As filed with the Securities and Exchange Commission on June 26, 2000
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Registration No. 2-11357
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-14
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. |_| Post-Effective Amendment No. |_|
(Check appropriate box or boxes)
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Neuberger Berman Equity Funds
(Exact name of registrant as specified in charter)
605 Third Avenue
NEW YORK, NEW YORK 10158-0180
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 476-8800
Peter E. Sundman, Chief Executive Officer
Neuberger Berman Equity Funds
605 Third Avenue, 2nd Floor
New York, New York 10158-0180
Arthur C. Delibert, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036-1800
(Names and Addresses of Agents for Service of Process)
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission acting pursuant to said section 8(a),
may determine.
For the new shares of Neuberger Equity Funds, the approximate date of
the proposed public offering is , 2000. The public offering of shares of
Registrant's series is on-going. The title of securities being registered is
shares of beneficial interest.
Neuberger Berman Equity Funds is a "master/feeder fund." This
Registration Statement includes signature pages for the master fund, Equity
Managers Trust, and appropriate officers and trustees thereof.
NEUBERGER BERMAN EQUITY FUNDS
FORM N-14
CONTENTS OF REGISTRATION STATEMENT ON FORM N-14
This Registration Statement consists of the following papers and documents:
Cover Sheet
Contents of Registration Statement on Form N-14
NEUBERGER BERMAN EQUITY FUNDS
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Part A - Prospectus and Information Statement
Part B - Statement of Additional Information
Part C - Other Information
Signature Pages
Exhibits
NEUBERGER BERMAN EQUITY FUNDS
NEUBERGER BERMAN EQUITY TRUST
NEUBERGER BERMAN EQUITY ASSETS
NEUBERGER BERMAN EQUITY SERIES
NEUBERGER BERMAN INCOME FUNDS
NEUBERGER BERMAN INCOME TRUST
August 15, 2000
Dear Shareholder:
The attached Combined Proxy Statement and Prospectus discusses several
Proposals to be voted upon by the holders of certain Neuberger Berman funds. As
a shareholder of the funds, you are asked to review the Combined Proxy Statement
and Prospectus and to cast your vote on the Proposals that relate to the funds
you own. THE BOARDS OF TRUSTEES OF THE NEUBERGER BERMAN (NB) FUNDS UNANIMOUSLY
RECOMMEND A VOTE FOR ALL OF THE PROPOSALS.
The goal of one of the proposals is to make the funds more efficient to
operate and the structure easier to understand. Other proposals would allow
certain funds greater investment flexibility; one authorizes certain funds to
adopt a distribution and shareholder services plan.
YOUR VOTE IS IMPORTANT TO US. VOTING YOUR SHARES EARLY WILL PERMIT THE
FUNDS TO AVOID COSTLY FOLLOW-UP MAIL AND TELEPHONE SOLICITATION. After reviewing
the attached materials, please complete, sign and date your proxy card and mail
it promptly in the enclosed postage paid envelope, or help us save time and
postage costs by voting on the Internet or by telephone - instructions can be
found on your proxy card. If we do not hear from you by September 7, our proxy
solicitor may contact you.
If you have any questions, please call 1-800-877-9700. Our representatives
will be glad to assist you. Thank you for your response and your continued
support of the Neuberger Berman funds.
Very truly yours,
/s/ Peter Sundman
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PETER SUNDMAN
President
Neuberger Berman Management Inc.
NEUBERGER BERMAN EQUITY FUNDS
NEUBERGER BERMAN EQUITY TRUST
NEUBERGER BERMAN EQUITY ASSETS
NEUBERGER BERMAN EQUITY SERIES
(INCLUDING THE CENTURY, FOCUS, GENESIS, GUARDIAN, INTERNATIONAL, MANHATTAN, MILLENNIUM,
PARTNERS, REGENCY, SOCIALLY RESPONSIVE AND TECHNOLOGY SERIES OF EACH)
(EACH A "FUND")
NEUBERGER BERMAN INCOME FUNDS
NEUBERGER BERMAN INCOME TRUST
(including the Cash Reserves, Government Money Fund, High Yield Bond Fund,
Municipal Money Fund and Municipal Securities Trust and the Institutional Cash
and Limited Maturity Bond
Series of each)
(EACH A "FUND")
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 31, 2000
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WHO IS ASKING FOR YOUR VOTE?
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The Board of Directors of Neuberger Berman Equity Funds, Equity Trust, Equity
Assets, Equity Series, Income Funds or Income Trust.
WHERE WILL THE MEETING BE HELD?
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The meeting will be held at the offices of Neuberger Berman, 605 Third Avenue,
41st Floor, New York, New York 10158-3698, on October 31, 2000 at 10:30 a.m.
Eastern time.
WHAT PROPOSALS APPLY TO EACH FUND?
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The following table summarizes each proposal to be presented at the meeting and
the funds whose shareholders the Board is soliciting with respect to each
proposal:
PROPOSAL AFFECTED FUNDS
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1. Electing trustees All funds
2. Changing the funds' fundamental All funds
investment restrictions
3. Ratifying selection of independent auditors
or accountants All funds
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4. Approving an Agreement and Plan of NB Century Trust
Reorganization NB Focus Trust and Assets
NB Genesis Trust, Assets and
Institutional
NB Guardian Trust and Assets
NB Institutional Cash Trust
NB International Trust
NB Limited Maturity Bond Trust
NB Manhattan Trust and Assets
NB Millennium Trust and Assets
NB Partners Trust and Assets
NB Regency Trust
NB Socially Responsive Trust and
Assets
NB Technology Trust
5. To approve a plan of distribution
and shareholder services NB Genesis Trust
NB Guardian Trust
NB Partners TrusT
6.. Changing the fund's fundamental restriction NB Cash Reserves
on industry concentration
7. Changing the fund's fundamental restrictions NB Government Money Fund
on investing in government securities,
diversification, lending, borrowing and
repurchase agreements
EACH PROPOSAL IS DISCUSSED IN GREATER DETAIL IN THE ATTACHED PROXY STATEMENT.
WHO IS ELIGIBLE TO VOTE?
You are entitled to vote at the meeting and any adjournment if you owned shares
of one or more funds at the close of business on AUGUST 15, 2000.
WHAT ARE THE DIFFERENT WAYS TO VOTE THIS PROXY?
There are a number of ways to vote your shares:
o BY MAIL: You may vote by completing the enclosed proxy card by
dating, signing and returning it in the postage paid envelope.
PLEASE NOTE THAT IF YOU SIGN, DATE AND THE PROXY CARD(S) BUT GIVE
NO VOTING INSTRUCTIONS, YOUR SHARES WILL BE VOTED "FOR" THE
PROPOSALS DESCRIBED ABOVE).
-3-
o BY PHONE: You may vote by telephone by calling the number on your
proxy card.
o VIA THE INTERNET: You may vote through the Internet by visiting
the website on your proxy card.
o IN PERSON: If you plan to attend the meeting, you may vote in
person. (PLEASE NOTE, THAT IF YOU VOTE A PROXY AND THEN VOTE IN
PERSON AT THE MEETING , YOUR PROXY IS AUTOMATICALLY REVOKED). IF
YOU PLAN TO ATTEND THE MEETING, PLEASE CALL THE FUNDS AT (800)
877-9700.
If you own shares of more than one fund, you must submit a separate proxy card
for each fund in which you own shares. Unless proxy cards submitted by
corporations and partnerships are signed by the appropriate persons as indicated
in the voting instructions on the proxy cards, they will not be voted.
Any additional proposals submitted to a vote at the meeting by anyone other than
the officers or Trustees of the funds may be voted only in person or by written
proxy.
By order of the Board of Trustees,
/s/ Claudia A. Brandon
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Claudia A. Brandon
Secretary
Neuberger Berman Equity Funds
Neuberger Berman Equity Trust
Neuberger Berman Equity Assets
Neuberger Berman Equity Series
Neuberger Berman Income Funds
Neuberger Berman Income Trust
_______________, 2000
New York, New York
4
NEUBERGER BERMAN EQUITY FUNDS
NEUBERGER BERMAN EQUITY TRUST
NEUBERGER BERMAN EQUITY ASSETS
NEUBERGER BERMAN EQUITY SERIES
NEUBERGER BERMAN INCOME FUNDS
NEUBERGER BERMAN INCOME TRUST
605 Third Avenue, 2nd Floor
New York, New York 10158-0180
800-877-9700
COMBINED PROXY STATEMENT AND PROSPECTUS
This Combined Proxy Statement and Prospectus, which includes a Notice of
Special Meeting of Shareholders, a Proxy Statement and one or more Proxy Cards,
is for the special meeting of shareholders of the Neuberger Berman Equity group
of funds (Neuberger Berman Equity Funds, Equity Trust, Equity Assets, and Equity
Series) and the Neuberger Berman Income group of funds (Neuberger Berman Income
Funds and Income Trust), to be held on October 31, 2000, and any adjournment
thereof ("Meeting").
This Combined Proxy Statement and Prospectus contains information about
several proposals that relate to the Neuberger Berman funds. Some proposals
relate to some of the funds but not others, so depending on which funds you own,
you may not be asked to vote on all of the proposals.
PROPOSAL 1 (APPLIES TO ALL SHAREHOLDERS OF ALL THE FUNDS): To elect eighteen
(18) Trustees to serve on the Board of Trustees until their successors are duly
elected and qualified.
PROPOSAL 2 (APPLIES TO ALL SHAREHOLDERS OF ALL THE FUNDS): To approve a change
in a fundamental investment limitation.
PROPOSAL 3 (APPLIES TO ALL SHAREHOLDER OF ALL THE FUNDS): To ratify the
selection of independent auditors or accountants for each fund.
PROPOSAL 4 (APPLIES TO SHAREHOLDERS OF: NB CENTURY TRUST
NB FOCUS TRUST AND ASSETS
NB GENESIS TRUST, ASSETS AND INSTITUTIONAL
NB GUARDIAN TRUST AND ASSETS
NB INSTITUTIONAL CASH TRUST
NB INTERNATIONAL TRUST
NB LIMITED MATURITY BOND TRUST
NB MANHATTAN TRUST AND ASSETS
NB MILLENNIUM TRUST AND ASSETS
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NB PARTNERS TRUST AND ASSETS
NB REGENCY TRUST
NB SOCIALLY RESPONSIVE TRUST AND ASSETS
NB TECHNOLOGY TRUST):
To approve an Agreement and Plan of Reorganization ("Reorganization Plan")
providing for the reorganization of each fund from the current two-level
master-feeder structure to a single-level multi-class structure.
PROPOSAL 5 (APPLIES TO SHAREHOLDERS OF NB GENESIS TRUST, NB GUARDIAN TRUST AND
NB PARTNERS TRUST): To approve a distribution and shareholder services plan to
authorize each fund to spend annually 0.10% of average daily net assets to
obtain distribution and/or shareholder services.
PROPOSAL 6 (APPLIES TO SHAREHOLDERS OF NB CASH RESERVES): To approve a change to
the fund's fundamental restriction on industry concentration to permit
concentration in the financial services group of industries.
PROPOSAL 7 (APPLIES TO SHAREHOLDERS OF NB GOVERNMENT MONEY FUND): To approve a
change in the fund's fundamental policies to (A) permit the fund to invest in
all securities issued or guaranteed as to principal or interest by the U.S.
Government, its agencies or instrumentalities; (B) permit the fund to invest in
repurchase agreements in an effort to earn more income; (C) modify the fund's
borrowing policy to permit the fund to use reverse repurchase agreements; and
(D) modify the fund's lending policy to permit the fund to loan portfolio
securities.
THE REORGANIZATION. The proposed Reorganization would not alter your
current investment program. Instead, it would change the operational structure
of the Neuberger Berman funds, so that they may benefit from certain
efficiencies and cost savings. The funds would be changing to a structure that
is more common in the mutual fund industry.
Like your current fund, the new single-level fund is an open-end,
management investment company comprised of a group of diversified series. These
series have investment programs that are identical to the similarly named series
of your current fund. Unlike your current fund, however, each series of the new
fund has classes of shares. After the Reorganization, you will hold shares of
the class that corresponds to your current fund. For example, if you currently
hold shares of Guardian Trust, after the Reorganization you will hold Trust
Class shares of the Guardian series of the new fund.
If you are a shareholder of Neuberger Berman Equity Trust, Equity Series
or Equity Assets, then after the Reorganization, you will hold class shares of a
corresponding series of NEUBERGER BERMAN EQUITY FUNDS.
Likewise, if you are a shareholder of Neuberger Berman Income Trust, then
after the Reorganization, you will hold Trust class shares of a corresponding
series of NEUBERGER BERMAN INCOME FUNDS.
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If you approve the Agreement and Plan of Reorganization ("Reorganization
Plan") your fund would become part of a new single-level fund that invests its
assets directly in the securities markets. The new fund would have classes of
shares that would correspond to the current feeder funds. The investment
program, management arrangements, and operations of the new single-level fund
would be identical to those of your present fund, and your rights as a
shareholder would remain essentially unchanged, with minor exceptions.
The Board of Trustees of each fund that proposes to participate in the
Reorganization and Neuberger Berman Management Inc. ("NBMI"), the funds'
investment manager, administrator and distributor believe that the
Reorganization:
o will result in certain administrative efficiencies and cost savings
for the funds,
o may enhance its ability to market and sell shares of the funds that
utilize the more common multi-class structure
This Combined Proxy Statement and Prospectus sets forth concisely
the information that a shareholder of the funds should know before voting on the
proposed Reorganization and other actions. It should be read and retained for
future reference. The current prospectuses of Neuberger Berman Equity Funds,
dated December 1, 1999, and Neuberger Berman Income Funds, dated March 1, 2000,
are incorporated by reference into (and legally a part of) this Combined Proxy
Statement and Prospectus. Copies are enclosed for your reference. Shareholders
of Equity Funds and Income Trust are not receiving prospectuses because you have
already received one or both as current shareholders.
Additional information about Neuberger Berman Equity Funds and Income
Funds appears in the funds' Statements of Additional Information, which are also
incorporated by reference into this Combined Proxy Statement and Prospectus. The
Statements of Additional Information are available without charge by writing the
Neuberger Berman Funds at 605 Third Avenue, 2nd Floor New York, New York
10158-0180, or calling at 800-877-9700.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-7-
VOTING INFORMATION
The Boards of Trustees of Neuberger Berman Equity Funds, Equity Trust,
Equity Assets and Equity Series, and the Boards of Trustees of Neuberger Berman
Income Funds and Income Trust (each a "Trust" and collectively, the "Trusts")
are asking you to sign the enclosed proxy card(s) for use at a Special Meeting
of shareholders of the funds listed on the front cover, to be held on October
31, 2000 at 10:30 a.m. Eastern time, at the offices of Neuberger Berman, LLC,
605 Third Avenue, 41st Floor, New York, New York 10158-3698, and at any
adjournments thereof (the "Meeting"). This combined Proxy Statement and
Prospectus is first being mailed on or about August 15, 2000.
One-third of each fund's shares outstanding and entitled to vote on August
15, 2000 ("Record Date"), represented in person or by proxy, make up a quorum
and must be present for the transaction of business at the Meeting with respect
to that fund. Shares of all funds that make up a single Trust will vote together
for the election of Trustees (Proposal 1), and the presence of one-third of an
entire Trust constitutes a quorum for purposes of that proposal. Each fund's
shareholders will vote separately on each other Proposal with respect to that
fund; if you are a shareholder of more than one fund, you will be voting on each
such Proposal separately with respect to each fund in which you hold shares.
If a quorum is not present at the Meeting or a quorum is present but
sufficient votes to approve any Proposal are not received, or for any other
reason, the persons named as proxies may propose one or more adjournments of the
Meeting to permit further solicitation of proxies. Any such adjournment will
require the affirmative vote of those shares voting at the Meeting in person or
by proxy. The persons named as proxies will vote those proxies that they are
entitled to vote FOR any proposal in favor of such an adjournment and will vote
those proxies required to be voted AGAINST a proposal against such adjournment.
A shareholder vote may be taken on any one or more of the Proposals in this
Combined Proxy Statement and Prospectus prior to such adjournment if sufficient
votes have been received for approval and it is otherwise appropriate.
If the enclosed proxy is properly executed and returned in time to be
voted at the Meeting, the shares represented by the proxy will be voted in
accordance with the instructions marked on the proxy card. If no instructions
are marked on the proxy card, the proxy will be voted FOR each Proposal
described in the accompanying Notice of Special Meeting of Shareholders and FOR
the election of each candidate nominated by the Board to serve as a Trustee.
Proxies that reflect "broker non-votes" (I.E., shares held by brokers or
nominees as to which (i) instructions have not been received from the beneficial
owners or the persons entitled to vote and (ii) the broker or nominee does not
have discretionary voting power on a particular matter) will not be counted for
purposes of determining a quorum and will have no effect on the outcome of the
Proposals. Abstentions will be counted as shares that are present and entitled
to vote for purposes of determining the presence of a quorum and will have a
negative effect on the Proposals. Shares held in individual retirement accounts
(IRA, Roth IRA or SIMPLE Retirement plans), the IRA Custodian shall vote the
shares in the account in accordance with instructions given by the Depositor.
However, if the Depositor fails to provide instructions on how to vote the
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shares in the account, the Custodian shall vote the undirected shares in the
same proportion as shares are voted considering all shares of the Fund for which
instructions are received.
Any shareholder who has given a proxy has the right to revoke it any time
prior to its exercise by attending the Meeting and voting his or her shares in
person, or by submitting a letter of revocation or a later-dated proxy to the
relevant Trust at the address indicated on the enclosed envelope provided with
this Proxy Statement. Any letter of revocation or later-dated proxy must be
received by the Trust prior to the Meeting and must indicate your name and
account number to be effective. Proxies voted by telephone or Internet may be
revoked at any time before they are voted at the Meeting in the same manner that
proxies voted by mail may be revoked.
Proxy solicitations will be made primarily by mail, but may also be made
by telephone, electronic transmission or personal meetings with officers and
employees of NBMI, affiliates of NBMI or other representatives of the Funds.
NBMI serves as principal underwriter and administrator of the Funds. NBMI and
its affiliates will not receive any compensation from the Fund for proxy
solicitation activities. Proxy solicitations may also be made by our proxy
solicitor. If votes are recorded by telephone, our proxy solicitor will use
procedures designed to authenticate shareholders' identities, to allow
shareholders to authorize the voting of their shares in accordance with their
instructions, and to confirm that a shareholder's instructions have been
properly recorded. You may also vote by mail or through a secure Internet site.
The cost of solicitation and the expenses incurred in connection with preparing
this Proxy Statement and its enclosures will be paid by the funds. PLEASE NOTE
THAT WHILE PROXIES MAY BE VOTED BY TELEPHONE OR THROUGH THE INTERNET WITH
RESPECT TO EACH PROPOSAL, ANY PROPOSAL SUBMITTED TO A VOTE AT THE MEETING BY
ANYONE OTHER THAN THE OFFICERS OR TRUSTEES OF THE TRUSTS MAY BE VOTED ONLY IN
PERSON OR BY WRITTEN PROXY.
For soliciting services, our proxy solicitor will be paid fees and
expenses of up to approximately $6,079, $311,209, $133,512, $520,036, $32,724,
$154,645, $46,082, $427,048, $1,856, $19,737, and $1,884 for Neuberger Berman
Century, Focus, Genesis, Guardian, International, Manhattan, Millennium,
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Partners, Regency, Socially Responsive and Technology Funds, respectively. Our
proxy solicitor will be paid fees and expenses of up to approximately $457,
$70,711, $180,355, $290,874, $1,006, $25,895, $3,653, $174,892, $6,186, $7,406,
and $446 for Neuberger Berman Century, Focus, Genesis, Guardian, International,
Manhattan, Millennium, Partners, Regency, Socially Responsive and Technology
Trust, respectively. Our proxy solicitor will be paid fees and expenses of up to
approximately $2,397, $33,200, $9,642, $1,426, $48, $19,000, and $77 for
Neuberger Berman Focus, Genesis, Guardian, Manhattan, Millennium, Partners, and
Socially Responsive Assets, respectively. Our proxy solicitor will be paid fees
and expenses of up to approximately $0 for Neuberger Berman Genesis
Institutional.
For soliciting services, our proxy solicitor will be paid fees and
expenses of up to approximately $69,269, $21,233, $790, $10,913, $17,147, and
$1,704 for Neuberger Berman Cash Reserves, Government Money Fund, High Yield
Bond Fund, Limited Maturity Bond Fund, Municipal Money Fund and Municipal
Securities Trust, respectively. Our proxy solicitor will be paid fees and
expenses of up to approximately $20,563 and $ 9,967 for Neuberger Berman Limited
Maturity Bond and Institutional Cash Trust, respectively.
The funds are separate series of their respective Trusts. Each Equity fund
(except for Neuberger Berman International Fund and International Trust) invests
all of its net investable assets in a corresponding master fund, which is a
series of Equity Managers Trust, a New York common law trust registered as an
open-end management investment company. Neuberger Berman International Fund and
International Trust invest in a corresponding series of Global Managers Trust, a
New York common law trust registered as an open-end management investment
company. Each Income fund invests all of its net investable assets in a
corresponding master fund, which is a series of Income Managers Trust, a New
York common law trust registered as an open-end management investment company.
NBMI serves as the investment manager and Neuberger Berman, LLC ("Neuberger
Berman") serves as sub-adviser to each series of Equity Managers Trust, Global
Managers Trust and Income Managers Trust. Each Managers Trust series invests in
securities in accordance with an investment objective, policies, and limitations
identical to those of its corresponding funds.
As of May 31, 2000, the following numbers of shares were outstanding with
respect to each fund:
Neuberger Berman Equity
Group of Funds Fund Trust Assets
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Century N/A
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Focus
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Genesis
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Guardian
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International
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Manhattan
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Millennium
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Partners
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Regency N/A
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Socially
Responsive
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Technology N/A
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Genesis Institutional
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NB Income Group of Funds Fund Trust
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Cash Reserves N/A
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Government Money N/A
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High Yield Bond N/A
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Institutional Cash
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Limited Maturity Bond
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Municipal Money N/A
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Municipal Securities Trust N/A
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In addition, to the Trust's knowledge, as of May 31, 2000, the following are all
of the beneficial and record owners of more than five percent of each fund.
Except where indicated, the owners listed are record owners.
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FUND NAME AND ADDRESS OF OWNER PERCENT OF
THE FUND
OWNED
- - --------------------------------------------------------------------------------
NB Century Trust Neuberger & Berman 92.42%
55 Water Street, 27th Floor
Attn: Ron Staib, OPS Control
New York, NY 10041-0001
A/C # 983031311/7
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National Financial Services Corp 6.33%
For the Exclusive Benefit of Our Customers
PO Box 3908
Church Street Station
New York, NY 10008-3908
A/C # 140117994-0
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NB Focus Trust Smith Barney Inc 22.44%
00109801250
388 Greenwich Street
New York, NY 10012-2339
A/C # 140360494/7
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FUND NAME AND ADDRESS OF OWNER PERCENT OF
THE FUND
OWNED
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EMJAYCO 11.47%
Omnibus Account
PO Box 170910
Milwaukee, WI 53217
A/C # 140296928
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American Express Trust Co. 11.81%
Benefit of American Express
Trust Retirement Services Plans
Attn: Pat Brown
50534 AXP Financial Center
Minneapolis, MN 55474
A/C # 140216267-1
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National Financial Services Corp 6.87%
For the Exclusive Benefit of Our Customers
PO Box 3908
Church Street Station
New York, NY 10008-3908
A/C # 140117994-0
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Boston Safe Deposit & Trust Co. TTEE 8.81%
TWA Inc Pilots Directed Acct. Plan & 401K
Plan for
Pilots of TWA Inc.
Attn: Lisa Bove
135 Santilli Highway #26-0320
Everett, MA 02149-1906
A/C # 140221394-4
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AETNA Life Insurance & Annuity Co. 7.57%
ACES-Separate Account F
Attn: Valuation Unit TS31
151 Farmington Avenue
Hartford, CT 06156-0001
A/C # 140188621-7
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NB Genesis Trust Fidelity Investments Inst. OPS Co. as Agent for 19.64%
Certain EE Benefit PL
Mailzone KWIC
Covington KY 41015
A/C # 140216026-2
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Smith Barney Inc 16.10%
00109801250
388 Greenwich Street
New York, NY 10012-2339
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FUND NAME AND ADDRESS OF OWNER PERCENT OF
THE FUND
OWNED
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National Financial Services Corp 14.53%
For the Exclusive Benefit of Our Customers
PO Box 3908
Church Street Station
New York, NY 10008-3908
A/C # 14011799-0
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Nationwide Life Insurance Co. 6.55%
QPVA
c/o IPO Portfolio Accounting
PO Box 182029
Columbus, OH 43218-2029
A/C # 140216217-6
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NB Guardian Trust The Manufactures Life Insurance Co. USA 26.21%
Attn: Rosie Chuck Pension Acctg.
200 Floor Street E NT3
Toronto ON N4W1E5
Canada
A/C # 140317724-1
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Fidelity Investments Inst. OPS Co. as Agent for 14.51%
Certain EE Benefit PL
100 Megellon Way
Mailzone KWIC
Covington KY 41015
A/C # 140216026-2
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Nationwide Life Insurance Co. 9.25%
QPVA
c/o IPO Portfolio Accounting
PO Box 182029
Columbus, OH 43218-2029
A/C # 140216217-6
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Variable Annuity Life Insurance Company 5.50%
(VALIC)
2929 Allen Parkway L7-01
Houston, TX 77019-2197
A/C # 140317787-2
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Connecticut General Life Insurance Company 5.38%
350 Church Street
PO Box 2975 M-1-10
Hartford, CT 06104-2975
A/C # 140317726-7
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FUND NAME AND ADDRESS OF OWNER PERCENT OF
THE FUND
OWNED
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National Financial Services Corp 4.94%
For the Exclusive Benefit of Our Customers
PO Box 3908
Church Street Station
New York, NY 10008-3908
A/C # 140117994-0
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NB International Chase Manhattan Bank TTEE 23.31%
Trust Various Retirement Plans
Under PPI Retirement Programs
Professional Pensions Inc.
