As filed with the Securities and Exchange Commission on May 3, 2002
Registration No. ----------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------------
FORM N-14
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. |_| Post-Effective Amendment No. |_|
(Check appropriate box or boxes)
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
Michael M. Kassen, President
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. 20036-1221
(Names and Addresses of Agents for Service of Process)
For the new shares of Neuberger Berman Century Fund, the approximate
date of the proposed public offering is as soon as practicable after this
registration statement goes effective under the Securities Act of 1933, as
amended. The public offering of shares of Registrant's series is on-going. The
title of securities being registered is shares of beneficial interest.
It is proposed that this filing will go effective on June 2, 2002
pursuant to Rule 488.
No filing fee is due because of Registrant's reliance on Section 24(f)
of the Investment Company Act of 1940, as amended.
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
Cross Reference Sheet
Neuberger Berman Equity Funds
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Neuberger Berman Century Fund
Part A - Prospectus and Information Statement
Part B - Statement of Additional Information
Part C - Other Information
Signature Pages
Exhibits
NEUBERGER BERMAN MANAGEMENT INC.
605 Third Avenue 2nd Floor
New York, NY 10158-0180
NEUBERGER BERMAN
June 6, 2002
Dear Shareholder:
As you are surely aware, the stock market has not been kind to the technology
sector in the past two years. Like other mutual funds in this sector, the
Neuberger Berman Technology Fund has experienced a sharp drop in net asset
value. Because the Fund was launched only two years ago, it has not accumulated
enough assets to make it economically viable for us to manage as a stand-alone
entity. For this reason, the Fund's Trustees have voted to merge the Technology
Fund into the Neuberger Berman Century Fund.
We believe the Century Fund will allow you to maintain your investment
objectives. Like the Technology Fund, the Century Fund seeks long-term growth of
capital. It invests primarily in large-cap companies where the manager sees the
potential for strong earnings growth. Your investment assets will be in very
seasoned hands: Century Fund's Portfolio Manager, Brooke Cobb, is a seasoned
investor with 30 years of experience. The attached N-14 document contains
further information about the merger and Century Fund, including performance
data.
You do not need to take any action regarding your account--the Funds' merger is
scheduled to take place on August 5, and your shares will automatically be
converted into Century Fund shares. Should you decide to redeem or exchange your
Technology Fund shares before the merger, beginning June 14, we will waive the
Fund's redemption fee. The Technology Fund will be closed to new investors and
to any purchases starting June 14.
Our Retail Services Representatives are available to answer any questions
regarding this transaction or to advise about exchanging your shares into one of
our other mutual funds. To speak to a representative, please call 800.877.9700
or visit our website at www.nb.com. Thank you for your continued confidence in
Neuberger Berman.
Sincerely,
Peter Sundman
President
Neuberger Berman Management Inc.
NEUBERGER BERMAN EQUITY FUNDS(R)
NEUBERGER BERMAN CENTURY FUNDSM
605 Third Avenue, 2nd Floor
New York, New York 10158-0180
800-877-9700
PROSPECTUS AND INFORMATION STATEMENT
DATED JUNE 3, 2002
This Prospectus and Information Statement is being furnished to
shareholders of Neuberger Berman Technology Fund ("Technology Fund") in
connection with a Plan of Reorganization and Termination ("Plan"). Pursuant to
the Plan, if approved, shareholders of Technology Fund will receive, in exchange
for shares of that Fund, shares of Neuberger Berman Century Fund ("Century
Fund") equal in total value to their holdings in Technology Fund as of the
closing date of the reorganization contemplated by the Plan ("Reorganization"),
which is expected to be August 2, 2002. When the Reorganization is complete,
Technology Fund will be dissolved.
This Prospectus and Information Statement sets forth concisely
information about Century Fund that investors should know before the closing
date. Additional information is contained in the following documents:
o The Statement of Additional Information ("SAI") dated June 3,
2002, relating to the Plan and including financial statements,
which has been filed with the Securities and Exchange Commission
("SEC") and is incorporated herein by this reference (that is, it
legally forms a part of this Prospectus and Information
Statement). The SAI is available without charge upon request by
calling Neuberger Berman Management Inc. ("NB Management") at
800-877-9700.
o The current Investor Class prospectus of the Century Fund
("Century Prospectus") accompanies this Prospectus and Information
Statement, has been filed with the SEC and is incorporated herein
by this reference.
o Information about Technology Fund is contained in the current
Investor Class prospectus of the Neuberger Berman Equity Funds
("Trust") ("Trust Prospectus") has been filed with the SEC and is
incorporated herein by this reference.
o The Trust's current Statement of Additional Information ("Trust
SAI"), Annual Report to Shareholders dated August 31, 2001
("Annual Report"), and Semi-Annual Report to Shareholders dated
February 28, 2002 ("Semi-Annual Report") have been filed with the
SEC and are incorporated herein by this reference.
o You can obtain a free copy of the Trust Prospectus, Trust SAI,
Annual Report or Semi-Annual Report by calling NB Management at
the phone number shown above.
Investors are advised to read and retain this Prospectus and
Information Statement for future reference.
Technology Fund and Century Fund (each a "Fund") are separate series of
the Trust, a Delaware business trust registered as an open-end, diversified
management investment company consisting of thirteen separate series in a
multiple-class fund structure.
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WE ARE NOT ASKING YOU FOR A PROXY OR WRITTEN CONSENT, AND YOU ARE REQUESTED
NOT TO SEND TO US A PROXY OR WRITTEN CONSENT.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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NB Management serves as the investment manager and Neuberger Berman,
LLC ("Neuberger Berman") serves as sub-adviser to each Fund.
The investment objective of Century Fund is to provide long-term growth
of capital; dividend income is a secondary goal. Technology Fund seeks to
provide long-term growth of capital.
The Board of Trustees of the Trust has determined to dissolve
Technology Fund because the Fund is not economically viable and is unlikely to
become viable in the foreseeable future, as a result of its small asset size and
inability to adequately attract new assets. Shareholders of Technology Fund are
not being asked to vote on the Plan or approve the Reorganization. Technology
Fund will cease selling its shares as of the close of regular trading on the New
York Stock Exchange on June 15, 2002.
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TABLE OF CONTENTS
PAGE
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SYNOPSIS.......................................................................1
The Reorganization..........................................................1
Investment Objectives and Policies..........................................2
Certain Differences Between Technology Fund and Century Fund................2
Fees and Expenses...........................................................3
Purchases...................................................................5
Redemptions.................................................................6
Exchange Privileges.........................................................6
Dividends and Other Distributions...........................................7
Federal Income Tax Consequences.............................................7
COMPARISON OF PRINCIPAL RISK FACTORS...........................................8
THE REORGANIZATION.............................................................8
Reorganization Plan.........................................................8
Reasons for the Reorganization.............................................10
Description of the Securities to be Issued.................................11
Federal Income Tax Considerations..........................................11
Capitalization.............................................................13
ADDITIONAL INFORMATION ABOUT CENTURY FUND.....................................13
Financial Highlights.......................................................13
Investment Objective and Policies..........................................13
Investment Manager, Subadviser and Portfolio Manager.......................13
Management's Discussion of Fund Performance................................14
Century Fund Shares........................................................14
Taxes, Dividends and Other Distributions...................................14
ADDITIONAL INFORMATION ABOUT TECHNOLOGY FUND..................................14
Financial Highlights.......................................................14
Investment Objective and Policies..........................................14
Investment Manager, Subadviser and Portfolio Management Team...............14
Management's Discussion of Fund Performance................................15
Technology Fund Shares.....................................................15
Taxes, Dividends and Other Distributions...................................15
INFORMATION REGARDING FIVE PERCENT SHARE OWNERSHIP AND INTERESTS
OF AFFILIATED PERSONS.........................................................15
Five Percent Holders.......................................................15
Shares Held by Officers and Directors......................................15
Interests of Affiliated Persons............................................15
MISCELLANEOUS.................................................................16
Available Information......................................................16
Legal Matters..............................................................16
Experts....................................................................16
i
NEUBERGER BERMAN EQUITY FUNDS
NEUBERGER BERMAN CENTURY FUND
605 Third Avenue, 2nd Floor
New York, New York 10158-0180
PROSPECTUS AND INFORMATION STATEMENT
DATED JUNE 3, 2002
SYNOPSIS
The following synopsis is a summary of certain information contained
elsewhere in this Prospectus and Information Statement and the Plan of
Reorganization and Termination ("Plan") and is qualified by reference to the
more complete information contained herein as well as the current prospectus of
Neuberger Berman Century Fund ("Century Prospectus"), which accompanies this
Prospectus and Information Statement. Shareholders should read this entire
Prospectus and Information Statement carefully.
The form of the Plan is attached to this Prospectus and Information
Statement as Appendix A. The transactions contemplated by the Plan
(collectively, the "Reorganization") are described herein.
THE REORGANIZATION
At a telephonic meeting held on April 17, 2002, the Board of Trustees
of Neuberger Berman Equity Funds ("Trust") (including a majority of those
Trustees who are not "interested persons," as that term is defined in Section
2(a)(19) of the Investment Company Act of 1940, as amended ("1940 Act")
("Independent Trustees")) unanimously approved the Plan, pursuant to which
Neuberger Berman Technology Fund ("Technology Fund") will transfer all of its
assets to Neuberger Berman Century Fund ("Century Fund"), which will assume all
of the Technology Fund's liabilities and shareholders in Technology Fund will
receive Investor Class shares of Century Fund, in exchange for their Investor
Class shares of Technology Fund. EACH TECHNOLOGY FUND SHAREHOLDER WILL RECEIVE
THE NUMBER OF FULL AND FRACTIONAL INVESTOR CLASS SHARES OF CENTURY FUND EQUAL IN
VALUE TO THAT SHAREHOLDER'S INVESTOR CLASS SHARES OF TECHNOLOGY FUND AS OF THE
CLOSING DATE OF THE REORGANIZATION, WHICH IS EXPECTED TO BE AUGUST 5, 2002
("CLOSING DATE").
Pursuant to the Plan, Technology Fund will transfer all of its assets
to Century Fund in exchange solely for that Fund's Investor Class shares and
assumption of all liabilities of Technology Fund. Technology Fund will then
distribute to its shareholders those Investor Class shares of Century Fund in
exchange for their Investor Class shares of Technology Fund; and Technology Fund
will be dissolved. When the Reorganization is completed, each person who held
Investor Class shares of Technology Fund will hold Investor Class shares of
Century Fund with exactly the same total value.
For the reasons set forth below under "Reasons for the Reorganization,"
the Trust's Board of Trustees, including the Independent Trustees, determined
that the Reorganization is in the best interests of the Funds and that the
interests of the Funds' shareholders will not be diluted as a result of the
Reorganization.
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of Technology Fund is long-term growth of
capital. The investment objective of Century Fund is long-term growth of
capital; dividend income is a secondary goal.
Technology Fund and Century Fund each invests in a portfolio of growth
stocks. Each Fund takes a growth approach to selecting stocks, seeking to buy
stock of companies with strong earnings growth and the potential for higher
earnings.
Technology Fund invests at least 80% of its net assets in companies
whose processes, products or services may be expected to significantly benefit
from technological developments and the application of technological advances.
These companies may be found in virtually any industry. The Fund may invest in
companies of any capitalization size. Because the managers seek companies that
benefit from innovations, there may be times when a significant portion of the
portfolio consists of small- and mid-cap companies.
Century Fund invests mainly in common stocks of large-cap companies.
Large-cap companies are usually well-established. They typically have a variety
of products and business lines, an experienced management team and a sound
financial base that can help them weather bad times. The Fund seeks to reduce
risk by diversifying among many companies, sectors and industries in order to
moderate variability in the Fund's performance.
The other investment policies and limitations of Technology Fund are
identical to the investment policies and limitations of Century Fund with
respect to investing in illiquid, restricted and Rule 144A securities,
repurchase agreements, foreign securities, futures contracts and options
thereon, put and call options on securities and securities indices, foreign
currency transactions, options on foreign currencies, fixed income securities
(including zero coupon securities), commercial paper, preferred stock, swap
agreements and securities of other investment companies. Each Fund may also
enter into reverse repurchase agreements, securities loans, and when-issued
transactions. As a non-fundamental policy, neither of the Funds may purchase
portfolio securities if its outstanding borrowings, including reverse repurchase
agreements, exceed 5% of its total assets. For temporary defensive purposes,
each Fund may invest up to 100% of its total assets in cash or cash equivalents,
commercial paper, U.S. Government and Agency Securities and certain other money
market instruments, as well as repurchase agreements on U.S. Government and
Agency Securities.
CERTAIN DIFFERENCES BETWEEN TECHNOLOGY FUND AND CENTURY FUND
While the Funds are similar in several respects, a number of
differences between them exist as well.
First, although the investment objectives of Technology Fund and
Century Fund are substantially similar since both funds seek long-term growth of
capital, Century Fund has a secondary objective of seeking dividend income.
Second, while Technology Fund and Century Fund each invests primarily
in growth securities, there are some differences in the types of growth
securities in which each Fund may invest. For example, Century Fund invests
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mainly in common stocks of large-cap companies while Technology Fund may invest
in companies of any capitalization size. Century Fund also invests among many
companies, sectors and industries, and while Technology Fund invests in many
companies and industries, it focuses on the technology sector. However, Century
Fund currently invests about 50% of its assets in the technology sector. SEE
"Principal Risk Factors" below for a discussion of the risks of investing in
such securities.
Third, while Technology Fund and Century Fund may both invest in fixed
income securities, including investment grade corporate bonds and debentures,
Century Fund may also invest up to 15% of its assets in corporate debt
securities rated below investment grade.
