As filed with the Securities and Exchange Commission on December 14, 2000
Securities Act File No. 2-88566
Investment Company Act File No. 811-4255
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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. 33 |X|
--
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 33 |X|
--
(Check appropriate box or boxes)
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
(Exact Name of Registrant as Specified in Charter)
605 Third Avenue, 2nd Floor, New York, New York 10158-0006
(Address of Principal Executive Offices)
Registrant's Telephone Number: (212) 476-8800
Michael M. Kassen
c/o Neuberger Berman Management Inc.
605 Third Avenue, 2nd Floor
New York, New York 10158-0006
(Name and Address of Agent for Service)
Copies to:
Jeffrey S. Puretz, Esq.
Dechert
1775 Eye Street, N.W.
Washington, D.C. 20006
It is proposed that this filing will become effective (check appropriate box)
[ ] Immediately upon filing [ ] on ______ pursuant to
pursuant to paragraph (b) paragraph (b)
[ ] 60 days after filing pursuant to [ ] on ______ pursuant to
paragraph (a)(1), or paragraph (a)(1)
[ ] 75 days after filing pursuant to [X] on March 1, 2001 pursuant to
paragraph (a)(2), or paragraph (a)(2) of Rule 485
[ ] This post-effective amendment
designates a new effective date for
a previously filed post-effective
amendment.
<PAGE>
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
Contents of Registration Statement
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This Post Effective Amendment No. 33 to the Registration Statement of the
Neuberger Berman Advisers Management Trust consists of the following documents:
Cover Sheet
Contents of Registration Statement
Neuberger Berman Advisers Management Trust
- Part A - Regency Portfolio Prospectus
- Part B - Regency Portfolio Statement of Additional Information
- Part C - Other Information, Signature Pages and Exhibit Index
- Exhibits - Expense Limitation Agreement between Registrant, on
behalf of the Regency Portfolio, and Neuberger Berman
Management Inc.
- Powers of Attorney
<PAGE>
The information in this Prospectus is not complete and may be changed. Neuberger
Berman Advisers Management Trust may not sell these securities until the
registration statement filed with the Securities and Exchange Commission is
effective. This 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.
Subject to Completion, dated _________________, 2000.
[LOGO]
Neuberger Berman
Advisers Management Trust
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Regency Portfolio Prospectus March 1, 2001
THIS PORTFOLIO:
o is offered to life insurance companies to serve as an investment vehicle
under their variable annuity and variable life insurance contracts
o is designed for investors with long-term goals in mind
o offers you the opportunity to participate in financial markets through a
professionally managed stock portfolio
o carries certain risks, including the risk that you could lose money if
portfolio shares are worth less than what you paid
o is a mutual fund, not a bank deposit, and is not guaranteed or insured by
the FDIC or any other government agency
Portfolio Management
All of the Neuberger Berman Advisers Management Trust Portfolios are 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 December 31, 2000) and continue an asset management history that began in
1939.
Risk Information
The investments of the Regency Portfolio are managed by the same individuals who
manage other Neuberger Berman mutual funds that have similar names, objectives,
and investment styles as the Regency Portfolio. You should be aware that the
Regency Portfolio's are likely to differ from these other mutual funds in size,
cash flow pattern, and tax matters. Accordingly, the holdings and performance of
these portfolios can be expected to vary from those of the other mutual funds.
This prospectus discusses principal risks of investment in portfolio shares.
These and other risks are discussed in detail in the Statement of Additional
Information (see back cover). If you are buying a variable contract, you should
also read the contract's prospectus.
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 the prospectus is
accurate or complete. Any representation to the contrary is a criminal offense.
The Neuberger Berman name and logo are service marks of Neuberger Berman, LLC.
"Neuberger Berman Management Inc." and the individual fund named in this
prospectus are either service marks or registered trademarks of Neuberger Berman
Management Inc. (Copyright)2001 Neuberger Berman Management Inc.
CONTENTS
The Portfolio
Regency Portfolio..........................2
Your Investment
Buying and Selling Portfolio Shares........5
Share Prices ..............................5
Portfolio Structure........................6
Distributions and Taxes ...................6
<PAGE>
Neuberger Berman Advisers Management Trust
Regency Portfolio
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"We focus on the mid-cap sector of the market because we believe there are
numerous opportunities there to find less well-known values. We look for
leadership companies with strong fundamentals whose underlying value is not yet
reflected in their stock prices."
Goal & Strategy
The portfolio seeks growth of capital.
To pursue this goal, the portfolio invests mainly in common stocks of
mid-capitalization companies. The portfolio seeks to reduce risk by diversifying
among different companies and industries.
The managers look for well-managed companies whose stock prices are undervalued.
Factors in identifying these firms may include:
o strong fundamentals, such as a company's financial, operational, and
competitive positions
o consistent cash flow
o a sound earnings record through all phases of the market cycle
The management may also look for other characteristics in a company, such as a
strong position relative to competitors, a high level of stock ownership among
management, and a recent sharp decline in stock price that appears to be the
result of a short-term market over-reaction to negative news.
The portfolio generally considers selling a stock when it reaches the managers'
target price, when it fails to perform as expected, or when other opportunities
appear more attractive.
The portfolio has the ability to change its goal without shareholder approval,
although it does not currently intend to do so.
Mid-cap stocks have historically shown risk/return characteristics that are in
between those of small- and large-cap stocks. Their prices can rise and fall
substantially, although they have the potential to offer comparatively
attractive long-term returns.
Mid-caps are less widely followed on Wall Street than large-caps, which can make
it comparatively easier to find attractive stocks that are not overpriced.
Value Investing
At any given time, there are companies whose stock prices are below the market
average, based on earnings, book value, or other financial measures. The value
investor examines these companies, searching for those that may rise in price
when other investors realize their worth.
2 Regency Portfolio
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MAIN RISKS
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Most of the portfolio's performance depends on what happens in the stock market.
The market's behavior is unpredictable, particularly in the short term. Because
of this, the value of your investment will rise and fall, and you could lose
money.
By focusing on mid-cap stocks, the portfolio is subject to their risks,
including the risk its holdings may:
o fluctuate more widely in price than the market as a whole
o underperform other types of stocks or be difficult to sell when the economy
is not robust, during market downturns, or when mid-cap stocks are out of
favor.
With a value approach, there is also the risk that stocks may remain
under-valued during a given period. This may happen because value stocks as a
category lose favor with investors compared to growth stocks or because the
managers failed to anticipate which stocks or industries would benefit from
changing market or economic conditions. To the extent that the managers sell
stocks before they reach their market peak, the fund may miss out on
opportunities for higher performance.
Through active trading, the portfolio may have a high portfolio turnover rate,
which can mean lower performance due to increased brokerage costs.
Other Risks
The portfolio may use certain practices and securities involving additional
risks.
Borrowing, securities lending and derivatives could create leverage, meaning
that certain gains or losses could be amplified, increasing share price
movements. In using certain derivatives to gain stock market exposure for excess
cash holdings, the portfolio increases its risk of loss.
Although they may add diversification, foreign securities can be riskier because
foreign markets tend to be more volatile and currency exchange rates fluctuate.
When the portfolio anticipates adverse market, economic, political or other
conditions, it may temporarily depart from its goal and invest substantially in
high-quality short-term fixed-income investments. This could help the portfolio
avoid losses but may mean lost opportunities.
3 Regency Portfolio
<PAGE>
PERFORMANCE OF A SIMILAR FUND
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Because the portfolio had not commenced investment operations as of December 31,
2000, it does not have performance to report in this prospectus.
However, the portfolio has an investment objective, policies, limitations, and
strategies substantially similar to those of, and the same portfolio manager as,
another mutual fund managed by Neuberger Berman Management called the Neuberger
Berman Regency Fund. The following table shows average annual total returns for
the Neuberger Berman Regency Fund, assuming reinvestment of all distributions,
as well as the Russell Midcap Value Index, which is pertinent to the Neuberger
Berman Regency Fund. This performance information does not reflect insurance
product expenses.
AVERAGE ANNUAL TOTAL % RETURNS as of 12/31/00
Since
Inception
1 Year (6/1/99)
------ ---------
Neuberger Berman Regency Fund __ __
Russell Midcap Value Index __ __
The Russell Midcap Value is an unmanaged index of the 800 smallest companies in
the Russell 1000 index.
The performance of Neuberger Berman Regency Fund reflects that fund's expense
ratio, and does not reflect any expenses or charges that apply to variable
contracts. Insurance expenses and charges would reduce performance. Although the
objective, policies, limitations and strategies of the portfolio are
substantially similar to that of the Neuberger Berman Regency Fund, the
portfolio is a distinct mutual fund and may have different investment returns,
portfolio holdings, and risk/return characteristics than Neuberger Berman
Regency Fund. The historical performance of Neuberger Berman Regency Fund is not
indicative of future performance of the portfolio.
This performance representation relies on data supplied by Neuberger Berman
Management or derived by Neuberger Berman Management from statistical services,
reports or other sources it believes to be reliable.
Management
Robert I. Gendelman is a Vice President of Neuberger Berman Management and
Managing Director of Neuberger Berman, LLC. Gendelman was a portfolio manager at
another firm from 1992 to 1993.
Neuberger Berman Management is the portfolio's investment manager,
administrator, and distributor. It engages Neuberger Berman, LLC as sub-adviser
to provide management and related services.
The portfolio pays the following fees to Neuberger Berman Management, all
expressed as a percentage of the portfolio's average daily net assets: for
investment management, 0.55% of the first $250 million; 0.525% of the next $250
million; 0.50% of the next $250 million; 0.475% of the next $250 million; 0.45%
of the next $500 million; and 0.425% on assets over $1.5 billion; and 0.30% for
administration. The portfolio's management agreements are written contracts and
may be altered under certain circumstances. Neuberger Berman Management has
agreed to limit the portfolio's expenses when certain annual operating expenses
of the portfolio exceed the agreed-upon limit. See the Statement of Additional
Information for more details.
4 Regency Portfolio
<PAGE>
Neuberger Berman Advisers Management Trust
Your Investment
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BUYING AND SELLING PORTOFOLIO SHARES
The Portfolio described in this prospectus is designed for use with certain
variable insurance contracts. Because shares of the portfolio are held by the
insurance companies involved, you will need to follow the instructions provided
by your insurance company for matters involving allocations to this portfolio.
Under certain circumstances, the portfolio reserves the right to:
o suspend the offering of shares
o reject any investment order
o satisfy an order to sell portfolio shares with securities rather than cash,
for certain very large orders
o suspend or postpone the redemption of shares on days when trading on the New
York Stock Exchange is restricted, or as otherwise permitted by the SEC
Because the portfolio is offered to different insurance companies and for
different types of variable contracts -- annuities and life insurance, groups
with different interests will share the portfolio. Due to differences of tax
treatment and other considerations among these shareholders, it is possible
(although not likely) that the interests of the shareholders might sometimes be
in conflict. For these reasons, the trustees of the portfolio watch for the
existence of any material irreconcilable conflicts and will determine what
action, if any, should be taken in the event of a conflict. If there is a
conflict, it is possible that to resolve it, one or more insurance company
separate accounts might be compelled to withdraw its investment in the
portfolio. While this might resolve the conflict, it also might force the
portfolio to sell securities at disadvantageous prices.
SHARE PRICES
When you buy and sell shares of the portfolio, the share price is the
portfolio's net asset value per share.
The portfolio is open for business every day the New York Stock Exchange is
open. The Exchange is closed on all national holidays and Good Friday;
portfolio shares will not be priced on those days. In general, every buy or
sell request you place will go through at the next share price to be calculated
after your request has been accepted; check with your insurance company to find
out by what time your transaction request must be received in order to be
processed the same day. The portfolio normally calculates its share price as of
the end of regular trading on the Exchange on business days, usually 4:00 p.m.
eastern time. Depending on when your insurance company accepts transaction
requests, it's possible that the portfolio's share price could change on days
when you are unable to buy or sell shares. Because foreign markets may be open
on days when U.S. markets are closed, the value of foreign securities owned by
the portfolio could change on days when you can't buy or sell portfolio shares.
The portfolio's share price, however, will not change until the next time it is
calculated.
Share Price Calculations
The portfolio's share price is the total value of its assets minus its
liabilities, divided by the total number of shares. Because the value of the
portfolio's securities changes every day, the share price usually changes as
well.
The portfolio values equity securities by using market prices, and values debt
securities using bid quotations from independent pricing services or principal
market makers. The portfolios may value short-term securities with remaining
maturities of less than 60 days at cost; these values, when combined with
interest earned, approximate market value.
In rare cases, events that occur after markets have closed may render certain
prices unreliable. When the portfolio believes a market price does not reflect a
security's true value, the portfolio may substitute for the market price a
fair-value estimate derived through methods approved by its trustees. The
portfolio may also use these methods to value certain types of illiquid
securities.
5 Your Portfolio
<PAGE>
DISTRIBUTIONS AND TAXES
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The information below is only a summary of some of the important Federal tax
considerations generally affecting the portfolio and its shareholders; for a
more detailed discussion, request a copy of the Statement of Additional
Information. Also, you may want to consult your tax professional. Everyone's tax
situation is different, and your professional should be able to help you answer
any questions you may have.
Distributions -- The portfolio pays out to shareholders of record any net income
and net capital gains. Ordinarily, the portfolio makes distributions once a year
(in February). All dividends and other distributions received by shareholders of
record are automatically reinvested in portfolio shares.
How distributions and transactions are taxed -- Dividends and other
distributions made by a portfolio, as well as transactions in portfolio shares,
are taxable, if at all, to the extent described in your variable contract
prospectus. Consult it for more information.
Insurance Expenses
The fees and policies outlined in this prospectus are set by the portfolio and
by Neuberger Berman Management. The fee information here does not include the
fees and expenses charged by your insurance company under your variable
contract; for those fees, you will need to see the prospectus for your variable
contract.
Distribution and Services
The portfolio has a non-fee distribution plan that recognizes that Neuberger
Berman Management may use its own resources, including profits that derive from
administration fees paid by the portfolio, to pay expenses associated with the
distribution of portfolio shares.
Neuberger Berman Management may also pay insurance companies and qualified plan
administrators for services they provide to current and prospective variable
contract owners and plan participants, such as providing information about the
portfolios and delivering portfolio documents, among other services.
Neuberger Berman Management does not receive any separate fees from the
portfolio for making these payments.
6 Your Investment
<PAGE>
DISTRIBUTIONS AND TAXES
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Other tax-related considerations -- In unusual circumstances, there may be a
risk to you of special tax liabilities from an investment in the portfolio.