444 Foxon Road
East Haven, CT 06513-2019
A/C # 140215987-5
- - --------------------------------------------------------------------------------
Fleet Trust Corporation 19.08%
FBO Third Party M P Alliances
Attn: David Nabb
PO Box 2197
Boston, MA 02106-2197
A/C # 140224012-4
- - --------------------------------------------------------------------------------
National Financial Services Corp 17.71%
For the Exclusive Benefit of Our Customers
200 Liberty Street
1 World Financial Center
Attn: Mutual Funds Dept 5th Floor
New York, NY 10281-1003
A/C # 140117994-0
- - --------------------------------------------------------------------------------
BENEFICIAL OWNER Neuberger and Berman Trust 9.87%
T/F Lillian Vernon Corp
401K Profit Sharing Plan
1 Theall RDL
Rye, NY 10580-1404
A/C # 140318915-8
- - --------------------------------------------------------------------------------
Smith Barney Inc 22.97%
00109801250
388 Greenwich Street
New York, NY 10012-2339
A/C # 140360494-7
- - --------------------------------------------------------------------------------
NB Manhattan Trust The Northern Trust Co TTEE 49.03%
Pro Case Corporation 22-75833
Attn: Ken King
Chicago, IL 60675-2956
A/C # 140214077-4
- - --------------------------------------------------------------------------------
-14-
- - --------------------------------------------------------------------------------
FUND NAME AND ADDRESS OF OWNER PERCENT OF
THE FUND
OWNED
- - --------------------------------------------------------------------------------
MAC & Co A/C 195-643 13.91%
AEOF1956432
P.O. Box 3198
Mutual Funds Operations
Pittsburgh, PA 15230-3198
A/C # 140162422-0
- - --------------------------------------------------------------------------------
Fleet National Bank 9.49%
Aetna/Fleet Directed Trustee
U/A Dtd 4/22/96
151 Farmington Avenue, Suite T531
Hartford, CT 06156-0001
A/C # 140319049-3
- - --------------------------------------------------------------------------------
Fidelity Investments Inst Ops 6.18%
CO as Agency for Certain EE Benefit PL
Mailzone KWIC
Covington, KY 41015
A/C # 140216026-2
- - --------------------------------------------------------------------------------
NB Millennium Trust National Financial Serv Corp 86.68%
For the Exclusive Benefit of Our Customers
P.O. Box 3908
Church Street Station
New York, NY 10008-3908
A/C # 140117994-0
- - --------------------------------------------------------------------------------
Donaldson, Lufkin & Jenrette Securities 6.88%
Corporation
Pershing Division
Mutual Fund Balancing
P.O. Box 2052
Jersey City, NJ 07303-2052
A/C # 140219348-8
- - --------------------------------------------------------------------------------
NB Partners Trust Nationwide Life Insurance 20.06%
QPVA
c/o IPO Portfolio Accounting
P.O. Box 182029
Columbus, OH 43218-2029
A/C # 140216217-6
- - --------------------------------------------------------------------------------
Connecticut General Life Insurance Company 11.27%
350 Church Street
P.O. Box 2975 N-110
Hartford CT 06104-2975
A/C # 140317726-7
- - --------------------------------------------------------------------------------
-15-
- - --------------------------------------------------------------------------------
FUND NAME AND ADDRESS OF OWNER PERCENT OF
THE FUND
OWNED
- - --------------------------------------------------------------------------------
PRC Inc 10.43
c/o T. Rowe Price Financial
Attn: Asset Room
P.O. Box 17215
Baltimore, MD 21297-1215
A/C # 140215856-2
- - --------------------------------------------------------------------------------
National Financial Serv Corp for the 8.17
Exclusive
Benefit of Our Customers
P.O. Box 3908
Church Street Station
New York, NY 10008-3908
A/C # 140117994-0
- - --------------------------------------------------------------------------------
Fidelity Investments Instit Oper Co as Agent for 7.58%
Certain Benefit Pln
100 Magellan Way
Mailzone KWIC
Covington, KY 41015-1999
A/C # 140216026-2
- - --------------------------------------------------------------------------------
Northern Trust Co TTEE 6.12%
FBO: Phycor Savings Plan DV
P.O. Box 92956
Chicago, IL 60675-2956
A/C # 1403777065-5
- - --------------------------------------------------------------------------------
NB Regency Trust Boston Safe Deposit & Trust Co TTEE 97.77%
TWA Inc Pilots Directed Acct Plan
& 401K Plan for Pilots of TWA Inc
Attn Lisa Bove
135 Santilli Hwy # 026-0320
Everett, MA 02149-1906
A/C # 140221394-4
- - --------------------------------------------------------------------------------
NB Socially ICMA Retirement Trust 60.32%
Responsive Trust 777 N Capitol Street NE
Washington, DC 20002-4239
A/C # 140317410-5
- - --------------------------------------------------------------------------------
Delaware Charter Guarantee & Trust 6.74%
Cust FBO Principal Mutual Life Ins
CD DTD 1/1/96
PO Box 8706
Wilmington, DE 19899-8706
A/C # 140317436-7
- - --------------------------------------------------------------------------------
-16-
- - --------------------------------------------------------------------------------
FUND NAME AND ADDRESS OF OWNER PERCENT OF
THE FUND
OWNED
- - --------------------------------------------------------------------------------
Chase Manhattan Bank TTEE 6.88%
Avon Products Inc
Svngs & Stock Ownership 12/28/84
1345 Avenue of the Americas
New York, NY 10105-0302
A/C # 141016331-6
- - --------------------------------------------------------------------------------
National Financial Serv Corp 5.22%
For The Exclusive Benefit of Our Customers
PO Box 3908
Church Street Station
New York, NY 10008-3908
A/C # 140117994-0
- - --------------------------------------------------------------------------------
The Union Central Life Ins Co 5.15%
401K Group SEP Acct
1876 Waycross RD
PO Box 40888
Cincinnati, OH 45240-0888
A/C # 141011568-1
- - --------------------------------------------------------------------------------
NB Focus Assets FTC & CO 21.71%
Attn: Datalynx (House Account)
PO Box 173736
Denver, CO 80217-3736
A/C # 141011560-7
- - --------------------------------------------------------------------------------
NB Focus Assets Smith Barney Corp Trust Co TTEE 20.27%
Smith Barney 401K
Advisor Group Trust
Two Tower Center
PO Box 1063
E Brunswick, NJ 08816-1063
A/C # 142010744-3
- - --------------------------------------------------------------------------------
First Union Natl Bank TTEE 19.81%
FBO FUNB Reinvestment Account
A/C #1080824434
1525 W Wt Harris Blvd NC-1151
Charlotte, NC 28262-1063
A/C # 994000003-5
- - --------------------------------------------------------------------------------
Morris & Co 17.53%
c/o First Source Bank
Attn Trust Operations
PO Box 1602
South Bend, IN 46634-1602
A/C # 140318696-0
- - --------------------------------------------------------------------------------
-17-
- - --------------------------------------------------------------------------------
FUND NAME AND ADDRESS OF OWNER PERCENT OF
THE FUND
OWNED
- - --------------------------------------------------------------------------------
Key Trust Co NA 11.65%
FBO Prism
4900 Tiedeman RD
Brooklyn, OH 44144-2338
A/C # 140317435-4
- - --------------------------------------------------------------------------------
Donaldson, Lufkin & Jenrette 6.02%
Securities Corporation
Pershing Division
Mutual Fund Balancing
PO Box 2052
Jersey City, NJ 07303-2052
A/C # 142011195-0
- - --------------------------------------------------------------------------------
NB Genesis Assets Donaldson, Lufkin & Jenrette 40.06%
Securities Corporation
Pershing Division
Mutual Fund Balancing
PO Box 2052
Jersey City, NJ 07303-2052
A/C # 142011195-0
- - --------------------------------------------------------------------------------
Key Trust Co. 29.22%
FBO Prism
4900 Tiedeman RD
Brooklyn, OH 44144-2302
A/C # 140317435-4
- - --------------------------------------------------------------------------------
NB Guardian Assets Travelers Insurance Company #4 97.07%
Attn: Bob Iagrossi 5MS
Shareholder Accounting
One Tower Square
Hartford, CT 06183-0002
A/C # 140296923-0
- - --------------------------------------------------------------------------------
NB Manhattan Assets BHC Securities 76.94%
Trade House Account
Attn: Mutual Fund Dept.
1 Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042
A/C # 142011785-7
- - --------------------------------------------------------------------------------
BSC AS Agent 7.02%
FBO BBH-SD
1375 Peachtree Street NE STE 300
Atlanta, GA 30309-3112
A/C # 141016563-1
- - --------------------------------------------------------------------------------
-18-
- - --------------------------------------------------------------------------------
FUND NAME AND ADDRESS OF OWNER PERCENT OF
THE FUND
OWNED
- - --------------------------------------------------------------------------------
BENEFICIAL HOLDER Neuberger and Berman 5.71%
Management Inc.
605 Third Avenue 2nd Floor
New York, NY 10158-0180
A/C 140289664-0
- - --------------------------------------------------------------------------------
Donaldson, Lufkin & Jenrette 5.90%
Securities Corporation
Pershing Division
Mutual Fund Balancing
PO Box 2052
Jersey City, NJ 07303-2052
A/C # 142011195-0
- - --------------------------------------------------------------------------------
NB Millennium Charles Schwab & Co. Inc. 91.11%
Assets Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94014-4122
A/C # 142011784-4
- - --------------------------------------------------------------------------------
NB Socially Neuberger & Berman 44.72%
Responsive Assets Management Inc.
BENEFICIAL HOLDER Attn: Nick Altomare
605 Third Avenue 37th Floor
New York, NY 10158-0180
A/C # 105785000-8
- - --------------------------------------------------------------------------------
First Union Natl Bank Cust 13.91%
Various Retirement Plan
A/C #1080826922
1525 W Wt Harris Blvd NC-1151
Charlotte, NC 28262-8522
A/C # 100000000-9
- - --------------------------------------------------------------------------------
Fidelity Investments Institutional 14.54%
Operations Co Inc. (FIIOC) As Agent
For Peets Tea Coffee Inc. Savings
Retirement Plan #09771
100 Magellan Way
Covington, KY 41015-1999
A/C 141017216-1
- - --------------------------------------------------------------------------------
Charles Schwab & Co Inc. 8.77%
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122
A/C # 142011784-4
- - --------------------------------------------------------------------------------
-19-
- - --------------------------------------------------------------------------------
FUND NAME AND ADDRESS OF OWNER PERCENT OF
THE FUND
OWNED
- - --------------------------------------------------------------------------------
Fidelity Investments Institutional Operations Co 8.57%
Inc. (FIIOC) As Agent
For Inforonics Retirement 401K Plan 09897
100 Magellan Way (KWIC)
Covington, KY 41015-1999
A/C # 141016349-7
- - --------------------------------------------------------------------------------
Fidelity Investments Institutional 8.02%
Operations Co Inc. (P110C) As Agent
For Citizens Enterprises Corp.
401 (K) Plan
100 Magellan Way (KWIC)
Covington, KY 41015-1999
A/C # 140379131-3
- - --------------------------------------------------------------------------------
NB Century Fund Neuberger & Berman 17.52%
55 Water Street 27th Floor
Attn: Ron Staib, OPS Control
New York, NY 10041-0001
A/C # 983031311-7
- - --------------------------------------------------------------------------------
NB Focus Fund Charles Schwab & Co. Inc. 9.64%
Attn: Mutual Funds
101 Montgomery Street
San Francisco,.CA 94104-4122
A/C # 140187165-9
- - --------------------------------------------------------------------------------
NB Genesis Fund Charles Schwab & Co. Inc. 25.56%
Attn: Mutual Funds
101 Montgomery Street
San Francisco,.CA 94104-4122
A/C # 140187165-9
- - --------------------------------------------------------------------------------
Union Central Life 5.50%
Insurance Co
Attn: Mutual Funds Dept Station 3
PO Box 40888
Cincinnati, OH 45210-0888
A/C # 140041406-2
- - --------------------------------------------------------------------------------
NB Guardian Fund Charles Schwab & Co Inc. 19.77%
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122
A/C # 140187165-9
- - --------------------------------------------------------------------------------
-20-
- - --------------------------------------------------------------------------------
FUND NAME AND ADDRESS OF OWNER PERCENT OF
THE FUND
OWNED
- - --------------------------------------------------------------------------------
NB International Neuberger & Berman 11.77%
Fund 55 Water Street 27th Floor
Attn: Ron Staib, OPS Control
New York, NY 10041-0001
A/C # 140221735-1
- - --------------------------------------------------------------------------------
Charles Schwab & Co. Inc. 9.31%
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122
A/C # 140187165-9
- - --------------------------------------------------------------------------------
BENEFICIAL HOLDER Neuberger & Berman Trust Co. TTEE 5.88%
Neuberger & Berman Employees
Profit Sharing Plan UTD 5/20/71
Attn: Al Boccardo
605 Third Avenue, 36th Floor
New York, NY 10158-0180
A/C # 140247272-7
- - --------------------------------------------------------------------------------
NB Manhattan Fund Charles Schwab & Co. Inc. 6.13%
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122
A/C # 140187165-9
- - --------------------------------------------------------------------------------
NB Regency Fund Neuberger & Berman 26.755
Attn: Ron Staib, OPS Control
55 Water Street, Floor 27
New York, NY 10041-0001
A/C # 983031113-5
- - --------------------------------------------------------------------------------
Charles Schwab & Co. Inc. 26.52%
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122
A/C # 140187165-9
- - --------------------------------------------------------------------------------
-21-
- - --------------------------------------------------------------------------------
FUND NAME AND ADDRESS OF OWNER PERCENT OF
THE FUND
OWNED
- - --------------------------------------------------------------------------------
NB Partners Fund Charles Schwab & Co. Inc. 14.00%
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122
A/C # 140187165-9
- - --------------------------------------------------------------------------------
NB Socially Charles Schwab & Co. Inc. 23.21%
Responsive Fund Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122
A/C # 140187165-7
- - --------------------------------------------------------------------------------
NB Limited Maturity Nationwide Life Insurance 27.34%
Bond Trust QPVA
c/o IPO Portfolio Accounting
P.O. Box 182029
Columbus, OH 43218-2029
A/C # 140216217-6
- - --------------------------------------------------------------------------------
Chase Manhattan Bank NA Directed 24.55%
TTEE Met Life Defined Contribution
Group
Attn: Davit Ottingnon
4 New York Plaza
New York, NY 10004-2413
A/C # 140317784-3
- - --------------------------------------------------------------------------------
BENEFICIAL HOLDER Gary N. Skoloff 11.49%
Saul A. Wolfe
Skoloff & Wolfe Target Benefit Trust
DTD 11-1-95
293 Eisenhower Parkway
Livingston, NJ 07039-1711
A/C # 140216230-9
- - --------------------------------------------------------------------------------
Chase Manhattan Bank TTEE 7.96%
Various Retirement Plans Under PPI
Retirement Programs
Professional Pensions, Inc.
444 Foxon Road
East Haven, CT 06513-2019
A/C # 140215987-5
- - --------------------------------------------------------------------------------
National Financial Service Corp. for the 6.92%
Exclusive Benefit of Our Customers
P.O. Box 3908
Church Street Station
New York, NY 10008-3908
A/C # 140117994-0
- - --------------------------------------------------------------------------------
-22-
- - --------------------------------------------------------------------------------
FUND NAME AND ADDRESS OF OWNER PERCENT OF
THE FUND
OWNED
- - --------------------------------------------------------------------------------
NB Cash Reserves Neuberger & Berman 78.74%
Fund 55 Water Street, 27th Floor
Attn: Ron Staib, OPS Control
New York, NY 10041-0001
A/C # 982009417-4
- - --------------------------------------------------------------------------------
NB Government Neuberger & Berman 81.70%
Money Fund 55 Water Street, 27th Floor
Attn: Ron Staib, OPS Control
New York, NY 10041-0001
A/C # 982009417-4
- - --------------------------------------------------------------------------------
NB High Yield Fund Neuberger & Berman 30.20%
55 Water Street, 27th Floor
Attn: Ron Staib, OPS Control
New York, NY 10041-0001
A/C # 98302231-2
- - --------------------------------------------------------------------------------
BENEFICIAL HOLDER Neuberger & Berman Trust Co. TTEE 6.45%
Neuberger & Berman Employees
Profit Sharing Plan UTD 5/20/71
Attn: Al Boccardo
605 Third Avenue, 36th Floor
New York, NY 10158-0180
A/C # 140247272-7
- - --------------------------------------------------------------------------------
Neuberger & Berman LLC 5.08%
Bodman Foundation
John N Irwin III Pres & Treas
C/O Intitutional Equity Dept
605 Third Ave 22 Floor
New York, NY 10158-2299
A/C # 143030908-2
- - --------------------------------------------------------------------------------
NB Limited Maturity Charles Schwab & Co. Inc. 23.58%
Bond Fund Attn: Mutual Funds
125 Broad Street, FL 15
New York, NY 10004-2400
A/C 140187165-9
- - --------------------------------------------------------------------------------
Nationwide Life Insurance Co. 9.17%
QPVA
c/o IPO Portfolio Accounting
PO Box 182029
Columbus, OH 43218-2029
A/C # 136753000-5
- - --------------------------------------------------------------------------------
-23-
- - --------------------------------------------------------------------------------
FUND NAME AND ADDRESS OF OWNER PERCENT OF
THE FUND
OWNED
- - --------------------------------------------------------------------------------
BENEFICIAL HOLDER Neuberger & Berman Trust Co. TTEE 5.61%
Neuberger & Berman Employees
Profit Sharing Plan UTD 05/20/71
Attn: AL Boccardo
605 Third Ave 36th Floor
New York, NY 10158-0180
A/C # 140247272-7
- - --------------------------------------------------------------------------------
NB Municipal Charles Schwab & Co. Inc. 25.18%
Securities Trust Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122
A/C # 140187165-9
- - --------------------------------------------------------------------------------
At May 31, 2000, the Trustees and officers of the Trusts as a group
beneficially owned less than 1% of the shares of each fund. Certain Trustees and
officers of the Trusts are employees and shareholders of NBMI, which will
benefit if the Proposal 5, related to the Distribution and Shareholder Services
Plan, is approved.
COPIES OF THE FUNDS' MOST RECENT ANNUAL AND SEMI-ANNUAL REPORTS, INCLUDING
FINANCIAL STATEMENTS, HAVE PREVIOUSLY BEEN DELIVERED TO SHAREHOLDERS.
SHAREHOLDERS OF THE NEUBERGER BERMAN EQUITY GROUP OF FUNDS (NEUBERGER BERMAN
EQUITY FUNDS, EQUITY TRUST, EQUITY ASSETS OR EQUITY SERIES) MAY REQUEST COPIES
OF THE FUNDS' ANNUAL REPORT FOR THE FISCAL YEAR ENDED AUGUST 31, 1999, INCLUDING
AUDITED FINANCIAL STATEMENTS, AND THE FUNDS' SEMI-ANNUAL REPORT FOR THE PERIOD
ENDED FEBRUARY 29, 2000, AT NO CHARGE BY WRITING NBMI AT 605 THIRD AVENUE, 2ND
FLOOR, NEW YORK, NEW YORK 10158-0180, OR BY CALLING TOLL FREE 800-877-9700.
SHAREHOLDERS OF THE NEUBERGER BERMAN INCOME GROUP OF FUNDS (NEUBERGER
BERMAN INCOME FUNDS OR INCOME TRUST) MAY REQUEST COPIES OF THE FUNDS' ANNUAL
REPORT FOR THE FISCAL YEAR ENDED OCTOBER 31, 1999, INCLUDING AUDITED FINANCIAL
STATEMENTS, AND THE FUNDS' SEMI-ANNUAL REPORT FOR THE PERIOD ENDED APRIL 30,
2000, AT NO CHARGE BY WRITING NBMI AT 605 THIRD AVENUE, 2ND FLOOR, NEW YORK, NEW
YORK 10158-0180, OR BY CALLING TOLL FREE 800-877-9700.
GENERAL OVERVIEW OF THE PROPOSALS
The following is a brief overview regarding the matters being presented
for your approval at the Meeting:
PROPOSAL 1 (SHAREHOLDERS OF ALL FUNDS): To elect a Board of Trustees. The
Neuberger Berman funds are composed of three fund groups - the equity funds, the
income funds, and the insurance funds. Currently, each fund group has its own
Board of Trustees, with very limited overlap in membership. The Boards,
including all of the independent Trustees, and management believe that
considerable efficiencies can be realized by having the same individuals serve
on each of the Boards.
-24-
PROPOSAL 2 (SHAREHOLDERS OF ALL FUNDS): To change the fundamental
limitation on diversification of investments among different issuers so as to
allow the funds to invest to a greater extent in securities issued by other
investment companies. This change is intended primarily to allow the funds to
take full advantage of a program whereby uninvested cash could be invested in a
money market fund managed by NBMI. The Board believes that such combined
management would result in greater efficiency, which could produce greater
return to investors.
PROPOSAL 3 (SHAREHOLDERS OF ALL FUNDS): To ratify the selection of the
funds' independent auditors or accountants.
PROPOSAL 4 (SHAREHOLDERS OF EQUITY TRUSTS, EQUITY ASSETS, EQUITY SERIES
AND INCOME TRUSTS): To convert each fund from the current two-level
master-feeder structure to a single-level multiple-class structure. The
investment programs of the funds and the rights of shareholders would be
unaffected by this change, except in certain minor respects explained below.
PROPOSAL 5 (SHAREHOLDERS OF GENESIS TRUST, GUARDIAN TRUST, AND PARTNERS
TRUST): To approve a distribution and shareholder services plan whereby each of
those funds would be authorized to spend up to 0.10% (one-tenth of one percent)
of its average net assets each year to obtain distribution and/or shareholder
services. Currently, all expenses of share distribution are paid by NBMI. If the
Proposal is approved, the Distribution and Shareholder Services Plan would
increase the annual expenses indirectly borne by the shareholders of each Fund
by 0.10% of average daily net assets.
PROPOSAL 6 (SHAREHOLDERS OF CASH RESERVES ONLY): To change Cash Reserves'
fundamental restriction on industry concentration to permit concentration in the
financial services group of industries.
PROPOSAL 7 (SHAREHOLDERS OF GOVERNMENT MONEY FUND ONLY): To change
Government Money Fund's fundamental policies to:
o permit the fund to invest in all securities issued or guaranteed as
to principal or interest by the U.S. Government, its agencies or
instrumentalities;
o permit the fund to invest in repurchase agreements in an effort to
earn more income;
o modify the fund's borrowing policy to permit the fund to use reverse
repurchase agreements;
o modify the fund's lending policy to permit the fund to lend portfolio
securities.
PROPOSAL 8 (SHAREHOLDERS OF ALL FUNDS): To vote on such other matters as
may properly come before the Meeting. The funds are not currently aware of any
such matters.
-25-
PROPOSAL 1. ELECTION OF TRUSTEES (ALL FUNDS)
The Boards of Trustees of the funds propose that shareholders elect the
individuals named in the table below as members of one Board of Trustees that
would serve all of the funds. With this proposal, the separate Boards of the
three different fund groups that make up the Neuberger Berman family of mutual
funds - the equity funds group, the income funds group, and the insurance funds
group - intend to consolidate, so the same individuals would serve on the Boards
of all three groups of funds.
Currently, each of these different groups has its own Board of Trustees
(several trustees serve on the boards of more than one group). For seven years,
the multiple boards have had separate meetings, but often have reviewed the same
or substantially the same policy issues, contractual arrangements and other
matters for their respective fund groups. The trustees of each of these Boards
have agreed that both the funds and NBMI would enjoy substantial efficiencies if
the same individuals served as Trustees of all of the funds in the Neuberger
Berman fund family.
This consolidation was initially proposed by NBMI at a time when several
of the Boards were contemplating shareholder meetings to fill Board vacancies
created by retirements. The proposal was taken up by the independent trustees of
each fund group (i.e., those who do not fall within the definition of
"interested person" in the Investment Company Act of 1940, as amended ("1940
Act") ("Independent Trustees")) and discussed at several meetings over a period
of months. The Boards explored the potential benefits and drawbacks of the
proposal, as well as various alternatives. They noted that consolidating the
three boards would reduce the duplication of board materials and reports, which
are comprehensive and often lengthy, and would avoid the need for repeated
presentations by the same personnel at the different meetings.
The Independent Trustees also considered that all Boards in the Neuberger
Berman fund family were actively seeking additional members, or soon would be,
and that consolidation of the Boards would produce a pool of candidates already
familiar with (1) the Neuberger Berman fund family, its manager, underwriter,
administrator, and methods of operation, (2) the mutual fund business and the
comprehensive regulatory regime under which it operates, as well as (3) the
special responsibilities that the law assigns to mutual fund trustees.
Therefore, each fund will be able to preserve the continuity of its current
Board's leadership while benefiting from the added knowledge and experience of
the other Neuberger Berman fund trustees. They considered the potential cost
savings, the ability of the Boards to act faster and in a more coordinated
fashion, and whether the benefits to NBMI would benefit the shareholders. They
also considered the potential size of the combined Board, noting that it would
be larger than the boards of most other mutual funds. They considered the effect
that consolidation might have on the Board's working style and the working
relationships among the members of each board, and the potential effect of
attrition over the next several years.
The matter was then taken up by the Nominating Committee of each Board,
which is also composed entirely of Independent Trustees. The Nominating
Committee considered the qualifications and backgrounds of the candidates, and
the expressed desire of certain members of the various Boards to retire.
-26-
Unless you give instructions on the enclosed proxy card to withhold your
vote for any candidate, your shares will be voted "FOR" the election of each of
the listed nominees. If any or all of the nominees should withdraw or otherwise
become unavailable for election, your shares will be voted "FOR" such other
nominee or nominees as the Nominating Committee may recommend. Each nominee has
indicated his or her willingness to serve if elected. If elected, each nominee
will hold office until his or her successor is elected and qualified, or until
he or she sooner retires, resigns, dies, or is removed from office as provided
in each fund's Trust Instrument.
If each of the nominees is elected, they will constitute the entire Board
of Trustees of each Trust. At May 31, 2000, the trustees and officers of each
fund, as a group, owned beneficially or of record less than 1% of the
outstanding shares of each series of each fund.
The following table lists the candidates. Unless otherwise indicated, each
candidate has engaged in the principal occupation listed for at least the last
five years, although not necessarily in the same capacity. As indicated, each of
the nominees (except Mr. Seip) currently serves as a Trustee of one or more
funds; of the candidates, all except Ms. Harvey, Mr. Cannon, Mr. Kassen and Mr.
Sundman were elected by shareholders in 1993 or 1994.
Present Position with the Neuberger
Berman Funds; Business Experience During
NAME, AGE, AND ADDRESS(1) Past Five YEARS; OTHER TRUSTEESHIPS (2)
- - ------------------------- ---------------------------------
John Cannon (70)
CDC Capital Management TRUSTEE OF INCOME FUNDS, INCOME TRUST,
450 Sentry Parkway AND INCOME MANAGERS TRUST (SINCE 1994).
Suite 105 Chairman and Chief Investment Officer of
P.O. Box 1212 CDC Capital Management (registered
Blue Bell, PA 19422 investment adviser) (1993-present).