FEES AND EXPENSES
As shown by this table, there are no transaction charges when you buy
Century Fund or Technology Fund shares or sell or exchange Century Fund shares.
There are, however, redemption fees when you sell or exchange Technology Fund
shares held 180 days or less. HOWEVER, BEGINNING JUNE 15, 2002 TECHNOLOGY FUND
WILL NOT CHARGE YOU A REDEMPTION FEE OR OTHER FEE IN CONNECTION WITH THE SALE OR
EXCHANGE OF ITS SHARES.
CENTURY TECHNOLOGY PRO FORMA
FUND FUND COMBINED
Sales Charge Imposed on Purchases NONE NONE NONE
Sales Charge Imposed on Reinvested Dividends NONE NONE NONE
Deferred Sales Charges NONE NONE NONE
Redemption Fees NONE 2.00% NONE
Exchange Fees NONE 2.00% NONE
If you want to redeem shares of either Fund by wire transfer, the
Funds' transfer agent charges a fee (currently $8.00) for each wire redemption.
Shareholders who have one or more accounts in the Neuberger Berman Funds(R)
aggregating $200,000 or more in value are not charged for wire redemptions; the
$8.00 fee is borne by Neuberger Berman Management Inc. ("NB Management").
Set forth below is a comparison of each Fund's operating expenses for
the fiscal year ended August 31, 2001. The ratios also are shown on a pro forma
(estimated) combined basis, giving effect to the Reorganization.
-3-
- ---------------------------------------- --------------------- ------------------------- -----------------------------
Neuberger Berman Century Fund Technology Fund Pro Forma Combined Fund
Equity Funds
- ---------------------------------------- --------------------- ------------------------- -----------------------------
Management and Administration Fees 0.81% 1.11% 0.81%
- ---------------------------------------- --------------------- ------------------------- -----------------------------
12b-1 Fees None None None
- ---------------------------------------- --------------------- ------------------------- -----------------------------
Other Expenses 0.69% 0.89% 0.69%
- ---------------------------------------- --------------------- ------------------------- -----------------------------
Total Operating Expenses(1) 1.50%2 2.00%3 1.50%
- ---------------------------------------- --------------------- ------------------------- -----------------------------
Total Annual Operating Expenses for each Fund are based upon current
administration and management fees for the Fund and any current expense
reimbursement undertakings. "Other Expenses" are based on each Fund's expenses
for the past fiscal year.
- -------------------
(1)The table reflects NB Management's undertaking to reimburse each Fund's Total
Operating Expenses as described below. Absent the reimbursement, Other Expenses
would have been 1.49%, 0.99% and 1.25% and Total Operating Expenses would have
been 2.60%, 1.80%, and 2.06% per annum of the average daily net assets of
Technology Fund, Century Fund, and the pro forma Combined Fund, respectively,
based upon the expenses of each Fund for the 2001 fiscal year. Century Fund's
contractual expense cap will continue after the Reorganization.
(2) NB Management has contractually agreed to reimburse certain expenses of
Century Fund through 12/31/2011, so that the Total Annual Operating Expenses of
the Fund are limited to 1.50% of average daily net assets. This arrangement does
not cover interest, taxes, brokerage commissions, and extraordinary expenses.
Century Fund has agreed to repay NB Management for expenses reimbursed to the
Fund provided that repayment does not cause the Fund's Total Annual Operating
Expenses to exceed 1.50% of its average daily net assets. Any such repayment
must be made with three years after the year in which NB Management incurred the
expense.
(3) NB Management has contractually agreed to reimburse certain expenses of
Technology Fund through 12/31/2011, so that the Total Annual Operating Expenses
of the Fund are limited to 2.00% of average daily net assets. This arrangement
does not cover interest, taxes, brokerage commissions, and extraordinary
expenses. Technology Fund has agreed to repay NB Management for expenses
reimbursed to the Fund provided that repayment does not cause the Fund's Total
Annual Operating Expenses to exceed 2.00% of its average daily net assets. Any
such repayment must be made with three years after the year in which NB
Management incurred the expense.
-4-
EXAMPLE
To illustrate the effect of Total Operating Expenses, assume that each
Fund's annual return is 5% and that it had Total Operating Expenses described in
the table above. For every $10,000 invested in each Fund, the following amounts
of total expenses would have been paid if an investor closed his or her account
at the end of each of the following time periods:
NEUBERGER BERMAN 1 YEAR 3 YEARS 5 YEARS 10 YEARS
EQUITY FUNDS
TECHNOLOGY FUND $203 $627 $1078 $1791
CENTURY FUND $153 $474 $ 818 $2327
PRO FORMA COMBINED $153 $474 $818 $1791
The purpose of these tables is to assist an investor in understanding
the various types of costs and expenses that an investor in the combined Fund
will bear, whether directly or indirectly. The assumption in this example of a
5% annual return is required by regulations of the Securities and Exchange
Commission ("SEC") applicable to all mutual funds. THE INFORMATION IN THE
PREVIOUS TABLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR RATES OF RETURN; ACTUAL EXPENSES OR RETURNS MAY BE GREATER OR LESS
THAN THOSE SHOWN.
PURCHASES
Procedures to purchase shares in the two Funds are identical.
Shareholders of each Fund can buy shares directly by mail, wire or telephone or
through an exchange of shares with another Neuberger Berman Fund. Shares are
purchased at the next price calculated on a day the New York Stock Exchange
("NYSE") is open, after a purchase order is received and accepted. Prices for
shares of each Fund are usually calculated as of 4 p.m. Eastern time. For
shareholders purchasing shares of a Fund for the first time, a minimum
investment of $1,000 is required. Each additional purchase of a Fund must be at
least $100, unless the purchase is made by telephone or by exchange. If made by
telephone or by exchanging shares of another Neuberger Berman Fund for shares of
a Fund, an additional purchase must be at least $1,000. An order made by
telephone may be canceled if payment is not received by the third business day
after the order is placed. NB Management, in its discretion, may waive the
minimum investment requirements.
Shares of each Fund may also be purchased indirectly through certain
stockbrokers, banks, and other financial institutions having an arrangement with
the Fund, some of which may charge a fee.
See "Maintaining Your Account" and "Buying Shares" in the Century
Prospectus enclosed herewith and the Trust Prospectus each of which is
incorporated by reference herein for additional information on how shares of
each Fund may be purchased.
-5-
REDEMPTIONS
Rights and procedures to redeem shares in the two Funds are almost
identical. Shareholders of each Fund may sell all or some of their shares at any
time by mail, fax or telephone. If the shareholder holds a certificate for the
shares, shares can be redeemed only by sending the certificate by mail. Shares
may also be sold by exchanging them for shares of another Neuberger Berman Fund.
Technology Fund charges a 2.00% redemption fee on shares redeemed or exchanged
for shares of another fund in 180 days or less of purchase. Century Fund does
not charge a redemption fee.
Usually, redemption proceeds will be mailed on the next business day
following the receipt of a proper redemption request, but in any case within
three business days of such receipt (under unusual circumstances, the Funds may
take longer, as permitted by law). If shares were purchased with a check, each
Fund may delay paying for any redemption until it is reasonably satisfied that
the check used to buy shares has cleared, which may take up to 15 days after the
purchase date. Redemption requests sent by fax are limited to not more than
$50,000. To redeem by telephone, the shares must be worth at least $1,000 unless
closing out the account. If a shareholder's account balance falls below $1,000
because he or she sold shares, each Fund has the right to close the account
after giving the shareholder at least 60 days' written notice to reestablish the
minimum balance.
Shareholders wishing to sell shares held in a retirement account or by
a trust, estate, guardian, or business organization should call 800-877-9700 for
instructions. Shareholders purchasing shares indirectly through certain
stockbrokers, banks, or other financial institutions, may sell those shares only
through those organizations, some of which may charge a fee.
Shares are sold at the next price calculated on a day the NYSE is open,
after the sales order is received and accepted. Prices for shares of each Fund
are usually calculated as of 4 p.m. Eastern time.
See "Maintaining Your Account" and "Selling Shares" in the Century
Prospectus enclosed herewith and the Trust Prospectus each of which is
incorporated by reference herein for additional information on how to redeem
shares held in each Fund.
EXCHANGE PRIVILEGES
Shares of each Fund may be exchanged for shares in another Neuberger
Berman Fund that is eligible for exchange as specified in the Trust SAI under
"Additional Exchange Information." Exchanges may be effected by telephone, by
sending a letter or by fax. See "When You Exchange Shares" in the Century
Prospectus enclosed herewith and the Trust Prospectus each of which is
incorporated by reference herein for restrictions on making such transfers. An
exchange must be for at least $1,000 worth of shares, and if the exchange is a
shareholder's first purchase in another Neuberger Berman Fund, it must be for at
least the minimum initial investment amount for that fund. Shares are exchanged
at the next price calculated on a day the NYSE is open, after the exchange order
is received and accepted.
-6-
See "Maintaining Your Account" and "When You Exchange Shares" in the
Century Prospectus enclosed herewith and the Trust Prospectus each of which is
incorporated by reference herein for additional information on how to exchange
Fund shares.
DIVIDENDS AND OTHER DISTRIBUTIONS
Each Fund distributes substantially all of its net investment income
(net of the Fund's expenses) and any net realized capital gains it earns. Income
dividends and net realized capital gains, if any, are normally distributed
annually in December. Investors who are considering the purchase of Fund shares
in December should take this into account because of the tax consequences of
such distributions. Income dividends for each Fund will accrue beginning on the
day after an investor's purchase order is converted to "federal funds."
All dividends and other distributions paid on shares of each Fund are
automatically reinvested in additional shares of that Fund, unless a shareholder
elects to receive them in cash. Dividends if any are reinvested at Fund's per
share net asset value once a year in December. Each other distribution is
reinvested at Fund's per share net asset value, usually as of the date the
distribution is payable. For retirement accounts, all distributions are
automatically reinvested in shares; when an investor is at least 59-1/2 years
old, he or she can receive distributions in cash without incurring a premature
distribution penalty tax.
Shareholders may elect to receive dividends in cash, with other
distributions being reinvested in additional Fund shares, or they may elect to
receive all dividends and other distributions in cash, by checking the
appropriate election box on the Fund application.
Checks for cash dividends and other distributions usually will be
mailed no later than seven days after the payable date. However, if shares were
purchased with a check, distributions on those shares may not be paid in cash
until the Fund is reasonably satisfied that the check has cleared, which may
take up to 15 days after the purchase date. Cash dividends and other
distributions may be paid through an electronic transfer to a bank account
designated in the Fund application.
Following the Reorganization, Century Fund will continue to honor the
current distribution election of each shareholder of Technology Fund. A
shareholder can change any distribution election by writing to State Street Bank
& Trust Company ("State Street"), the Funds' shareholder servicing agent.
FEDERAL INCOME TAX CONSEQUENCES
The Trust will receive an opinion of Kirkpatrick & Lockhart LLP, its
counsel, to the effect that Technology Fund's transfer of its assets to Century
Fund in exchange solely for the latter's Investor Class shares and its
assumption of Technology Fund's liabilities will qualify as a tax-free
"reorganization" as defined in section 368(a)(1)(C) of the Internal Revenue Code
of 1986, as amended ("Code"). Accordingly, neither Fund nor their shareholders
will recognize any gain or loss as a direct result of the
-7-
Reorganization. See "The Reorganization -- Federal Income Tax Considerations,"
for more information regarding the federal income tax consequences of the
Reorganization.
COMPARISON OF PRINCIPAL RISK FACTORS
Most of the performance of both Technology Fund and Century Fund
depends on what happens in the stock market. The market's behavior is
unpredictable, particularly in the short term and the value of an investment
will rise and fall, sometimes sharply. Also, because the prices of most growth
stocks are based on future expectations, these stocks tend to be more sensitive
than value stocks to bad economic news and negative earnings surprises. Growth
stocks in particular may underperform during periods when the market favors
value stocks. The Funds' performance may also suffer if certain stocks do not
perform as the portfolio managers expected.
By focusing on technology stocks, Technology Fund is more subject to
their risks, including the risk its holdings may:
- - fluctuate more widely and rapidly in price than the market as a whole;
- - underperform other types of stocks or be difficult to sell when the
economy is not robust, during market downturns or when these stocks are
out of favor;
- - be subject to the risk that stocks of companies in inter-related
industries will decline in price due to sector-specific developments;
- - be affected by obsolete technology, expired patents, short product
cycles, price competition, market saturation and new market entrants.
Century Fund is subject to risks associated with investing in large-cap
companies which, at times, may lag behind other types of stocks in performance;
this could cause the Fund to perform worse than certain other funds over a given
time period. Technology Fund, on the other hand, takes on the risks associated
with a type of stock to the extent it invests in that type. For instance,
mid-cap and small-cap stocks tend to be less liquid and more volatile than
large-cap stocks. Smaller companies tend to be unseasoned issuers with new
products and less experienced management and may have greater difficulty
weathering economic downturns.
THE REORGANIZATION
REORGANIZATION PLAN
The terms and conditions under which the Reorganization will be
consummated are set forth in the Plan. Significant provisions of the Plan are
summarized below; however, this summary is qualified in its entirety by
reference to the Plan, the form of which is attached as Appendix A to this
Prospectus and Information Statement.
The Plan contemplates (1) Century Fund's acquiring substantially all of
the assets of Technology Fund in exchange solely for Investor Class shares of
Century Fund and the assumption by Century Fund of all of Technology Fund's
liabilities, if any, as of the Closing Date and (2) the constructive
distribution on the Closing Date of such shares to the shareholders of
Technology Fund.