Because the portfolio is offered through certain variable insurance contracts,
it is subject to special diversification standards beyond those that normally
apply to mutual funds. If the underlying assets of the portfolio fail to meet
the special standards, you could be subject to adverse tax consequences -- for
example, some of the income earned by the portfolio could generate a current tax
liability.
The managers of the portfolio's assets intend to comply with the special
diversification requirements. It is possible that their attempts to comply may
at times call for decisions that would somewhat reduce investment performance.
Conversion to the Euro
Like other mutual funds, the portfolio could be affected by problems relating to
the conversion of European currencies into the Euro, which extends from 1/1/99
to 7/1/02.
At Neuberger Berman, we are taking steps to ensure that our own computer systems
are compliant with the Euro issue and to determine that the systems used by our
major service providers are also compliant. We are also making efforts to
determine whether companies whose securities are owned by the portfolio will be
affected by this issue.
At the same time, it is impossible to know whether the ongoing conversion, which
could disrupt portfolio operations and investments if problems arise, has been
adequately addressed until the conversion is completed.
7 Your Investment
<PAGE>
FOR ADDITIONAL INFORMATION
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If you'd like further details on this portfolio, you can request a free copy of
the following documents:
Shareholder Reports -- Published twice a year, the shareholder reports offer
information about the portfolio'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 this portfolio, including:
o various types of securities and practices, and their risks
o investment limitations and additional policies
o information about the portfolio's management and business structure
The SAI is incorporated by reference into this prospectus, making it legally
part of this prospectus.
Investment manager:
Neuberger Berman Management Inc.
Sub-adviser:
Neuberger Berman, LLC
NEUBERGER BERMAN
[LOGO]
Neuberger Berman Management Inc.
605 Third Avenue, 2nd Floor
New York, NY 10158-0180
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
202-942-8090 (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.
[LOGO] A0070 05/00rr
SEC file number 811-4225
<PAGE>
The information in this Statement of Additional Information is not complete and
may be changed. Neuberger Berman Advisers Management Trust may not sell these
securities until the registration statement filed with the Securities and
Exchange Commission is effective. This 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.
Subject to Completion, Dated _________________.
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
REGENCY PORTFOLIO
STATEMENT OF ADDITIONAL INFORMATION
Dated March 1, 2001
The Regency Portfolio of Neuberger Berman Advisers Management Trust
("Trust") offers shares pursuant to a Prospectus dated March 1, 2001.
The Portfolio's Prospectus provides the basic information that an
investor should know before investing. You can get a free copy of the Prospectus
from Neuberger Berman Management Inc. ("NB Management"), 605 Third Avenue, 2nd
Floor, New York, NY 10158-0180, or by calling the Trust at 1-800-877-9700.
This Statement of Additional Information ("SAI") relates only to the
Regency Portfolio. A separate SAI dated May 1, 2000 has been prepared for the
Balanced Portfolio, Guardian Portfolio, Growth Portfolio, International
Portfolio, Limited Maturity Bond Portfolio, Liquid Asset Portfolio, Mid-Cap
Growth Portfolio, Partners Portfolio and Socially Responsive Portfolio of the
Trust (these Portfolios, along with the Regency Portfolio, are referred to
collectively as the "Portfolios").
This 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 Portfolio or its distributor. The Prospectus and this SAI do not
constitute an offering by the Portfolio 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 Portfolios named in this SAI are
either service marks or registered trademarks of NB Management.(C)2001 Neuberger
Berman Management Inc.
<PAGE>
TABLE OF CONTENTS
Page
INVESTMENT INFORMATION........................................................1
Investment Policies and Limitations..................................1
Temporary Defensive Positions........................................3
Investment Objective.................................................3
Rating Agencies......................................................4
Investment Insight...................................................4
Additional Investment Information....................................5
PERFORMANCE INFORMATION......................................................25
TRUSTEES AND OFFICERS........................................................28
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES..........................33
INVESTMENT MANAGEMENT, ADVISORY AND ADMINISTRATION SERVICES..................33
Expense Limitations.................................................34
Code of Ethics......................................................35
Management and Control of NB Management and Neuberger Berman........35
Sub-Adviser.........................................................36
Investment Companies Advised........................................37
DISTRIBUTION ARRANGEMENTS....................................................39
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION...............................40
Suspension of Redemptions...........................................40
Redemptions in Kind.................................................41
DIVIDENDS AND OTHER DISTRIBUTIONS............................................41
ADDITIONAL TAX INFORMATION...................................................41
Taxation of the Portfolio...........................................42
PORTFOLIO TRANSACTIONS.......................................................46
PORTFOLIO TURNOVER...........................................................50
REPORTS TO SHAREHOLDERS......................................................50
ii
<PAGE>
INFORMATION REGARDING ORGANIZATION, CAPITALIZATION, AND OTHER MATTERS........50
CUSTODIAN AND TRANSFER AGENT.................................................51
INDEPENDENT AUDITORS.........................................................51
LEGAL COUNSEL................................................................52
REGISTRATION STATEMENT.......................................................52
APPENDIX A:RATINGS OF CORPORATE BONDS AND COMMERCIAL PAPER..................A-1
iii
<PAGE>
INVESTMENT INFORMATION
The Regency Portfolio (the "Portfolio") is a separate series of the
Trust, a Delaware business trust registered with the Securities and Exchange
Commission ("SEC") as a diversified, open-end management investment company and
organized on May 23, 1994. The Portfolio commenced operations on March 1, 2001.
The Portfolio seeks its investment objective by investing in accordance with its
investment objective and policies. The Portfolio is managed by NB Management.
The following information supplements the discussion in the Prospectus
of the investment objective, policies and limitations of each Portfolio. Unless
otherwise specified, those investment objectives, policies and limitations are
not fundamental and may be changed by the trustees of the Trust ("Trustees")
without shareholder approval. The fundamental investment objectives, policies
and limitations of 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
Portfolio represented at a meeting at which more than 50% of the outstanding
Portfolio shares are represented; or (2) a majority of the outstanding shares of
the 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."
Investment Policies and Limitations
The Regency Portfolio has its own fundamental and non-fundamental
investment policies and limitations, as discussed below.
For purposes of the investment limitation on concentration in a
particular industry, NB Management determines the "issuer" of a municipal
obligation that is not a general obligation note or bond based on the
obligation's characteristics. The most significant of these characteristics is
the source of funds for the repayment of principal and payment of interest on
the obligation. If an obligation is backed by an irrevocable letter of credit or
other guarantee, without which the obligation would not qualify for purchase
under the Portfolio's quality restrictions, the issuer of the letter of credit
or the guarantee is considered an issuer of the obligation. If an obligation
meets the quality restrictions of the Portfolio without credit support, the
Portfolio treats the commercial developer or the industrial user, rather than
the governmental entity or the guarantor, as the issuer of the obligation, even
if the obligation is backed by a letter of credit or other guarantee. 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 and certificates of deposit ("CD") are interpreted to include
similar types of time deposits.
Except for the limitation on borrowing and, 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, as applicable, or illiquid securities, NB Management
will take appropriate steps to
<PAGE>
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 Portfolio's fundamental investment policies and limitations are as
follows:
1. Borrowing. The Portfolio may not borrow money, except that the
Portfolio may (i) borrow money from banks for temporary or emergency purposes
and not for leveraging or investment and (ii) enter into reverse repurchase
agreements for any purpose; provided that (i) and (ii) in combination do not
exceed 33-1/3% of the value of its total assets (including the amount borrowed)
less liabilities (other than borrowings). If at any time borrowings exceed
33-1/3% of the value of the Portfolio's total assets, the Portfolio will reduce
its borrowings within three days (excluding Sundays and holidays) to the extent
necessary to comply with the 33-1/3% limitation.
2. Commodities. The Portfolio may not purchase physical commodities or
contracts thereon, unless acquired as a result of the ownership of securities or
instruments, but this restriction shall not prohibit the Portfolio from
purchasing futures contracts or options (including options on futures and
foreign currencies and forward contracts but excluding options or futures
contracts on physical commodities) or from investing in securities of any kind.
For purposes of the limitations on commodities, the Portfolio does not
consider foreign currencies or forward contracts to be physical commodities.
3. Diversification. The Portfolio may not, with respect to 75% of the
value of its total assets, purchase the securities of any issuer (other than
securities issued or guaranteed by the U.S. Government, or any of its agencies
or instrumentalities) if, as a result, (i) more than 5% of the value of the
Portfolio's total assets would be invested in the securities of that issuer or
(ii) the Portfolio would hold more than 10% of the outstanding voting securities
of that issuer.
4. Industry Concentration. The Portfolio may not purchase any security
if, as a result, 25% or more of its total assets (taken at current value) would
be invested in the securities of issuers having their principal business
activities in the same industry. This limitation does not apply to purchases of
(i) securities issued or guaranteed by the U.S. Government, or its agencies or
instrumentalities, or (ii) investments by the Portfolio in certificates of
deposit or bankers' acceptances issued by domestic branches of U.S. banks.
5. Lending. The Portfolio may not lend any security or make any other
loan if, as a result, more than 33-1/3% of its total assets (taken at current
value) would be lent to other parties, except in accordance with its investment
objective, policies, and limitations, (i) through the purchase of a portion of
an issue of debt securities, or (ii) by engaging in repurchase agreements.
6. Real Estate. The Portfolio may not purchase real estate unless
acquired as a result of the ownership of securities or instruments, but this
restriction shall not prohibit the Portfolio from purchasing securities issued
by entities or investment vehicles that own or deal in real estate or interests
therein, or instruments secured by real estate or interests therein.
2
<PAGE>
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").
9. Investment through a Master/Feeder Structure. Notwithstanding any
other investment policy, the Portfolio may invest all of its net 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 Portfolio. Currently, the Portfolio
does not utilize this policy. Rather, the Portfolio invests directly in
securities.
The following non-fundamental investment policies and limitations apply
to the Portfolio unless otherwise indicated.
1. Borrowing. The Portfolio may not purchase securities if outstanding
borrowings, including any reverse repurchase agreements, exceed 5% of its total
assets.
2. Lending. Except for the purchase of debt securities and engaging in
repurchase agreements, the Portfolio may not make any loans other than
securities loans.
3. Margin Transactions. The Portfolio may not purchase securities on
margin from brokers or other lenders except that the Portfolio may obtain such
short-term credits as are necessary for the clearance of securities
transactions. The Portfolio's margin payments in connection with transactions in
futures contracts and options on futures contracts shall not constitute the
purchase of securities on margin and shall not be deemed to violate the
foregoing limitation.
4. Illiquid Securities. The Portfolio may not purchase any security if,
as a result, more than 15% of its net assets would be invested in illiquid
securities. Illiquid securities include securities that cannot be sold within
seven days in the ordinary course of business for approximately the amount at
which the Portfolio has valued the securities, such as repurchase agreements
maturing in more than seven days.
Temporary Defensive Positions
For temporary defensive purposes, the Portfolio may invest up to 100%
of its total assets in cash or cash equivalents, U.S. Government and Agency
Securities, commercial paper, other money market funds and certain other money
market instruments, as well as repurchase agreements collateralized by the
foregoing.
Investment Objective
The Portfolio's investment objective is growth of capital. This
objective is non-fundamental and may be changed by the Trustees without
shareholder approval.
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Rating Agencies
The Portfolio may purchase securities rated by Standard & Poor's
Ratings Group ("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, 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 to
this SAI. The Portfolio may also invest in unrated securities that are deemed
comparable in quality by NB Management to the rated securities in which the
Portfolio may permissibly invest.
Investment Insight
Neuberger Berman's commitment to its asset management approach is
reflected in the more than $125 million the organization's employees and their
families have invested in the Neuberger Berman mutual funds.
The Regency Portfolio seeks growth of capital by investing mainly in
common stocks of mid-capitalization companies. The portfolio seeks to reduce
risk by diversifying among different companies and industries.
The portfolio manager's ultimate goal is to find undervalued companies
that have not yet been discovered by the majority of investors, or better yet,
to buy "great companies at a great price." He attempts to do this by focusing on
the mid-cap segment of the market because it tends to be less followed than the
large-cap segment by Wall Street analysts.
Mid-cap companies with market leadership
Regency's portfolio manager searches the mid-cap stock universe for
companies with a dominant market share in their industry. Historically,
businesses with market leadership have delivered significant returns for
shareholders over the long term. While this may not always be the case,
discovering such middle-weight champions before the rest of Wall Street does can
yield substantial payoffs for investors. Of course, there can be no assurance
that the manager will select the right stocks every time. Remember that the
stocks of mid-cap companies may be more volatile, and entail more risk, than the
stocks of larger companies.
Bottom-up approach to stock selection
The portfolio manager's extensive bottom-up approach begins with
financial screens that are used to search for undervalued securities with
compelling fundamentals. Then, in-depth company and industry analyses are
conducted, followed by interviews with company managements and their
competitors, customers, and suppliers. In this stage, reviewing strategic plans
and evaluating management are critical steps. After applying these financial and
qualitative screens the portfolio manager then seeks to identify a catalyst for
change that could
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improve a stock's valuation. These catalysts are generally managerial,
operational, structural or financial in nature and include changes in company
management, new corporate strategies, changes in the business mix, and improving
financials, among others. The remaining candidates are then ranked on a
risk/reward basis. Stocks with the most compelling risk/reward ratios are placed
in the portfolio, while stocks that are currently not a good Portfolio fit, are
placed on a monitor list for further evaluation.
Broad view of risk management
In order to reduce risk on the buy side, the manager looks for
reasonably priced stocks, diversifies investments across an array of industries,
and avoids making large sector bets. On the sell side, stocks are sold when they
reach their price target, do not perform as expected, or are considered less
attractive than other opportunities.
Investment Process
STOCK UNIVERSE
Financial Analysis
VALUE STOCK UNIVERSE
Qualitative Evaluation
Catalyst for change
EXECUTIVE
Proven Track Record
Strategic Plan
Inside Ownership
Regency Investors Can Expect:
Mid-cap companies with market leadership
Bottom-up approach to stock selection
Broad view of risk management
Additional Investment Information
The Portfolio, as indicated below, 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.
* * *
Illiquid Securities. Illiquid securities are securities that cannot be
expected to be sold within seven days at approximately the price at which they
are valued. These may include unregistered or other restricted securities and
repurchase agreements maturing in greater than seven days. Illiquid securities
may also include commercial paper under section 4(2) of the 1933 Act, as
amended, and
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Rule 144A securities (restricted securities that may be traded
freely among qualified institutional buyers pursuant to an exemption from the
registration requirements of the securities laws); these securities are
considered illiquid unless NB Management, acting pursuant to guidelines
established by the Trustees, 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 U.S. Illiquid
securities may be difficult for the Portfolio to value or dispose of due to the
absence of an active trading market. The sale of some illiquid securities by the
Portfolio may be subject to legal restrictions which could be costly to the
Portfolio.