Faith Colish (64) TRUSTEE OF EQUITY FUNDS, EQUITY TRUST,
63 Wall Street EQUITY ASSETS, AND EQUITY MANAGERS TRUST
24th Floor (SINCE 1993); EQUITY SERIES (SINCE
New York, NY 10005 1998); AND NEUBERGER BERMAN ADVISERS
MANAGEMENT TRUST (SINCE 1989). Attorney
at Law, Faith Colish, A Professional
Corporation.
Walter G. Ehlers (67) TRUSTEE OF NEUBERGER BERMAN ADVISERS
6806 Suffolk Place MANAGEMENT TRUST (SINCE 1989).
Harvey Cedars, NJ 08008 Consultant, Director of the Turner
Corporation, A.B. Chance Company and
Crescent Jewelry, Inc
-27-
Present Position with the Neuberger
Berman Funds; Business Experience During
NAME, AGE, AND ADDRESS(1) Past Five YEARS; OTHER TRUSTEESHIPS (2)
- - ------------------------- ---------------------------------
C. Anne Harvey (62) TRUSTEE OF NEUBERGER BERMAN ADVISERS
2555 Pennsylvania Avenue, MANAGEMENT TRUST (SINCE 1998). Director
N.W. of American Association of Retired
Washington, D.C. 20037 Persons ("AARP") Program Services and
Administrator of AARP Foundation; The
National Rehabilitation Hospital's Board
of Advisors; Individual Investors
Advisory Committee to the New York Stock
Exchange Board of Directors; Steering
Committee for the U.S. Securities and
Exchange Commission Facts on Saving and
Investing Campaign; and American Savings
Education Council's Policy Board
(ASEC).
Barry Hirsch (67) TRUSTEE OF INCOME FUNDS, INCOME TRUST
Loews Corporation AND INCOME MANAGERS TRUST (SINCE 1993).
667 Madison Avenue Senior Vice President, Secretary, and
7th Floor General Counsel of Loews Corporation
New York, NY 10021 (diversified financial corporation).
Michael M. Kassen* (47) PRESIDENT AND TRUSTEE OF EQUITY FUNDS,
EQUITY TRUST, EQUITY ASSETS, EQUITY
SERIES AND EQUITY MANAGERS TRUST;
PRESIDENT OF GLOBAL MANAGERS TRUST
(SINCE 1999). Executive Vice President,
Chief Investment Officer of Neuberger
Berman LLC; Chairman and Director of
NBMI; Chief Investment Officer and
Director of Neuberger Berman Inc.
Robert A. Kavesh (72) TRUSTEE OF INCOME FUNDS, INCOME TRUST
110 Bleecker Street AND INCOME MANAGERS TRUST (SINCE 1993).
Apt. 24B Professor of Finance and Economics at
New York, NY 10012 Stern School of Business, New York University.
Howard A. Mileaf (63) TRUSTEE OF EQUITY FUNDS, EQUITY TRUST,
WHX Corporation EQUITY ASSETS, AND EQUITY MANAGERS TRUST
110 East 59th Street (SINCE 1993); EQUITY SERIES (SINCE
30th Floor 1998); GLOBAL MANAGERS TRUST (SINCE
New York, NY 10022 1994); AND NEUBERGER BERMAN ADVISERS
MANAGEMENT TRUST (SINCE 1999). Vice
President and Special Counsel to WHX
Corporation (holding company) since
1992; Director of Kevlin Corporation
(manufacturer of microwave and other
products).
-28-
Present Position with the Neuberger
Berman Funds; Business Experience During
NAME, AGE, AND ADDRESS(1) Past Five YEARS; OTHER TRUSTEESHIPS (2)
- - ------------------------- ---------------------------------
Edward I. O'Brien* (71) TRUSTEE OF EQUITY FUNDS, EQUITY TRUST,
12 Woods Lane EQUITY ASSETS, AND EQUITY MANAGERS TRUST
Scarsdale, NY 10183 (SINCE 1993); AND EQUITY SERIES (SINCE
1998). Private Investment Management;
President of the Securities Industry
Association ("SIA") (securities
industry's representative in government
relations and regulatory matters at the
federal and state levels) from 1974 to
1992; Adviser to SIA from November 1992
to November 1993; Director of Legg
Mason, Inc.
John T. Patterson, Jr. TRUSTEE OF EQUITY FUNDS, EQUITY TRUST,
(72) EQUITY ASSETS AND, EQUITY MANGERS TRUST
7082 Siena Court (SINCE 1993); GLOBAL MANGERS TRUST
Boca Raton, FL 33433 (SINCE 1994); AND EQUITY SERIES (SINCE
1998). Retired. Formerly, President
of SOBRO (South Bronx Overall Economic
Development Corporation).
John P. Rosenthal (67) TRUSTEE OF EQUITY FUNDS, EQUITY TRUST,
Burnham Securities Inc. EQUITY ASSETS AND EQUITY MANGERS TRUST
Burnham Asset Management (SINCE 1993); GLOBAL MANAGERS TRUST
Corp. (SINCE 1994). Senior Vice President of
1325 Avenue of the Burnham Securities Inc. (a registered
Americas broker-dealer) since 1991.
26th Floor
New York, NY 10019
William E. Rulon (67) TRUSTEE OF INCOME FUNDS, INCOME TRUST
2980 Bayside Walk AND INCOME MANAGERS TRUST (SINCE 1993).
San Diego, CA 92109 Retired. Senior Vice President of
Foodmaker, Inc. (operator and franchiser
of restaurants) until January 1997;
Secretary of Foodmaker, Inc. until July
1996.
Cornelius T. Ryan (68) TRUSTEE OF EQUITY FUNDS, EQUITY TRUST,
Oxford Bioscience EQUITY ASSETS AND EQUITY MANAGERS TRYST
Partners (SINCE 1993); AND, EQUITY SERIES (SINCE
315 Post Road West 1998). General Partner of Oxford
Westport, CT 06880 Partners and Oxford Bioscience Partners
(venture capital partnerships) and
President of Oxford Venture Corporation;
Director of Capital Cash Management
Trust (money market fund) and Prime Cash Fund.
Tom Decker Seip NOMINEE. General Partner of SEIP Investments
(LP) (private investment partnership); of Offroad
Capital Inc. and E-Finance Corporation (pre-public
Internet Commerce Companies); Trustee of Hambrecht
and Quist Fund Trust; Director of AmericaOne;
Senior executive of the Charles Schwab Corp. from
1983 to 1999; including Chief Executive Officer of
Charles Schwab Investment Management Inc.; Trustee
of Schwab Family of Funds and Schwab Investments
from 1997 to 1998; Executive Vice President-Retail
Brokerage for Charles Schwab Investment Management
from 1994 to 1997.
-29-
Present Position with the Neuberger
Berman Funds; Business Experience During
NAME, AGE, AND ADDRESS(1) Past Five YEARS; OTHER TRUSTEESHIPS (2)
- - ------------------------- ---------------------------------
Gustave H. Shubert (71) TRUSTEE OF EQUITY FUNDS, EQUITY TRUST,
13838 Sunset Boulevard EQUITY ASSETS AND EQUITY MANAGERS TRUST
Pacific Palisades, CA (SINCE 1993); AND EQUITY SERIES (SINCE
90272 1998). Senior Fellow/Corporate
Advisor and Advisory Trustee of Rand (a
non-profit public interest research
institution) since 1989; Honorary Member
of the Board of Overseers of the
Institute for Civil Justice, the Policy
Advisory Committee of the Clinical
Scholars Program at the University of
California, the American Association for
the Advancement of Science, the Counsel
on Foreign Relations, and the Institute
for Strategic Studies (London); advisor
to the Program Evaluation and
Methodology Division of the U.S. General
Accounting Office; formerly Senior Vice
President and Trustee of Rand.
Candace L. Straight (52) TRUSTEE OF INCOME FUNDS, INCOME TRUST,
518 E. Passaic Avenue INCOME MANAGERS TRUST (SINCE 1993); AND
Bloomfield, NJ 07003 NEUBERGER BERMAN ADVISERS MANAGEMENT
TRUST (SINCE 1999). Private investor
and consultant specializing in the
insurance industry; Advisory Director of
Securities Capital LLC, (a global
private equity investment firm dedicated
to making investments in the insurance
sector); Principal of Head & Company,
LLC (limited liability company providing
investment banking and consulting
services to the insurance industry)
until March 1996; Director of Drake
Holdings (U.K. motor insurer) until June
1996.
-30-
Present Position with the Neuberger
Berman Funds; Business Experience During
NAME, AGE, AND ADDRESS(1) Past Five YEARS; OTHER TRUSTEESHIPS (2)
- - ------------------------- ---------------------------------
Peter E. Sundman* (41) CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE
OFFICER, AND TRUSTEE OF EQUITY FUNDS,
EQUITY TRUST, EQUITY ASSETS, EQUITY
SERIES, EQUITY MANAGERS TRUST AND GLOBAL
MANAGERS TRUST; PRESIDENT AND CHIEF
EXECUTIVE OFFICER OF INCOME FUNDS,
INCOME TRUST AND INCOME MANAGERS TRUST;
PRESIDENT AND PRINCIPAL EXECUTIVE
OFFICER OF ADVISERS MANAGERS TRUST
(SINCE 1999). Executive Vice President
of Neuberger Berman LLC; President and
Director of NBMI; and Executive Vice
President and Director of Neuberger
Berman Inc.
Peter P. Trapp (55) TRUSTEE OF NEUBERGER BERMAN ADVISERS
Ford Motor Credit Company MANAGERS TRUST (SINCE 1989). Regional
1455 Lincoln Parkway Manager for Atlanta Region, Ford Motor
Atlanta, GA 30346-2209 Credit Company since August, 1997; prior
thereto, President, Ford Life Insurance
Company, April 1995 until August 1997.
(1) UNLESS OTHERWISE INDICATED, THE BUSINESS ADDRESS OF EACH LISTED PERSON IS
605 THIRD AVENUE, NEW YORK, NEW YORK 10158.
(2) EXCEPT AS OTHERWISE INDICATED, EACH INDIVIDUAL HAS HELD THE POSITIONS SHOWN
FOR AT LEAST THE LAST FIVE YEARS.
* INDICATES A TRUSTEE WHO IS AN "INTERESTED PERSON" OF EACH TRUST WITHIN THE
MEANING OF THE 1940 ACT. MESSRS. KASSEN AND SUNDMAN ARE INTERESTED PERSONS BY
VIRTUE OF THE FACT THAT THEY ARE OFFICERS AND/OR DIRECTORS OF NB MANAGEMENT AND
EXECUTIVE VICE PRESIDENTS 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 NB MANAGEMENT SERVES AS INVESTMENT
MANAGER.
The current Boards of Trustees of the funds are responsible for general
oversight of the funds' business and operations. The 1940 Act and SEC rules
assign to the Boards or to the Independent Trustees responsibility to consider
and decide certain issues, including some in which the funds' interests may not
be the same as those of management. The Boards of the funds in the Neuberger
Berman family follow certain policies and practices intended to enhance the
independence and effectiveness of the Independent Trustees. These include
separate meetings of the Independent Trustees with counsel of their own
choosing; a Nominating Committee composed entirely of Independent Trustees,
which is responsible for identifying, screening, and naming candidates for the
Board and Board committees and administering the Board's retirement policy; an
-31-
Audit Committee composed entirely of Independent Trustees, which operates under
a written charter and meets with each fund's independent auditors outside the
presence of management; and a policy that compensation for serving as
Independent Trustee must be set by the Independent Trustees. The Boards of
Trustees of Equity Funds, Equity Trust, Equity Assets each met 6 times and
Equity Series met 4 times during the fiscal year ended August 31, 1999. The
Boards of Trustees of Income Funds and Income Trust each met 4 times during the
fiscal year ended October 31, 1999. All of the Trustees of each fund attended
75% or more of the board meetings during each fund's last fiscal year.
The following Trustees currently serve on the Audit Committee of the
Boards of Trustees of Equity Funds, Equity Trust, Equity Assets and Equity
Series: Howard A. Mileaf (Chairman), Cornelius T. Ryan, and Gustave H. Shubert.
The following Trustees currently serve on the Audit Committee of the Boards of
Trustees of Income Funds and Income Trust: William E. Rulon (Chairman), John
Cannon and Barry Hirsch. The principal duties of the Audit Committees are: (a)
to review the financial and accounting policies of the funds, including internal
accounting control procedures, and to review reports prepared by the funds'
independent auditors, including reports on the funds' financial statements; (b)
to evaluate the independence of the independent auditors and to recommend
whether to retain such independent auditors for the next fiscal year; (c) to
review and recommend approval or disapproval of audit and non-audit services and
the fees charged for such services; and (d) to report to the Board and make such
recommendations as it deems necessary. The Audit Committee of Equity Funds,
Equity Trust, Equity Assets and Equity Series met one time during the fiscal
year ended August 31, 1999. Each member of the Audit Committee attended that
meeting. The Audit Committee of Income Funds and Income Trust met one time
during the fiscal year ended October 31, 1999. Each member of the Audit
Committee attended that meeting.
The following Trustees currently serve on the Nominating Committee of the
Boards of Trustees of Equity Funds, Equity Trust, Equity Assets and Equity
Series: Cornelius T. Ryan (Chairman), John T. Patterson, Jr., and John P.
Rosenthal. The following Trustees currently serve on the Nominating Committee of
the Boards of Trustees of Income Funds and Income Trust: Candance L: Straight
(Chairman) and Barry Hirsch. The Nominating Committees search for and interview
trustee candidates for recommendation to the Boards. The Nominating Committee of
Equity Funds, Equity Trust, Equity Assets and Equity Series met one time during
the fiscal year ended August 31, 1999. Each member of the Nominating Committee
attended that meeting. The Nominating Committee of Income Funds and Income Trust
met one time during the fiscal year ended October 31, 1999. Each member of the
Nominating Committee attended that meeting. The Fund pays the Independent
Trustees $32,000 annually and up to $3,750 for each Board meeting and $750 for
each separate meeting of a Board committee. Trustees of the Trust who are
"interested persons" as defined in the 1940 Act receive no compensation from the
Trust. Trustees are reimbursed for any expenses incurred in attending meetings.
The Nominating Committees also administer the funds' retirement policy. The
retirement policy with respect to the Equity Trustees is determined on a
case-by-case basis. Each Income Trustee will be subject to retirement at the end
of the year in which he or she becomes 75 years old. The following table sets
-32-
forth information concerning the compensation of the Trustees of the funds. None
of the Neuberger Berman Funds has any retirement plan for its trustees.
COMPENSATION TABLE
FISCAL YEAR ENDED AUGUST 31, 1999
NEUBERGER BERMAN EQUITY GROUP OF FUNDS
Aggregate Aggregate Aggregate Aggregate
Compensation Compensation Compensation Compensation Total Compensation from
NAME AND POSITION from Neuberger from Neuberger from Neuberger from Neuberger Investment Companies in the
- - ----------------- Berman Berman Berman Berman Neuberger Berman Fund
Equity Funds Equity Assets Equity Series Equity Trust Complex Paid to Trustees**
------------ ------------ ------------ ------------ --------------------------
Faith Colish $18,571 $276 $31 $6,354 $83,500
Trustee
Stanley Egener* $0 $0 $0 $0 $0
Chairman of the
Board, Chief
Executive
Officer, and
Trustee
Howard A. Mileaf $19,402 $283 $31 $6,641 $56,250
Trustee
Edward I. $20,038 $296 $31 $6,868 $53,750
O'Brien Trustee
John T. $20,310 $301 $31 $6,966 $58,500
Patterson, Jr.
Trustee
John P. $19,398 $286 $31 $6,643 $56,250
Rosenthal
Trustee
Cornelius T. $16,740 $255 $31 $5,707 $44,750
Ryan
Trustee
Gustave H. $19,220 $281 $31 $6,576 $51,500
Shubert
Trustee
Lawrence $0 $0 $0 $0 $0
Zicklin*
President and
Trustee
*Retired, October 27, 1999
**No fund within the complex has a bonus, pension, profit sharing or retirement
plan.
-33-
COMPENSATION TABLE
FISCAL YEAR ENDED OCTOBER 31, 1999
NEUBERGER BERMAN INCOME GROUP OF FUNDS
Name and Position Aggregate Aggregate Total Compensation from Trusts
WITH THE TRUST Compensation from Compensation from in the Neuberger Berman Fund
WITH THE TRUST Income Funds Income Trust Complex Paid to Trustees
- - ------------------ ------------ ------------ ------------------------
John Cannon $24,579 $671 $52,000
Trustee (1 other investment company)
Stanley Egener* $0 $0 $0
Chairman of the (9 other investment companies)
Board, Chief
Executive Officer,
and Trustee
Theodore P. Giuliano $0 $0 $0
President and Trustee (1 other investment company)
Barry Hirsch $23,978 $647 $49,250
Trustee (1 other investment company)
Robert A. Kavesh $24,215 $660 $51,250
Trustee (1 other investment company)
William E. Rulon $23,244 $631 $47,750
Trustee
(1 other investment company)
Candace L. Straight $23,978 $647 $51,500
Trustee (1 other investment company)
* Retired, December 16, 1999.
REQUIRED VOTE
The election of each Trustee requires approval by a plurality of the votes
cast at the Meeting on the matter.
THE BOARDS OF TRUSTEES, INCLUDING ALL OF THE INDEPENDENT TRUSTEES,
UNANIMOUSLY RECOMMEND THAT YOU VOTE "FOR" EACH NOMINEE IN PROPOSAL 1.
If the Reorganization is not approved, or is approved but not implemented
(see Proposal 4), so that the funds continue in a two-level master-feeder
structure, a vote for a Trustee candidate will be considered authorization for
your Trust to vote for that same candidate as a member of the Board of Trustees
of the master fund.
PROPOSAL 2. MODIFICATION OF FUNDAMENTAL RESTRICTION ON
PORTFOLIO DIVERSIFICATION (ALL FUNDS)
The Boards of Trustees of the funds have approved a change to the
fundamental investment limitations of each fund regarding diversification. The
-34-
Boards and NB Management believe that the proposed change will provide the funds
with greater flexibility to respond to certain present and future investment
opportunities. As discussed below, these fundamental restrictions, in their
current form, impede the funds' use of certain portfolio management techniques
that are now used by other mutual funds. Because the policies in question are
fundamental, the changes require shareholder approval before they can be
implemented.
The existing fundamental restriction on issuer diversification would be
changed by adding the underlined portion:
DIVERSIFICATION. The Fund may not, with respect to 75% of the value
of its total assets, purchase the securities of any issuer (other than
securities issued or guaranteed by the U.S. Government or any of its
agencies or instrumentalities, OR SECURITIES ISSUED BY OTHER INVESTMENT
COMPANIES) if, as a result, (i) more than 5% of the value of the Fund's
total assets would be invested in the securities of that issuer or (ii)
the Fund would hold more than 10% of the outstanding voting securities of
that issuer.
The 1940 Act requires all mutual funds to state whether they are
"diversified" or "non-diversified." Each of the Neuberger Berman funds is a
diversified fund and, accordingly, must restrict the percentage of its assets
that can be invested in any one issuer. Diversified funds are generally safer,
because the risk is spread over a larger number of issuers.
The 1940 Act permits a fund, in counting the percentage of its assets
invested in various issuers for diversity purposes, to disregard investments in
U.S. Government securities or securities issued by other investment companies.
The current diversification policies of the funds do not take full advantage of
this provision. Specifically, they do not reflect the exception for investments
in securities of other investment companies.
The proposed modification would add the exemption for investments in
securities of other investment companies. Among other things, this would allow
the funds' greater flexibility in managing uninvested cash. The funds have
[requested/received] permission from the SEC to invest their uninvested cash in
the Neuberger Berman Institutional Cash Trust, a registered money market fund,
as a means of obtaining more efficient and effective management of the funds'
uninvested cash. The proposed change would provide the funds with greater
flexibility to use this investment technique [should the SEC grant the funds'
request].1
REQUIRED VOTE
Approval of the change contemplated by Proposal 2 with respect to a fund
requires the affirmative vote of a "majority of the outstanding voting
- - --------
1 Section 12(d)(1) of the 1940 Act contains other limitations on the extent to
which one investment company can invest in another. Specifically, one fund
cannot purchase more than 3% of the outstanding voting securities of another
fund, may not invest more than 5% of its total assets in the other fund, and may
not invest more than 10% of its total assets in the securities of all investment
companies combined. Through their exemptive application to permit joint cash
management, the Funds have [asked for/received] relief from these limits.
-35-
securities" of that fund, which for this purpose means the affirmative vote of
the lesser of (1) more than 50% of the outstanding shares of the fund or (2) 67%
or more of the shares of the fund present at the Meeting if more than 50% of the
outstanding shares of the fund are represented at the Meeting in person or by
proxy.
If Proposal 4 for conversion to a multi-class system is not approved, but
the change to the diversification policy presented in this Proposal 2 is
approved, such approval would be deemed a change of policy for the respective
feeder fund, plus authority for that fund to cast its vote in favor of an
identical change to the policies of the master fund in which it invests.
If the change contemplated by Proposal 2 is not approved by shareholders
of a fund, the existing fundamental restriction of the fund will continue in
effect for that fund as long as it remains a separate fund; but disapproval of
Proposal 2 by the shareholders of one fund will not affect approvals of Proposal
2 by shareholders of any other fund.
THE BOARD OF TRUSTEES, INCLUDING ALL OF THE INDEPENDENT TRUSTEES,
UNANIMOUSLY RECOMMENDS THAT YOU APPROVE THE MODIFICATION OF THE FUNDAMENTAL
RESTRICTION ON PORTFOLIO DIVERSIFICATION IN PROPOSAL 2.
PROPOSAL 3. SELECTION OF INDEPENDENT AUDITORS OR ACCOUNTANTS
(ALL FUNDS)
The Boards of Trustees of the funds and the master funds in which they
invest, including all of the Independent Trustees, have selected Ernst & Young
LLP to continue to serve as the independent auditors of each of the funds and
their corresponding master funds, except the Neuberger Berman Manhattan funds,
the Millennium funds, the Regency funds, the Socially Responsive funds and
Neuberger Berman International Portfolio (the Master Fund). Ernst & Young LLP
has no direct financial interest or material indirect financial interest in
these funds. The Board of Trustees has selected Ernst & Young as the independent
auditor of Global Manager Trust and Neuberger Berman International Portfolio.
Ernst & Young has no direct financial interest or material in direct financial
interest in these funds. The Boards of Trustees of the funds and the master
funds in which they invest, including all of the Independent Trustees, have
selected PricewaterhouseCoopers LLP to continue to serve as independent
accountants of the Neuberger Berman Century funds, Manhattan funds, the
Millennium funds, the Regency funds, the Socially Responsive funds and the
Neuberger Berman Technology funds. PricewaterhouseCoopers LLP has no direct
financial interest or material indirect financial interest in these funds.
Representatives of Ernst & Young LLP and PricewaterhouseCoopers LLP are not
expected to attend the Meeting, but have been given the opportunity to make a
statement if they so desire, and will be available should any matter arise
requiring their attention.
The independent auditors and accountants examine annual financial
statements for each fund and provide other audit and tax-related services. In
recommending the selection of Ernst & Young LLP and PricewaterhouseCoopers LLP,
the Boards reviewed the nature and scope of the services to be provided
(including non-audit services) and whether the performance of such services
would affect the auditors' or accountants' independence.
As described under Proposal 4, if the shareholders of the funds approve
the Agreement and Plan of Reorganization, they will become holders of shares of
the Trust Class, Assets Class or Fund Class of Equity Funds or Income
Funds (Genesis Institutional will have a separate, fourth class). The
-36-
boards of trustees of Equity Funds and Income Funds have also recommended the
selection of Ernst & Young LLP and PricewaterhouseCoopers LLP as independent
auditors and accountants of those series of Equity Funds and Income Funds
corresponding to the funds mentioned above. Therefore, immediately after the
Reorganization, the same independent auditors or accountants will serve your
fund (in which you will hold shares in the Trust Class, Assets Class or Fund
Class, or for Genesis Institutional, Institutional Class) that served the fund
in which you held shares prior to the Reorganization.
REQUIRED VOTE
Approval of Proposal 3 requires the affirmative vote of a majority of the
shares present and voting at the Meeting.
If Proposal 4 for conversion to a multi-class system is not approved, but
Proposal 3 is approved, such approval would be considered as a ratification of
the auditors and/or accountants mentioned above with respect to the funds and
their corresponding master funds.
THE BOARDS OF TRUSTEES, INCLUDING ALL OF THE INDEPENDENT TRUSTEES,
UNANIMOUSLY RECOMMEND THAT YOU VOTE TO RATIFY THEIR SELECTION OF THE FUNDS'
INDEPENDENT AUDITORS/ACCOUNTANTS.
PROPOSAL 4. APPROVAL OF THE PROPOSED REORGANIZATION
At the Meeting, shareholders of Neuberger Berman Equity Trust, Neuberger
Berman Equity Assets, Neuberger Berman Equity Series, and Neuberger Berman
Income Trusts will be asked to approve the proposed Reorganization. Because
Neuberger Berman Equity Funds and Income Funds will survive the proposed
Reorganization, Equity Funds and Income Funds shareholders are not being asked
to vote.
WHAT ARE THE REASONS FOR THE PROPOSED REORGANIZATION?
The reorganization is being proposed because the Boards and NBMI each
believe that eliminating the master-feeder structure and reorganizing into a
multi-class structure would simplify the operations of the funds and,
consequently, may result in some reduction in each fund's operating expenses.
For example, the number of tax filings filed annually by the equity master and
feeder funds would be reduced from [40] to [11], and separate audits of the
master funds would no longer be necessary. Over time, the funds may benefit from
the fewer number of required filings with the Securities and Exchange Commission
(the "SEC") and other legal and administrative cost savings.
In addition, NBMI, which serves as each fund's principal underwriter, has
advised the Boards that investors are more familiar with the more common
multiple class structure than they are with the master-feeder structure.
Accordingly, the Reorganization should make it easier to market the funds. While
NBMI would be one beneficiary of such a development, fund shareholders would
also benefit, because increased assets typically result in economies that
produce a lower expense ratio for all investors.
-37-
The Boards have determined that it would be in the best interests of each
fund and its shareholders to operate each fund in the single level, multi-class
structure that has become increasingly favored by the mutual fund industry.
DESCRIPTION OF THE REORGANIZATION PLAN
The terms and conditions under which the Reorganization would be completed
are set forth in the Reorganization Plan. The following is a summary of the
Reorganization Plan and is qualified in its entirety by reference to the
Reorganization Plan, the form of which is attached as Appendix A. The
Reorganization Plan provides for the completion of the Reorganization in several
steps:
First, each of Neuberger Berman Equity Trust, Equity Assets and Equity
Series will transfer its assets (which consist primarily of its interest
in the underlying master fund) and liabilities to the corresponding
series of Equity Funds, in exchange for shares of the Trust Class, Asset
Class, or Institutional Class of that series identical in number and
value to the fund shares held by investors.