-8-
The assets of Technology Fund to be acquired by Century Fund will
include all cash, cash equivalents, securities, receivables (including interest
and dividends receivable), deferred or prepaid expenses shown as assets on the
books of Technology Fund and other property of any kind owned by Technology Fund
as of the close of business on the Closing Date ("Effective Time") [The
investment policies and limitations of the two Funds are sufficiently similar
that it will not be necessary for Technology Fund to dispose of any assets or
for Century Fund to dispose of any of the assets it receives from Technology
Fund in order for Century Fund to continue operating within its investment
policies and limitations.] However, sales of certain assets held by Technology
Fund may be necessary or desirable based upon Century Fund's investment strategy
and the market as it exists following the Reorganization. Those sales may result
in the recognition of gains for tax purposes that will have to be distributed
to, and thus taxed to Fund shareholders.
Century Fund will assume all liabilities of Technology Fund, if any.
However, Technology Fund will utilize its best efforts to discharge all of its
known liabilities prior to the Closing Date.
The value of Technology Fund's assets to be acquired and the amount of
its liabilities to be assumed by Century Fund and the net asset value of a share
of Century Fund will be determined as of the close of regular trading on the
NYSE on the Closing Date and will be determined in accordance with the valuation
procedures described in the Funds' then-current Prospectus and Statement of
Additional Information. Securities and other assets for which market quotations
are not readily available will be valued by a method that the Trust's Board of
Trustees believe accurately reflects fair value. All computations described in
this paragraph will be performed by State Street, which serves as custodian and
transfer agent for each Fund, using to the extent possible prices provided by
outside pricing services approved by the Board of Trustees.
As soon as practicable after the Closing Date, Technology Fund will
distribute PRO RATA to its shareholders of record as of the Effective Time the
Investor Class shares of Century Fund it receives in the Reorganization, so that
each shareholder of Technology Fund will receive a number of full and fractional
Investor Class shares of Century Fund equal in value to the shareholder's
Technology Fund shares. Technology Fund will be dissolved as soon as practicable
thereafter. Such distribution will be accomplished by opening accounts on the
books of Century Fund in the names of Technology Fund shareholders and by
transferring to these accounts the Investor Class shares of Century Fund
previously credited to the account of Technology Fund on those books. Each
shareholder account shall be credited with the PRO RATA number of Century Fund's
Investor Class shares due to that shareholder. Fractional shares of Century Fund
will be rounded to the third decimal place.
Accordingly, immediately after the Reorganization, each former
shareholder of Technology Fund Investor Class shares will own Investor Class
shares of Century Fund equal to the value of that shareholder's Technology Fund
shares immediately prior to the Reorganization. Moreover, because Investor Class
shares of Century Fund will be issued at net asset value in exchange for the net
assets of Technology Fund that will equal the aggregate value of those shares,
the net asset value per share of Century Fund will be unchanged. Thus, the
Reorganization will not result in a dilution of the value of any shareholder
account in either Fund. However, in general, the Reorganization will
substantially reduce the percentage ownership of each Technology Fund
shareholder below such shareholder's current percentage ownership in Technology
Fund because, while the
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shareholder will have the same dollar amount invested initially in Century Fund
that he or she had invested in Technology Fund, his or her investment will
represent a smaller percentage of the combined net assets of the Funds.
Any transfer taxes payable on issuance of Investor Class shares of
Century Fund in a name other than that of the registered holder of the shares on
the books of Technology Fund as of the time of transfer will be paid by the
person to whom those shares are to be issued as a condition of the transfer. Any
reporting responsibility of Technology Fund will continue to be its
responsibility up to and including the Closing Date and thereafter until it is
dissolved.
The consummation of the Reorganization is subject to a number of
conditions set forth in the Plan. The Plan may be terminated and the
Reorganization abandoned at any time prior to the Closing Date by the Board of
Trustees if it determines that the Reorganization would be inadvisable for
either Fund. The Board of Trustees also may amend the Plan in any manner that
does not have a material adverse effect on Technology Fund's shareholders'
interests. The Trust's officers may change the Closing Date.
REASONS FOR THE REORGANIZATION
At a telephonic meeting held on April 17, 2002, the Board of Trustees,
including a majority of the Independent Trustees, determined that the
Reorganization is in the best interests of Technology Fund and Century Fund,
respectively, and that the interests of shareholders in Technology Fund and
Century Fund, respectively, will not be diluted as a result of the
Reorganization. In recommending the Reorganization, NB Management indicated that
the Reorganization would eliminate the expense of maintaining Technology Fund as
a separate series of the Trust (I.E., fund accounting, legal, audit, shareholder
reporting, custodial expenses, etc.), producing economies of scale in Century
Fund and making it more marketable, and eliminating the need for further expense
reimbursements with respect to Technology Fund.
In considering the Reorganization, the Board of Trustees considered the
following factors, among others:
(1) the small asset base of Technology Fund and its failure to
attract new assets;
(2) the effect of the Reorganization will be to place Technology
Fund shareholders' assets in another Neuberger Berman Fund having the
most nearly similar investment strategy with a minimum of
administrative burden to shareholders;
(3) the Reorganization will be tax-neutral to investors;
(4) the compatibility of the different investment objectives and
strategies of Technology Fund and Century Fund, as a result of which
the portfolio resulting from the proposed transactions is not expected
to require any significant restructuring;
(5) the Funds' historical performance records and risk/reward
ratios, expense ratios, past growth in assets, and their future
prospects;
(6) alternatives to the proposed transactions, including simple
liquidation of the Technology Fund or maintaining the status quo;
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(7) the effect of the Reorganization on the expense ratio of
Century Fund, namely, that the Reorganization will permit the fixed
costs of Century Fund to be spread over a larger asset base,
effectively bringing the assets of that Fund closer to the point where
expenses borne by each shareholder will be reduced, based upon the
Fund's current fee structure;
(8) NB Management, as administrator of the Funds, has capped the
expenses of each participating Fund, and would thus bear much of the
cost of the Reorganization;
(9) the benefit to NB Management due to the elimination of the
need to reimburse Technology Fund for expenses exceeding 2.00%;
(10) the potential benefit to NB Management due to the possible
decrease in the expenses of Century Fund, and
(11) the benefit to Technology Fund shareholders of investing in a
Fund that does not impose a redemption fee.
DESCRIPTION OF THE SECURITIES TO BE ISSUED
The Trust is registered with the SEC as an open-end management
investment company, and its Trustees are authorized to issue an unlimited number
of shares of beneficial interest in each separate series (par value $0.001 per
share). Shares of each Fund represent equal proportionate interests in the
assets of that Fund only and have identical voting, dividend, redemption,
liquidation and other rights. All shares issued are fully paid and
non-assessable, and shareholders have no preemptive or other rights to subscribe
to any additional shares.
The Trust's Board of Trustees does not intend to hold annual meetings
of shareholders of the Funds. The Trustees will call special meetings of the
shareholders of a Fund only if required under the 1940 Act or in their
discretion or upon the written request of holders of 10% or more of the
outstanding shares of that Fund entitled to vote.
Under Delaware law, the shareholders of a Fund will not be personally
liable for the obligations of any Fund; a shareholder is entitled to the same
limitation of personal liability extended to shareholders of a corporation. To
guard against the risk that Delaware law might not be applied in other states,
the Trust Instrument of the Trust requires that every written obligation of the
Trust or a Fund contain a statement that such obligation may be enforced only
against the assets of the Trust or a specific Fund and provides for
indemnification out of Trust or Fund property of any shareholder nevertheless
held personally liable for Trust or Fund obligations, respectively.
FEDERAL INCOME TAX CONSIDERATIONS
The exchange of Technology Fund's assets for Century Fund's Investor
Class shares and the latter's assumption of Technology Fund's liabilities is
intended to qualify for federal income tax purposes as a tax-free reorganization
under section 368(a)(1)(C) of the Code. The Trust will receive an opinion of
Kirkpatrick & Lockhart LLP, its counsel ("Opinion"), substantially to the effect
that:
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(1) Century Fund's acquisition of Technology Fund's assets in
exchange solely for Century Fund Investor Class shares and the latter's
assumption of Technology Fund's liabilities, followed by Technology
Fund's distribution of those shares to its shareholders constructively
in exchange for their Technology Fund shares, will qualify as a
"reorganization" as defined in 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;
(2) Technology Fund will recognize no gain or loss on the transfer
to Century Fund will recognize no gain or loss of its assets in
exchange solely for Investor Class shares of Century Fund and the
latter's assumption of Technology Fund's liabilities or on the
subsequent distribution of those shares to Technology Fund's
shareholders in constructive exchange for their Investor Class shares
of the Technology Fund;
(3) Century Fund will recognize no gain or loss recognize no gain
or loss on its receipt of the transferred assets in exchange solely for
Investor Class shares and its assumption of Technology Fund's
liabilities;
(4) Century Fund's basis in the transferred assets will be the
same as Technology Fund's basis therein immediately before the
Reorganization, and Century Fund's holding period for those assets will
include Technology Fund's holding period therefor;
(5) A Technology Fund shareholder will recognize no gain or loss
on the constructive exchange of all its Investor Class shares of
Technology Fund solely for Investor Class shares of Century Fund
pursuant to the Plan; and
(6) A Technology Fund shareholder's aggregate basis in the Century
Fund shares it receives in the Reorganization will be the same as the
aggregate basis in its Technology Fund shares it constructively
surrenders in exchange for those Century Fund shares, and its holding
period for those Century Fund shares will include its holding period
for those Technology Fund shares, provided the shareholder held them as
capital assets at the Effective Time.
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The 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.
Utilization by Century Fund after the Reorganization of
Pre-Reorganization capital losses Technology Fund realized could be subject to
limitation in future years under the Code.
Shareholders of Technology Fund should consult their tax advisers
regarding the effect, if any, of the Reorganization in light of their individual
circumstances. Because the foregoing discussion only relates to the federal
income tax consequences of the Reorganization, those shareholders also should
consult their tax advisers as to state and local tax consequences, if any, of
the Reorganization.
CAPITALIZATION
The following table shows the capitalization of Century Fund and
Technology Fund as of February 28, 2002 and the pro forma combined
capitalization of both Funds as if the Reorganization had occurred on that date.
CENTURY TECHNOLOGY PRO FORMA
FUND FUND COMBINED
Net Assets (000) $15,356 $7,172 $22,528
Net Asset Value per share $6.26 $3.05 $6.26
Shares Outstanding (000) 2,454 2,353 3,600
ADDITIONAL INFORMATION ABOUT CENTURY FUND
FINANCIAL HIGHLIGHTS
For a table of the financial highlights of Century Fund, see "Financial
Highlights" in the Century Prospectus enclosed herewith and incorporated by
reference herein. The most recent financial highlights of Century Fund included
in the Trust's Semi-Annual Report to Shareholders for the period ended February
28, 2002, are attached as Appendix B. This information is derived from and
should be read in conjunction with the financial statements of Century Fund and
notes thereto, included in the Trust's Annual Report to Shareholders for the
period ended August 31, 2001 which are incorporated by reference into the SAI
together with the report of the independent auditors, KPMG LLP, thereon.
INVESTMENT OBJECTIVE AND POLICIES
For a discussion of Century Fund's investment objective and policies
and the risk factors associated with an investment in the Fund in addition to
that included in this Prospectus and Information Statement, see "Goal &
Strategy" and "Main Risks" in the Century Prospectus enclosed herewith and
incorporated by reference herein.
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INVESTMENT MANAGER, SUBADVISER AND PORTFOLIO MANAGER
For a discussion of Century Fund's investment manager, subadviser and
portfolio manager, see "Management" in the Century Prospectus enclosed herewith
and incorporated by reference herein.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
See Attachment C for management's discussion of the performance of
Century Fund as included in the Trust's Annual Report to Shareholders dated
August 31, 2001 and Semi-Annual Report to Shareholders dated February 28, 2002
and the material factors affecting this performance.
CENTURY FUND SHARES
For a discussion of Century Fund's shares, including voting rights and
exchange rights, and how the shares may be purchased and redeemed, in addition
to that included in this Prospectus and Information Statement, see "Maintaining
Your Account," "Buying Shares" and "Selling Shares" in the Century Prospectus
enclosed herewith and incorporated by reference herein.
TAXES, DIVIDENDS AND OTHER DISTRIBUTIONS
For a discussion of Century Fund's policy with respect to dividends and
other distributions and the tax consequences of an investment in its shares in
addition to that included in this Prospectus and Information Statement, see
"Distributions and Taxes" in the Century Prospectus enclosed herewith and
incorporated by reference herein.
ADDITIONAL INFORMATION ABOUT TECHNOLOGY FUND
FINANCIAL HIGHLIGHTS
For a table of the financial highlights of Technology Fund, see
"Financial Highlights" in the Trust Prospectus incorporated by reference herein.
The most recent financial highlights of Technology Fund included in the Trust's
Semi-Annual Report to Shareholders for the period ended February 28, 2002, are
attached as Appendix B. This information is derived from and should be read in
conjunction with the financial statements of Technology Fund and notes thereto,
included in the Trust's Annual Report to Shareholders for the period ended
August 31, 2001 which are incorporated by reference into the SAI together with
the report of the independent auditors, KPMG LLP, thereon.
INVESTMENT OBJECTIVE AND POLICIES
For a discussion of Technology Fund's investment objective and policies
and the risk factors associated with an investment in the Fund in addition to
that included in this Prospectus and Information Statement, see "Goal &
Strategy" and "Main Risks" in the Trust Prospectus incorporated by reference
herein.