Policies and Limitations. The Portfolio may invest up to 15% of its net
assets in illiquid securities
Repurchase Agreements. In a repurchase agreement, the Portfolio
purchases securities from a bank that is a member of the Federal Reserve System,
or from a securities dealer, that agrees to repurchase the securities from the
Portfolio at a higher price on a designated future date. Repurchase agreements
generally are for a short period of time, usually less than a week. Costs,
delays, or losses could result if the selling party to a repurchase agreement
becomes bankrupt or otherwise defaults. NB Management monitors the
creditworthiness of sellers.
Policies and Limitations. Repurchase agreements with a maturity of more
than seven days are considered to be illiquid securities. The Portfolio may not
enter into a repurchase agreement with a maturity of more than seven days if, as
a result, more than 15% of the value of its net assets would then be invested in
such repurchase agreements and other illiquid securities. The Portfolio may
enter into a repurchase agreement only if (1) the underlying securities are of a
type (excluding maturity and duration 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 securities to banks, brokerage
firms, or 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
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extensions of secured credit, loans of portfolio securities involve some
risk of loss of rights in the collateral should the borrower fail financially.
Policies and Limitations. The Portfolio may lend securities with a
value not exceeding 33-1/3% of its total assets to banks, brokerage firms, or
other institutional investors judged creditworthy by NB Management. Borrowers
are required continuously to secure their obligations to return securities on
loan from the Portfolio by depositing collateral in a form determined to be
satisfactory by the 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, which 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 have the effect of increasing the level
of the Portfolio's illiquidity. NB Management, acting under guidelines
established by the Trustees, may determine that certain securities qualified for
trading under Rule 144A are liquid. Foreign securities that are freely tradable
in their principal markets are not considered to be restricted. 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 Trustees believe
accurately reflect fair value.
Policies and Limitations. To the extent restricted securities,
including Rule 144A securities, are illiquid, purchases thereof will be subject
to each Portfolio's 15% 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. Each Portfolio may invest in commercial paper
that cannot be resold to the public without an effective registration statement
under the 1933 Act. While restricted commercial paper normally is deemed
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illiquid, NB Management may in certain cases determine that such paper is
liquid, pursuant to guidelines established by the Trustees.
Policies and Limitations. The Portfolio normally may invest up to 35%
of its net assets in debt securities, including commercial paper. The Portfolio
may invest in commercial paper only if it has received the highest rating from
S&P (A-1) or Moody's (P-1) or is deemed by NB Management to be of comparable
quality. To the extent restricted commercial paper is deemed illiquid, purchases
thereof will be subject to the Portfolio's 15% limit on investments in illiquid
securities.
Reverse Repurchase Agreements. In a reverse repurchase agreement, the
Portfolio sells portfolio securities subject to its agreement to repurchase the
securities at a later date for a fixed price reflecting a market rate of
interest. Reverse repurchase agreements may increase fluctuations in the
Portfolio's net asset value ("NAV") 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.
Policies and Limitations. Reverse repurchase agreements are considered
borrowings for purposes of each Portfolio's investment limitations and policies
concerning borrowings. While a reverse repurchase agreement is outstanding, the
Portfolio will deposit in a segregated account with its custodian cash or
appropriate liquid securities, marked to market daily, in an amount at least
equal to each 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. The Portfolio may invest in securities issued
by a commercial bank or savings institution only if (1) the bank or institution
has total assets of at least $1,000,000,000, (2) the bank or institution is on
NB Management's approved list, and (3) 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
Portfolio. These limitations do not prohibit investments in securities issued by
foreign branches of U.S. banks that meet the foregoing requirements.
The Portfolio will normally limit its investments in debt securities,
including banking and savings institution securities, to no more than 35% of its
total assets.
Foreign Securities. The Portfolio may invest in U.S. dollar-denominated
securities issued by foreign issuers and foreign branches of U.S. banks,
including negotiable CDs, banker's
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acceptances and commercial paper. Foreign issuers are issuers organized and
doing business principally outside the U.S. and include banks, non-U.S.
governments and quasi-governmental organizations.
While investments in foreign securities are intended to reduce risk by
providing further diversification, such investments involve sovereign and other
risks, in addition to the credit and market risks normally associated with
domestic securities. These additional risks include the possibility of adverse
political and economic developments (including political instability,
nationalization, expropriation, or confiscatory taxation) and the potentially
adverse effects of unavailability of public information regarding issuers, less
governmental supervision regarding financial markets, reduced liquidity of
certain financial markets, and the lack of uniform accounting, auditing, and
financial standards or the application of standards that are different or less
stringent than those applied in the United States. It may be difficult to invoke
legal process or to enforce contractual obligations abroad.
The Portfolio also may invest in equity, debt, or other
income-producing securities that are denominated in or indexed to foreign
currencies, including, but not limited to (1) common and preferred stocks, (2)
CDs, commercial paper, fixed-time deposits, and bankers' acceptances issued by
foreign banks, (3) obligations of other corporations, and (4) obligations of
foreign governments, or their subdivisions, agencies, and instrumentalities,
international agencies, and supranational entities. Investing in foreign
currency denominated securities includes the special risks associated with
investing in non-U.S. issuers described in the preceding paragraph and the
additional risks of (1) adverse changes in foreign exchange rates, and (2)
adverse changes in investment or exchange control regulations (which could
prevent cash from being brought back to the United States). Additionally,
dividends and interest payable on foreign securities (and gains realized on
disposition thereof) may be subject to foreign taxes, including taxes withheld
from those payments, and there are generally higher commission rates on foreign
portfolio transactions. Fixed commissions on foreign securities exchanges are
generally higher than negotiated commissions on U.S. exchanges, although each
Portfolio endeavors to achieve the most favorable net results on portfolio
transactions.
Foreign securities often trade with less frequency and in less volume
than domestic securities and may exhibit greater price volatility. Additional
costs associated with an investment in foreign securities may include higher
custodian fees than apply to domestic custodial arrangements and transaction
costs of foreign currency conversions. Changes in foreign exchange rates also
will affect the value of securities denominated or quoted in currencies other
than the U.S. dollar.
Foreign markets also have different clearance and settlement
procedures, and in certain markets, there have been times when settlements have
been unable to keep pace with the volume of securities transactions, making it
difficult to conduct such transactions. Delays in settlement could result in
temporary periods when a portion of the assets of the Portfolio is uninvested
and no return is earned thereon. The inability of the Portfolio to make intended
security purchases due to settlement problems could cause the Portfolio to miss
attractive investment opportunities. Inability to dispose of portfolio
securities due to settlement problems could result either in losses to the
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Portfolio due to subsequent declines in value of the portfolio securities, or,
if the Portfolio has entered into a contract to sell the securities, could
result in possible liability to the purchaser.
Prices of foreign securities and exchange rates for foreign currencies
may be affected by the interest rates prevailing in other countries. The
interest rates in other countries are often affected by local factors, including
the strength of the local economy, the demand for borrowing, the government's
fiscal and monetary policies, and the international balance of payments.
Individual foreign economies may differ favorably or unfavorably from the U.S.
economy in such respects as gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency and balance of payments position.
The Portfolio may invest in ADRs, EDRs, GDRs, and IDRs. ADRs (sponsored
or unsponsored) are receipts typically issued by a U.S. bank or trust company
evidencing its ownership of the underlying foreign securities. Most ADRs are
denominated in U.S. dollars and are traded on a U.S. stock exchange. Issuers of
the securities underlying sponsored ADRs, but not unsponsored ADRs, are
contractually obligated to disclose material information in the United States.
Therefore, the market value of unsponsored ADRs may not reflect the effect of
such information. EDRs and IDRs are receipts typically issued by a European bank
or trust company evidencing its ownership of the underlying foreign securities.
GDRs are receipts issued by either a U.S. or non-U.S. banking institution
evidencing its ownership of the underlying foreign securities and are often
denominated in U.S. dollars.
Policies and Limitations. In order to limit the risks inherent in
investing in foreign currency denominated securities, the Portfolio may not
purchase any such security if, as a result, more than 10% of its total assets
(taken at market value) would be invested in foreign currency denominated
securities. Within this limitation, however, the Portfolio is not restricted in
the amount it may invest in securities denominated in any one foreign currency.
Investments in securities of foreign issuers are subject to the
Portfolio's quality standards. The Portfolio may invest only in securities of
issuers in countries whose governments are considered stable by NB Management.
Variable or Floating Rate Securities; Demand and Put Features and
Guarantees. 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 quality
standards applicable to
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obligations purchased by the Portfolio. 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 demand features or put options, permitting 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 credit
enhancements in purchasing these securities.
Policies and Limitations. The Portfolio may invest more than 5% of its
total assets in securities backed by credit instruments from any one issuer or
by insurance from any one insurer. For purposes of this limitation, the
Portfolio excludes securities that do not rely on the credit instrument or
insurance for their ratings, i.e., stand on their own credit. The Portfolio
normally may invest up to 35% of its total assets in debt securities, including
variable or floating rate securities.
Futures, Options on Futures, Options on Securities and Indices,
Forward Contracts, and Options on Foreign
Currencies (collectively, "Financial Instruments")
Futures Contracts and Options Thereon. The Portfolio may purchase and
sell interest rate futures contracts, stock and bond index futures contracts,
and foreign currency futures contracts and may purchase and sell options thereon
in an attempt to hedge against changes in the prices of securities or, in the
case of foreign currency futures and options thereon, to hedge against changes
in prevailing currency exchange rates. Because the futures markets may be more
liquid than the cash markets, the use of futures contracts permits each
Portfolio to enhance portfolio liquidity and maintain a defensive position
without having to sell portfolio securities. This Portfolio views investment in
(i) interest rate and securities index futures and options thereon as a maturity
management device and/or a device to reduce risk or preserve total return in an
adverse environment for the hedged securities, and (ii) foreign currency futures
and options thereon as a means of establishing more definitely the effective
return on, or the purchase price of, securities denominated in foreign
currencies that are held or intended to be acquired by the Portfolio.
For the purposes of managing cash flow, the Portfolio may purchase and
sell stock index futures contracts, and may purchase and sell options thereon to
increase its exposure to the performance of a recognized securities index, such
as the S&P 500 Index.
A "sale" of a futures contract (or a "short" futures position) entails
the assumption of a contractual obligation to deliver the securities or currency
underlying the contract at a specified price at a specified future time. A
"purchase" of a futures contract (or a "long" futures position) entails the
assumption of a contractual obligation to acquire the securities or currency
underlying the contract at a specified price at a specified future time. Certain
futures, including stock and bond index futures, are settled on a net cash
payment basis rather than by the sale and delivery of the securities underlying
the futures.
U.S. futures contracts (except certain currency futures) are traded on
exchanges that have been designated as "contract markets" by the CFTC; futures
transactions must be executed through a futures commission merchant that is a
member of the relevant contract market. In both U.S. and
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foreign markets, an exchange's affiliated clearing organization guarantees
performance of the contracts between the clearing members of the exchange.
Although futures contracts by their terms may require the actual
delivery or acquisition of the underlying securities or currency, in most cases
the contractual obligation is extinguished by being offset before the expiration
of the contract. A futures position is offset by buying (to offset an earlier
sale) or selling (to offset an earlier purchase) an identical futures contract
calling for delivery in the same month. This may result in a profit or loss.
While futures contracts entered into by the Portfolio will usually be liquidated
in this manner, the Portfolio may instead make or take delivery of underlying
securities whenever it appears economically advantageous for it to do so.
"Margin" with respect to a futures contract is the amount of assets
that must be deposited by the Portfolio with, or for the benefit of, a futures
commission merchant in order to initiate and maintain the Portfolio's futures
positions. The margin deposit made by the Portfolio when it enters into a
futures contract ("initial margin") is intended to assure its performance of the
contract. If the price of the futures contract changes -- increases in the case
of a short (sale) position or decreases in the case of a long (purchase)
position -- so that the unrealized loss on the contract causes the margin
deposit not to satisfy margin requirements, the Portfolio will be required to
make an additional margin deposit ("variation margin"). However, if favorable
price changes in the futures contract cause the margin deposit to exceed the
required margin, the excess will be paid to the Portfolio. In computing its NAV,
the Portfolio marks to market the value of their open futures positions. The
Portfolio also must make margin deposits with respect to options on futures that
it has written (but not with respect to options on futures that it has
purchased). If the futures commission merchant holding the margin deposit goes
bankrupt, the Portfolio could suffer a delay in recovering its funds and could
ultimately suffer a loss.
An option on a futures contract gives the purchaser the right, in
return for the premium paid, to assume a position in the contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the option exercise period. The
writer of the option is required upon exercise to assume a short futures
position (if the option is a call) or a long futures position (if the option is
a put). Upon exercise of the option, the accumulated cash balance in the
writer's futures margin account is delivered to the holder of the option. That
balance represents the amount by which the market price of the futures contract
at exercise exceeds, in the case of a call, or is less than, in the case of a
put, the exercise price of the option. Options on futures have characteristics
and risks similar to those of securities options, as discussed herein.
Although the Portfolio believes that the use of futures contracts will
benefit it, if NB Management's judgment about the general direction of the
markets or about interest rate or currency exchange rate trends is incorrect,
the Portfolio's overall return would be lower than if it had not entered into
any such contracts. Further, an appropriate futures contract may not be
available even if the portfolio manager wishes to enter into one. The prices of
futures contracts are volatile and are influenced by, among other things, actual
and anticipated changes in interest or currency exchange rates, which in turn
are affected by fiscal and monetary policies and by national and international
political and economic events. At best, the correlation between changes in
prices of futures contracts and of securities being hedged can be only
approximate due to differences between the
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futures and securities markets or differences between the securities or
currencies underlying the Portfolio's futures position and the securities held
by or to be purchased for the Portfolio. The currency futures market may be
dominated by short-term traders seeking to profit from changes in exchange
rates. This would reduce the value of such contracts used for hedging purposes
over a short-term period. Such distortions are generally minor and would
diminish as the contract approaches maturity.
Because of the low margin deposits required, futures trading involves
an extremely high degree of leverage; as a result, a relatively small price
movement in a futures contract may result in immediate and substantial loss, or
gain, to the investor. Losses that may arise from certain futures transactions
are potentially unlimited.
