As filed with the Securities and Exchange Commission on December 23, 1999
1933 Act Registration No. 2-85229
1940 Act Registration No. 811-3802
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]
-----
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 28 [ X ]
---- -----
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
-----
Amendment No. 29 [ X ]
---- -----
(Check appropriate box or boxes)
NEUBERGER BERMAN INCOME FUNDS
(Exact Name of the Registrant as Specified in Charter)
605 Third Avenue
New York, New York 10158-0180
(Address of Principal Executive Offices)
Registrant's Telephone Number, including area code: (212) 476-8800
Theodore P. Giuliano, President
Neuberger Berman Income Funds
605 Third Avenue, 2nd Floor
New York, New York 10158-0180
Arthur C. Delibert, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036-1800
(Names and Addresses of agents for service)
Approximate Date of Proposed Public Offering: Continuous
It is proposed that this filing will become effective:
___ immediately upon filing pursuant to paragraph (b)
___ ______________________ pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a)(1)
___ on ___________________ pursuant to paragraph (a)(1)
X 75 days after filing pursuant to paragraph (a)(2)
- ---
___ on ________________ pursuant to paragraph (a)(2)
The public offering of Registrant's series is on-going. The title of
securities being registered is shares of beneficial interest.
Neuberger Berman Income Funds is a "master/feeder fund." This
Post-Effective Amendment No. 28 includes a signature page for the master fund,
Income Managers Trust, and appropriate officers and trustees thereof.
<PAGE>
NEUBERGER BERMAN INCOME FUNDS
CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 28 ON FORM N-1A
This Post-Effective Amendment consists of the following papers and
documents.
Cover Sheet
Contents of Post-Effective Amendment No. 28 on Form N-1A
NEUBERGER BERMAN INSTITUTIONAL CASH FUND
Part A - Prospectus
Part B - Statement of Additional Information
Part C - Other Information
Signature Pages
Exhibits
2
<PAGE>
SUBJECT TO COMPLETION __________________, 2000
Neuberger Berman
INSTITUTIONAL CASH FUND
- -----------------------------------------------------------------------------
PROSPECTUS [March __, 2000]
These securities, like the securities of all mutual
funds, have not been approved or disapproved by the
Securities and Exchange Commission, and the Securities
and Exchange Commission has not determined if this
prospectus is accurate or complete. Any representation
to the contrary is a criminal offense.
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PRELIMINARY
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
<PAGE>
CONTENTS
NEUBERGER BERMAN INCOME FUNDS
Institutional Cash Fund
YOUR INVESTMENT
Share Prices
Privileges and Services
Distributions and Taxes
Maintaining Your Account
Buying Shares
Selling Shares
The "Neuberger Berman" name and logo are service marks of Neuberger Berman, LLC.
"Neuberger Berman Management Inc." and the individual fund name in this
prospectus are either service marks or registered trademarks of Neuberger Berman
Management Inc. (copyright) 2000 Neuberger Berman Management Inc.
<PAGE>
THIS FUND:
- - is designed for investors seeking capital preservation, liquidity and income
- - offers you the opportunity to participate in financial markets through a
professionally managed money market portfolio
- - is a money market sweep fund for certain eligible retirement and other
benefit plans.
- - uses a master/feeder structure in its portfolio; see page __ for information
on how it works
- - is a mutual fund, not a bank deposit, and is not guaranteed or insured by the
FDIC or any other government agency
[SIDEBAR]
FUND MANAGEMENT
The fund is managed by Neuberger Berman Management Inc., in conjunction with
Neuberger Berman, LLC, as sub-adviser. Together, the firms manage more than
$____ billion in total assets (as of _________, 1999) and continue an asset
management history that began in 1939.
[SIDEBAR]
RISK INFORMATION
This prospectus discusses principal risks of investment in fund shares. These
and other risks are discussed in detail in the Statement of Additional
Information (see back cover).
1
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Neuberger Berman
INSTITUTIONAL CASH FUND
- -----------------------------------------------------------------------------
2
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GOAL & STRATEGY
THE FUND SEEKS THE HIGHEST AVAILABLE CURRENT INCOME CONSISTENT WITH SAFETY
AND LIQUIDITY.
To pursue this goal, the fund invests in a diversified portfolio of high-quality
money market securities. These securities may be from U.S. or foreign issuers,
including governments and their agencies, banks, and corporations, but in all
cases must be denominated in U.S. dollars. The fund seeks to maintain a stable
$1.00 share price, and seeks to reduce credit risk by diversifying among many
issuers of money market securities.
The fund may invest more than 25% of total assets in the obligations of U.S.
banks. The fund may also invest more than 25% of total assets in the obligations
of foreign banks when the manager believes such obligations offer equal or
higher credit quality and better interest rates.
The fund may also invest in repurchase agreements, investment company
securities, and variable and floating rate instruments, whose interest rate
adjusts on certain reset dates or whenever a specified interest rate index
changes. In addition, the fund may engage in reverse repurchase agreements and
securities lending. The fund may invest up to one-third of its total assets in
reverse repurchase agreements and may lend its securities with a value of up to
one-third of its total assets (including the value of the collateral for the
loan) to qualified brokers, dealers, banks and other financial institutions in
order to realize additional income by investing the proceeds of the reverse
repurchase agreement or collateral for the loan. Investments in reverse
repurchase agreements and securities lending will be aggregated for purposes of
this limitation.
The managers monitor a range of economic and financial factors in order to weigh
the yields of money market securities of various maturities against their levels
of interest rate and credit risk. Based on their analysis, the managers invest
the fund's assets in a mix of money market securities that is intended to
provide as high a yield as possible without violating the fund's credit quality
policies or jeopardizing the stability of its share price.
The fund is authorized to change its goal without shareholder approval, although
it does not currently intend to do so.
[SIDEBAR]
MONEY MARKET FUNDS
Money market funds are subject to federal regulations designed to help maintain
liquidity and a stable share price. The regulations set strict standards for
credit quality and for maturity (397 days or less for individual securities, 90
days or less on average for the portfolio overall).
The regulations also require money market funds to limit investments to the top
two rating categories of credit quality. This fund typically exceeds this
requirement by investing only in first-tier securities.
3
<PAGE>
[SIDEBAR]
OTHER RISKS
Although the fund intends to maintain a stable share price, the share price
could fluctuate, meaning that there is a chance that you could lose money by
investing in the fund.
While the fund may hold securities that carry U.S. government guarantees, these
guarantees do not extend to shares of the fund itself.
MAIN RISKS
Most of the fund's performance depends on interest rates. When interest rates
fall, the fund's yields will typically fall as well. The fund is also subject to
credit risk, which is that issuers may fail, or become less able, to make
payments when due.
The fund's emphasis on securities in the first tier of credit quality may mean
that its yields are somewhat lower than those available from certain other money
market funds. Over time, the fund may produce a lower return than bond or stock
investments. The fund's average yield is expected to outpace inflation over the
long term, but it may not do so. Your results relative to the rate of inflation
will, of course, be affected by any taxes you pay on fund distributions.
Because the fund may invest more than 25% of total assets in securities issued
by banks, its performance could be affected by factors influencing the health of
the banking industry. These may include economic trends, industry competition
and governmental actions, as well as factors affecting the financial stability
of borrowers. The bank securities in which the fund may invest typically are not
insured by the federal government. Securities that do not represent deposits
have lower priority in the bank's capital structure than those that do.
The fund may use certain practices and securities involving additional risks.
Reverse repurchase agreements and securities lending could create the effect of
leverage, meaning that certain gains or losses could be amplified, increasing
share price movements. (To reduce that risk, the fund does not intend to invest
the proceeds of any reverse repurchase agreement in instruments having a
maturity longer than the reverse repurchase agreement.) Investment in foreign
securities may involve trading practices different from those that prevail in
the United States, and custody of securities at foreign banks and depositories,
which could expose the fund to some risk. All securities in which the fund
invests must be U.S. dollar-denominated.
4
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[SIDEBAR]
MANAGEMENT
THEODORE P. GIULIANO, a Vice President and Director of Neuberger Berman
Management and a Managing Director of Neuberger Berman, LLC, is the manager of
the Fixed Income Group of Neuberger Berman, which he helped establish in 1984.
He has co-managed the fund's assets since its inception in 2000.
JOSEPHINE MAHANEY is a Vice President of Neuberger Berman Management and a
Managing Director of Neuberger Berman, LLC. She joined the firm in 1976 and has
co-managed the fund's assets since its inception in 2000.
NEUBERGER BERMAN MANAGEMENT is the fund's investment manager, administrator, and
distributor. It engages Neuberger Berman, LLC as sub-adviser to provide
management and related services. For these services, the fund pays NB Management
a fee at the annual rate of [0.10%] of average daily net assets.
INVESTOR EXPENSES
The fund does not charge you any fees for buying, selling, or exchanging shares,
or for maintaining your account. Your only fund cost is your share of annual
operating expenses.
The expense example can help you compare costs among funds.
FEE TABLE
SHAREHOLDER FEES None
ANNUAL OPERATING EXPENSES (% of average net assets)* These are deducted from
fund assets, so you pay them indirectly.
Management fees [0.25]
Plus: Distribution (12b-1) fees None
Other expenses [0.07]
Equals: Total annual operating [0.32]
expenses
Minus: Expense reimbursement [0.12]
Equals: Net expenses [0.20]
* Neuberger Berman Management also has contractually agreed to reimburse
certain expenses of the fund through 12/31/03, so that the total annual
operating expenses of the fund are limited to 0.20% of average net assets.
This arrangement does not cover interest, taxes, brokerage commissions, and
extraordinary expenses. The table includes costs paid by the fund and its
share of master portfolio costs. For more information on master/feeder funds,
see "Fund Structure" on page __.
** Other expenses are based on estimated amounts for the current fiscal year.
EXPENSE EXAMPLE
The example assumes that you invested $10,000 for the periods shown, that you
earned a hypothetical 5% total return each year, and that the fund's expenses
were those in the table above. Your costs would be the same whether you sold
your shares or continued to hold on to them at the end of each period. Actual
performance and expenses may be higher or lower.
1 YEAR 3 YEARS
Expenses $20 $64
5
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YOUR INVESTMENT
[SIDEBAR]
SHARE PRICE CALCULATIONS
The fund's share price is the total value of its assets minus its liabilities,
divided by the total number of shares. The fund anticipates that its share price
will not fluctuate.
When valuing portfolio securities, the fund uses a constant amortization method.
SHARE PRICES
Because the fund does not have a sales charge, the price you pay for each share
of the fund is the fund's net asset value per share. Similarly, because there
are no fees for selling shares, the fund pays you the full share price when you
sell shares.
The fund is open for business every day that both the New York Stock Exchange
and the Federal Reserve Wire system are open. The Exchange and the Federal
Reserve are closed on all national holidays; the Exchange is also closed on Good
Friday. Fund shares will not be priced on those days. In general, every buy or
sell order you place will go through at the next share price to be calculated
after your order has been accepted.
The fund calculates its share price as of the end of regular trading on the
Exchange on business days, usually 4:00 p.m. eastern time, and the fund accepts
orders for purchase and redemption up to 4:00 p.m. Eastern time each business
day.
6
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PRIVILEGES
AND SERVICES
As a Neuberger Berman fund shareholder, you have access to a range of services
to make investing easier:
ELECTRONIC BANK TRANSFERS -- When you sell fund shares, you can have the money
sent to your bank account electronically rather than mailed to you as a check.
Please note that your bank must be a member of the Automated Clearing House, or
ACH, system. This service is not available for retirement accounts.
INTERNET ACCESS -- At www.nbfunds.com, you can make transactions, check your
account, and access a wealth of information.
FUNDFONE(REGISTERED) -- Get up-to-date performance and account information
through our 24-hour automated service by calling 800-335-9366.
7
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DISTRIBUTIONS
AND TAXES
DISTRIBUTIONS -- The fund pays out to shareholders any net income and net
capital gains it earns. The fund declares income dividends daily and pays them
monthly. Any net short-term capital gains would be paid annually in December.
The fund does not anticipate making any long-term capital gain distributions.
Unless you tell us otherwise, your income and capital gain distributions from
the fund will be reinvested in the fund. However, if you prefer you may:
o receive all distributions in cash
o reinvest capital gain distributions, but receive income distributions in cash
To take advantage of one of these options, please indicate your choice on your
application.
HOW DISTRIBUTIONS ARE TAXED -- Except for tax-advantaged retirement accounts and
other tax-exempt investors, all fund distributions you receive are generally
taxable to you, regardless of whether you take them in cash or reinvest them.
Fund dividends paid to Roth IRAs, other individual retirement accounts and
qualified retirement plans generally are tax-free. Eventual withdrawals from a
Roth IRA of those amounts also may be tax-free, while withdrawals from other
retirement accounts and plans generally are subject to tax.
8
<PAGE>
Dividends are taxable in the year you receive them. In some cases, dividends you
receive in January are taxable as if they had been paid the previous December
31. Your tax statement (see sidebar) will help clarify this for you.
Distributions of net income and net short-term capital gains are taxed as
ordinary income.
[SIDEBAR]
TAXES AND YOU
The taxes you actually owe on distributions and transactions can vary with many
factors, such as your tax bracket.
How can you figure out your tax liability on fund distributions and
transactions? One helpful tool is the tax statement that we send you every
January. It details the distributions you received during the past year and
shows their tax status. A separate statement covers your transactions.
Most importantly, consult your tax professional. Everyone's tax situation is
different, and your professional should be able to help you answer any questions
you may have.
9
<PAGE>
MAINTAINING YOUR
ACCOUNT
WHEN YOU BUY SHARES -- Instructions for buying shares are on pages __ and __.
Whenever you make an initial investment in one of the funds or add to an
existing account (except with an automatic investment), you will be sent a
statement confirming your transaction. All investments must be made in U.S.
dollars, and investment checks must be drawn on a U.S. bank or a U.S. branch of
a foreign bank. The fund does not issue certificates for shares.
When you purchase shares by phone you will receive the share price calculated on
the day your order is received. Dividends will not be earned or accrued until
the day after our transfer agent receives payment.
WHEN YOU SELL SHARES -- Instructions for selling shares are on pages __ and __.
You can place an order to sell some or all of your shares at any time. The
proceeds from the shares you sold are generally sent out the next business day
after your order is executed, and nearly always within three business days.
There are two cases in which proceeds may be delayed beyond this time:
o in unusual circumstances where the law allows additional time if needed
o if a check you wrote to buy shares hasn't cleared by the time you sell
those shares
10
<PAGE>
If you think you may need to sell shares soon after buying them, you can avoid
the check clearing time (which may be up to 15 days) by investing by wire or
certified check.
In some cases, you will have to place your order to sell shares in writing, and
you will need a signature guarantee (see sidebar). These cases include: when
selling more than [$50,000] worth of shares when you want the check for the
proceeds to be made out to someone other than an owner of record, or sent
somewhere other than the address of record when you want the proceeds sent by
wire or electronic transfer to a bank account you have not designated in
advance.
When selling shares in an account that you do not intend to close, be sure to
leave at least [$2,000] worth of shares in the account. Otherwise, the fund has
the right to request that you bring the balance back up to the minimum level. If
you have not done so within 60 days, we may close your account and send you the
proceeds by mail.
STATEMENTS AND CONFIRMATIONS -- Please review your account statements and
confirmations carefully as soon as you receive them. You must contact us within
30 days if you have any questions or notice any discrepancies. Otherwise, you
may adversely affect your right to make a claim about the transaction(s).
[SIDEBAR]
SIGNATURE GUARANTEES
A signature guarantee is a guarantee that your signature is authentic.
Most banks, brokers, and other financial institutions can provide you with one.
Some may charge a fee; others may not, particularly if you are a customer of
theirs.
A notarized signature from a notary public is not a signature guarantee.
UNCASHED CHECKS
We do not pay interest on uncashed checks from fund distributions or the sale of
fund shares. We are not responsible for checks after they are sent to you. After
allowing a reasonable time for delivery, please call us if you have not received
an expected check. While we cannot track a check, we may make arrangements for a
replacement.
11
<PAGE>
[SIDEBAR]
FUND STRUCTURE
The fund uses a "master-feeder" structure.
Rather than investing directly in securities, the fund is a "feeder fund,"
meaning that it invests in a corresponding "master portfolio." The master
portfolio in turn invests in securities, using the strategies described in this
prospectus. One potential benefit of this structure is lower costs, since the
expenses of the master portfolio can be shared with any other feeder funds.
In this prospectus, we have used the word "fund" to mean a feeder fund and its
master portfolio. Costs for a feeder fund include its own costs and its share of
master portfolio costs.
For reasons relating to costs or a change in investment goal, among others, a
feeder fund could switch to another master portfolio or decide to manage its
assets itself. The fund is not currently contemplating such a move.
MAINTAINING YOUR
ACCOUNT CONTINUED
OTHER POLICIES -- Under certain circumstances, the fund reserves the right to:
o suspend the offering of shares
o reject any investment order
o satisfy an order to sell fund shares with securities rather than cash, for
certain very large orders
o suspend or postpone your right to sell fund shares on days when trading on
the New York Stock Exchange is restricted, or as otherwise permitted by
the SEC
o change its investment minimums or other requirements for buying and
selling, or waive any minimums or requirements for certain investors
12
<PAGE>
BUYING SHARES
Method Things to know
WIRING MONEY A wire for a first investment must be for at least $__
million
Wires for additional investments must be for at least
$____
SENDING US A CHECK Your first investment must be at least $___ million
Additional investments can be as little as $____
We cannot accept cash, money orders, starter checks, or
travelers checks
You will be responsible for any losses or fees resulting
from a bad check; if necessary, we may sell other shares
belonging to you in order to cover these losses
All checks must be made out to "Neuberger Berman Funds;"
we cannot accept checks made out to you or other parties
and signed over to us
13
<PAGE>
Instructions
Before wiring any money, call 800-877-9700 for an order confirmation
Have your financial institution send your wire to State Street Bank and Trust
Company
Include your name, the fund name, your account number and other information as
requested
Fill out the application and enclose your check
If regular first-class mail, address to:
NEUBERGER BERMAN FUNDS
BOSTON SERVICE CENTER
P.O BOX 8403
BOSTON, MA 02266-8403
If express delivery, registered mail, or certified mail, send to:
NEUBERGER BERMAN FUNDS
C/O STATE STREET BANK AND TRUST COMPANY
66 BROOKS DRIVE
BRAINTREE, MA 02184-3839
[SIDEBAR]
RETIREMENT PLANS
We offer investors a number of tax-advantaged plans for retirement saving:
TRADITIONAL IRAS allow money to grow tax-deferred until you take it out at
retirement. Contributions are deductible for some investors, but even when
they're not, an IRA can be beneficial.
ROTH IRAS offer tax-free growth like a traditional IRA, but instead of
tax-deductible contributions, the withdrawals are tax-free for investors who
meet certain requirements.