Neuberger Berman Income Trust will transfer its assets (which consist
primarily of its interest in the underlying master fund) and its
liabilities to the corresponding series of Income Funds, in exchange for
shares of the Trust Class of that series identical in number and value to
the fund shares held by investors.
Second, each fund will distribute the Trust Class, Asset Class or
Institutional Class shares it receives to its shareholders, and will
dissolve. For example, if you own shares of Neuberger Berman Guardian
Trust, you would receive in exchange an equal amount of Trust Class
shares of Neuberger Berman Guardian Fund, which is the corresponding
series of Equity Funds. If you own shares of Neuberger Berman Limited
Maturity Bond Trust, you would receive in exchange an equal amount of
Trust Class shares of Neuberger Berman Limited Maturity Bond Fund, which
is the corresponding series of Income Funds.
Third, each series of Equity Funds and Income Funds will withdraw its
investment in its corresponding master fund. Each master fund will
dissolve and distribute its assets in kind (i.e., in the form of stocks,
bonds, and other investments held by the master fund, as well as any
cash) to each corresponding series of Equity Funds and Income Funds.
Finally, NBMI will enter into investment management agreements with
Equity Funds and Income Funds with provisions identical in all material
respects to those of its current investment management agreements with
the master fund. (If your Fund currently has or approves a Distribution
and Shareholder Servicing Plan, your class of shares will also have such
a plan identical in every material respect.)
The completion of the Reorganization is subject to various conditions,
including approval of this Proposal, completion of all filings with, and receipt
-38-
of all necessary approvals from, the SEC, delivery of legal opinions regarding
the federal tax consequences of the Reorganization, and other customary
corporate and securities matters. The Boards of Trustees may waive any
conditions if, in their judgment, such waiver will not have a material adverse
effect on shareholders' interest. The Reorganization Plan may be terminated for
one or more funds at any time prior to closing if the Board of Trustees of
either that fund or the surviving fund determines in good faith that the
Reorganization is not in the best interests of the shareholders.
FEDERAL TAX CONSEQUENCES OF THE REORGANIZATION
It is a condition to the consummation of the transactions described in the
Reorganization Plan, that each fund, including Equity Funds and Income Funds,
must have obtained an opinion of Kirkpatrick & Lockhart LLP, legal counsel to
the funds, to the effect that the Reorganization will constitute a tax-free
reorganization pursuant to Section 368(a)(1)(C) of the Internal Revenue Code of
1986, as amended (the "Code"). Accordingly, no gain or loss will be recognized
by any fund or its shareholders.
SUMMARY: COMPARISON OF THE FUNDS AND THE SERIES OF EQUITY FUNDS AND INCOME FUNDS
Equity Funds and Income Funds were organized in December 1992 as business
trusts under the laws of the State of Delaware. Equity Funds is comprised of
eleven diversified series, and Income Funds is comprised of six diversified
series (the "Portfolios") that have identical investment programs to the funds
that are reorganizing. Unlike the funds, however, the Portfolios of Equity Funds
have three classes of shares: Trust Class, Assets Class and Fund Class. (some of
the Portfolios will have only Trust and Fund Class shares. Genesis Portfolio has
a fourth class, Institutional Class, because there are four Genesis feeder
funds.) The Portfolios of Income Funds have two classes of shares: Trust Class
and Fund Class (only the Institutional Cash series and Limited Maturity Bond
series have both Trust and Fund Classes). If the Reorganization is completed,
shareholders of each fund will become holders of Trust Class, Assets Class, Fund
Class or Institutional Class shares of the Portfolio that has the same
investment program as that fund. The net asset value of the shares in a
Portfolio class held by a shareholder immediately after the Reorganization will
be the same as the net asset value of the shares of the corresponding fund held
by the shareholder immediately prior to the Reorganization.
A brief comparison of the funds with the new Portfolios is set forth
below:
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
- - ------------------------------------------------
The investment objectives, policies and restrictions under which the
assets of the funds presently are managed will not be affected by the proposed
Reorganization except that (1) rather than investing all of its net investable
assets in a corresponding master fund, each fund will seek to achieve the same
investment objectives by engaging NBMI as its investment adviser to directly
manage its assets; and (2) if approved by the shareholders of the corresponding
series of Equity Funds and Income Funds, the series will have a slightly more
flexible diversification policy, as described in Proposal 3, below. The
investment objectives, policies and restrictions of the Portfolios will
otherwise be the same as those in effect for the funds and the master funds
immediately prior to the Reorganization.
39
INVESTMENT MANAGER
- - ------------------
NBMI currently manages the assets of each fund indirectly, by virtue of
the fact that it manages the assets of the corresponding master fund in which
the fund invests. Since the funds currently invest their assets only through the
corresponding master funds, they do not engage NBMI or any other investment
manager directly. Upon completion of the Reorganization, Equity Funds and Income
Funds will enter into new investment advisory agreements with NBMI on behalf of
each Portfolio, on terms and conditions substantially identical to the terms and
conditions of the current investment management agreement between NBMI and the
master funds. Neuberger Berman, LLC ("Neuberger Berman"), an affiliate of NBMI
registered as an investment adviser and broker-dealer, also provides services to
each master fund pursuant to a sub-advisory agreement between NBMI and Neuberger
Berman. It would provide such services to each Portfolio of Equity Funds and
Income Funds following the Reorganization.
In each case, it is anticipated that the same individuals would provide
these services, and each series of Equity Funds and Income Funds would pay fees
at the same rate provided for in the current agreements. Accordingly, there will
be no shareholder vote on the new agreement.
In summary, NBMI and Neuberger Berman currently manage the assets of the
funds indirectly, by virtue of the funds' investment in the master funds. After
the Reorganization, NBMI and Neuberger Berman will manage the assets of each
Portfolio directly, according to the same investment program that they employed
for the master funds.
ADMINISTRATIVE SERVICES
- - -----------------------
NBMI serves as administrator of each fund, pursuant to an administration
agreement with each fund, and is responsible for performing all administrative
services required for the daily business operations of the funds. Each of Equity
Trust, Equity Assets, Equity Series and Income Trust has an administration
agreement with NBMI on behalf of its series. After the Reorganization, the
administration agreements with the funds will be terminated and Equity Funds and
Income Funds will enter into new administration agreements on behalf of their
series. The new agreement will incorporate the multi-class structure of the
series, but will otherwise be on terms and conditions substantially identical to
those applicable to the funds immediately prior to the Reorganization.
DISTRIBUTOR, TRANSFER AGENT AND CUSTODIAN
- - -----------------------------------------
NBMI serves as the principal underwriter for the funds pursuant to
distribution agreements with the funds. State Street Bank and Trust Company
serves as the transfer agent and custodian for the funds pursuant to transfer
agency and custodian agreements with the funds. After the Reorganization, those
agreements with the funds will be terminated and Equity Funds and Income Funds
will enter into new distribution, transfer agency and custodian agreements on
behalf of the Portfolios. The new agreements will incorporate the multi-class
structure of the Portfolios, but will otherwise be on terms and conditions
substantially identical to those applicable to the funds immediately prior to
the Reorganization.
-40-
PRO FORMA EXPENSES
- - ------------------
Calculations performed by NBMI indicate that with respect to all but two
of the funds, the total annual operating expenses as a percentage of average net
assets for the most recent fiscal year would have decreased by no more than one
basis point if the Reorganization had taken place at that time. As to the
remaining two funds, expenses would have decreased by no more than three basis
points. In addition, the current expense limitations imposed by NBMI would not
be changed by the Reorganization. Accordingly, pro forma expense information has
not been included for the various classes.
PRO FORMA CAPITALIZATION
- - ------------------------
Pro forma capitalization information has not been included for the various
classes, as it would not change from the current information for the funds.
PURCHASES AND REDEMPTIONS
- - -------------------------
As explained above, in the Reorganization, shareholders of the funds will
receive shares of classes of the new Portfolios. After the Reorganization,
shareholders of the funds will be able to purchase and redeem shares in the
Portfolios in substantially the same manner and subject to substantially the
same conditions as shares in the funds are presently purchased and redeemed.
This information is set forth in each fund's current prospectus and statement of
additional information.
DIVIDENDS, DISTRIBUTIONS AND TAXES
- - ----------------------------------
After the Reorganization, the Portfolios will declare and pay dividends
and calculate and make distributions of net capital gains, if any, in a manner
identical to that of the funds and set forth in the funds' current prospectuses
and statements of additional information.
Like the funds, each of Equity Funds and Income Funds has elected to
qualify its respective Portfolios as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended, and intends that
each Portfolio will remain so qualified. After the Reorganization, each
Portfolio will be entitled to the same benefits and subject to the same tax
regulations as the funds immediately prior to the Reorganization.
PORTFOLIO TRANSACTIONS AND BROKERAGE
- - ------------------------------------
NBMI will execute the portfolio transactions and allocate the brokerage
business of the Portfolios of Equity Funds and Income Funds subject to the
policies established by the Boards of Trustees of Equity Funds and Income Funds,
which are substantially identical to those in effect with respect to the master
funds immediately prior to the Reorganization.
SHAREHOLDERS' RIGHTS
- - --------------------
-41-
The rights of shareholders of the Portfolios will be identical in all
material respects to those of shareholders of the funds, with a few exceptions.
As was the case before the Reorganization, shareholders of the Portfolios will
vote on a per Portfolio basis on those matters that affect only particular
Portfolios. In addition, on those matters affecting only a particular class,
only shareholders of that class will vote. On all other matters, shareholders of
Equity Funds will vote in the aggregate, and shareholders of Income Funds will
likewise vote in the aggregate. Because the Reorganization will increase the
size of the Portfolios, the voting power of individual shareholders will be
diluted with respect to matters on which shareholders of Equity Funds and Income
Funds vote in the aggregate or vote on a per series basis rather than on an
individual class basis. However, the same "dilution" could occur through growth
in the size of your fund, which would bring in additional shareholders.
Furthermore, matters currently requiring a vote of master fund investors, such
as approval of changes in advisory fees, already require that each feeder fund
solicit the votes of its shareholders.
RISK FACTORS
- - ------------
The Portfolios will have investment objectives, policies and restrictions
that are identical to those of the funds and the corresponding master funds,
except that (1) the Portfolios will invest their assets directly rather than
through the master funds, (2) the shareholders of Equity Funds and Income Funds
are currently being asked to approve a change in fundamental investment policies
regarding diversification identical to that contained in Proposal 2 of this
Combined Proxy Statement and Prospectus, and (3) Cash Reserves and Government
Money Fund will have changed their investment policies as described in Proposals
6 and 7. In addition, the Portfolios will be administered in every material
respect in a substantially identical manner to the funds. Consequently, the
risks associated with investing in the Portfolios will be virtually identical to
those associated with investing in the funds.
FURTHER INFORMATION ABOUT THE PORTFOLIOS AND THE FUNDS
- - ------------------------------------------------------
Further information about the funds is contained in their current
prospectuses and statements of additional information, which are incorporated
into this Combined Proxy Statement and Prospectus by reference. A copy of Equity
Funds' prospectus and Income Funds' prospectus accompanies this document. Each
of Equity Trust, Equity Assets and Equity Series will also provide its most
recent annual report to shareholders with respect to the funds for the fiscal
year ended August 31, 1999, and its semiannual report to shareholders for the
six months ended February 29, 2000, upon request. Income Trust will also provide
its most recent annual report to shareholders for the fiscal year ended October
31, 1999, and its semiannual report to shareholders for the six months ended
April 30, 2000, upon request. These documents are available without charge by
writing the Neuberger Berman Funds at 605 Third Avenue, 2nd Floor, New York, New
York 10158-0180, or calling at 800-877-9700.
The funds are subject to the information requirements of the Securities
Exchange Act of 1934 and the Investment Company Act of 1940, and are required by
those Acts to file reports, proxy statements and other information with the SEC.
Such reports, proxy statements and other information can be inspected and copied
at the Public Reference Room maintained by the SEC at 450 Fifth Street, N.W.,
Washington, D.C. They may also be viewed on the Internet at [WWW.SEC.GOV].
Copies of such materials can be obtained at prescribed rates from the Public
42
Reference Branch, Office of Consumer Affairs and Information Services of the
SEC, Washington D.C. 20549.
APPROVAL OF THE BOARD OF TRUSTEES
At a Board meeting held on June 6, 2000, the Boards of Trustees of Equity
Funds, Equity Trust, Equity Assets, Equity Series, Income Funds and Income Trust
approved the Reorganization Plan and determined that the proposed Reorganization
was in the best interests of the shareholders of each series of the funds and
will not result in dilution of the financial interests of the shareholders of
any series of the funds. After considering the relevant factors, the Boards of
Trustees of the funds, including the Trustees who are not "interested persons"
of the funds, as that term is defined in the 1940 Act (the "Independent
Trustees"), voted to approve and voted to recommend that shareholders of each
fund approve the Reorganization Plan. In making this determination, the Boards
considered the following factors, among others:
1. the potential cash savings that may be achieved by reorganizing the
master-feeder structure into a single, multi-class structure through the
elimination of duplicate expenses;
2. the expected administrative benefits resulting from the simplified
structure;
3. the proposal from NBMI to manage each fund's assets for the same
investment management fee currently charged to the fund;
4. the tax-free nature of the reorganization;
5. the potential for greater investor interest in funds organized in
the more common and familiar multi-class structure;
6. the greater likelihood of asset growth that potentially may result
from a more familiar structure and the greater economies of scale that can be
achieved from such asset growth, including without limitation lower management
fees that can be reached at certain asset level breakpoints;
7. the terms and conditions of the Reorganization Plan; and
8. alternative options to the Reorganization.
In considering the Reorganization Plan and proposed Reorganization, the
Boards determined that the multi-class structure would eliminate the cost and
complexity of maintaining the master-feeder structure. There are certain
duplicate expenses associated with maintaining the master-feeder structure,
which requires maintaining separate investment companies for the master fund and
for each feeder fund. Among others, these include the legal and administrative
costs of maintaining separate SEC registrations for the master fund and each
feeder fund, and of producing separate reports to the SEC and to shareholders
for each feeder fund and each master fund on a semi-annual basis, state
qualification fees associated with these separate entities, franchise fees,
-43-
separate audit fees, and the other legal and administrative costs of maintaining
the separate entities.
The Boards believe that the Reorganization may result in lower expense
ratios for the funds. This lower expense ratio has the potential to attract new
investors and thus increase the opportunity for further asset growth. This
potential asset growth may enable fund shareholders to obtain economies of scale
by spreading certain expenses over a larger asset base, and may assist a fund in
reaching its asset breakpoint in the rate of the investment management fee
payable to NBMI. There can be no assurance, however, that such asset growth,
economies of scale and lower expense ratios will be realized.
The Boards also believe that the Reorganization may improve the
marketability of the funds, because investors apparently understand the
multi-class structure better than they do the master-feeder structure. The
Boards considered that any improved marketability would benefit both NBMI (by
virtue of certain fees determined as a percentage of net assets) and existing
shareholders (by virtue of economies of scale).
REORGANIZATION EXPENSES
Each entity participating in the Reorganization (i.e., Equity Funds,
Equity Trust, Equity Assets, Equity Series, Income Funds, Income Trust and each
of their series) will bear its own expenses. The expenses borne by each Trust
will be allocated among its series on the basis of their relative net assets.
THE BOARDS OF TRUSTEES, INCLUDING ALL OF THE INDEPENDENT TRUSTEES, UNANIMOUSLY
RECOMMEND THAT YOU APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION IN PROPOSAL
4.
VOTE REQUIRED
Approval of the Reorganization Plan with respect to a fund requires the
affirmative vote of either (1) a majority of the outstanding shares of that
fund, or (2) at least 67 percent of the shares present in person or by proxy at
a meeting at which more than 50% of the shares are present.
If shareholders approve the Reorganization Plan with respect to a fund, it
is currently intended that the Reorganization of the Equity funds will take
place at the close of business on or about December __, 2000, and the
Reorganization of the Income Funds will take place at the close of business on
or about January __, 2001. On or about the date for your fund, you will receive
a prospectus for Equity Funds and/or Income Funds, containing information about
the relevant class of shares.
If the shareholders of one or more funds do not approve the Reorganization
Plan, or the Reorganization is not completed for any other reason, then the
Board of Trustees of the relevant fund will determine what additional steps may
be appropriate. The Trust Instrument governing the funds permits the Board to
reorganize a fund into a series of another investment company if the Board
-44-
determines that continued operation of that series is no longer viable. If some
funds vote to reorganize and others do not, the Board may determine, based on
the facts as they then exist, that the remaining funds are no longer viable as
separate entities.
-45-
PROPOSAL 5. APPROVAL OF THE DISTRIBUTION AND
SHAREHOLDER SERVICES PLAN
(NEUBERGER BERMAN GENESIS, GUARDIAN AND PARTNERS TRUST ONLY)
The Board of Trustees of Neuberger Berman Equity Trust has approved, and
unanimously recommends that the shareholders of Neuberger Berman Genesis Trust,
Neuberger Berman Guardian Trust and Neuberger Berman Partners Trust approve, the
Distribution and Shareholder Services Plan. The Trustees of Equity Trust,
including a majority of those Trustees who are not "interested persons" (as
defined in the Investment Company Act of 1940 ("1940 Act")) and who do not have
any direct or indirect financial interest in the operation of the Plan
("Independent Trustees"), approved the Distribution and Shareholder Services
Plan with respect to each fund's shares at a meeting held on April 28, 1999, and
determined at their meeting of June 6, 2000, to resubmit the Plan to
shareholders.
The Distribution and Shareholder Services Plan provides for the payment of
compensation for shareholder servicing activities, including but not limited to:
(a) responding to inquiries from shareholders or their representatives
requesting information regarding matters such as shareholder account or
transaction status, net asset value of shares, performance, services, plans and
options, investment policies, portfolio holdings, and distributions and taxation
thereof; and (b) dealing with communications and correspondence of shareholders;
including compensation to organizations and employees who service shareholder
accounts, and expenses of such organizations, including overhead, telephone, and
other communication expenses. (See Section 3.B. of the proposed Plan).
The Distribution and Shareholder Services Plan also permits payment of
compensation for distribution-related activities, including but not limited to
compensation for (a) the distribution of shares; (b) overhead, telephone, and
communication expenses; (c) the printing of prospectuses, statements of
additional information, and reports for other than existing shareholders; and
(d) the preparation and distribution of sales literature and advertising
materials. (See Section 3.A. of the proposed Plan)
Assuming approval of the Distribution and Shareholder Services Plan by
Genesis Trust, Guardian Trust and Partners Trust, each fund would pay a new fee
at an annual rate of 0.10% of its average daily net assets to NBMI. NBMI expects
to pay most or all of this fee to pension administrators, broker-dealers and
other financial institutions that make fund shares available to investors and/or
provide services to the funds and their shareholders.
The funds would not be obligated under the Distribution and Shareholder
Services Plan to compensate NBMI for expenses incurred in excess of the
authorized distribution fee, even if the expenses incurred by it for servicing
or distributing the funds' shares exceed the fee payable under the Plan. The fee
paid to a financial institution may be based on the level of services it
provides. If NBMI does not have to pay the entire amount to institutions, the
remaining portion would represent compensation to NBMI for new or existing
distribution and shareholder servicing expenses.
-46-
The Distribution and Shareholder Services Plan provides that a report of
the amounts expended under it, and the purposes for which such expenditures were
incurred, must be made to the Trust's Board of Trustees for review at least
quarterly. In addition, the Plan provides that it may not be amended to
materially increase the costs that a fund may bear pursuant to it without
approval of the fund's shareholders. Other material amendments to the Plan must
be approved by the vote of a majority of the Trustees, including a majority of
the Independent Trustees, cast in person at a meeting called for the purpose of
considering such amendments. The Distribution and Shareholder Services Plan is
terminable with respect to a fund at any time by vote of a majority of the
Independent Trustees or by vote of the holders of a majority of the outstanding
shares of the fund. The Distribution and Shareholder Services Plan would be
adopted pursuant to Rule 12b-1 under the 1940 Act. In accordance with this Rule,
the selection and nomination of the Trustees who are not interested persons of
Equity Trust is committed to the discretion of the then current Trustees who are
not interested persons of Equity Trust. (All of the Neuberger Berman Funds
follow this nominating policy already.)
A comparison of the current expense ratio and the proposed expense ratio
(after giving effect to the Distribution and Shareholder Services Plan) with
respect to each fund is shown in the tables under "Impact of the Proposal"
below.
This description of the Distribution and Shareholder Services Plan is
qualified in its entirety by reference to the Plan itself, a form of which is
attached as Appendix B to this proxy statement. If approved by shareholders, the
Distribution and Shareholder Services Plan will become effective in December
2000 and will remain in effect for one year thereafter, subject to continuation
by the Board of Trustees.
IMPACT OF THE PROPOSAL. If the Proposal is approved, each fund would incur
distribution fees at an annual rate of 0.10% of average daily net assets, in
addition to the fees and expenses currently applicable. Under its existing
administration and shareholder services agreement with NBMI, each fund currently
pays a fee at an annual rate of 0.40% of average daily net assets. Of this
amount, NBMI pays at least 0.25% to pension administrators, broker-dealers and
other financial institutions that provide services to the funds and their
shareholders, and retains the rest for administration and accounting services
provided by NBMI. The following tables compare the management fees, distribution
fees, other expenses, and total fund operating expenses that shareholders of
each fund would bear under the existing structure with the fees and expenses
each shareholder would bear if they approve the Distribution and Shareholder
Services Plan.
Each fund currently has an arrangement whereby NBMI reimburses certain of
the fund's expenses so that the fund's total annual operating expenses are not
more than 0.10% above those of a certain other Neuberger Berman fund that
invests in the same portfolio of securities ("Sister Fund"). If the Distribution
and Shareholder Services Plan is adopted, each fund's total annual operating
expenses will be limited to no more than 0.20% above those of its Sister Fund.
These expense limitation arrangements can be terminated upon 60 days notice to a
fund.
If shareholders approve both the Plan of Reorganization (Proposal 4) and
the implementation of the Distribution and Shareholder Services Plan, then
shareholders of each fund will be holders of the Trust Class shares that are
subject to the Distribution and Shareholder Services Plan. For example, if
-47-
Genesis Trust shareholders approve both Proposals, they will become holders of
Trust Class shares of Neuberger Berman Genesis Fund that are subject to the
Distribution and Shareholder Services Plan. If the funds do not approve Proposal
4, then each fund will continue to operate with a master-feeder structure (so
long as it is viable), and each fund that has approved the Distribution and
Services Plan will be subject to it.
-48-
NEUBERGER BERMAN GENESIS TRUST
CURRENT PROPOSED
- - -------
FEE TABLE FEE TABLE
Shareholder fees None Shareholder fees None
Annual operating expenses (% of average Annual operating expenses (% of average
net assets)* net assets)*
These are deducted from fund assets, These are deducted from fund assets,
so you pay them indirectly. so you pay them indirectly.
Management fees 1.12 Management fees 1.12
Plus: Distribution (12b-1) fees None PLUS: DISTRIBUTION (12B-1) FEES
0.10
Other expenses 0.11 Other expenses 0.11
--------- -------
Equals: Total annual operating expenses 1.23 EQUALS: TOTAL ANNUAL OPERATING 1.33
EXPENSES
* Neuberger Berman Management reimburses * Neuberger Berman Management reimburses
certain expenses of the fund so that its certain expenses of the fund so that
total annual operating expenses are not more its total annual operating expenses
than 0.10% above those of another Neuberger are not more than 0.20% above those of
Berman fund that invests in the same another Neuberger Berman fund that
portfolio of securities. This arrangement invests in the same portfolio of
does not cover interest, taxes, brokerage securities. This arrangement does not
commissions, and extraordinary expenses, and cover interest, taxes, brokerage
can be terminated by NB Management by giving commissions, and extraordinary
the fund at least 60 days' prior written expenses, and can be terminated by NB
notice. The figures in the table are based Management by giving the fund at least
on last year's expenses. Actual expenses 60 days' prior written notice. The
this year may be higher or lower. The table figures in the table are based on last
includes costs paid by the fund and its year's expenses. Actual expenses this
share of master portfolio costs. year may be higher or lower. The
table includes costs paid by the fund
and its share of master portfolio
costs.
EXPENSE EXAMPLE EXPENSE EXAMPLE
This example assumes that you invested $10,000 This example assumes that you invested
for the periods shown, that you earned a $10,000 for the periods shown, that you
hypothetical 5% total return each year, and earned a hypothetical 5% total return each
that the fund's expenses were those in the year, and that the fund's expenses were
table above. Your costs would be the same those in the table above. Your costs
whether you sold your shares or continued to would be the same whether you sold your
hold them at the end of each period. Actual shares or continued to hold them at the
performance and expenses may be higher or lower. end of each period. Actual performance
and expenses may be higher or lower.
1 3 5 10 1 3 5 10
Year Years Years Years Year Years Years Years
Expenses $125 $390 $676 $1489 Expenses $135 $421 $729 $1,601
-49-
NEUBERGER BERMAN GUARDIAN TRUST
CURRENT PROPOSED
- - ------- --------
FEE TABLE FEE TABLE
Shareholder fees None Shareholder fees None
Annual operating expenses (% of Annual operating expenses (% of
average net assets)* average net assets)*
These are deducted from fund assets, These are deducted from fund
so you pay them indirectly. assets, so you pay them indirectly.
Management fees 0.84 Management fees 0.84
Plus: Distribution (12b-1) fees None PLUS: DISTRIBUTION (12B-1) FEES 0.10
Other expenses 0.04 Other expenses 0.04
--------- -------
Equals: Total annual operating expenses 0.88 EQUALS: TOTAL ANNUAL OPERATING 0.98
EXPENSES
* Neuberger Berman Management reimburses * Neuberger Berman Management reimburses
certain expenses of the fund so that its certain expenses of the fund so that
total annual operating expenses are not more its total annual operating expenses
than 0.10% above those of another Neuberger are not more than 0.20% above those of
Berman fund that invests in the same another Neuberger Berman fund that
portfolio of securities. This arrangement invests in the same portfolio of
does not cover interest, taxes, brokerage securities. This arrangement does not
commissions, and extraordinary expenses, and cover interest, taxes, brokerage
can be terminated by NB Management by giving commissions, and extraordinary
the fund at least 60 days' prior written expenses, and can be terminated by NB
notice. The figures in the table are based Management by giving the fund at least
on last year's expenses. Actual expenses 60 days' prior written notice. The
this year may be higher or lower. The table figures in the table are based on last
includes costs paid by the fund and its year's expenses. Actual expenses this
share of master portfolio costs. year may be higher or lower. The
table includes costs paid by the fund
and its share of master portfolio
costs.
