villar Vice President None Susan Walsh Assistant Vice President None Margaret Didi Vice President None Weinblatt Michael J. Weiner Senior Vice President and Vice President Treasurer (Principal Financial Officer) Stephen A. White Vice President None C-14 POSITIONS AND OFFICES POSITIONS AND NAME WITH UNDERWRITER OFFICES WITH REGISTRANT Celeste Wischerth Assistant Vice President None Lawrence Zicklin Director Trustee and President
(c) No commissions or other compensation were received directly or indirectly from the Registrant by any principal underwriter who was not an affiliated person of the Registrant. Item 30. Location of Accounts and Records. All accounts, books and other documents required to be maintained by Section 31(a) of the 1940 act, as amended, and the rules promulgated thereunder with respect to the Registrant are maintained at the offices of State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110, except for the Registrant's Trust Instrument and By-Laws, minutes of meetings of the Registrant's Trustees and shareholders and the Registrant's policies and contracts, which are maintained at the offices of the Registrant, 605 Third Avenue, New York, New York 10158. Item 31. Management Services Other than as set forth in Parts A and B of this Post- Effective Amendment, the Registrant is not a party to any management- related service contract. Item 32. Undertakings Registrant hereby undertakes to file a Post-Effective Amendment to its Registration Statement, containing financial statements with respect to Neuberger & Berman Focus Assets, Neuberger & Berman Guardian Assets, Neuberger & Berman Manhattan Assets, and Neuberger & Berman Partners Assets, which need not be certified, within four to six months from the date of each respective Fund's commencement of operations. C-15 SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, EQUITY MANAGERS TRUST has duly caused the Post-Effective Amendment No. 1 to be signed on its behalf by the undersigned, thereto duly authorized, in the City and State of New York on the 28th day of November, 1995. EQUITY MANAGERS TRUST By: /s/ Lawrence Zicklin ____________________________ Lawrence Zicklin President Pursuant to the requirements of the Securities Act of 1933, the Post-Effective Amendment No. 1 has been signed below by the following persons in the capacities and on the date indicated. Signature Title Date /s/ Faith Colish Trustee November 28, 1995 ______________________ Faith Colish /s/ Donald M. Cox Trustee November 28, 1995 ______________________ Donald M. Cox /s/ Stanley Egener Chairman of the November 28, 1995 __________________________ Board and Trustee Stanley Egener (Chief Executive Officer) /s/ Howard A. Mileaf Trustee November 28, 1995 __________________________ Howard A. Mileaf /s/ Edward I. O'Brien Trustee November 28, 1995 __________________________ Edward I. O'Brien /s/ John T. Patterson, Jr. Trustee November 28, 1995 __________________________ John T. Patterson, Jr. /s/ John P. Rosenthal Trustee November 28, 1995 __________________________ John P. Rosenthal Signature Title Date /s/ Cornelius T. Ryan Trustee November 28, 1995 __________________________ Cornelius T. Ryan /s/ Gustave H. Shubert Trustee November 28, 1995 __________________________ Gustave H. Shubert /s/ Alan R. Gruber Trustee November 28, 1995 __________________________ Alan R. Gruber /s/ Lawrence Zicklin President and November 28, 1995 __________________________ Trustee Lawrence Zicklin /s/ Michael J. Weiner Vice President November 28, 1995 __________________________ (Principal Michael J. Weiner Financial Officer) /s/ Richard Russell Treasurer November 28, 1995 __________________________ (Principal Richard Russell Accounting Officer) SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant, NEUBERGER & BERMAN EQUITY ASSETS has duly caused this Post-Effective Amendment No. 1 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 28th day of November 1995. NEUBERGER & BERMAN EQUITY FUNDS By: /s/ Lawrence Zicklin _________________________ Lawrence Zicklin President Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment No. 1 has been signed below by the following persons in the capacities and on the date indicated. Signature Title Date /s/ Faith Colish Trustee November 28, 1995 __________________________ Faith Colish /s/ Donald M. Cox Trustee November 28, 1995 __________________________ Donald M. Cox /s/ Stanley Egener Chairman of the November 28, 1995 __________________________ Board and Trustee Stanley Egener (Chief Executive Officer) /s/ Howard A. Mileaf Trustee November 28, 1995 __________________________ Howard A. Mileaf /s/ Edward I. O'Brien Trustee November 28, 1995 __________________________ Edward I. O'Brien /s/ John T. Patterson, Jr. Trustee November 28, 1995 __________________________ John T. Patterson, Jr. /s/ John P. Rosenthal Trustee November 28, 1995 __________________________ John P. Rosenthal Signature Title Date /s/ Cornelius T. Ryan Trustee November 28, 1995 ______________________ Cornelius T. Ryan /s/ Gustave H. Shubert Trustee November 28, 1995 ______________________ Gustave H. Shubert /s/ Alan R. Gruber Trustee November 28, 1995 ______________________ Alan R. Gruber /s/ Lawrence Zicklin President and November 28, 1995 ______________________ Trustee Lawrence Zicklin /s/ Michael J. Weiner Vice President November 28, 1995 ______________________ (Principal Michael J. Weiner Financial Official) /s/ Richard Russell Treasurer November 28, 1995 ______________________ (Principal Richard Russell Accounting Officer) NEUBERGER & BERMAN EQUITY ASSETS POST-EFFECTIVE AMENDMENT NO. 1 ON FORM N-1A INDEX TO EXHIBITS
Sequentially Exhibit Numbered Number Description Page (1) (a) Certificate of Trust. Filed herewith. ____ (b) Trust Instrument of Neuberger & Berman ____ Equity Assets. Filed herewith. (c) Schedule A - Current Series of Neuberger ____ & Berman Equity Assets. Filed herewith. (2) By-Laws of Neuberger & Berman Equity ____ Assets. Filed herewith. (3) Voting Trust Agreement. None. N.A. (4) (a) Specimen Share Certificate for Neuberger N.A. & Berman Socially Responsive Trust. Incorporated by Reference to Pre- Effective Amendment No. 2 to Registrant's Registration Statement, File Nos. 33- 82568 and 811-8106. (b) Specimen Share Certificate for Neuberger N.A. & Berman Focus Assets. To be Filed by Amendment. (c) Specimen Share Certificate for Neuberger N.A. & Berman Guardian Assets. To be Filed by Amendment. (d) Specimen Share Certificate for Neuberger N.A. & Berman Manhattan Assets. To be Filed by Amendment. (e) Specimen Share Certificate for Neuberger N.A. & Berman Partners Assets. To be Filed by Amendment. Sequentially Exhibit Numbered Number Description Page (5) (a) (i) Management Agreement Between N.A. Equity Managers Trust and Neuberger & Berman Management Incorporated. Incorporated by Reference to Post-Effective Amendment No. 70 to Registration Statement of Neuberger & Berman Equity Funds, File Nos. 2-11357 and 811-582, EDGAR Accession No. 0000898342-95-000314. N.A. (ii) Schedule A - Series of Neuberger & Berman Equity Managers Trust Currently Subject to the Management Agreement. Incorporated by Reference to Post-Effective Amendment No. 70 to Registration Statement of Neuberger & Berman Equity Funds, File Nos. 2-11357 and 811-582, EDGAR Accession No. 0000898342- 95-000314. (iii) Schedule B - Schedule of N.A. Compensation Under the Management Agreement. Incorporated by Reference to Post-Effective Amendment No. 70 to Registration Statement of Neuberger & Berman Equity Funds, File Nos. 2-11357 and 811-582, EDGAR Accession No. 0000898342- 95-000314. Sequentially Exhibit Numbered Number Description Page (b) (i) Sub-Advisory Agreement Between N.A. Neuberger & Berman Management Incorporated and Neuberger & Berman with respect to Equity Managers Trust. Incorporated by Reference to Post-Effective Amendment No. 70 to registration statement of Neuberger & Berman Equity Funds, File Nos. 2-11357 and 811-582, EDGAR Accession No. 0000898342-95-000314. N.A. (ii) Schedule A - Series of Equity Managers Trust Currently Subject to the Sub-Advisory Agreement. Incorporated by Reference to Post-Effective Amendment No. 70 to Registration Statement of Equity Managers Trust, File Nos. 2-11357 and 811-582, EDGAR Accession No. 0000898342-95- 000314. (6) (a) (i) Distribution Agreement Between ____ Neuberger & Berman Equity Assets and Neuberger & Berman Management Incorporated with respect to Neuberger & Berman Socially Responsive Trust. Filed herewith. (ii) Schedule A - Series of Neuberger ____ & Berman Equity Assets Currently Subject to the Distribution Agreement. Filed herewith. (b) (i) Form of Distribution Agreement N.A. between Neuberger & Berman Equity Assets and Neuberger & Berman Management Incorporated with Respect to Other Series. To be Filed by Amendment. (ii) Schedule A - Series of Neuberger N.A. & Berman Equity Assets Currently Subject to Distribution Agreement. To be Filed by Amendment. Sequentially Exhibit Numbered Number Description Page (7) Bonus, Profit Sharing or Pension Plans. None. N.A. (8) (a) Custodian Contract Between Neuberger & N.A. Berman Equity Assets and State Street Bank and Trust Company. Incorporated by Reference to Pre-Effective Amendment No. 1 to Registrant's Registration Statement. (b) Schedule A - Approved Foreign Banking N.A. Institutions and Securities Depositories Under the Custodian Contract. Incorporated by Reference to Pre- Effective Amendment No. 1 to Registrant's Registration Statement, File Nos. 33- 82568 and 811-8106. (9) (a) (i) Transfer Agency Agreement N.A. Between Neuberger & Berman Equity Assets and State Street Bank and Trust Company. Incorporated by Reference to Pre-Effective Amendment No. 2 to Registrant's Registration Statement, File Nos. 33-82568 and 811-8106. (ii) Schedule A - Series of Neuberger N.A. & Berman Equity Assets Currently Subject to the Transfer Agency Agreement. To be Filed by Amendment. (b) (i) Administration Agreement Between N.A. Neuberger & Berman Equity Assets and Neuberger & Berman Management Incorporated. To be Filed by Amendment. (ii) Schedule A - Series of Neuberger N.A. & Berman Equity Assets Currently Subject to the Administration Agreement. To be Filed by Amendment. (iii) Schedule B - Schedule of N.A. Compensation Under the Administration Agreement. To be Filed by Amendment. Sequentially Exhibit Numbered Number Description Page (10) Opinion and Consent of Kirkpatrick & Lockhart LLP N.A. on Securities Matters. To be Filed by Amendment. (11) (a) Consent of Ernst & Young LLP, Independent N.A. Auditors. To be Filed by Amendment. (b) Consent of Coopers & Lybrand L.L.P., N.A. Independent Accountants. To be Filed by Amendment. (12) Financial Statements Omitted from Prospectus. N.A. None. (13) Letter of Investment Intent. None. N.A. (14) Prototype Retirement Plan. None. N.A. (15) Plan Pursuant to Rule 12b-1. To be Filed by N.A. Amendment. (16) Schedule of Computation of Performance N.A. Quotations. None. (17) Financial Data Schedule. To be Filed by N.A. Amendment. (18) Plan Pursuant to Rule 18f-3. None. N.A.
EX-99.1(A) 2 CERTIFICATE OF TRUST OF NEUBERGER & BERMAN EQUITY ASSETS This Certificate of Trust ("Certificate") is filed in accordance with the provisions of the Delaware Business Trust Act (12 Del. Code Ann. Tit. 12 Section 3801 et seq.) and sets forth the following: 1. The name of the trust is: Neuberger & Berman Equity Assets ("Trust"). 2. The business address of the registered office of the Trust and of the registered agent of the Trust is: The Corporation Trust Company Corporation Trust Center 1209 Orange Street Wilmington, Delaware 19801 3. This Certificate is effective upon filing. 4. The Trust is a Delaware business trust to be registered under the Investment Company Act of 1940. Notice is hereby given that the Trust shall consist of one or more series. The debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to a particular series of the Trust shall be enforceable against the assets of such series only, and not against the assets of the Trust generally or any other series. IN WITNESS WHEREOF, the undersigned, being the initial Trustees, have executed this Certificate on this 14th day of October, 1993. /s/ Claudia A. Brandon --------------------------------------- Claudia A. Brandon, as Trustee and not individually /s/ Ellen Metzger --------------------------------------- Ellen Metzger, as Trustee and not individually /s/ Michael J. Wiener --------------------------------------- Michael J. Wiener, as Trustee and not individually Address: 605 Third Avenue New York, NY 10158 STATE OF NEW YORK CITY OF NEW YORK Before me this 14th day of October, 1993, personally appeared the above-named Claudia A. Brandon, Ellen Metzger, and Michael J. Wiener, known to me to be the persons who executed the foregoing instrument and who acknowledged that they executed the same. /s/ Loraine Olavarria --------------------------------------- Notary Public My commission expires April 15, 1995 Loraine Olavarria Notary Public, State of New York Qualified in Bronx County Commission Expires 4-15-95 - 2 - STATE OF DELAWARE OFFICE OF THE SECRETARY OF STATE ------------------------------------ I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF BUSINESS TRUST REGISTRATION OF "NEUBERGER & BERMAN EQUITY ASSETS", FILED IN THIS OFFICE ON THE EIGHTEENTH DAY OF OCTOBER, A.D. 1993, at 10 O'CLOCK A.M. [LOGO] SEAL OF THE STATE OF DELAWARE /s/ Edward J. Freel ----------------------------------- Edward J. Freel, Secretary of State - 3 - EX-99.1(B) 3 NEUBERGER & BERMAN EQUITY ASSETS -------------------------------- TRUST INSTRUMENT --------------- TABLE OF CONTENTS PAGE ---- ARTICLE I --Definitions . . . . . . . . . . . . . . . . . . 1 ARTICLE II--The Trustees . . . . . . . . . . . . . . . . . 2 Section 1. Management of the Trust . . . . . . . . . . 2 Section 2. Initial Trustees; Election and Number of Trustees . . . . . . . . . . . . 2 Section 3. Term of Office of Trustees . . . . . . . . 2 Section 4. Vacancies; Appointment of Trustees . . . . 3 Section 5. Temporary Vacancy or Absence . . . . . . . 3 Section 6. Chairman . . . . . . . . . . . . . . . . . 3 Section 7. Action by the Trustees . . . . . . . . . . 3 Section 8. Ownership of Trust Property . . . . . . . . 4 Section 9. Effect of Trustees Not Serving . . . . . . 4 Section 10. Trustees, etc. as Shareholders . . . . . . 4 ARTICLE III--Powers of the Trustees . . . . . . . . . . . . 4 Section 1. Powers . . . . . . . . . . . . . . . . . . 4 Section 2. Certain Transactions . . . . . . . . . . . 7 ARTICLE IV--Series; Classes; Shares . . . . . . . . . . . . 