Most U.S. futures exchanges limit the amount of fluctuation in the
price of a futures contract or option thereon during a single trading day; once
the daily limit has been reached, no trades may be made on that day at a price
beyond that limit. The daily limit governs only price movements during a
particular trading day, however; it thus does not limit potential losses. In
fact, it may increase the risk of loss, because prices can move to the daily
limit for several consecutive trading days with little or no trading, thereby
preventing liquidation of unfavorable futures and options positions and
subjecting traders to substantial losses. If this were to happen with respect to
a position held by the Portfolio, it could (depending on the size of the
position) have an adverse impact on the NAV of the Portfolio.
Policies and Limitations. The Portfolio may purchase and sell futures
contracts and may purchase and sell options thereon in an attempt to hedge
against changes in the prices of securities or, in the case of foreign currency
futures and options thereon, to hedge against prevailing currency exchange
rates. This Portfolio does not engage in transactions in futures and options on
futures for speculation.
Call Options on Securities. The Portfolio may write covered call
options and may purchase call options in related closing transactions. The
purpose of writing call options is to hedge (i.e., to reduce, at least in part,
the effect of price fluctuations of securities held by the Portfolio on the
Portfolio's NAV) or to earn premium income. Portfolio securities on which call
options may be written and purchased by a are purchased solely on the basis of
investment considerations consistent with the Portfolio's investment objective.
When the Portfolio writes a call option, it is obligated to sell a
security to a purchaser at a specified price at any time until a certain date if
the purchaser decides to exercise the option. The Portfolio receives a premium
for writing the call option. When writing call options, each Portfolio writes
only "covered" call options on securities it owns. So long as the obligation of
the call option continues, the Portfolio may be assigned an exercise notice,
requiring it to deliver the underlying security against payment of the exercise
price. The Portfolio may be obligated to deliver securities underlying an option
at less than the market price.
The writing of covered call options is a conservative investment
technique that is believed to involve relatively little risk, but is capable of
enhancing the Portfolio's total return.
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When writing a covered call option, the Portfolio, in return for the premium,
gives up the opportunity for profit from a price increase in the underlying
security above the exercise price, but conversely retains the risk of loss
should the price of the security decline.
If a call option that the Portfolio has written expires unexercised,
the Portfolio will realize a gain in the amount of the premium; however, that
gain may be offset by a decline in the market value of the underlying security
during the option period. If the call option is exercised, the Portfolio will
realize a gain or loss from the sale of the underlying security.
When the Portfolio purchases a call option, it pays a premium for the
right to purchase a security from the writer at a specified price until a
specified date.
Policies and Limitations. The Portfolio may write covered call options
and may purchase call options in related closing transactions. The Portfolio
writes only "covered" call options on securities it owns (in contrast to the
writing of "naked" or uncovered call options, which the Portfolio will not do).
The Portfolio would purchase a call option to offset a previously
written call option. The Portfolio also may purchase a call option to protect
against an increase in the price of the securities it intends to purchase.
General Information About Securities Options. The exercise price of an
option may be below, equal to, or above the market value of the underlying
security at the time the option is written. Options normally have expiration
dates between three and nine months from the date written. American-style
options are exercisable at any time prior to their expiration date. The
obligation under any option written by the Portfolio terminates upon expiration
of the option or, at an earlier time, when the Portfolio offsets the option by
entering into a "closing purchase transaction" to purchase an option of the same
series. If an option is purchased by the Portfolio and is never exercised or
closed out, the Portfolio will lose the entire amount of the premium paid.
Options are traded both on U.S. national securities exchanges and in
the over-the-counter ("OTC") market. Exchange-traded options are issued by a
clearing organization affiliated with the exchange on which the option is
listed; the clearing organization in effect guarantees completion of every
exchange-traded option. In contrast, OTC options are contracts between the
Portfolio and a counter-party, with no clearing organization guarantee. Thus,
when the Portfolio sells (or purchases) an OTC option, it generally will be able
to "close out" the option prior to its expiration only by entering into a
closing transaction with the dealer to whom (or from whom) the Portfolio
originally sold (or purchased) the option. There can be no assurance that the
Portfolio would be able to liquidate an OTC option at any time prior to
expiration. Unless the Portfolio is able to effect a closing purchase
transaction in a covered OTC call option it has written, it will not be able to
liquidate securities used as cover until the option expires or is exercised or
until different cover is substituted. In the event of the counter-party's
insolvency, the Portfolio may be unable to liquidate its options position and
the associated cover. NB Management monitors the creditworthiness of dealers
with which the Portfolio may engage in OTC options transactions.
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The premium received (or paid) by the Portfolio when it writes (or
purchases) an option is the amount at which the option is currently traded on
the applicable market. The premium may reflect, among other things, the current
market price of the underlying security, the relationship of the exercise price
to the market price, the historical price volatility of the underlying security,
the length of the option period, the general supply of and demand for credit,
and the interest rate environment. The premium received by the Portfolio for
writing an option is recorded as a liability on the Portfolio's statement of
assets and liabilities. This liability is adjusted daily to the option's current
market value, which is the last reported sales price before the time the
Portfolio's NAV is computed on the day the option is being valued or, in the
absence of any trades thereof on that day, the mean between the bid and asked
prices as of that time.
Closing transactions are effected in order to realize a profit (or
minimize a loss) on an outstanding option, to prevent an underlying security
from being called, or to permit the sale or the put of the underlying security.
Furthermore, effecting a closing transaction permits the Portfolio to write
another call option on the underlying security with a different exercise price
or expiration date or both. There is, of course, no assurance that the Portfolio
will be able to effect closing transactions at favorable prices. If the
Portfolio cannot enter into such a transaction, it may be required to hold a
security that it might otherwise have sold (or purchase a security that it would
not have otherwise bought), in which case it would continue to be at market risk
on the security.
The Portfolio will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more than the premium
received from writing the call or put option. Because increases in the market
price of a call option generally reflect increases in the market price of the
underlying security, any loss resulting from the repurchase of a call option is
likely to be offset, in whole or in part, by appreciation of the underlying
security owned by the Portfolio; however, the Portfolio could be in a less
advantageous position than if it had not written the call option.
The Portfolio pays brokerage commissions or spreads in connection with
purchasing or writing options, including those used to close out existing
positions. From time to time, the Portfolio may purchase an underlying security
for delivery in accordance with an exercise notice of a call option assigned to
it, rather than delivering the security from its portfolio. In those cases,
additional brokerage commissions are incurred.
The hours of trading for options may not conform to the hours during
which the underlying securities are traded. To the extent that the options
markets close before the markets for the underlying securities, significant
price and rate movements can take place in the underlying markets that cannot be
reflected in the options markets.
Policies and Limitations. The Portfolio may use American-style options.
The assets used as cover (or held in a segregated account) for OTC
options written by the Portfolio will be considered illiquid unless the OTC
options are sold to qualified dealers who agree that the Portfolio may
repurchase any OTC option it writes at a maximum price to be calculated by a
formula set forth in the option agreement. The cover for an OTC call option
written subject to this
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procedure will be considered illiquid only to the extent that the maximum
repurchase price under the formula exceeds the intrinsic value of the option.
Put and Call Options on Securities Indices. For purposes of managing
cash flow, the Portfolio may purchase put and call options on securities indices
to increase the Portfolio's exposure to the performance of a recognized
securities index, such as the S&P 500 Index.
Unlike a securities option, which gives the holder the right to
purchase or sell a specified security at a specified price, an option on a
securities index gives the holder the right to receive a cash "exercise
settlement amount" equal to (1) the difference between the exercise price of the
option and the value of the underlying securities index on the exercise date (2)
multiplied by a fixed "index multiplier." A securities index fluctuates with
changes in the market values of the securities included in the index. Options on
stock indices are currently traded on the Chicago Board Options Exchange, the
New York Stock Exchange ("NYSE"), the American Stock Exchange, and other U.S.
and foreign exchanges.
The effectiveness of hedging through the purchase of securities index
options will depend upon the extent to which price movements in the securities
being hedged correlate with price movements in the selected securities index.
Perfect correlation is not possible because the securities held or to be
acquired by the Portfolio will not exactly match the composition of the
securities indices on which options are available.
Securities index options have characteristics and risks similar to
those of securities options, as discussed herein.
Policies and Limitations. For purposes of managing cash flow, the
Portfolio may purchase put and call options on securities indices to increase
the Portfolio's exposure to the performance of a recognized securities index,
such as the S&P 500 Index. All securities index options purchased by the
Portfolio will be listed and traded on an exchange.
Foreign Currency Transactions. The Portfolio may enter into contracts
for the purchase or sale of a specific currency at a future date (usually less
than one year from the date of the contract) at a fixed price ("forward
contracts"). The Portfolio also may engage in foreign currency exchange
transactions on a spot (i.e., cash) basis at the spot rate prevailing in the
foreign currency exchange market.
The Portfolio enters into forward contracts in an attempt to hedge
against changes in prevailing currency exchange rates. The Portfolio does do not
engage in transactions in forward contracts for speculation; they view
investments in forward contracts as a means of establishing more definitely the
effective return on, or the purchase price of, securities denominated in foreign
currencies. Forward contract transactions include forward sales or purchases of
foreign currencies for the purpose of protecting the U.S. dollar value of
securities held or to be acquired by the Portfolio or protecting the U.S. dollar
equivalent of dividends, interest, or other payments on those securities.
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Forward contracts are traded in the interbank market directly between
dealers (usually large commercial banks) and their customers. A forward contract
generally has no deposit requirement, and no commissions are charged at any
stage for trades; foreign exchange dealers realize a profit based on the
difference (the spread) between the prices at which they are buying and selling
various currencies.
At the consummation of a forward contract to sell currency, the
Portfolio may either make delivery of the foreign currency or terminate its
contractual obligation to deliver by purchasing an offsetting contract. If the
Portfolio chooses to make delivery of the foreign currency, it may be required
to obtain such currency through the sale of portfolio securities denominated in
such currency or through conversion of other assets of the Portfolio into such
currency. If the Portfolio engages in an offsetting transaction, it will incur a
gain or a loss to the extent that there has been a change in forward contract
prices. Closing purchase transactions with respect to forward contracts are
usually made with the currency dealer who is a party to the original forward
contract.
NB Management believes that the use of foreign currency hedging
techniques, including "proxy-hedges," can provide significant protection of NAV
in the event of a general rise in the U.S. dollar against foreign currencies.
For example, the return available from securities denominated in a particular
foreign currency would diminish if the value of the U.S. dollar increased
against that currency. Such a decline could be partially or completely offset by
an increase in value of a hedge involving a forward contract to sell that
foreign currency or a proxy-hedge involving a forward contract to sell a
different foreign currency whose behavior is expected to resemble the currency
in which the securities being hedged are denominated but which is available on
more advantageous terms.
However, a hedge or proxy-hedge cannot protect against exchange rate
risks perfectly, and, if NB Management is incorrect in its judgment of future
exchange rate relationships, the Portfolio could be in a less advantageous
position than if such a hedge had not been established. If the Portfolio uses
proxy-hedging, it may experience losses on both the currency in which it has
invested and the currency used for hedging if the two currencies do not vary
with the expected degree of correlation. Using forward contracts to protect the
value of the Portfolio's securities against a decline in the value of a currency
does not eliminate fluctuations in the prices of the underlying securities.
Because forward contracts are not traded on an exchange, the assets used to
cover such contracts may be illiquid. The Portfolio may experience delays in the
settlement of its foreign currency transactions.
Policies and Limitations. The Portfolio may enter into forward
contracts for the purpose of hedging and not for speculation.
Options on Foreign Currencies. The Portfolio may write and purchase
covered call and put options on foreign currencies.
Currency options have characteristics and risks similar to those of
securities options, as discussed herein. Certain options on foreign currencies
are traded on the OTC market and involve liquidity and credit risks that may not
be present in the case of exchange-traded currency options.
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Policies and Limitations. The Portfolio would use options on foreign
currencies to protect against declines in the U.S. dollar value of portfolio
securities or increases in the U.S. dollar cost of securities to be acquired or
to protect the U.S. dollar equivalent of dividends, interest, or other payments
on those securities.
Regulatory Limitations on Using Financial Instruments. To the extent
the Portfolio sells or purchases futures contracts or writes options thereon or
options on foreign currencies that are traded on an exchange regulated by the
CFTC other than for bona fide hedging purposes (as defined by the CFTC), the
aggregate initial margin and premiums on those positions (excluding the amount
by which options are "in-the-money") may not exceed 5% of the Portfolio's net
assets.
Cover for Financial Instruments. Securities held in a segregated
account cannot be sold while the futures, options, or forward strategy covered
by those securities is outstanding, unless they are replaced with other suitable
assets. As a result, segregation of a large percentage of the Portfolio's assets
could impede portfolio management or the Portfolio's ability to meet current
obligations. The Portfolio may be unable to promptly dispose of assets which
cover, or are segregated with respect to, an illiquid futures, options, or
forward position; this inability may result in a loss to the Portfolio.
Policies and Limitations. The Portfolio will comply with SEC guidelines
regarding "cover" for Financial Instruments and, if the guidelines so require,
set aside in a segregated account with its custodian the prescribed amount of
cash or appropriate liquid securities.
General Risks of Financial Instruments. The primary risks in using
Financial Instruments are: (1) imperfect correlation or no correlation between
changes in market value of the securities or currencies held or to be acquired
by the Portfolio and changes in the prices of Financial Instruments; (2)
possible lack of a liquid secondary market for Financial Instruments and the
resulting inability to close out Financial Instruments when desired; (3) the
fact that the skills needed to use Financial Instruments are different from
those needed to select the Portfolio's securities; (4) the fact that, although
use of Financial Instruments for hedging purposes can reduce the risk of loss,
they also can reduce the opportunity for gain, or even result in losses, by
offsetting favorable price movements in hedged investments; and (5) the possible
inability of the Portfolio to purchase or sell a portfolio security at a time
that would otherwise be favorable for it to do so, or the possible need for the
Portfolio to sell a portfolio security at a disadvantageous time, due to its
need to maintain cover or to segregate securities in connection with its use of
Financial Instruments. There can be no assurance that the Portfolio's use of
Financial Instruments will be successful.
The Portfolio's use of Financial Instruments may be limited by the
provisions of the Internal Revenue Code of 1986, as amended ("Code"), with which
it must comply if it is to continue to qualify as a regulated investment company
("RIC"). See "Additional Tax Information." Financial Instruments may not be
available with respect to some currencies, especially those of so-called
emerging market countries.
Policies and Limitations. NB Management intends to reduce the risk of
imperfect correlation by investing only in Financial Instruments whose behavior
is expected to resemble or
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offset that of the Portfolio's underlying securities or currency. NB Management
intends to reduce the risk that the Portfolio will be unable to close out
Financial Instruments by entering into such transactions only if NB Management
believes there will be an active and liquid secondary market.