EXPENSE EXAMPLE EXPENSE EXAMPLE
This example assumes that you invested $10,000 This example assumes that you invested
for the periods shown, that you earned a $10,000 for the periods shown, that you
hypothetical 5% total return each year, and earned a hypothetical 5% total return each
that the fund's expenses were those in the year, and that the fund's expenses were
table above. Your costs would be the same those in the table above. Your costs
whether you sold your shares or continued to would be the same whether you sold your
hold them at the end of each period. Actual shares or continued to hold them at the
performance and expenses may be higher or lower. end of each period. Actual performance
and expenses may be higher or lower.
1 3 5 10 1 3 5 10
Year Years Years Years Year Years Years Years
Expenses $90 $281 $488 $1084 Expenses $100 $312 $542 $1,201
-50-
NEUBERGER BERMAN PARTNERS TRUST
CURRENT PROPOSED
- - ------- --------
FEE TABLE FEE TABLE
Shareholder fees None Shareholder fees None
Annual operating expenses (% of Annual operating expenses (% of
average net assets)* average net assets)*
These are deducted from fund assets, These are deducted from fund assets,
so you pay them indirectly. so you pay them indirectly.
Management fees 0.85 Management fees 0.85
Plus: Distribution (12b-1) fees None PLUS: DISTRIBUTION (12B-1) FEES 0.10
Other expenses 0.06 Other expenses 0.06
-------- -------
Equals: Total annual operating expenses 0.91 EQUALS: TOTAL ANNUAL OPERATING 1.01
EXPENSES
* Neuberger Berman Management reimburses * Neuberger Berman Management reimburses certain
certain expenses of the fund so that its expenses of the fund so that its total annual
total annual operating expenses are not operating expenses are not more than 0.20%
more than 0.10% above those of another above those of another Neuberger Berman fund
Neuberger Berman fund that invests in the that invests in the same portfolio of
same portfolio of securities. This securities. This arrangement does not cover
arrangement does not cover interest, taxes, interest, taxes, brokerage commissions, and
brokerage commissions, and extraordinary extraordinary expenses. Neuberger Berman
expenses. Neuberger Berman Management can Management can terminate this arrangement
terminate this arrangement upon sixty days' upon sixty days' notice to the fund. The
notice to the fund. The figures expenses. figures in the table are based on last year's
Actual expenses this year may be in the expenses. Actual expenses this year may be
table are based on last year's higher or higher or lower. The table includes costs
lower. The table includes costs paid by the paid by the fund and its share of master
fund and its share of master portfolio costs. portfolio costs.
EXPENSE EXAMPLE EXPENSE EXAMPLE
This example assumes that you invested $10,000 This example assumes that you invested $10,000
for the periods shown, that you earned a for the periods shown, that you earned a
hypothetical 5% total return each year, and hypothetical 5% total return each year, and that
that the fund's expenses were those in the the fund's expenses were those in the
table above. Your costs would be the same table above. Your costs would be the same
whether you sold your shares or continued to whether you sold your shares or continued
hold them at the end of each period. Actual to hold them at the end of each period.
performance and expenses may be higher or lower. Actual performance and expenses may be higher or
lower.
1 3 5 10 1 3 5 10
Year Years Years Years Year Years Years Years
Expenses $93 $290 $504 $1120 Expenses $103 $322 $558 $1236
-51-
REASONS FOR THE PROPOSAL. NBMI has recommended Proposal 5 to the Board of
Trustees in light of the expenses associated with providing shareholder
servicing and distribution services to the funds. NBMI believes that the
distribution and shareholder servicing fee proposed for the funds is appropriate
to defray a portion of the costs associated with shareholder servicing
activities and to support the marketing of the funds.
NBMI believes that the compensation practices that prevail among the
entities that make the funds available to investors justify adopting the
Distribution and Shareholder Services Plan. The funds rely exclusively on
third-party service providers such as pension plan administrators, fund
"supermarkets," banks and broker-dealers to make fund shares available to
investors. These third-party service providers generally hold shares in omnibus
accounts and provide shareholder services, including sub-accounting, shareholder
assistance, transaction processing and settlements, shareholder account
statement preparation and distribution, confirmation preparation and
distribution, payment of fund distributions, prospectus delivery, and
account-level tax reporting. Many of these third-party service providers have
asked the funds for additional fees to cover their increasing costs, including
those resulting from the increased use of sophisticated technology to support
shareholder servicing. As a result, the funds face increasing costs and must pay
these fees to maintain an effective servicing program that meets shareholders'
expectations for a high level of service and up-to-date technology.
NBMI believes that adopting the Distribution and Shareholder Services Plan
is a prudent alternative to raising the fees under the funds' existing
administration agreement. SEC rules prohibit a fund from paying for activities
"primarily intended to result in the sale of shares" except pursuant to a plan
adopted under the rules. While it is not clear that the services rendered by the
funds' third-party service providers fall within the legal definition of
activities "primarily intended to result in the sale of shares," recent SEC
pronouncements raise a question, at least in the case of payments to fund
supermarkets, whether a portion of the payments to the third-party service
providers may be characterized as payments for share distribution. If the Plan
is adopted, the fees paid would be available for distribution-related expenses
as well as shareholder servicing.
Many of the funds' competitors have distribution plans, which they use to
compensate third-party service providers for making fund shares available to
their clients and/or for providing services to investors. NBMI believes it will
be difficult to maintain a relationship with these third-party service providers
unless they are provided with additional compensation to offset the increased
costs of making the funds available to their clients and maintaining the
clients' assets in the funds. Certain third-party service providers that are
registered broker-dealers may use money provided under the Distribution and
Shareholder Services Plan to pay individual sales representatives.
NBMI believes that the fees under the Distribution and Shareholder
Services Plan will help the funds maintain an effective program to make their
shares available to investors, which is necessary for the funds to maintain a
sufficient size to spread their fixed costs over a substantial asset base.
-52-
CONSIDERATION AND APPROVAL BY THE BOARD OF TRUSTEES. Before approving the
Distribution and Shareholder Services Plan, the funds' Trustees were provided
with detailed information relating to it. They considered carefully the factors
described above and consulted with independent counsel.
The Trustees of Equity Trust considered, among other factors: (a) the
circumstances that would make adoption of the Distribution and Shareholder
Services Plan appropriate and the causes of such circumstances; (b) the way in
which the Distribution and Shareholder Services Plan would address these
circumstances; and (c) the amounts of the expenses under the Distribution and
Shareholder Services Plan in relation to the overall cost structure of the
funds.
Taking the above factors into account, the Board of Trustees determined
that approval of the Distribution and Shareholder Services Plan was appropriate
for three principal reasons.
First, because the third-party service providers who require increased
fees are some of the funds' largest holders, the Trustees believe the funds must
meet the demand for higher fees to maintain the funds' viability. The Trustees
believe that maintenance of strong shareholder servicing and marketing efforts
are of critical importance in the highly competitive mutual fund industry. To
remain competitive, the funds need to meet the demands of changing technology
and of rising shareholder service expectations. In light of recent SEC
pronouncements, the Trustees believe that adopting the Distribution and
Shareholder Services Plan is a prudent way to secure resources for third-party
service provider needs, because the Plan would allow resources to be spent for
both distribution and shareholder servicing activities.
Second, the Board determined that the servicing and/or distribution fees
under the Distribution and Shareholder Services Plan would be attractive to fund
supermarkets and others that make the funds' shares available, resulting in
greater growth of the funds or maintenance of fund assets at higher levels than
might otherwise be the case. The Trustees recognized that if the funds
experience growth as a result of increased shareholder subscriptions (sales of
new shares), they will have greater access to cash for new purchases of
securities, thereby making the funds easier to manage and maintaining their
viability. The Trustees also recognized that an increase in each fund's asset
size may result in certain economies of scale. These economies of scale would be
shared by investors in the funds, both because fixed expenses would be spread
over a larger asset base and because the management fees that the funds pay
under their management contracts include breakpoints of declining percentages
based on greater asset size.
Third, the Trustees gave particular attention to the fact that to the
extent the increase is not offset by economies of scale, the net result of the
Distribution and Shareholder Services Plan will be to increase the operating
expenses of each fund and, therefore, its expense ratio. The Trustees weighed
this increase in expenses in their deliberations and determined that the
payments under the Plan are reasonable, because the amount of the fee is closely
tied to the actual or projected increases in the fees charged by many service
providers.
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The Trustees also considered the extent to which the retention of assets
and additional sales of fund shares would be likely to increase the amount of
compensation paid by the funds to NBMI, because such fees are calculated as a
percentage of each fund's assets and thus will increase if net assets increase.
The Trustees further recognized that there can be no assurance that any of the
potential benefits described above will be achieved if the Distribution and
Shareholder Services Plan is implemented.
Following their consideration, the Trustees, including all of the
Independent Trustees, concluded that the fees payable under the Distribution and
Shareholder Services Plan were reasonable in view of both the services to be
provided, directly or indirectly, by NBMI and others, and the anticipated
benefits of the Distribution and Shareholder Services Plan. The Trustees,
including all of the Independent Trustees, determined that implementing the
Distribution and Shareholder Services Plan would have a reasonable likelihood of
benefiting each fund and its shareholders and would be in the best interests of
each fund and its shareholders.
Accordingly, the Trustees, including all of the Independent Trustees,
voted to approve the Distribution and Shareholder Services Plan, as set forth
above, and to recommend that each fund's shareholders vote FOR the Proposal.
REQUIRED VOTE
Approval of Proposal 5 with respect to each fund requires the affirmative
vote of a "majority of the outstanding voting securities" of that fund, which
for this purpose means the affirmative vote of the lesser of (1) more than 50%
of the outstanding shares of the fund or (2) 67% or more of the shares of the
fund present at the Meeting if more than 50% of the outstanding shares of the
fund are represented at the Meeting in person or by proxy.
The Distribution and Shareholder Services Plan will become effective with
respect to a fund whose shareholders approve it as described above, even if
shareholders the other funds do not approve the Plan.
THE BOARD OF TRUSTEES, INCLUDING ALL OF THE INDEPENDENT TRUSTEES,
UNANIMOUSLY RECOMMENDS THAT YOU APPROVE THE DISTRIBUTION AND SHAREHOLDER
SERVICES PLAN IN PROPOSAL 5.
PROPOSAL 6. MODIFICATION OF FUNDAMENTAL RESTRICTION ON
INDUSTRY CONCENTRATION (SHAREHOLDERS OF CASH RESERVES ONLY)
The Board of Trustees of Income Funds is proposing a change to a
fundamental investment restriction of Neuberger Berman Cash Reserves. The
proposed change would require Cash Reserves normally to invest at least 25% of
its assets in the financial services group of industries. The law requires that
a change to any investment policy that a fund deems "fundamental" must be
approved by shareholders. Accordingly, the Board is asking you to consider this
change.
-54-
Cash Reserves' current policy prohibits the fund from "concentrating"
(that is, investing 25% or more of its assets) in securities of issuers having
their principal business activities in the same industry or group of industries.
This restriction does not apply to (1) securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities; and (2) investments in CDs
or bankers' acceptances issued by domestic branches of U.S. banks. As mentioned
above, the proposed change would require Cash Reserves normally to invest at
least 25% of its assets in the financial services group of industries.
Obligations of issuers in the financial services industries include, but are not
limited to, those of domestic and foreign banks, savings institutions, consumer
and industrial finance companies, issuers of asset-backed securities, securities
brokerage companies and a variety of firms in the insurance field. The
flexibility the fund previously had to concentrate or not concentrate in certain
obligations of domestic banks would be deleted as no longer necessary.
The Board believes changing this fundamental restriction would provide the
fund with greater flexibility for future contingencies. The fund's investment
manager believes that this change is desirable because an increasing number of
instruments suitable for investment by money market funds are either issued or
guaranteed by companies in the financial services industries. In addition, this
change would conform the industry concentration policy of Cash Reserves to that
of another money market fund in the Neuberger Berman fund family.
Because Cash Reserves, under the new policy, would normally concentrate
more than 25% of its total assets in the financial services industries, it will
have greater exposure to the risks associated with those industries, such as
adverse interest rate trends, increased credit defaults, potentially burdensome
government regulation, the availability and cost of capital funds, and general
economic conditions. Also, with financial services reform legislation, there is
likely to be consolidation among entities in these industries, resulting in
increased competitive pressures. The bank instruments in which Cash Reserves
invests typically are not covered by deposit insurance. As amended, the
limitation would read as follows:
INDUSTRY CONCENTRATION. The Fund may not purchase any security if, as a
result, 25% or more of its total assets (taken at current value) would be
invested in the securities of issuers having their principal business
activities in the same industry, EXCEPT THAT THE FUND NORMALLY WILL
INVEST MORE THAN 25% OF ITS TOTAL ASSETS IN THE OBLIGATIONS OF ISSUERS
HAVING THEIR PRINCIPAL BUSINESS ACTIVITIES IN THE FINANCIAL SERVICES
INDUSTRIES OR REPURCHASE AGREEMENTS ON SUCH OBLIGATIONS. This limitation
does not apply to purchases of securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities.
REQUIRED VOTE
Approval of Proposal 6 requires the affirmative vote of a "majority of the
outstanding voting securities" of the fund, which for this purpose means the
affirmative vote of the lesser of (1) more than 50% of the outstanding shares of
the fund or (2) 67% or more of the shares of the fund present at the Meeting if
more than 50% of the outstanding shares of the fund are represented at the
Meeting in person or by proxy.
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If Proposal 4 for conversion to a multi-class system is not approved, but
Proposal 6 is approved, such approval would be deemed a change of policy for the
fund, plus authority for the fund to cast its vote in favor of an identical
change to policies of the master fund in which it invests.
If the change contemplated by Proposal 6 is not approved by shareholders
of the fund, the existing fundamental restriction(s) of the fund will continue
in effect.
THE BOARD OF TRUSTEES, INCLUDING ALL OF THE INDEPENDENT TRUSTEES,
UNANIMOUSLY RECOMMENDS THAT YOU APPROVE THE MODIFICATION OF THE FUNDAMENTAL
RESTRICTION ON INDUSTRY CONCENTRATION IN PROPOSAL 6.
PROPOSAL 7. MODIFICATION OF FUNDAMENTAL RESTRICTIONS OF NEUBERGER BERMAN
GOVERNMENT MONEY FUND
(SHAREHOLDERS OF GOVERNMENT MONEY FUND ONLY)
The Board of Trustees of Income Funds has approved several changes to the
fundamental investment limitations of Neuberger Berman Government Money Fund
that are intended generally to promote uniformity with the fundamental
restrictions of other similar Neuberger Berman funds. The law requires that a
change to any investment policy that a fund deems "fundamental" must be approved
by shareholders. Accordingly, the Board is asking you to consider these changes.
The Board believes the proposed changes would provide the fund with
greater investment flexibility, while at the same time preserving the fund's
objective of maximum safety and liquidity with the highest available current
income. The Board believes that conforming the fund's fundamental restrictions
to other similar Neuberger Berman funds will enhance management's ability to
manage the fund's assets efficiently and effectively in changing regulatory and
investment environments.
A. MODIFYING THE FUNDAMENTAL RESTRICTION LIMITING GOVERNMENT MONEY FUND TO
SECURITIES BACKED BY THE FULL FAITH AND CREDIT OF THE U.S. GOVERNMENT
As a fundamental policy, Government Money Fund currently may not invest in
any security that is not backed by the full faith and credit of the U.S.
Government. The proposed change to this policy would allow the fund to invest in
all securities issued or guaranteed as to principal or interest by the U.S.
Government, its agencies or instrumentalities.
U.S. Government agencies and instrumentalities issue many securities that
are not backed by the full faith and credit of the U.S. Government, but are
backed by the issuing agency or instrumentality. Some of these are backed by the
right of the issuing entity to borrow from the U.S. Treasury, others by the
discretionary authority of the Treasury to loan money, and still others only by
the creditworthiness of the issuing entity.
-56-
Investment in this broader array of U.S. Government securities offers the
potential for greater income, but carries with it a greater degree of risk. The
market prices of U.S. Government securities are not guaranteed by the government
and generally fluctuate inversely with changing interest rates. However, the
investment manager believes that, as the federal debt continues to shrink, the
fund should have greater flexibility to access this broader array of government
securities. The investment manager will continue to evaluate each security
purchased for the fund and, in accordance with SEC rules governing money market
funds, must determine that it presents a minimal credit risk to the fund.
B. REMOVING THE FUNDAMENTAL PROHIBITION ON REPURCHASE AGREEMENTS
As a fundamental policy, Government Money Fund may not invest in
repurchase agreements. The proposed change would allow the fund to invest in
repurchase agreements collateralized by the same types of securities in which it
can invest (although the securities used as collateral may have a longer
maturity than the securities in which the fund normally invests).
The proposed change would allow the fund to use repurchase agreements in
an effort to earn more income. In a repurchase agreement, the fund would
purchase 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
fund at a higher price on a designated future date, usually less than a week
from the purchase date. The difference between the purchase and sale prices is
keyed to current interest rates, and repurchase agreements are treated under the
securities laws as a form of lending. These agreements allow a fund to make
profitable use of cash amounts that are either too small to invest otherwise or
have come into the fund too late in the day to invest directly in government
securities, or to get the latest (and therefore highest) rates when rates are
rising.
While costs, delays, or losses could result if the selling party to a
repurchase agreement becomes bankrupt or otherwise defaults, repurchase
agreements are generally considered to be a very secure form of lending. When a
repurchase agreement is properly collateralized by government securities, the
SEC permits money market funds, such as the Government Money Fund, to treat them
as investments in government securities, rather than as investments in the bank
or broker-dealer that is acting as counter-party.
C. MODIFYING THE BORROWING POLICY TO PERMIT REVERSE REPURCHASE AGREEMENTS
Currently, the fundamental borrowing policy of the Government Money Fund
permits borrowing only from banks and only for temporary or emergency purposes.
The proposed change would amend this policy to read as follows:
The Fund may not borrow money, except that the Fund 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). IN
ADDITION TO THE FOREGOING, THE FUND MAY BORROW FROM ANY PERSON FOR
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TEMPORARY PURPOSES IN AN AMOUNT NOT EXCEEDING 5% OF THE FUND'S TOTAL
ASSETS AT THE TIME THE LOAN IS MADE.
The principal purpose of the proposed change is to permit the fund to use
reverse repurchase agreements. Reverse repurchase agreements are a form of
borrowing very common among institutional investors such as mutual funds. In a
reverse repurchase agreement, the fund would sell portfolio securities subject
to an agreement to repurchase the securities at a later date and for a fixed
price. The difference between the purchase and sale prices generally reflects a
market rate of interest.
The investment manager for Government Money Fund may want to use reverse
repurchase agreements to borrow money for investment purposes, as a means of
earning additional income. Reverse repurchase agreements may be viewed as a form
of leverage. Leverage creates an opportunity for increased total return but, at
the same time, carries certain risks. For example, leverage will tend to amplify
changes in the fund's net asset value. In addition, leverage from borrowing
creates interest expenses for the fund. To the extent the income derived from
securities purchased with borrowed funds exceeds the interest the fund will have
to pay, the fund's total return will be greater than it would be if leverage
were not used. Conversely, if the income from the assets obtained with borrowed
funds is not sufficient to cover the cost of leveraging, the net income of the
fund will be less than it would be if leverage were not used, and therefore the
amount available for distribution to the fund's shareholders as dividends will
be reduced. There is also a risk that the counter-party to a reverse repurchase
agreement will be unable or unwilling to complete the transaction as scheduled,
which may result in losses to the fund.
As a non-fundamental policy, the fund will not enter into reverse
repurchase agreements if securities lending transactions and reverse repurchase
agreements would exceed, in the aggregate, 33-1/3% of its total assets.
Additionally, it is the investment manager's current intention not to use the
proceeds of reverse repurchase agreements to invest in any securities with
maturities beyond the end of the term of the reverse repurchase agreement. This
practice is a way of limiting the risk of leverage.
D. MODIFYING THE FUNDAMENTAL RESTRICTION TO PERMIT SECURITIES LENDING
Currently, the fund is prohibited from making loans of its portfolio
securities. The proposed change would amend the existing fundamental restriction
on lending to read as follows:
LENDING. The Fund may not lend any security or make any other loan
if, as a result, more than 33-1/3% of its total assets (taken at
current value) would be lent to other parties, provided, however,
that in accordance with its investment objective, policies, and
limitations, the Fund can (i) purchase debt securities and (ii)
engage in repurchase agreements.
The proposed change would provide the fund with another means of earning
income through the lending of its portfolio securities. This practice has become
widespread among mutual funds, including money market funds.
-58-
Any loan of portfolio securities would be subject to certain special
limitations and requirements established by the SEC staff to minimize the risk
to registered investment companies. These special requirements provide that
borrowers must continuously secure their obligations to return securities on
loan from the fund by depositing collateral in a form determined by the fund's
Trustees to be satisfactory. The collateral, which must be marked to market
daily, must be equal to at least 100% of the market value of the loaned
securities, which will also be marked to market daily. As a non-fundamental
policy, the fund will not lend securities if securities lending transactions and
reverse repurchase agreements would exceed, in the aggregate, 33-1/3% of its
total assets.
REQUIRED VOTE
SHAREHOLDERS OF NEUBERGER BERMAN GOVERNMENT MONEY FUND MUST VOTE ON EACH
OF THE CHANGES DESCRIBED IN ITEMS A-D OF PROPOSAL 7. Approval of each of the
changes contemplated by Proposal 6 requires the affirmative vote of a "majority
of the outstanding voting securities" of the fund, which for this purpose means
the affirmative vote of the lesser of (1) more than 50% of the outstanding
shares of the fund or (2) 67% or more of the shares of the fund present at the
Meeting if more than 50% of the outstanding shares of the fund are represented
at the Meeting in person or by proxy.
If Proposal 4 for conversion to a multi-class system is not approved, but
Proposal 7 regarding fundamental restrictions and policies is approved, such
approval would be deemed a change of policy for the fund, plus authority for
that fund to cast its vote in favor of an identical change to policies of the
master fund in which it invests.
IF SHAREHOLDERS DO NOT APPROVE ONE OR MORE OF THE CHANGES DESCRIBED IN
ITEMS A - D OF PROPOSAL 7, THEN THE FUND'S EXISTING POLICY WILL REMAIN IN EFFECT
AS TO THAT PARTICULAR ITEM. EACH SEPARATE CHANGE DESCRIBED IN ITEMS A -D THAT IS
APPROVED BY SHAREHOLDERS WILL BECOME EFFECTIVE WITH RESPECT TO THE FUND, EVEN IF
OTHER CHANGES ARE NOT APPROVED.
THE BOARD OF TRUSTEES, INCLUDING ALL OF THE INDEPENDENT TRUSTEES,
UNANIMOUSLY RECOMMENDS THAT YOU APPROVE ITEMS A - D OF PROPOSAL 7.
-59-
OTHER INFORMATION
INFORMATION ABOUT NBMI. NBMI, located at 605 Third Avenue, New York, New
York 10158, serves as the funds' principal underwriter and administrator and as
investment manager to the master funds. NBMI manages the master funds in
conjunction with Neuberger Berman, LLC, as sub-adviser. Together, the firms
manage more than $ billion in total assets (as of , 2000) and continue an asset
management history that began in 1939.
OTHER MATTERS TO COME BEFORE THE MEETING. The Trustees do not intend to
present any other business at the Meeting, nor are they aware that any
shareholder intends to do so. If, however, any other matters are properly
brought before the Meeting, the persons named in the accompanying proxy card(s)
will vote on those matters in accordance with their judgment.
SHAREHOLDER PROPOSALS. The Trusts do not hold annual shareholder meetings.
Shareholders wishing to submit proposals for consideration for inclusion in a
proxy statement for a subsequent shareholder meeting should send their written
proposals to the Trust at 605 Third Avenue, New York, New York 10158, such that
they will be received by the Trust a reasonable period of time prior to any such
meeting.
NOTICE TO BANKS, BROKER-DEALERS AND VOTING TRUSTEES AND THEIR NOMINEES.
Please advise the Trusts at 605 Third Avenue, New York, New York 10158, whether
other persons are beneficial owners of fund shares for which proxies are being
solicited and, if so, the number of copies of this proxy statement needed to
supply copies to the beneficial owners of the respective shares.
By Order of the Board of Trustees
-----------------------------------
Claudia A. Brandon
Secretary
Neuberger Berman Equity Funds
Neuberger Berman Equity Trust
Neuberger Berman Equity Assets
Neuberger Berman Equity Series
Neuberger Berman Income Funds
Neuberger Berman Income Trust
-60-
APPENDIX A
FORM OF
AGREEMENT AND PLAN OF REORGANIZATION AND TERMINATION
THIS AGREEMENT AND PLAN OF REORGANIZATION AND TERMINATION ("Agreement") is
made as of ________, 2000, between Neuberger Berman Equity Funds ("Equity
Funds"), on behalf of each segregated portfolio of assets ("series") thereof
listed on Schedule A to this Agreement ("Schedule A") (each, an "Acquiring
Fund"), and Neuberger Berman Equity Trust ("Equity Trust"), on behalf of each
series thereof listed on Schedule A (each, a "Target"). (Each Acquiring Fund and
Target is sometimes referred to herein individually as a "Fund" and collectively
as the "Funds"; and Equity Funds and Equity Trust are sometimes referred to
herein individually as an "Investment Company" and collectively as the
"Investment Companies.") All agreements, representations, actions, and
obligations described herein made or to be taken or undertaken by a Fund are
made and shall be taken or undertaken by Equity Funds on behalf of each
Acquiring Fund and by Equity Trust on behalf of each Target.
The Investment Companies, each of which is a Delaware business trust, wish
to effect eleven separate reorganizations, each described in section
368(a)(1)(C) of the Internal Revenue Code of 1986, as amended ("Code"), and
intend this Agreement to be, and adopt it as, a "plan of reorganization" within
the meaning of the regulations under section 368 of the Code ("Regulations").
Each reorganization will involve the transfer of a Target's assets to the
Acquiring Fund listed on Schedule A opposite its name (each, a "corresponding
Acquiring Fund") in exchange solely for voting shares of beneficial interest in
that Acquiring Fund and that Acquiring Fund's assumption of that Target's
liabilities, followed by the constructive distribution of those shares PRO RATA
to the holders of shares of beneficial interest in that Target in exchange
therefor, all on the terms and conditions set forth herein. (All such
transactions involving each Target and its corresponding Acquiring Fund are
referred to herein as a "Reorganization.") For convenience, the balance of this
Agreement will refer only to a single Reorganization, one Target, and one
Acquiring Fund, but the terms and conditions hereof shall apply separately to
each Reorganization. The consummation of one Reorganization shall not be
contingent on the consummation of any other Reorganization.