8 Section 1. Establishment of Series or Class . . . . . 8 Section 2. Shares . . . . . . . . . . . . . . . . . . 8 Section 3. Investment in the Trust . . . . . . . . . . 9 Section 4. Assets and Liabilities of Series . . . . . 9 Section 5. Ownership and Transfer of Shares . . . . . 10 Section 6. Status of Shares; Limitation of Shareholder Liability . . . . . . . . . . . . . . . . . 10 ARTICLE V--Distributions and Redemptions . . . . . . . . . . 11 Section 1. Distributions . . . . . . . . . . . . . . . 11 Section 2. Redemptions . . . . . . . . . . . . . . . . 11 Section 3. Determination of Net Asset Value . . . . . 12 Section 4. Suspension of Right of Redemption . . . . . 12 Section 5. Redemptions Necessary for Qualification as Regulated Investment Company . . . . . . . 12 ARTICLE VI--Shareholders' Voting Powers and Meetings . . . . 13 Section 1. Voting Powers . . . . . . . . . . . . . . . 13 Section 2. Meetings of Shareholders . . . . . . . . . 13 Section 3. Quorum; Required Vote . . . . . . . . . . . 13 ARTICLE VII--Contracts with Service Providers . . . . . . . 14 Section 1. Investment Adviser . . . . . . . . . . . . 14 Section 2. Principal Underwriter . . . . . . . . . . . 14 Section 3. Transfer Agency, Shareholder Services, and Administration Agreements . . . . . . . . . 14 Section 4. Custodian . . . . . . . . . . . . . . . . . 15 Section 5. Parties to Contracts with Service Providers 15 ARTICLE VIII--Expenses of the Trust and Series . . . . . . . 15 ARTICLE IX--Limitation of Liability and Indemnification . . 16 Section 1. Limitation of Liability . . . . . . . . . . 16 Section 2. Indemnification . . . . . . . . . . . . . . 17 Section 3. Indemnification of Shareholders . . . . . . 18 ARTICLE X--Miscellaneous . . . . . . . . . . . . . . . . . . 19 Section 1. Trust Not a Partnership . . . . . . . . . . 19 Section 2. Trustee Action; Expert Advice; No Bond or Surety . . . . . . . . . . . . . . . . . 19 Section 3. Record Dates . . . . . . . . . . . . . . . 19 Section 4. Termination of the Trust . . . . . . . . . 19 Section 5. Reorganization . . . . . . . . . . . . . . 20 Section 6. Trust Instrument . . . . . . . . . . . . . 21 Section 7. Applicable Law . . . . . . . . . . . . . . 21 Section 8. Amendments . . . . . . . . . . . . . . . . 21 Section 9. Fiscal Year . . . . . . . . . . . . . . . . 22 Section 10. Severability . . . . . . . . . . . . . . . 22 - ii - NEUBERGER & BERMAN EQUITY ASSETS -------------------------------- TRUST INSTRUMENT ---------------- This TRUST INSTRUMENT is made on October 18, 1993, by the Trustees, to establish a business trust for the investment and reinvestment of funds contributed to the Trust by investors. The Trustees declare that all money and property contributed to the Trust shall be held and managed in trust pursuant to this Trust Instrument. The name of the Trust created by this Trust Instrument is Neuberger & Berman Equity Assets. ARTICLE I --------- DEFINITIONS ----------- Unless otherwise provided or required by the context: (a) "By-laws" means the By-laws of the Trust adopted by the Trustees, as amended from time to time; (b) "Class" means the class of Shares of a Series established pursuant to Article IV; (c) "Commission," "Interested Person," and "Principal Underwriter" have the meanings provided in the 1940 Act; (d) "Covered Person" means a person so defined in Article IX, Section 2; (e) "Delaware Act" means Chapter 38 of Title 12 of the Delaware Code entitled "Treatment of Delaware Business Trusts," as amended from time to time; (f) "Majority Shareholder Vote" means "the vote of a majority of the outstanding voting securities" as defined in the 1940 Act; (g) "Net Asset Value" means the net asset value of each Series of the Trust, determined as provided in Article V, Section 3; (h) "Outstanding Shares" means Shares shown in the books of the Trust or its transfer agent as then issued and outstanding, but does not include Shares which have been repurchased or redeemed by the Trust and which are held in the treasury of the Trust; (i) "Series" means a series of Shares established pursuant to Article IV; (j) "Shareholder" means a record owner of Outstanding Shares; (k) "Shares" means the equal proportionate transferable units of interest into which the beneficial interest of each Series or Class is divided from time to time (including whole Shares and fractions of Shares); (l) "Trust" means Neuberger & Berman Equity Assets, established hereby, and reference to the Trust, when applicable to one or more Series, refers to that Series; (m) "Trustees" means the persons who have signed this Trust Instrument, so long as they shall continue in office in accordance with the terms hereof, and all other persons who may from time to time be duly qualified and serving as Trustees in accordance with Article II, in all cases in their capacities as Trustees hereunder; (n) "Trust Property" means any and all property, real or personal, tangible or intangible, which is owned or held by or for the Trust or any Series or by the Trustees on behalf of the Trust or any Series; (o) The "1940 Act" means the Investment Company Act of 1940, as amended from time to time. ARTICLE II ---------- THE TRUSTEES ------------ Section 1. Management of the Trust. The business and affairs of the Trust shall be managed by or under the direction of the Trustees, and they shall have all powers necessary or desirable to carry out that responsibility. The Trustees may execute all instruments and take all action they deem necessary or desirable to promote the interests of the Trust. Any determination made by the Trustees in good faith as to what is in the interests of the Trust shall be conclusive. Section 2. Initial Trustees; Election and Number of Trustees. The initial Trustees shall be the persons initially signing this Trust Instrument. The number of Trustees (other than the initial Trustees) shall be fixed from time to time by a majority of the Trustees; provided, that there shall be at least two (2) Trustees. The Shareholders shall elect the Trustees (other than the initial Trustees) on such dates as the Trustees may fix from time to time. Section 3. Term of Office of Trustees. Each Trustee shall hold office for life or until his successor is elected or the Trust terminates; except that (a) any Trustee may resign by delivering to the other Trustees or to any Trust officer a written resignation effective upon such delivery or a later date specified therein; (b) any Trustee may be removed with or without cause at any time by a written instrument signed by at least two-thirds of the other Trustees, specifying the effective date of removal; (c) any Trustee who requests to be retired, or who has become physically or mentally incapacitated or is otherwise unable to serve, may be retired by a written instrument signed by a majority of the other - 2 - Trustees, specifying the effective date of retirement; and (d) any Trustee may be removed at any meeting of the Shareholders by a vote of at least two-thirds of the Outstanding Shares. Section 4. Vacancies; Appointment of Trustees. Whenever a vacancy shall exist in the Board of Trustees, regardless of the reason for such vacancy, the remaining Trustees shall appoint any person as they determine in their sole discretion to fill that vacancy, consistent with the limitations under the 1940 Act. Such appointment shall be made by a written instrument signed by a majority of the Trustees or by a resolution of the Trustees, duly adopted and recorded in the records of the Trust, specifying the effective date of the appointment. The Trustees may appoint a new Trustee as provided above in anticipation of a vacancy expected to occur because of the retirement, resignation, or removal of a Trustee, or an increase in number of Trustees, provided that such appointment shall become effective only at or after the expected vacancy occurs. As soon as any such Trustee has accepted his appointment in writing, the trust estate shall vest in the new Trustee, together with the continuing Trustees, without any further act or conveyance, and he shall be deemed a Trustee hereunder. The power of appointment is subject to Section 16(a) of the 1940 Act. Section 5. Temporary Vacancy or Absence. Whenever a vacancy in the Board of Trustees shall occur, until such vacancy is filled, or while any Trustee is absent from his domicile (unless that Trustee has made arrangements to be informed about, and to participate in, the affairs of the Trust during such absence), or is physically or mentally incapacitated, the remaining Trustees shall have all the powers hereunder and their certificate as to such vacancy, absence, or incapacity shall be conclusive. To the extent permitted under the 1940 Act, any Trustee may, by power of attorney, delegate his powers as Trustee for a period not exceeding six (6) months at any one time to any other Trustee or Trustees. Section 6. Chairman. The Trustees shall appoint one of their number to be Chairman of the Board of Trustees. The Chairman shall preside at all meetings of the Trustees, shall be authorized to execute the policies established by the Trustees and the administration of the Trust, and may be the chief executive, financial and/or accounting officer of the Trust. Section 7. Action by the Trustees. The Trustees shall act by majority vote at a meeting duly called (including at a telephonic meeting, unless the 1940 Act requires that a particular action be taken only at a meeting of Trustees in person) at which a quorum is present or by written consent of a majority of Trustees (or such greater number as may be required by applicable law) without a meeting. A majority of the Trustees shall constitute a quorum at any meeting. Meetings of the Trustees may be called orally or in writing by the Chairman of the Board of Trustees or by any two other Trustees. Notice of the time, date and place of all Trustees meetings shall be given to each Trustee by telephone, facsimile or other electronic mechanism sent to his home or business address at - 3 - least twenty-four hours in advance of the meeting or by written notice mailed to his home or business address at least seventy-two hours in advance of the meeting. Notice need not be given to any Trustee who attends the meeting without objecting to the lack of notice or who signs a waiver of notice either before or after the meeting. Subject to the requirements of the 1940 Act, the Trustees by majority vote may delegate to any Trustee or Trustees authority to approve particular matters or take particular actions on behalf of the Trust. Any written consent or waiver may be provided and delivered to the Trust by facsimile or other similar electronic mechanism. Section 8. Ownership of Trust Property. The Trust Property of the Trust and of each Series shall be held separate and apart from any assets now or hereafter held in any capacity other than as Trustee hereunder by the Trustees or any successor Trustees. All of the Trust Property and legal title thereto shall at all times be considered as vested in the Trustees on behalf of the Trust, except that the Trustees may cause legal title to any Trust Property to be held by or in the name of the Trust, or in the name of any person as nominee. No Shareholder shall be deemed to have a severable ownership in any individual asset of the Trust or of any Series or any right of partition or possession thereof, but each Shareholder shall have, as provided in Article IV, a proportionate undivided beneficial interest in the Trust or Series represented by Shares. Section 9. Effect of Trustees Not Serving. The death, resignation, retirement, removal, incapacity, or inability or refusal to serve of the Trustees, or any one of them, shall not operate to annul the Trust or to revoke any existing agency created pursuant to the terms of this Trust Instrument. Section 10. Trustees, etc. as Shareholders. Subject to any restrictions in the By-laws, any Trustee, officer, agent or independent contractor of the Trust may acquire, own and dispose of Shares to the same extent as any other Shareholder; the Trustees may issue and sell Shares to and buy Shares from any such person or any firm or company in which such person is interested, subject only to any general limitations herein. ARTICLE III ----------- POWERS OF THE TRUSTEES ---------------------- Section 1. Powers. The Trustees in all instances shall act as principals, free of the control of the Shareholders. The Trustees shall have full power and authority to take or refrain from taking any action and to execute any contracts and instruments that they may consider necessary or desirable in the management of the Trust. The Trustees shall not in any way be bound or limited by current or future laws or customs applicable to trust investments, but shall have full power and authority to make any investments which they, in their sole discretion, deem proper to accomplish the purposes of the Trust, and to dispose of the same. The - 4 - Trustees may exercise all of their powers without recourse to any court or other authority. Subject to any applicable limitation herein or in the By-laws or resolutions of the Trust, the Trustees shall have power and authority, without limitation: (a) To invest and reinvest cash and other property, and to hold cash or other property uninvested, without in any event being bound or limited by any current or future law or custom concerning investments by trustees, and to sell, exchange, lend, pledge, mortgage, hypothecate, write options on and lease any or all of the Trust Property; to invest in obligations and securities of any kind, and without regard to whether they may mature before the possible termination of the Trust; and without limitation to invest all or any part of its cash and other property in securities issued by a registered investment company or series thereof, subject to the provisions of the 1940 Act; (b) To operate as and carry on the business of a registered investment company, and exercise all the powers necessary and proper to conduct such a business; (c) To adopt By-laws not inconsistent with this Trust Instrument providing for the conduct of the business of the Trust and to amend and repeal them to the extent such right is not reserved to the Shareholders; (d) To elect and remove such officers and appoint and terminate such agents as they deem appropriate; (e) To employ as custodian of any assets of the Trust, subject to any provisions herein or in the By-laws, one or more banks, trust companies or companies that are members of a national securities exchange, or other