Convertible Securities. The Portfolio may invest in convertible
securities. A convertible security is a bond, debenture, note, preferred stock,
or other security that may be converted into or exchanged for a prescribed
amount of common stock of the same or a different issuer within a particular
period of time at a specified price or formula. Convertible securities generally
have features of both common stocks and debt securities. A convertible security
entitles the holder to receive interest paid or accrued on debt or the dividend
paid on preferred stock until the convertible security matures or is redeemed,
converted or exchanged. Before conversion, convertible securities ordinarily
provide a stream of income with generally higher yields than those of common
stocks of the same or similar issuers, but lower than the yield on
non-convertible debt. Convertible securities are usually subordinated to
comparable-tier nonconvertible securities but rank senior to common stock in a
corporation's capital structure. The value of a convertible security is a
function of (1) its yield in comparison with the yields of other securities of
comparable maturity and quality that do not have a conversion privilege, and (2)
its worth, at market value, if converted into the underlying common stock.
The price of a convertible security often reflects such variations in
the price of the underlying common stock in a way that nonconvertible debt does
not. Convertible securities are typically issued by smaller capitalized
companies whose stock prices may be volatile. A convertible security is a bond,
debenture, note, preferred stock, or other security that may be converted into
or exchanged for a prescribed amount of common stock of the same or a different
issuer within a particular period of time at a specified price or formula.
Convertible securities generally have features of both common stocks and debt
securities. A convertible security may be subject to redemption at the option of
the issuer at a price established in the security's governing instrument. If a
convertible security held by the Portfolio is called for redemption, the
Portfolio will be required to convert it into the underlying common stock, sell
it to a third party or permit the issuer to redeem the security. Any of these
actions could have an adverse effect on the Portfolio's ability to achieve its
investment objective.
Preferred Stock. The Portfolio may invest in preferred stock. Unlike
interest payments on debt securities, dividends on preferred stock are generally
payable at the discretion of the issuer's board of directors, although preferred
shareholders may have certain rights if dividends are not paid. Shareholders may
suffer a loss of value if dividends are not paid, and generally have no legal
recourse against the issuer. The market prices of preferred stocks are generally
more sensitive to changes in the issuer's creditworthiness than are the prices
of debt securities.
Zero Coupon The Portfolio may invest in zero coupon securities which
are debt obligations that do not entitle the holder to any periodic payment of
interest prior to maturity or that specify a future date when the securities
begin paying current interest. Zero coupon securities are issued and traded at a
significant discount from their face amount or par value. The discount varies
depending on prevailing interest rates, the time remaining until cash payments
begin, the liquidity of the
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security, and the perceived credit quality of the issuer. They 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. Because the Portfolio must distribute to its
shareholders substantially all of its net income each year for income 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 its distribution requirements.
The market prices of zero coupon securities generally are more volatile
than the prices of securities that pay interest periodically. Zero coupon
securities are likely to respond to changes in interest rates to a greater
degree than other types of debt securities having a similar maturity and credit
quality.
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 normally may invest up to 35%
of their total assets in debt securities, including U.S. Government and Agency
Securities.
Fixed Income Securities. While the emphasis of the Portfolio's
investment program is on common stocks and other equity securities, the
Portfolio may also invest in money market instruments, U.S. Government and
Agency Securities, and other fixed income securities. The Portfolio may invest
in investment grade corporate bonds and debentures and may invest in corporate
debt securities rated below investment grade.
"Investment grade" debt securities are those receiving one of the four
highest ratings from Moody's Investors Service, Inc. ("Moody's"), Standard &
Poor's ("S&P"), or another nationally recognized statistical rating organization
("NRSRO") or, if unrated by any NRSRO, deemed by NB Management to be comparable
to such rated securities ("Comparable Unrated Securities"). Securities rated by
Moody's in its fourth highest rating category (Baa) or Comparable Unrated
Securities may be deemed to have speculative characteristics.
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The ratings of an NRSRO represent its opinion as to the quality of
securities it undertakes to rate. Ratings are not absolute standards of quality;
consequently, securities with the same maturity, coupon, and rating may have
different yields. Although the Portfolio may rely on the ratings of any NRSRO,
the Portfolio primarily refers to ratings assigned by S&P and Moody's, which are
described in Appendix A to this SAI.
Fixed income securities are subject to the risk of an issuer's
inability to meet principal and interest payments on its obligations ("credit
risk") and are subject to price volatility due to such factors as interest rate
sensitivity, market perception of the creditworthiness of the issuer, and market
liquidity ("market risk"). The value of the fixed income securities in which the
Portfolio may invest is likely to decline in times of rising market interest
rates. Conversely, when rates fall, the value of the Portfolio's fixed income
investments is likely to rise. Foreign debt securities are subject to risks
similar to those of other foreign securities. Lower rated securities are more
likely to react to developments affecting market and credit risk than are more
highly rated securities, which react primarily to movements in the general level
of interest rates.
Lower Rated Debt Securities. Lower-rated debt securities or "junk
bonds" are those rated below the fourth highest category by all NRSROs that have
rated them (including those securities rated as low as D by S&P) or unrated
securities of comparable quality. Securities rated below investment grade may be
considered speculative. Securities rated B are judged to be predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal in accordance with their terms and obligations. Lower rated debt
securities generally offer a higher current yield than that available for
investment grade issues with similar maturities, but they may involve
significant risk under adverse conditions. In particular, adverse changes in
general economic conditions and in the industries in which the issuers are
engaged and changes in the financial condition of the issuers are more likely to
cause price volatility and weaken the capacity of the issuer to make principal
and interest payments than is the case for higher-grade debt securities. In
addition, investing in lower-quality securities may cause the Portfolio to incur
additional expenses to the extent recovery is sought on defaulted securities.
Because of the many risks involved in investing in high-yield securities, the
success of such investments is dependent on the credit analysis of NB
Management.
During periods of economic downturn or rising interest rates, highly
leveraged issuers may experience financial stress which could adversely affect
their ability to make payments of interest and principal and increase the
possibility of default. In addition, such issuers may not have more traditional
methods of financing available to them and may be unable to repay debt at
maturity by refinancing. The risk of loss due to default by such issuers is
significantly greater because such securities frequently are unsecured and
subordinated to the prior payment of senior indebtedness.
The market for lower rated debt securities has expanded rapidly in
recent years, and its growth generally paralleled a long economic expansion. In
the past, the prices of many lower rated debt securities declined substantially,
reflecting an expectation that many issuers of such securities might experience
financial difficulties. As a result, the yields on lower rated debt securities
rose dramatically. However, such higher yields did not reflect the value of the
income
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stream that holders of such securities expected, but rather the risk that
holders of such securities could lose a substantial portion of their value as a
result of the issuers' financial restructuring or defaults. There can be no
assurance that such declines will not recur.
The market for lower rated debt issues generally is thinner or less
active than that for higher quality securities, which may limit the Portfolio's
ability to sell such securities at fair value in response to changes in the
economy or financial markets. Judgment may play a greater role in pricing such
securities than it does for more liquid securities. Adverse publicity and
investor perceptions, whether or not based on fundamental analysis, may also
decrease the values and liquidity of lower rated debt securities, especially in
a thinly traded market.
See Appendix A for further information about the ratings of debt
securities assigned by S&P and Moody's.
Policies and Limitations. The Portfolio may invest up to 15% of its net
assets, measured at the time of investment, in corporate debt securities rated
below investment grade or Comparable Unrated Securities.
Subsequent to its purchase by the Portfolio, an issue of debt
securities may cease to be rated or its rating may be reduced, so that the
securities would no longer be eligible for purchase by that Portfolio. In such a
case, the Portfolio will engage in an orderly disposition of downgraded
securities to the extent necessary to ensure that the Portfolio's holdings of
securities rated below investment grade and Comparable Unrated Securities will
not exceed 15% of its assets.
Ratings of Fixed Income Securities
As discussed above, the Portfolio may purchase securities rated by S&P,
Moody's, or any other 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 refer to ratings assigned by S&P
and Moody's, which are described in Appendix A. The Portfolio may also invest in
unrated securities 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.
Investment Grade Debt Securities. Investment grade debt securities are
securities that have received a rating from at least one NRSRO in one of the
four highest rating categories or, if not rated by any NRSRO, have been
determined by NB Management to be of comparable quality. Moody's deems
securities rated in its fourth highest category (Baa) to have speculative
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characteristics; a change in economic factors could lead to a weakened capacity
of the issuer to repay.
Lower-Rated Debt Securities. Lower-rated debt securities or "junk
bonds" are those rated below the fourth highest category by all NRSROs that have
rated them (including those securities rated as low as D by S&P) or unrated
securities of comparable quality. Securities rated below investment grade may be
considered speculative. Securities rated B are judged to be predominantly
speculative with respect to their capacity to pay interest and repay principal
in accordance with the terms of the obligations. Although these securities
generally offer higher yields than investment grade debt securities with similar
maturities, lower-quality securities involve greater risks, including the
possibility of default or bankruptcy by the issuer, or the securities may
already be in default. See the additional risks described above for lower-rated
securities.
Subsequent to its purchase by the Portfolio, an issue of debt
securities may cease to be rated or its rating may be reduced, so that the
securities would no longer be eligible for purchase by that Portfolio. The
policy on downgraded securities is discussed above under "Lower Rated Debt
Securities."
Duration and Maturity
Duration is a measure of the sensitivity of debt securities to changes
in market interest rates, based on the entire cash flow associated with the
securities, including payments occurring before the final repayment of
principal. NB Management utilizes duration as a tool in portfolio selection
instead of the more traditional measure known as "term to maturity." "Term to
maturity" measures only the time until a debt security provides its final
payment, taking no account of the pattern of the security's payments prior to
maturity. Duration incorporates a bond's yield, coupon interest payments, final
maturity and call features into one measure. Duration therefore provides a more
accurate measurement of a bond's likely price change in response to a given
change in market interest rates. The longer the duration, the greater the bond's
price movement will be as interest rates change. For any fixed income security
with interest payments occurring prior to the payment of principal, duration is
always less than maturity.
Futures, options and options on futures have durations which are
generally related to the duration of the securities underlying them. Holding
long futures or call option positions will lengthen the Portfolio's duration by
approximately the same amount as would holding an equivalent amount of the
underlying securities. Short futures or put options have durations roughly equal
to the negative of the duration of the securities that underlie these positions,
and have the effect of reducing portfolio duration by approximately the same
amount as would selling an equivalent amount of the underlying securities.
There are some situations where even the standard duration calculation
does not properly reflect the interest rate exposure of a security. For example,
floating and variable rate securities often have final maturities of ten or more
years; however, their interest rate exposure
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corresponds to the frequency of the coupon reset. Another example where the
interest rate exposure is not properly captured by duration is the case of
mortgage-backed securities. The stated final maturity of such securities is
generally 30 years, but current and expected prepayment rates are critical in
determining the securities' interest rate exposure. In these and other similar
situations, NB Management, where permitted, will use more sophisticated
analytical techniques that incorporate the economic life of a security into the
determination of its interest rate exposure.
Risks of Equity Securities
The Portfolio may invest in securities that include common stocks,
preferred stocks, convertible securities and warrants. Common stocks and
preferred stocks represent shares of ownership in a corporation. Preferred
stocks usually have specific dividends and rank after bonds and before common
stock in claims on assets of the corporation should it be dissolved. Increases
and decreases in earnings are usually reflected in a corporation's stock price.
Convertible securities are debt or preferred equity securities convertible into
common stock. Usually, convertible securities pay dividends or interest at rates
higher than common stock, but lower than other securities. Convertible
securities usually participate to some extent in the appreciation or
depreciation of the underlying stock into which they are convertible. Warrants
are options to buy a stated number of shares of common stock at a specified
price anytime during the life of the warrants.
To the extent the Portfolio invests in such securities, the value of
securities held by the Portfolio will be affected by changes in the stock
markets, which may be the result of domestic or international political or
economic news, changes in interest rates or changing investor sentiment. At
times, the stock markets can be volatile and stock prices can change
substantially. The equity securities of smaller companies are more sensitive to
these changes than those of larger companies. This market risk will affect the
Portfolio's NAV per share, which will fluctuate as the value of the securities
held by the Portfolio changes. Not all stock prices change uniformly or at the
same time and not all stock markets move in the same direction at the same time.
Other factors affect a particular stock's prices, such as poor earnings reports
by an issuer, loss of major customers, major litigation against an issuer, or
changes in governmental regulations affecting an industry. Adverse news
affecting one company can sometimes depress the stock prices of all companies in
the same industry. Not all factors can be predicted.
Other Investment Companies. The Portfolio may invest in instruments
structured as investment companies to gain exposure to the performance of a
recognized securities index, such as the S&P 500 Index or another appropriate
index.
As a shareholder in an investment company, the Portfolio would bear its
pro rata share of that investment company's expenses. At the same time, the
Portfolio will continue to pay its own management fees and expenses with respect
to its portfolio investments, including the shares of other investment
companies. Investment in other funds may involve the payment of substantial
premiums above the value of such issuer's portfolio securities. The Portfolio
does not intend to
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invest in such funds unless, in the judgment of NB Management, the potential
benefits of such investment justify the payment of any applicable premium or
sales charge.
Policies and Limitations. Each 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.
Preferred Stock. The Portfolio may invest in preferred stock. Unlike
interest payments on debt securities, dividends on preferred stock are generally
payable at the discretion of the issuer's board of directors. Preferred
shareholders may have certain rights if dividends are not paid but generally
have no legal recourse against the issuer. Shareholders may suffer a loss of
value if dividends are not paid. The market prices of preferred stocks are
generally more sensitive to changes in the issuer's creditworthiness than are
the prices of debt securities.
PERFORMANCE INFORMATION
The Portfolio's performance may be quoted in advertising in terms of
yield or total return if accompanied by performance of an insurance company's
separate account. The Portfolio's performance figures are based on historical
earnings and are not intended to indicate future performance. The share price
yield and total return of each Portfolio will vary, and an investment in the
Portfolio, when redeemed, may be worth more or less than the original purchase
price. Performance information does not reflect insurance product or qualified
plan expenses.
Total Return Computations.
The Portfolio may advertise certain total return information. An
average annual compounded rate of return ("T") may be computed by using the
redeemable value at the end of a specified period ("ERV") of a hypothetical
initial investment of $1,000 ("P") over a period of time ("n") according to the
formula:
n
P (1 + T) = ERV
Average annual total return smoothes out year-to-year variations in
performance and, in that respect, differs from actual year-to-year results. Of
course, past performance cannot be a guarantee of future results. These
calculations assume that all dividends and distributions are reinvested.