Also available: SEP-IRA, SIMPLE, Keogh, and other types of plans. Consult your
tax professional to find out which types of plans may be beneficial for you,
then call 800-877-9700 for information on any Neuberger Berman retirement plan.
14
<PAGE>
SELLING SHARES
Method Things to know
SENDING US A LETTER Unless you tell us otherwise, we will mail your proceeds
by check to the address of record, payable to the
registered owner(s)
If you have designated a bank account on your
application, you can request that we wire the proceeds
to this account; [if the total balance in all of your
Neuberger Berman fund accounts is less than $200,000,
you will be charged an $8.00 fee]
You can also request that we send the proceeds to your
designated bank account by electronic transfer without
fee
You may need a signature guarantee (see page ___)
SENDING US A FAX For amounts of up to $____
Not available if you have changed the address on the
account by phone, fax, or postal address change in the
past 15 days
BY CHECK Available for money market funds only
Withdrawals must be at least $250
15
<PAGE>
Instructions
Send us a letter requesting us to sell shares signed by all registered owners;
include your name, account number, the fund name, the dollar amount or number of
shares you want to sell, and any other instructions
If regular first-class mail, send to:
NEUBERGER BERMAN FUNDS
BOSTON SERVICE CENTER
P.O BOX 8403
BOSTON, MA 02266-8403
If express delivery, registered mail, or certified mail, send to:
NEUBERGER BERMAN FUNDS
C/O STATE STREET BANK AND TRUST COMPANY
66 BROOKS DRIVE
BRAINTREE, MA 02184-3839
Write a request to sell shares as described above Fax it to 212-476-8848 Call
800-877-9700 to make sure your fax arrived and is in order
[SIDEBAR]
INTERNET CONNECTION
Investors with Internet access can enjoy many valuable and time-saving features
by visiting us on the World Wide Web at WWW.NBFUNDS.COM.
The site offers complete information on our funds, current performance data, and
an Investment Education Center with interactive worksheets for college and
retirement planning. Also available are relevant news items, tax information,
portfolio manager interviews, and related articles.
As a Neuberger Berman funds shareholder, you can use the web site to access
account information and even make secure transactions n 24 hours a day.
16
<PAGE>
OBTAINING INFORMATION
You can obtain a shareholder report, SAI, and other information from:
NEUBERGER BERMAN
MANAGEMENT INC.
605 Third Avenue 2nd Floor
New York, NY 10158-0180
800-877-9700
212-476-8800
Web site:
www.nbfunds.com
Email:
[email protected]
SECURITIES AND EXCHANGE
COMMISSION
Washington, DC
20549-6009
1-800-SEC-0330 (Public
Reference Section)
Web site:
www.sec.gov
You can request copies of documents from the SEC for the cost of a duplicating
fee, or view documents at the SEC's Public Reference Room in Washington.
NEUBERGER BERMAN INSTITUTIONAL CASH FUND
o No load
o No sales charges
o No 12b-1 fees
If you'd like further details on any of these funds, you can request a free copy
of the following documents:
SHAREHOLDER REPORTS -- Published twice a year, the shareholder reports offer
information about the fund's recent performance, including:
o a discussion by the portfolio manager(s) about strategies and market
conditions
o fund performance data and financial statements
o complete portfolio holdings
STATEMENT OF ADDITIONAL INFORMATION -- The SAI contains more comprehensive
information on these funds, including:
o various types of securities and practices, and their risks
o investment limitations and additional policies
o information about each fund's management and business structure
The SAI is incorporated by reference into this prospectus, making it legally
part of the prospectus.
Investment manager:
Neuberger Berman Management Inc.
Sub-adviser:
Neuberger Berman, LLC
NEUBERGER BERMAN
Neuberger Berman Management Inc.
605 Third Avenue 2nd Floor
New York, NY 10158-0180
[RECYCLE LOGO] NMLRR1030299 SEC file number: 811-3802
<PAGE>
SUBJECT TO COMPLETION ____________________, 2000
NEUBERGER BERMAN INSTITUTIONAL CASH FUND AND
NEUBERGER BERMAN INSTITUTIONAL MONEY MARKET PORTFOLIO
STATEMENT OF ADDITIONAL INFORMATION
DATED [MARCH __, 2000]
No-Load Mutual Fund
605 Third Avenue, 2nd Floor, New York, NY 10158-0180
Toll-Free 800-877-9700
Neuberger Berman INSTITUTIONAL CASH FUND ("Fund") is a no-load
mutual fund that offers shares pursuant to a Prospectus dated [March __, 2000].
The Fund invests all of its net investable assets in Neuberger Berman
INSTITUTIONAL MONEY MARKET Portfolio ("Portfolio").
The Fund's Prospectus provides basic information that an investor
should know before investing. You can get a free copy of the Prospectus from
Neuberger Berman Management Incorporated ("NB Management"), 605 Third Avenue,
2nd Floor, New York, NY 10158-0180 or by calling 800-877-9700.
This Statement of Additional Information ("SAI") is not a prospectus
and should be read in conjunction with the Prospectus.
No person has been authorized to give any information or to make any
representations not contained in the Prospectus or in this SAI in connection
with the offering made by the Prospectus, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Fund or its distributor. The Prospectus and this SAI do not constitute an
offering by the Fund or its distributor in any jurisdiction in which such
offering may not lawfully be made.
The "Neuberger Berman" name and logo are service marks of Neuberger
Berman LLC. "Neuberger Berman Management Inc." and the fund and portfolio names
in this SAI are either service marks or registered trademarks of Neuberger
Berman Management Inc. (C) 2000 Neuberger Berman Management Inc.
THE INFORMATION IN THIS SAI IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS SAI IS NOT A PROSPECTUS.
<PAGE>
TABLE OF CONTENTS
INVESTMENT INFORMATION.......................................................1
Investment Policies and Limitations....................................1
Investment Insight.....................................................4
Additional Investment Information......................................4
Risks of Fixed Income Securities......................................15
CERTAIN RISK CONSIDERATIONS.................................................15
PERFORMANCE INFORMATION.....................................................16
Yield Calculations....................................................16
Comparative Information...............................................16
Other Performance Information.........................................17
TRUSTEES AND OFFICERS.......................................................18
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES...........................24
Investment Manager and Administrator..................................24
Management and Administration Fees....................................25
Expense Reimbursements and Waivers....................................25
Sub-Adviser...........................................................26
Investment Companies Managed..........................................27
Management and Control of NB Management...............................29
DISTRIBUTION ARRANGEMENTS...................................................29
ADDITIONAL PURCHASE INFORMATION.............................................30
Share Prices and Net Asset Value......................................30
ADDITIONAL REDEMPTION INFORMATION...........................................30
Suspension of Redemptions.............................................30
Redemptions in Kind...................................................31
DIVIDENDS AND OTHER DISTRIBUTIONS...........................................31
i
<PAGE>
ADDITIONAL TAX INFORMATION..................................................32
Taxation of the Fund..................................................32
Taxation of the Portfolio.............................................33
Taxation of the Fund's Shareholders...................................34
VALUATION OF PORTFOLIO SECURITIES...........................................34
PORTFOLIO TRANSACTIONS......................................................35
REPORTS TO SHAREHOLDERS.....................................................35
ORGANIZATION, CAPITALIZATION AND OTHER MATTERS..............................36
The Fund..............................................................36
The Portfolio.........................................................36
CUSTODIAN AND TRANSFER AGENT................................................38
INDEPENDENT AUDITORS........................................................38
LEGAL COUNSEL...............................................................38
REGISTRATION STATEMENT......................................................38
Appendix A.................................................................A-1
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INVESTMENT INFORMATION
The Fund is a separate series of Neuberger Berman Income Funds
("Trust"), a Delaware business trust that is registered with the Securities and
Exchange Commission ("SEC") as a diversified, open-end management investment
company. The Fund seeks its investment objective by investing all of its net
investable assets in a Portfolio of Income Managers Trust ("Managers Trust")
that has an investment objective identical to, and a name similar to, that of
the Fund. The Portfolio, in turn, invests in securities in accordance with an
investment objective, policies, and limitations identical to those of the Fund.
(The Trust and Managers Trust, which is an open-end management investment
company managed by Neuberger Berman Management Inc. ("NB Management"), are
together referred to below as the "Trusts.")
The following information supplements the discussion in the
Prospectus of the investment objective, policies, and limitations of the Fund
and Portfolio. The investment objective and, unless otherwise specified, the
investment policies and limitations of the Fund and Portfolio are not
fundamental. Any investment objective, policy or limitation that is not
fundamental may be changed by the trustees of the Trust ("Fund Trustees") or of
Managers Trust ("Portfolio Trustees") without shareholder approval. The
fundamental investment policies and limitations of the Fund or the Portfolio may
not be changed without the approval of the lesser of:
(1) 67% of the total units of beneficial interest ("shares") of the
Fund or Portfolio represented at a meeting at which more than 50% of the
outstanding Fund or Portfolio shares are represented or
(2) a majority of the outstanding shares of the Fund or Portfolio.
These percentages are required by the Investment Company Act of 1940
("1940 Act") and are referred to in this SAI as a "1940 Act majority vote."
Whenever the Fund is called upon to vote on a change in a fundamental investment
policy or limitation of the Portfolio, the Fund casts its votes thereon in
proportion to the votes of its shareholders at a meeting thereof called for that
purpose.
INVESTMENT POLICIES AND LIMITATIONS
The Fund has the following fundamental investment policy, to enable
it to invest in the Portfolio:
Notwithstanding any other investment policy of the Fund, the Fund may
invest all of its investable assets (cash, securities, and receivables
relating to securities) in an open-end management investment company
having substantially the same investment objective, policies, and
limitations as the Fund.
All other fundamental investment policies and limitations and the
non-fundamental investment policies and limitations of the Fund are identical to
those of the Portfolio. Therefore, although the following discusses the
investment policies and limitations of the Portfolio, it applies equally to the
Fund.
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The Portfolio determines the "issuer" of a municipal obligation for
purposes of its policy on industry concentration in accordance with the
principles of Rule 2a-7 under the 1940 Act. Also, for purposes of the investment
limitation on concentration in a particular industry, both mortgage-backed and
asset-backed securities are grouped together as a single industry.
Except for the limitation on borrowing and the limitation on
illiquid securities, any maximum percentage of securities or assets contained in
any investment policy or limitation will not be considered to be exceeded unless
the percentage limitation is exceeded immediately after, and because of, a
transaction by the Portfolio. If events subsequent to a transaction result in
the Portfolio exceeding the percentage limitation on borrowing or illiquid
securities, NB Management will take appropriate steps to reduce the percentage
of borrowings or the percentage held in illiquid securities, as may be required
by law, within a reasonable amount of time.
The fundamental investment policies and limitations of the Portfolio
are as follows:
1. BORROWING. The Portfolio may not borrow money, except that the
Portfolio may (i) borrow money from banks for temporary or emergency purposes
and not for leveraging or investment, and (ii) enter into reverse repurchase
agreements for any purpose; provided that (i) and (ii) in combination do not
exceed 33-1/3% of the value of its total assets (including the amount borrowed)
less liabilities (other than borrowings). If at any time borrowings in
accordance with the foregoing exceed 33-1/3% of the value of the Portfolio's
total assets, it will reduce its borrowings within three days (excluding
Sundays, holidays and any other days permitted by law or by the SEC) to the
extent necessary to comply with the 33-1/3% limitation. In addition to the
foregoing, the Portfolio may borrow from any person for temporary purposes in an
amount not exceeding 5% of the Portfolio's total assets at the time the loan is
made.
2. COMMODITIES. The Portfolio may not purchase commodities or
contracts thereon, but this restriction shall not prohibit the Portfolio from
purchasing the securities of issuers that own interests in any of the foregoing.
3. DIVERSIFICATION. The Portfolio may not, with respect to 75% of
the value of its total assets, purchase the securities of any issuer (other than
U.S. Government and Agency Securities) if, as a result, (i) more than 5% of the
value of the Portfolio's total assets would be invested in the securities of
that issuer or (ii) the Portfolio would hold more than 10% of the outstanding
voting securities of that issuer. (Although not a fundamental limitation, the
Portfolio is subject to the diversification requirements under Rule 2a-7 of the
1940 Act.)
4. INDUSTRY CONCENTRATION. The Portfolio may not purchase any
security if, as a result, 25% or more of its total assets (taken at current
value) would be invested in the securities of issuers having their principal
business activities in the same industry. This limitation does not apply to (i)
purchases of securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities ("U.S. Government and Agency Securities") or (ii)
investments in instruments issued by U.S. banks, U.S. branches of foreign banks
that are subject to the same regulation as U.S. banks, and foreign branches of
U.S. banks if the obligation is unconditionally guaranteed by the domestic
parent (collectively, "domestic banks"). Notwithstanding the foregoing, the
Portfolio may invest 25% or more of its total assets in instruments issued by
non-domestic banks when the portfolio manager believes they offer equal or
higher credit quality and better interest rates than domestic banks.
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5. LENDING. The Portfolio may not lend any security or make any
other loan if, as a result, more than 33-1/3% of its total assets (taken at
current value) would be lent to other parties, except, in accordance with its
investment objective, policies, and limitations, (i) through the purchase of
debt securities or (ii) by engaging in repurchase agreements.
6. REAL ESTATE. The Portfolio may not purchase real estate unless
acquired as a result of the ownership of securities or instruments, but this
restriction shall not prohibit the Portfolio from purchasing securities issued
by entities or investment vehicles that own or deal in real estate or interests
therein, or instruments secured by real estate or interests therein.
7. SENIOR SECURITIES. The Portfolio may not issue senior securities,
except as permitted under the 1940 Act.
8. UNDERWRITING. The Portfolio may not underwrite securities of
other issuers, except to the extent that the Portfolio, in disposing of
portfolio securities, may be deemed to be an underwriter within the meaning of
the Securities Act of 1933 ("1933 Act").
The non-fundamental investment policies and limitations of the
Portfolio are as follows:
1. INVESTMENTS IN ANY ONE ISSUER. The Portfolio may not purchase the
securities of any one issuer (other than U.S. Government and Agency Securities
or securities subject to a guarantee issued by a non-controlled person as
defined in Rule 2a-7 under the 1940 Act) if, as a result, more than 5% of the
Portfolio's total assets would be invested in the securities of that issuer;
provided, however, that the Portfolio may invest up to 25% of its total assets
in the first-tier securities of a single issuer for up to three business days,
provided that the Portfolio may make only one such investment at a time.
2. ILLIQUID SECURITIES. The Portfolio may not purchase any security
if, as a result, more than 10% of its net assets would be invested in illiquid
securities. Illiquid securities include securities that cannot be sold within
seven days in the ordinary course of business for approximately the amount at
which the Portfolio has valued the securities, such as repurchase agreements
maturing in more than seven days.
3. LENDING. Except for the purchase of debt securities and engaging
in repurchase agreements, the Portfolio may not make any loans other than
securities loans.
4. MARGIN TRANSACTIONS. The Portfolio may not purchase securities on
margin from brokers or other lenders, except that the Portfolio may obtain such
short-term credits as are necessary for the clearance of securities
transactions.
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INVESTMENT INSIGHT
Neuberger Berman's commitment to its asset management approach is
reflected in the more than $___ million the organization's employees and their
families have invested in the Neuberger Berman mutual funds.
INSTITUTIONAL CASH is a money market fund with a dollar-weighted
average portfolio maturity of up to 90 days. INSTITUTIONAL CASH is oriented to
investors who seek a high degree of liquidity while investing in Government and
corporate money market instruments. INSTITUTIONAL CASH seeks to provide
investors with the highest available current income consistent with safety and
liquidity. In pursuit of its objective, the Fund invests in high quality U.S.
dollar-denominated money-market instruments. The portfolio co-managers select
securities to maximize yield, while seeking a stable $1.00 net asset value. They
also broadly diversify among number and types of issuers to help limit risk.
ADDITIONAL INVESTMENT INFORMATION
The Portfolio may make the following investments, among others, some
of which are part of the Portfolio's principal investment strategies and some of
which are not. The principal risks of the Portfolio's principal strategies are
discussed in the prospectus. The Portfolio may not buy all of the types of
securities or use all of the investment techniques that are described.
U.S. GOVERNMENT AND AGENCY SECURITIES. U.S. Government Securities
are obligations of the U.S. Treasury backed by the full faith and credit of the
United States. U.S. Government Agency Securities are issued or guaranteed by
U.S. Government agencies, or by instrumentalities of the U.S. Government, such
as the Government National Mortgage Association ("GNMA"), Fannie Mae (also known
as the Federal National Mortgage Association), Freddie Mac (also known as the
Federal Home Loan Mortgage Corporation), Student Loan Marketing Association
(commonly known as "Sallie Mae"), and Tennessee Valley Authority. Some U.S.
Government Agency Securities are supported by the full faith and credit of the
United States, while others may be supported by the issuer's ability to borrow
from the U.S. Treasury, subject to the Treasury's discretion in certain cases,
or only by the credit of the issuer. U.S. Government Agency Securities include
U.S. Government Agency mortgage-backed securities. (See "Mortgage-Backed
Securities," below.) The market prices of U.S. Government Agency Securities are
not guaranteed by the Government and generally fluctuate inversely with changing
interest rates.
POLICIES AND LIMITATIONS. The Portfolio may invest 25% or more of
its total assets in U.S. Government and Agency Securities.
ILLIQUID SECURITIES. Illiquid securities are securities that cannot
be expected to be sold within seven days at approximately the price at which
they are valued. These may include unregistered or other restricted securities
and repurchase agreements maturing in greater than seven days. Illiquid
securities may also include commercial paper under section 4(2) of the
Securities Act of 1933, as amended, and Rule 144A securities (restricted
securities that may be traded freely among qualified institutional buyers
pursuant to an exemption from the registration requirements of the securities
laws); these securities are considered illiquid unless NB Management, acting
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pursuant to guidelines established by the trustees of Managers Trust, determines
they are liquid. Generally, foreign securities freely tradable in their
principal market are not considered restricted or illiquid, even if they are not
registered in the United States. Illiquid securities may be difficult for the
Portfolio to value or dispose of due to the absence of an active trading market.
The sale of some illiquid securities by the Portfolio may be subject to legal
restrictions which could be costly to the Portfolio.
POLICIES AND LIMITATIONS. The Portfolio may invest up to 10% of its
net assets in illiquid securities.
REPURCHASE AGREEMENTS. In a repurchase agreement, the Portfolio
purchases securities from a bank that is a member of the Federal Reserve System
or from a securities dealer that agrees to repurchase the securities from the
Portfolio at a higher price on a designated future date. Repurchase agreements
generally are for a short period of time, usually less than a week. Costs,
delays, or losses could result if the selling party to a repurchase agreement
becomes bankrupt or otherwise defaults. NB Management monitors the
creditworthiness of sellers.