Each Target has a single class of shares ("Target Shares"). Acquiring
Fund's shares are divided into multiple classes, including Trust Class shares.
Only Acquiring Fund's Trust Class shares ("Acquiring Fund Shares"), which are
substantially similar to the Target Shares, are involved in the Reorganization.
In consideration of the mutual promises contained herein, the parties
agree as follows:
1. PLAN OF REORGANIZATION AND TERMINATION
--------------------------------------
1.1. Target agrees to assign, sell, convey, transfer, and deliver all of
its assets described in paragraph 1.2 ("Assets") to Acquiring Fund. Acquiring
Fund agrees in exchange therefor --
(a) to issue and deliver to Target the number of full and
fractional (rounded to the third decimal place) Acquiring Fund
Shares determined by dividing the net value of Target
(computed as set forth in paragraph 2.1) by the net asset
value ("NAV") of an Acquiring Fund Share (computed as set
forth in paragraph 2.2), and
(b) to assume all of Target's liabilities described in paragraph
1.3 ("Liabilities"). These transactions shall take place at
the Closing (as defined in paragraph 3.1).
1.2. The Assets shall include all cash, cash equivalents, securities,
receivables (including interest and dividends receivable), claims and rights of
action, rights to register shares under applicable securities laws, books and
records, deferred and prepaid expenses shown as assets on Target's books, and
other property owned by Target at the Effective Time (as defined in paragraph
3.1).
1.3. The Liabilities shall include all of Target's liabilities, debts,
obligations, and duties of whatever kind or nature, whether absolute, accrued,
contingent, or otherwise, whether or not arising in the ordinary course of
business, whether or not determinable at the Effective Time, and whether or not
specifically referred to in this Agreement. Notwithstanding the foregoing,
Target agrees to use its best efforts to discharge all its known Liabilities
before the Effective Time.
1.4. At or immediately before the Effective Time, Target shall declare
and pay to its shareholders a dividend and/or other distribution in an amount
large enough so that it will have distributed substantially all (and in any
event not less than 90%) of its investment company taxable income (computed
without regard to any deduction for dividends paid) and substantially all of its
realized net capital gain, if any, for the current taxable year through the
Effective Time.
1.5. At the Effective Time (or as soon thereafter as is reasonably
practicable), Target shall distribute the Acquiring Fund Shares received by it
pursuant to paragraph 1.1 to Target's shareholders of record, determined as of
the Effective Time (each a "Shareholder" and collectively "Shareholders"), in
constructive exchange for their Target Shares. That distribution shall be
accomplished by Equity Funds's transfer agent's opening accounts on Acquiring
Fund's share transfer books in the Shareholders' names and transferring those
Acquiring Fund Shares thereto. Each Shareholder's account shall be credited with
the respective PRO RATA number of full and fractional (rounded to the third
decimal place) Acquiring Fund Shares due that Shareholder. All outstanding
Target Shares , including any represented by certificates, shall simultaneously
be canceled on Target's share transfer books. Acquiring Fund shall not issue
certificates representing the Acquiring Fund Shares issued in connection with
the Reorganization.
1.6. As soon as reasonably practicable after distribution of the
Acquiring Fund Shares pursuant to paragraph 1.5, but in all events within six
months after the Effective Time, Target shall be terminated as a series of
Equity Trust and any further actions shall be taken in connection therewith as
required by applicable law.
1.7. Any reporting responsibility of Target to a public authority is and
shall remain its responsibility up to and including the date on which it is
terminated.
1.8. Any transfer taxes payable on issuance of Acquiring Fund Shares in
a name other than that of the registered holder on Target's books of the Target
Shares constructively exchanged therefor shall be paid by the person to whom
those Acquiring Fund Shares are to be issued, as a condition of that transfer.
2. VALUATION
---------
2.1. For purposes of paragraph 1.1(a), Target's net value shall be (a)
the value of the Assets computed as of the close of regular trading on the New
York Stock Exchange ("NYSE") on the date of the Closing ("Valuation Time"),
using the valuation procedures set forth in its then-current prospectus and
statement of additional information ("SAI"), less (b) the amount of the
Liabilities as of the Valuation Time.
2.2. For purposes of paragraph 1.1(a), the NAV of an Acquiring Fund
Share shall be computed as of the Valuation Time, using the valuation procedures
set forth in Acquiring Fund's then-current prospectus and SAI.
-2-
2.3. All computations pursuant to paragraphs 2.1 and 2.2 shall be made
by or under the direction of Neuberger Berman Management Inc.
3. CLOSING AND EFFECTIVE TIME
--------------------------
3.1. The Reorganization, together with related acts necessary to
consummate the same ("Closing"), shall occur at the Investment Companies'
principal office on or about [____ _], 2000, or at such other place and/or on
such other date as to which the Investment Companies may agree. All acts taking
place at the Closing shall be deemed to take place simultaneously as of the
close of business on the date thereof or at such other time as to which the
Investment Companies may agree ("Effective Time"). If, immediately before the
Valuation Time, (a) the NYSE is closed to trading or trading thereon is
restricted or (b) trading or the reporting of trading on the NYSE or elsewhere
is disrupted, so that accurate appraisal of Target's net value and/or the NAV of
an Acquiring Fund Share is impracticable, the Effective Time shall be postponed
until the first business day after the day when that trading shall have been
fully resumed and that reporting shall have been restored.
3.2. Equity Trust's fund accounting and pricing agent shall deliver at
the Closing a certificate of an authorized officer verifying that the
information (including adjusted basis and holding period, by lot) concerning the
Assets, including all portfolio securities, transferred by Target to Acquiring
Fund, as reflected on Acquiring Fund's books immediately after the Closing, does
or will conform to that information on Target's books immediately before the
Closing. Equity Trust's custodian shall deliver at the Closing a certificate of
an authorized officer stating that (a) the Assets it holds will be transferred
to Acquiring Fund at the Effective Time and (b) all necessary taxes in
conjunction with the delivery of the Assets, including all applicable federal
and state stock transfer stamps, if any, have been paid or provision for payment
has been made. 3.3. Equity Trust shall deliver to Equity Funds at the Closing a
list of the names and addresses of the Shareholders and the number of
outstanding Target Shares owned by each Shareholder, all as of the Effective
Time, certified by Equity Trust's Secretary or an Assistant Secretary thereof.
Equity Funds's transfer agent shall deliver at the Closing a certificate as to
the opening on Acquiring Fund's share transfer books of accounts in the
Shareholders' names. Equity Funds shall issue and deliver a confirmation to
Equity Trust evidencing the Acquiring Fund Shares to be credited to Target at
the Effective Time or provide evidence satisfactory to Equity Trust that those
Acquiring Fund Shares have been credited to Target's account on Acquiring Fund's
books.
3.4. Each Investment Company shall deliver to the other at the Closing
(a) a certificate executed in its name by its President or a Vice President in
form and substance satisfactory to the recipient and dated the Effective Time,
to the effect that the representations and warranties it made in this Agreement
are true and correct at the Effective Time except as they may be affected by the
transactions contemplated by this Agreement and (b) bills of sale, checks,
assignments, stock certificates, receipts, and other documents the other
Investment Company or its counsel reasonably requests.
4. REPRESENTATIONS AND WARRANTIES
------------------------------
4.1. Equity Trust represents and warrants as follows:
4.1.1. Equity Trust is a business trust duly organized and validly
existing under the laws of the State of Delaware, and its Certificate of
Trust has been duly filed in the office of the Secretary of State
thereof;
4.1.2.Equity Trust is duly registered as an open-end management
investment company under the Investment Company Act of 1940, as amended
("1940 Act"), and that registration will be in full force and effect at
the Effective Time;
4.1.3. Target is a duly established and designated series of Equity
Trust;
-3-
4.1.4. At the Closing, Target will have good and marketable title
to the Assets and full right, power, and authority to sell, assign,
transfer, and deliver the Assets free of any liens or other
encumbrances; and on delivery and payment for the Assets, Acquiring Fund
will acquire good and marketable title thereto;
4.1.5.Target's current prospectus and SAI conform in all material
respects to the applicable requirements of the Securities Act of 1933,
as amended ("1933 Act"), and the 1940 Act and the rules and regulations
thereunder and do not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading;
4.1.6.Target is not in violation of, and the execution and delivery
of this Agreement and consummation of the transactions contemplated
hereby will not conflict with or violate, Delaware law or any provision
of the Amended and Restated Trust Instrument ("Trust Instrument") or
By-Laws of Equity Trust or of any agreement, instrument, lease, or other
undertaking to which Target is a party or by which it is bound or result
in the acceleration of any obligation, or the imposition of any penalty,
under any agreement, judgment, or decree to which Target is a party or
by which it is bound, except as previously disclosed in writing to and
accepted by Equity Funds;
4.1.7.Except as otherwise disclosed in writing to and accepted by
Equity Funds, all material contracts and other commitments of or
applicable to Target (other than this Agreement and investment
contracts, including options, futures, and forward contracts) will be
terminated, or provision for discharge of any liabilities of Target
thereunder will be made, at or prior to the Effective Time, without
either Fund's incurring any liability or penalty with respect thereto
and without diminishing or releasing any rights Target may have had with
respect to actions taken or omitted or to be taken by any other party
thereto prior to the Closing;
4.1.8.Except as otherwise disclosed in writing to and accepted by
Equity Funds, no litigation, administrative proceeding, or investigation
of or before any court or governmental body is presently pending or (to
Equity Trust's knowledge) threatened against Equity Trust with respect
to Target or any of its properties or assets that, if adversely
determined, would materially and adversely affect Target's financial
condition or the conduct of its business; and Equity Trust knows of no
facts that might form the basis for the institution of any such
litigation, proceeding, or investigation and is not a party to or
subject to the provisions of any order, decree, or judgment of any court
or governmental body that materially or adversely affects its business
or its ability to consummate the transactions contemplated hereby;
4.1.9.The execution, delivery, and performance of this Agreement
have been duly authorized as of the date hereof by all necessary action
on the part of Equity Trust's board of trustees, which has made the
determinations required by Rule 17a-8(a) under the 1940 Act; and,
subject to approval by Target's shareholders, this Agreement constitutes
a valid and legally binding obligation of Target, enforceable in
accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium,
and similar laws relating to or affecting creditors' rights and by
general principles of equity;
4.1.10. At the Effective Time, the performance of this Agreement
shall have been duly authorized by all necessary action by Target's
shareholders;
-4-
4.1.11. No governmental consents, approvals, authorizations, or
filings are required under the 1933 Act, the Securities Exchange Act of
1934, as amended ("1934 Act"), or the 1940 Act for the execution or
performance of this Agreement by Equity Trust, except for (a) the filing
with the Securities and Exchange Commission ("SEC") of a registration
statement by Equity Funds on Form N-14 relating to the Acquiring Fund
Shares issuable hereunder, and any supplement or amendment thereto
("Registration Statement"), including therein a prospectus/proxy
statement ("Proxy Statement"), and (b) such consents, approvals,
authorizations, and filings as have been made or received or as may be
required subsequent to the Effective Time;
4.1.12. On the effective date of the Registration Statement, at the
time of the shareholders' meeting referred to in paragraph 5.2, and at
the Effective Time, the Proxy Statement will (a) comply in all material
respects with the applicable provisions of the 1933 Act, the 1934 Act,
and the 1940 Act and the rules and regulations thereunder and (b) not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; provided that the foregoing shall not apply to
statements in or omissions from the Proxy Statement made in reliance on
and in conformity with information furnished by Equity Funds for use
therein;
4.1.13. The Liabilities were incurred by Target in the ordinary
course of its business and are associated with the Assets; and there are
no Liabilities other than liabilities disclosed or provided for in
Equity Trust's financial statements referred to in paragraph 4.1.18 and
liabilities incurred by Target in the ordinary course of its business
subsequent to [_______ __, 2000], or otherwise previously disclosed to
Equity Funds, none of which has been materially adverse to the business,
assets, or results of Target's operations;
4.1.14. Target is a "fund" as defined in section 851(g)(2) of the
Code; it qualified for treatment as a regulated investment company under
Subchapter M of the Code ("RIC") for each past taxable year since it
commenced operations and will continue to meet all the requirements for
that qualification for its current taxable year; the Assets will be
invested at all times through the Effective Time in a manner that
ensures compliance with the foregoing; and Target has no earnings and
profits accumulated in any taxable year in which the provisions of
Subchapter M did not apply to it;
4.1.15. Target is not under the jurisdiction of a court in a "title
11 or similar case" (within the meaning of section 368(a)(3)(A) of the
Code);
4.1.16. During the five-year period ending on the Closing Date,
neither Target nor any person "related" (as defined in section
1.368-1(e)(3) of the Regulations without regard to section
1.368-1(e)(3)(i)(A) thereof) to Target will have directly or through any
transaction, agreement, or arrangement with any other person, (a)
acquired Target Shares with consideration other than Acquiring Fund
Shares or Target Shares, except for shares redeemed in the ordinary
course of Target's business as a series of an open-end investment
company as required by the 1940 Act, or (b) made distributions with
respect to Target Shares, except for (i) dividends qualifying for the
deduction for dividends paid (as defined in section 561 of the Code)
referred to in sections 852(a)(1) and 4982(c)(1)(A) of the Code and (ii)
additional distributions, to the extent they do not exceed 50% of the
value (without giving effect to those distributions) of the proprietary
interest in Target on the Closing Date;
-5-
4.1.17. Target's federal income tax returns, and all applicable
state and local tax returns, for all taxable years through and including
the taxable year ended [_____ __, ____], have been timely filed and all
taxes payable pursuant to those returns have been timely paid; and
4.1.18. Equity Trust's financial statements for the year ended
[_____ __, ____], [AND FOR THE SIX MONTHS ENDED _____ __, 2000,] to be
delivered to Equity Funds, fairly represent Target's financial position
as of that [EACH SUCH] date and the results of its operations and
changes in its net assets for the year [PERIOD] then ended.
4.2. Equity Funds represents and warrants as follows:
4.2.1. Equity Funds is a business trust duly organized and validly
existing under the laws of the State of Delaware, and its Certificate of
Trust has been duly filed in the office of the Secretary of State
thereof;
4.2.2. Equity Funds is duly registered as an open-end management
investment company under the 1940 Act, and that registration will be in
full force and effect at the Effective Time;
4.2.3. Acquiring Fund is a duly established and designated series
of Equity Funds;
4.2.4. No consideration other than Acquiring Fund Shares (and
Acquiring Fund's assumption of the Liabilities) will be issued in
exchange for the Assets in the Reorganization;
4.2.5.The Acquiring Fund Shares to be issued and delivered to
Target hereunder will, at the Effective Time, have been duly authorized
and, when issued and delivered as provided herein, will be duly and
validly issued and outstanding shares of Acquiring Fund, fully paid and
non-assessable;
4.2.6.Acquiring Fund's current prospectus and SAI conform in all
material respects to the applicable requirements of the 1933 Act and the
1940 Act and the rules and regulations thereunder and do not include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading;
4.2.7.Acquiring Fund is not in violation of, and the execution and
delivery of this Agreement and consummation of the transactions
contemplated hereby will not conflict with or violate, Delaware law or
any provision of the Trust Instrument or By-Laws of Equity Funds or of
any provision of any agreement, instrument, lease, or other undertaking
to which Acquiring Fund is a party or by which it is bound or result in
the acceleration of any obligation, or the imposition of any penalty,
under any agreement, judgment, or decree to which Acquiring Fund is a
party or by which it is bound, except as previously disclosed in writing
to and accepted by Equity Trust;
4.2.8.Except as otherwise disclosed in writing to and accepted by
Equity Trust, no litigation, administrative proceeding, or investigation
of or before any court or governmental body is presently pending or (to
Equity Funds's knowledge) threatened against Equity Funds with respect
to Acquiring Fund or any of its properties or assets that, if adversely
determined, would materially and adversely affect Acquiring Fund's
financial condition or the conduct of its business; and Equity Funds
knows of no facts that might form the basis for the institution of any
such litigation, proceeding, or investigation and is not a party to or
subject to the provisions of any order, decree, or judgment of any court
or governmental body that materially or adversely affects its business
or its ability to consummate the transactions contemplated hereby;
-6-
4.2.9.The execution, delivery, and performance of this Agreement
have been duly authorized as of the date hereof by all necessary action
on the part of Equity Funds's board of trustees (together with Equity
Trust's board of trustees, the "Boards"), which has made the
determinations required by Rule 17a-8(a) under the 1940 Act; and this
Agreement constitutes a valid and legally binding obligation of
Acquiring Fund, enforceable in accordance with its terms, except as the
same may be limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium, and similar laws relating to or affecting
creditors' rights and by general principles of equity;
4.2.10. No governmental consents, approvals, authorizations, or
filings are required under the 1933 Act, the 1934 Act, or the 1940 Act
for the execution or performance of this Agreement by Equity Funds,
except for (a) the filing with the SEC of the Registration Statement and
(b) such consents, approvals, authorizations, and filings as have been
made or received or as may be required subsequent to the Effective Time;
4.2.11. On the effective date of the Registration Statement, at the
time of the shareholders' meeting referred to in paragraph 5.2, and at
the Effective Time, the Proxy Statement will (a) comply in all material
respects with the applicable provisions of the 1933 Act, the 1934 Act,
and the 1940 Act and the rules and regulations thereunder and (b) not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; provided that the foregoing shall not apply to
statements in or omissions from the Proxy Statement made in reliance on
and in conformity with information furnished by Equity Trust for use
therein;
4.2.12. Acquiring Fund is a "fund" as defined in section 851(g)(2)
of the Code; it qualified for treatment as a RIC for each past taxable
year since it commenced operations and will continue to meet all the
requirements for such qualification for its current taxable year; it
intends to continue to meet all such requirements for the next taxable
year; and it has no earnings and profits accumulated in any taxable year
in which the provisions of Subchapter M of the Code did not apply to it;
4.2.13. Acquiring Fund has no plan or intention to issue additional
Acquiring Fund Shares following the Reorganization except for shares
issued in the ordinary course of its business as a series of an open-end
investment company; nor does Acquiring Fund, or any person "related"
(within the meaning of section 1.368-1(e)(3) of the Regulations) to
Acquiring Fund, have any plan or intention to redeem or otherwise
reacquire any Acquiring Fund Shares issued to the Shareholders pursuant
to the Reorganization, except to the extent it is required by the 1940
Act to redeem any of its shares presented for redemption at NAV in the
ordinary course of that business;
4.2.14. Following the Reorganization, Acquiring Fund (a) will
continue Target's "historic business" (within the meaning of section
1.368-1(d)(2) of the Regulations), (b) will use a significant portion of
Target's "historic business assets" (within the meaning of section
1.368-1(d)(3) of the Regulations) in a business; in addition, Acquiring
Fund has no plan or intention to sell or otherwise dispose of any of the
Assets, except for dispositions made in the ordinary course of that
business and dispositions necessary to maintain its status as a RIC;
4.2.15. There is no plan or intention for Acquiring Fund to be
dissolved or merged into another business trust or a corporation or any
"fund" thereof (within the meaning of section 851(g)(2) of the Code)
following the Reorganization;
-7-
4.2.16. Acquiring Fund does not directly or indirectly own, nor at
the Effective Time will it directly or indirectly own, nor has it
directly or indirectly owned at any time during the past five years, any
shares of Target;
4.2.17. Acquiring Fund's federal income tax returns, and all
applicable state and local tax returns, for all taxable years through
and including the taxable year ended [_____ __, ____], have been timely
filed and all taxes payable pursuant to such returns have been timely
paid; and
4.2.18. Equity Funds's financial statements for the year ended
[_____ __, ____], [AND FOR THE SIX MONTHS ENDED _____ __, 2000,] to be
delivered to Equity Trust, fairly represent Acquiring Fund's financial
position as of that [EACH SUCH] date and the results of its operations
and changes in its net assets for the year [PERIOD] then ended.
4.3. Each Investment Company represents and warrants as follows:
4.3.1. The fair market value of the Acquiring Fund Shares received
by each Shareholder will be approximately equal to the fair market value
of its Target Shares constructively surrendered in exchange therefor;
4.3.2.Its management (a) is unaware of any plan or intention of
Shareholders to redeem, sell, or otherwise dispose of (i) any portion of
their Target Shares before the Reorganization to any person "related"
(within the meaning of section 1.368-1(e)(3) of the Regulations) to
either Fund or (ii) any portion of the Acquiring Fund Shares to be
received by them in the Reorganization to any person "related" (within
such meaning) to Acquiring Fund, (b) does not anticipate dispositions of
those Acquiring Fund Shares at the time of or soon after the
Reorganization to exceed the usual rate and frequency of dispositions of
shares of Target as a series of an open-end investment company, (c)
expects that the percentage of Shareholder interests, if any, that will
be disposed of as a result of or at the time of the Reorganization will
be DE MINIMIS, and (d) does not anticipate that there will be
extraordinary redemptions of Acquiring Fund Shares immediately following
the Reorganization;
4.3.3. The Shareholders will pay their own expenses, if any,
incurred in connection with the Reorganization;
4.3.4. The fair market value of the Assets on a going concern basis
will equal or exceed the Liabilities to be assumed by Acquiring Fund and
those to which the Assets are subject;
4.3.5. There is no intercompany indebtedness between the Funds that
was issued or acquired, or will be settled, at a discount;
4.3.6.Pursuant to the Reorganization, Target will transfer to
Acquiring Fund, and Acquiring Fund will acquire, at least 90% of the
fair market value of the net assets, and at least 70% of the fair market
value of the gross assets, Target held immediately before the
Reorganization. For the purposes of this representation, any amounts
Target used to pay its Reorganization expenses and to make redemptions
and distributions immediately before the Reorganization (except (a)
redemptions in the ordinary course of its business required by section
22(e) of the 1940 Act and (b) regular, normal dividend distributions
made to conform to its policy of distributing all or substantially all
of its income and gains to avoid the obligation to pay federal income
tax and/or the excise tax under section 4982 of the Code) after the date
of this Agreement will be included as assets held thereby immediately
before the Reorganization;
-8-
4.3.7.None of the compensation received by any Shareholder who is
an employee of or service provider to Target will be separate
consideration for, or allocable to, any of the Target Shares held by
that Shareholder; none of the Acquiring Fund Shares received by any such
Shareholder will be separate consideration for, or allocable to, any
employment agreement, investment advisory agreement, or other service
agreement; and the consideration paid to any such Shareholder will be
for services actually rendered and will be commensurate with amounts
paid to third parties bargaining at arm's-length for similar services;
4.3.8. Immediately after the Reorganization, the Shareholders will
not own shares constituting "control" (within the meaning of section
304(c) of the Code) of Acquiring Fund; and
4.3.9. Neither Fund will be reimbursed for any expenses incurred by
it or on its behalf in connection with the Reorganization unless those
expenses are solely and directly related to the Reorganization
(determined in accordance with the guidelines set forth in Rev. Rul.
73-54, 1973-1 C.B. 187).
5. COVENANTS
---------
5.1. Each Fund covenants to operate its respective business in
the ordinary course between the date hereof and the Closing, it being
understood that --
(a) such ordinary course will include declaring and paying customary
dividends and other distributions and changes in operations
contemplated by each Fund's normal business activities, and
(b) each Fund will retain exclusive control of its investments until the
Closing; provided that Target shall not dispose of more than an
insignificant portion of its historic business assets (as defined
above) during that period without Acquiring Fund's prior consent.
5.2. Target covenants to call a shareholders' meeting to consider and
act on this Agreement and to take all other action necessary to obtain approval
of the transactions contemplated hereby.
5.3. Target covenants that the Acquiring Fund Shares to be delivered
hereunder are not being acquired for the purpose of making any distribution
thereof, other than in accordance with the terms hereof.
5.4. Target covenants that it will assist Equity Funds in obtaining
information Equity Funds reasonably requests concerning the beneficial ownership
of Target Shares. 5.5. Target covenants that its books and records (including
all books and records required to be maintained under the 1940 Act and the rules
and regulations thereunder) will be turned over to Equity Funds at the Closing.
5.6. Each Fund covenants to cooperate in preparing the Proxy Statement
in compliance with applicable federal and state securities laws.
5.7. Each Fund covenants that it will, from time to time, as and when
requested by the other Fund, execute and deliver or cause to be executed and
delivered all assignments and other instruments, and will take or cause to be
taken further action, the other Fund may deem necessary or desirable to vest in,
and confirm to, (a) Acquiring Fund, title to and possession of all the Assets,
and (b) Target, title to and possession of the Acquiring Fund Shares to be
delivered hereunder, and otherwise to carry out the intent and purpose hereof.
5.8. Acquiring Fund covenants to use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act, the 1940 Act, and
state securities laws it deems appropriate to continue its operations after the
Effective Time.
-9-
5.9. Subject to this Agreement, each Fund covenants to take or cause to
be taken all actions, and to do or cause to be done all things, reasonably
necessary, proper, or advisable to consummate and effectuate the transactions
contemplated hereby.
6. CONDITIONS PRECEDENT
--------------------
Each Fund's obligations hereunder shall be subject to (a) the other
Fund's performance of all its obligations to be performed hereunder at or before
the Effective Time, (b) all representations and warranties of the other Fund
contained herein being true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated
hereby, as of the Effective Time, with the same force and effect as if made at
and as of the Effective Time, and (c) the following further conditions that, at
or before the Effective Time:
6.1. This Agreement and the transactions contemplated hereby shall have
been duly adopted and approved by each Board and shall have been approved by
Target's shareholders in accordance with Equity Trust's Trust Instrument and
By-Laws and applicable law.
6.2. All necessary filings shall have been made with the SEC and state
securities authorities, and no order or directive shall have been received that
any other or further action is required to permit the parties to carry out the
transactions contemplated hereby. The Registration Statement shall have become
effective under the 1933 Act, no stop orders suspending the effectiveness
thereof shall have been issued, and the SEC shall not have issued an unfavorable
report with respect to the Reorganization under section 25(b) of the 1940 Act
nor instituted any proceedings seeking to enjoin consummation of the
transactions contemplated hereby under section 25(c) of the 1940 Act. All
consents, orders, and permits of federal, state, and local regulatory
authorities (including the SEC and state securities authorities) deemed
necessary by either Investment Company to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain same would not involve a risk of a material
adverse effect on either Fund's assets or properties, provided that either
Investment Company may for itself waive any of such conditions.
6.3. At the Effective Time, no action, suit, or other proceeding shall
be pending before any court or governmental agency in which it is sought to
restrain or prohibit, or to obtain damages or other relief in connection with,
the transactions contemplated hereby.