NB Management may waive a portion of its fee or reimburse Portfolio and
predecessor of the Portfolio for certain expenses during the periods shown,
which has the effect of increasing total return. Actual reimbursements and
waivers are described in the Prospectus and in "Investment Management and
Administrative Services" below.
Average annual total returns quoted for the Portfolio include the
effect of deducting the Portfolio's expenses, but do not include
insurance-related charges and other expenses attributable to any particular
insurance product. Since you can only purchase shares of the Portfolio through a
variable annuity or variable life insurance contract you should carefully review
the prospectus of the insurance product you have chosen for information on
relevant charges and expenses.
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<PAGE>
Excluding these charges from quotations of the Portfolio's performance has the
effect of increasing the performance quoted. You should bear in mind the effect
of these charges when comparing the Portfolio's performance to that of other
mutual funds.
Comparative Information
From time to time the Portfolio'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.
("Lipper"), C.D.A. Investment Technologies, Inc., Wiesenberger
Investment Companies Service, Investment Company Data Inc.,
IBC/Financial Data Inc.'s Money Market Fund Report, Morningstar, Inc.
("Morningstar"), Micropal Incorporated, VARDS and quarterly mutual fund
rankings by Money, Fortune, Forbes, Business Week, Personal Investor,
and U.S. News & World Report magazines, The Wall Street Journal, New
York Times, Kiplinger's Personal Finance, and Barron's Newspaper, or
(2) recognized bond, stock and other indices, such as the
Shearson Lehman Bond Index, The Standard & Poor's 500 Composite Stock
Price Index ("S&P 500 Index"), S&P Small Cap 600 ("S&P 600"), S&P Mid
Cap 400 ("S&P 400"), Russell 2000 Stock Index, Russell Mid Cap Growth
Index, Dow Jones Industrial Average ("DJIA"), Wilshire 1750, NASDAQ,
Montgomery Securities Growth Stock Index, Value Line Index, U.S.
Department of Labor Consumer Price Index ("Consumer Price Index"),
College Board Survey of Colleges Annual Increases of College costs,
Kanon Bloch's Family Performance Index, the Barra Growth Index, the
Barra Value Index, the EAFE(R) Index, the Financial Times World XUS
Index, and various other domestic, international, and global indices.
The S&P 500 Index is a broad index of common stock prices, while the
DJIA represents a narrower segment of industrial companies. The S&P 600
includes stocks that range in market value from $35 million to $6.1
billion, with an average of $572 million. The S&P 400 measures
mid-sized companies with an average market capitalization of $2.1
billion. The EAFE(R) Index is an unmanaged index of common stock prices
of more than 1,000 companies from Europe, Australia, and the Far East
translated into U.S. dollars. The Financial Times World XUS Index is an
index of 24 international markets, excluding the U.S. market. 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.
Evaluations of the Portfolio's performance, its yield/total return and
comparisons may be used in advertisements and in information furnished to
present and prospective shareholders (collectively, "Advertisements"). The
Portfolio may also be compared to individual asset classes
26
<PAGE>
such as common stocks, small-cap stocks, or Treasury bonds, based on information
supplied by Ibbotson and Sinquefield.
The Portfolio may invest some of its assets in different types of
securities than those included in the index used as a comparison with the
Portfolio's historical performance. The Portfolio 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.
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. This information may include portfolio
diversification by asset type.
27
<PAGE>
TRUSTEES AND OFFICERS
The following table sets forth information concerning the trustees and
officers of the Trust, 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 advised by Neuberger
Berman and NB Management.
<TABLE>
<CAPTION>
Positions Held
Name, Address and Age (1) With the Trust Principal Occupation(s)(2)
--------------------- -------------- -----------------------
<S> <C> <C>
Faith Colish Trustee Attorney at law, Faith Colish, A Professional
63 Wall Street Corporation.
24th Floor
New York, NY 10005
Age: 64
Walter G. Ehlers Trustee Consultant; Director of The Turner
6806 Suffolk Place Corporation, A.B. Chance Company, and
Harvey Cedars, NJ 08008 Crescent Jewelry, Inc.
Age: 67
C. Anne Harvey Trustee Director of American Association of Retired
2555 Pennsylvania Avenue, N.W. Persons ("AARP") Program Services and
Washington, DC 20037 Administrator of AARP Foundation; The
Age: 62 National Rehabilitation Hospital's Board of
Advisors; Individual Investors Advisory
Committee to the New York Stock Exchange
Board of Directors; Steering Committee for
the U.S. Securities and Exchange Commission
Facts on Saving and Investing Campaign; and
American Savings Education Council's Policy
Board (ASEC).
Howard A. Mileaf Trustee Vice President and Special Counsel to WHX
WHX Corporation Corporation (holding company) since 1992;
110 East 59th Street Director of Kevlin Corporation (manufacturer
30th Floor of microwave and other products).
New York, NY 10022
Age: 63
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
Positions Held
Name, Address and Age (1) With the Trust Principal Occupation(s)(2)
--------------------- -------------- -----------------------
<S> <C> <C>
John Cannon Trustee Retired; formerly Chairman and Chief
531 Willow Avenue Investment Officer of CDC Capital Management
Amber, PA 19002 (registered investment adviser) (1993-Jan.
Age: 70 1999).
Candace L. Straight Trustee Private investor and consultant specializing
518 E. Passaic Avenue in the insurance industry; Advisory Director
Bloomfield, NJ 07003 of Securities Capital LLC, (a global private
Age: 52 equity investment firm 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.
Peter P. Trapp Trustee Assistant Regional Manager for Atlanta
Ford Motor Credit Company Region, Ford Motor Credit Company since
1455 Lincoln Parkway August, 1997; prior thereto, President, Ford
Atlanta, GA 30346-2209 Life Insurance Company, April, 1995 until
Age: 55 August, 1997.
Barry Hirsch Trustee Senior Vice President, Secretary, and General
Lowes Corporation Counsel of Lowes Corporation (diversified
667 Madison Avenue, 77th Floor financial corporation).
New York, NY 10021
Age: 67
Peter E. Sundman* Chairman of the Board, Executive Vice President and Director of
Age: 40 Principal Executive Neuberger Berman, Inc. (holding company);
Officer and Trustee President and Director of NB Management;
Executive Vice President and Principal of
Neuberger Berman, LLC from 1997 to 1999.
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
Positions Held
Name, Address and Age (1) With the Trust Principal Occupation(s)(2)
--------------------- -------------- -----------------------
<S> <C> <C>
Robert A. Kavesh Trustee Professor of Finance and Economics at Stern
110 Bleecker Street, Apt. 24B School of Business, New York University.
New York, NY 10012
Age: 72
Edward I. O'Brien* Trustee Private Investment Management; President of
12 Woods Lane the Securities Industry Association ("SIA")
Scarsdale, NY 10183 (securities industry's representative in
Age: 71 government relations and regulatory matters
at the federal and state levels) from 1974 to
1992; Adviser to SIA from November 1992 to
November 1993; Director of Legg Mason, Inc.
Michael M. Kassen* President and Trustee Executive Vice President, Chief Investment
Age: 47 Officer and Director of NBMI; Executive Vice
President, Chief Investment Officer and
Director of Neuberger Berman Inc. (holding
company.
John T. Patterson, Jr. Trustee Retired. Formerly, President of SOBRO (South
7082 Siena Court Bronx Overall Economic Development
Boca Raton, FL 35433 Corporation).
Age: 72
John P. Rosenthal Trustee Senior Vice President of Burnham Securities
Burnham Securities Inc. Inc. (a registered broker-dealer) since 1991;
Burnham Asset Management Corp. Director, Cancer Treatment Holdings, Inc.
1325 Avenue of the Americas
26th Floor
New York, NY 10019
Age: 67
William E. Rulon Trustee Retired. Senior Vice President of Foodmaker,
2980 Bayside Walk Inc. (operator and franchiser of restaurants)
San Diego, CA 92109 until January 1997; Secretary of Foodmaker,
Age: 67 Inc. until July 1996.
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
Positions Held
Name, Address and Age (1) With the Trust Principal Occupation(s)(2)
--------------------- -------------- -----------------------
<S> <C> <C>
Cornelius T. Ryan Trustee General Partner of Oxford Partners and Oxford
Oxford Bioscience Partners Bioscience Partners (venture capital
315 Post Road West partnerships) and President of Oxford Venture
Westport, CT 06880 Corporation; Director of Capital Cash
Age: 68 Management Trust (money market fund) and
Prime Cash Fund.
Tom Decker Seip Trustee General Partner of Seip Investments LP (a
30 Ridge Lane private investment partnership); Member of
Orinda, CA 94563 the Board of Directors of Offroad Capital
Age: 50 Inc. and E-Finance Corporation (pre-public
internet commerce companies); Trustee of
Hambrecht and Quist Fund Trust; Member of the
Board of Directors of AmericaOne; Senior
executive at the Charles Schwab Corporation
from 1983 to 1999; including Chief Executive
Officer of Charles Schwab Investment
Management, Inc. and Trustee of Schwab Family
of Funds and Schwab Investments from 1997 to
1998; Executive Vice President-Retail
Brokerage for Charles Schwab Investment
Management from 1994 to 1997.
Gustave H. Shubert Trustee Senior Fellow/Corporate Advisor and Advisory
13838 Sunset Boulevard Trustee of Rand (a non-profit public interest
Pacific Palisades, CA 90272 research institution) since 1989; Honorary
Age: 71 Member of the Board of Overseers of the
Institute for Civil Justice, the Policy
Advisory Committee of Clinical Scholars
Program at the University of California, the
American Association for the Advancement of
Science, the Council on Foreign Relations,
and the Institute for Strategic Studies
(London); advisor to the Program Evaluation
and Methodology Division of the U.S.
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
Positions Held
Name, Address and Age (1) With the Trust Principal Occupation(s)(2)
--------------------- -------------- -----------------------
<S> <C> <C>
General Accounting Office; formerly Senior
Vice President and Trustee of Rand.
Daniel J. Sullivan Vice President Senior Vice President of NB Management since
Age: 60 1992; Vice President of two other mutual
funds for which NB Management acts as
investment manager or administrator.
Claudia A. Brandon Secretary Employee of Neuberger Berman Management since
Age: 43 1999; Vice President of NB Management from
1986 to 1999; Secretary of two other mutual
funds for which NB Management acts as
investment manager or administrator.
Richard Russell Treasurer and Principal Employee of NB Management since 1993;
Age: 53 Financial and Accounting Treasurer and Principal Accounting Officer of
Officer nine other mutual funds for which NB
Management acts as investment manager or
administrator.
Stacy Cooper-Shugrue Assistant Secretary Employee of Neuberger Berman; Assistant Vice
Age: 37 President of NB Management from 1993 to 1999;
Assistant Secretary of two other mutual funds
for which NB Management acts as investment
manager or administrator.
Barbara DiGiorgio Assistant Treasurer Employee of NB Management; Assistant Vice
Age: 41 President of NB Management from 1993 to 1999;
Assistant Treasurer of two other mutual funds
for which NB Management acts as investment
manager or administrator since 1996.
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
Positions Held
Name, Address and Age (1) With the Trust Principal Occupation(s)(2)
--------------------- -------------- -----------------------
<S> <C> <C>
Celeste Wischerth Assistant Treasurer of Employee of NB Management; Assistant
Age: 39 each Trust Treasurer since 1996 of two other mutual
funds for which NB Management acts as
investment manager or administrator.
</TABLE>
-----------------------
(1) Unless otherwise indicated, the business address of each listed person is
605 Third Avenue, New York, New York 10158.
(2) Except as otherwise indicated, each individual has held the position shown
for at least the last five years.
* Indicates a Trustee who is an "interested person" of the Trust within the
meaning of the 1940 Act. Mr. Sundman and Mr. Kassen are interested persons
of the Trust by virtue of the fact that they are officers and/or directors
of NB Management and Managing Directors of Neuberger Berman. Mr. O'Brien is
an interested person of the Trust by virtue of the fact that he is a
director of Legg Mason, Inc., a wholly owned subsidiary of which, from time
to time, serves as a broker or dealer of the Funds and other funds for which
NB Management serves as an investment manager.
The Trust's Trust Instrument provides that the Trust will indemnify the
Trustees and officers against liabilities and expenses reasonably incurred in
connection with litigation in which they may be involved because of their
offices with the Trust unless it is adjudicated that they engaged in bad faith,
willful misfeasance, gross negligence, or reckless disregard of the duties
involved in their offices. In the case of settlement, such indemnification will
not be provided unless it has been determined -- by a court or other body
approving the settlement or other disposition, or by a majority of disinterested
Trustees, based upon a review of readily available facts, or in a written
opinion of independent counsel -- that such officers or Trustees have not
engaged in willful misfeasance, bad faith, gross negligence, or reckless
disregard of their duties.
Trustees who are not managing directors, officers or employees of NB
Management, Neuberger Berman and/or the participating life insurance companies
or any of their affiliates are paid trustees' fees. For the year ended December
31, 2000, a total of $_______ in fees was paid to the Trustees as a group by the
Trust and a total of $_______ in fees was paid to the Trustees as a group by
Advisers Managers Trust. The following table shows compensation by Trustee for
the year 2000.
33
<PAGE>
COMPENSATION TABLE
<TABLE>
<CAPTION>
Pension or Total Compensation
Retirement Estimated From Trust and Fund
Aggregate Benefits Accrued Annual Benefits Complex Paid to
Name of Person, Compensation From As Part of Upon Retirement Trustees(1)
Position Trust(1) Trust's Expenses
-------------------------------- ---------------------- ------------------ ------------------ ----------------------
<S> <C> <C> <C> <C>
Peter E. Sundman, None None None None
Chairman and Trustee
Faith Colish, $_______ None None $_______
Trustee
Walter G. Ehlers, $_______ None None $_______
Trustee
C. Anne Harvey, $_______ None None $_______
Trustee
Michael M. Kassen None None None None
Trustee
Howard A. Mileaf, $_______ None None $_______
Trustee
Robert A. Kavesh $_______ None None $_______
Trustee
John Cannon, $_______ None None $_______
Trustee
Candace L. Straight $_______ None None $_______
Trustee
Peter P. Trapp, $_______ None None $_______
Trustee
Barry Hirsch, $_______ None None $_______
Trustee
Edward I. O'Brien $_______ None None $_______
Trustee
John P. Rosenthal $_______ None None $_______
Trustee
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
Pension or Total Compensation
Retirement Estimated From Trust and Fund
Aggregate Benefits Accrued Annual Benefits Complex Paid to
Name of Person, Compensation From As Part of Upon Retirement Trustees(1)
Position Trust(1) Trust's Expenses
-------------------------------- ---------------------- ------------------ ------------------ ----------------------
<S> <C> <C> <C> <C>
William E. Rulon $_______ None None $_______
Trustee
Cornelius T. Ryan $_______ None None $_______
Trustee
Tom Decker Seip $_______ None None $_______
Trustee
Gustave H. Shubert $_______ None None $_______
Trustee
</TABLE>
(1) "Aggregate Compensation From Trust" and "Total Compensation From Trust and
Fund Complex Paid to Trustees" is for the period from January 1 through
December 31, 2000.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Shares of the Portfolio are issued and redeemed in connection with
investments in and payments under certain variable annuity contracts and
variable life insurance policies (collectively, "Variable Contracts") issued
through separate accounts of life insurance companies (the "Life Companies").