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INVESTMENT MANAGER, SUBADVISER AND PORTFOLIO MANAGEMENT TEAM
For a discussion of Technology Fund's investment manager, subadviser
and portfolio management team, see "Management" in the Trust Prospectus
incorporated by reference herein.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
See Attachment C for management's discussion of the performance of
Technology Fund as included in the Trust's Annual Report to Shareholders dated
August 31, 2001 and Semi-Annual Report to Shareholders dated February 28, 2002
and the material factors affecting this performance.
TECHNOLOGY FUND SHARES
For a discussion of Technology Fund's shares, including voting rights
and exchange rights, and how the shares may be purchased and redeemed, in
addition to that included in this Prospectus and Information Statement, see
"Maintaining Your Account," "Buying Shares" and "Selling Shares" in the Trust
Prospectus incorporated by reference herein.
TAXES, DIVIDENDS AND OTHER DISTRIBUTIONS
For a discussion of Technology Fund's policy with respect to dividends
and other distributions and the tax consequences of an investment in its shares,
in addition to that included in this Prospectus and Information Statement, see
"Distributions and Taxes" in the Trust Prospectus incorporated by reference
herein.
INFORMATION REGARDING FIVE PERCENT SHARE OWNERSHIP AND
INTERESTS OF AFFILIATED PERSONS
FIVE PERCENT HOLDERS
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On April 15, 2002 there were no beneficial or record owners of more
than 5% of Century Fund or Technology Fund.
SHARES HELD BY OFFICERS AND DIRECTORS
On April 15, 2002, the trustees and officers of the Trust, as a group,
owned beneficially or of record less than 1% of the outstanding shares of each
Fund.
INTERESTS OF AFFILIATED PERSONS
NB Management, the investment manager, administrator and distributor of
the Funds may be deemed to benefit from the Reorganization, because the
combination of the Funds will eliminate expenses, such as fund accounting,
legal, and shareholder reporting, and custodial expenses, that are involved in
maintaining Technology Fund as a separate series of the Trust. NB Management
anticipates that this will produce economies of scale in Century Fund and make
Century Fund more marketable, as well as eliminate the need for further expense
reimbursements with respect to Technology Fund. The SEC staff has concluded that
such benefits are fully compatible with Rule 17a-8 under the 1940 Act, which is
the principal rule governing mutual fund combinations.
MISCELLANEOUS
AVAILABLE INFORMATION
The Trust and each series thereof are subject to the informational
requirements of the Securities Exchange Act of 1934 and the 1940 Act and in
accordance therewith files reports, proxy material and other information with
the SEC. Such reports, proxy material and other information can be inspected and
copied at the Public Reference Facilities maintained by the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the SEC's regional offices in New
York (233 Broadway, New York, New York 10279). Copies of such material also can
be obtained at prescribed rates from the Public Reference Branch, Office of
Consumer Affairs and Information Services, Securities and Exchange Commission,
450 Fifth Street, N.W., Washington, D.C. 20549.
LEGAL MATTERS
Certain legal matters in connection with the issuance of Century Fund
shares as part of the Reorganization will be passed upon by Kirkpatrick &
Lockhart LLP, counsel to the Trust.
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EXPERTS
The audited financial statements of Century Fund and Technology Fund,
incorporated by reference in the Statement of Additional Information, for dates
prior to fiscal year 2001 have been audited by PricewaterhouseCoopers LLP, the
Funds' previous independent accountants. Financial statements for fiscal year
2001 have been audited by KPMG LLP, the Funds' independent auditors, to the
extent indicated in their reports thereon which are included in the Annual
Report to shareholders of Century Fund and Technology Fund for the fiscal year
ended August 31, 2001. The financial statements of Century Fund and Technology
Fund audited by PricewaterhouseCoopers LLP for dates prior to fiscal year 2001
and by KPMG LLP for fiscal year 2001 have been incorporated by reference in the
Statement of Additional Information in reliance on their reports given on their
authority as experts in auditing and accounting.
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APPENDIX A
FORM OF PLAN OF REORGANIZATION AND TERMINATION
THIS PLAN OF REORGANIZATION AND TERMINATION ("Plan"), effective as of
_____, 2002, is adopted by Neuberger Berman Equity Funds, a Delaware business
trust ("Trust"), on behalf of Neuberger Berman Century Fund ("Acquiring Fund")
and Neuberger Berman Technology Fund ("Target"), each a segregated portfolio of
assets ("series") thereof (each a "Fund").
Trust wishes to effect a reorganization described in section 368(a)(1)(C)
of the Internal Revenue Code of 1986, as amended ("Code"), and intends this Plan
to be, and adopts it as, a "plan of reorganization" within the meaning of the
regulations under the Code ("Regulations"). The reorganization will involve the
transfer of Target's assets to Acquiring Fund in exchange solely for voting
shares of beneficial interest in Acquiring Fund ("Acquiring Fund Shares") and
Acquiring Fund's assumption of Target's liabilities, followed by the
constructive distribution of those shares pro rata to the holders of shares of
beneficial interest in Target ("Target Shares") in exchange therefor, all on the
terms and conditions set forth herein. The foregoing transactions are referred
to herein collectively as the "Reorganization."
Trust is a business trust that is duly organized, validly existing, and in
good standing under the laws of the State of Delaware, and a copy of its Trust
Instrument ("Trust Instrument") is on file with the Secretary of the State of
Delaware. Trust is duly registered as an open-end management investment company
under the Investment Company Act of 1940, as amended ("1940 Act"). Before
January 1, 1997, Trust "claimed" classification for federal tax purposes as an
association taxable as a corporation, and it has never elected otherwise.
Each Fund is a duly established and designated series of Trust and has a
single class of shares, which are substantially similar to each other.
1. PLAN OF REORGANIZATION AND TERMINATION
--------------------------------------
1.1. At the Closing (as defined in paragraph 3.1), Target shall assign,
sell, convey, transfer, and deliver all of its assets described in paragraph 1.2
("Assets") to Acquiring Fund. In exchange therefor, Acquiring Fund shall --
(a) 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) assume all of Target's liabilities described in paragraph 1.3
("Liabilities").
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 Plan. 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 it receives
pursuant to paragraph 1.1 to its 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 Trust'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 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.
A-2
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 the Funds' then-current prospectus and
statement of additional information ("P/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 the P/SAI.
2.3. All computations pursuant to paragraphs 2.1 and 2.2 shall be made by
or under the direction of Neuberger Berman Management Incorporated ("NB
Management").
3. CLOSING AND EFFECTIVE TIME
--------------------------
3.1. The Reorganization, together with related acts necessary to
consummate the same ("Closing"), shall occur at Trust's principal office on or
about August 5, 2002, or at such other place and/or on such other date Trust
determines. 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 Trust determines ("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 has been fully resumed and
that reporting has been restored.
3.2. 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.
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.
Trust's transfer agent shall deliver at the Closing a certificate as to the
opening of accounts in the Shareholders' names on Acquiring Fund's share
transfer books and a confirmation, or other evidence satisfactory to Trust, that
the Acquiring Fund Shares to be credited to Target at the Effective Time have
been credited to Target's account on Acquiring Fund's books.
4. CONDITIONS PRECEDENT
4.1. Trust's obligation to implement this Plan on Acquiring Fund's behalf
shall be subject to satisfaction of the following conditions at or before the
Effective Time:
A-3
4.1.1. 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 (except
securities that are subject to "securities loans" as referred to in
section 851(b)(2) of the Code); and on delivery and payment for the
Assets, Acquiring Fund will acquire good and marketable title thereto;
4.1.2. 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;
4.1.3. Target is not in violation of, and the adoption of this Plan
and consummation of the transactions contemplated hereby will not conflict
with or violate, Delaware law or any provision of the Trust Instrument or
Trust's By-Laws 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;
4.1.4. All material contracts and other commitments of or applicable
to Target (other than this Plan 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;
4.1.5. No litigation, administrative proceeding, or investigation of
or before any court or governmental body is presently pending or (to
Trust's knowledge) threatened against 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 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;
4.1.6. Target incurred the Liabilities in the ordinary course of its
business;
4.1.7. 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
A-4
accumulated in any taxable year in which the provisions of Subchapter M
did not apply to it;
4.1.8. Target is not under the jurisdiction of a court in a "title 11
or similar case" (as defined in section 368(a)(3)(A) of the Code);
4.1.9. During the five-year period ending at the Effective Time, (a)
neither Target nor any person "related" (within the meaning of section
1.368-1(e)(3) of the Regulations) to it will have acquired Target Shares,
either directly or through any transaction, agreement, or arrangement with
any other person, 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 section 22(e) of the 1940 Act, and (b) no distributions will
have been made with respect to Target Shares, other than normal, regular
dividend distributions made pursuant to Target's historic dividend-paying
practice that qualify for the deduction for dividends paid (within the
meaning of section 561 of the Code) referred to in sections 852(a)(1) and
4982(c)(1)(A) of the Code;
4.1.10. Not more than 25% of the value of Target's total assets
(excluding cash, cash items, and U.S. government securities) is invested
in the stock and securities of any one issuer, and not more than 50% of
the value of such assets is invested in the stock and securities of five
or fewer issuers; and
4.1.11. 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 August 31, 2001, have been timely filed and all taxes
payable pursuant to those returns have been timely paid.
4.2. Trust's obligation to implement this Plan on Target's behalf shall be
subject to satisfaction of the following conditions at or before the Effective
Time:
4.2.1. 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;
4.2.2. 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;
4.2.3. 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;
A-5
4.2.4. Acquiring Fund is not in violation of, and the adoption of
this Plan and consummation of the transactions contemplated hereby will
not conflict with or violate, Delaware law or any provision of the Trust
Instrument or Trust's By-Laws or 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;
4.2.5. No litigation, administrative proceeding, or investigation of
or before any court or governmental body is presently pending or (to
Trust's knowledge) threatened against Trust 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 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;
4.2.6. 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;
4.2.7. 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 it,
have any plan or intention to acquire -- during the five-year period
beginning at the Effective Time, either directly or through any
transaction, agreement, or arrangement with any other person -- with
consideration other than Acquiring Fund Shares, any Acquiring Fund Shares
issued to the Shareholders pursuant to the Reorganization, except for
redemptions in the ordinary course of such business as required by section
22(e) of the 1940 Act;
4.2.8. 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) and (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; moreover, Acquiring Fund (c) 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, and (d) expects to retain
substantially all the Assets in the same form as it receives them in the
Reorganization, unless and until subsequent investment circumstances
A-6
suggest the desirability of change or it becomes necessary to make
dispositions thereof to maintain such status;
4.2.9. 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 (as defined in section 851(g)(2) of the Code) following the
Reorganization;
4.2.10. 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;
4.2.11. During the five-year period ending at the Effective Time,
neither Acquiring Fund nor any person "related" (within the meaning of
section 1.368-1(e)(3) of the Regulations) to it will have acquired Target
Shares with consideration other than Acquiring Fund Shares;
4.2.12. Immediately after the Reorganization, (a) not more than 25%
of the value of Acquiring Fund's total assets (excluding cash, cash items,
and U.S. government securities) will be invested in the stock and
securities of any one issuer and (b) not more than 50% of the value of
such assets will be invested in the stock and securities of five or fewer
issuers;
4.2.13. 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 August 31, 2001, have been timely filed
and all taxes payable pursuant to such returns have been timely paid; and
4.2.14. If the Reorganization is consummated, Acquiring Fund will
treat each Shareholder that receives Acquiring Fund Shares in connection
with the Reorganization as having made a minimum initial purchase of such
shares for the purpose of making additional investments therein,
regardless of the value of the shares so received.