entities permitted by the Commission to serve as such; (f) To retain one or more transfer agents and Shareholder servicing agents, or both; (g) To provide for the distribution of Shares either through a Principal Underwriter as provided herein or by the Trust itself, or both, and, subject to applicable law, to adopt a distribution plan of any kind; (h) To set record dates in the manner provided for herein or in the By-laws; (i) To delegate such authority as they consider desirable to any officers of the Trust and to any agent, independent contractor, manager, investment adviser, custodian or underwriter, in either general or specific terms; (j) To sell or exchange any or all of the assets of the Trust, subject to Article X, Section 4; (k) To vote or give assent, or exercise any rights of ownership, with respect to other securities or property; and, if necessary, to - 5 - execute and deliver powers of attorney delegating such power to other persons; (l) To exercise powers and rights of subscription or otherwise which in any manner arise out of ownership of securities; (m) To hold any security or other property (i) in a form not indicating any trust, whether in bearer, book entry, unregistered or other negotiable form, or (ii) either in the Trust's or Trustees' own name or in the name of a custodian or a nominee or nominees, subject to safeguards according to the usual practice of business trusts or investment companies; (n) To establish separate and distinct Series with separately defined investment objectives and policies and distinct investment purposes, and with separate Shares representing beneficial interests in such Series, and to establish separate Classes, all in accordance with the provisions of Article IV; (o) To the full extent permitted by Section 3804 of the Delaware Act, to allocate assets, liabilities and expenses of the Trust to a particular Series and liabilities and expenses to a particular Class or to apportion the same between or among two or more Series or Classes, provided that any liabilities or expenses incurred by a particular Series or Class shall be payable solely out of the assets belonging to that Series or Class as provided for in Article IV, Section 4; (p) To consent to or participate in any plan for the reorganization, consolidation or merger of any corporation or concern whose securities are held by the Trust; to consent to any contract, lease, mortgage, purchase, or sale of property by such corporation or concern; and to pay calls or subscriptions with respect to any security held in the Trust; (q) To compromise, arbitrate, or otherwise adjust claims in favor of or against the Trust or any matter in controversy including, but not limited to, claims for taxes; (r) To make distributions of income and of capital gains to Shareholders in the manner hereinafter provided for; (s) To borrow money; (t) To establish, from time to time, a minimum total investment for Shareholders, and to require the redemption of the Shares of any Shareholders whose investment is less than such minimum upon giving notice to such Shareholder; (u) To establish committees for such purposes, with such membership, and with such responsibilities as the Trustees may consider proper, including a committee consisting of fewer than all of the Trustees then in office, which may act for and bind the Trustees and the Trust with - 6 - respect to the institution, prosecution, dismissal, settlement, review or investigation of any legal action, suit or proceeding, pending or threatened; (v) To issue, sell, repurchase, redeem, cancel, retire, acquire, hold, resell, reissue, dispose of and otherwise deal in Shares; to establish terms and conditions regarding the issuance, sale, repurchase, redemption, cancellation, retirement, acquisition, holding, resale, reissuance, disposition of or dealing in Shares; and, subject to Articles IV and V, to apply to any such repurchase, redemption, retirement, cancellation or acquisition of Shares any funds or property of the Trust or of the particular Series with respect to which such Shares are issued; (w) To definitively interpret the investment objectives, policies and limitations of the Trust or any Series; and (x) To carry on any other business in connection with or incidental to any of the foregoing powers, to do everything necessary or desirable to accomplish any purpose or to further any of the foregoing powers, and to take every other action incidental to the foregoing business or purposes, objects or powers. The clauses above shall be construed as objects and powers, and the enumeration of specific powers shall not limit in any way the general powers of the Trustees. Any action by one or more of the Trustees in their capacity as such hereunder shall be deemed an action on behalf of the Trust or the applicable Series, and not an action in an individual capacity. No one dealing with the Trustees shall be under any obligation to make any inquiry concerning the authority of the Trustees, or to see to the application of any payments made or property transferred to the Trustees or upon their order. In construing this Trust Instrument, the presumption shall be in favor of a grant of power to the Trustees. Section 2. Certain Transactions. Except as prohibited by applicable law, the Trustees may, on behalf of the Trust, buy any securities from or sell any securities to, or lend any assets of the Trust to, any Trustee or officer of the Trust or any firm of which any such Trustee or officer is a member acting as principal, or have any such dealings with any investment adviser, administrator, distributor or transfer agent for the Trust or with any Interested Person of such person. The Trust may employ any such person or entity in which such person is an Interested Person, as broker, legal counsel, registrar, investment adviser, administrator, distributor, transfer agent, dividend disbursing agent, custodian or in any other capacity upon customary terms. ARTICLE IV ---------- SERIES; CLASSES; SHARES ----------------------- Section 1. Establishment of Series or Class. The Trust shall consist of one or more Series. The Trustees hereby establish the Series listed in Schedule A attached hereto and made a part hereof. Each - 7 - additional Series shall be established by the adoption of a resolution of the Trustees. The Trustees may designate the relative rights and preferences of the Shares of each Series. The Trustees may divide the Shares of any Series into Classes. In such case each Class of a Series shall represent interests in the assets of that Series and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except that expenses allocated to a Class may be borne solely by such Class as determined by the Trustees and a Class may have exclusive voting rights with respect to matters affecting only that Class. The Trust shall maintain separate and distinct records for each Series and hold and account for the assets thereof separately from the other assets of the Trust or of any other Series. A Series may issue any number of Shares and need not issue Shares. Each Share of a Series shall represent an equal beneficial interest in the net assets of such Series. Each holder of Shares of a Series shall be entitled to receive his pro rata share of all distributions made with respect to such Series. Upon redemption of his Shares, such Shareholder shall be paid solely out of the funds and property of such Series. The Trustees may change the name of any Series or Class. Section 2. Shares. The beneficial interest in the Trust shall be divided into Shares of one or more separate and distinct Series or Classes established by the Trustees. The number of Shares of each Series and Class is unlimited and each Share shall have a par value of $0.001 per Share. All Shares issued hereunder shall be fully paid and nonassessable. Shareholders shall have no preemptive or other right to subscribe to any additional Shares or other securities issued by the Trust. The Trustees shall have full power and authority, in their sole discretion and without obtaining Shareholder approval: to issue original or additional Shares at such times and on such terms and conditions as they deem appropriate; to issue fractional Shares and Shares held in the treasury; to establish and to change in any manner Shares of any Series or Classes with such preferences, terms of conversion, voting powers, rights and privileges as the Trustees may determine (but the Trustees may not change Outstanding Shares in a manner materially adverse to the Shareholders of such Shares); to divide or combine the Shares of any Series or Classes into a greater or lesser number; to classify or reclassify any unissued Shares of any Series or Classes into one or more Series or Classes of Shares; to abolish any one or more Series or Classes of Shares; to issue Shares to acquire other assets (including assets subject to, and in connection with, the assumption of liabilities) and businesses; and to take such other action with respect to the Shares as the Trustees may deem desirable. Shares held in the treasury shall not confer any voting rights on the Trustees and shall not be entitled to any dividends or other distributions declared with respect to the Shares. Section 3. Investment in the Trust. The Trustees shall accept investments in any Series from such persons and on such terms as they may from time to time authorize. At the Trustees' discretion, such investments, subject to applicable law, may be in the form of cash or securities in which that Series is authorized to invest, valued as provided in Article V, Section 3. Investments in a Series shall be - 8 - credited to each Shareholder's account in the form of full Shares at the Net Asset Value per Share next determined after the investment is received or accepted as may be determined by the Trustees; provided, however, that the Trustees may, in their sole discretion, (a) impose a sales charge upon investments in any Series or Class, (b) issue fractional Shares, or (c) determine the Net Asset Value per Share of the initial capital contribution. The Trustees shall have the right to refuse to accept investments, or any investment, in any Series at any time without any cause or reason therefor whatsoever. Section 4. Assets and Liabilities of Series. All consideration received by the Trust for the issue or sale of Shares of a particular Series, together with all assets in which such consideration is invested or reinvested, all income, earnings, profits, and proceeds thereof (including any proceeds derived from the sale, exchange or liquidation of such assets, and any funds or payments derived from any reinvestment of such proceeds in whatever form the same may be), shall be held and accounted for separately from the other assets of the Trust and every other Series and are referred to as "assets belonging to" that Series. The assets belonging to a Series shall belong only to that Series for all purposes, and to no other Series, subject only to the rights of creditors of that Series. Any assets, income, earnings, profits, and proceeds thereof, funds, or payments which are not readily identifiable as belonging to any particular Series shall be allocated by the Trustees between and among one or more Series as the Trustees deem fair and equitable. Each such allocation shall be conclusive and binding upon the Shareholders of all Series for all purposes, and such assets, earnings, income, profits or funds, or payments and proceeds thereof shall be referred to as assets belonging to that Series. The assets belonging to a Series shall be so recorded upon the books of the Trust, and shall be held by the Trustees in trust for the benefit of the Shareholders of that Series. The assets belonging to a Series shall be charged with the liabilities of that Series and all expenses, costs, charges and reserves attributable to that Series, except that liabilities and expenses allocated solely to a particular Class shall be borne by that Class. Any general liabilities, expenses, costs, charges or reserves of the Trust which are not readily identifiable as belonging to any particular Series or Class shall be allocated and charged by the Trustees between or among any one or more of the Series or Classes in such manner as the Trustees deem fair and equitable. Each such allocation shall be conclusive and binding upon the Shareholders of all Series or Classes for all purposes. Without limiting the foregoing, but subject to the right of the Trustees to allocate general liabilities, expenses, costs, charges or reserves as herein provided, the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to a particular Series shall be enforceable against the assets of such Series only, and not against the assets of the Trust generally or of any other Series. Notice of this contractual limitation on liabilities among Series may, in the Trustees' discretion, be set forth in the certificate of trust of the Trust (whether originally or by amendment) as filed or to be filed in the Office of the Secretary of State of the State of Delaware pursuant - 9 - to the Delaware Act, and upon the giving of such notice in the certificate of trust, the statutory provisions of Section 3804 of the Delaware Act relating to limitations on liabilities among Series (and the statutory effect under Section 3804 of setting forth such notice in the certificate of trust) shall become applicable to the Trust and each Series. Any person extending credit to, contracting with or having any claim against any Series may look only to the assets of that Series to satisfy or enforce any debt, with respect to that Series. No Shareholder or former Shareholder of any Series shall have a claim on or any right to any assets allocated or belonging to any other Series. Section 5. Ownership and Transfer of Shares. The Trust shall maintain a register containing the names and addresses of the Shareholders of each Series and Class thereof, the number of Shares of each Series and Class held by such Shareholders, and a record of all Share transfers. The register shall be conclusive as to the identity of Shareholders of record and the number of Shares held by them from time to time. The Trustees may authorize the issuance of certificates representing Shares and adopt rules governing their use. The Trustees may make rules governing the transfer of Shares, whether or not represented by certificates. Section 6. Status of Shares; Limitation of Shareholder Liability. (a) Shares shall be deemed to be personal property giving Shareholders only the rights provided in this