As of February 1, 2001, separate accounts of the following Life
Companies owned of record or beneficially 5% or more of the shares of the
Portfolios:
Percentage of
Outstanding Shares Owned
[To be Provided.]
These Life Companies are required to vote Portfolio shares in
accordance with instructions received from owners of Variable Contracts funded
by separate accounts with respect to separate accounts of these Life Companies
that are registered with the Securities and Exchange Commission as unit
investment trusts.
35
<PAGE>
INVESTMENT MANAGEMENT, ADVISORY AND ADMINISTRATION SERVICES
Neuberger Berman is an investment management firm with headquarters in
New York. The firm's focus is on U.S. fixed income, equity and balanced fund
management. Total assets under management by Neuberger Berman and its affiliates
were approximately $____ billion as of December 31, 2000. Founded in 1939 to
manage portfolios for high net worth individuals, the firm entered the mutual
fund management business in 1950, and began offering active management for
pension funds and institutions in the mid-1970s. Most money managers that come
to the Neuberger Berman organization have at least fifteen years of experience.
Neuberger Berman and NB Management employ experienced professionals that work in
a competitive environment.
NB Management serves as each Portfolio's investment manager pursuant to
a Management Agreement ("Management Agreement") dated as of May 1, 2000, that
was approved by the Trustees with respect to the Regency Portfolio on December
6, 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 each 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, but NB Management has no current plans to pay a
material amount of such compensation.
NB Management provides to the Portfolio, without cost, office space,
equipment, and facilities and personnel necessary to perform executive,
administrative, and clerical functions and pays all salaries, expenses, and fees
of the officers, trustees, and employees of the Trust who are officers,
directors, or employees of NB Management. Several individuals who are directors,
officers or employees of NB Management and/or Neuberger Berman also serve as
trustees and/or officers of the Trust. See "Trustees and Officers." NB
Management provides similar facilities and services to each Portfolio pursuant
to an administration agreement dated May 1, 1995 ("Administration Agreement").
The Portfolio was authorized to become subject to the Administration Agreement
by vote of the Trustees on December 6, 2000.
Management and Administration Fees
For investment management services, the Portfolio each pays NB
Management a fee at the annual rate of 0.55% of the first $250 million of the
Portfolio's average daily net assets, 0.525% of the next $250 million, 0.50% of
the next $250 million, 0.475% of the next $250 million, 0.45% of the next $500
million, and 0.425% of average daily net assets in excess of $1.5 billion.
36
<PAGE>
For administrative services, the Portfolio pays NB Management a fee at
the annual rate of 0.30% of that Portfolio's average daily net assets. In
addition, each Portfolio pays certain out-of-pocket expenses for technology used
for shareholder servicing and shareholder communications subject to the prior
approval of an annual budget by the Trust's Board of Trustees, including a
majority of those Trustees who are not interested persons of the Trust or of NB
Management, and periodic reports to the Board of Trustees on actual expenses.
Expense Limitations
NB Management has contractually undertaken to limit the Portfolio's
expenses through April 30, 2002 by reimbursing the Portfolio for its total
operating expenses, excluding taxes, interest, extraordinary expenses, brokerage
commissions and transaction costs, that exceed, in the aggregate, 1.5% per annum
of the Portfolio's average daily net asset value. The Portfolio has in turn
contractually undertaken to repay through December 31, 2005, for the excess
operating expenses borne by NB Management, so long as the Portfolio's annual
operating expenses during that period exclusive taxes, interest, extraordinary
expenses, brokerage commissions and transaction costs) do not exceed the expense
limitation, and further provided that the reimbursements are made within three
years after the year in which NB Management incurred the expense.
The effect of any expense limitation by NB Management is to reduce
operating expenses of the Portfolio and thereby increase total return. There can
no assurance that these expense limitation agreements will be continued or be
extended beyond the period indicated.
The Management Agreement will continue until June 30, 2001. The
Administration Agreement will continue until May 1, 2001. The Management
Agreement is renewable 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 Trustees who are not "interested persons" of NB Management or the Trust
("Independent 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 Trustees or by
a 1940 Act majority vote of the outstanding shares in that Portfolio. The
Administration Agreement is renewable from year to year with respect to a
Portfolio, so long as its continuance is approved at least annually (1) by the
vote of a majority of the Independent Trustees cast in person at a meeting
called for the purpose of voting on such approval, and (2) by the vote of the
majority of the Trustees or by a 1940 Act majority vote of the outstanding
shares in that Portfolio. The Management Agreement is terminable with respect to
the Portfolio without penalty on 60 days' prior written notice either by the
Trust or by NB Management. The Administration Agreement is terminable with
respect to the Portfolio without penalty by NB Management upon at least 120
days' prior written notice to the Portfolio, and by the Portfolio if authorized
by the Trustees, including a majority of the Independent Trustees, on at least
30 days' prior written notice to NB Management. Each Agreement terminates
automatically if it is assigned.
Code of Ethics
The Portfolio, NB Management and Neuberger Berman have personal
securities trading policies that restrict the personal securities transactions
of employees, officers, and trustees. Their primary purpose is to ensure that
personal trading by these individuals does not disadvantage any Portfolio
managed by NB Management. The Portfolio managers and other investment personnel
who comply with the policies' preclearance and disclosure procedures may be
permitted to purchase, sell or hold certain types of securities which also may
be or are held in the funds they
37
<PAGE>
advise, but are restricted from trading in close conjunction with their Funds or
taking personal advantage of investment opportunities that may belong to a
Portfolio.
Management and Control of NB Management and Neuberger Berman
The directors and officers of NB Management, who are deemed "control
persons," all of whom have offices at the same address as NB Management, are
Michael M. Kassen, Director and Chairman; Richard A. Cantor, Director; Robert
Matza, Director; Theodore P. Giuliano, Director and Vice President; Barbara
Katersky, Senior Vice President; Daniel J. Sullivan, Senior Vice President;
Philip Ambrosio, Senior Vice President and Chief Financial Officer; Peter E.
Sundman, Director and President; and Lawrence Zicklin, Director.
The directors and officers of Neuberger Berman, who are deemed "control
persons", all of whom have offices at the same address as Neuberger Berman, are
Jeffrey B. Lane, President and Chief Executive Officer; Robert Matza, Executive
Vice President and Chief Administrative Officer; Michael M. Kassen, Executive
Vice President and Chief Investment Officer; Heidi L. Schneider, Executive Vice
President; Peter E. Sundman, Executive Vice President; Philip Ambrosio, Senior
Vice President and Chief Financial Officer; Kevin Handwerker, Senior Vice
President, General Counsel and Secretary; Robert Akeson, Senior Vice President;
Salvatore A. Buonocore, Senior Vice President; Seth J. Finkel, Senior Vice
President; Robert Firth, Senior Vice President; Brian Gaffney, Senior Vice
President; Brian E. Hahn, Senior Vice President; Lawrence J. Cohn, Senior Vice
President; Joseph K. Herlihy, Senior Vice President and Treasurer; Barbara R.
Katersky, Senior Vice President; Diane E. Lederman, Senior Vice President; Peter
B. Phelan, Senior Vice President; Robert H. Splan, Senior Vice President; Andrea
Trachtenberg, Senior Vice President; Marvin C. Schwartz, Managing Director.
Messrs. Sundman and Kassen are officers of the Trust.
Neuberger Berman and NB Management are wholly owned subsidiaries of
Neuberger Berman, Inc., a publicly held holding company owned primarily by the
employees of Neuberger Berman.
Sub-Adviser
NB Management retains Neuberger Berman, 605 Third Avenue, New York, NY
10158-3698, as a sub-adviser with respect to each Portfolio, pursuant to a
Sub-Advisory Agreement dated _________ __, 2000 that was approved by the
Trustees with respect to the Regency Portfolio on December 6, 2000.
The Sub-Advisory Agreement provides in substance that Neuberger Berman
will furnish to NB Management, upon reasonable request, investment
recommendations and research information of the same type that Neuberger Berman
from time to time provides to its principals and employees for use in managing
client accounts, as NB Management reasonably requests. 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 research staff consists of numerous investment analysts, each of whom
specializes in studying one or more industries, under the
38
<PAGE>
supervision of research partners who are also available for consultation with NB
Management. The Sub-Advisory Agreement provides that the services rendered by
Neuberger Berman will be paid for by NB Management on the basis of 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
advised by NB Management.
The Sub-Advisory Agreement continues until June 30, 2001, and is
renewable from year to year thereafter, subject to approval of its continuance
in the same manner as the Management Agreement. The Sub-Advisory Agreement is
subject to termination, without penalty, by the Trustees, or by a 1940 Act
majority vote of the outstanding shares of that Portfolio, by NB Management, or
by Neuberger Berman on not less than 30 nor more than 60 days' prior written
notice to the appropriate Portfolio. The Sub-Advisory Agreement also terminates
automatically if it is assigned or if the Management Agreement terminates with
respect to the Portfolio.
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.
The Portfolio is subject to certain limitations imposed on all advisory
clients of Neuberger Berman (including the Portfolios, other mutual funds
referred to below ("Other NB Funds"), and other accounts) and personnel of
Neuberger Berman and its affiliates. These include, for example, limits that may
be imposed in certain industries or by certain companies, and policies of
Neuberger Berman that limit the aggregate purchases, by all accounts under
management, of outstanding shares of public companies.
Investment Companies Advised
NB Management currently serves as investment adviser or manager of the
following investment companies, which had aggregate net assets of approximately
$____ billion, as of December 31, 2000. Neuberger Berman acts as sub-adviser to
these investment companies.
Approximate Net
Assets at
Name December 31, 2000
---- -----------------
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)
39
<PAGE>
Approximate Net
Assets at
Name December 31, 2000
---- -----------------
Neuberger Berman Limited Maturity Bond................ $_____________
Portfolio (investment portfolio for
Neuberger Berman Limited Maturity
Bond Fund and Neuberger Berman
Limited Maturity Bond Trust)
Neuberger Berman High Yield Bond Portfolio............ $_____________
(investment portfolio for Neuberger Berman
High Yield Bond Fund)
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 Genesis Portfolio.................... $_____________
(investment portfolio for Neuberger Berman
Genesis Fund, Neuberger Berman
Genesis Trust, Neuberger Berman Genesis Assets
and Neuberger Berman Genesis Institutional)
Neuberger Berman Guardian Portfolio................... $_____________
(investment portfolio for Neuberger Berman
Guardian Fund, Neuberger Berman
Guardian Trust and Neuberger Berman
Guardian Assets)
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
Millenium Fund, Neuberger Berman Millennium
Trust and Neuberger Berman Millennium Assets)
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Neuberger Berman International Portfolio $_____________
(investment portfolio for Neuberger Berman
International Fund and Neuberger Berman
International Trust)
Neuberger Berman Partners Portfolio................... $_____________
(investment portfolio for Neuberger Berman
Partners Fund, Neuberger Berman
Partners Trust and Neuberger Berman
Partners Assets)
Neuberger Berman Focus Portfolio...................... $_____________
(investment portfolio for Neuberger Berman
Focus Fund, Neuberger Berman Focus
Trust and Neuberger Berman Focus Assets)
Neuberger Berman Socially Responsive.................. $_____________
Portfolio (investment portfolio for
Neuberger Berman Socially Responsive Fund,
Neuberger Berman Socially Responsive Trust, and
Neuberger Berman Socially Responsive Assets
Neuberger Berman Century Portfolio.................... $_____________
(investment portfolio for Neuberger Berman
Century Fund and Neuberger Berman Century Trust
Neuberger Berman Regency Portfolio.................... $_____________
(investment portfolio for Neuberger Berman
Regency Fund and Neuberger Berman Regency Trust)
Advisers Managers Trust (eight series) ............... $_____________
The investment decisions concerning the Portfolio and the other mutual
funds referred to above (collectively, "Other NB Funds") have been and will
continue to be made independently of one another. In terms of their investment
objectives, most of the Other NB Funds differ from the Portfolio. Even where the
investment objectives are similar, however, the methods used by the Other NB
Funds and the Portfolio to achieve their objectives may differ. The investment
results achieved by all of the mutual funds managed by NB Management have varied
from one another in the past and are likely to vary in the future.
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There may be occasions when the Portfolio and one or more of the Other
NB Funds or other accounts managed by Neuberger Berman are contemporaneously
engaged in purchasing or selling the same securities from or to third parties.
When this occurs, the transactions are averaged as to price and allocated, in
terms of amount, in accordance with a formula considered to be equitable to the
funds involved. Although in some cases this arrangement may have a detrimental
effect on the price or volume of the securities as to the Portfolio, in other
cases it is believed that the Portfolio's ability to participate in volume
transactions may produce better executions for it. In any case, it is the
judgment of the Trustees that the desirability of each Portfolio having its
advisory arrangements with NB Management outweighs any disadvantages that may
result from contemporaneous transactions.
The Portfolio is subject to certain limitations imposed on all advisory
clients of Neuberger Berman (including the Portfolios, the Other NB Funds, and
other managed accounts) and personnel of Neuberger Berman and its affiliates.
These include, for example, limits that may be imposed in certain industries or
by certain companies, and policies of Neuberger Berman that limit the aggregate
purchases, by all accounts under management, of the outstanding shares of public
companies.
DISTRIBUTION ARRANGEMENTS
NB Management serves as the distributor ("Distributor") in connection
with the offering of each Portfolio's shares on a no-load basis. In connection
with the sale of its shares, each Portfolio 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 each Portfolio's "principal underwriter"
within the meaning of the 1940 Act and, as such, acts as agent in arranging for
the sale of each Portfolio's shares without sales commission or other
compensation and bears all advertising and promotion expenses incurred in the
sale of the Portfolio's shares.
The Trust, on behalf of the Portfolio, and the Distributor are parties
to a Distribution Agreement dated May 1, 1995, that continues until _____, 2001.