6.4. Equity Trust shall have received an opinion of Kirkpatrick &
Lockhart LLP ("Counsel") substantially to the effect that:
6.4.1.Acquiring Fund is a duly established series of Equity Funds,
a business trust duly organized and validly existing under the laws of
the State of Delaware with power under its Trust Instrument to own all
its properties and assets and, to the knowledge of Counsel, to carry on
its business as presently conducted;
6.4.2.This Agreement (a) has been duly authorized, executed, and
delivered by Equity Funds on behalf of Acquiring Fund and (b) assuming
due authorization, execution, and delivery of this Agreement by Equity
Trust on behalf of Target, is a valid and legally binding obligation of
Equity Funds with respect to Acquiring Fund, enforceable in accordance
with its terms, except as the same may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium, and similar
laws relating to or affecting creditors' rights and by general
principles of equity;
6.4.3.The Acquiring Fund Shares to be issued and distributed to the
Shareholders under this Agreement, assuming their due delivery as
contemplated by this Agreement, will be duly authorized, validly issued
and outstanding, and fully paid and non-assessable;
-10-
6.4.4.The execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated hereby will not,
materially violate Equity Funds's Trust Instrument or By-Laws or any
provision of any agreement (known to Counsel, without any independent
inquiry or investigation) to which Equity Funds (with respect to
Acquiring Fund) is a party or by which it is bound or (to the knowledge
of Counsel, without any independent inquiry or investigation) result in
the acceleration of any obligation, or the imposition of any penalty,
under any agreement, judgment, or decree to which Equity Funds (with
respect to Acquiring Fund) is a party or by which it is bound, except as
set forth in that opinion or as previously disclosed in writing to and
accepted by Equity Trust;
6.4.5.To the knowledge of Counsel (without any independent inquiry
or investigation), no consent, approval, authorization, or order of any
court or governmental authority is required for the consummation by
Equity Funds (on behalf of Acquiring Fund) of the transactions
contemplated herein, except those obtained under the 1933 Act, the 1934
Act, and the 1940 Act and those that may be required under state
securities laws;
6.4.6. Equity Funds is registered with the SEC as an investment
company, and to the knowledge of Counsel no order has been issued or
proceeding instituted to suspend that registration; and
6.4.7.To the knowledge of Counsel (without any independent inquiry
or investigation), (a) no litigation, administrative proceeding, or
investigation of or before any court or governmental body is pending or
threatened as to Equity Funds (with respect to Acquiring Fund) or any of
its properties or assets attributable or allocable to Acquiring Fund and
(b) Equity Funds (with respect to Acquiring Fund) is not a party to or
subject to the provisions of any order, decree, or judgment of any court
or governmental body that materially and adversely affects Acquiring
Fund's business, except as set forth in that opinion or as otherwise
disclosed in writing to and accepted by Equity Trust.
In rendering the foregoing opinion, Counsel may (1) rely, as to matters governed
by the laws of the State of Delaware, on an opinion of competent Delaware
counsel, (2) make assumptions regarding the authenticity, genuineness, and/or
conformity of documents and copies thereof without independent verification
thereof, (3) limit that opinion to applicable federal and state law, and (4)
define the word "knowledge" and related terms to mean the knowledge of attorneys
then with Counsel who have devoted substantive attention to matters directly
related to this Agreement and the Reorganization. 6.5. Equity Funds shall have
received an opinion of Counsel substantially to the effect that:
6.5.1.Target is a duly established series of Equity Trust, a
business trust duly organized and validly existing under the laws of the
State of Delaware with power under its Trust Instrument to own all its
properties and assets and, to the knowledge of Counsel, to carry on its
business as presently conducted;
6.5.2.This Agreement (a) has been duly authorized, executed, and
delivered by Equity Trust on behalf of Target and (b) assuming due
authorization, execution, and delivery of this Agreement by Equity Funds
on behalf of Acquiring Fund, is a valid and legally binding obligation
of Equity Trust with respect to Target, enforceable in accordance with
its terms, except as the same may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium, and similar laws
relating to or affecting creditors' rights and by general principles of
equity;
6.5.3.The execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated hereby will not,
materially violate Equity Trust's Trust Instrument or By-Laws or any
-11-
provision of any agreement (known to Counsel, without any independent
inquiry or investigation) to which Equity Trust (with respect to Target)
is a party or by which it is bound or (to the knowledge of Counsel,
without any independent inquiry or investigation) result in the
acceleration of any obligation, or the imposition of any penalty, under
any agreement, judgment, or decree to which Equity Trust (with respect
to Target) is a party or by which it is bound, except as set forth in
that opinion or as previously disclosed in writing to and accepted by
Equity Funds;
6.5.4.To the knowledge of Counsel (without any independent inquiry
or investigation), no consent, approval, authorization, or order of any
court or governmental authority is required for the consummation by
Equity Trust (on behalf of Target) of the transactions contemplated
herein, except those obtained under the 1933 Act, the 1934 Act, and the
1940 Act and those that may be required under state securities laws;
6.5.5. Equity Trust is registered with the SEC as an investment
company, and to the knowledge of Counsel no order has been issued or
proceeding instituted to suspend that registration; and
6.5.6.To the knowledge of Counsel (without any independent inquiry
or investigation), (a) no litigation, administrative proceeding, or
investigation of or before any court or governmental body is pending or
threatened as to Equity Trust (with respect to Target) or any of its
properties or assets attributable or allocable to Target and (b) Equity
Trust (with respect to Target) is not a party to or subject to the
provisions of any order, decree, or judgment of any court or
governmental body that materially and adversely affects Target's
business, except as set forth in that opinion or as otherwise disclosed
in writing to and accepted by Equity Funds.
In rendering the foregoing opinion, Counsel may (1) rely, as to matters governed
by the laws of the State of Delaware, on an opinion of competent Delaware
counsel, (2) make assumptions regarding the authenticity, genuineness, and/or
conformity of documents and copies thereof without independent verification
thereof, (3) limit such opinion to applicable federal and state law, and (4)
define the word "knowledge" and related terms to mean the knowledge of attorneys
then with Counsel who have devoted substantive attention to matters directly
related to this Agreement and the Reorganization.
6.6. Each Investment Company shall have received an opinion of Counsel,
addressed to and in form and substance reasonably satisfactory to it, as to the
federal income tax consequences mentioned below ("Tax Opinion"). In rendering
the Tax Opinion, Counsel may rely as to factual matters, exclusively and without
independent verification, on the representations made in this Agreement, which
Counsel may treat as representations made to it, or in separate letters
addressed to Counsel and the certificates delivered pursuant to paragraph 3.4.
The Tax Opinion shall be substantially to the effect that, based on the facts
and assumptions stated therein and conditioned on consummation of the
Reorganization in accordance with this Agreement, for federal income tax
purposes:
6.6.1. Acquiring Fund's acquisition of the Assets in exchange
solely for Acquiring Fund Shares and Acquiring Fund's assumption of the
Liabilities, followed by Target's distribution of those shares PRO RATA
to the Shareholders constructively in exchange for their Target Shares,
will qualify as a reorganization within the meaning of section
368(a)(1)(C) of the Code, and each Fund will be "a party to a
reorganization" within the meaning of section 368(b) of the Code;
-12-
6.6.2.Target will recognize no gain or loss on the transfer of the
Assets to Acquiring Fund in exchange solely for Acquiring Fund Shares
and Acquiring Fund's assumption of the Liabilities or on the subsequent
distribution of those shares to the Shareholders in constructive
exchange for their Target Shares;
6.6.3. Acquiring Fund will recognize no gain or loss on its receipt
of the Assets in exchange solely for Acquiring Fund Shares and its
assumption of the Liabilities;
6.6.4. Acquiring Fund's basis in the Assets will be the same as
Target's basis therein immediately before the Reorganization, and
Acquiring Fund's holding period for the Assets will include Target's
holding period therefor;
6.6.5. A Shareholder will recognize no gain or loss on the
constructive exchange of all its Target Shares solely for Acquiring Fund
Shares pursuant to the Reorganization; and
6.6.6.A Shareholder's aggregate basis in the Acquiring Fund Shares
to be received by it in the Reorganization will be the same as the
aggregate basis in its Target Shares to be constructively surrendered in
exchange for those Acquiring Fund Shares, and its holding period for
those Acquiring Fund Shares will include its holding period for those
Target Shares, provided the Shareholder held them as capital assets at
the Effective Time.
Notwithstanding subparagraphs 6.6.2 and 6.6.4, the Tax Opinion may state that no
opinion is expressed as to the effect of the Reorganization on the Funds or any
Shareholder with respect to any asset as to which any unrealized gain or loss is
required to be recognized for federal income tax purposes at the end of a
taxable year (or on the termination or transfer thereof) under a mark-to-market
system of accounting.
At any time before the Closing, either Investment Company may waive any of
the foregoing conditions (except that set forth in paragraph 6.1) if, in the
judgment of its Board, that waiver will not have a material adverse effect on
its Fund's shareholders' interests.
7. BROKERAGE FEES AND EXPENSES
---------------------------
7.1. Each Investment Company represents and warrants to the other that
there are no brokers or finders entitled to receive any payments in connection
with the transactions provided for herein.
7.2. Each Fund will bear its own Reorganization expenses.
8. ENTIRE AGREEMENT; NO SURVIVAL
-----------------------------
Neither party has made any representation, warranty, or covenant not set
forth herein, and this Agreement constitutes the entire agreement between the
parties. The representations, warranties, and covenants contained herein or in
any document delivered pursuant hereto or in connection herewith shall not
survive the Closing.
9. TERMINATION OF AGREEMENT
------------------------
This Agreement may be terminated at any time at or prior to the
Effective Time, whether before or after approval by Target's shareholders:
9.1. By either Fund (a) in the event of the other Fund's material breach
of any representation, warranty, or covenant contained herein to be performed at
or prior to the Effective Time, (b) if a condition to its obligations has not
been met and it reasonably appears that such condition will not or cannot be
met, or (c) if the Closing has not occurred on or before December 31, 2000; or
9.2. By the parties' mutual agreement.
In the event of termination under paragraphs 9.1(c) or 9.2, there shall be no
liability for damages on the part of either Fund, or the trustees or officers of
either Investment Company, to the other Fund.
-13-
10. AMENDMENT
---------
This Agreement may be amended, modified, or supplemented at any time,
notwithstanding approval thereof by Target's shareholders, in any manner
mutually agreed on in writing by the parties; provided that following that
approval no such amendment shall have a material adverse effect on the
Shareholders' interests.
11. MISCELLANEOUS
-------------
11.1. This Agreement shall be governed by and construed in accordance
with the internal laws of the State of Delaware; provided that, in the case of
any conflict between those laws and the federal securities laws, the latter
shall govern.
11.2. Nothing expressed or implied herein is intended or shall be
construed to confer on or give any person, firm, trust, or corporation other
than the parties and their respective successors and assigns any rights or
remedies under or by reason of this Agreement.
11.3. Each Investment Company acknowledges that the other is a business
trust organized in series form. This Agreement is executed by Equity Funds on
behalf of Acquiring Fund, and by Equity Trust on behalf of Target, and by their
respective trustees and/or officers in their capacities as such, and not
individually. Each Investment Company's obligations under this Agreement are not
binding on or enforceable against any of its trustees, officers, or shareholders
but are only binding on and enforceable against (a) in the case of Equity Funds,
the assets and property of Acquiring Fund and no other series thereof and (b) in
the case of Equity Trust, the assets and property of Target and no other series
thereof. A trustee of one Investment Company shall not be personally liable
hereunder to the other Investment Company or its trustees or shareholders for
any act, omission, or obligation of the former Investment Company or any other
trustee thereof. Each Investment Company agrees that, in asserting any rights or
claims under this Agreement on behalf of its Fund, it shall look only to the
other Fund's assets and property in settlement of those rights and claims and
not to those trustees, officers, or shareholders.
11.4. This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become effective
when one or more counterparts have been executed by each Investment Company and
delivered to the other party. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
-14-
IN WITNESS WHEREOF, each party has caused this Agreement to be executed
and delivered by its duly authorized officers as of the day and year first
written above.
ATTEST: NEUBERGER BERMAN EQUITY FUNDS, on
behalf of each of its series listed
on Schedule A
________________________ By:___________________________
Secretary _______________
Vice President
ATTEST: NEUBERGER BERMAN EQUITY TRUST, on behalf
of each of its series listed on Schedule A
________________________ By:___________________________
Secretary _______________
Vice President
-15-
SCHEDULE A
TARGETS ACQUIRING FUNDS
(All Series of Equity Trust) (All Series of Equity Funds)
- - -------------------------------------- ------------------------------------
Neuberger Berman Century Trust Neuberger Berman Century Fund
Neuberger Berman Focus Trust Neuberger Berman Focus Fund
Neuberger Berman Genesis Trust Neuberger Berman Genesis Fund
Neuberger Berman Guardian Trust Neuberger Berman Guardian Fund
Neuberger Berman International Trust Neuberger Berman International Fund
Neuberger Berman Manhattan Trust Neuberger Berman Manhattan Fund
Neuberger Berman Millennium Trust Neuberger Berman Millennium Fund
Neuberger Berman Partners Trust Neuberger Berman Partners Fund
Neuberger Berman Regency Trust Neuberger Berman Regency Fund
Neuberger Berman Socially Responsive Neuberger Berman Socially
Trust Responsive Fund
Neuberger Berman Technology Trust Neuberger Berman Technology Fund
-16-
APPENDIX B
FORM OF
NEUBERGER BERMAN EQUITY TRUST
PLAN PURSUANT TO RULE 12B-1
WHEREAS, Neuberger Berman Equity Trust ("Trust") is an open-end management
investment company registered under the Investment Company Act of 1940, as
amended ("1940 Act"), and intends to offer for public sale shares of beneficial
interest in several series (each series a "Fund");
WHEREAS, the Trust desires to adopt a plan pursuant to Rule 12b-1 under
the 1940 Act and the Board of Trustees has determined that there is a reasonable
likelihood that adoption of said plan will benefit the Funds and their
shareholders; and
WHEREAS, the Trust has employed Neuberger Berman Management Inc. ("NBMI")
as principal underwriter of the shares of the Trust;
NOW, THEREFORE, the Trust hereby adopts this Plan Pursuant to Rule 12b-1
("Plan") in accordance with Rule 12b-1 under the 1940 Act on the following terms
and conditions:
1. This Plan applies to the Funds listed on Schedule A.
2. A. Each Fund shall pay to NBMI, as compensation for selling Fund
shares or for providing services to Fund shareholders, a fee at the rate
specified for that Fund on Schedule A, such fee to be calculated and accrued
daily and paid monthly or at such other intervals as the Board shall determine.
B. The fees payable hereunder are payable without regard to the
aggregate amount that may be paid over the years, PROVIDED THAT, so long as the
limitations set forth in Rule 2830 of the Conduct Rules ("Rule 2830") of the
National Association of Securities Dealers, Inc. ("NASD") remain in effect and
apply to recipients of payments made under this Plan, the amounts paid hereunder
shall not exceed those limitations, including permissible interest. Amounts
expended in support of the activities described in Paragraph 3.B. of this Plan
may be excluded in determining whether expenditures under the Plan exceed the
appropriate percentage of new gross assets specified in Rule 2830.
3. A. As principal underwriter of the Trust's shares, NBMI may spend such
amounts as it deems appropriate on any activities or expenses primarily intended
to result in the sale of shares of the Funds, including, but not limited to,
compensation to employees of NBMI; compensation to NBMI and other broker-dealers
that engage in or support the distribution of shares; expenses of NBMI and such
other broker-dealers and entities, including overhead and telephone and other
communication expenses; the printing of prospectuses, statements of additional
information, and reports for other than existing shareholders; and the
preparation and distribution of sales literature and advertising materials.
B. NBMI may spend such amounts as it deems appropriate on the
administration and servicing of shareholder accounts, including, but not limited
to, responding to inquiries from shareholders or their representatives
requesting information regarding matters such as shareholder account or
transaction status, net asset value of shares, performances, services, plans and
options, investment policies, portfolio holdings, and distributions and taxation
thereof; and dealing with complaints and correspondence of shareholders;
including compensation to organizations and employees who service shareholder
accounts, and expenses of such organizations, including overhead and telephone
and other communications expenses.
4. This Plan shall take effect on December 1, 2000 and shall continue in
effect with respect to each Fund for successive periods of one year from its
execution for so long as such continuance is specifically approved with respect
to such Fund at least annually together with any related agreements, by votes of
a majority of both (a) the Board of Trustees of the Trust and (b) those Trustees
who are not "interested persons" of the Trust, as defined in the 1940 Act, and
who have no direct or indirect financial interest in the operation of this Plan
or any agreements related to it (the "Rule 12b-1 Trustees"), cast in person at a
meeting or meetings called for the purpose of voting on this Plan and such
related agreements; and only if the Trustees who approve the implementation or
continuation of the Plan have reached the conclusion required by Rule 12b-1(e)
under the 1940 Act.
5. Any person authorized to direct the disposition of monies paid or
payable by a Fund pursuant to this Plan or any related agreement shall provide
to the Trust's Board of Trustees and the Board shall review, at least quarterly,
a written report of the amounts so expended and the purposes for which such
expenditures were made.
6. This Plan may be terminated with respect to a Fund at any time by vote
of a majority of the Rule 12b-1 Trustees or by vote of a majority of the
outstanding voting securities of that Fund.
7. This Plan may not be amended to increase materially the amount of fees
to be paid by any Fund hereunder unless such amendment is approved by a vote of
at least a majority of the outstanding securities (as defined in the 1940 Act)
of that Fund, and no material amendment to the Plan shall be made unless such
amendment is approved in the manner provided in Paragraph 4 hereof for annual
approval.
8. While this Plan is in effect, the selection and nomination of Trustees
who are not interested persons of the Trust, as defined in the 1940 Act, shall
be committed to the discretion of Trustees who are themselves not interested
persons.
9. The Trust shall preserve copies of this Plan and any related
agreements for a period of not less than six years from the date of expiration
of the Plan or agreement, as the case may be, the first two years in an easily
accessible place; and shall preserve copies of each report made pursuant to
Paragraph 5 hereof for a period of not less than six years from the date of such
report, the first two years in an easily accessible place.
-2-
IN WITNESS WHEREOF, the Trust has executed this Plan Pursuant to Rule
12b-1 as of the day and year set forth below.
Date: ________________________ NEUBERGER BERMAN EQUITY TRUST
Attest: By:_________________________________
Name:
Title:
By:
________________________
Agreed and assented to:
NEUBERGER BERMAN MANAGEMENT INC.
By:________________________________
Name:
Title:
-3-
NEUBERGER BERMAN EQUITY TRUST
PLAN PURSUANT TO RULE 12b-1
SCHEDULE A
The series of Neuberger Berman Equity Trust subject to the Plan Pursuant
to 12b-1, and the applicable fee rates, are:
Fee (as a Percentage of
Series Average Daily Net Assets
------ ------------------------
Neuberger Berman Century Trust 0.10%
Neuberger Berman Focus Trust 0.10%
Neuberger Berman Genesis Trust 0.10%
Neuberger Berman Guardian Trust 0.10%
Neuberger Berman Millennium Trust 0.10%
Neuberger Berman Partners Trust 0.10%
Neuberger Berman Socially Responsive Trust 0.10%
-4-
NEUBERGER BERMAN EQUITY FUNDS
NEUBERGER BERMAN EQUITY TRUST
NEUBERGER BERMAN EQUITY ASSETS
NEUBERGER BERMAN EQUITY SERIES
NEUBERGER BERMAN INCOME FUNDS
NEUBERGER BERMAN INCOME TRUST
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
OCTOBER 31, 2000
This proxy is being solicited on behalf of the Boards of Trustees of Neuberger
Berman Equity Funds, Equity Trust, Equity Assets and Equity Series ("The Equity
Trusts") and relates to the proposals on behalf of the Century, Focus, Genesis,
Guardian, International, Manhattan, Millennium, Partners, Regency, Socially
Responsive and Technology series of The Equity Trusts (each a "Fund"). This
proxy is also being solicited on behalf of the Boards of Trustees of Neuberger
Berman Income Funds and Income Trust ("The Income Trusts") and relates to the
proposals on behalf of the Cash Reserves, Government Money, High Yield Bond,
Institutional Cash, Limited Maturity Bond, Municipal Money and Municipal
Securities series of The Income Trusts (each a "Fund"). The undersigned hereby
appoints as proxies Daniel J. Sullivan and Claudia A. Brandon, and each of them
(with power of substitution), to vote all shares of common stock of the
undersigned in the Funds at the Special Meeting of Shareholders to be held at
10:30 a.m., Eastern time, on October 31, 2000, at the offices of the Trust, 605
Third Avenue, 41st Floor, New York, NY 10158-3698, and any adjournment thereof
("Meeting"), with all the power the undersigned would have if personally
present.
The shares represented by this proxy will be voted as instructed. Unless
indicated to the contrary, this proxy shall be deemed to grant authority to vote
"FOR" all proposals set forth in this proxy statement relating to the Fund and
discretionary power to vote upon such other business as may properly come before
the Meeting.
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN.
IF YOU ARE NOT VOTING BY PHONE OR INTERNET, PLEASE SIGN AND DATE
THIS PROXY CARDAND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
VOTE TODAY BY MAIL,
TOUCH-TONE PHONE OR THE INTERNET
CALL TOLL-FREE 1-888-221-0697
OR LOG ON TO WWW.PROXYWEB.COM
***Control Number: 999 999 999 999 99*** Please fold and detach card at perforation before mailing
Please vote by checking the appropriate boxes below.
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. To elect eighteen (18) trustees to serve on the Board of Trustees / / / / / /
until their successors are duly elected and qualified.
ALL FUNDS
2. To approve a change in the Fund's fundamental investment limitation / / / / / /
regarding diversification of its investments among a variety of
issuers
ALL FUNDS
3. Ratification of the selection of Ernst & Young LLP or / / / / / /
PricewaterhouseCoopers LLP as the Fund's Independent Auditors or
Accountants.
ALL FUNDS
4. To approve an Agreement and Plan of Reorganization ("Reorganization Plan") / / / / / /
providing for the reorganization of the Fund from the current two-tiered
master-feeder structure to a single-tiered multi-class structure.
NEUBERGER BERMAN CENTURY TRUST
NEUBERGER BERMAN FOCUS TRUST
NEUBERGER BERMAN FOCUS ASSETS
NEUBERGER BERMAN GENESIS TRUST
NEUBERGER BERMAN GENESIS ASSETS
NEUBERGER BERMAN GENESIS INSTITUTIONAL
NEUBERGER BERMAN GUARDIAN TRUST
NEUBERGER BERMAN GUARDIAN ASSETS
NEUBERGER BERMAN INSTITUTIONAL CASH TRUST
NEUBERGER BERMAN INTERNATIONAL TRUST
NEUBERGER BERMAN LIMITED MATURITY BOND TRUST
NEUBERGER BERMAN MANHATTAN TRUST
NEUBERGER BERMAN MANHATTAN ASSETS
NEUBERGER BERMAN MILLENNIUM TRUST
NEUBERGER BERMAN MILLENNIUM ASSETS
NEUBERGER BERMAN PARTNERS TRUST
NEUBERGER BERMAN PARTNERS ASSETS
NEUBERGER BERMAN REGENCY TRUST
NEUBERGER BERMAN REGENCY ASSETS
NEUBERGER BERMAN SOCIALLY RESPONSIVE TRUST
NEUBERGER BERMAN SOCIALLY RESPONSIVE ASSETS
NEUBERGER BERMAN TECHNOLOGY TRUST
5. To approve a distribution and shareholder services plan to authorize the / / / / / /
fund to spend annually up to one-tenth of one percent (0.10%) of its
average daily net assets to pay for distribution and/or shareholder
servicing expenses.
NEUBERGER BERMAN GENESIS TRUST
NEUBERGER BERMAN GUARDIAN TRUST
NEUBERGER BERMAN PARTNERS TRUST
6. To approve a change in the Fund's fundamental investment limitations so as / / / / / /
to provide that the Fund will normally concentrate its investments (i.e.,
invest at least 25% of its assets) in the financial services group of
industries.
NEUBERGER BERMAN CASH RESERVES
7. A. To approve a change in the Fund's fundamental investment policies / / / / / /
so as to permit the Fund to invest in any securities issued or
guaranteed as to principal or interest by the U.S. Government, its
agencies or instrumentalities.
B. To approve a change in the Fund's fundamental investment policies so as / / / / / /
to permit the Fund to engage in repurchase agreements collateralized by the
same types of securities in which the Fund can invest.
C. To approve a change in the Fund's fundamental investment policies to / / / / / /
permit the Fund to borrow amounts up to 33-1/3% of its total assets by
entering into reverse repurchase agreements.
D. To approve a change in the Fund's fundamental investment limitation on / / / / / /
lending so as to permit the Fund to lend its portfolio securities as a
means of earning additional income.
NEUBERGER BERMAN GOVERNMENT MONEY FUND
[NAME AND ADDRESS]
Please sign exactly as name appears hereon. If shares are held in the name of
joint owners, each should sign. Attorneys-in-fact, executors, administrators,
etc. should so indicate. If shareholder is a corporation or partnership, please
sign in full corporate or partnership name by authorized person.
Date _________________________________, 2000
___________________________________________________________
___________________________________________________________
Signature (owner, joint owners, trustee, custodian, etc.)
NEUBERGER BERMAN EQUITY FUNDS
(INCLUDING THE CENTURY, FOCUS, GENESIS, GUARDIAN, INTERNATIONAL, MANHATTAN,
MILLENNIUM, PARTNERS, REGENCY, SOCIALLY RESPONSIVE AND TECHNOLOGY SERIES)
(EACH A "FUND")
NEUBERGER BERMAN INCOME FUNDS
(including the Cash Reserves, Government Money, High Yield Bond, Institutional
Cash, Limited Maturity Bond, Municipal Money and Municipal Securities series)
(EACH A "FUND")
605 THIRD AVENUE, 2ND FLOOR
NEW YORK, NEW YORK 10158-0180
STATEMENT OF ADDITIONAL INFORMATION
DATED AUGUST 15, 2000
This Statement of Additional Information ("SAI") relates specifically
to the proposed reorganization of Neuberger Berman Equity Funds, Neuberger
Berman Equity Trust, Neuberger Berman Equity Assets, Neuberger Berman Equity
Series, Neuberger Berman Income Funds and Neuberger Berman Income Trust from a
"master feeder" structure" to a single-level, multiple-class structure. This
Statement of Additional Information is not a prospectus and should be read only
in conjunction with the Prospectus and Information Statement dated August 15,
2000 relating to the above-referenced matter. A copy of the Prospectus and
Information Statement may be obtained by calling Neuberger Berman Management
Inc. at 800-877-9700. This Statement of Additional Information consists of the
information set forth herein and the following described documents, each of
which is incorporated by reference herein (legally forms a part of the SAI):
(1) The audited financial statements of Neuberger Berman Income
Funds and Income Managers Trust and notes thereto for the fiscal
year ended October 31, 1999, and the reports of Ernst & Young
LLP, independent auditors, with respect to such audited
financial statements of Neuberger Berman CASH RESERVES and
Portfolio, Neuberger Berman GOVERNMENT MONEY Fund and Portfolio,
Neuberger Berman HIGH YIELD BOND Fund and Portfolio, and
Neuberger Berman LIMITED MATURITY BOND Fund and Portfolio,
previously filed on EDGAR, Accession Number
0000898432-99-001174.