POLICIES AND LIMITATIONS. Repurchase agreements with a maturity of
more than seven days are considered to be illiquid securities; the Portfolio may
not enter into such a repurchase agreement if, as a result, more than 10% of the
value of its net assets would then be invested in such repurchase agreements and
other illiquid securities. The Portfolio may enter into a repurchase agreement
only if (1) the underlying securities are of the type (excluding maturity
limitations) that the Portfolio's investment policies and limitations would
allow it to purchase directly, (2) the market value of the underlying
securities, including accrued interest, at all times equals or exceeds the
repurchase price, and (3) payment for the underlying securities is made only
upon satisfactory evidence that the securities are being held for the
Portfolio's account by its custodian or a bank acting as the Portfolio's agent.
SECURITIES LOANS. The Portfolio may lend portfolio securities to
banks, brokerage firms, and other institutional investors judged creditworthy by
NB Management, provided that cash or equivalent collateral, equal to at least
100% of the market value of the loaned securities, is continuously maintained by
the borrower with the Portfolio. The Portfolio may invest the cash collateral
and earn income, or it may receive an agreed upon amount of interest income from
a borrower who has delivered equivalent collateral. During the time securities
are on loan, the borrower will pay the Portfolio an amount equivalent to any
dividends or interest paid on such securities. These loans are subject to
termination at the option of the Portfolio or the borrower. The Portfolio may
pay reasonable administrative and custodial fees in connection with a loan and
may pay a negotiated portion of the interest earned on the cash or equivalent
collateral to the borrower or placing broker. The Portfolio does not have the
right to vote securities on loan, but would terminate the loan and regain the
right to vote if that were considered important with respect to the investment.
NB Management believes the risk of loss on these transactions is slight because,
if a borrower were to default for any reason, the collateral should satisfy the
obligation. However, as with other extensions of secured credit, loans of
portfolio securities involve some risk of loss of rights in the collateral
should the borrower fail financially.
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POLICIES AND LIMITATIONS. In order to realize income, the Portfolio
may lend Portfolio securities with a value not exceeding 33-1/3% of its total
assets to banks, brokerage firms, or institutional investors judged creditworthy
by NB Management. Investments in reverse repurchase agreements and securities
lending transactions will be aggregated for purposes of the 33-1/3% limitation.
Borrowers are required continuously to secure their obligations to return
securities on loan from the Portfolio by depositing collateral in a form
determined to be satisfactory by the Portfolio Trustees. The collateral, which
must be marked to market daily, must be equal to at least 100% of the market
value of the loaned securities, which will also be marked to market daily.
RESTRICTED SECURITIES AND RULE 144A SECURITIES. The Portfolio may
invest in restricted securities, which are securities that may not be sold to
the public without an effective registration statement under the 1933 Act.
Before they are registered, such securities may be sold only in a privately
negotiated transaction or pursuant to an exemption from registration. In
recognition of the increased size and liquidity of the institutional market for
unregistered securities and the importance of institutional investors in the
formation of capital, the SEC has adopted Rule 144A under the 1933 Act. Rule
144A is designed to facilitate efficient trading among institutional investors
by permitting the sale of certain unregistered securities to qualified
institutional buyers. To the extent privately placed securities held by the
Portfolio qualify under Rule 144A and an institutional market develops for those
securities, the Portfolio likely will be able to dispose of the securities
without registering them under the 1933 Act. To the extent that institutional
buyers become, for a time, uninterested in purchasing these securities,
investing in Rule 144A securities could increase the level of the Portfolio's
illiquidity. NB Management, acting under guidelines established by the Portfolio
Trustees, may determine that certain securities qualified for trading under Rule
144A are liquid. Regulation S under the 1933 Act permits the sale abroad of
securities that are not registered for sale in the United States.
Where registration is required, the Portfolio may be obligated to
pay all or part of the registration expenses, and a considerable period may
elapse between the decision to sell and the time the Portfolio may be permitted
to sell a security under an effective registration statement. If, during such a
period, adverse market conditions were to develop, the Portfolio might obtain a
less favorable price than prevailed when it decided to sell. Restricted
securities for which no market exists are priced by a method that the Portfolio
Trustees believe accurately reflects fair value.
POLICIES AND LIMITATIONS. To the extent restricted securities,
including Rule 144A securities, are illiquid, purchases thereof will be subject
to the Portfolio's 10% limit on investments in illiquid securities.
COMMERCIAL PAPER. Commercial paper is a short-term debt security
issued by a corporation, bank, municipality, or other issuer, usually for
purposes such as financing current operations. The Portfolio may invest in
commercial paper that cannot be resold to the public without an effective
registration statement under the 1933 Act. While restricted commercial paper
normally is deemed illiquid, NB Management may in certain cases determine that
such paper is liquid, pursuant to guidelines established by the Portfolio
Trustees.
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POLICIES AND LIMITATIONS. To the extent restricted commercial paper
is deemed illiquid, purchases thereof will be subject to the Portfolio's 10%
limit on investments in illiquid securities.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement,
the Portfolio sells portfolio securities subject to its agreement to repurchase
the securities at a later date for a fixed price reflecting a market rate of
interest. Reverse repurchase agreements may increase fluctuations in the
Portfolio's and the Fund's net asset values ("NAVs") and may be viewed as a form
of leverage. There is a risk that the counter-party to a reverse repurchase
agreement will be unable or unwilling to complete the transaction as scheduled,
which may result in losses to the Portfolio. NB Management monitors the
creditworthiness of counterparties to reverse repurchase agreements.
The Portfolio's investment of the proceeds of a reverse repurchase
agreement involved the speculative factor known as leverage. The Portfolio
generally will enter into a reverse repurchase agreement only if the adviser
anticipates that the interest income from investment of the proceeds will be
greater than the interest expense of the transaction and the proceeds are
invested for a period no longer than the term of the agreement. In certain
circumstances the proceeds from the reverse repurchase agreement may be invested
for a longer period of time than the term of the agreement, such as where the
Fund receives a large-scale redemption near the close of regular trading on the
NYSE.
POLICIES AND LIMITATIONS. Reverse repurchase agreements are
considered borrowings for purposes of the Portfolio's investment policies and
limitations concerning borrowings. The Fund may invest up to one-third of its
total assets in reverse repurchase agreements. Investments in reverse repurchase
agreements and securities lending transactions will be aggregated for purposes
of this investment limitation. While a reverse repurchase agreement is
outstanding, the Portfolio will deposit in a segregated account with its
custodian cash or appropriate liquid securities, marked to market daily, in an
amount at least equal to the Portfolio's obligations under the agreement.
BANKING AND SAVINGS INSTITUTION SECURITIES. These include CDs, time
deposits, bankers' acceptances, and other short-term and long-term debt
obligations issued by commercial banks and savings institutions. CDs are
receipts for funds deposited for a specified period of time at a specified rate
of return; time deposits generally are similar to CDs, but are uncertificated.
Bankers' acceptances are time drafts drawn on commercial banks by borrowers,
usually in connection with international commercial transactions. The CDs, time
deposits, and bankers' acceptances in which the Portfolio invests typically are
not covered by deposit insurance.
POLICIES AND LIMITATIONS. Instruments issued by domestic banks are
not subject to the Portfolio's fundamental limitation on industry concentration
and at various times, may amount to more or less than 25% of the Portfolio's
total assets. In addition, the Portfolio may invest 25% or more of its total
assets in instruments issued by non-domestic banks when the portfolio manager
believes they offer equal or higher credit quality and better interest rates
than domestic banks. The Portfolio may invest in securities issued by a
commercial bank or savings institution only if (1) the bank or institution is on
Neuberger Berman's approved list, and (2) in the case of a foreign bank or
institution, the securities are, in NB Management's opinion, of an investment
quality comparable with other debt securities that may be purchased by the
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Portfolio. These limitations do not prohibit investments in securities issued by
foreign branches of U.S. banks that meet the foregoing requirements.
VARIABLE OR FLOATING RATE SECURITIES; DEMAND AND PUT FEATURES.
Variable rate securities provide for automatic adjustment of the interest rate
at fixed intervals (e.g., daily, monthly, or semi-annually); floating rate
securities provide for automatic adjustment of the interest rate whenever a
specified interest rate or index changes. The interest rate on variable and
floating rate securities (collectively, "Adjustable Rate Securities") ordinarily
is determined by reference to a particular bank's prime rate, the 90-day U.S.
Treasury Bill rate, the rate of return on commercial paper or bank CDs, an index
of short-term tax-exempt rates or some other objective measure.
Adjustable Rate Securities frequently permit the holder to demand
payment of the obligations' principal and accrued interest at any time or at
specified intervals not exceeding one year. The demand feature usually is backed
by a credit instrument (e.g., a bank letter of credit) from a creditworthy
issuer and sometimes by insurance from a creditworthy insurer. Without these
credit enhancements, some Adjustable Rate Securities might not meet the
Portfolio's quality standards. Accordingly, in purchasing these securities, the
Portfolio relies primarily on the creditworthiness of the credit instrument
issuer or the insurer. The Portfolio can also buy fixed rate securities
accompanied by a demand feature or by a put option, which permits the Portfolio
to sell the security to the issuer or third party at a specified price. The
Portfolio may rely on the creditworthiness of issuers of the credit enhancements
in purchasing these securities.
Among the Adjustable Rate Securities in which the Portfolio may
invest are so-called guaranteed investment contracts ("GICs") issued by
insurance companies. In the event of insolvency of the issuing insurance
company, the ability of the Portfolio to recover its assets may depend on the
treatment of GICs under state insurance laws.
POLICIES AND LIMITATIONS. The Portfolio may invest in securities
subject to demand features or guarantees as permitted by Rule 2a-7 under the
1940 Act.
For purposes of determining its dollar-weighted average maturity,
the Portfolio calculates the remaining maturity of variable and floating rate
instruments as provided in Rule 2a-7 under the 1940 Act. In calculating its
dollar-weighted average maturity, the Portfolio is permitted to treat certain
Adjustable Rate Securities as maturing on a date prior to the date on which the
final repayment of principal must unconditionally be made. In applying such
maturity shortening devices, NB Management considers whether the interest rate
reset is expected to cause the security to trade at approximately its par value.
GICs are generally regarded as illiquid. Thus, the Portfolio may not
invest in such GICs if, as a result, more than 10% of the value of its net
assets would then be invested in such GICs and other illiquid securities.
OTHER INVESTMENT COMPANIES. The Fund may invest up to 10% of its
total assets in the securities of other money market funds. The shares of other
money market funds are subject to the management fees and other expenses of
those funds. Therefore, investments in such other investment companies will
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cause the Fund (and indirectly, the Fund's shareholders) to bear proportionately
the costs incurred by the other investment companies' operations. At the same
time, the Fund will continue to pay its own management fees and expenses with
respect to its portfolio investments, including the shares of other investment
companies.
POLICIES AND LIMITATIONS. The Portfolio's investment in such
securities is limited to (i) 3% of the total voting stock of any one investment
company, (ii) 5% of the Portfolio's total assets with respect to any one
investment company and (iii) 10% of the Portfolio's total assets in the
aggregate.
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ASSET-BACKED SECURITIES. Asset-backed securities represent direct or
indirect participations in, or are secured by and payable from, among other
things, pools of assets such as motor vehicle installment sales contracts,
installment loan contracts, leases of various types of real and personal
property, and receivables from revolving credit (credit card) agreements. These
assets are securitized through the use of trusts and special purpose
corporations. Credit enhancements, such as various forms of cash collateral
accounts or letters of credit, may support payments of principal and interest on
asset-backed securities. Although these securities may be supported by letters
of credit or other credit enhancements, payment of interest and principal
ultimately depends upon individuals paying the underlying loans, which may be
affected adversely by general downturns in the economy. Asset-backed securities
are subject to the same risk of prepayment described with respect to
mortgage-backed securities. The risk that recovery on repossessed collateral
might be unavailable or inadequate to support payments,
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however, is greater for asset-backed securities than for mortgage-backed
securities.
Certificates for Automobile ReceivablesSM ("CARSSM") represent
undivided fractional interests in a trust whose assets consist of a pool of
motor vehicle retail installment sales contracts and security interests in the
vehicles securing those contracts. Payments of principal and interest on the
underlying contracts are passed through monthly to certificate holders and are
guaranteed up to specified amounts by a letter of credit issued by a financial
institution unaffiliated with the trustee or originator of the trust. Underlying
installment sales contracts are subject to prepayment, which may reduce the
overall return to certificate holders. Certificate holders also may experience
delays in payment or losses on CARSSM if the trust does not realize the full
amounts due on underlying installment sales contracts because of unanticipated
legal or administrative costs of enforcing the contracts; depreciation, damage,
or loss of the vehicles securing the contracts; or other factors.
Credit card receivable securities are backed by receivables from
revolving credit card agreements ("Accounts"). Credit balances on Accounts are
generally paid down more rapidly than are automobile contracts. Most of the
credit card receivable securities issued publicly to date have been pass-through
certificates. In order to lengthen their maturity or duration, most such
securities provide for a fixed period during which only interest payments on the
underlying Accounts are passed through to the security holder; principal
payments received on the Accounts are used to fund the transfer of additional
credit card charges made on the Accounts to the pool of assets supporting the
securities. Usually, the initial fixed period may be shortened if specified
events occur which signal a potential deterioration in the quality of the assets
backing the security, such as the imposition of a cap on interest rates. An
issuer's ability to extend the life of an issue of credit card receivable
securities thus depends on the continued generation of principal amounts in the
underlying Accounts and the non-occurrence of the specified events. The
non-deductibility of consumer interest, as well as competitive and general
economic factors, could adversely affect the rate at which new receivables are
created in an Account and conveyed to an issuer, thereby shortening the expected
weighted average life of the related security and reducing its yield. An
acceleration in cardholders' payment rates or any other event that shortens the
period during which additional credit card charges on an Account may be
transferred to the pool of assets supporting the related security could have a
similar effect on its weighted average life and yield.
Credit cardholders are entitled to the protection of state and
federal consumer credit laws. Many of those laws give a holder the right to set
off certain amounts against balances owed on the credit card, thereby reducing
amounts paid on Accounts. In addition, unlike the collateral for most other
asset-backed securities, Accounts are unsecured obligations of the cardholder.
U.S. DOLLAR-DENOMINATED FOREIGN DEBT SECURITIES. These are
securities of foreign issuers (including banks, governments and
quasi-governmental organizations) and foreign branches of U.S. banks, including
negotiable CDs, bankers' acceptances, and commercial paper. While investments in
foreign securities are intended to reduce risk by providing further
diversification, such investments involve sovereign and other risks, in addition
to the credit and market risks normally associated with domestic securities.
These additional risks include the possibility of adverse local, political,
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social, diplomatic and economic developments (including political instability)
and the potentially adverse effects of unavailability of public information
regarding issuers, less governmental supervision and regulation of financial
markets, reduced liquidity of certain financial markets, and the lack of uniform
accounting, auditing, and financial reporting standards or the application of
standards that are different or less stringent than those applied in the United
States. It may be difficult to invoke legal process or to enforce contractual
obligations abroad.
POLICIES AND LIMITATIONS. These investments are subject to the
Portfolio's quality, maturity, and duration standards.
WHEN-ISSUED TRANSACTIONS. These transactions may involve
mortgage-backed securities such as GNMA, Fannie Mae, and Freddie Mac
certificates. These transactions involve a commitment by the Portfolio to
purchase securities that will be issued at a future date (ordinarily within two
months, although the Portfolio may agree to a longer settlement period). The
price of the underlying securities (usually expressed in terms of yield) and the
date when the securities will be delivered and paid for (the settlement date)
are fixed at the time the transaction is negotiated. When-issued purchases are
negotiated directly with the other party, and such commitments are not traded on
exchanges.
When-issued transactions enable the Portfolio to "lock in" what NB
Management believes to be an attractive price or yield on a particular security
for a period of time, regardless of future changes in interest rates. In periods
of falling interest rates and rising prices, the Portfolio might purchase a
security on a when-issued basis and sell a similar security to settle such
purchase, thereby obtaining the benefit of currently higher yields. If the
seller fails to complete the sale, the Portfolio may lose the opportunity to
obtain a favorable price.
The value of securities purchased on a when-issued basis and any
subsequent fluctuations in their value are reflected in the computation of the
Portfolio's NAV starting on the date of the agreement to purchase the
securities. Because the Portfolio has not yet paid for the securities, this
produces an effect similar to leverage. The Portfolio does not earn interest on
securities it has committed to purchase until the securities are paid for and
delivered on the settlement date.
POLICIES AND LIMITATIONS. The Portfolio will purchase securities on
a when-issued basis only with the intention of completing the transaction and
actually purchasing the securities. If deemed advisable as a matter of
investment strategy, however, the Portfolio may dispose of or renegotiate a
commitment after it has been entered into. The Portfolio also may sell
securities it has committed to purchase before those securities are delivered to
the Portfolio on the settlement date. The Portfolio may realize capital gains or
losses in connection with these transactions.
When the Portfolio purchases securities on a when-issued basis, it
will deposit in a segregated account with its custodian, until payment is made,
appropriate liquid securities having an aggregate market value (determined
daily) at least equal to the amount of the Portfolio's purchase commitments.
This procedure is designed to ensure that the Portfolio maintains sufficient
assets at all times to cover its obligations under when-issued purchases.
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<PAGE>
LEVERAGE. The Portfolio may make investments while borrowings are
outstanding. Leverage creates an opportunity for increased total return but, at
the same time, creates special risk considerations. For example, leverage may
amplify changes in the Portfolio's and its corresponding Fund's NAVs. Although
the principal of such borrowings will be fixed, the Portfolio's assets may
change in value during the time the borrowing is outstanding. Leverage from
borrowing creates interest expenses for the Portfolio. To the extent the income
derived from securities purchased with borrowed funds exceeds the interest the
Portfolio will have to pay, the Portfolio's total return will be greater than it
would be if leverage were not used. Conversely, if the income from the assets
obtained with borrowed funds is not sufficient to cover the cost of leveraging,
the net income of the Portfolio will be less than it would be if leverage were
not used, and therefore the amount available for distribution to the Fund's
shareholders as dividends will be reduced. Reverse repurchase agreements,
securities lending transactions and when-issued transactions may create
leverage.
POLICIES AND LIMITATIONS. The Portfolio may borrow money from banks
for temporary or emergency purposes or enter into reverse repurchase agreements
for any purpose, as long as such borrowings do not exceed 33-1/3% of the value
of its total assets (including the amount borrowed) less liabilities (other than
borrowings). The Portfolio may also borrow up to 5% of its total assets for
temporary purposes, e.g., for the purpose of settling purchase and sale
transactions; these temporary borrowings are not subject to the 33-1/3%
limitation.