Trust Instrument. Every Shareholder, by virtue of having acquired a Share, shall be held expressly to have assented to and agreed to be bound by the terms of this Trust Instrument and to have become a party hereto. (b) No Shareholder shall be personally liable for the debts, liabilities, obligations and expenses incurred by, contracted for, or otherwise existing with respect to, the Trust or any Series. Neither the Trust nor the Trustees shall have any power to bind any Shareholder personally or to demand payment from any Shareholder for anything, other than as agreed by the Shareholder. Shareholders shall have the same limitation of personal liability as is extended to shareholders of a private corporation for profit incorporated in the State of Delaware. Every written obligation of the Trust or any Series shall contain a statement to the effect that such obligation may only be enforced against the assets of the Trust or such Series; however, the omission of such statement shall not operate to bind or create personal liability for any Shareholder or Trustee. ARTICLE V --------- DISTRIBUTIONS AND REDEMPTIONS ----------------------------- Section 1. Distributions. The Trustees may declare and pay dividends and other distributions, including dividends on Shares of a particular Series and other distributions from the assets belonging to that Series. The amount and payment of dividends or distributions and their form, whether they are in cash, Shares or other Trust Property, - 10 - shall be determined by the Trustees. Dividends and other distributions may be paid pursuant to a standing resolution adopted once or more often as the Trustees determine. All dividends and other distributions on Shares of a particular Series shall be distributed pro rata to the Shareholders of that Series in proportion to the number of Shares of that Series they held on the record date established for such payment, except that such dividends and distributions shall appropriately reflect expenses allocated to a particular Class of such Series. The Trustees may adopt and offer to Shareholders such dividend reinvestment plans, cash dividend payout plans or similar plans as the Trustees deem appropriate. Section 2. Redemptions. Each Shareholder of a Series shall have the right at such times as may be permitted by the Trustees to require the Series to redeem all or any part of his Shares at a redemption price per Share equal to the Net Asset Value per Share at such time as the Trustees shall have prescribed by resolution, less any applicable charges or sales loads. In the absence of such resolution, the redemption price per Share shall be the Net Asset Value next determined after receipt by the Series of a request for redemption in proper form less such charges as are determined by the Trustees and described in the Trust's Registration Statement for that Series under the Securities Act of 1933. The Trustees may specify conditions, prices, and places of redemption, and may specify binding requirements for the proper form or forms of requests for redemption. Payment of the redemption price may be wholly or partly in securities or other assets at the value of such securities or assets used in such determination of Net Asset Value, or may be in cash. Upon redemption, Shares may be reissued from time to time. The Trustees may require Shareholders to redeem Shares for any reason under terms set by the Trustees, including the failure of a Shareholder to supply a personal identification number if required to do so, or to have the minimum investment required, or to pay when due for the purchase of Shares issued to him. To the extent permitted by law, the Trustees may retain the proceeds of any redemption of Shares required by them for payment of amounts due and owing by a Shareholder to the Trust or any Series or Class. Notwithstanding the foregoing, the Trustees may postpone payment of the redemption price and may suspend the right of the Shareholders to require any Series or Class to redeem Shares during any period of time when and to the extent permissible under the 1940 Act. Section 3. Determination of Net Asset Value. The Trustees shall cause the Net Asset Value of Shares of each Series or Class to be determined from time to time in a manner consistent with applicable laws and regulations. The Trustees may delegate the power and duty to determine Net Asset Value per Share to one or more Trustees or officers of the Trust or to a custodian, depository or other agent appointed for such purpose. The Net Asset Value of Shares shall be determined separately for each Series or Class at such times as may be prescribed by the Trustees or, in the absence of action by the Trustees, as of the close of trading on the New York Stock Exchange on each day for all or part of which such Exchange is open for unrestricted trading. - 11 - Section 4. Suspension of Right of Redemption. If, as referred to in Section 2 of this Article, the Trustees postpone payment of the redemption price and suspend the right of Shareholders to redeem their Shares, such suspension shall take effect at the time the Trustees shall specify, but not later than the close of business on the business day next following the declaration of suspension. Thereafter Shareholders shall have no right of redemption or payment until the Trustees declare the end of the suspension. If the right of redemption is suspended, a Shareholder may either withdraw his request for redemption or receive payment based on the Net Asset Value per Share next determined after the suspension terminates. ARTICLE VI ---------- SHAREHOLDERS' VOTING POWERS AND MEETINGS ---------------------------------------- Section 1. Voting Powers. The Shareholders shall have power to vote only with respect to (a) the election of Trustees as provided in Section 2 of this Article; (b) the removal of Trustees as provided in Article II, Section 3(d); (c) any investment advisory or management contract as provided in Article VII, Section 1; (d) any termination of the Trust as provided in Article X, Section 4; (e) the amendment of this Trust Instrument to the extent and as provided in Article X, Section 8; and (f) such additional matters relating to the Trust as may be required or authorized by law, this Trust Instrument, or the By-laws or any registration of the Trust with the Commission or any State, or as the Trustees may consider desirable. On any matter submitted to a vote of the Shareholders, all Shares shall be voted by individual Series or Class, except (a) when required by the 1940 Act, Shares shall be voted in the aggregate and not by individual Series or Class, and (b) when the Trustees have determined that the matter affects the interests of more than one Series or Class, then the Shareholders of all such Series or Classes shall be entitled to vote thereon. Each whole Share shall be entitled to one vote as to any matter on which it is entitled to vote, and each fractional Share shall be entitled to a proportionate fractional vote. There shall be no cumulative voting in the election of Trustees. Shares may be voted in person or by proxy or in any manner provided for in the By-laws. The By-laws may provide that proxies may be given by any electronic or telecommunications device or in any other manner, but if a proposal by anyone other than the officers or Trustees is submitted to a vote of the Shareholders of any Series or Class, or if there is a proxy contest or proxy solicitation or proposal in opposition to any proposal by the officers or Trustees, Shares may be voted only in person or by written proxy. Until Shares of a Series are issued, as to that Series the Trustees may exercise all rights of Shareholders and may take any action required or permitted to be taken by Shareholders by law, this Trust Instrument or the By-laws. Section 2. Meetings of Shareholders. The first Shareholders' meeting shall be held to elect Trustees at such time and place as the - 12 - Trustees designate. Special meetings of the Shareholders of any Series or Class may be called by the Trustees and shall be called by the Trustees upon the written request of Shareholders owning at least ten percent of the Outstanding Shares of such Series or Class entitled to vote. Shareholders shall be entitled to at least fifteen days' notice of any meeting, given as determined by the Trustees. Section 3. Quorum; Required Vote. One-third of the Outstanding Shares of each Series or Class, or one-third of the Outstanding Shares of the Trust, entitled to vote in person or by proxy shall be a quorum for the transaction of business at a Shareholders' meeting with respect to such Series or Class, or with respect to the entire Trust, respectively. Any lesser number shall be sufficient for adjournments. Any adjourned session of a Shareholders' meeting may be held within a reasonable time without further notice. Except when a larger vote is required by law, this Trust Instrument or the By-laws, a majority of the Outstanding Shares voted in person or by proxy shall decide any matters to be voted upon with respect to the entire Trust (or, if required by law, a Majority Shareholder Vote of the entire Trust) and a plurality of such Outstanding Shares shall elect a Trustee; provided, that if this Trust Instrument or applicable law permits or requires that Shares be voted on any matter by individual Series or Classes, then a majority of the Outstanding Shares of that Series or Class (or, if required by law, a Majority Shareholder Vote of that Series or Class) voted in person or by proxy voted on the matter shall decide that matter insofar as that Series or Class is concerned. Shareholders may act as to the Trust or any Series or Class by the written consent of a majority (or such greater amount as may be required by applicable law, this Trust Instrument, or the By-laws) of the Outstanding Shares of the Trust or of such Series or Class, as the case may be. ARTICLE VII ------------ CONTRACTS WITH SERVICE PROVIDERS -------------------------------- Section 1. Investment Adviser. Subject to a Majority Shareholder Vote, the Trustees may enter into one or more investment advisory contracts on behalf of the Trust or any Series, providing for investment advisory services, statistical and research facilities and services, and other facilities and services to be furnished to the Trust or Series on terms and conditions acceptable to the Trustees. Any such contract may provide for the investment adviser to effect purchases, sales or exchanges of portfolio securities or other Trust Property on behalf of the Trustees or may authorize any officer or agent of the Trust to effect such purchases, sales or exchanges pursuant to recommendations of the investment adviser. The Trustees may authorize the investment adviser to employ one or more sub-advisers. Section 2. Principal Underwriter. The Trustees may enter into contracts on behalf of the Trust or any Series or Class, providing for the distribution and sale of Shares by the other party, either directly or as sales agent, on terms and conditions acceptable to the Trustees. The - 13 - Trustees may adopt a plan or plans of distribution with respect to Shares of any Series or Class and enter into any related agreements, whereby the Series or Class finances directly or indirectly any activity that is primarily intended to result in sales of its Shares, subject to the requirements of Section 12 of the 1940 Act, Rule 12b-1 thereunder, and other applicable rules and regulations. Section 3. Transfer Agency, Shareholder Services, and Administration Agreements. The Trustees, on behalf of the Trust or any Series or Class, may enter into transfer agency agreements, Shareholder service agreements, and administration and management agreements with any party or parties on terms and conditions acceptable to the Trustees. Section 4. Custodian. The Trustees shall at all times place and maintain the securities and similar investments of the Trust and of each Series in custody meeting the requirements of Section 17(f) of the 1940 Act and the rules thereunder. The Trustees, on behalf of the Trust or any Series, may enter into an agreement with a custodian on terms and conditions acceptable to the Trustees, providing for the custodian, among other things, to (a) hold the securities owned by the Trust or any Series and deliver the same upon written order or oral order confirmed in writing, (b) receive and receipt for any moneys due to the Trust or any Series and deposit the same in its own banking department or elsewhere, (c) disburse such funds upon orders or vouchers, and (d) employ one or more sub-custodians. Section 5. Parties to Contracts with Service Providers. The Trustees may enter into any contract with any entity, although one more of the Trustees or officers of the Trust may be an officer, director, trustee, partner, shareholder, or member of such entity, and no such contract shall be invalidated or rendered void or voidable because of such relationship. No person having such a relationship shall be disqualified from voting on or executing a contract in his capacity as Trustee and/or Shareholder, or be liable merely by reason of such relationship for any loss or expense to the Trust with respect to such a contract or accountable for any profit realized directly or indirectly therefrom; provided, that the contract was reasonable and fair and not inconsistent with this Trust Instrument or the By-laws. Any contract referred to in Sections 1 and 2 of this Article shall be consistent with and subject to the applicable requirements of Section 15 of the 1940 Act and the rules and orders thereunder with respect to its continuance in effect, its termination, and the method of authorization and approval of such contract or renewal. No amendment to a contract referred to in Section 1 of this Article shall be effective unless assented to as required by Section 15 of the 1940 Act, and the rules and orders thereunder. - 14 - ARTICLE VIII ------------ EXPENSES OF THE TRUST AND SERIES Subject to Article IV, Section 4, the Trust or a particular Series shall pay, or shall reimburse the Trustees from the Trust estate or the assets belonging to the particular Series, for their expenses and disbursements, including, but not limited to, interest charges, taxes, brokerage fees and commissions; expenses of issue, repurchase and redemption of Shares; certain insurance premiums; applicable fees, interest charges and expenses of third parties, including the Trust's investment advisers, managers, administrators, distributors, custodians, transfer