4.3. Trust's obligation to implement this Plan on each Fund's behalf shall
be subject to satisfaction of the following conditions at or before the
Effective Time:
4.3.1. The fair market value of the Acquiring Fund Shares each
Shareholder receives will be approximately equal to the fair market value
of its Target Shares it constructively surrenders 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 they receive 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
A-7
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 the foregoing, any amounts Target uses 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) will be included as assets held thereby
immediately before the Reorganization;
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 that Shareholder held; none
of the Acquiring Fund Shares any such Shareholder receives 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" (as defined in section 304(c) of the
Code) of Acquiring Fund;
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) ("Reorganization Expenses");
A-8
4.3.10. The aggregate value of the acquisitions, redemptions, and
distributions limited by paragraphs 4.1.9, 4.2.7, and 4.2.11 will not
exceed 50% of the value (without giving effect to such acquisitions,
redemptions, and distributions) of the proprietary interest in Target at
the Effective Time;
4.3.11. This Plan has been duly authorized by all necessary action on
the part of Trust's board of trustees, which has made the determinations
required by Rule 17a-8(a) under the 1940 Act; and this Plan constitutes a
valid and legally binding obligation of each 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;
4.3.12. 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 Trust's adoption of
this Plan, except for (a) the filing with the Securities and Exchange
Commission ("SEC") of a registration statement by Trust on Form N-14
relating to the Acquiring Fund Shares issuable hereunder, and any
supplement or amendment thereto ("Registration Statement"), including
therein a prospectus and information statement ("Prospectus/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;
4.3.13. On the effective date of the Registration Statement and at
the Effective Time, the Prospectus/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;
4.3.14. All necessary filings will have been made with the SEC and
state securities authorities, and no order or directive will 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 will have become effective under the 1933 Act, no
stop orders suspending the effectiveness thereof will have been issued,
and the SEC will 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) Trust deems necessary
to permit consummation, in all material respects, of the transactions
contemplated hereby will have been obtained, except where failure to
obtain same would not involve a risk of a material adverse effect on the
assets or properties of either Fund;
4.3.15. At the Effective Time, no action, suit, or other proceeding
will 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
A-9
connection with, the transactions contemplated hereby;
4.3.16. Trust will have received an opinion of Kirkpatrick & Lockhart
LLP ("Counsel") substantially to the effect that:
(a) Each Fund is a duly established series of Trust, a business
trust that is duly organized, validly existing, and in good standing
under the laws of the State of Delaware with power under the Trust
Instrument to own all its properties and assets and, to Counsel's
knowledge, to carry on its business as presently conducted;
(b) This Plan (1) has been duly authorized and adopted by Trust
on behalf of each Fund and (2) is a valid and legally binding
obligation of Trust with respect to each 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;
(c) The Acquiring Fund Shares to be issued and distributed to
the Shareholders under this Plan, assuming their due delivery as
contemplated hereby, will be duly authorized and validly issued and
outstanding and fully paid and non-assessable;
(d) The adoption of this Plan did not, and the consummation of
the transactions contemplated hereby will not, materially violate any
provision of the Trust Instrument or Trust's By-Laws or of any
agreement (known to Counsel, without any independent inquiry or
investigation) to which Trust (with respect to either Fund) is a
party or by which it is bound or (to Counsel's knowledge, 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 Trust (with respect to either
Fund) is a party or by which it is bound, except as set forth in such
opinion;
(e) To Counsel's knowledge (without any independent inquiry or
investigation), no consent, approval, authorization, or order of any
court or governmental authority is required for the consummation by
Trust on behalf of either Fund of the transactions contemplated
herein, except such as have been obtained under the 1933 Act, the
1934 Act, and the 1940 Act and such as may be required under state
securities laws;
(f) Trust is registered with the SEC as an investment company,
and to Counsel's knowledge no order has been issued or proceeding
instituted to suspend such registration; and
(g) To Counsel's knowledge (without any independent inquiry or
investigation), (1) no litigation, administrative proceeding, or
investigation of or before any court or governmental body is pending
A-10
or threatened as to Trust (with respect to either Fund) or any of its
properties or assets attributable or allocable to either Fund and (b)
Trust (with respect to each 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 either Fund's
business, except as set forth in such opinion.
In rendering such 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 Plan and the Reorganization;
and
4.3.17. Trust will 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 assume satisfaction of all the conditions set
forth in this paragraph 4, may treat them as representations and
warranties Trust made to Counsel, and may rely as to factual matters,
exclusively and without independent verification, on such representations
and warranties. 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 Plan, for
federal income tax purposes:
(a) 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" as defined in
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;
(b) 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;
(c) 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;
(d) 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;
A-11
(e) 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
(f) A Shareholder's aggregate basis in the Acquiring Fund Shares
it receives in the Reorganization will be the same as the aggregate
basis in its Target Shares it constructively surrenders 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 (b) and (d), 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.
4.4. At any time before the Closing, Trust may waive any of the conditions
set forth in this paragraph 4 if, in the judgment of its board of trustees, that
waiver will not have a material adverse effect on either Fund's shareholders'
interests.
5. TERMINATION AND AMENDMENT OF PLAN
---------------------------------
5.1. Trust's trustees may terminate this Plan and abandon the
Reorganization at any time prior to the Effective Time if circumstances develop
that, in their judgment, make proceeding with the Reorganization inadvisable for
either Fund.
5.2. Trust's trustees may amend, modify, or supplement this Plan at any
time in any manner; provided that no such amendment, modification, or supplement
shall have a material adverse effect on the Shareholders' interests.
6. MISCELLANEOUS
-------------
6.1. This Plan 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.
6.2. Each Fund shall bear a proportionate part of the total Reorganization
Expenses (except to the extent that they are reimbursable by NB Management, the
Funds' administrator and investment manager).
6.3. 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
Funds and their respective successors and assigns any rights or remedies under
or by reason of this Plan.
6.4. Notice is hereby given that this instrument is adopted on behalf of
Trust's trustees solely in their capacities as trustees, and not individually,
and that Trust's obligations under this instrument are not binding on or
A-12
enforceable against any of its trustees, officers, or shareholders or any series
of Trust other than the Funds but are only binding on and enforceable against
the respective Funds' property. Each Fund, in asserting any rights or claims
under this Plan, shall look only to the other Fund's property in settlement of
such rights or claims and not to such trustees, officers, or shareholders.
A-13
APPENDIX B
FINANCIAL HIGHLIGHTS
(FROM NEUBERGER BERMAN EQUITY FUNDS ANNUAL REPORT
TO SHAREHOLDERS DATED FEBRUARY 28, 2002)
FINANCIAL HIGHLIGHTS CENTURY FUND
The following table includes selected data for a share outstanding
throughout each period and other performance information derived from the
Financial Statements.@
INVESTOR CLASS+
PERIOD FROM
SIX MONTHS YEAR DECEMBER 6,
ENDED ENDED 1999^
FEBRUARY 28, AUGUST 31, TO AUGUST 31
----------------------- ------------------ --------------------
2002 2001 2000
(UNAUDITED)
NET ASSET VALUE, BEGINNING OF PERIOD $ 6.50 $ 13.44 $ 10.00
------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.03) (.08) (.05)
NET GAINS OR LOSSES ON SECURITIES (BOTH
REALIZED AND UNREALIZED) (.21) (6.86) 3.49
--------- --------- --------
TOTAL FROM INVESTMENT OPERATIONS (.24) (6.94) 3.44
--------- --------- --------
NET ASSET VALUE, END OF PERIOD $ 6.26 $ 6.50 $13.44
------- ------- ------
TOTAL RETURN++ -3.85%** -51.60% +34.40%**
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (IN MILLIONS) $15.4 $17.5 $43.6
RATIO OF GROSS EXPENSES TO AVERAGE NET
ASSETS# 1.51%* 1.50% 1.50%*
RATIO OF NET EXPENSES TO AVERAGE NET
ASSETS++ 1.51%* 1.50% 1.50%*
RATIO OF NET INVESTMENT INCOME (LOSS) TO
AVERAGE NET ASSETS (.89%)* (.86%) (.81%)*
PORTFOLIO TURNOVER RATE 62% 107% 65%
- -------------------
See Notes to Financial Highlights.
-B-1 -
FINANCIAL HIGHLIGHTS TECHNOLOGY FUND
- ------------------------------------
The following table includes selected data for a share outstanding
throughout each period and other performance information derived from the
Financial Statements.@
INVESTOR CLASS+
PERIOD FROM
SIX MONTHS ENDED YEAR ENDED MAY 1, 2000^
FEBRUARY 28, AUGUST 31, TO AUGUST 31
--------------------------- ------------------ -------------------
2002 2001 2000
(UNAUDITED)
NET ASSET VALUE, BEGINNING OF PERIOD $ 3.61 $ 12.16 $ 10.00
------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.03) (.09) (.01)
NET GAINS OR LOSSES ON SECURITIES
(BOTH REALIZED AND UNREALIZED) (.53) (8.44) 2.17
--------- --------- --------
TOTAL FROM INVESTMENT OPERATIONS (.56) (8.53) 2.16
--------- --------- --------
LESS DISTRIBUTIONS
FROM NET CAPITAL GAINS - (.02) -
-------- --------- --------
NET ASSET VALUE, END OF PERIOD $ 3.05 $ 3.61 $12.16
------- ------- ------
TOTAL RETURN++ -15.51%** -70.24% +21.60%**
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (IN MILLIONS) $ 7.2 $ 9.0 $22.0
RATIO OF GROSS EXPENSES TO AVERAGE NET
ASSETS# 2.02%* 2.00% 2.00%*
RATIO OF NET EXPENSES TO AVERAGE NET
ASSETS++ 2.01%* 2.00% 2.00%*
RATIO OF NET INVESTMENT INCOME (LOSS) TO
AVERAGE NET ASSETS (1.84%)* (1.45%) (.12%)**
PORTFOLIO TURNOVER RATE 172% 234% 55%
NOTES TO FINANCIAL HIGHLIGHTS EQUITY FUNDS
- ------------------------------------------
+ The per share amounts and ratios which are shown reflect income and
expenses, including the Fund's proportionate share of its corresponding
Portfolio's income and expenses through December 15, 2000 under the
prior master/feeder fund structure.
++ Total return based on per share net asset value reflects the effects of
changes in net asset value on the performance of each Fund during each
fiscal period and assumes dividends and other distributions, if any,
were reinvested. Results represent past performance and do not
guarantee future results. Investment returns and principal may
fluctuate and shares when redeemed may be worth more or less than
original cost. Total return would have been lower if Management had not
reimbursed certain expenses.
-B-2-
# The Fund is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset
arrangements.
^ The date investment operations commenced.
@ The per share amounts which are shown for the periods ended August 31,
2001 and thereafter, have been computed based on the average number of
shares outstanding during each fiscal period.
* Annualized.
** Not annualized.
++ After reimbursement of expenses by Management. Had Management not
undertaken such action the annualized ratios of net expenses to average
daily net assets would have been:
SIX MONTHS
ENDED
FEBRUARY 28, YEAR ENDED AUGUST 31,
2002 2001 2000 1999 1998 1997
Century Fund 2.39% 1.80% 1.76%(1) - - -
Investor Class
Technology Fund 3.80% 2.60% 3.92%(2) - - -
Investor Class
(1) Period from December 6, 1999 to August 31, 2000.
(2) Period from May 1, 2000 to August 31, 2000.
-B-3-
APPENDIX C-1
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
(FROM NEUBERGER BERMAN EQUITY FUNDS ANNUAL REPORT
TO SHAREHOLDERS DATED AUGUST 31, 2001)
CENTURY FUND PORTFOLIO COMMENTARY
- ---------------------------------
In fiscal 2001, growth materially underperformed value in the large-cap
sector. The Russell 1000 Growth Index fell sharply, while the Russell 1000 Value
Index finished with a very modest decline. Technology stocks suffered the
highest casualty rate in the growth stock massacre, with the tech component of
the Russell 1000 Growth Index falling precipitously.
Why did value outperform growth by such a wide margin? Macroeconomic
trends (the rapidly decelerating economy an corporate earnings slowdown), and
specific technology industry trends (the sharp decline in information technology
and communications technology spending) undermined short-term fundamentals.
Slower earnings growth, combined with lower earnings visibility (or the
predictability of future results, hampered by the current uncertain economic
environment), caused investors to abandon growth stocks in favor of more
defensive value sectors. In the process, price/earnings multiples contracted
substantially, compounding the pain for growth stock investors.
Value investing often gains the upper hand during periods of economic
and market uncertainty. However, we are a bit confounded that investors have
become so enamored of the kind of slow growth companies that underperformed for
so long. We are also somewhat taken aback by the severity of the growth stock
bear market. Some of the great growth franchises in America - companies that are
industry powerhouses and we believe present exceptional long-term investment
opportunity - have lost half of their market value or more in one short year.
Technology - in our opinion, still the most dynamic growth industry in the
economy - has been beaten senseless and left for dead. We believe the silver
lining within the current growth stock cloud is that prices relative to
long-term earnings growth prospects are every bit as attractive as they were
prior to the great growth stock bull market of 1997-99.
In fiscal 2001, we continued to do a relatively good job of identifying
stocks that met or exceeded consensus earnings expectations; over 90% of the
portfolio fit this description, as of the last reported quarter (2nd quarter
calendar 2001). However, those that "missed their numbers" took a heavy toll on
performance. The portfolio was also hurt by companies that met consensus
estimates but warned that future quarters' results would not be as good as
expected. In addition, we had our share of "damned if you do" stocks: companies
- -------------------
Because of the extraordinary and tragic events of September 11, 2001, short
term market activity since August 31, 2001 has been highly volatile, and as a
result current performance may be less than that shown.
Please see Endnotes for additional information.
-C-1-
that hit estimates and announced that they expected to sustain earnings growth
in the coming quarters, but which were in industry groups that investors wanted
nothing to do with. However, by far the most significant impact on portfolio
performance came from slowing earnings. Over the last year, the portfolio's
earnings growth rate dropped from approximately 45% to about 20% - still
impressive in this moribund economy, but not strong enough to support valuations
based on faster earnings growth.
We did have some portfolio winners. Branded consumer-goods holdings
such as Pepsico and Anheuser Busch posted strong returns. Our investment in
specialty pharmaceutical company Forest Labs rewarded us. In general, technology
was our albatross and our biotechnology investments also disappointed. Although
cautious, we are not giving up on either group. We think tech spending and
earnings will rebound with the economy and that the biotechnology pipeline is
filled with promising new drugs, whose approval has been delayed by the current
void at the head of the Food and Drug Administration.
Looking forward, investors will have to cope with two issues. First and
foremost is the economic impact of the terrorist attacks on America and our
nation's possible response. As I write - just a week after this horrible tragedy
- - it is virtually impossible to predict what the immediate future holds. By the
time you read this report, the economic and market picture may be clearer and
we, as managers, will have responded to changing conditions.
The second issue, but one that will have a greater impact on Americans'
financial lives over the long term, is confidence in the economy and financial
markets. It is well worth pointing out that through our long history, the U.S.
economy and equities markets have survived numerous political and economic
crises. The terrorist attacks may have changed our lives forever, but they have
not extinguished the spirit of democracy, the will of our people, or the
entrepreneurial capitalism that has made America the greatest nation on earth.
We believe that investors who refuse to be frightened out of the market will be
rewarded over the long term. We also remain confident that companies that have
above-market average earnings growth rates and consistently meet or exceed
consensus earnings estimates will produce the most generous long-term returns.