ZERO COUPON SECURITIES. The Portfolio may invest in zero coupon
securities. These securities are debt obligations that do not entitle the holder
to any periodic payment of interest prior to maturity or that specify a future
date when the securities begin to pay current interest. Zero coupon securities
are issued and traded at a significant discount from their face amount or par
value. This discount varies depending on prevailing interest rates, the time
remaining until cash payments begin, the liquidity of the security, and the
perceived credit quality of the issuer. Zero coupon securities are redeemed at
face value when they mature. The discount on zero coupon securities ("original
issue discount" or "OID") must be taken into income ratably by the Portfolio
prior to the receipt of any actual payments. Pay-in-kind securities pay interest
through the issuance of additional securities.
Because the Fund must distribute substantially all of its net income
(including its share of the Portfolio's non-cash income attributable to zero
coupon securities) to its shareholders each year for income and excise tax
purposes, the Portfolio may have to dispose of portfolio securities under
disadvantageous circumstances to generate cash, or may be required to borrow, to
satisfy the Fund's distribution requirements. See "Additional Tax Information."
The market prices of zero coupon securities generally are more
volatile than the prices of securities that pay interest periodically. Zero
coupon securities are likely to respond to changes in interest rates to a
greater degree than other types of debt securities having similar maturities and
credit quality.
MUNICIPAL OBLIGATIONS. Municipal obligations are issued by or on
behalf of states, the District of Columbia, and U.S. territories and possessions
and their political subdivisions, agencies, and instrumentalities. The interest
on municipal obligations is generally exempt from federal income tax.
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<PAGE>
Municipal obligations include "general obligation" securities, which
are backed by the full taxing power of a municipality, and "revenue" securities,
which are backed only by the income from a specific project, facility, or tax.
Municipal obligations also include industrial development and private activity
bonds which are issued by or on behalf of public authorities, but are not backed
by the credit of any governmental or public authority. "Anticipation notes" are
issued by municipalities in expectation of future proceeds from the issuance of
bonds or from taxes or other revenues, and are payable from those bond proceeds,
taxes, or revenues. Municipal obligations also include tax-exempt commercial
paper, which is issued by municipalities to help finance short-term capital or
operating requirements.
The value of municipal obligations is dependent on the continuing
payment of interest and principal when due by the issuers of the municipal
obligations (or, in the case of industrial development bonds, the revenues
generated by the facility financed by the bonds or, in certain other instances,
the provider of the credit facility backing the bonds). As with other fixed
income securities, an increase in interest rates generally will reduce the value
of the Portfolio's investments in municipal obligations, whereas a decline in
interest rates generally will increase that value.
Current efforts to restructure the federal budget and the
relationship between the federal government and state and local governments may
adversely impact the financing of some issuers of municipal securities. Some
states and localities may experience substantial deficits and may find it
difficult for political or economic reasons to increase taxes. Efforts are under
way that may result in a restructuring of the federal income tax system. These
developments could reduce the value of all municipal securities, or the
securities of particular issuers.
POLICIES AND LIMITATIONS. The Portfolio may invest in municipal
obligations that otherwise meet its criteria for quality and maturity.
RISKS OF FIXED INCOME SECURITIES
Fixed income securities are subject to the risk of an issuer's
inability to meet principal and interest payments on its obligations ("credit
risk") and are subject to price volatility due to such factors as interest rate
sensitivity, market perception of the creditworthiness of the issuer, and market
liquidity ("market risk"). Securities in which the Portfolio invests react
primarily to movements in the general level of interest rates.
RATINGS OF FIXED INCOME SECURITIES
As discussed in the Prospectus, the Portfolio may purchase
securities rated by Standard & Poor's ("S&P"), Moody's Investors Service, Inc.
("Moody's"), or any other nationally recognized statistical rating organization
("NRSRO"). The ratings of an NRSRO represent its opinion as to the quality of
securities it undertakes to rate. Ratings are not absolute standards of quality;
consequently, securities with the same maturity, duration, coupon, and rating
may have different yields. Although the Portfolio may rely on the ratings of any
NRSRO, the Portfolio mainly refers to ratings assigned by S&P and Moody's, which
are described in Appendix A. The Portfolio may also invest in unrated securities
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<PAGE>
that are deemed comparable in quality by NB Management to the rated securities
in which the Portfolio may permissibly invest.
HIGH-QUALITY DEBT SECURITIES. High-quality debt securities are
securities that have received a rating from at least one NRSRO, such as S&P or
Moody's, in one of the two highest rating categories (the highest category in
the case of commercial paper) or, if not rated by any NRSRO, such as U.S.
Government and Agency Securities, have been determined by NB Management to be of
comparable quality. If two or more NRSROs have rated a security, at least two of
them must rate it as high quality if the security is to be eligible for purchase
by the Portfolio.
Subsequent to its purchase by the Portfolio, the rating of an issue
of debt securities may be reduced, so that the securities would no longer be
eligible for purchase by the Portfolio. With respect to the Portfolio, NB
Management will consider the need to dispose of such securities in accordance
with the requirements of Rule 2a-7 under the 1940 Act.
The Portfolio is required to maintain a dollar-weighted average
portfolio maturity of no more than 90 days and invest in a portfolio of debt
instruments with remaining maturities of 397 days or less.
CERTAIN RISK CONSIDERATIONS
The Fund's investment in the Portfolio may be affected by the
actions of other large investors in the Portfolio, if any. For example, if a
large investor in the Portfolio (other than the Fund) redeemed its interest in
the Portfolio, the Portfolio's remaining investors (including the Fund) might,
as a result, experience higher pro rata operating expenses, thereby producing
lower returns.
Although the Portfolio seeks to reduce risk by investing in a
diversified portfolio of securities, diversification does not eliminate all
risk. There can, of course, be no assurance that the Portfolio will achieve its
investment objective.
PERFORMANCE INFORMATION
The Fund's performance figures are based on historical results and
are not intended to indicate future performance. The yield and total return of
the Fund will vary.
YIELD CALCULATIONS
The Fund may advertise its "current yield" and "effective yield" in
the financial press and other publications. The Fund's CURRENT YIELD is based on
the return for a recent seven-day period and is computed by determining the net
change (excluding capital changes) in the value of a hypothetical account having
a balance of one share at the beginning of the period, subtracting a
hypothetical charge reflecting deductions from shareholder accounts, and
dividing the difference by the value of the account at the beginning of the base
period. The result is a "base period return," which is then annualized -- that
is, the amount of income generated during the seven-day period is assumed to be
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<PAGE>
generated each week over a 52-week period -- and shown as an annual percentage
of the investment.
The EFFECTIVE YIELD of the Fund is calculated similarly, but the
base period return is assumed to be reinvested. The assumed reinvestment is
calculated by adding 1 to the base period return, raising the sum to a power
equal to 365 divided by seven, and subtracting one from the result, according to
the following formula:
Effective Yield = [(Base Period Return + 1)365/7] - 1.
NB Management may from time to time reimburse the Fund or Portfolio
for a portion of its expenses. Such action has the effect of increasing yield
and total return. Actual reimbursements are described in the Prospectus and in
"Investment Management and Administration Services" below.
COMPARATIVE INFORMATION
From time to time the Fund's performance may be compared with:
(1) data (that may be expressed as rankings or ratings) published by
independent services or publications (including newspapers,
newsletters, and financial periodicals) that monitor the performance
of mutual funds, such as Lipper Analytical Services, Inc., CDA
Investment Technologies, Inc., Wiesenberger Investment Companies
Service, IBC/Financial Data Inc.'s Money Market Fund Report,
Investment Company Data Inc., Morningstar Inc., Micropal
Incorporated and quarterly mutual fund rankings by Money, Fortune,
Forbes, Business Week, Personal Investor, and U.S. News & World
Report magazines, The Wall Street Journal, The New York Times,
Kiplinger's Personal Finance, and Barron's Newspaper, or
(2) recognized bond, stock, and other indices such as the Lehman
Brothers Bond Index, the Standard & Poor's 500 Composite Stock Price
Index ("S&P 500 Index"), Dow Jones Industrial Average ("DJIA"),
S&P/BARRA Index, Russell Index, and various other domestic,
international, and global indices and changes in the U.S. Department
of Labor Consumer Price Index. The S&P 500 Index is a broad index of
common stock prices, while the DJIA represents a narrower segment of
industrial companies. Each assumes reinvestment of distributions and
is calculated without regard to tax consequences or the costs of
investing. Each Portfolio may invest in different types of
securities from those included in some of the above indices.
The Fund's performance also may be compared from time to time with
the following specific indices, among others, and other measures of performance:
IBC/Financial Data Inc.'s Government Money Market Funds average and Taxable
General Purpose Money Market Funds average.
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<PAGE>
The Fund may invest some of its assets in different types of
securities than those included in the index used as a comparison with the Fund's
historical performance. The Fund may also compare certain indices, which
represent different segments of the securities markets, for the purpose of
comparing the historical returns and volatility of those particular market
segments. Measures of volatility show the range of historical price
fluctuations. Standard deviation may be used as a measure of volatility. There
are other measures of volatility, which may yield different results.
In addition, the Fund's performance may be compared at times with
that of various bank instruments (including bank money market accounts and CDs
of varying maturities) as reported in publications such as The Bank Rate
Monitor. Any such comparisons may be useful to investors who wish to compare the
Fund's past performance with that of certain of its competitors. Of course, past
performance is not a guarantee of future results. Unlike an investment in the
Fund, bank CDs pay a fixed rate of interest for a stated period of time and are
insured up to $100,000.
The Fund may also be compared to individual asset classes such as
common stocks, small-cap stocks, or Treasury bonds, based on information
supplied by Ibbotson and Sinquefield. Evaluations of the Fund's performance,
their yield/ total returns and comparisons may be used in advertisements and in
information furnished to current and prospective shareholders (collectively,
"Advertisements").
OTHER PERFORMANCE INFORMATION
From time to time, information about the Portfolio's portfolio
allocation and holdings as of a particular date may be included in
Advertisements for the Fund. This information may include the Portfolio's
portfolio diversification by asset type. Information used in Advertisements may
include statements or illustrations relating to the appropriateness of types of
securities and/or mutual funds that may be employed to meet specific financial
goals, such as (1) funding retirement, (2) paying for children's education, and
(3) financially supporting aging parents.
Information (including charts and illustrations) showing the effects
of compounding interest may be included in Advertisements from time to time.
Compounding is the process of earning interest on principal plus interest that
was earned earlier. Interest can be compounded at different intervals, such as
annually, semi-annually, quarterly, monthly, or daily. For example, $1,000
compounded annually at 9% will grow to $1,090 at the end of the first year (an
increase of $90) and $1,188 at the end of the second year (an increase of $98).
The extra $8 that was earned on the $90 interest from the first year is the
compound interest. One thousand dollars compounded annually at 9% will grow to
$2,367 at the end of ten years and $5,604 at the end of twenty years. Other
examples of compounding are as follows: at 7% and 12% annually, $1,000 will grow
to $1,967 and $3,106, respectively, at the end of ten years and $3,870 and
$9,646, respectively, at the end of twenty years. All these examples are for
illustrative purposes only and are not indicative of any Fund's performance.
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<PAGE>
Information relating to inflation and its effects on the dollar also
may be included in Advertisements. For example, after ten years, the purchasing
power of $25,000 would shrink to $16,621, $14,968, $13,465, and $12,100,
respectively, if the annual rates of inflation during that period were 4%, 5%,
6%, and 7%, respectively. (To calculate the purchasing power, the value at the
end of each year is reduced by the inflation rate for the ten-year period.)
Information (including charts and illustrations) showing the total
return performance for government funds, 6-month CDs and money market funds may
be included in Advertisements from time to time.
Information regarding the effects of automatic investing and
systematic withdrawal plans, investing at market highs and/or lows, and
investing early versus late for retirement plans also may be included in
Advertisements, if appropriate.
TRUSTEES AND OFFICERS
The following table sets forth information concerning the trustees
and officers of the Trusts, including their addresses and principal business
experience during the past five years. Some persons named as trustees and
officers also serve in similar capacities for other funds and their
corresponding portfolios administered or managed by NB Management and Neuberger
Berman.
Positions
Name, Address Held With
And Age(1) the Trusts Principal Occupation(s)(2)
- ---------- ---------- --------------------------
John Cannon (69) Trustee of each Chairman and Chief
CDC Capital Management Trust Investment Officer of CDC
450 Sentry Parkway Capital Management
Suite 105 (registered investment
P.O. Box 1212 adviser) (1993-present).
Blue Bell, PA 19422
Peter Sundman* (__) President, Chief Principal of Neuberger
Executive Officer, Berman; President and
and Trustee of Director of NB
each Trust Management; Chairman of
the Board, Chief
Executive Officer or
Trustee of nine other
mutual funds for which NB
Management acts as
investment manager or
administrator.
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<PAGE>
Positions
Name, Address Held With
And Age(1) the Trusts Principal Occupation(s)(2)
- ---------- ---------- --------------------------
Theodore P. Giuliano* (46) Chairman of the Principal of Neuberger
Board and Trustee Berman; Vice President
of each Trust and Director of NB
Management; Chairman of the
Board and Trustee of one
other mutual fund for which
NB Management acts as
administrator.
Barry Hirsch (65) Trustee of each Senior Vice President,
Loews Corporation Trust Secretary, and General
667 Madison Avenue Counsel of Loews
7th Floor Corporation (diversified
New York, NY 10021 financial corporation).
Robert A. Kavesh (71) Trustee of each Professor of Finance and
110 Bleecker Street Trust Economics at Stern School
Apt. 24B of Business, New York
New York, NY 10012 University; Director of
Del Laboratories, Inc.
and Greater New York
Mutual Insurance Co.
William E. Rulon (66) Trustee of each Retired. Senior Vice
1761 Hotel Circle South Trust President of Foodmaker,
San Diego, CA 92108 Inc. (operator and
franchiser of
restaurants) until
January 1997; Secretary
of Foodmaker, Inc. until
July 1996.
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<PAGE>
Positions
Name, Address Held With
And Age(1) the Trusts Principal Occupation(s)(2)
- ---------- ---------- --------------------------
Candace L. Straight (51) Trustee of each Private investor and
518 E. Passaic Avenue Trust consultant specializing
Bloomfield, NJ 07003 in the insurance
industry; Advisory Director
of Securities Capital LLC,
(a global private equity
investment firm dedicated
to making investments in
the insurance sector);
Principal of Head &
Company, LLC (limited
liability company providing
investment banking and
consulting services to the
insurance industry) until
March 1996; Director of
Drake Holdings (U.K. motor
insurer) until June 1996.
Daniel J. Sullivan (59) Vice President of Senior Vice President of
each Trust NB Management since 1992;
prior thereto, Vice
President of NB
Management; Vice
President of nine other
mutual funds for which NB
Management acts as
investment manager or
administrator.
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<PAGE>
Positions
Name, Address Held With
And Age(1) the Trusts Principal Occupation(s)(2)
- ---------- ---------- --------------------------
Michael J. Weiner (52) Vice President and Principal of Neuberger
Principal Berman; Senior Vice
Financial Officer President of NB
of each Trust Management since 1992;
Treasurer of NB Management
from 1992 to 1996; prior
thereto, Vice President and
Treasurer of NB Management
and Treasurer of certain
mutual funds for which NB
Management acted as
investment adviser; Vice
President and Principal
Financial Officer of nine
other mutual funds for
which NB Management acts as
investment manager or
administrator.
Claudia A. Brandon (42) Secretary of each Vice President of NB
Trust Management; Secretary of
nine other mutual funds
for which NB Management
acts as investment
manager or administrator.
Richard Russell (52) Treasurer and Vice President of NB
Principal Management since 1993;
Accounting Officer prior thereto, Assistant
of each Trust Vice President of NB
Management; Treasurer and
Principal Accounting
Officer of nine other
mutual funds for which NB
Management acts as
investment manager or
administrator.
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<PAGE>
Positions
Name, Address Held With
And Age(1) the Trusts Principal Occupation(s)(2)
- ---------- ---------- --------------------------
Stacy Cooper-Shugrue (36) Assistant Assistant Vice President
Secretary of each of NB Management since
Trust 1993; prior thereto,
employee of NB
Management; Assistant
Secretary of nine other
mutual funds for which NB
Management acts as
investment manager or
administrator.
C. Carl Randolph (61) Assistant Principal of Neuberger
Secretary of Berman since 1992; prior
each Trust thereto, employee of
Neuberger Berman; Assistant
Secretary of nine other
mutual funds for which NB
Management acts as
investment manager or
administrator.
Barbara DiGiorgio (40) Assistant Assistant Vice President
Treasurer of each of NB Management since
Trust 1993; prior thereto,
employee of NB
Management; Assistant
Treasurer of nine other
mutual funds for which NB
Management acts as
investment manager or
administrator.
Celeste Wischerth (38) Assistant Assistant Vice President
Treasurer of each of NB Management since
Trust 1994; prior thereto,
employee of NB
Management; Assistant
Treasurer of nine other
mutual funds for which NB
Management acts as
investment manager or
administrator.
- --------------------
(1) Unless otherwise indicated, the business address of each listed person is
605 Third Avenue, New York, NY 10158.
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<PAGE>
(2) Except as otherwise indicated, each individual has held the positions shown
for at least the last five years.
* Indicates a trustee who is an "interested person" of each Trust
within the meaning of the 1940 Act. Messrs. Sundman and Giuliano are interested
persons by virtue of the fact that they are officers and directors of NB
Management and principals of Neuberger Berman.
The Trust's Trust Instrument and Managers Trust's Declaration of
Trust provide that each such Trust will indemnify its trustees and officers
against liabilities and expenses reasonably incurred in connection with
litigation in which they may be involved because of their offices with the
Trust, unless it is adjudicated that they (a) engaged in bad faith, willful
misfeasance, gross negligence, or reckless disregard of the duties involved in
the conduct of their offices, or (b) did not act in good faith in the reasonable
belief that their action was in the best interest of the Trust. In the case of
settlement, such indemnification will not be provided unless it has been
determined (by a court or other body approving the settlement or other
disposition, or by a majority of disinterested trustees based upon a review of
readily available facts, or in a written opinion of independent counsel) that
such officers or trustees have not engaged in willful misfeasance, bad faith,
gross negligence, or reckless disregard of their duties.
The following table sets forth information concerning the
compensation of the trustees and officers of the Trust. None of the Neuberger
Berman Funds(R) has any retirement plan for its trustees or officers.