agents and fund accountants; fees of pricing, interest, dividend, credit and other reporting services; costs of membership in trade associations; telecommunications expenses; funds transmission expenses; auditing, legal and compliance expenses; costs of forming the Trust and its Series and maintaining its existence; costs of preparing and printing the prospectuses of the Trust and each Series, statements of additional information and Shareholder reports and delivering them to Shareholders; expenses of meetings of Shareholders and proxy solicitations therefor; costs of maintaining books and accounts; costs of reproduction, stationery and supplies; fees and expenses of the Trustees; compensation of the Trust's officers and employees and costs of other personnel performing services for the Trust or any Series; costs of Trustee meetings; Commission registration fees and related expenses; state or foreign securities laws registration fees and related expenses; and for such non-recurring items as may arise, including litigation to which the Trust or a Series (or a Trustee or officer of the Trust acting as such) is a party, and for all losses and liabilities by them incurred in administering the Trust. The Trustees shall have a lien on the assets belonging to the appropriate Series, or in the case of an expense allocable to more than one Series, on the assets of each such Series, prior to any rights or interests of the Shareholders thereto, for the reimbursement to them of such expenses, disbursements, losses and liabilities. ARTICLE IX ---------- LIMITATION OF LIABILITY AND INDEMNIFICATION ------------------------------------------ Section 1. Limitation of Liability. All persons contracting with or having any claim against the Trust or a particular Series shall look only to the assets of the Trust or such Series, respectively, for payment under such contract or claim; and neither the Trustees nor any of the Trust's officers, employees or agents, whether past, present or future, shall be personally liable therefor. Every written instrument or obligation on behalf of the Trust or any Series shall contain a statement to the foregoing effect, but the absence of such statement shall not operate to make any Trustee or officer of the Trust liable thereunder. Provided they have exercised reasonable care and have acted under the reasonable belief that their actions are in the best interest of the Trust, the Trustees and - 15 - officers of the Trust shall not be responsible or liable for any act or omission or for neglect or wrongdoing of them or any officer, agent, employee, investment adviser or independent contractor of the Trust, but nothing contained in this Trust Instrument or in the Delaware Act shall protect any Trustee or officer of the Trust against liability to the Trust or to Shareholders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office. Section 2. Indemnification. (a) Subject to the exceptions and limitations contained in subsection (b) below: (i) every person who is, or has been, a Trustee or an officer, employee or agent of the Trust ("Covered Person") shall be indemnified by the Trust or the appropriate Series to the fullest extent permitted by law against liability and against all expenses reasonably incurred or paid by him in connection with any claim, action, suit or proceeding in which he becomes involved as a party or otherwise by virtue of his being or having been a Covered Person and against amounts paid or incurred by him in the settlement thereof; provided, however, that the Trust shall not be obligated to indemnify any agent acting pursuant to a written contract with the Trust, except to the extent required by such contract; (ii) as used herein, the words "claim," "action," "suit," or "proceeding" shall apply to all claims, actions, suits or proceedings (civil, criminal or other, including appeals), actual or threatened, and the words "liability" and "expenses" shall include, without limitation, attorneys' fees, costs, judgments, amounts paid in settlement, fines, penalties and other liabilities. (b) No indemnification shall be provided hereunder to a Covered Person: (i) who shall have been adjudicated by a court or body before which the proceeding was brought (A) to be liable to the Trust 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, or (B) not to have acted in good faith in the reasonable belief that his action was in the best interest of the Trust; or (ii) in the event of a settlement, unless there has been a determination that such Covered Person did not engage in willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office (A) by the court or other body approving - 16 - the settlement; (B) by at least a majority of those Trustees who are neither Interested Persons of the Trust nor are parties to the matter based upon a review of readily available facts (as opposed to a full trial-type inquiry); or (C) by written opinion of independent legal counsel based upon a review of readily available facts (as opposed to a full trial-type inquiry). (c) The rights of indemnification herein provided may be insured against by policies maintained by the Trust, shall be severable, shall not be exclusive of or affect any other rights to which any Covered Person may now or hereafter be entitled, and shall inure to the benefit of the heirs, executors and administrators of a Covered Person. (d) To the maximum extent permitted by applicable law, expenses in connection with the preparation and presentation of a defense to any claim, action, suit or proceeding of the character described in subsection (a) of this Section shall be paid by the Trust or applicable Series from time to time prior to final disposition thereof upon receipt of an undertaking by or on behalf of such Covered Person that such amount will be paid over by him to the Trust or applicable Series if it is ultimately determined that he is not entitled to indemnification under this Section; provided, however, that either (i) such Covered Person shall have provided appropriate security for such undertaking, (ii) the Trust is insured against losses arising out of any such advance payments or (iii) either a majority of the Trustees who are neither Interested Persons of the Trust nor parties to the matter, or independent legal counsel in a written opinion, shall have determined, based upon a review of readily available facts (as opposed to a full trial-type inquiry) that there is reason to believe that such Covered Person will not be disqualified from indemnification under this Section; provided, however, that the Trust shall not be obligated to pay the expenses of any agent acting pursuant to a written contract with the Trust, except to the extent required by such contract; (e) Any repeal or modification of this Article IX by the Shareholders of the Trust, or adoption or modification of any other provision of the Trust Instrument or By-laws inconsistent with this Article, shall be prospective only, to the extent that such repeal or modification would, if applied retrospectively, adversely affect any limitation on the liability of any Covered Person or adversely affect any indemnification available to any Covered Person with respect to any act or omission which occurred prior to such repeal, modification or adoption. Section 3. Indemnification of Shareholders. If any Shareholder or former Shareholder of any Series shall be held personally liable solely by reason of his being or having been a Shareholder and not because of his acts or omissions or for some other reason, the Shareholder or former Shareholder (or his 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 - 17 - from such liability. The Trust, 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. ARTICLE X --------- MISCELLANEOUS ------------- Section 1. Trust Not a Partnership. This Trust Instrument creates a trust and not a partnership. No Trustee shall have any power to bind personally either the Trust's officers or any Shareholder to any obligation to which such person has not consented. Section 2. Trustee Action; Expert Advice; No Bond or Surety. The exercise by the Trustees of their powers and discretion hereunder in good faith and with reasonable care under the circumstances then prevailing shall be binding upon everyone interested. Subject to the provisions of Article IX, the Trustees shall not be liable for errors of judgment or mistakes of fact or law. The Trustees may take advice of counsel or other experts with respect to the meaning and operation of this Trust Instrument, and subject to the provisions of Article IX, shall not be liable for any act or omission in accordance with such advice or for failing to follow such advice. The Trustees shall not be required to give any bond as such, nor any surety if a bond is obtained. Section 3. Record Dates. The Trustees may fix in advance a date up to ninety (90) days before the date of any Shareholders' meeting, or the date for the payment of any dividends or other distributions, or the date for the allotment of any other rights, or the date when any change or conversion or exchange of Shares shall go into effect as a record date for the determination of the Shareholders entitled to notice of, and to vote at, any such meeting, or entitled to receive payment of such dividend or other distribution, or to receive any such allotment of rights, or to exercise such rights in respect of any such change, conversion or exchange of Shares. Section 4. Termination of the Trust. (a) This Trust shall have perpetual existence. Subject to a Majority Shareholder Vote of the Trust or of each Series to be affected, the Trustees may (i) sell and convey all or substantially all of the assets of the Trust or any affected Series to another Series or to another entity which is an open-end investment company as defined in the 1940 Act, or is a series thereof, for adequate consideration, which may include the assumption of all outstanding obligations, taxes and other liabilities, accrued or contingent, of the Trust or any affected Series, and which may include shares of or interests in such Series, entity, or series thereof; or - 18 - (ii) at any time sell and convert into money all or substantially all of the assets of the Trust or any affected Series. Upon making reasonable provision for the payment of all known liabilities of the Trust or any affected Series in either (i) or (ii), by such assumption or otherwise, the Trustees shall distribute the remaining proceeds or assets (as the case may be) ratably among the Shareholders of the Trust or any affected Series; however, the payment to any particular Series or Class of such Series may be reduced by any fees, expenses or charges allocated to that Series or Class. (b) The Trustees may take any of the actions specified in subsection (a) (i) and (ii) above without obtaining a Majority Shareholder Vote of the Trust or any Series if a majority of the Trustees determines that the continuation of the Trust or Series is not in the best interests of the Trust, such Series, or their respective Shareholders as a result of factors or events adversely affecting the ability of the Trust or such Series to conduct its business and operations in an economically viable manner. Such factors and events may include the inability of the Trust or a Series to maintain its assets at an appropriate size, changes in laws or regulations governing the Trust or the Series or affecting assets of the type in which the Trust or Series invests, or economic developments or trends having a significant adverse impact on the business or operations of the Trust or such Series. (c) Upon completion of the distribution of the remaining proceeds or assets pursuant to subsection (a), the Trust or affected Series shall terminate and the Trustees and the Trust shall be discharged of any and all further liabilities and duties hereunder with respect thereto and the right, title and interest of all parties therein shall be canceled and discharged. Upon termination of the Trust, following completion of winding up of its business, the Trustees shall cause a certificate of cancellation of the Trust's certificate of trust to be filed in accordance with the Delaware Act, which certificate of cancellation may be signed by any one Trustee. Section 5. Reorganization. Notwithstanding anything else herein, to change the Trust's form of organization the Trustees may, without Shareholder approval, (a) cause the Trust to merge or consolidate with or into one or more entities, if the surviving or resulting entity is the Trust or another open-end management investment company under the 1940 Act, or a series thereof, that will succeed to or assume the Trust's registration under the 1940 Act, or (b) cause the Trust to incorporate under the laws of Delaware. Any agreement of merger or consolidation or certificate of merger may be signed by a majority of Trustees and facsimile signatures conveyed by electronic or telecommunication means shall be valid. Pursuant to and in accordance with the provisions of Section 3815(f) of the Delaware Act, an agreement of merger or consolidation approved by the Trustees in accordance with this Section 5 may effect any - 19 - amendment to the Trust Instrument or effect the adoption of a new trust instrument of the Trust if it is the surviving or resulting trust in the merger or consolidation. Section 6. Trust Instrument. The original or a copy of this Trust Instrument and of each amendment hereto or Trust Instrument supplemental shall be kept at the office of the Trust where it may be inspected by any Shareholder. Anyone dealing with the Trust may rely on a certificate by a Trustee or an officer of the Trust as to the authenticity of the Trust Instrument or any such amendments or supplements and as to any matters in connection with the Trust. The masculine gender herein shall include the feminine and neuter genders. Headings herein are for convenience only and shall not affect the construction of this Trust Instrument. This Trust Instrument may be executed in any number of counterparts, each of which shall be deemed an original. Section 7. Applicable Law. This Trust Instrument and the Trust created hereunder are governed by and construed and administered according to the Delaware Act and the applicable laws of the State of Delaware; provided, however, that there shall not be applicable to the Trust, the Trustees or this Trust Instrument (a) the provisions of Section 3540 of Title 12 of the Delaware Code, or (b) any provisions of the laws (statutory or common) of the State of Delaware (other than the Delaware Act) pertaining to trusts which relate to or regulate (i) the filing with any court or governmental body or agency of trustee accounts or schedules of trustee fees and charges, (ii) affirmative requirements to post bonds for trustees, officers, agents or employees of a trust, (iii) the necessity for obtaining court or other governmental approval concerning the acquisition, holding or disposition of real or personal property, (iv) fees or other sums payable to trustees, officers, agents or employees of a trust, (v) the allocation of receipts and expenditures to income or principal, (vi) restrictions or limitations on the permissible nature, amount or concentration of trust investments or requirements relating to the titling, storage or other manner of holding of trust assets, or (vii) the establishment of fiduciary or other standards of responsibilities or limitations on the acts or powers of trustees, which are inconsistent with the limitations or liabilities or authorities and powers of the Trustees set forth or referenced in this Trust Instrument. The Trust shall be of the type commonly called a Delaware business trust, and, without limiting the provisions hereof, the Trust may exercise all powers which are ordinarily exercised by such a trust under Delaware law. The Trust specifically reserves the right to exercise any of the powers or privileges afforded to trusts or actions that may be engaged in by trusts under the Delaware Act, and the absence of a specific reference herein to any such power, privilege or action shall not imply that the Trust may not exercise such power or privilege or take such actions. Section 8. Amendments. All rights granted to Shareholders hereunder are granted subject to a right to amend this Trust Instrument, except as otherwise provided herein. The Trustees may, without any Shareholder vote, amend or otherwise supplement this Trust Instrument by making an amendment, a Trust Instrument supplemental hereto or an amended - 20 - and restated trust instrument; provided, that Shareholders shall have the right to vote on any amendment (a) which would affect the voting rights of Shareholders granted in Article VI, Section 1, (b) to this Section 8, (c) required to be approved by Shareholders by law or by the Trust's registration statement(s) filed with the Commission, and (d) submitted to them by the Trustees in their discretion. Any amendment submitted to Shareholders which the Trustees determine would affect the Shareholders of any Series shall be authorized by vote of the Shareholders of such Series and no vote shall be required of Shareholders of a Series not affected. Notwithstanding anything else herein, any amendment to Article IX which would have the effect of reducing the indemnification and other rights provided thereby to Trustees, officers, employees, and agents of the Trust or to Shareholders or former Shareholders, and any repeal or amendment of this sentence, shall each require the affirmative vote of the holders of two-thirds of the Outstanding Shares of the Trust entitled to vote thereon. Section 9. Fiscal Year. The fiscal year of the Trust shall end on a specified date as set forth in the By-laws. The Trustees may change the fiscal year of the Trust without Shareholder approval. Section 10. Severability. The provisions of this Trust Instrument are severable. If the Trustees determine, with the advice of counsel, that any provision hereof conflicts with the 1940 Act, the regulated investment company provisions of the Internal Revenue Code or with other applicable laws and regulations, the conflicting provision shall be deemed never to have constituted a part of this Trust Instrument; provided, however, that such determination shall not affect any of the remaining provisions of this Trust Instrument or render invalid or improper any action taken or omitted prior to such determination. If any provision hereof shall be held invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall attach only to such provision only in such jurisdiction and shall not affect any other provision of this Trust Instrument. - 21 - IN WITNESS WHEREOF, the undersigned, being the initial Trustees, have executed this Trust Instrument as of the date first above written. /s/ Claudia A. Brandon ----------------------------- Claudia A. Brandon, as Trustee and not individually /s/ Ellen Metzger ------------------------------ Ellen Metzger, as Trustee and not individually /s/ Michael J.Weiner ------------------------------- Michael J. Weiner, as Trustee and not individually Address: 605 Third Avenue New York, New York 10158 STATE OF NEW YORK ss CITY OF NEW YORK Before me this 14th day of October 1993, personally appeared the above-named Claudia A. Brandon, Ellen Metzger, and Michael J. Weiner, known to me to be the persons who executed the foregoing instrument and who acknowledged that they executed the same. /s/ Loraine Olavarria ________________________________ Notary Public My Commission expires 4-15-95. Loraine Olavarria Notary Public, State of New York No. 03-4979299 Qualified in Bronx County Commission Expires 4-15-95 - 22 - EX-99.1(C) 4 SCHEDULE A INITIAL SERIES Neuberger & Berman Socially Responsive Trust ADDITIONAL SERIES Neuberger & Berman Focus Assets Neuberger & Berman Guardian Assets Neuberger & Berman Manhattan Assets Neuberger & Berman Partners Trust EX-99.2 5 NEUBERGER & BERMAN EQUITY ASSETS BY-LAWS October 18, 1993 TABLE OF CONTENTS Page ---- ARTICLE I PRINCIPAL OFFICE AND SEAL . . . . . . . . . . . . . . . . 1 Section 1. Principal Office . . . . . . . . . . . . . . . . 1 Section 2. Seal . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE II MEETINGS OF TRUSTEES . . . . . . . . . . . . . . . . . . 1 Section 1. Action by Trustees . . . . . . . . . . . . . . . 1 Section 2. Compensation of Trustees . . . . . . . . . . . . 1 ARTICLE III COMMITTEES . . . . . . . . . . . . . . . . . . . . . . . 1 Section 1. Establishment . . . . . . . . . . . . . . . . . 1 Section 2. Proceedings; Quorum; Action . . . . . . . . . . 2 Section 3. Executive Committee . . . . . . . . . . . . . . 2 Section 4. Nominating Committee . . . . . . . . . . . . . . 2 Section 5. Audit Committee . . . . . . . . . . . . . . . . 2 Section 6. Compensation of Committee Members . . . . . . . 2 ARTICLE IV OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 1. General . . . . . . . . . . . . . . . . . . . . 2 Section 2. Election, Tenure and Qualifications of Officers . . . . . . . . . . . . . . . . . . 2 Section 3. Vacancies and Newly Created Offices . . . . . . 3 Section 4. Removal and Resignation . . . . . . . . . . . . 3 Section 5. Chairman . . . . . . . . . . . . . . . . . . . . 3 Section 6. President . . . . . . . . . . . . . . . . . . . 3 Section 7. Vice President(s) . . . . . . . . . . . . . . . 3 Section 8. Treasurer and Assistant Treasurer(s) . . . . . . 4 Section 9. Secretary and Assistant Secretaries . . . . . . 4 Section 10. Compensation of Officers . . . . . . . . . . . . 4 Section 11. Surety Bond . . . . . . . . . . . . . . . . . . 4 ARTICLE V MEETINGS OF SHAREHOLDERS . . . . . . . . . . . . . . . . . 5 Section 1. No Annual Meetings . . . . . . . . . . . . . . . 5 Section 2. Special Meetings . . . . . . . . . . . . . . . . 5 Section 3. Notice of Meetings; Waiver . . . . . . . . . . . 5 Section 4. Adjourned Meetings . . . . . . . . . . . . . . . 6 Section 5. Validity of Proxies . . . . . . . . . . . . . . 6 Section 6. Record Date . . . . . . . . . . . . . . . . . . 7 Section 7. Action Without a Meeting . . . . . . . . . . . . 7 ARTICLE VI SHARES OF BENEFICIAL INTEREST . . . . . . . . . . . . . . 7 Section 1. No Share Certificates . . . . . . . . . . . . . 7 Section 2. Transfer of Shares . . . . . . . . . . . . . . . 7 ARTICLE VII FISCAL YEAR AND ACCOUNTANT . . . . . . . . . . . . . . . 7 Section 1. Fiscal Year . . . . . . . . . . . . . . . . . . 7 Section 2. Accountant . . . . . . . . . . . . . . . . . . . 7 - i - ARTICLE VIII AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . 8 Section 1. General . . . . . . . . . . . . . . . . . . . . 8 Section 2. By Shareholders Only . . . . . . . . . . . . . . 8 ARTICLE IX NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . 8 ARTICLE X CONFLICT OF INTEREST PROCEDURES . . . . . . . . . . . . . 9 Section 1. Monitoring and Reporting Conflicts . . . . . . . 9 Section 2. Annual Report . . . . . . . . . . . . . . . . . 9 Section 3. Resolution of Conflicts . . . . . . . . . . . . 9 Section 4. Annual Review . . . . . . . . . . . . . . . . . 9 - ii - BY-LAWS OF NEUBERGER & BERMAN EQUITY ASSETS These By-laws of Neuberger & Berman Equity Assets (the "Trust"), a Delaware business trust, are subject to the Trust Instrument of the Trust dated as of October 18, 1993, as from time to time amended, supplemented or restated (the "Trust Instrument"). Capitalized terms used herein have the same meanings as in the Trust Instrument. ARTICLE I --------- PRINCIPAL OFFICE AND SEAL -------------------------- Section 1. Principal Office. The principal office of the Trust shall be located in New York, New York, or such other location as the Trustees determine. The Trust may establish and maintain other offices and places of business, as the Trustees determine. Section 2. Seal. The Trustees may adopt a seal for the Trust in such form and with such inscription as the Trustees determine. Any Trustee or officer of the Trust shall have authority to affix the seal to any document. ARTICLE II ---------- MEETINGS OF TRUSTEES -------------------- Section 1. Action by Trustees. Trustees may take actions at meetings held at such places and times as the Trustees may determine, or without meetings, all as provided in Article II, Section 7, of the Trust Instrument. Section 2. Compensation of Trustees. Each Trustee who is neither an employee of an investment adviser of the Trust or any Series nor an employee of an entity affiliated with the investment adviser may receive such compensation from the Trust for services and reimbursement for expenses as the Trustees may determine. ARTICLE III ----------- COMMITTEES ---------- Section 1. Establishment. The Trustees may designate one or more committees of the Trustees, which shall include an Executive Committee, a Nominating Committee, and an Audit Committee (collectively, the "Established Committees"). The Trustees shall determine the number of members of each committee and its powers and shall appoint its members and its chair. Each committee member and each committee chair shall serve as such at the pleasure of the Trustees. The Trustees may abolish any committee, other than the Established Committees, at any time. Each committee shall maintain records of its meetings and report its actions to the Trustees. The Trustees may rescind any action of any committee, but such rescission shall not have retroactive effect. The Trustees may delegate to any committee any of its powers, subject to the limitations of applicable law. Section 2. Proceedings; Quorum; Action. Each committee may adopt such rules governing its proceedings, quorum and manner of acting as it shall deem proper and desirable. In the absence of such rules, a majority of any committee shall constitute a quorum, and a committee shall act by the vote of a majority of a quorum. Section 3. Executive Committee. The Executive Committee shall have all the powers of the Trustees when the Trustees are not in session. The Chairman shall be a member and the chair of the Executive Committee. A majority of the members of the Executive Committee shall be trustees who are not "interested persons" of the Trust, as defined in the 1940 Act ("Disinterested Trustees"). Section 4. Nominating Committee. The Nominating Committee shall nominate individuals to serve as Trustees (including Disinterested Trustees), as members of committees, and as officers of the Trust. The members of the Committee shall be Disinterested Trustees. Section 5. Audit Committee. The Audit Committee shall review and evaluate the audit function, including recommending the selection of independent certified public accountants for each Series. The members of the Committee shall be Disinterested Trustees. Section 6. Compensation of Committee Members. Each committee member who is a Disinterested Trustee may receive such compensation from the Trust for services and reimbursement for expenses as the Trustees may determine. ARTICLE IV ---------- OFFICERS -------- Section 1. General. The officers of the Trust shall be a Chairman, a President, one or more Vice Presidents, a Treasurer, and a Secretary, and may include one or more Assistant Treasurers or Assistant Secretaries and such other officers ("Other Officers") as the Trustees may determine. Section 2. Election, Tenure and Qualifications of Officers. The Trustees shall elect the officers of the Trust. Each officer elected by the Trustees shall hold office until his or her successor shall have been elected and qualified or until his or her earlier death, inability to serve, or resignation. Any person may hold one or more offices, except that the Chairman and the Secretary may not be the same individual. A person who holds more than one office in the Trust may not act on behalf - 2 - of the Trust in more than one capacity to execute, acknowledge, or verify an instrument required by law to be executed, acknowledged, or verified by more than one officer. No officer other than the Chairman need be a Trustee or Shareholder. Section 3. Vacancies and Newly Created Offices. Whenever a vacancy shall occur in any office or if any new office is created, the Trustees may fill such vacancy or new office. Section 4. Removal and Resignation. Officers serve at the pleasure of the Trustees and may be removed at any time with or without cause. The Trustees may delegate this power to the Chairman or President with respect to any Other Officer. Such removal shall be without prejudice to the contract rights, if any, of the person so removed. Any officer may resign from office at any time by delivering a written resignation to the Trustees, Chairman, or the President. Unless otherwise specified therein, such resignation shall take effect upon delivery. Section 5. Chairman. The Chairman shall be the chief executive officer of the Trust. Subject to the direction of the Trustees, the Chairman shall have general charge, supervision and control over the Trust's business affairs and shall be responsible for the management thereof and the execution of policies established by the Trustees. The Chairman shall preside at any Shareholders' meetings and at all meetings