Sincerely,
/S/ BROOKE A. COBB
-----------------------
Brooke A. Cobb
Portfolio Manager
AVERAGE ANNUAL TOTAL RETURN(1)
INVESTOR CLASS(3) RUSSELL 1000(R)GROWTH(2) S&P 500(2)
1 YEAR (51.60%) (45.32%) (24.38%)
LIFE OF FUND (21.93%) (23.27%) (11.55%)
INCEPTION DATE 12/06/1999
-C-2-
COMPARISON OF A $10,000 INVESTMENT
Century Fund
Investor Class Russell 1000 Growth S&P 500
12/6/1999 10,000 10,000 10,000
2/29/2000 12,380 10,586 9,561
5/31/2000 10,730 10,260 9.971
8/31/2000 13,430 11,535 10,682
11/30/2000 9,460 8,483 9,281
2/28/2001 8,210 7,291 8,777
5/31/2001 7,740 7,212 8,920
8/31/2001 6,500 6,307 8,078
VALUE AS OF 8/31/01
Century Fund Investor Class $6,500
Russell 1000 Growth $6,307
S&P 500 $8,078
This charts show the value of a hypothetical $10,000 investment in the
Fund over the past 10 fiscal years, or since the Fund's inception, if it has not
operated for 10 years. The graphs are based on the Investor Class shares only;
performance of other classes will vary due to differences in fee structures (see
Average Annual Total Return chart above). The result is compared with
benchmarks, which may include a broad-based market index and or a narrower
index. Please note that market indexes do not include expenses. All results
include the reinvestment of dividends and capital gain distributions. Results
represent past performance and do not indicate future results.
-C-3-
TECHNOLOGY FUND PORTFOLIO COMMENTARY
- ------------------------------------
Over the past year, everything that could go wrong did go wrong for the
technology industry and tech investors. The economy went from 5% GDP growth to
virtually no growth within a matter of months. Consumers stopped buying
computers, and capital spending on information technology declined faster and
further than anyone anticipated. Concurrently, the communications
capital-spending boom went bust, paralyzing what had been the single most
dynamic sub-sector of the broad technology industry.
Why didn't anyone see any of this coming? Because of the speed of the
economic downturn and a near-absolute reversal in business and investor
psychology. After a long series of Federal Reserve rate hikes from 1999 to 2000,
the economy kept barreling along. Then, rather than slowing gradually, the
economy abruptly stalled in third quarter 2000 (near the beginning of our 2001
fiscal year). Corporate managers suddenly quit thinking about enhancing
productivity and improving customer service by investing in information
technology (IT), and they began worrying about the collapse of demand and the
growth of inventories. Their previous interest in spending more on IT than the
competition gave way to fear that if the competition was cutting back, "We had
better cut back further." Demand for many technology products and services
didn't just soften, it virtually evaporated. Technology industry leaders with
highly respected management teams were assuring the investment community they
would hit revenue and earnings targets and then, just weeks later, announcing
substantial shortfalls. Investors, who were enamored of almost anything with a
technology label in 1999, shunned anything remotely connected with tech.
Communications technology companies had to cope not only with a
no-growth economy, but also a major shakeout in the telecommunications industry.
IN 1998 and 1999, the financial markets threw barrels of money at Competitive
Local Exchange Carriers (CLECs), Data Local Exchange Carriers (DLECs - the
companies building high speed DSL networks for connecting to the Internet),
independent wireless communications providers, and web-hosting companies (firms
that provide Internet and other data network services for corporations). These
young companies were drivers in the construction of networks to accommodate an
anticipated boom in data traffic created by the Internet and private data
networks. When initial demand fell short of lofty expectations, the financial
markets reversed course and pulled the plug. As cash-flow casualties mounted,
communications technology companies lost some of their best customers. To
compound the problem, with the competition on the ropes, established telecom
companies like the Regional Bell Operating Companies also stopped spending on
new networks. The bluest of communications technology blue chips - outstanding
companies in our portfolio such as Cisco, Juniper Networks, and Redback - got
hammered.
Like technology company managers, tech investors were caught by
surprise. In recent years, many had profited from buying technology stocks on
dips. After tech stocks retreated in third quarter 1998's Asian/hedge fund
crisis, because of the extraordinary and tragic events of September 11, 2001,
short term market activity since August 31, 2001 has been highly volatile, and
as a result current performance may be less than that shown.
Please see Endnotes for additional information.
-C-4-
they came roaring back, generating spectacular returns for investors who bought
aggressively on the way down. This year, by the time investors recognized the
extent of the problems facing the technology industry, short of going to cash,
it was virtually impossible to get out of harm's way.
Over the course of the year, we reduced our exposure to communications
technology, but not in time to avoid substantial losses. We scaled back our
commitment to the specialty software sector, which we (and many industry
analysts) had mistakenly believed would be less vulnerable to an economic
contraction - but again, not in time to escape significant damage. We added to
positions in "safe technology," companies such as Microsoft, PeopleSoft,
Peregrine, and Citrix, which are upgrading products for large installed user
bases. The first three have declined, but only modestly, and Citrix has shown a
slight gain.
As we write, we are coming to grips emotionally with the terrorist
attacks on America and are diligently assessing the impact on the economy in
general and the technology sector in particular. We strongly believe technology
will prove essential, not only in enhancing our defense and security
capabilities, but also in providing the necessary back-up for critical
information systems and communications networks. Overall, we believe that
technology spending would have recovered - along with the economy - without any
additional factors. The crisis may in fact stimulate technology spending sooner
rather than later. In addition, we believe the Federal Reserve's and federal
government's response to this tragedy may hasten a broader-based economic and
market recovery.
Sincerely,
/S/ JENNIFER K. SILVER
--------------------------------
Jennifer K. Silver
Portfolio Management Team Leader
AVERAGE ANNUAL TOTAL RETURN(1)
RUSSELL 1000(R)
INVESTOR CLASS(3) GROWTH(2) S&P 500(2)
1 YEAR (70.24%) (45.32%) (24.38%)
LIFE OF FUND (53.24%) (33.14%) (15.89%)
INCEPTION DATE 05/01/2000
-C-5-
COMPARISON OF A $10,000 INVESTMENT
Century Fund Investor Class Russell 1000 Growth S&P 500
5/1/2000 10,000 10,000 10,000
5/31/2000 8,700 9,497 9,795
8/31/2000 12,160 10,677 10,493
11/30/2000 7,010 7,852 9,117
2/28/2001 5,253 6,749 8,622
5/31/2001 4,542 6,675 8,762
8/31/2001 3,619 5,838 7,935
VALUE AS OF 8/31/01
Century Fund Investor Class $3,619
Russell 1000 Growth $5,838
S&P 500 $7,935
This charts show the value of a hypothetical $10,000 investment in the
Fund over the past 10 fiscal years, or since the Fund's inception, if it has not
operated for 10 years. The graphs are based on the Investor Class shares only;
performance of other classes will vary due to differences in fee structures (see
Average Annual Total Return chart above). The result is compared with
benchmarks, which may include a broad-based market index and or a narrower
index. Please note that market indexes do not include expenses. All results
include the reinvestment of dividends and capital gain distributions. Results
represent past performance and do not indicate future results.
ENDNOTES
- -------------------
1. "Total Return" includes reinvestment of all income dividends and capital
gain distributions. Results represent past performance and do not indicate
future results. The value of an investment in the Fund and the return on
the investment both will fluctuate, and redemption proceeds may be higher
or lower than an investor's original cost.
2. Please see "Glossary of Indices" for a description of indices. Please note
that indices do not take into account any fees and expenses of investing
in the individual securities that they track, and that individuals cannot
invest directly in any index. Data about the performance of these indices
are prepared or obtained by Management and include reinvestment of all
dividends and capital gain distributions. The Funds may invest in many
securities not included in the above-described indices.
3. Expense Caps or Waivers; Absent these arrangements, which are subject to
change, the total returns for these periods would have been less. Please
-C-6-
see the notes to the financial statements for specific information
regarding which funds and which classes currently have a portion of their
operating expenses absorbed by NB Management.
a. NBMI currently absorbs certain operating expenses.
GLOSSARY OF INDICES
- -------------------
S&P 500 Index: The S&P 500 Index is widely regarded as the
standard for measuring large-cap U.S. stock
markets' performance and includes a
representative sample of leading companies in
leading industries.
Russell 1000(R) Growth Index: Measures the performance of the Russell 1000(R)
companies with higher price-to-book ratios and
higher forecasted growth values.
Please note that indices do not take into account any fees and expenses of the
individual securities that they track and that individuals cannot invest
directly in any index. Data about the performance of these indices are prepared
or obtained by NB Management and include reinvestment of all dividend and
capital gain distributions. The Funds may invest in securities not included in
the above-described indices.
-C-7-
APPENDIX C-2
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
(FROM NEUBERGER BERMAN EQUITY FUNDS SEMI-ANNUAL REPORT
TO SHAREHOLDERS DATED FEBRUARY 28, 2002)
APPENDIX C-2
------------
CENTURY FUND PORTFOLIO COMMENTARY
- ----------------------------------
The first half of fiscal 2002 was a difficult period for large-cap
growth stocks. Although leading market indices made substantial progress after
bottoming in the weeks following the September 11 terrorist attacks, growth
continued to lag value by a significant margin. However, we expect the economy
and growth-stock earnings to regain momentum in the year ahead.
Technology continued to be the Achilles' heel of growth stock investors
and the Century portfolio. We were modestly overweighted in the tech sector and,
overall, our technology holdings underperformed the tech component of the
Russell 1000 Growth Index benchmark. We believe this is largely a function of
our owning tech stocks with a history of faster growth, which were punished more
severely for earnings shortfalls. With the exception of communications
technology (where we have very limited exposure), we think technology is on the
road to recovery. Going forward, we expect the sector to benefit substantially
from "easy" quarterly earnings comparisons, particularly in the second half of
calendar 2002.
Our utilities holdings, primarily power generator/energy trader Dynegy,
also disappointed. Although we believe Dynegy will ultimately profit from the
demise of its leading competitor, Enron, the stock was tainted by uncertainty
created by Enron's collapse. The Enron debacle also took its toll on Tyco, our
worst-performing stock in the first half of fiscal 2002. We think Tyco is a good
company, but its complex financials and lack of earnings transparency spooked
investors in the wake of the Enron accounting scandal. We were also disappointed
in the company's decision to break itself into four pieces. We eliminated both
positions from our portfolio.
Healthcare was the brightest spot in the Century portfolio, with stable
earners such as Pfizer and Johnson & Johnson making our top-ten performance
list. Consumer stocks, most notably discount retailer Target Corp. and Kraft
Foods, also contributed to performance. We continue to favor select discounters
such as Target and Costco, which we expect to benefit from the troubles of their
competitor, Kmart. We have also invested in Best Buy, a leading consumer
electronics discounter, whose sales and earnings we expect to accelerate with
the growing popularity of new digital products. Slot machine manufacturer
International Game Technology was another big gainer, on strong earnings
augmented by its acquisition of Anchor Gaming.
-C-1 -
Strategically, we are modestly shifting our bias from the
"steady-Eddie" earners that have done so well over the last year to more
economically sensitive growth stocks that we believe will outperform in the year
ahead. Economic data released shortly after the end of this reporting period
indicate we have emerged from a mild recession and are in the early stages of an
economic recovery, which we expect to gain momentum in the second half of 2002.
In his most recent testimony to Congress, the normally reserved Federal Reserve
Chairman Alan Greenspan was surprisingly upbeat regarding the economy.
While this very probably signals an end to a long series of Fed rate
cuts, we believe that interest rates will remain low and continue to sustain
consumer spending. In most industries, inventories have been depleted and we are
beginning to see "demand pull" generate increased manufacturing activity and
business investment. Extensive cost cutting and improved productivity have
substantially lowered corporate break-even points. Consequently, revenue
increases should magnify profits.
Going forward, we expect to benefit from what we refer to as "The
Pendulum Effect." During periods in which the economy is slowing, Wall Street
analysts never seem to be able to reduce earnings estimates fast enough to
reflect the changing economic reality. During periods when the economy is
accelerating, they can't seem to raise estimates fast enough. Last year, we saw
a record number of earnings disappointments. In the year ahead, we think we will
experience a greater number of pleasant earnings surprises. Since we focus on
companies we believe are capable of beating Wall Street earnings estimates, this
could be a much more productive environment for our discipline.
In closing, growth has been "out" and value has been "in" over the last
couple of years. We are reminded that just two years ago (after approximately
five years of exceptional growth stock performance), almost everyone was in the
growth camp and value investing had been declared dead. Today, the reverse is
true. Taking nothing away from our value-investing colleagues at Neuberger
Berman, we are committed to the growth style and believe that over the longer
term, owning companies that consistently grow earnings faster than the market
average produces superior investment returns.
Sincerely,
/S/ BROOKE A. COBB
---------------------
Brooke A. Cobb
Portfolio Manager
-C-2 -
- --------------------------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS
NEUBERGER BERMAN CENTURY FUND(1) INCEPTION DATE SIX MONTH AVERAGE ANNUAL TOTAL
PERIOD ENDED RETURN ENDED 3/31/02
2/28/2002 1 YEAR LIFE OF FUND
INVESTOR CLASS3B 12/06/1999 (3.85%) (5.76%) (16.67%)
RUSSELL 1000 GROWTH INDEX2 (2.41%) (2.00%) (17.68%)
S&P 500 INDEX2 (1.67%) 0.24% (8.00%)
The composition, industries and holdings of the Fund are subject to change.
Century Fund is invested in a wide array of stocks and no single holding makes
up more than a small fraction of the Fund's total assets.