TABLE OF COMPENSATION
FOR FISCAL YEAR ENDED 10/31/99
Aggregate Total Compensation from
Name and Position Compensation Trusts in the Neuberger Berman
With the Trust From the Trust Fund Complex Paid to Trustees
- -------------- -------------- -----------------------------
John Cannon $ $
Trustee (2 other investment companies)
Stanley Egener $0 $0
Trustee (since retired) (10 other investment
companies)
Theodore P. Giuliano $0 $0
Chairman of the Board and (2 other investment companies)
Trustee
Barry Hirsch $ $
Trustee (2 other investment companies)
Robert A. Kavesh $ $
Trustee (2 other investment companies)
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<PAGE>
TABLE OF COMPENSATION
FOR FISCAL YEAR ENDED 10/31/99
Aggregate Total Compensation from
Name and Position Compensation Trusts in the Neuberger Berman
With the Trust From the Trust Fund Complex Paid to Trustees
- -------------- -------------- -----------------------------
William E. Rulon $ $
Trustee (2 other investment companies)
Candace L. Straight $ $
Trustee (2 other investment companies)
At _________, 1999, the trustees and officers of the Trust and
Managers Trust, as a group, owned beneficially or of record less than 1% of the
outstanding shares of each Fund.
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
INVESTMENT MANAGER AND ADMINISTRATOR
Because all of the Fund's net investable assets are invested in the
Portfolio, the Fund does not need an investment manager. NB Management serves as
the Portfolio's investment manager pursuant to a management agreement with
Managers Trust, on behalf of the Portfolio, dated as of July 2, 1993
("Management Agreement"). The Management Agreement was approved by the holders
of the interests in the Portfolio on __________, 2000.
The Management Agreement provides, in substance, that NB Management
will make and implement investment decisions for the Portfolio in its discretion
and will continuously develop an investment program for the Portfolio's assets.
The Management Agreement permits NB Management to effect securities transactions
on behalf of the Portfolio through associated persons of NB Management. The
Management Agreement also specifically permits NB Management to compensate,
through higher commissions, brokers and dealers who provide investment research
and analysis to the Portfolio, although NB Management has no current plans to
pay a material amount of such compensation.
NB Management provides to the Portfolio, without separate cost,
office space, equipment, and facilities and the personnel necessary to perform
executive, administrative, and clerical functions. NB Management pays all
salaries, expenses, and fees of the officers, trustees, and employees of
Managers Trust who are officers, directors, or employees of NB Management. Three
officers and directors of NB Management (who also are principals of Neuberger
Berman) presently serve as trustees and officers of the Trusts. See "Trustees
and Officers." The Portfolio pays NB Management a management fee based on the
Portfolio's average daily net assets, as described in the Prospectus.
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<PAGE>
NB Management provides similar facilities, services, and personnel
to the Fund pursuant to an administration agreement with the Trust, dated May 1,
1995 ("Administration Agreement"). For such administrative services, each Fund
pays NB Management a fee based on the Fund's average daily net assets, as
described in the Prospectus. NB Management enters into administrative services
agreements with Institutions, pursuant to which it compensates such Institutions
for accounting, recordkeeping and other services that they provide in connection
with investments in the Fund. The Fund became subject to the Administration
Agreement on __________, 2000.
Under the Administration Agreement, NB Management also provides to
the Fund and its shareholders certain shareholder, shareholder-related, and
other services that are not furnished by the Fund's shareholder servicing agent.
NB Management provides the direct shareholder services specified in the
Administration Agreement, assists the shareholder servicing agent in the
development and implementation of specified programs and systems to enhance
overall shareholder servicing capabilities, solicits and gathers shareholder
proxies, performs services connected with the qualification of the Fund's shares
for sale in various states, and furnishes other services the parties agree from
time to time should be provided under the Administration Agreement. From time to
time, NB Management or the Fund may enter into arrangements with registered
broker-dealers or other third parties pursuant to which it pays the
broker-dealer or third party a per account fee or a fee based on a percentage of
the aggregate net asset value of Fund shares purchased by the broker-dealer or
third party on behalf of its customers, in payment for administrative and other
services rendered to such customers.
MANAGEMENT AND ADMINISTRATION FEES
For investment management services, the Portfolio pays NB Management
a fee at the annual rate of 0.10% of the Portfolio's average daily net assets.
For administrative services, the Fund pays NB Management at the
annual rate of 0.15% of that Fund's average daily net assets. With the Fund's
consent, NB Management may subcontract to third parties some of its
responsibilities to that Fund under the administration agreement. In addition,
the Fund may compensate such third parties for accounting and other services.
EXPENSE REIMBURSEMENTS AND WAIVERS
NB Management has contractually agreed through 12/31/03 to reimburse
the Fund for its Operating Expenses (including fees under the Administration
Agreement) and the Fund's pro rata share of the Portfolio's Operating Expenses
(including fees under the Management Agreement) that exceed, in the aggregate,
0.20% of the Fund's average daily net assets. Operating Expenses exclude
interest, taxes, brokerage commissions, and extraordinary expenses.
The Management Agreement continues with respect to the Portfolio for
a period of two years after the date the Portfolio became subject thereto. The
Management Agreement is renewable thereafter from year to year with respect to
the Portfolio, so long as its continuance is approved at least annually (1) by
the vote of a majority of the Portfolio Trustees who are not "interested
persons" of NB Management or Managers Trust ("Independent Portfolio Trustees"),
cast in person at a meeting called for the purpose of voting on such approval,
and (2) by the vote of a majority of the Portfolio Trustees or by a 1940 Act
majority vote of the outstanding interests in the Portfolio. The Administration
Agreement continues with respect to the Fund for a period of two years after the
date the Fund became subject thereto. The Administration Agreement is renewable
from year to year with respect to the Fund, so long as its continuance is
approved at least annually (1) by the vote of a majority of the Fund Trustees
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<PAGE>
who are not "interested persons" of NB Management or the Trust ("Independent
Fund Trustees"), cast in person at a meeting called for the purpose of voting on
such approval and (2) by the vote of a majority of the Fund Trustees or by a
1940 Act majority vote of the outstanding shares in the Fund.
The Management Agreement is terminable, without penalty, with
respect to the Portfolio on 60 days' written notice either by Managers Trust or
by NB Management. The Administration Agreement is terminable, without penalty,
with respect to the Fund on 60 days' written notice either by NB Management or
by the Trust. Each Agreement terminates automatically if it is assigned.
SUB-ADVISER
NB Management retains Neuberger Berman, 605 Third Avenue, New York,
NY 10158-3698, as sub-adviser with respect to the Portfolio pursuant to a
sub-advisory agreement dated July 2, 1993 ("Sub-Advisory Agreement"). The
Sub-Advisory Agreement was approved by the holders of the interests in the
Portfolio on ___________, 2000.
The Sub-Advisory Agreement provides in substance that Neuberger
Berman will furnish to NB Management, upon reasonable request, the same type of
investment recommendations and research that Neuberger Berman, from time to
time, provides to its employees for use in managing client accounts. In this
manner, NB Management expects to have available to it, in addition to research
from other professional sources, the capability of the research staff of
Neuberger Berman. This staff consists of numerous investment analysts, each of
whom specializes in studying one or more industries, under the supervision of
the Director of Research, who is also available for consultation with NB
Management. The Sub-Advisory Agreement provides that NB Management will pay for
the services rendered by Neuberger Berman based on the direct and indirect costs
to Neuberger Berman in connection with those services. Neuberger Berman also
serves as a sub-adviser for all of the other mutual funds managed by NB
Management.
The Sub-Advisory Agreement continues with respect to the Portfolio
for a period of two years after the date the Portfolio became subject thereto,
and is renewable thereafter from year to year, subject to approval of its
continuance in the same manner as the Management Agreement. The Sub-Advisory
Agreement is subject to termination, without penalty, with respect to the
Portfolio by the Portfolio Trustees or a 1940 Act majority vote of the
outstanding interests in the Portfolio, by NB Management, or by Neuberger Berman
on not less than 30 nor more than 60 days' prior written notice to the Fund. The
Sub-Advisory Agreement also terminates automatically with respect to the
Portfolio if it is assigned or if the Management Agreement terminates with
respect to the Portfolio.
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Most money managers that come to the Neuberger Berman organization
have at least fifteen years experience. Neuberger Berman and NB Management
employ experienced professionals that work in a competitive environment.
INVESTMENT COMPANIES MANAGED
As of December 31, 1999, the investment companies managed by NB
Management had aggregate net assets of approximately $______ billion. NB
Management currently serves as investment manager of the following investment
companies:
Approximate Net Assets at
Name December 31, 1999
---- -----------------
Neuberger Berman Cash Reserves Portfolio...........................$ _________
(investment portfolio for Neuberger Berman Cash Reserves)
Neuberger Berman Government Money Portfolio........................$ _________
(investment portfolio for Neuberger Berman Government Money Fund)
Neuberger Berman High Yield Bond Portfolio.........................$ _________
(investment portfolio for Neuberger Berman High Yield Bond Fund)
Neuberger Berman Institutional Money Market Portfolio........(in registration)
(investment portfolio for Neuberger Berman Institutional Cash Fund and
Neuberger Berman ERISA Trust)
Neuberger Berman Limited Maturity Bond Portfolio...................$ _________
(investment portfolio for Neuberger Berman Limited Maturity Bond Fund and
Neuberger Berman Limited Maturity Bond Trust)
Neuberger Berman Municipal Money Portfolio.........................$ _________
(investment portfolio for Neuberger Berman Municipal Money Fund)
Neuberger Berman Municipal Securities Portfolio....................$ _________
(investment portfolio for Neuberger Berman Municipal Securities Trust)
Neuberger Berman Century Portfolio.................................$ _________
(investment portfolio for Neuberger Berman Century Fund and Neuberger
Berman Century Trust)
Neuberger Berman Focus Portfolio...................................$__________
(investment portfolio for Neuberger Berman Focus Fund, Neuberger Berman
Focus Trust, and Neuberger Berman Focus Assets)
Neuberger Berman Genesis Portfolio.................................$ _________
(investment portfolio for Neuberger Berman Genesis Fund, Neuberger Berman
Genesis Trust, and Neuberger Berman Genesis Assets)
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Neuberger Berman Guardian Portfolio.............................. $ _________
(investment portfolio for Neuberger Berman Guardian Fund, Neuberger
Berman Guardian Trust, and Neuberger Berman Guardian Assets)
Neuberger Berman International Portfolio...........................$ _________
(investment portfolio for Neuberger Berman International Fund and
Neuberger Berman International Trust)
Neuberger Berman Manhattan Portfolio...............................$ _________
(investment portfolio for Neuberger Berman Manhattan Fund, Neuberger
Berman Manhattan Trust, and Neuberger Berman Manhattan Assets)
Neuberger Berman Millennium Portfolio..............................$ _________
(investment portfolio for Neuberger Berman Millennium Fund, Neuberger
Berman Millennium Trust, and Neuberger Berman Millennium Assets)
Neuberger Berman Partners Portfolio................................$ _________
(investment portfolio for Neuberger Berman Partners Fund, Neuberger
Berman Partners Trust, and Neuberger Berman Partners Assets)
Neuberger Berman Regency Portfolio.................................$ _________
(investment portfolio for Neuberger Berman Rengency Fund and Neuberger
Berman Regency Trust)
Neuberger Berman Socially Responsive Portfolio.....................$ _________
(investment portfolio for Neuberger Berman Socially Responsive Fund,
Neuberger Berman Socially Responsive Trust, Neuberger Berman NYCDC
Socially Responsive Trust, and Neuberger Berman Socially Responsive
Assets)
Advisers Managers Trust (seven series).............................$ _________
The investment decisions concerning the Portfolio and the other
mutual funds managed by NB Management (collectively, "Other NB Funds") have been
and will continue to be made independently of one another. In terms of their
investment objectives, most of the Other NB Funds differ from the Portfolio.
Even where the investment objectives are similar, however, the methods used by
the Other NB Funds and the Portfolio to achieve their objectives may differ. The
investment results achieved by all of the funds managed by NB Management have
varied from one another in the past and are likely to vary in the future.
There may be occasions when the Portfolio and one or more of the
Other NB Funds or other accounts managed by Neuberger Berman are
contemporaneously engaged in purchasing or selling the same securities from or
to third parties. When this occurs, the transactions are averaged as to price
and allocated, in terms of amount, in accordance with a formula considered to be
equitable to the funds involved. Although in some cases this arrangement may
have a detrimental effect on the price or volume of the securities as to the
Portfolio, in other cases it is believed that the Portfolio's ability to
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participate in volume transactions may produce better executions for it. In any
case, it is the judgment of the Portfolio Trustees that the desirability of the
Portfolio's having their advisory arrangements with NB Management outweighs any
disadvantages that may result from contemporaneous transactions.
MANAGEMENT AND CONTROL OF NB MANAGEMENT
[To be updated] The directors and officers of NB Management, all of
whom have offices at the same address as NB Management, are Richard A. Cantor,
Chairman; Theodore P. Giuliano, Vice President; Michael M. Kassen, Executive
Vice President and Chief Investment Officer; Barbara Katersky, Senior Vice
President; Daniel J. Sullivan, Senior Vice President; Philip Ambrosio, Senior
Vice President and Chief Financial Officer; Peter E. Sundman, President; Michael
J. Weiner, Senior Vice President; Brooke A. Cobb, Vice President; Valerie Chang,
Vice President; Robert W. D'Alelio, Vice President; Clara Del Villar, Vice
President; Robert S. Franklin, Vice President; Robert I. Gendelman, Vice
President; Thomas Gengler, Vice President; Josephine P. Mahaney, Vice President;
Michael F. Malouf, Vice President; S. Basu Mullick, Vice President; Janet W.
Prindle, Vice President; Kevin L. Risen, Vice President; Jennifer K. Silver,
Vice President; Kent C. Simons, Vice President; Judith M. Vale, Vice President;
Catherine Waterworth, Vice President; Allan R. White, III, Vice President;
Robert Conti, Treasurer; Robert L. Ladd, Vice President; Ingrid Saukaitis, Vice
President; Benjamin E. Segal, Vice President; Josephine Velez, Vice President;
Ellen Metzger, Secretary. Messrs. Cantor, D'Alelio, Gendelman, Giuliano, Kassen,
Risen, Simons, Sundman, Weiner and White and Mmes. Prindle, Silver and Vale are
employees of Neuberger Berman.
Mr. Giuliano is a trustee of the Trust and Managers Trust. Messrs.
Sundman, Giuliano, Sullivan and Weiner are officers of each Trust.]
Neuberger Berman and NB Management are wholly owned subsidiaries of
Neuberger Berman Inc., a publicly owned holding company owned primarily by the
employees of Neuberger Berman.
DISTRIBUTION ARRANGEMENTS
NB Management serves as the distributor ("Distributor") in
connection with the offering of the Fund's shares on a no-load basis to
Institutions. In connection with the sale of its shares, the Fund has authorized
the Distributor to give only the information, and to make only the statements
and representations, contained in the Prospectus and this SAI or that properly
may be included in sales literature and advertisements in accordance with the
1933 Act, the 1940 Act, and applicable rules of self-regulatory organizations.
Sales may be made only by the Prospectus, which may be delivered personally,
through the mails, or by electronic means. The Distributor is the Fund's
"principal underwriter" within the meaning of the 1940 Act and, as such, acts as
agent in arranging for the sale of the Fund's shares to Institutions without
sales commission or other compensation and bears all advertising and promotion
expenses incurred in the sale of the Fund's shares.
The Distributor or one of its affiliates may, from time to time,
deem it desirable to offer to Fund shareholders, through use of shareholder
lists, the shares of other mutual funds for which the Distributor acts as
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distributor or other products or services. Any such use of the Fund's
shareholder lists, however, will be made subject to terms and conditions, if
any, approved by a majority of the Independent Fund Trustees. These lists will
not be used to offer to the Fund's shareholders any investment products or
services other than those managed or distributed by NB Management or Neuberger
Berman.
The Trust, on behalf of the Fund, and the Distributor are parties to
a Distribution Agreement that continues until July 2, 2000. The Portfolio became
a party to the Distribution Agreement on ____________, 2000. The Distribution
Agreement may be renewed annually if specifically approved by (1) the vote of a
majority of the Fund Trustees or a 1940 Act majority vote of the Fund's
outstanding shares and (2) the vote of a majority of the Independent Fund
Trustees, cast in person at a meeting called for the purpose of voting on such
approval. The Distribution Agreement may be terminated by either party and will
terminate automatically on its assignment, in the same manner as the Management
Agreement.
ADDITIONAL PURCHASE INFORMATION
SHARE PRICES AND NET ASSET VALUE
The Fund's shares are bought or sold at a price that is the Fund's
NAV per share. The NAVs for the Fund and the Portfolio are calculated by
subtracting liabilities from total assets (in the case of the Portfolio, the
market value of the securities the Portfolio holds plus cash and other assets;
in the case of the Fund, its percentage interest in the Portfolio, multiplied by
the Portfolio's NAV, plus any other assets). The Fund's per share NAV is
calculated by dividing its NAV by the number of Fund shares outstanding and
rounding the result to the nearest full cent.
The Fund tries to maintain a stable NAV of $1.00 per share. The
Portfolio values its securities at their cost at the time of purchase and
assumes a constant amortization to maturity of any discount or premium. The
Portfolio and the Fund calculate their NAVs as of 4:00 p.m. Eastern time on each
day the NYSE and the Federal Reserve Wire are open.
If NB Management believes that the price of a security obtained
under the Portfolio's valuation procedures (as described above) does not
represent the amount that the Portfolio reasonably expects to receive on a
current sale of the security, the Portfolio will value the security based on a
method that the trustees of Managers Trust believe accurately reflects fair
value.
ADDITIONAL REDEMPTION INFORMATION
SUSPENSION OF REDEMPTIONS
The right to redeem the Fund's shares may be suspended or payment of
the redemption price postponed (1) when the New York Stock Exchange ("NYSE") or
the Fed. wire is closed, (2) when trading on the NYSE is restricted, (3) when an
emergency exists as a result of which it is not reasonably practicable for the
Portfolio to dispose of securities it owns or fairly to determine the value of
its net assets, or (4) for such other period as the SEC may by order permit for
the protection of the Fund's shareholders. Applicable SEC rules and regulations
shall govern whether the conditions prescribed in (2) or (3) exist. If the right
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of redemption is suspended, shareholders may withdraw their offers of
redemption, or they will receive payment at the NAV per share in effect at the
close of business on the first day the NYSE is open ("Business Day") after
termination of the suspension.
REDEMPTIONS IN KIND
The Fund reserve the right, under certain conditions, to honor any
request for redemption (or a combination of requests from the same shareholder
in any 90-day period) exceeding $250,000 or 1% of the net assets of the Fund,
whichever is less, by making payment in whole or in part in securities valued as
described under "Share Prices and Net Asset Value" above. If payment is made in
securities, an Institution generally will incur brokerage expenses or other
transaction costs in converting those securities into cash and will be subject
to fluctuation in the market prices of those securities until they are sold. The
Fund does not redeem in kind under normal circumstances, but would do so when
the Fund Trustees determined that it was in the best interests of the Fund's
shareholders as a whole.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Fund distributes to its shareholders substantially all of its
share of any net investment income (after deducting expenses incurred directly
by the Fund), and any net realized capital gains (both long-term and
short-term). The Portfolio's net investment income consists of all income
accrued on portfolio assets less accrued expenses but does not include capital
gains and losses. Net investment income and net gains and losses are reflected
in the Portfolio's NAV (and, hence, the Fund's NAV) until they are distributed.