of the Trustees and shall in general exercise the powers and perform the duties of the Chairman of the Trustees. Except as the Trustees may otherwise order, the Chairman shall have the power to grant, issue, execute or sign powers of attorney, proxies, agreements or other documents. The Chairman also shall have the power to employ attorneys, accountants and other advisers and agents for the Trust. The Chairman shall exercise such other powers and perform such other duties as the Trustees may assign to the Chairman. Section 6. President. The President shall have such powers and perform such duties as the Trustees or the Chairman may determine. At the request or in the absence or disability of the Chairman, the President shall perform all the duties of the Chairman and, when so acting, shall have all the powers of the Chairman. Section 7. Vice President(s). The Vice President(s) shall have such powers and perform such duties as the Trustees or the Chairman may determine. At the request or in the absence or disability of the President, the Vice President (or, if there are two or more Vice Presidents, then the senior of the Vice Presidents present and able to act) shall perform all the duties of the President and, when so acting, shall have all the powers of the President. The Trustees may designate a Vice President as the principal financial officer of the Trust or to serve one or more other functions. If a Vice President is designated as principal financial officer of the Trust, he or she shall have general charge of the finances and books of the Trust and shall report to the Trustees annually regarding the financial condition of each Series as soon as possible after the close of such Series's fiscal year. The Trustees also may designate one of the Vice Presidents as Executive Vice President. - 3 - Section 8. Treasurer and Assistant Treasurer(s). The Treasurer may be designated by the Trustees as the principal financial officer or as the principal accounting officer of the Trust. If designated as principal financial officer, the Treasurer shall have general charge of the finances and books of the Trust, and shall report to the Trustees annually regarding the financial condition of each Series as soon as possible after the close of such Series' fiscal year. The Treasurer shall be responsible for the delivery of all funds and securities of the Trust to such company as the Trustees shall retain as Custodian. The Treasurer shall furnish such reports concerning the financial condition of the Trust as the Trustees may request. The Treasurer shall perform all acts incidental to the office of Treasurer, subject to the Trustees' supervision, and shall perform such additional duties as the Trustees may designate. Any Assistant Treasurer may perform such duties of the Treasurer as the Trustees or the Treasurer may assign, and, in the absence of the Treasurer, may perform all the duties of the Treasurer. Section 9. Secretary and Assistant Secretaries. The Secretary shall record all votes and proceedings of the meetings of Trustees and Shareholders in books to be kept for that purpose. The Secretary shall be responsible for giving and serving notices of the Trust. The Secretary shall have custody of any seal of the Trust and shall be responsible for the records of the Trust, including the Share register and such other books and documents as may be required by the Trustees or by law. The Secretary shall perform all acts incidental to the office of Secretary, subject to the supervision of the Trustees, and shall perform such additional duties as the Trustees may designate. Any Assistant Secretary may perform such duties of the Secretary as the Trustees or the Secretary may assign, and, in the absence of the Secretary, may perform all the duties of the Secretary. Section 10. Compensation of Officers. Each officer may receive such compensation from the Trust for services and reimbursement for expenses as the Trustees may determine. Section 11. Surety Bond. The Trustees may require any officer or agent of the Trust to execute a bond (including, without limitation, any bond required by the 1940 Act and the rules and regulations of the Securities and Exchange Commission ("Commission")) to the Trust in such sum and with such surety or sureties as the Trustees may determine, conditioned upon the faithful performance of his or her duties to the Trust, including responsibility for negligence and for the accounting of any of the Trust's property, funds or securities that may come into his or her hands. - 4 - ARTICLE V --------- MEETINGS OF SHAREHOLDERS ------------------------ Section 1. No Annual Meetings. There shall be no annual Shareholders' meetings, unless required by law. Section 2. Special Meetings. The Secretary shall call a special meeting of Shareholders of the Trust or of any Series or Class whenever ordered by the Trustees. The Secretary also shall call a special meeting of Shareholders of the Trust or of any Series or Class upon the written request of Shareholders owning at least ten percent of the Outstanding Shares entitled to vote at such meeting; provided, that (1) such request shall state the purposes of such meeting and the matters proposed to be acted on, and (2) the Shareholders requesting such meeting shall have paid to the Trust the reasonably estimated cost of preparing and mailing the notice thereof, which the Secretary shall determine and specify to such Shareholders. If the Secretary fails for more than thirty days to call a special meeting when required to do so, the Trustees or the Shareholders requesting such a meeting may, in the name of the Secretary, call the meeting by giving the required notice. The Secretary shall not call a special meeting upon the request of Shareholders of the Trust or of any Series or Class to consider any matter that is substantially the same as a matter voted upon at any special meeting of Shareholders of the Trust or of such Series or Class held during the preceding twelve months, unless requested by the holders of a majority of the Outstanding Shares entitled to be voted at such meeting. A special meeting of Shareholders of the Trust or of any Series or Class shall be held at such time and place as is determined by the Trustees and stated in the notice of that meeting. Section 3. Notice of Meetings; Waiver. The Secretary shall call a special meeting of Shareholders by giving written notice of the place, date, time, and purposes of that meeting at least fifteen days before the date of such meeting. The Secretary may deliver or mail, postage prepaid, the written notice of any meeting to each Shareholder entitled to vote at such meeting. If mailed, notice shall be deemed to be given when deposited in the United States mail directed to the Shareholder at his or her address as it appears on the records of the Trust. Section 4. Adjourned Meetings. A Shareholders' meeting may be adjourned one or more times for any reason, including the failure of a quorum to attend the meeting. No notice of adjournment of a meeting to another time or place need be given to Shareholders if such time and place are announced at the meeting at which the adjournment is taken or reasonable notice is given to persons present at the meeting, and if the adjourned meeting is held within a reasonable time after the date set for the original meeting. Any business that might have been transacted at the original meeting may be transacted at any adjourned meeting. If after the - 5 - adjournment a new record date is fixed for the adjourned meeting, the Secretary shall give notice of the adjourned meeting to Shareholders of record entitled to vote at such meeting. Any irregularities in the notice of any meeting or the nonreceipt of any such notice by any of the Shareholders shall not invalidate any action otherwise properly taken at any such meeting. Section 5. Validity of Proxies. Subject to the provisions of the Trust Instrument, Shareholders entitled to vote may vote either in person or by proxy; provided, that either (1) the Shareholder or his or her duly authorized attorney has signed and dated a written instrument authorizing such proxy to act, or (2) the Trustees adopt by resolution an electronic, telephonic, computerized or other alternative to execution of a written instrument authorizing the proxy to act, but if a proposal by anyone other than the officers or Trustees is submitted to a vote of the Shareholders of any Series or Class, or if there is a proxy contest or proxy solicitation or proposal in opposition to any proposal by the officers or Trustees, Shares may be voted only in person or by written proxy. Unless the proxy provides otherwise, it shall not be valid if dated more than eleven months before the date of the meeting. All proxies shall be delivered to the Secretary or other person responsible for recording the proceedings before being voted. A proxy with respect to Shares held in the name of two or more persons shall be valid if executed by one of them unless at or prior to exercise of such proxy the Trust receives a specific written notice to the contrary from any one of them. Unless otherwise specifically limited by their terms, proxies shall entitle the Shareholder to vote at any adjournment of a Shareholders' meeting. A proxy purporting to be executed by or on behalf of a Shareholder shall be deemed valid unless challenged at or prior to its exercise, and the burden of proving invalidity shall rest on the challenger. At every meeting of Shareholders, unless the voting is conducted by inspectors, the chairman of the meeting shall decide all questions concerning the qualifications of voters, the validity of proxies, and the acceptance or rejection of votes. Subject to the provisions of the Delaware Business Trust Act, the Trust Instrument, and these By-laws, the General Corporation Law of the State of Delaware relating to proxies, and judicial interpretations thereunder shall govern all matters concerning the giving, voting or validity of proxies, as if the Trust were a Delaware corporation and the Shareholders were shareholders of a Delaware corporation. Section 6. Record Date. The Trustees may fix in advance a date up to ninety days before the date of any Shareholders' meeting as a record date for the determination of the Shareholders entitled to notice of, and to vote at, any such meeting. The Shareholders of record entitled to vote at a Shareholders' meeting shall be deemed the Shareholders of record at any meeting reconvened after one or more adjournments, unless the Trustees have fixed a new record date. If the Shareholders' meeting is adjourned for more than sixty days after the original date, the Trustees shall establish a new record date. Section 7. Action Without a Meeting. Shareholders may take any action without a meeting if a majority (or such greater amount as may be - 6 - required, or such lesser amount as may be permitted, by law) of the Outstanding Shares entitled to vote on the matter consent to the action in writing and such written consents are filed with the records of Shareholders' meetings. Such written consent shall be treated for all purposes as a vote at a meeting of the Shareholders. ARTICLE VI ---------- SHARES OF BENEFICIAL INTEREST ----------------------------- Section 1. No Share Certificates. Neither the Trust nor any Series or Class shall issue certificates certifying the ownership of Shares, unless the Trustees may otherwise specifically authorize such certificates. Section 2. Transfer of Shares. Shares shall be transferable only by a transfer recorded on the books of the Trust by the Shareholder of record in person or by his or her duly authorized attorney or legal representative. Shares may be freely transferred and the Trustees may, from time to time, adopt rules and regulations regarding the method of transfer of such Shares. ARTICLE VII ----------- FISCAL YEAR AND ACCOUNTANT -------------------------- Section 1. Fiscal Year. The fiscal year of the Trust shall end on August 31. Section 2. Accountant. The Trust shall employ independent certified public accountants as its Accountant to examine the accounts of the Trust and to sign and certify financial statements filed by the Trust. The Accountant's certificates and reports shall be addressed both to the Trustees and to the Shareholders. A majority of the Disinterested Trustees shall select the Accountant at any meeting held within ninety days before or after the beginning of the fiscal year of the Trust, acting upon the recommendation of the Audit Committee. The Trust shall submit the selection for ratification or rejection at the next succeeding Shareholders' meeting, if such a meeting is to be held within the Trust's fiscal year. If the selection is rejected at that meeting, the Accountant shall be selected by majority vote of the Trust's outstanding voting securities, either at the meeting at which the rejection occurred or at a subsequent meeting of Shareholders called for the purpose of selecting an Accountant. The employment of the Accountant shall be conditioned upon the right of the Trust to terminate such employment without any penalty by vote of a Majority Shareholder Vote at any Shareholders' meeting called for that purpose. - 7 - ARTICLE VIII ------------ AMENDMENTS ---------- Section 1. General. Except as provided in Section 2 of this Article, these By-laws may be amended by the Trustees, or by the affirmative vote of a majority of the Outstanding Shares entitled to vote at any meeting. Section 2. By Shareholders Only. After the issue of any Shares, this Article may be amended only by the affirmative vote of the holders of the lesser of (a) at least two-thirds of the Outstanding Shares present and entitled to vote at any meeting at which a quorum is present, or (b) at least fifty percent of the Outstanding Shares. ARTICLE IX ---------- NET ASSET VALUE --------------- The term "Net Asset Value" of any Series shall mean that amount by which the assets belonging to that Series exceed its liabilities, all as determined by or under the direction of the Trustees. Net Asset Value per Share shall be determined separately for each Series and shall be determined on such days and at such times as the Trustees may determine. The Trustees shall make such determination with respect to securities for which market quotations are readily available, at the market value of such securities, and with respect to other securities and assets, at the fair value as determined in good faith by the Trustees; provided, however, that the Trustees, without Shareholder approval, may