(2) The unaudited financial statements of Neuberger Berman Income
Funds and Income Managers Trust and notes thereto for the
semi-annual period ended April 30, 2000, with respect to
Neuberger Berman CASH RESERVES and Portfolio, Neuberger Berman
GOVERNMENT MONEY Fund and Portfolio, Neuberger Berman HIGH YIELD
BOND Fund and Portfolio, and Neuberger Berman LIMITED MATURITY
BOND Fund and Portfolio, previously filed on EDGAR, Accession
Number 0000898432-00-000465.
(3) The audited financial statements of Neuberger Berman Income
Funds and Income Managers Trust and notes thereto for the fiscal
year ended October 31, 1999, and the reports of Ernst & Young
LLP, independent auditors, with respect to such audited
financial statements of Neuberger Berman MUNICIPAL MONEY FUND
and Portfolio and Neuberger Berman MUNICIPAL SECURITIES Trust
and Portfolio, previously filed on EDGAR, Accession Number
0000898432-99-001176.
(4) The unaudited financial statements of Neuberger Berman Income
Funds and Income Managers Trust and notes thereto for the
semi-annual period ended April 30, 2000, with respect to
Neuberger Berman MUNICIPAL MONEY FUND and Portfolio and
Neuberger Berman MUNICIPAL SECURITIES Trust and Portfolio,
previously filed on EDGAR, Accession Number
0000898432-00-000466.
(5) The audited financial statements of Neuberger Berman Income
Trust and Income Managers Trust and notes thereto for the fiscal
year ended October 31, 1999, and the reports of Ernst & Young
LLP, independent auditors, with respect to such audited
financial statements of Neuberger Berman LIMITED MATURITY BOND
Trust and Portfolio, previously filed on EDGAR, Accession Number
0000898432-99-000709.
(6) The unaudited financial statements of Neuberger Berman Income
Trust and Income Managers Trust and notes thereto for the
semi-annual period ended April 30, 2000, with respect to
Neuberger Berman LIMITED MATURITY BOND Trust and Portfolio,
previously filed on EDGAR, Accession Number
0000898432-00-000467.
(7) The audited financial statements of Neuberger Berman Equity
Funds and Equity Managers Trust and notes thereto for the fiscal
year ended August 31, 1999, and the reports of Ernst & Young
LLP, independent auditors, with respect to such audited
financial statements of Neuberger Berman GENESIS Fund and
Portfolio, Neuberger Berman GUARDIAN Fund and Portfolio,
Neuberger Berman PARTNERS Fund and Portfolio, Neuberger Berman
FOCUS Fund and Portfolio, and Neuberger Berman INTERNATIONAL
Fund; the report of Ernst & Young, independent auditors, with
respect to such audited financial statements of Neuberger Berman
INTERNATIONAL Portfolio; and the reports of
PricewaterhouseCoopers LLP, independent accountants, with
respect to such audited financial statements of Neuberger Berman
MANHATTAN Fund and Portfolio, Neuberger Berman REGENCY Fund and
Portfolio, Neuberger Berman MILLENNIUM Fund and Portfolio, and
Neuberger Berman SOCIALLY RESPONSIVE Fund and Portfolio,
previously filed on EDGAR, Accession Number
0000898432-99-001011.
(8) The unaudited financial statements of Neuberger Berman Equity
Funds and Equity Managers Trust and notes thereto for the
semi-annual period ended February 29, 2000, with respect to
Neuberger Berman GENESIS Fund and Portfolio, Neuberger Berman
GUARDIAN Fund and Portfolio, Neuberger Berman PARTNERS Fund and
Portfolio, Neuberger Berman FOCUS Fund and Portfolio, and
Neuberger Berman INTERNATIONAL Fund and Portfolio, Neuberger
Berman MANHATTAN Fund and Portfolio, Neuberger Berman REGENCY
Fund and Portfolio, Neuberger Berman MILLENNIUM Fund and
Portfolio, and Neuberger Berman SOCIALLY RESPONSIVE Fund and
Portfolio, previously filed on EDGAR, Accession Number
0000898432-000338.
2
(9) The audited financial statements of Neuberger Berman Equity
Trust and Equity Managers Trust and notes thereto for the fiscal
year ended August 31, 1999, and the reports of Ernst & Young
LLP, independent auditors, with respect to such audited
financial statements of Neuberger Berman GENESIS Trust and
Portfolio, Neuberger Berman FOCUS Trust and Portfolio, Neuberger
Berman GUARDIAN Trust and Portfolio, Neuberger Berman PARTNERS
Trust and Portfolio, and Neuberger Berman INTERNATIONAL Trust;
the report of Ernst & Young, independent auditors, with respect
to such audited financial statements of Neuberger Berman
INTERNATIONAL Portfolio; and the reports of
PricewaterhouseCoopers LLP, independent accountants, with
respect to such audited financial statements of Neuberger Berman
MANHATTAN Trust and Portfolio, Neuberger Berman REGENCY Trust
and Portfolio, Neuberger Berman MILLENNIUM Trust and Portfolio
and Neuberger Berman SOCIALLY RESPONSIVE Trust and Portfolio,
previously filed on EDGAR, Accession Number
0000898432-99-001008.
(10) The unaudited financial statements of Neuberger Berman Equity
Trust and Equity Managers Trust and notes thereto for the
semi-annual period ended February 29, 2000, with respect to
Neuberger Berman GENESIS Trust and Portfolio, Neuberger Berman
FOCUS Trust and Portfolio, Neuberger Berman GUARDIAN Trust and
Portfolio, Neuberger Berman PARTNERS Trust and Portfolio, and
Neuberger Berman INTERNATIONAL Trust and Portfolio, Neuberger
Berman MANHATTAN Trust and Portfolio, Neuberger Berman REGENCY
Trust and Portfolio, Neuberger Berman MILLENNIUM Trust and
Portfolio and Neuberger Berman SOCIALLY RESPONSIVE Trust and
Portfolio, previously filed on EDGAR, Accession Number
0000898432-00-000340.
(11) The audited financial statements of Neuberger Berman Equity
Assets and Equity Managers Trust and notes thereto for the
fiscal year ended August 31, 1999, and the reports of Ernst &
Young LLP, independent auditors, with respect to such audited
financial statements of Neuberger Berman FOCUS Assets and
Portfolio, Neuberger Berman GENESIS Assets and Portfolio and
Neuberger Berman GUARDIAN Assets and Portfolio, and Neuberger
Berman PARTNERS Assets and Portfolio, and the report of
PricewaterhouseCoopers LLP, independent accountants, with
respect to such audited financial statements of Neuberger Berman
MANHATTAN Assets and Portfolio, Neuberger Berman MILLENNIUM
Assets and Portfolio, Neuberger Berman SOCIALLY RESPONSIVE
Assets and Portfolio, previously filed on EDGAR, Accession
Number 0000898432-99-001010.
(12) The unaudited financial statements of Neuberger Berman Equity
Assets and Equity Managers Trust and notes thereto for the
semi-annual period ended February 29, 2000, with respect to
Neuberger Berman FOCUS Assets and Portfolio, Neuberger Berman
GENESIS Assets and Portfolio and Neuberger Berman GUARDIAN
Assets and Portfolio, Neuberger Berman PARTNERS Assets and
Portfolio, Neuberger Berman MANHATTAN Assets and Portfolio,
Neuberger Berman MILLENNIUM Assets and Portfolio, Neuberger
3
Berman SOCIALLY RESPONSIVE Assets and Portfolio, previously
filed on EDGAR, Accession Number 0000898432-00-000339.
(13) The audited financial statements of Neuberger Berman Genesis
Institutional (a series of Neuberger Berman Equity Series) and
Neuberger Berman Genesis Portfolio (as series of Equity Mangers
Trust) and notes thereto for the fiscal year ended August 31,
1999, and the reports of Ernst & Young LLP, independent
auditors, with respect to such audited financial statements,
previously filed on EDGAR, Accession Number
0000898432-99-001012.
(14) The unaudited financial statements of Neuberger Berman Genesis
Institutional (a series of Neuberger Berman Equity Series) and
Neuberger Berman Genesis Portfolio (as series of Equity Managers
Trust) and notes thereto for the semi-annual period ended
February 29, 2000, previously filed on EDGAR, Accession Number
0000898432-00-000337.
(15) The Statement of Additional Information of Neuberger Berman
Income Funds, dated March 1, 2000, previously filed on EDGAR,
Accession Number 0000898432-00-000182. The Statement of
Additional Information of Neuberger Berman Institutional Cash
Fund, previously filed on EDGAR Accession Number 000089842-00-
000312.
(16) The Statement of Additional Information of Neuberger Berman
Equity Funds, dated December 1, 1999, as amended on May 1, 2000,
previously filed on EDGAR, Accession Number 0000898432-99-000157
and 0000898432-00-000389, respectively. The Statement of
Additional Information of Neuberger Berman Technology Fund,
previously filed on EDGAR Accession Number 0000892842-00-000304.
4
NEUBERGER BERMAN EQUITY FUNDS
FORM N-14
PART C
OTHER INFORMATION
ITEM 15. INDEMNIFICATION.
- - ------- ---------------
A Delaware business trust may provide in its governing instrument for
indemnification of its officers and trustees from and against any and all claims
and demands whatsoever. Article IX, Section 2 of the Trust Instrument provides
that the Registrant shall indemnify any present or former trustee, officer,
employee or agent of the Registrant ("Covered Person") to the fullest extent
permitted by law against liability and all expenses reasonably incurred or paid
by him or her in connection with any claim, action, suit or proceeding
("Action") in which he or she becomes involved as a party or otherwise by virtue
of his or her being or having been a Covered Person and against amounts paid or
incurred by him or her in settlement thereof. Indemnification will not be
provided to a person adjudged by a court or other body to be liable to the
Registrant or its shareholders by reason of "willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office" ("Disabling Conduct"), or not to have acted in good faith in the
reasonable belief that his or her action was in the best interest of the
Registrant. In the event of a settlement, no indemnification may be provided
unless there has been a determination that the officer or trustee did not engage
in Disabling Conduct (i) by the court or other body approving the settlement;
(ii) by at least a majority of those trustees who are neither interested
persons, as that term is defined in the Investment Company Act of 1940 ("1940
Act"), of the Registrant ("Independent Trustees"), nor parties to the matter
based upon a review of readily available facts; or (iii) by written opinion of
independent legal counsel based upon a review of readily available facts.
Pursuant to Article IX, Section 3 of the Trust Instrument, if any
present or former shareholder of any series ("Series") of the Registrant shall
be held personally liable solely by reason of his or her being or having been a
shareholder and not because of his or her acts or omissions or for some other
reason, the present or former shareholder (or his or her heirs, executors,
administrators or other legal representatives or in the case of any entity, its
general successor) shall be entitled out of the assets belonging to the
applicable Series to be held harmless from and indemnified against all loss and
expense arising from such liability. The Registrant, on behalf of the affected
Series, shall, upon request by such shareholder, assume the defense of any claim
made against such shareholder for any act or obligation of the Series and
satisfy any judgment thereon from the assets of the Series.
Section 9 of the Management Agreements between Neuberger Berman
Management Inc. ("NB Management") and Equity Managers Trust and Global Managers
Trust (Equity Managers Trust and Global Managers Trust are collectively referred
to as the "Managers Trusts") provide that neither NB Management nor any
director, officer or employee of NB Management performing services for the
series of the Managers Trusts at the direction or request of NB Management in
connection with NB Management's discharge of its obligations under the
Agreements shall be liable for any error of judgment or mistake of law or for
any loss suffered by a series in connection with any matter to which the
Agreements relates; provided, that nothing in the Agreements shall be construed
(i) to protect NB Management against any liability to the Managers Trusts or any
series thereof or their interest holders to which NB Management would otherwise
be subject by reason of willful misfeasance, bad faith, or gross negligence in
the performance of its duties, or by reason of NB Management's reckless
disregard of its obligations and duties under the Agreements, or (ii) to protect
any director, officer or employee of NB Management who is or was a trustee or
officer of the Managers Trusts against any liability to the Managers Trusts or
any series thereof or 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 Trusts.
Section 1 of the Sub-Advisory Agreements between NB Management and
Neuberger Berman, LLC ("Neuberger Berman") with respect to the Managers Trusts
provides that, in the absence of willful misfeasance, bad faith or gross
negligence in the performance of its duties or of reckless disregard of its
duties and obligations under the Agreement, Neuberger Berman will not be subject
to any liability for any act or omission or any loss suffered by any series of
the Managers Trusts or their interest holders in connection with the matters to
which the Agreements relate.
Section 12 of the Administration Agreement between the Registrant and
NB Management provides that NB Management will not be liable to the Registrant
for any action taken or omitted to be taken by NB Management or its employees,
agents or contractors in carrying out the provisions of the Agreement if such
action was taken or omitted in good faith and without negligence or misconduct
on the part of NB Management, or its employees, agents or contractors. Section
13 of the Administration Agreement provides that the Registrant shall indemnify
NB Management and hold it harmless from and against any and all losses, damages
and expenses, including reasonable attorneys' fees and expenses, incurred by NB
Management that result from: (i) any claim, action, suit or proceeding in
connection with NB Management's entry into or performance of the Agreement; or
(ii) any action taken or omission to act committed by NB Management in the
performance of its obligations under the Agreement; or (iii) any action of NB
Management upon instructions believed in good faith by it to have been executed
by a duly authorized officer or representative of a Series; provided, that NB
Management will not be entitled to such indemnification in respect of actions or
omissions constituting negligence or misconduct on the part of NB Management, or
its employees, agents or contractors. Amounts payable by the Registrant under
this provision shall be payable solely out of assets belonging to that Series,
and not from assets belonging to any other Series of the Registrant. Section 14
of the Administration Agreement provides that NB Management will indemnify the
Registrant and hold it harmless from and against any and all losses, damages and
expenses, including reasonable attorneys' fees and expenses, incurred by the
Registrant that result from: (i) NB Management's failure to comply with the
terms of the Agreement; or (ii) NB Management's lack of good faith in performing
its obligations under the Agreement; or (iii) the negligence or misconduct of NB
Management, or its employees, agents or contractors in connection with the
Agreement. The Registrant shall not be entitled to such indemnification in
respect of actions or omissions constituting negligence or misconduct on the
part of the Registrant or its employees, agents or contractors other than NB
Management, unless such negligence or misconduct results from or is accompanied
by negligence or misconduct on the part of NB Management, any affiliated person
of NB Management, or any affiliated person of an affiliated person of NB
Management.
Section 11 of the Distribution Agreement between the Registrant and
NB Management provides that NB Management shall look only to the assets of a
Series for the Registrant's performance of the Agreement by the Registrant on
behalf of such Series, and neither the Trustees nor any of the Registrant's
officers, employees or agents, whether past, present or future, shall be
personally liable therefor.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 ("1933 Act") may be permitted to trustees, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the 1933 Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the 1933 Act and will be governed by the final adjudication of such
issue.
ITEM 16. EXHIBITS.
- - ------- --------
EXHIBIT
NUMBER DESCRIPTION
------ -----------
(1) (a) Certificate of Trust. Incorporated by
Reference to Post-Effective Amendment No.
70 to Registrant's Registration
Statement, File Nos. 2-11357 and 811-582.
(b) Restated Certificate of Trust.
Incorporated by Reference to
Post-Effective Amendment No. 82 to
Registrant's Registration Statement, File
Nos. 2-11357 and 811-582.
2
EXHIBIT
NUMBER DESCRIPTION
------ -----------
(c) Trust Instrument of Neuberger Berman
Equity Funds. Incorporated by Reference
to Post-Effective Amendment No. 70 to
Registrant's Registration Statement, File
Nos. 2-11357 and 811-582.
(d) Schedule A - Current Series of Neuberger
Berman Equity Funds. To Be Filed by
Amendment.
(2) By-laws of Neuberger Berman Equity Funds.
Incorporated by Reference to
Post-Effective Amendment No. 70 to
Registrant's Registration Statement, File
Nos. 2-11357 and 811-582.
(3) Voting Trust Agreement. Not Applicable.
(4) Plan of Reorganization. Filed Herewith.
(5) (a) Trust Instrument of Neuberger Berman
Equity Funds, Articles IV, V, and VI.
Incorporated by Reference to
Post-Effective Amendment No. 70 to
Registrant's Registration Statement, File
Nos. 2-11357 and 811-582.
(b) By-Laws of Neuberger Berman Equity Funds,
Articles V, VI, and VIII. Incorporated by
Reference to Post-Effective Amendment No.
70 to Registrant's Registration
Statement, File Nos. 2-11357 and 811-582.
(6) (a) (i) Management Agreement Between
Equity Managers Trust and
Neuberger Berman Management
Inc. Incorporated by Reference
to Post-Effective Amendment No.
87 to Registrant's Registration
Statement, File Nos. 2-11357
and 811-582.
(ii) Schedule A - Series of Equity
Managers Trust Currently
Subject to the Management
Agreement. To Be Filed by
Amendment.
(iii) Schedule B - Schedule of
Compensation Under the
Management Agreement.
Incorporated by Reference to
Post-Effective Amendment No. 87
to Registrant's Registration
Statement, File Nos. 2-11357
and 811-582.
(b) (i) Sub-Advisory Agreement Between
Neuberger Berman Management
Inc. and Neuberger Berman, LLC
with Respect to Equity Managers
Trust. Incorporated by
Reference to Post-Effective
Amendment No. 70 to
Registrant's Registration
Statement, File Nos. 2-11357
and 811-582.
(ii) Schedule A - Series of Equity
Managers Trust Currently
Subject to the Sub-Advisory
Agreement. To Be Filed by
Amendment.
3
EXHIBIT
NUMBER DESCRIPTION
------ -----------
(c) (i) Management Agreement Between
Global Managers Trust and
Neuberger Berman Management
Inc.. Incorporated by Reference
to Post-Effective Amendment No.
74 to Registrant's Registration
Statement, File Nos. 2-11357
and 811-582.
(ii) Schedule A - Series of Global
Managers Trust Currently
Subject to the Management
Agreement. Incorporated by
Reference to Post-Effective
Amendment No. 74 to
Registrant's Registration
Statement, File Nos. 2-11357
and 811-582.
(iii) Schedule B - Schedule of
Compensation Under the
Management Agreement.
Incorporated by Reference to
Post-Effective Amendment No. 74
to Registrant's Registration
Statement, File Nos. 2-11357
and 811-582.
(d) (i) Sub-Advisory Agreement Between
Neuberger Berman Management
Inc. and Neuberger Berman, LLC
with Respect to Global Managers
Trust. Incorporated by
Reference to Post-Effective
Amendment No. 74 to
Registrant's Registration
Statement, File Nos. 2-11357
and 811-582.
(ii) Schedule A - Series of Global
Managers Trust Currently
Subject to the Sub-Advisory
Agreement. Incorporated by
Reference to Post-Effective
Amendment No. 74 to
Registrant's Registration
Statement, File Nos. 2-11357
and 811-582.
(7) (a) Distribution Agreement Between Neuberger
Berman Equity Funds and Neuberger Berman
Management Inc. Incorporated by Reference
to Post-Effective Amendment No. 87 to
Registrant's Registration Statement, File
Nos. 2-11357 and 811-582.
(b) Schedule A - Series of Neuberger Berman
Equity Funds Currently Subject to the
Distribution Agreement. Incorporated by
Reference to Post-Effective Amendment No.
87 to Registrant's Registration
Statement, File Nos. 2-11357 and 811-582.
(8) Bonus, Profit Sharing or Pension Plans.
None.
(9) (a) Custodian Contract Between Neuberger
Berman Equity Funds and State Street Bank
and Trust Company. Incorporated by
Reference to Post-Effective Amendment No.
74 to Registrant's Registration
Statement, File Nos. 2-11357 and 811-582.
(b) Schedule of Compensation under the
Custodian Contract. Incorporated by
Reference to Post-Effective Amendment No.
76 to Registrant's Registration
Statement, File Nos. 2-11357 and 811-582.
(10) Plan Pursuant to Rule 12b-1. None.
4
EXHIBIT
NUMBER DESCRIPTION
------ -----------
(11) Opinion and Consent of Kirkpatrick &
Lockhart LLP on Securities Matters with
Respect to Neuberger Berman Equity Funds.
Filed Herewith.
(12) Opinion of Counsel Supporting Tax
Matters. To Be Filed by Amendment.
(13) (a) (i) Transfer Agency and Service
Agreement Between Neuberger
Berman Equity Funds and State
Street Bank and Trust Company.
Incorporated by Reference to
Post-Effective Amendment No. 70
to Registrant's Registration
Statement, File Nos. 2-11357
and 811-582.
(ii) First Amendment to Transfer
Agency and Service Agreement
Between Neuberger Berman Equity
Funds and State Street Bank and
Trust Company. Incorporated by
Reference to Post-Effective
Amendment No. 70 to
Registrant's Registration
Statement, File Nos. 2-11357
and 811-582.
(iii) Second Amendment to Transfer
Agency and Service Agreement
between Neuberger Berman Equity
Funds and State Street Bank and
Trust Company. Incorporated by
Reference to Post-Effective
Amendment No. 77 to
Registrant's Registration
Statement, File Nos. 2-11357
and 811-582.
(iv) Schedule of Compensation under
the Transfer Agency and Service
Agreement. Incorporated by
Reference to Post-Effective
Amendment No. 76 to
Registrant's Registration
Statement, File Nos. 2-11357
and 811-582.
(b) (i) Administration Agreement
Between Neuberger Berman Equity
Funds and Neuberger Berman
Management Inc. Incorporated by
Reference to Post-Effective
Amendment No. 87 to
Registrant's Registration
Statement, File Nos. 2-11357
and 811-582.
(ii) Schedule A - Series of
Neuberger Berman Equity Funds
Currently Subject to the
Administration Agreement. To Be
Filed by Amendment.
(iii) Schedule B - Schedule of
Compensation Under the
Administration Agreement.
Incorporated by Reference to
Post-Effective Amendment No. 87
to Registrant's Registration
Statement, File Nos. 2-11357
and 811-582.
5
(14) Consent of Independent Auditors. Filed
Herewith.
(15) Financial Statements Omitted from
Prospectus. None.
(16) Power of Attorney. Filed Herewith.
(17) Additional Exhibits. None.
6
ITEM 17. UNDERTAKINGS.
- - ------- ------------
(1) The undersigned registrant agrees that prior to any public
reoffering of the securities registered through the use of a prospectus which is
a part of this registration statement by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c) of the Securities Act [17 CFR
230.145c], the reoffering prospectus will contain the information called for by
the applicable registration form for reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
(2) The undersigned registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as a part of an amendment to the
registration statement and will not be used until the amendment is effective,
and that, in determining any liability under the 1933 Act, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering of them.
(3)The undersigned registrant agrees to file an amendment to the
registration statement, pursuant to Rule 485(b) of Regulation C of the 1933 Act,
prior to the effective date for the purpose of including Exhibit 12, Opinion of
Counsel Supporting Tax Matters.
SIGNATURES
As required by the Securities Act of 1933, this registration statement has been
signed on behalf of the registrant, in the City of New York, and the State of
New York on the 22nd day of June, 2000.
Registrant: NEUBERGER BERMAN EQUITY FUNDS
By:
---------------------
Michael M. Kassen
President
As required by the Securities Act of 1933, this registration statement has been
signed by the following persons in the capacities and on the date indicated.
SIGNATURE TITLE DATE
- - --------- ----- ----
Chairman of the Board June 22, 2000
- - -------------------- and Trustee (Chief
Peter E. Sundman Executive Officer)
President and Trustee June 22, 2000
- - ---------------------
Michael M. Kassen
Vice President June 22, 2000
- - --------------------- (Principal Financial
Michael J. Weiner Officer)
Treasurer (Principal June 22, 2000
- - ------------------- Accounting Officer)
Richard Russell
*Signature affixed by Arthur C. Delibert pursuant to power of attorney dated
June 6, 2000, a copy of which is filed herewith.
SIGNATURE TITLE DATE
- - --------- ----- ----
Trustee June 22, 2000
- - ----------------
Faith Colish
Trustee June 22, 2000
- - --------------------
Howard A. Mileaf
Trustee June 22, 2000
- - ---------------------
Edward I. O'Brien
Trustee June 22, 2000
- - ---------------------------
John T. Patterson, Jr.
Trustee June 22, 2000
- - ---------------------
John P. Rosenthal
Trustee June 22, 2000
- - ----------------------
Cornelius T. Ryan
Trustee June 22, 2000
- - -----------------------
Gustave H. Shubert
*Signature affixed by Arthur C. Delibert pursuant to powers of attorney dated
June 6, 2000, a copy of which is filed herewith.
SIGNATURES
As required by the Securities Act of 1933, this registration statement has been
signed on behalf of the registrant, in the City of New York, and the State of
New York on the 22nd day of June, 2000.
Registrant: EQUITY MANAGERS TRUST
By:
---------------------
Michael M. Kassen
President
As required by the Securities Act of 1933, this registration statement has been
signed by the following persons in the capacities and on the date indicated.
SIGNATURE TITLE DATE
- - --------- ----- ----
Chairman of the Board June 22, 2000
- - -------------------- and Trustee (Chief
Peter E. Sundman Executive Officer)
President and Trustee June 22, 2000
- - ---------------------
Michael M. Kassen
Vice President June 22, 2000
- - --------------------- (Principal Financial
Michael J. Weiner Officer)
Treasurer (Principal June 22, 2000
- - ------------------- Accounting Officer)
Richard Russell
*Signature affixed by Arthur C. Delibert pursuant to power of attorney dated
June 6, 2000, a copy of which is filed herewith.
SIGNATURE TITLE DATE
- - --------- ----- ----
Trustee June 22, 2000
- - ----------------
Faith Colish
Trustee June 22, 2000
- - --------------------
Howard A. Mileaf
Trustee June 22, 2000
- - ---------------------
Edward I. O'Brien
Trustee June 22, 2000
- - ---------------------------
John T. Patterson, Jr.
Trustee June 22, 2000
- - ---------------------
John P. Rosenthal
Trustee June 22, 2000
- - ----------------------
Cornelius T. Ryan
Trustee June 22, 2000
- - -----------------------
Gustave H. Shubert
*Signature affixed by Arthur C. Delibert pursuant to powers of attorney dated
June 6, 2000, a copy of which is filed herewith.