The Fund calculates its net investment income and share price as of the close of
regular trading on the NYSE on each Business Day (usually 4 p.m. Eastern time).
Income dividends are declared daily; dividends declared for each
month are paid on the last Business Day of the month. Fund shares begin earning
income dividends on the Business Day the proceeds of the purchase order are
converted into "federal funds" and continue to earn dividends through the
Business Day before they are redeemed. Distributions of net realized capital
gains, if any, normally are paid once annually, in December.
Dividends and other distributions are automatically reinvested in
additional shares of the distributing Fund, unless the shareholder elects to
receive them in cash ("cash election"). Shareholders may make a cash election on
the original account application or at a later date by writing to State Street
Bank and Trust Company ("State Street"), c/o Boston Service Center, P.O. Box
8403, Boston, MA 02266-8403. Cash distributions can be paid through an
electronic transfer to a bank account designated in the shareholder's original
account application. To the extent dividends and other distributions are subject
to federal, state, or local income taxation, they are taxable to the
shareholders whether received in cash or reinvested in Fund shares.
A cash election remains in effect until the shareholder notifies
State Street in writing to discontinue the election. If it is determined,
however, that the U.S. Postal Service cannot properly deliver Fund mailings to
the shareholder for 180 days, the Fund will terminate the shareholder's cash
election. Thereafter, the shareholder's dividends and other distributions will
automatically be reinvested in additional Fund shares until the shareholder
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notifies State Street or the Fund in writing to request that the cash election
be reinstated.
Dividend or other distribution checks that are not cashed or
deposited within 180 days from being issued will be reinvested in additional
shares of the distributing Fund at the Fund's price on the day the check is
reinvested. No interest will accrue on amounts represented by uncashed dividend
or distribution checks.
ADDITIONAL TAX INFORMATION
TAXATION OF THE FUND
In order to qualify for treatment as a RIC under the Code, the Fund
must distribute to its shareholders for each taxable year at least 90% of its
investment company taxable income (consisting generally of taxable net
investment income and net short-term capital gain) ("Distribution Requirement")
and must meet several additional requirements. These requirements include the
following: (1) the Fund must derive at least 90% of its gross income each
taxable year from dividends, interest, payments with respect to securities
loans, and gains from the sale or other disposition of securities or foreign
currencies, or other income (including gains from Hedging Instruments) derived
with respect to its business of investing in securities or those currencies
("Income Requirement"); and (2) at the close of each quarter of the Fund's
taxable year, (i) at least 50% of the value of its total assets must be
represented by cash and cash items, U.S. Government securities, securities of
other RICs and other securities limited, in respect of any one issuer, to an
amount that does not exceed 5% of the value of the Fund's total assets and that
does not represent more than 10% of the issuer's outstanding voting securities,
and (ii) not more than 25% of the value of its total assets may be invested in
securities (other than U.S. Government securities or securities of other RICs)
of any one issuer. If the Fund failed to qualify for treatment as a RIC for any
taxable year, it would be taxed on the full amount of its taxable income for
that year without being able to deduct the distributions it makes to its
shareholders and the shareholders would treat all those distributions, including
distributions of net capital gain (the excess of net long-term capital gain over
net short-term capital loss), as dividends (that is, ordinary income) to the
extent of the Fund's earnings and profits.
Other Funds, which are series of the Trust, have received rulings
from the Internal Revenue Service ("Service") that each series, as an investor
in its corresponding portfolio of Managers Trust, will be deemed to own a
proportionate share of the portfolio's assets and income for purposes of
determining whether the series satisfies all the requirements described above to
qualify as a RIC. Although these rulings may not be relied upon as precedent by
the Fund, NB Management believes the reasoning thereof and, hence, their
conclusion apply to the Fund as well.
The Fund will be subject to a nondeductible 4% excise tax ("Excise
Tax") to the extent it fails to distribute by the end of any calendar year
substantially all of its ordinary income for that year and capital gain net
income for the one-year period ending on October 31 of that year, plus certain
other amounts.
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See the next section for a discussion of the tax consequences to the
Fund of distributions to it from the portfolio in certain securities and certain
other transactions engaged in by the Portfolio.
TAXATION OF THE PORTFOLIO
Other series of Managers Trust have received rulings from the
Service to the effect that, among other things, each portfolio will be treated
as a separate partnership for federal income tax purposes and will not be a
"publicly traded partnership." Although these rulings may not be relied upon as
precedent by the Portfolio, NB Management believes the reasoning thereof and,
hence, their conclusion apply to the Portfolio as well. As a result, the
Portfolio is not subject to federal income tax; instead, each investor in the
Portfolio, such as the Fund, is required to take into account in determining its
federal income tax liability its share of the Portfolio's income, gains, losses,
deductions, credits, and tax preference items, without regard to whether it has
received any cash distributions from the Portfolio. The Portfolio also is not
subject to Delaware or New York income or franchise tax.
Because the Fund is deemed to own a proportionate share of the
Portfolio's assets and income for purposes of determining whether the Fund
satisfies the requirements to qualify as a RIC, the Portfolio intends to
continue to conduct its operations so that the Fund will be able to continue to
satisfy all those requirements.
Distributions to the Fund from the Portfolio (whether pursuant to a
partial or complete withdrawal or otherwise) will not result in the Fund's
recognition of any gain or loss for federal income tax purposes, except that (1)
gain will be recognized to the extent any cash that is distributed exceeds the
Fund's basis for its interest in the Portfolio before the distribution, (2)
income or gain will be recognized if the distribution is in liquidation of the
Fund's entire interest in the Portfolio and includes a disproportionate share of
any unrealized receivables held by the Portfolio, (3) loss may be recognized if
a liquidation distribution consists solely of cash and/or unrealized receivables
and (4) gain (and, in certain situations, loss) may be recognized on an in-kind
distribution by the Portfolio. The Fund's basis for its interest in the
Portfolio generally equals the amount of cash and the basis of any property the
Fund invests in the Portfolio, increased by the Fund's share of the Portfolio's
net income and capital gains and decreased by (a) the amount of cash and the
basis of any property the Portfolio distributes to the Fund and (b) the Fund's
share of the Portfolio's losses.
Dividends and interest received by the Portfolio and gains realized
by the Portfolio may be subject to income, withholding, or other taxes imposed
by foreign countries and U.S. possessions that would reduce the yield and/or
total return on its securities. Tax conventions between certain countries and
the United States may reduce or eliminate these foreign taxes, however, and many
foreign countries do not impose taxes on capital gains in respect of investments
by foreign investors.
The Portfolio may invest in municipal bonds that are purchased with
market discount (that is, at a price less than the bond's principal amount or,
in the case of a bond that was issued with OID, a price less than the amount of
the issue price plus accrued OID) ("municipal market discount bonds"). If a
bond's market discount is less than the product of (1) 0.25% of the redemption
price at maturity times (2) the number of complete years to maturity after the
taxpayer acquired the bond, then no market discount is considered to exist. Gain
on the disposition of a municipal market discount bond purchased by the
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Portfolio (other than a bond with a fixed maturity date within one year from its
issuance) generally is treated as ordinary (taxable) income, rather than capital
gain, to the extent of the bond's accrued market discount at the time of
disposition. Market discount on such a bond generally is accrued ratably, on a
daily basis, over the period from the acquisition date to the date of maturity.
In lieu of treating the disposition gain as described above, the Portfolio may
elect to include market discount in its gross income currently, for each taxable
year to which it is attributable.
The Portfolio may acquire zero coupon or other securities issued
with OID. As a holder of those securities, the Portfolio (and, through it, the
Fund) must take into income the OID and other non-cash income that accrues on
the securities during the taxable year, even if it receives no corresponding
payment on the securities during the year. Because the Fund annually must
distribute substantially all of its investment company taxable income (including
its share of the Portfolio's accrued OID and other non-cash income) to satisfy
the Distribution Requirement and avoid imposition of the Excise Tax, the Fund
may be required in a particular year to distribute as a dividend an amount that
is greater than its share of the total amount of cash the Portfolio actually
receives. Those distributions will be made from the Fund's (or its share of the
Portfolio's) cash assets or, if necessary, from the proceeds of sales of the
Portfolio's securities. The Portfolio may realize capital gains or losses from
those sales, which would increase or decrease the Fund's investment company
taxable income and/or net capital gain.
TAXATION OF THE FUND'S SHAREHOLDERS
Each Fund is required to withhold 31% of all dividends and capital
gain distributions payable to any individuals and certain other noncorporate
shareholders who do not provide the Fund with a correct taxpayer identification
number. Withholding at that rate also is required from dividends and capital
gain distributions payable to such shareholders who otherwise are subject to
backup withholding.
As described in "Maintaining Your Account" in the Prospectus, the
Fund may close a shareholder's account with the Fund and redeem the remaining
shares if the account balance falls below the specified minimum and the
shareholder fails to reestablish the minimum balance after being given the
opportunity to do so. If an account that is closed pursuant to the foregoing was
maintained for an individual retirement account ("IRA") (including an education
IRA and a Roth IRA) or a qualified retirement plan (including a simplified
employee pension plan, "Savings Incentive Match Plan for Employees" ("SIMPLE"),
self-employed individual retirement plan (so-called "Keogh plan"), corporate
profit-sharing and money purchase pension plan, section 401(k) plan, and section
403(b)(7) account), the Fund's payment of the redemption proceeds may result in
adverse tax consequences for the accountholder. The accountholder should consult
his or her tax adviser regarding any such consequences.
VALUATION OF PORTFOLIO SECURITIES
The Portfolio relies on Rule 2a-7 under the 1940 Act to use the
amortized cost method of valuation to enable the Fund to stabilize the purchase
and redemption price of its shares at $1.00 per share. This method involves
valuing portfolio securities at their cost at the time of purchase and
thereafter assuming a constant amortization (or accretion) to maturity of any
premium (or discount), regardless of the impact of interest rate fluctuations on
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the market value of the securities. Although the Portfolio's reliance on Rule
2a-7 and use of the amortized cost valuation method should enable the Fund,
under most conditions, to maintain a stable $1.00 share price, there can be no
assurance it will be able to do so. An investment in the Fund, as in any mutual
fund, is neither insured nor guaranteed by the U.S. Government.
PORTFOLIO TRANSACTIONS
Purchases and sales of portfolio securities generally are transacted
with issuers, underwriters, or dealers that serve as primary market-makers, who
act as principals for the securities on a net basis. The Portfolio typically
does not pay brokerage commissions for such purchases and sales. Instead, the
price paid for newly issued securities usually includes a concession or discount
paid by the issuer to the underwriter, and the prices quoted by market-makers
reflect a spread between the bid and the asked prices from which the dealer
derives a profit.
In purchasing and selling portfolio securities other than as
described above (for example, in the secondary market), the Portfolio seeks to
obtain best execution at the most favorable prices through responsible
broker-dealers and, in the case of agency transactions, at competitive
commission rates. In selecting broker-dealers to execute transactions, NB
Management considers such factors as the price of the security, the rate of
commission, the size and difficulty of the order, and the reliability,
integrity, financial condition, and general execution and operational
capabilities of competing broker-dealers. NB Management also may consider the
brokerage and research services that broker-dealers provide to the Portfolio or
NB Management. Under certain conditions, the Portfolio may pay higher brokerage
commissions in return for brokerage and research services, although the
Portfolio does not have a current arrangement to do so. In any case, the
Portfolio may effect principal transactions with a dealer who furnishes research
services, may designate any dealer to receive selling concessions, discounts, or
other allowances, or otherwise may deal with any dealer in connection with the
acquisition of securities in underwritings.
No affiliate of the Portfolio receives give-ups or reciprocal
business in connection with its portfolio transactions. The Portfolio does not
effect transactions with or through broker-dealers in accordance with any
formula or for selling shares of the Fund. However, broker-dealers who execute
portfolio transactions may from time to time effect purchases of Fund shares for
their customers. The 1940 Act generally prohibits Neuberger Berman from acting
as principal in the purchase of portfolio securities from, or the sale of
portfolio securities to, the Portfolio unless an appropriate exemption is
available.
REPORTS TO SHAREHOLDERS
Shareholders of the Fund receive unaudited semi-annual financial
statements, as well as year-end financial statements audited by the independent
auditors for the Fund and for the Portfolio. The Fund's statements show the
investments owned by the Portfolio and the market values thereof and provide
other information about the Fund and its operations, including the Fund's
beneficial interest in the Portfolio.
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ORGANIZATION, CAPITALIZATION AND OTHER MATTERS
THE FUND
The Fund is a separate series of the Trust, a Delaware business
trust organized pursuant to a Trust Instrument dated as of December 23, 1992.
The Trust is registered under the 1940 Act as a diversified, open-end management
investment company, commonly known as a mutual fund. The Trust has seven
separate operating series. The Fund invests all of its net investable assets in
the Portfolio, in each case receiving a beneficial interest in the Portfolio.
The trustees of the Trust may establish additional series or classes of shares
without the approval of shareholders. The assets of each series belong only to
that series, and the liabilities of each series are borne solely by that series
and no other.
Prior to November 9, 1998, the name of the Trust was "Neuberger &
Berman Income Funds."
DESCRIPTION OF SHARES. The Fund is authorized to issue an unlimited
number of shares of beneficial interest (par value $0.001 per share). Shares of
the Fund represent equal proportionate interests in the assets of 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.
SHAREHOLDER MEETINGS. The trustees of the Trust do not intend to
hold annual meetings of Fund shareholders. The trustees will call special
meetings of shareholders of the Fund only if required under the 1940 Act or in
their discretion or upon the written request of holders of 10% or more of the
outstanding shares of the Fund entitled to vote.
CERTAIN PROVISIONS OF TRUST INSTRUMENT. Under Delaware law, the
shareholders of the Fund will not be personally liable for the obligations of
the Fund; a shareholder is entitled to the same limitation of personal liability
extended to shareholders of a corporation. To guard against the risk that
Delaware law might not be applied in other states, the Trust Instrument requires
that every written obligation of the Trust or the Fund contain a statement that
such obligation may be enforced only against the assets of the Trust or Fund and
provides for indemnification out of Trust or Fund property of any shareholder
nevertheless held personally liable for Trust or Fund obligations, respectively.
THE PORTFOLIO
The Portfolio is a separate operating series of Managers Trust, a
New York common law trust organized as of December 1, 1992. Managers Trust is
registered under the 1940 Act as a diversified, open-end management investment
company. Managers Trust has seven separate Portfolios. The assets of each series
belong only to that series, and the liabilities of each series are borne solely
by that series and no other.
FUND'S INVESTMENT IN THE PORTFOLIO. The Fund is a "feeder fund" that
seeks to achieve its investment objective by investing all of its net investable
assets in the Portfolio, which is a "master fund." The Portfolio, which has the
same investment objective, policies, and limitations as the Fund, in turn
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invests in securities; the Fund thus acquires an indirect interest in those
securities.
The Fund's investment in the Portfolio is in the form of a
non-transferable beneficial interest. Members of the general public may not
purchase a direct interest in the Portfolio. Neuberger Berman Institutional Cash
Trust, a series of Neuberger Berman Income Trust ("Income Trust"), invests all
of its net assets in the Portfolio. Income Trust does not sell its shares to
members of the general public.
The Portfolio may also permit other investment companies and/or
other institutional investors to invest in the Portfolio. All investors will
invest in the Portfolio on the same terms and conditions as the Fund and will
pay a proportionate share of the Portfolio's expenses. Other investors in the
Portfolio are not required to sell their shares at the same public offering
price as the Fund, could have a different administration fee and expenses than
the Fund, and (except Income Trust) might charge a sales commission. Therefore,
Fund shareholders may have different returns than shareholders in another
investment company that invests exclusively in the Portfolio. There is currently
no such other investment company that offers its shares directly to members of
the general public. Information regarding the other fund that invests in the
Portfolio is available from NB Management by calling 800-877-9700.
The trustees of the Trust believe that investment in the Portfolio
by other potential investors in addition to the Fund may enable the Portfolio to
realize economies of scale that could reduce its operating expenses, thereby
producing higher returns and benefiting all shareholders. However, the Fund's
investment in the Portfolio may be affected by the actions of other large
investors in the Portfolio, if any. For example, if a large investor in the
Portfolio (other than the Fund) redeemed its interest in the Portfolio, the
Portfolio's remaining investors (including the Fund) might, as a result,
experience higher pro rata operating expenses, thereby producing lower returns.
The Fund may withdraw its entire investment from the Portfolio at
any time, if the trustees of the Trust determine that it is in the best
interests of the Fund and its shareholders to do so. The Fund might withdraw,
for example, if there were other investors in a Portfolio with power to, and who
did by a vote of all investors (including the Fund), change the investment
objective, policies, or limitations of the Portfolio in a manner not acceptable
to the trustees of the Trust. A withdrawal could result in a distribution in
kind of portfolio securities (as opposed to a cash distribution) by the
Portfolio to the Fund. That distribution could result in a less diversified
portfolio of investments for the Fund and could affect adversely the liquidity
of the Fund's investment portfolio. If the Fund decided to convert those
securities to cash, it usually would incur brokerage fees or other transaction
costs. If the Fund withdrew its investment from the Portfolio, the trustees of
the Trust would consider what actions might be taken, including the investment
of all of the Fund's net investable assets in another pooled investment entity
having substantially the same investment objective as the Fund or the retention
by the Fund of its own investment manager to manage its assets in accordance
with its investment objective, policies, and limitations. The inability of the
Fund to find a suitable replacement could have a significant impact on
shareholders.
-37-
<PAGE>
INVESTOR MEETINGS AND VOTING. The Portfolio normally will not hold
meetings of investors except as required by the 1940 Act. Each investor in the
Portfolio will be entitled to vote in proportion to its relative beneficial
interest in the Portfolio. On most issues subjected to a vote of investors, the
Fund will solicit proxies from its shareholders and will vote its interest in
the Portfolio in proportion to the votes cast by the Fund's shareholders. If
there are other investors in the Portfolio, there can be no assurance that any
issue that receives a majority of the votes cast by Fund shareholders will
receive a majority of votes cast by all Portfolio investors; indeed, if other
investors hold a majority interest in the Portfolio, they could have voting
control of the Portfolio.
CERTAIN PROVISIONS. Each investor in the Portfolio, including the
Fund, will be liable for all obligations of the Portfolio. However, the risk of
an investor in the Portfolio incurring financial loss beyond the amount of its
investment on account of such liability would be limited to circumstances in
which the Portfolio had inadequate insurance and was unable to meet its
obligations out of its assets. Upon liquidation of the Portfolio, investors
would be entitled to share pro rata in the net assets of the Portfolio available
for distribution to investors.