Please see Endnotes for additional information.
-C-3 -
TECHNOLOGY FUND PORTFOLIO COMMENTARY
- -------------------------------------
The first half of 2002 was an up-and-down period for the technology
sector and the Fund. Technology industry fundamentals had been improving
modestly prior to the tragic events of September 11, and tech stocks were
beginning to show signs of recovery. Then, tech spending was put on the back
burner for nearly a month as everyone struggled to assess terrorism's damage to
the economy and individual businesses. In November and December, demand for
technology products firmed up again, and tech stocks rallied. However, at the
beginning of calendar 2002, investors became increasingly skeptical that the
nascent recovery was for real, and tech stocks swooned before rebounding in the
last week of February.
There were a few bright spots in the portfolio. Our healthcare
investments, primarily biotech and most notably Imclone, posted gains. Our
commitments to data-storage-related stocks such as Emulex, Network Appliance,
and Veritas also contributed, as investors focused on the importance of backing
up data, following the September 11 tragedy. Although we have trimmed some
positions in storage-related stocks, we think the long-term outlook is still
relatively favorable. Our post-9/11 investments in wireless stocks such as Nokia
and RF MicroDevices (a Nokia supplier) performed well immediately following the
tragedy, as demand for handsets surged temporarily. We closed out these
positions before demand flattened again, with consumers postponing purchases to
wait for the next generation of cellular products with Internet capabilities to
come to market.
Our discouragingly long list of losing stocks reflects the poor tone of
the tech stock market in general; it includes stocks we either bought too early
or which failed to live up to our fundamental expectations. We remain committed
to the former and have liquidated the latter.
Understandably, in view of the Fund's 82.2% average tech weighting
during the six months versus the 28.8% information technology component of the
Russell 1000 Growth Index, we underperformed our benchmark by a wide margin.
However, we also underperformed most purer technology indices. This was largely
a result of our decision in early November to significantly overweight
semiconductors and software, the two most economically sensitive tech
sub-sectors. We believe our investment rationale was correct, but our timing was
poor. It hurt us badly in the January/early February period, when investors
began to question whether the economic recovery was for real and began worrying
about the potential for a "double dip" recession. Economic data released near
the end of February eased investors' concerns, and semiconductor and software
stocks took off - unfortunately too late to have much of a favorable impact on
the first-half 2002 returns. Interestingly, if this six-month reporting period
were to be stretched out to include the first two weeks of March, performance
would be considerably better.
Why did we overweight semiconductors and software? Historically,
semiconductor stocks outperform in the early stages of an economic recovery. The
semiconductor industry has become very adept at lowering cost structures during
periods of weak demand. So, when demand improves, these companies generally
enjoy a huge expansion in profit margins and a surge in earnings. We believe
qualify semiconductor stocks will post impressive earnings gains over the next
year.
-C-4 -
Our commitment to software stocks resulted from our talks with
corporate information technology (IT) officers regarding their top priorities.
The overwhelming majority wanted to do more with less. In other words, they
wanted to maximize the efficiency of existing systems through relatively
inexpensive and cost-effective software upgrades, rather than buy new systems.
Now that the economic dust has settled somewhat, we expect IT officers to follow
through with these plans, providing a nice boost to software company earnings.
At the end of this reporting period, semiconductor-related stocks comprised
37.6% of portfolio assets and software stocks, 36.2%. This compares to a 31.6%
weighting in semiconductors and a 32.8% weighting in software for the
technology-only component of the Russell 1000 Growth Index. If these stocks'
recent performance is any indication, these overweightings should work to our
advantage on an absolute and relative basis going forward.
Sincerely,
/S/ JENNIFER K. SILVER
--------------------------------
Jennifer K. Silver
Portfolio Management Team Leader
- ----------------------------------------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS
NEUBERGER BERMAN TECHNOLOGY FUND1 INCEPTION DATE SIX MONTH AVERAGE ANNUAL TOTAL
PERIOD ENDED RETURN ENDED 3/31/02
2/28/2002 1 YEAR LIFE OF FUND
INVESTOR CLASS3B 05/01/2000 (15.51%) (14.79%) (42.95%)
RUSSELL 1000 GROWTH INDEX2 (2.41%) (2.00%) (24.09%)
S&P 500 INDEX2 (1.67%) 0.24% (10.43%)
THE RISKS INVOLVED IN SEEKING CAPITAL APPRECIATION FROM INVESTMENTS PRIMARILY IN
TECHNOLOGY-RELATED COMPANIES AND/OR WITH SMALL MARKET CAPITALIZATION ARE SET
FORTH IN THE PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION.
The composition, industries and holdings of the Portfolio are subject to change.
Technology Fund is invested in a wide array of stocks and no single holding
makes up more than a small fraction of the fund's total assets.
Please see Endnotes for additional information.
-C-5 -
ENDNOTES
1. "Total Return" includes reinvestment of all income dividends and
capital gain distributions. Results represent past performance and do
not indicate future results. The value of an investment in the Fund and
the return on the investment both will fluctuate, and redemption
proceeds may be higher or lower than an investor's original cost.
2. Please see "Glossary of Indices" for a description of indices. Please
note that indices do not take into account any fees and expenses of
investing in the individual securities that they track, and that
individuals cannot invest directly in any index. Data about the
performance of these indices are prepared or obtained by Management and
include reinvestment of all dividends and capital gain distributions.
The Funds may invest in many securities not included in the
above-described indices.
3. Expense Caps or Waivers: Absent these arrangements, which are subject
to change, the total returns for these periods would have been less.
Please see the notes to the financial statements for specific
information regarding which funds and which classes currently have a
portion of their operating expenses absorbed by NBMI.
a. NBMI currently absorbs certain operating expenses.
-C-6 -
GLOSSARY OF INDICES
- -------------------
S&P 500 INDEX: The S&P 500 Index is widely regarded as the
standard for measuring large-cap U.S. stock
markets' performance and includes a
representative sample of leading companies in
leading industries.
RUSSELL 1000(R)GROWTH INDEX: Measures the performance of the Russell
1000(R)companies with higher price-to-book
ratios and higher forecasted growth values.
Please note that indices do not take into account any fees and expenses of the
individual securities that they track and that individuals cannot invest
directly in any index. Data about the performance of these indices are prepared
or obtained by Neuberger Berman Management, Inc. and include reinvestment of all
dividends and capital gain distributions. The Funds may invest in securities not
included in the above-described indices.
-C-7 -
NEUBERGER BERMAN EQUITY FUNDS
NEUBERGER BERMAN CENTURY FUND
605 THIRD AVENUE, 2ND FLOOR
NEW YORK, NEW YORK 10158-0180
STATEMENT OF ADDITIONAL INFORMATION
DATED JUNE 3, 2002
This Statement of Additional Information ("SAI") relates specifically
to the reorganization of Neuberger Berman Technology Fund ("Technology Fund")
into Neuberger Berman Century Fund ("Century Fund"), whereby Technology Fund
will transfer substantially all of its assets to Century Fund, and shareholders
in Technology Fund will receive Investor Class shares of Century Fund, in
exchange for their Investor Class shares of Technology Fund. 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 Century
Fund and Neuberger Berman Technology Fund (series of Neuberger
Berman Equity Funds) included in the Annual Report to
Shareholders of Neuberger Berman Equity Funds for the fiscal
year ended August 31, 2001, previously filed on EDGAR,
Accession Number 0000898432-01-500389.
(2) The unaudited financial statements of Neuberger Berman Century
Fund and Neuberger Berman Technology Fund (series of Neuberger
Berman Equity Funds) included in the Semi-Annual Report to
Shareholders of Neuberger Berman Equity Funds for the fiscal
year ended February 28, 2002, previously filed on EDGAR,
Accession Number 0000898432-02-000301.
(3) The Statement of Additional Information of Neuberger Berman
Equity Funds, dated December 17, 2001, previously filed on
EDGAR, Accession Number 0000898432-01-500518.
This Statement of Additional Information is not a prospectus and should
be read only in conjunction with the Prospectus and Information Statement dated
June 3, 2002 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.
AVERAGE ANNUAL TOTAL RETURN INFORMATION
The table below shows the average annual total return for Century Fund
and Technology Fund for the fiscal period ended February 28.
1
Average Annual Total Returns(1)
Investor Class Periods Ended 2/28/2002
One Year Five Years Ten Years Period from Inception(2)
CENTURY (23.87%) N/A N/A (18.96%)
TECHNOLOGY (41.79%) N/A N/A (47.61%)
(1) Through December 15, 2000, the Investor Class of each of the Funds was
a feeder fund in a master/feeder structure. Performance results prior
to 12/16/00 represent the performance of each Investor Class Fund's
predecessor feeder fund, which had an identical investment program and
the same overall fees as the corresponding Investor Class Fund.
(2) The inception dates of the Investor Class of each Fund were as follows:
Neuberger Berman CENTURY Fund, 12/6/99 and Neuberger Berman TECHNOLOGY
Fund, 5/1/00.
NOTES TO PRO FORMA COMBINED
FINANCIAL STATEMENTS (UNAUDITED)
The accompanying unaudited Pro Forma Combined Schedule of Investments
and Statements of Assets and Liabilities as of February 28, 2002 and the Pro
Forma Combined unaudited Statements of Operations for the six months ended
February 28, 2002, and the year ended August 31, 2002 are intended to present
the financial condition and related results of operations of Neuberger Berman
Century Fund ("Century Fund") as if the reorganization with Neuberger Berman
Technology Fund ("Technology Fund") had been consummated on that date. Certain
expenses have been adjusted to reflect the expected operations of the combined
entities.
Certain expenses will be reduced due to the elimination of duplicate
services. Under the Plan of Reorganization and Termination, each Fund will bear
its own costs associated with the Reorganization, which are expected to total
approximately $10,000. It is expected that Neuberger Berman Management Inc. will
bear these costs persuant to contractual expense reimbursemen agreements
described in the section entitled "Fees and Expenses" in the Prospectus/Proxy
Statement. The pro forma combined financial statements reflect the current
expense cap of Century Fund, 1.50% of the average daily net assets of the Fund,
which will continue to be the expense cap for that Fund following the
Reorganization.
The pro forma combined financial statements are presented for the
information of the reader and may not necessarily be representative of what the
actual combined financial statements would have been had the Reorganization
occurred at February 28, 2002. The pro forma combined financial statements
should be read in conjunction with the separate annual audited financial
statements of the constituent Funds incorporated by reference into this
Statement of Additional Information.