alter the method of appraising portfolio securities insofar as permitted under the 1940 Act and the rules, regulations and interpretations thereof promulgated or issued by the SEC or its staff or insofar as permitted by any order of the SEC applicable to the Series. The Trustees may delegate any of their powers and duties under this Article X with respect to appraisal of assets and liabilities. At any time the Trustees may cause the Net Asset Value per Share last determined to be determined again in a similar manner and may fix the time when such redetermined values shall become effective. ARTICLE X --------- CONFLICT OF INTEREST PROCEDURES ------------------------------- Section 1. Monitoring and Reporting Conflicts. The trustees of Equity Managers Trust and the Trust (collectively, the "Trusts") are the same individuals. Set forth in this Article are procedures established to address potential conflicts of interest that may arise between the Trusts. On an ongoing basis, the investment adviser ("Manager") of Equity Managers Trust shall be responsible for monitoring the Trusts for the existence of any material conflicts of interest between the Trusts. The Manager shall be responsible for reporting any potential or existing conflicts to trustees of the Trusts as they may develop. - 8 - Section 2. Annual Report. The Manager shall report to the trustees of the Trusts annually regarding its monitoring of the Trusts for conflicts of interest. Section 3. Resolution of Conflicts. If a potential conflict of interest arises, the Trustees shall take such action as is reasonably appropriate to deal with the conflict, up to and including recommending a change in the trustees and implementing such recommendation, consistent with applicable law. Section 4. Annual Review. The Trustees, including a majority of the Disinterested Trustees, shall determine no less frequently than annually that the operating structure is in the best interest of Shareholders. The Trustees shall consider, among other things, whether the expenses incurred by the Trust are approximately the same or less than the expenses that the Trust would incur if it invested directly in the type of securities being held by Equity Managers Trust. The Trustees, including a majority of the Disinterested Trustees, shall review no less frequently than annually these procedures for their continuing appropriateness. - 9 - EX-99.6(A)(I) 6 DISTRIBUTION AGREEMENT This Agreement is made as of November 1, 1994, between Neuberger & Berman Equity Assets, a Delaware business trust ("Trust"), and Neuberger & Berman Management Incorporated, a New York corporation (the "Distributor"). WHEREAS, the Trust is registered under the Investment Company Act of 1940, as amended ("1940 Act"), as an open-end, diversified management investment company and has the power to establish several separate series of shares ("Series"), with each Series having its own assets and investment policies; and WHEREAS, the Trust desires to retain the Distributor to furnish distribution services to each Series listed in Schedule A attached hereto, and to such other Series of the Trust hereinafter established as agreed to from time to time by the parties, evidenced by an addendum to Schedule A (hereinafter "Series" shall refer to each Series which is subject to this Agreement and all agreements and actions described herein to be made or taken by a Series shall be made or taken by the Trust on behalf of the Series), and the Distributor is willing to furnish such services, NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties agree as follows: 1. The Trust hereby appoints the Distributor as agent to sell the shares of beneficial interest of each Series (the "Shares") and the Distributor hereby accepts such appointment. All sales by the Distributor shall be expressly subject to acceptance by the Trust, acting on behalf of the Series. The Trust may suspend sales of the Shares any one or more Series at any time, and may resume sales at any later time. 2. (a) The Distributor agrees that (i) all Shares sold by the Distributor shall be sold at the net asset value ("NAV") thereof as described in Section 3 hereof, and (ii) the Series shall receive 100% of such NAV. (b) The Distributor may enter into agreements, in form and substance satisfactory to the Trust, with dealers selected by the Distributor, providing for the sale to such dealers and resale by such dealers of Shares at their NAV. 3. The Trust agrees to supply to the Distributor, promptly after the time or times at which NAV is determined, on each day on which all or part of the New York Stock Exchange is open for unrestricted trading and on such other days as the Board of Trustees of the Trust ("Trustees") may from time to time determine (each such day being hereinafter called a "business day"), a statement of the NAV of each Series having been determined in the manner set forth in the then-current Prospectus and Statement of Additional Information ("SAI") of each Series. Each determination of NAV shall take effect as of such time or times on each business day as set forth in the then-current Prospectus of each Series. 4. Upon receipt by the Trust at its principal place of business of a written order from the Distributor, together with delivery instructions, the Trust shall, if it elects to accept such order, as promptly as practicable, cause the Shares purchased by such order to be delivered in such amounts and in such names as the Distributor shall specify, against payment therefor in such manner as may be acceptable to the Trust. The Trust may, in its discretion, refuse to accept any order for the purchase of Shares that the Distributor may tender to it. 5. (a) All sales literature and advertisements used by the Distributor in connection with sales of Shares shall be subject to approval by the Trust. The Trust authorizes the Distributor, in connection with the sale or arranging for the sale of Shares of any Series, to provide only such information and to make only such statements or representations as are contained in the Series's then-current Prospectus and SAI or in such financial and other statements furnished to the Distributor pursuant to the next paragraph or as may properly be included in sales literature or advertisements in accordance with the provisions of the Securities Act of 1933 (the "1933 Act"), the 1940 Act and applicable rules of self-regulatory organizations. Neither the Trust nor any Series shall be responsible in any way for any information provided or statements or representations made by the Distributor or its representatives or agents other than the information, statements and representations described in the preceding sentence. (b) Each Series shall keep the Distributor fully informed with regard to its affairs, shall furnish the Distributor with a certified copy of all of its financial statements and a signed copy of each report prepared for it by its independent auditors, and shall cooperate fully in the efforts of the Distributor to negotiate and sell Shares of such Series and in the Distributor's performance of all its duties under this Agreement. 6. The Distributor, as agent of each Series and for the account and risk of each Series, is authorized, subject to the direction of the Trust, to redeem outstanding Shares of such Series when properly tendered by shareholders pursuant to the redemption right granted to such Series's shareholders by the Trust Instrument of the Trust, as from time to time in effect, at a redemption price equal to the NAV per Share of such Series next determined after proper tender and acceptance. The Trust has delivered to the Distributor a copy of the Trust's Trust Instrument as currently in effect and agrees to deliver to the Distributor any amendments thereto promptly upon filing thereof with the Office of the Secretary of State of the State of Delaware. 7. The Distributor shall assume and pay or reimburse each Series for the following expenses of such Series: (i) costs of printing and distributing reports, prospectuses and SAIs used by such Series in connection with the sale or offering of its Shares and of preparing, printing and distributing all advertising and sales literature relating to such Series printed at the instruction of the Distributor; and (ii) counsel fees and expenses in connection with the foregoing. The - 2 - Distributor shall also pay all its own costs and expenses connected with the sale of Shares. 8. Each Series shall maintain a currently effective Registration Statement on Form N-1A with respect to such Series and shall file with the Securities and Exchange Commission ("SEC") such reports and other documents as may be required under the 1933 Act and the 1940 Act or by the rules and regulations of the SEC thereunder. Each Series represents and warrants that the Registration Statement, post-effective amendments, Prospectus and SAI (excluding statements relating to the Distributor and the services it provides that are based upon written information furnished by the Distributor expressly for inclusion therein) of such Series shall not contain any untrue statement of material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that all statements or information furnished to the Distributor, pursuant to Section 5(b) hereof, shall be true and correct in all material respects. 9. (a) This Agreement shall become effective on the date hereof and shall remain in full force and effect until November 1, 1996 and may be continued from year to year thereafter; PROVIDED, that such continuance shall be specifically approved each year by the Trustees or by a majority of the outstanding voting securities of the Series, and in either case, also by a majority of the Trustees who are not interested persons of the Trust or the Distributor ("Disinterested Trustees"). This Agreement may be amended as to any Series with the approval of the Trustees or of a majority of the outstanding voting securities of such Series; PROVIDED, that in either case, such amendment also shall be approved by a majority of the Disinterested Trustees. (b) Either party may terminate this Agreement without the payment of any penalty, upon not more than sixty days' nor less than thirty days' written notice delivered personally or mailed by registered mail, postage prepaid, to the other party; PROVIDED, that in the case of termination by any Series, such action shall have been authorized (i) by resolution of the Trustees, or (ii) by vote of a majority of the outstanding voting securities of such Series, or (iii) by written consent of a majority of the Disinterested Trustees. (c) This Agreement shall automatically terminate if it is assigned by the Distributor. (d) Any question of interpretation of any term or provision of this Agreement having a counterpart in or otherwise derived from a term or provision of the 1940 Act shall be resolved by reference to such term or provision of the 1940 Act and to interpretation thereof, if any, by the United States courts or, in the absence of any controlling decision of any such court, by rules, regulations or orders of the SEC validly issued pursuant to the 1940 Act. Specifically, the terms "interested persons," "assignment" and "vote of a majority of the - 3 - outstanding voting securities," as used in this Agreement, shall have the meanings assigned to them by Section 2(a) of the 1940 Act. In addition, when the effect of a requirement of the 1940 Act reflected in any provision of this Agreement is modified, interpreted or relaxed by a rule, regulation or order of the SEC, whether of special or of general application, such provision shall be deemed to incorporate the effect of such rule, regulation or order. The Trust and the Distributor may from time to time agree on such provisions interpreting or clarifying the provisions of this Agreement as, in their joint opinion, are consistent with the general tenor of this Agreement and with the specific provisions of this Section 9(d). Any such interpretations or clarifications shall be in writing signed by the parties and annexed hereto, but no such interpretation or clarification shall be effective if in contravention of any applicable federal or state law or regulations, and no such interpretation or clarification shall be deemed to be an amendment of this Agreement. No term or provision of this Agreement shall be construed to require the Distributor to provide distribution services to any series of the Trust other than the Series, or to require any Series to pay any compensation or expenses that are properly allocable, in a manner approved by the Trustees, to a series of the Trust other than such Series. (e) This Agreement is made and to be principally performed in the State of New York, and except insofar as the 1940 Act or other federal laws and regulations may be controlling, this Agreement shall be governed by, and construed and enforced in accordance with, the internal laws of the State of New York. (f) This Agreement is made by the Trust solely with respect to the Series, and the obligations created hereby with respect to one Series bind only assets belonging to that Series and are not binding on any other series of the Trust. 10. The Distributor or one of its affiliates may from time to time deem it desirable to offer to the list of shareholders of each Series the shares of other mutual funds for which it acts as Distributor, including other series of the Trust or other products or services; however, any such use of the list of shareholders of any Series shall be made subject to such terms and conditions, if any, as shall be approved by a majority of the Disinterested Trustees. 11. The Distributor shall look only to the assets of a Series for the performance of this Agreement by the Trust on behalf of such Series, and neither the Shareholders, the Trustees nor any of the Trust's officers, employees or agents, whether past, present or future, shall be personally liable therefor. - 4 - IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed by their duly authorized officers and under their respective seals. NEUBERGER & BERMAN EQUITY ASSETS Attest: By: /s/ Michael J. Weiner /s/ Claudia A. Brandon Title: Vice President Secretary NEUBERGER & BERMAN MANAGEMENT INCORPORATED Attest: By: /s/ Stanley Egener /s/ Ellen Metzger Title: President Secretary - 5 - EX-99.6(A)(II) 7 DISTRIBUTION AGREEMENT SCHEDULE A The Series of Neuberger & Berman Equity Assets currently subject to this Agreement are as follows: Neuberger & Berman Socially Responsive Trust Dated: -----END PRIVACY-ENHANCED MESSAGE-----