CUSTODIAN AND TRANSFER AGENT
The Fund and Portfolio has selected State Street Bank and Trust
Company ("State Street"), 225 Franklin Street, Boston, MA 02110 as custodian for
its securities and cash. State Street also serves as the Fund's transfer and
shareholder servicing agent, administering purchases, redemptions, and transfers
of Fund shares with respect to Institutions and the payment of dividends and
other distributions to Institutions. All correspondence should be mailed to
Neuberger Berman Funds, Institutional Services, 605 Third Avenue, 2nd Floor, New
York, NY 10158-01800.
INDEPENDENT AUDITORS
The Fund and Portfolio has selected [Ernst & Young LLP, 200
Clarendon Street, Boston, MA 02116], as the independent auditors who will audit
its financial statements.
LEGAL COUNSEL
The Fund and Portfolio has selected Kirkpatrick & Lockhart LLP, 1800
Massachusetts Avenue, N.W., 2nd Floor, Washington, D.C. 20036-1800, as its legal
counsel.
REGISTRATION STATEMENT
This SAI and the Prospectus do not contain all the information
included in the Trust's registration statement filed with the SEC under the 1933
Act with respect to the securities offered by the Prospectus. The registration
statement, including the exhibits filed therewith, may be examined at the SEC's
offices in Washington, D.C. The SEC maintains a Website (http://www.sec.gov)
that contains this SAI, material incorporated by reference, and other
information regarding the Fund and Portfolio.
Statements contained in this SAI and in the Prospectus as to the
contents of any contract or other document referred to are not necessarily
complete, and in each instance reference is made to the copy of any contract or
-38-
<PAGE>
other document filed as an exhibit to the registration statement, each such
statement being qualified in all respects by such reference.
-39-
<PAGE>
Appendix A
RATINGS OF CORPORATE BONDS AND COMMERCIAL PAPER
S&P CORPORATE BOND RATINGS:
AAA - Bonds rated AAA have the highest rating assigned by S&P.
Capacity to pay interest and repay principal is extremely strong.
AA - Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the higher rated issues only in small degree.
A - Bonds rated A have a strong capacity to pay interest and repay
principal, although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher rated
categories.
BBB - Bonds rated BBB are regarded as having an adequate capacity to
pay principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in higher rated categories.
BB, B, CCC, CC, C - Bonds rated BB, B, CCC, CC, and C are regarded,
on balance, as predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation and C the highest degree of
speculation. While such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
CI - The rating CI is reserved for income bonds on which no interest
is being paid.
D - Bonds rated D are in default, and payment of interest and/or
repayment of principal is in arrears.
PLUS (+) OR MINUS (-) - The ratings above may be modified by the
addition of a plus or minus sign to show relative standing within the major
categories.
MOODY'S CORPORATE BOND RATINGS:
Aaa - Bonds rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or an exceptionally
stable margin, and principal is secure. Although the various protective elements
are likely to change, the changes that can be visualized are most unlikely to
impair the fundamentally strong position of the issuer.
Aa - Bonds rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally known
as "high grade bonds." They are rated lower than the best bonds because margins
A-1
<PAGE>
of protection may not be as large as in Aaa-rated securities, fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present that make the long-term risks appear somewhat larger than in Aaa-rated
securities.
A - Bonds rated A possess many favorable investment attributes and
are considered to be upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present that
suggest a susceptibility to impairment sometime in the future.
- Bonds which are rated Baa are considered as medium grade
obligations; i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. These bonds lack outstanding
investment characteristics and in fact have speculative characteristics as well.
Ba - Bonds rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa - Bonds rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca - Bonds rated Ca represent obligations that are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C - Bonds rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
MODIFIERS - Moody's may apply numerical modifiers 1, 2, and 3 in
each generic rating classification described above. The modifier 1 indicates
that the security ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the
issuer ranks in the lower end of its generic rating category.
S&P COMMERCIAL PAPER RATINGS:
A-1 - This highest category indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted with a plus sign (+).
A-2
<PAGE>
MOODY'S COMMERCIAL PAPER RATINGS
Issuers rated PRIME-1 (or related supporting institutions), also
known as P-1, have a superior capacity for repayment of short-term promissory
obligations. PRIME-1 repayment capacity will normally be evidenced by the
following characteristics:
- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structures with moderate reliance
on debt and ample asset protection.
- Broad margins in earnings coverage of fixed financial charges
and high internal cash generation.
- Well-established access to a range of financial markets and
assured sources of alternate liquidity.
A-3
<PAGE>
NEUBERGER BERMAN INCOME FUNDS
POST-EFFECTIVE AMENDMENT NO. 28 ON FORM N-1A
PART C
OTHER INFORMATION
ITEM 23. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements: None.
(b) Exhibits:
Exhibit DESCRIPTION
NUMBER
(a) (1) Certificate of Trust. Incorporated by
Reference to Post-Effective Amendment No. 21
to Registrant's Registration Statement, File
Nos. 2-85229 and 811-3802.
(2) Restated Certificate of Trust. Incorporated by
Reference to Post-Effective Amendment No. 26 to
Registrant's Registration statement, File Nos.
2-85229 and 811-03802.
(3) Trust Instrument of Neuberger Berman Income Funds.
Incorporated by Reference to Post-Effective
Amendment No. 21 to Registrant's Registration
Statement, File Nos. 2-85229 and 811-3802.
(4) Schedule A - Current Series of Neuberger Berman
Income Funds. Incorporated by Reference to
Post-Effective Amendment No. 25 to Registrant's
Registration Statement, File Nos.
2-85229 and 811-3802.
(b) By-Laws of Neuberger Berman Income Funds. Incorporated by
Reference to Post-Effective Amendment No. 21 to
Registrant's Registration Statement, File Nos. 2-85229
and 811-3802.
(c) (1) Trust Instrument of Neuberger Berman Income
Funds, Articles IV, V, and VI. Incorporated
by Reference to Post-Effective Amendment No.
21 to Registrant's Registration Statement,
File Nos. 2-85229 and 811-3802.
(2) By-Laws of Neuberger Berman Income Funds, Articles
V, VI, and VIII. Incorporated by Reference to
Post-Effective Amendment No. 21 to Registrant's
Registration Statement, File Nos. 2-85229 and
811-3802.
3
<PAGE>
(d) (1) (i) Management Agreement Between Income
Managers Trust and Neuberger Berman
Management Incorporated. Incorporated
by Reference to Post-Effective Amendment
No. 21 to Registrant's Registration
Statement, File Nos. 2-85229 and 811-3802.
(ii) Schedule A - Portfolios of Income Managers
Trust Currently Subject to the Management
Agreement. Incorporated by Reference to
Post-Effective Amendment No. 25 to
registrant's Registration Statement, File
Nos. 2-85229 and 811-3802.
(iii) Schedule B - Schedule of Compensation under
the Management Agreement. Incorporated by
Reference to Post-Effective Amendment No. 25
to Registrant's Registration Statement, File
Nos. 2-85229 and 811-3802.
(2) (i) Sub-Advisory Agreement Between Neuberger
Berman Management Incorporated and
Neuberger Berman, L.P. with respect to
Income Managers Trust. Incorporated by
Reference to Post-Effective Amendment
No. 21 to Registrant's Registration
Statement, File Nos. 2-85229 and 811-3802.
(ii) Schedule A - Portfolios of Income Managers
Trust Currently Subject to the Sub-Advisory
Agreement. Incorporated by Reference to
Post-Effective Amendment No. 25 to
Registrant's Registration Statement, File
Nos. 2-85229 and 811-3802.
(iii) Substitution Agreement Among Neuberger Berman
Management Incorporated, Income Managers
Trust, Neuberger Berman, L.P., and Neuberger
Berman, LLC. Incorporated by Reference to
Post-Effective Amendment No. 23 to
Registrant's Registration Statement, File
Nos. 2-85229 and 811-3802.
(e) (1) Distribution Agreement between Neuberger
Berman Income Funds and Neuberger Berman
Management Incorporated. Incorporated by
Reference to Post-Effective Amendment No. 21
to Registrant's Registration Statement, File
Nos. 2-85229 and 811-3802.
(2) Schedule A - Series of Neuberger Berman Income
Funds Currently Subject to the Distribution
Agreement. Incorporated by Reference to
Post-Effective Amendment No. 25 to Registrant's
Registration Statement, File Nos. 2-85229 and
811-3802.
(f) Bonus, Profit Sharing or Pension Plans. None.
4
<PAGE>
(g) (1) Custodian Contract Between Neuberger Berman
Income Funds and State Street Bank and Trust
Company. Incorporated by Reference to
Post-Effective Amendment No. 21 to
Registrant's Registration Statement, File Nos.
2-85229 and 811-3802.
(2) Agreement between Neuberger Berman Income Funds and
State Street Bank and Trust Company Adding
Neuberger Berman High Yield Bond Fund as a Series
Governed by the Custodian Contract. Incorporated by
Reference to Post-Effective Amendment No. 25 to
Registrant's Registration Statement, File Nos.
2-85229 and 811-3802.
(3) Schedule of Compensation under the Custodian
Contract. Incorporated by Reference to
Post-Effective Amendment No. 23 to Registrant's
Registration Statement, File Nos. 2-85229
and 811-3802.
(h) (1) (i) Transfer Agency and Service Agreement
Between Neuberger Berman Income Funds
and State Street Bank and Trust
Company. Incorporated by Reference to
Post-Effective Amendment No. 21 to
Registrant's Registration Statement,
File Nos. 2-85229 and 811-3802.
(ii) Agreement between Neuberger Berman Income
Funds and State Street Bank and Trust Company
Adding Neuberger Berman High Yield Bond Fund
as a Series Governed by the Transfer Agency
and Service Agreement. Incorporated by
Reference to Post-Effective Amendment No. 25
to Registrant's Registration Statement, File
Nos. 2-85229 and 811-3802.
(iii) First Amendment to Transfer Agency and
Service Agreement between Neuberger Berman
Income Funds and State Street Bank and Trust
Company. Incorporated by Reference to
Post-Effective Amendment No. 21 to
Registrant's Registration Statement, File
Nos. 2-85229 and 811-3802.
(iv) Schedule of Compensation under the Transfer
Agency and Service Agreement. Incorporated by
Reference to Post-Effective Amendment No. 23
to Registrant's Registration Statement, File
Nos. 2-85229 and 811-3802.
(2) (i) Administration Agreement Between Neuberger
Berman Income Funds and Neuberger Berman
Management Incorporated. Incorporated by
Reference to Post-Effective Amendment No. 21
to Registrant's Registration Statement,
File Nos. 2-85229 and 811-3802.
5
<PAGE>
(ii) Schedule A - Series of Neuberger Berman
Income Funds Currently Subject to the
Administration Agreement. Incorporated
by Reference to Post-Effective Amendment
No. 25 to Registrant's Registration
Statement, File Nos. 2-85229 and
811-3802.
(iii) Schedule B - Schedule of Compensation Under
the Administration Agreement. Incorporated by
Reference to Post-Effective Amendment No. 23
to Registrant's Registration Statement, File
Nos. 2-85229 and 811-3802.
(i) (1) Opinion and Consent of Kirkpatrick & Lockhart
on Securities Matters with respect to
Neuberger Berman High Yield Bond Fund.
Incorporated by Reference to Post-Effective
Amendment No. 24 to Registrant's Registration
Statement, File Nos. 2-85229 and 811-3802.
(2) Opinion and Consent of Kirkpatrick & Lockhart LLP
on Securities Matters with respect to Neuberger
Berman Income Funds. Incorporated by Reference to
Post-Effective Amendment No. 25 to Registrant's
Registration Statement, File Nos. 2-85229 and
811-3802.
(3) Opinion and Consent of Kirkpatrick & Lockhart LLP
on Securities Matters with respect to Neuberger
Berman Institutional Cash Fund. Filed Herewith.
(j) Consent of Independent Auditors. None.
(k) Financial Statements Omitted from Prospectus. None.
(l) Letter of Investment Intent. None.
(m) Plan Pursuant to Rule 12b-1. None.
(n) Plan Pursuant to Rule 18f-3. None.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
No person is controlled by or under common control with the Registrant.
(Registrant is organized in a master/feeder fund structure, and technically may
be considered to control the master fund in which it invests, Income Managers
Trust.)
ITEM 25. INDEMNIFICATION.
A Delaware business trust may provide in its governing instrument for
indemnification of its officers and trustees from and against any and all claims
and demands whatsoever. Article IX, Section 2 of the Trust Instrument provides
that the Registrant shall indemnify any present or former trustee, officer,
6
<PAGE>
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 Agreement between Income Managers Trust
("Managers Trust") and Neuberger and Berman Management Incorporated ("NB
Management") provides that neither NB Management nor any director, officer or
employee of NB Management performing services for any series of Managers Trust
(each a "Portfolio") at the direction or request of NB Management in connection
with NB Management's discharge of its obligations under the Agreement shall be
liable for any error of judgment or mistake of law or for any loss suffered by a
Portfolio in connection with any matter to which the Agreement relates;
provided, that nothing in the Agreement shall be construed (i) to protect NB
Management against any liability to Managers Trust or a Portfolio or its
interestholders 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 Agreement, or (ii) to protect any director, officer or
employee of NB Management who is or was a trustee or officer of Managers Trust
against any liability to Managers Trust or a Portfolio or its interestholders to
which such person would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of such person's office with Managers Trust.
Section 1 of the Sub-Advisory Agreement between NB Management and
Neuberger Berman, L.P. ("Neuberger Berman") with respect to Managers Trust
provides that, in the absence of willful misfeasance, bad faith or gross
negligence in the performance of its duties, or of reckless disregard of its
duties and obligations under the Agreement, Neuberger Berman will not be subject
to liability for any act or omission or any loss suffered by any Portfolio or
its interestholders in connection with the matters to which the Agreement
relates.
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
7
<PAGE>
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 26. BUSINESS AND OTHER CONNECTIONS OF ADVISER AND SUB-ADVISER.
There is set forth below information as to any other business, profession,
vocation or employment of a substantial nature in which each director or officer
of NB Management and each principal of Neuberger Berman is, or at any time
during the past two years has been, engaged for his or her own account or in the
capacity of director, officer, employee, partner or trustee.
NAME BUSINESS AND OTHER CONNECTIONS
Philip Ambrosio Senior Vice President and Chief Financial
Senior Vice President and Officer, Neuberger Berman Inc.
Chief Financial Officer,
Neuberger Berman
Brooke A. Cobb Chief Investment Officer, Bainco
Vice President, International Investors. Senior Vice
NB Management President and Senior Portfolio Manager,
Putnam Investments.(1)
- --------------------
(1) Until 1997.
8
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
Barbara DiGiorgio, Assistant Treasurer, Neuberger Berman
Assistant Vice President, Advisers Management Trust; Assistant
NB Management Treasurer, Advisers Managers Trust; Assistant
Treasurer, Neuberger Berman Income Funds;
Assistant Treasurer, Neuberger Berman Income
Trust; Assistant Treasurer, Neuberger Berman
Equity Funds; Assistant Treasurer, Neuberger
Berman Equity Trust; Assistant Treasurer,
Income Managers Trust; Assistant Treasurer,
Equity Managers Trust; Assistant Treasurer,
Global Managers Trust; Assistant Treasurer,
Neuberger Berman Equity Assets; Assistant
Treasurer, Neuberger Berman Equity Series.
Theodore P. Giuliano President and Trustee, Neuberger Berman
Vice President, NB Income Funds; President and Trustee,
Management; Managing Neuberger Berman Income Trust; President
Director, Neuberger Berman and Trustee, Income Managers Trust.
Michael M. Kassen Executive Vice President, Chief Investment
Executive Vice Officer and Director, Neuberger Berman Inc.
President,
Neuberger Berman
Jeffrey B. Lane President, Chief Executive Officer and
President and Chief Director of Neuberger Berman, Inc.
Executive Officer,
Neuberger Berman
Michael F. Malouf Portfolio Manager, Dresdner RCM Global
Vice President Investors.(2)
NB Management
Robert Matza Executive Vice President, Chief
Executive Vice Administrative Officer and Director,
President and Chief Neuberger Berman, Inc.
Administrative Officer
Neuberger Berman
S. Basu Mullick Portfolio Manager, Ark Asset Management(3)
Vice President,
NB Management
- --------------------
(2) Until 1998.
(3) Until 1998.
9
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
C. Carl Randolph Secretary and General Counsel, Neuberger
Senior Vice President, Berman, Inc. Assistant Secretary,
General Counsel and Neuberger Berman Advisers Management Trust;
Secretary, Assistant Secretary, Advisers Managers
Neuberger Berman Trust; Assistant Secretary, Neuberger Berman
Income Funds, Assistant Secretary, Neuberger
Berman Income Trust; Assistant Secretary,
Neuberger Berman Equity Funds; Assistant
Secretary, Neuberger Berman Equity Trust;
Assistant Secretary, Income Managers Trust;
Assistant Secretary, Equity Managers Trust;
Assistant Secretary, Global Managers Trust;
Assistant Secretary, Neuberger Berman Equity
Assets; Assistant Secretary, Neuberger Berman
Equity Series.
Richard Russell Treasurer, Neuberger Berman Advisers
Vice President, Management Trust; Treasurer, Advisers
NB Management Managers Trust; Treasurer, Neuberger Berman
Income Funds; Treasurer, Neuberger Berman
Income Trust; Treasurer, Neuberger Berman
Equity Funds; Treasurer, Neuberger Berman
Equity Trust; Treasurer, Income Managers
Trust; Treasurer, Equity Managers Trust;
Treasurer, Global Managers Trust; Treasurer,
Neuberger Berman Equity Assets; Treasurer,
Neuberger Berman Equity Series.
Ingrid Saukaitis Project Director, Council on Economic
Vice President, NB Priorities.(4)
Management
Heidi L. Schneider Executive Vice President and Director,
Executive Vice President, Neuberger Berman, Inc.
Neuberger Berman
Benjamin E. Segal Assistant Portfolio Manager, GT Global
Vice President, NB Investment Management*/; Consultant,
Management, Managing Bain & Company, Inc.**/
Director, Neuberger Berman
Jennifer K. Silver Portfolio Manager and Director, Putnum
Vice President, NB Investments.(5)
Management, Managing
Director, Neuberger Berman
- --------------------
(4) Until 1997.
*/ Until 1997.
**/ Until 1997.
(5) Until 1997.
10
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
Daniel J. Sullivan Vice President, Neuberger Berman Advisers
Senior Vice President, Management Trust; Vice President, Advisers
NB Management Managers Trust; Vice President, Neuberger
Berman Income Funds; Vice President, Neuberger
Berman Income Trust; Vice President, Neuberger
Berman Equity Funds; Vice President, Neuberger
Berman Equity Trust; Vice President, Income
Managers Trust; Vice President, Equity
Managers Trust; Vice President, Global
Managers Trust; Vice President, Neuberger
Berman Equity Assets; Vice President,
Neuberger Berman Equity Series.