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS
- ------------------------------------------
NEUBERGER BERMAN EQUITY FUNDS
CENTURY TECHNOLOGY CENTURY TECHNOLOGY PRO FORMA
FUND FUND FUND FUND COMBINED
- --------------------------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES MARKET VALUE MARKET VALUE MARKET VALUE
(000'S OMITTED) (000'S OMITTED) (000'S OMITTED)
COMMON STOCKS (96.4%)
BIOTECHNOLOGY (1.0%)
3,500 2,500 IDEC Pharmaceuticals $220 $157 $377
-------------------------------------------------------------
BUSINESS SERVICES (0.5%)
2,200 FedEx Corp. 127 127
-------------------------------------------------------------
BUSINESS SERVICES -
IT BUSINESS SERVICES (3.4%)
4,000 Affiliated Computer Services 196 196
8,200 Concord EFS 246 246
10,400 SunGard Data Systems 321 321
-------------------------------------------------------------
763 763
CAPITAL EQUIPMENT (2.7%)
15,600 General Electric 601 601
-------------------------------------------------------------
COMMUNICATIONS EQUIPMENT (4.4%)
7,300 Brocade Communications Systems 161 161
15,800 11,925 Cisco Systems 225 170 395
5,200 Emulex Corp. 169 169
1,900 L-3 Communications Holdings 209 209
14,000 Viewpoint Corp. 77 77
434 577 1,011
-------------------------------------------------------------
COMPUTER RELATED (0.6%)
15,900 10,000 Sun Microsystems 135 85 220
-------------------------------------------------------------
COMPUTERS & SYSTEMS (1.6%)
1,300 CDW Computer Centers 69 69
-------------------------------------------------------------
CONSUMER CYCLICAL - LEISURE &
CONSUMER SERVICES (1.3%)
4,375 International Game Technology 295 295
-------------------------------------------------------------
CONSUMER PRODUCTS & SERVICES (0.7%)
5,600 Masco Corp. 157 157
-------------------------------------------------------------
ELECTRICAL EQUIPMENT (4.7%)
4,000 Artisan Components 53 53
5,000 Broadcom Corp. 153 153
8,125 Integrated Device Technology 208 208
3,600 KLA-Tencor 208 208
3,900 LTX Corp. 84 84
3,400 Microtune, Inc. 39 39
5,700 PMC-Sierra 83 83
4,800 Power-One 34 34
5,900 Teradyne, Inc. 198 198
-------------------------------------------------------------
1,060 1060
ENERGY (0.6%)
3,200 El Paso Corp. 125 125
-------------------------------------------------------------
FINANCIAL SERVICES (5.5%)
3,200 American International Group 237 237
7,500 Citigroup Inc. 339 339
4,500 Freddie Mac 287 287
3,400 Household International 175 175
3,100 Lehman Brothers Holdings 175 175
1,200 Prudential Financial 37 37
-------------------------------------------------------------
1,250 1250
FOOD & BEVERAGE (3.6%)
4,200 Anheuser-Busch 214 214
7,200 Kraft Foods 281 281
6,200 PepsiCo, Inc. 313 313
-------------------------------------------------------------
808 808
HARDWARE (2.8%)
5,000 IBM 491 491
8,900 Network Appliance 142 142
-------------------------------------------------------------
491 142 633
HEALTH CARE (18.3%)
4,500 Abbott Laboratories 254 254
2,800 AmerisourceBergen Corp. 190 190
5,200 Amgen Inc. 301 301
1,300 Cephalon, Inc. 76 76
2,500 Eli Lilly 189 189
5,700 Express Scripts 295 295
3,200 Forest Laboratories 254 254
3,700 Genentech, Inc. 175 175
2,400 Gilead Sciences 169 169
2,700 Guidant Corp. 115 115
8,354 Johnson & Johnson 509 509
1,100 Laboratory Corp. of America Holdings 90 90
16,225 Pfizer Inc. 665 665
5,700 Pharmacia Corp. 234 234
2,000 Quest Diagnostics 142 142
4,900 Wyeth 311 311
-------------------------------------------------------------
3,724 245 3,969
INSURANCE (0.7%)
1,700 XL Capital 162 162
-------------------------------------------------------------
INTERNET (5.0%)
3,875 3,200 eBay Inc. 202 167 369
6,300 Internet Security Systems 149 149
4,250 Intuit Inc. 161 161
6,900 KPMG Consulting 121 121
4,400 Network Associates 104 104
3,000 Websense, Inc. 67 67
10,000 Yahoo! Inc. 145 145
-------------------------------------------------------------
202 914 1116
MEDIA (1.7%)
1,800 Electronic Arts 97 97
6,000 Viacom Inc. Class B 279 279
-------------------------------------------------------------
279 97 376
OIL & GAS (0.8%)
4,600 Talisman Energy 174 174
-------------------------------------------------------------
RETAIL (6.0%)
3,700 Best Buy 250 250
6,600 Costco Wholesale 272 272
5,900 Home Depot 295 295
8,800 Target Corp. 369 369
4,100 Walgreen Co. 165 165
-------------------------------------------------------------
1,351 1351
SEMICONDUCTORS (13.1%)
18,000 4,950 Intel Corp. 514 141 655
7,675 Intersil Corp. 210 210
3,500 Linear Technology 129 129
4,100 Maxim Integrated Products 188 188
1,900 Microchip Technology 65 65
6,500 Micron Technology 209 209
20,500 15,900 Taiwan Semiconductor Manufacturing ADR 333 258 591
11,000 6,900 Texas Instruments 323 202 525
6,100 Xilinx Inc. 219 219
-------------------------------------------------------------
1,380 1,411 2,791
SOFTWARE (13.3%)
4,700 Adobe Systems 171 171
11,500 BMC Software 185 185
13,400 Borland Software 184 184
7,200 9,600 Mercury Interactive 244 325 569
9,800 4,500 Microsoft Corp. 572 263 835
2,100 Precise Software Solutions 44 44
5,000 Rational Software 93 93
10,200 6,800 Siebel Systems 283 189 472
5,700 7,000 VERITAS Software 202 248 450
-------------------------------------------------------------
1,301 1,702 3,003
SYSTEMS & COMPONENTS (1.3%)
8,800 8,800 Dell Computer 217 217 434
4,800 Flextronics International 69 69
-------------------------------------------------------------
217 286 503
TECHNOLOGY (1.2%)
7,300 Cadence Design Systems 154 154
2,150 3,150 NVIDIA Corp. 110 161 271
-------------------------------------------------------------
264 161 425
TELECOMMUNICATIONS (0.9%)
5,400 Cox Communications 199 199
-------------------------------------------------------------
TRANSPORTATION (0.7%)
7,800 Southwest Airlines 165 165
-------------------------------------------------------------
TOTAL COMMON STOCKS
(COST $14,585, $7,255, AND $21,840 RESPECTIVELY) 14,824 6,906 21,730
-------------------------------------------------------------
PRINCIPAL AMOUNT
SHORT-TERM INVESTMENTS (11.7%)
$1,653,615 $517,960 N&B Securities Lending Quality Fund, LLC 1,654 518 2,172
460,081 Neuberger Berman Institutional Cash
Fund Trust Class 460 460
TOTAL SHORT-TERM INVESTMENTS
(COST $2,114, $518, AND -------------------------------------------------------------
$2,632 RESPECTIVELY) 2,114 518 2,632
TOTAL INVESTMENTS (108.1%)
(COST $16,699, $7,773, AND
$24,472 RESPECTIVELY) 16,938 7,424 24,362
Liabilities, less cash, receivables
and other assets [(8.1%)] (1,582) (252) (1,834)
-------------------------------------------------------------
TOTAL NET ASSETS (100.0%) $15,356 $7,172 $22,528
-------------------------------------------------------------
02/28/2001
STATEMENT OF ASSETS AND LIABILITIES Adjustments
SHARES OUTSTANDING ADJUSTMENT
Technology's Net Assets 7,172
Century's NAV/share 6.26
Century shares Technology shareholders received 1,146
Technology's Shares Outstanding 2,353
Adjustment Needed (1,207)
STATEMENT OF OPERATIONS
INVESTMENT MANAGEMENT ADJUSTMENT
Class 1
Average Net Assets for the period 16,951,986 Century
Average Net Assets for the period 8,689,558 Technology
25,641,544
0.55%
Combined Investment Management Fee 141,028
Annualized Combined Investment Management Fee 69,935
Adjustment needed (17)
CUSTODIAN ADJUSTMENT
NET ASSETS USING MARKET VALUE 15,356,043 Century
NET ASSETS USING MARKET VALUE 7,171,875 Technology
22,527,919
per Custodian Agreement 0.075% $0-$20m net assets
per Custodian Agreement 0.037% $20m-$100m net assets
Under $20m differential 1,741
Over $20m differential 468
Century Custodian Fees 20,087
Combined Custodian Fees 22,296
Adjustment needed (16)
08/31/2001
Investment Management Adjustment
Class 1 Class 2
Average Net Assets for the period 27,360,945 1,451,472 Century
Average Net Assets for the period 16,147,260 1,469,040 Technology
43,508,205 2,920,512
Total Average Net Assets 46,428,717
0.55%
Combined Investment Management Fee 255,358
Adjustment needed (52)
Custodian Adjustment
NET ASSETS USING MARKET VALUE 18,547,946 Century
NET ASSETS USING MARKET VALUE 9,894,975 Technology
28,442,921
per Custodian Agreement 0.075% $0-$20m net assets
per Custodian Agreement 0.037% $20m-$100m net assets
Under $20m differential 1,089
Over $20m differential 3,124
Century Custodian Fees 47,682
Combined Custodian Fees 51,895
Adjustment needed (42)
Trustees Adjustment
15 Trustees * meeting fees of
7500 * 4 meetings 450,000.00
15 Trustees * quarterly fees of 10000
* 4 meetings 600,000.00
Total Fees 1,050,000.00
divided by 27 funds 38,888.89
Adjustment needed (19)
Trustees Adjustment
15 Trustees*meeting fees of 7500*4 meetings 450,000
15 Trustees*quarterly fees of 10000*4 meetings 600,000
Total Fees 1,050,000
divided by 27 funds 38,889
Annualized Combined Trustees Fees 19,285
Adjustment needed (23)
NEUBERGER BERMAN FOR THE SIX MONTHS ENDED FEBRUARY 28, 2002 (UNAUDITED)
PRO FORMA COMBINED STATEMENTS OF OPERATIONS
NEUBERGER BERMAN EQUITY FUNDS
CENTURY TECHNOLOGY PRO FORMA
(000's omitted) FUND FUND ADJUSTMENTS (1) COMBINED
- --------------------------------------------------------------------------------------------------------------------------------
Investment Income
INCOME:
Dividend income $ 44 $ 1 $ 45
Interest income 9 7 16
--------------------------------------------------------
Total income 53 8 - 61
--------------------------------------------------------
EXPENSES:
Investment management fee 48 39 (17) (2+3) 70
Administration fee 23 12 35
Shareholder servicing agent fees 25 23 (13) (2) 35
Auditing fees 8 8 (8) (2) 8
Custodian fees 20 18 (16) (2+3) 22
Legal fees 14 17 (17) (2) 14
Registration and filing fees 40 28 (28) (2) 40
Shareholder reports 13 13 (13) (2) 13
Trustees' fees and expenses 21 21 (23) (2+3) 19
Miscellaneous - 2 (2) (2) -
--------------------------------------------------------
Total expenses 212 181 (136) 257
Expenses reimbursed by administrator and/or reduced by custodian fee
expense offset arrangement (82) (88) 88 (4) (82)
--------------------------------------------------------
Total net expenses 130 93 (48) 175
--------------------------------------------------------
Net investment income (loss) (77) (85) 48 (114)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investment securities sold (3,220) (2,029) (5,249)
Change in net unrealized appreciation (depreciation) in value of:
Investment securities 2,802 855 3,657
--------------------------------------------------------
Net gain (loss) on investments (418) (1,174) - (1,592)
--------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (495) $ (1,259) 48 $ (1,706)
--------------------------------------------------------
1 The adjustments assume that Century Fund has obtained all the shareholder accounts and assets of Technology Fund.
2 Certain expenses have been reduced due to the elimination of partially duplicative services.
3 Certain expenses, which are determined on a per trust basis or on a sliding scale based upon net assets, have been adjusted
to reflect the combination of Century Fund and Technology Fund.
4 Reflects expenses of Technology Fund that were reimbursed by the administrator and/or reduced by the custodian fee
expense offset arrangement.
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 or 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 Description
Number -----------
------
(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 Description
Number -----------
------
(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 as Appendix A to Prospectus and
Information Statement of NB Century Fund.
(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 Funds and Neuberger Berman
Management Inc. Incorporated by Reference to the Registrant's
Registration Statement on Form N-14, File Nos. 2-11357 and 811-582
(Filed August 2, 2001).
(ii) Schedule A - Series of Equity Funds 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. 101 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 Funds. Incorporated by
Reference to the Registrant's Registration Statement on Form N-14,
File Nos. 2-11357 and 811-582.
(ii) Schedule A - Series of Equity Funds Currently Subject to the
Sub-Advisory Agreement. To Be Filed by Amendment.
(7) (a) Distribution Agreement Between Neuberger Berman Equity Funds and Neuberger
Berman Management Inc. Incorporated by Reference to the Registrant's
Registration Statement on Form N-14, File Nos. 2-11357 and 811-582 (Filed
August 2, 2001).
(b) Schedule A - Series of Neuberger Berman Equity Funds Currently Subject to the
Distribution Agreement. To Be Filed by Amendment.
(8) Bonus, Profit Sharing Contracts. None.
3
Exhibit Description
Number -----------
------
(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.
(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 the
Registrant's Registration Statement on Form N-14, File Nos. 2-11357
and 811-582 (Filed August 2, 2001).
(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.
101 to Registrant's Registration Statement, File Nos. 2-11357 and
811-582.
(14) Consent of Independent Auditors. Filed Herewith.
4
Exhibit Description
Number -----------
------
(15) Financial Statements Omitted from Prospectus. None.
(16) Power of Attorney. None.
(17) Additional Exhibits. None.
5
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,
for the purpose of including Exhibit 12, Opinion of Counsel Supporting Tax
Matters within a reasonable time after receipt of such Opinion.
6
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant, NEUBERGER BERMAN EQUITY FUNDS has duly caused this Registration
Statement on Form N-14 to be signed on its behalf by the undersigned, thereto
duly authorized, in the City and State of New York on the 2nd day of May, 2002.
NEUBERGER BERMAN EQUITY FUNDS
By: /s/ Michael M. Kassen
--------------------------------
Michael M. Kassen
President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement on Form N-14 has been signed below by the following
persons in the capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/ Peter E. Sundman
- -------------------------- Chairman of the Board May 2, 2002
Peter E. Sundman and Trustee (Chief --------------
Executive Officer)
/s/ Michael M. Kassen President and Trustee May 2, 2002
- -------------------------- ---------------
Michael M. Kassen
/s/ Richard Russell Treasurer (Principal May 2, 2002
- -------------------------- Financial and Accounting ---------------
Richard Russell Officer)
(signatures continued on next page)
Signature Title Date
- --------- ----- ----
- -------------------------- Trustee _______________
John Cannon
/s/ Faith Colish Trustee May 2, 2002
- -------------------------- ---------------
Faith Colish
/s/ Walter G. Ehlers Trustee May 2, 2002
- -------------------------- ---------------
Walter G. Ehlers
/s/ C. Anne Harvey Trustee May 2, 2002
- -------------------------- ---------------
C. Anne Harvey
/s/ Barry Hirsh Trustee May 2, 2002
- -------------------------- ---------------
Barry Hirsch
/s/ Robert A. Kavesh Trustee May 2, 2002
- -------------------------- ---------------
Robert A. Kavesh
- -------------------------- Trustee _______________
Howard A. Mileaf
/s/ Edward I. 'Brien Trustee May 2, 2002
- -------------------------- ---------------
Edward I. O'Brien
Signature Title Date
- --------- ----- ----
/s/ John P. Rosenthal Trustee May 2, 2002
- -------------------------- ---------------
John P. Rosenthal
/s/ William E. Rulon Trustee May 2, 2002
- -------------------------- ---------------
William E. Rulon
/s/ Cornelius T. Ryan Trustee May 2, 2002
- -------------------------- ---------------
Cornelius T. Ryan
/s/ Tom Decker Seip Trustee May 2, 2002
- -------------------------- ---------------
Tom Decker Seip
/s/ Candace L. Straight Trustee May 2, 2002
- -------------------------- ---------------
Candace L. Straight
/s/ Peter P. Trapp Trustee May 2, 2002
- -------------------------- ---------------
Peter P. Trapp