Peter E. Sundman Executive Vice President and Director,
President, NB Neuberger Berman Inc.
Management; Executive
Vice President,
Neuberger Berman
Michael J. Weiner Vice President, Neuberger Berman Advisers
Senior Vice President, Management Trust; Vice President, Advisers
NB Management; Senior Managers Trust; Vice President, Neuberger
Vice President, Berman Income Funds; Vice President,
Neuberger Berman Neuberger Berman Income Trust; Vice President,
Neuberger Berman Equity Funds; Vice President,
Neuberger Berman Equity Trust; Vice President,
Income Managers Trust; Vice President, Equity
Managers Trust; Vice President, Global
Managers Trust; Vice President, Neuberger
Berman Equity Assets; Vice President,
Neuberger Berman Equity Series.
11
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
Allan R. White, III Portfolio Manager, Salomon Asset
Vice President, NB Management.(6)
Management; Managing
Director, Neuberger Berman
Celeste Wischerth, Assistant Treasurer, Neuberger Berman
NB Management Advisers Management Trust; Assistant
Treasurer, Advisers Managers Trust;
Assistant Treasurer, Neuberger Berman
Income Funds; Assistant Treasurer, Neuberger
Berman Income Trust; Assistant Treasurer,
Neuberger Berman Equity Funds; Assistant
Treasurer, Neuberger Berman Equity Trust;
Assistant Treasurer, Income Managers Trust;
Assistant Treasurer, Equity Managers Trust;
Assistant Treasurer, Global Managers Trust;
Assistant Treasurer, Neuberger Berman Equity
Assets; Assistant Treasurer, Neuberger Berman
Equity Series.
The principal address of NB Management, Neuberger Berman, and of each of
the investment companies named above, is 605 Third Avenue, New York, New York
10158.
ITEM 27. PRINCIPAL UNDERWRITERS.
(a) NB Management, the principal underwriter distributing securities of
the Registrant, is also the principal underwriter and distributor for each of
the following investment companies:
Neuberger Berman Advisers Management Trust
Neuberger Berman Equity Assets
Neuberger Berman Equity Series
Neuberger Berman Equity Trust
Neuberger Berman Income Trust
NB Management is also the investment manager to the master funds in
which the above-named investment companies invest.
(b) Set forth below is information concerning the directors and officers
of the Registrant's principal underwriter. The principal business address of
each of the persons listed is 605 Third Avenue, New York, New York 10158-0180,
which is also the address of the Registrant's principal underwriter.
- --------------------
(6) Until 1998.
12
<PAGE>
NAME POSITIONS AND OFFICES POSITIONS AND
WITH UNDERWRITER OFFICES
WITH REGISTRANT
Ramesh Babu Vice President None
Richard A. Cantor Chairman of the Board None
Valerie Chang Vice President None
Brooke A. Cobb Vice President None
Robert Conti Treasurer None
Robert W. D'Alelio Vice President None
Clara Del Villar Vice President None
Barbara DiGiorgio Assistant Vice President Assistant Treasurer
Robert S. Franklin Vice President None
Robert I. Gendelman Vice President None
Theodore P. Giuliano Vice President and Director None
Michael M. Kassen Vice President and Director None
Robert L. Ladd Vice President None
Josephine Mahaney Vice President None
Michael F. Malouf Vice President None
Ellen Metzger Secretary None
S. Basu Mullick Vice President None
Janet W. Prindle Vice President None
Kevin L. Risen Vice President None
Ingrid Saukaitis Vice President None
Benjamin Segal Vice President None
Jennifer K. Silver Vice President None
Kent C. Simons Vice President None
Daniel J. Sullivan Senior Vice President Vice President
Peter E. Sundman President None
Judith M. Vale Vice President None
Josephine Velez Vice President None
Catherine Waterworth Vice President None
Michael J. Weiner Senior Vice President Vice President and
Principal Financial
Officer
Allan R. White, III Vice President None
13
<PAGE>
(c) No commissions or other compensation were received directly or
indirectly from the Registrant by any principal underwriter who was not an
affiliated person of the Registrant.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
All accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act, as amended, and the rules promulgated thereunder
with respect to the Registrant are maintained at the offices of State Street
Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110, except
for the Registrant's Trust Instrument and By-Laws, minutes of meetings of the
Registrant's Trustees and shareholders and the Registrant's policies and
contracts, which are maintained at the offices of the Registrant, 605 Third
Avenue, New York, New York 10158.
ITEM 29. MANAGEMENT SERVICES
Other than as set forth in Parts A and B of this Post-Effective
Amendment, the Registrant is not a party to any management-related service
contract.
ITEM 30. UNDERTAKINGS
None.
14
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, NEUBERGER BERMAN INCOME FUNDS has duly caused
this Post-Effective Amendment No. 28 to the Registration Statement to be signed
on its behalf by the undersigned, thereto duly authorized, in the City and State
of New York on the 20th day of December, 1999.
NEUBERGER BERMAN INCOME FUNDS
By: /s/ Peter E. Sundman
---------------------
Peter E. Sundman
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 28 has been signed below by the following persons
in the capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/ John Cannon Trustee December 20, 1999
- ------------------------
John Cannon
/s/ Theodore P. Giuliano Chairman of the Board December 20, 1999
- ------------------------ and Trustee
Theodore P. Giuliano
/s/ Barry Hirsch Trustee December 20, 1999
- ------------------------
Barry Hirsch
/s/ Robert A. Kavesh Trustee December 20, 1999
- ------------------------
Robert A. Kavesh
<PAGE>
Signature Title Date
- --------- ----- ----
/s/ William E. Rulon Trustee December 20, 1999
- ------------------------
William E. Rulon
/s/ Candace L. Straight Trustee December 20, 1999
- ------------------------
Candace L. Straight
/s/ Richard Russell Treasurer and December 20, 1999
- ------------------------ Principal Accounting
Richard Russell Officer
/s/ Michael J. Weiner Vice President and December 20, 1999
- ------------------------ Principal Financial
Michael J. Weiner Officer
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, INCOME MANAGERS TRUST has duly caused this
Post-Effective Amendment No. 28 to the Registration Statement to be signed on
its behalf by the undersigned, thereto duly authorized, in the City and State of
New York on the 20th day of December, 1999.
INCOME MANAGERS TRUST
By:/s/ Peter E. Sundman
---------------------
Peter E. Sundman
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 28 has been signed below by the following persons
in the capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/ John Cannon Trustee December 20, 1999
- ------------------------
John Cannon
/s/ Theodore P. Giuliano Chairman of the Board December 20, 1999
- ------------------------ and Trustee
Theodore P. Giuliano
/s/ Barry Hirsch Trustee December 20, 1999
- ------------------------
Barry Hirsch
/s/ Robert A. Kavesh Trustee December 20, 1999
- ------------------------
Robert A. Kavesh
<PAGE>
Signature Title Date
- --------- ----- ----
/s/ William E. Rulon Trustee December 20, 1999
- ------------------------
William E. Rulon
/s/ Candace L. Straight Trustee December 20, 1999
- ------------------------
Candace L. Straight
/s/ Richard Russell Treasurer and December 20, 1999
- ------------------------ Principal Accounting
Richard Russell Officer
/s/ Michael J. Weiner Vice President and December 20, 1999
- ------------------------ Principal Financial
Michael J. Weiner Officer
<PAGE>
NEUBERGER BERMAN INCOME FUNDS
POST-EFFECTIVE AMENDMENT NO. 28 ON FORM N-1A
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
NUMBER DESCRIPTION PAGE
- ------- ----------- ----
(a) (1) Certificate of Trust. Incorporated by N.A.
Reference to Post-Effective Amendment
No. 21 to Registrant's Registration
Statement, File Nos. 2-85229 and
811-3802.
(2) Restated Certificate of Trust. N.A.
Incorporated by Reference to Post-
Effective Amendment No. 26 to
Registrant's Registration statement,
File Nos. 2-85229 and 811-03802.
(3) Trust Instrument of Neuberger Berman N.A.
Income Funds. Incorporated by
Reference to Post-Effective Amendment
No. 21 to Registrant's Registration
Statement, File Nos. 2-85229 and
811-3802.
(4) Schedule A - Current Series of N.A.
Neuberger Berman Income Funds.
Incorporated by Reference to
Post-Effective Amendment No. 25 to
Registrant's Registration Statement,
File Nos. 2-85229 and 811-3802.
(b) By-Laws of Neuberger Berman Income Funds. N.A.
Incorporated by Reference to Post-Effective
Amendment No. 21 to Registrant's Registration
Statement, File Nos. 2-85229 and 811-3802.
(c) (1) Trust Instrument of Neuberger Berman N.A.
Income Funds, Articles IV, V, and VI.
Incorporated by Reference to
Post-Effective Amendment No. 21 to
Registrant's Registration Statement,
File Nos. 2-85229 and 811-3802.
(2) By-Laws of Neuberger Berman Income N.A.
Funds, Articles V, VI, and VIII.
Incorporated by Reference to
Post-Effective Amendment No. 21 to
Registrant's Registration Statement,
File Nos. 2-85229 and 811-3802.
(d) (1) (i) Management Agreement Between N.A.
Income Managers Trust and
Neuberger Berman Management
Incorporated. Incorporated by
Reference to Post-Effective
Amendment No. 21 to Registrant's
Registration Statement, File
Nos. 2-85229 and 811-3802.
<PAGE>
Sequentially
Exhibit Numbered
NUMBER DESCRIPTION PAGE
- ------- ----------- ----
(ii) Schedule A - Portfolios of N.A.
Income Managers Trust Currently
Subject to the Management
Agreement. Incorporated by
Reference to Post-Effective
Amendment No. 25 to Registrant's
Registration Statement , File
Nos. 2-85229 and 811-3802.
(iii) Schedule B - Schedule of N.A.
Compensation Under the
Management Agreement.
Incorporated by Reference to
Post-Effective Amendment No. 25
to Registrant's Registration
Statement, File Nos. 2-85229 and
811-3802.
(2) (i) Sub-Advisory Agreement Between N.A.
Neuberger Berman Management
Incorporated and Neuberger
Berman, L.P. with Respect to
Income Managers Trust.
Incorporated by Reference to
Post-Effective Amendment No. 21
to Registrant's Registration
Statement, File Nos. 2-85229 and
811-3802.
(ii) Schedule A - Portfolios of N.A.
Income Managers Trust Currently
Subject to the Sub-Advisory
Agreement. Incorporated by
Reference to Post-Effective
Amendment No. 25 to Registrant's
Registration Statement, File
Nos. 2-85229 and 811-3802.
(iii) Substitution Agreement Among N.A.
Neuberger Berman Management
Incorporated, Income Managers
Trust, Neuberger Berman, L.P.,
and Neuberger Berman, LLC.
Incorporated by Reference to
Post-Effective Amendment No. 23
to Registrant's Registration
Statement, File Nos. 2-85229 and
811-3802.
(e) (1) Distribution Agreement Between N.A.
Neuberger Berman Income Funds and
Neuberger Berman Management
Incorporated. Incorporated by
Reference to Post-Effective Amendment
No. 21 to Registrant's Registration
Statement, File Nos. 2-85229 and
811-3802.
(2) Schedule A - Series of Neuberger Berman N.A.
Income Funds Currently Subject to the
Distribution Agreement. Incorporated by
Reference to Post-Effective Amendment
No. 25 to Registrant's Registration
Statement, File Nos. 2-85229 and
811-3802.
(f) Bonus, Profit Sharing or Pension Plans. None. N.A.
<PAGE>
Sequentially
Exhibit Numbered
NUMBER DESCRIPTION PAGE
- ------- ----------- ----
(g) (1) Custodian Contract Between Neuberger N.A.
Berman Income Funds and State Street
Bank and Trust Company. Incorporated
by Reference to Post-Effective
Amendment No. 21 to Registrant's
Registration Statement, File Nos.
2-85229 and 811-3802.
(2) Agreement between Neuberger Berman N.A.
Income Funds and State Street Bank and
Trust Company Adding Neuberger Berman
High Yield Bond Fund as a Series
Governed by the Custodian Contract.
Incorporated by Reference to
Post-Effective Amendment No. 25 to
Registrant's Registration Statement,
File Nos. 2-85229 and 811-3802.
(3) Schedule of Compensation under the N.A.
Custodian Contract. Incorporated by
Reference to Post-Effective Amendment
No. 23 to Registrant's Registration
Statement, File Nos. 2-85229 and
811-3802.
(h) (1) (i) Transfer Agency and Service N.A.
Agreement Between Neuberger
Berman Income Funds and State
Street Bank and Trust Company.
Incorporated by Reference to
Post-Effective Amendment No. 21
to Registrant's Registration
Statement, File Nos. 2-85229 and
811-3802.
(ii) Agreement between Neuberger N.A.
Berman Income Funds and State
Street Bank and Trust Company
adding Neuberger Berman High
Yield Bond Fund as a Series
Governed by the Transfer Agency
and Service Agreement.
Incorporated by Reference to
Post-Effective Amendment No. 25
to Registrant's Registration
Statement, File Nos. 2-85229 and
811-3802.
(iii) First Amendment to Transfer N.A.
Agency and Service Agreement
between Neuberger Berman Income
Funds and State Street Bank and
Trust Company. Incorporated by
Reference to Post-Effective
Amendment No. 21 to Registrant's
Registration Statement, File
Nos. 2-85229 and 811-3802.
(iv) Schedule of Compensation under N.A.
the Transfer Agency and Service
Agreement. Incorporated by
Reference to Post-Effective
Amendment No. 23 to Registrant's
Registration Statement, File
Nos. 2-85229 and 811-3802.
<PAGE>
Sequentially
Exhibit Numbered
NUMBER DESCRIPTION PAGE
- ------- ----------- ----
(2) (i) Administration Agreement Between N.A.
Neuberger Berman Income Funds
and Neuberger Berman Management
Incorporated. Incorporated by
Reference to Post-Effective
Amendment No. 21 to Registrant's
Registration Statement, File
Nos. 2-85229 and 811-3802.
(ii) Schedule A - Series of Neuberger N.A.
Berman Income Funds Currently
Subject to the Administration
Agreement. Incorporated by
Reference to Post-Effective
Amendment No 25 to Registrant's
Registration Statement, File
Nos. 2-85229 and 811-3802.
(iii) Schedule B - Schedule of N.A.
Compensation under the
Administration Agreement.
Incorporated by Reference to
Post-Effective Amendment No. 23
to Registrant's Registration
Statement, File Nos. 2-85229 and
811-3802.
(i) (1) Opinion and Consent of N.A.
Kirkpatrick & Lockhart on Securities
Matters with respect to Neuberger
Berman High Yield Bond Fund.
Incorporated by Reference to
Post-Effective Amendment No. 24 to
Registrant's Registration Statement,
File Nos. 2-85229 and 811-3802.
(2) Opinion and Consent of N.A.
Kirkpatrick & Lockhart LLP on
Securities Matters with respect to
Neuberger Berman Income Funds.
Incorporated by Reference to
Post-Effective Amendment No. 25 to
Registrant's Registration Statement,
File Nos. 2-85229 and 811-3802.
(3) Opinion and Consent of ____
Kirkpatrick & Lockhart on Securities
Matters with respect to Neuberger
Berman Institutional Cash Fund. Filed
Herewith.
(j) Consent of Independent Auditors. None. N.A.
(k) Financial Statements Omitted from N.A.
Prospectus. None.
(l) Letter of Investment Intent. None. N.A.
(m) Plan Pursuant to Rule 12b-1. None. N.A.
(n) Plan Pursuant to Rule 18f-3. None. N.A.
Exhibit (i)(2)
--------------------------
KIRKPATRICK & LOCKHART LLP
--------------------------
1800 MASSACHUSETTS AVENUE, N.W.
2ND FLOOR
WASHINGTON, D.C. 20036-1800
TELEPHONE: (202) 778-9000
FACSIMILE: (202) 778-9100
WWW.KL.COM
December 22, 1999
Neuberger Berman Income Funds
605 Third Avenue, Second Floor
New York, New York 10158-0180
Ladies and Gentlemen:
Neuberger Berman Income Funds ("Trust") is a business trust organized
under the laws of the State of Delaware and governed by a Trust Instrument dated
December 23, 1992. You have requested our opinion regarding certain matters in
connection with the Trust's issuance of shares of beneficial interest, par value
$0.001 per share ("Shares"), in its new series, Neuberger Berman Institutional
Cash Fund ("Series").
As counsel to the Trust, we have participated in various matters of Trust
operations and other matters relating to the Trust. We have examined copies of
the Trust Instrument and the Trust's By-Laws, as now in effect, and the minutes
of meetings of the trustees of the Trust, and we are generally familiar with its
business affairs. Based upon the foregoing, it is our opinion that, when issued
in accordance with the Trust's Trust Instrument, By-Laws and prospectus, the
Shares will be legally issued, fully paid and non-assessable by the Trust.
The Trust is a business trust established pursuant to the Delaware
Business Trust Act ("Delaware Act"). The Delaware Act provides that a
shareholder of the Trust is entitled to the same limitation of personal
liability extended to shareholders of for-profit corporations. To the extent
that the Trust or any of its shareholders becomes subject to the jurisdiction of
courts in states which do not have statutory or other authority limiting the
liability of business trust shareholders, such courts might not apply the
Delaware Act and could subject Trust shareholders to liability.
To guard against this risk, the Trust Instrument: (i) requires that every
written obligation of the Trust contain a statement that such obligation may be
enforced only against the assets of the Trust; however, the omission of such a
disclaimer will not operate to create personal liability for any shareholder;
and (ii) provides for indemnification out of Trust property of any shareholder
held personally liable, solely by reason of being a shareholder, for the
obligations of the Trust. Thus, the risk of a Trust shareholder incurring
financial loss beyond his or her investment simply as a rsult of being a
shareholder is limited to circumstances in which: (i) a court refuses to apply
Delaware law; (ii) no contractual limitation of liability is in effect; and
(iii) the Trust itself is unable to meet its obligations.
<PAGE>
Neuberger Berman Income Funds
December 22, 1999
Page 2
We express no opinion as to compliance with the Securities Act of 1933,
the Investment Company Act of 1940, or applicable state securities laws in
connection with the sale of Shares.
We hereby consent to the filing of this opinion in connection with
Post-Effective Amendment No. 28 to the Trust's Registration Statement on Form
N-1A. We also consent to the reference to our firm under the caption "Legal
Counsel" in the Statement of Additional Information filed as part of the
Registration Statement.
Sincerely,
KIRKPATRICK & LOCKHART LLP
By: /s/ Arthur C. Delibert
-----------------------
Arthur C. Delibert