The Distribution Agreement may be renewed annually thereafter if specifically
approved by (1) the vote of a majority of the Trustees or a 1940 Act majority
vote of the Portfolio's outstanding shares and (2) the vote of a majority of the
Independent Trustees, cast in person at a meeting called for the purpose of
voting on such approval. The Distribution Agreement may be terminated by either
party and will automatically terminate on its assignment, in the same manner as
the Management Agreement and the Sub-Advisory Agreement.
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ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Share Prices and Net Asset Value
The Portfolio's shares are bought or sold at a price that is the
Portfolio's NAV per share. The NAVs for each Portfolio are calculated by
subtracting total liabilities from total assets. The Portfolio's per share NAV
is calculated by dividing its NAV by the number of shares outstanding and
rounding the result to the nearest full cent. Each Portfolio calculates its NAV
as of the close of regular trading on the NYSE, usually 4 p.m. Eastern time, on
each day the NYSE is open.
The Portfolio values securities (including options) listed on the NYSE,
the American Stock Exchange or other national securities exchanges or quoted on
The Nasdaq Stock Market, and other securities for which market quotations are
readily available, at the last reported sale price on the day the securities are
being valued. If there is no reported sale of such a security on that day, the
security is valued at the mean between its closing bid and asked prices on that
day. The Portfolio values all other securities and assets, including restricted
securities, by a method that the Trustees believe accurately reflects fair
value.
Suspension of Redemptions
The Portfolio is normally open for business each day the NYSE is open
("Business Day"). The right to redeem the Portfolio's shares may be suspended or
payment of the redemption price postponed (1) when the NYSE is closed, (2) when
trading on the NYSE is restricted, (3) when an emergency exists as a result of
which disposal by the Portfolio of securities owned by it is not reasonably
practicable or it is not reasonably practicable for that Portfolio 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 Portfolio's shareholders; provided
that applicable SEC rules and regulations shall govern as to whether the
conditions prescribed in (2) or (3) exist. If the right of redemption is
suspended, shareholders may withdraw their offers of redemption or they will
receive payment at the NAV per share in effect at the close of business on the
first Business Day after termination of the suspension.
Redemptions in Kind
The Portfolio reserves the right, under certain conditions, to honor
any request for redemption (or a combination of requests from the same
shareholder in any 90-day period) exceeding $250,000 or 1% of the net assets of
the Portfolio, whichever is less, by making payment in whole or in part in
securities valued as described under "Share Prices and Net Asset Value" in the
Prospectus. Further, the Portfolio may make payment in whole or in part in
securities if a redeeming shareholder so requests. If payment is made in
securities, a shareholder 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
Portfolio does not redeem in kind under normal circumstances, but may do so in
the circumstances described above in accordance with procedures adopted by the
Board of Trustees.
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DIVIDENDS AND OTHER DISTRIBUTIONS
The Portfolio distributes to its shareholders (primarily insurance
company separate accounts and Qualified Plans) substantially all of its share of
its net investment income, any net realized capital gains and any net realized
gains from foreign currency transactions, if any, earned or realized by it. The
Portfolio calculates its net investment income and NAV as of the close of
regular trading on the NYSE (usually 4:00 p.m. Eastern time) on each Business
Day. The Portfolio's net investment income consists of all income accrued on
portfolio assets less accrued expenses, but does not include net realized or
unrealized capital and foreign currency gains or losses. Net investment income
and net gains and losses are reflected in the Portfolio's NAV until they are
distributed. Dividends from net investment income and distributions of net
realized capital gains and net realized gains from foreign currency
transactions, if any, normally are paid once annually, in February.
ADDITIONAL TAX INFORMATION
Set forth below is a discussion of certain U.S. federal income tax
issues concerning the Portfolio and the purchase, ownership, and disposition of
Portfolio shares. This discussion does not purport to be complete or to deal
with all aspects of federal income taxation that may be relevant to shareholders
in light of their particular circumstances. This discussion is based upon
present provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), the regulations promulgated thereunder, and judicial and administrative
ruling authorities, all of which are subject to change, which change may be
retroactive. Prospective investors should consult their own tax advisers with
regard to the federal tax consequences of the purchase, ownership, or
disposition of Portfolio shares, as well as the tax consequences arising under
the laws of any state, foreign country, or other taxing jurisdiction.
Taxation of the Portfolio
Subchapter M
To continue to qualify for treatment as a RIC under the Code, the
Portfolio must distribute to its shareholders for each taxable year at least 90%
of its investment company taxable income (consisting generally of net investment
income, net short-term capital gain, and net gains from certain foreign currency
transactions) ("Distribution Requirement") and must meet several additional
requirements. These requirements include the following: (1) the Portfolio 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 stock, securities or foreign currencies, or other income
(including gains from options, futures, and forward contracts (collectively,
"Hedging Instruments")) derived with respect to its business of investing in
such stock, securities or currencies ("Income Requirement"); and (2) at the
close of each quarter of the Portfolio'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 Portfolio's total assets and that does not represent more than 10% of the
issuer's outstanding voting securities, and
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(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 (together with the 50% requirement, the "Diversification
Requirement"). Each Portfolio intends to satisfy the Distribution Requirement,
the Income Requirement, and the Diversification Requirement. If the Portfolio
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 Portfolio's earnings
and profits.
The Portfolio 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. To avoid application of the Excise Tax, the Portfolio intends to
make distributions in accordance with the calendar year requirement.
A distribution will be treated as paid on December 31 of a calendar
year if it is declared by the Portfolio in October, November or December of that
year with a record date in such a month and paid by the Portfolio during January
of the following year.
Section 817(h)
The Portfolio serves as the underlying investments for variable annuity
contracts and variable life insurance policies ("Variable Contracts") issued
through separate accounts of the life insurance companies which may or may not
be affiliated. Section 817(h) of the Code imposes certain diversification
standards on the underlying assets of segregated asset accounts that fund
contracts such as the Variable Contracts (that is, the assets of the Portfolio),
which are in addition to the diversification requirements imposed on the
Portfolio by the 1940 Act and Subchapter M of the Code. Failure to satisfy those
standards would result in imposition of Federal income tax on a Variable
Contract owner with respect to the increase in the value of the Variable
Contract. Section 817(h)(2) provides that a segregated asset account that funds
contracts such as the Variable Contracts is treated as meeting the
diversification standards if, as of the close of each calendar quarter, the
assets in the account meet the diversification requirements for a regulated
investment company and no more than 55% of those assets consist of cash, cash
items, U.S. Government securities and securities of other regulated investment
companies.
The Treasury Regulations amplify the diversification standards set
forth in Section 817(h) and provide an alternative to the provision described
above. Under the regulations, an investment portfolio will be deemed adequately
diversified if (i) no more than 55% of the value of the total assets of the
Portfolio is represented by any one investment; (ii) no more than 70% of such
value is represented by any two investments; (iii) no more than 80% of such
value is represented by any three investments; and (iv) no more than 90% of such
value is represented by any four investments. For purposes of these Regulations
all securities of the same issuer are treated as a single investment, but each
United States government agency or instrumentality shall be treated as a
separate issuer.
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The Portfolio will be managed with the intention of complying with
these diversification requirements. It is possible that, in order to comply with
these requirements, less desirable investment decisions may be made which would
affect the investment performance of the Portfolio.
Tax Aspects of the Investments of the Portfolio
Dividends, interest, and in some cases, capital gains received 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 the stock of "passive foreign investment
companies" ("PFICs"). A PFIC is any foreign corporation (with certain
exceptions) that, in general, meets either of the following tests: (1) at least
75% of its gross income is passive; or (2) an average of at least 50% of its
assets produce, or are held for the production of, passive income. Under certain
circumstances, if the Portfolio holds stock of a PFIC, it will be subject to
federal income tax on a portion of any "excess distribution" received on the
stock as well as gain on disposition of the stock (collectively, "PFIC income"),
plus interest thereon, even if the Portfolio distributes the PFIC income as a
taxable dividend to its shareholders. The balance of the PFIC income will be
included in the Portfolio's investment company taxable income and, accordingly,
will not be taxable to it to the extent it distributes that income to its
shareholders (assuming the Portfolio qualifies as a regulated investment
company).
In general, under the PFIC rules, an excess distribution is treated as
having been realized ratably over the period during which the Portfolio held the
PFIC shares. The Portfolio will itself be subject to tax on the portion, if any,
of an excess distribution that is so allocated to prior Portfolio taxable years
and an interest factor will be added to the tax, as if the tax had been payable
in such prior taxable years. Certain distributions from a PFIC as well as gain
from the sale of PFIC shares are treated as excess distributions. Excess
distributions are characterized as ordinary income even though, absent
application of the PFIC rules, certain excess distributions might have been
classified as capital gain.
If the Portfolio invests in a PFIC and elects to treat the PFIC as a
qualified electing fund ("QEF"), then in lieu of incurring the foregoing tax and
interest obligation, the Portfolio would be required to include in income each
year its pro rata share of the Portfolio's pro rata share of the QEF's annual
ordinary earnings and net capital gain (the excess of net long-term capital gain
over net short-term capital loss) -- which most likely would have to be
distributed by the Portfolio to satisfy the Distribution Requirement and avoid
imposition of the excise tax -- even if those earnings and gain were not
received by the Portfolio from the QEF. In most instances it will be very
difficult, if not impossible, to make this election because of certain
requirements thereof.
A holder of stock in a PFIC generally may elect to include in ordinary
income for each taxable year the excess, if any, of the fair market value of the
stock over its adjusted basis as of the end of that year. Pursuant to the
election, a deduction (as an ordinary, not capital, loss) also
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would be allowed for the excess, if any, of the holder's adjusted basis in PFIC
stock over the fair market value thereof as of the taxable year-end, but only to
the extent of any net mark-to-market gains with respect to that stock included
in income for prior taxable years under the election (and under regulations
proposed in 1992 that provided a similar election with respect to the stock of
certain PFICs). The adjusted basis in each PFIC's stock subject to the election
would be adjusted to reflect the amounts of income included and deductions taken
thereunder. Any gain on the sale of PFIC stock subject to a mark-to-market
election would be treated as ordinary income.
The use by the Portfolio of hedging strategies, such as writing
(selling) and purchasing futures contracts and options and entering into forward
contracts, involves complex rules that will determine for income tax purposes
the amount, character and timing of recognition of the gains and losses they
realize in connection therewith. Gains from the disposition of foreign
currencies (except certain gains that may be excluded by future regulations),
and gains from Hedging Instruments derived by the Portfolio with respect to its
business of investing in securities or foreign currencies, will qualify as
permissible income under the Income Requirement.
Exchange-traded futures contracts, certain options, and certain forward
contracts constitute "Section 1256 Contracts." Section 1256 Contracts are
required to be "marked-to-market" (that is, treated as having been sold at
market value) for federal income tax purposes at the end of the Portfolio's
taxable year. Sixty percent of any net gain or loss recognized as a result of
these "deemed sales" and 60% of any net realized gain or loss from any actual
sales of Section 1256 contracts are treated as long-term capital gain or loss,
and the remainder is treated as short-term capital gain or loss. Section 1256
contracts also may be marked-to-market for purposes of the excise tax. These
rules may operate to increase the amount that the Portfolio must distribute to
satisfy the Distribution Requirement, which will be taxable to the shareholders
as ordinary income, and to increase the net capital gain recognized by the
Portfolio, without in either case increasing the cash available to the
Portfolio. The Portfolio may elect to exclude certain transactions from the
operation of section 1256, although doing so may have the effect of increasing
the relative proportion of net short-term capital gain (taxable as ordinary
income) and/or increasing the amount of dividends that such Portfolio must
distribute to meet the Distribution Requirement and to avoid imposition of the
excise tax.
Transactions in options, futures and forward contracts undertaken by
the Portfolio may result in "straddles" for federal income tax purposes. The
straddle rules may affect the character of gains (or losses) realized by the
Portfolio, and losses realized by the Portfolio on positions that are part of a
straddle may be deferred under the straddle rules, rather than being taken into
account in calculating the taxable income for the taxable year in which the
losses are realized. In addition, certain carrying charges (including interest
expense) associated with positions in a straddle may be required to be
capitalized rather than deducted currently. Certain elections that the Portfolio
may make with respect to its straddle positions may also affect the amount,
character and timing of the recognition of gains or losses from the affected
positions.
Because only a few regulations implementing the straddle rules have
been promulgated, the consequences of such transactions to the Portfolio are not
entirely clear. The straddle rules
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may increase the amount of short-term capital gain realized by the Portfolio,
which is taxed as ordinary income when distributed to shareholders. Because
application of the straddle rules may affect the character of gains or losses,
defer losses and/or accelerate the recognition of gains or losses from the
affected straddle positions, the amount which must be distributed to
shareholders as ordinary income or long-term capital gain may be increased or
decreased substantially as compared to a fund that did not engage in such
transactions.
Section 988 of the Code also may apply to forward contracts and options
on foreign currencies. Under section 988 each foreign currency gain or loss
generally is computed separately and treated as ordinary income or loss. In the
case of overlap between section 1256 and 988, special provisions determine the
character and timing of any income, gain or loss.
When a covered call option written (sold) by the Portfolio expires, it
realizes a short-term capital gain equal to the amount of the premium it
received for writing the option. When the Portfolio terminates its obligations
under such an option by entering into a closing transaction, it realizes a
short-term capital gain (or loss), depending on whether the cost of the closing
transaction is less (or more) than the premium it received when it wrote the
option. When a covered call option written by the Portfolio is exercised, the
Portfolio is treated as having sold the underlying security, producing long-term
or short-term capital gain or loss, depending on the holding period of the
underlying security and whether the sum of the option price received on the
exercise plus the premium received when it wrote the option is more or less than
the basis of the underlying security.
If the Portfolio has an "appreciated financial position" -- generally,
an interest (including an interest through an option, futures or forward
contract, or short sale) with respect to any stock, debt instrument (other than
"straight debt"), or partnership interest the fair market value of which exceeds
its adjusted basis -- and enters into a "constructive sale" of the same or
substantially similar property, the Portfolio will be treated as having made an
actual sale thereof, with the result that gain will be recognized at that time.
A constructive sale generally consists of a short sale, an offsetting notional
principal contract (e.g., a swap contract), or a futures or forward contract
entered into by the Portfolio or a related person with respect to the same or
substantially similar property. In addition, if the appreciated financial
position is itself a short sale or such a contract, acquisition of the
underlying property or substantially identical property will be deemed a
constructive sale. The foregoing will not apply, however, to any transaction
during any taxable year that otherwise would be treated as a constructive sale
if the transaction is closed within 30 days after the end of that year and the
Portfolio holds the appreciated financial position unhedged for 60 days after
that closing (i.e., at no time during that 60-day period is the Portfolio's risk
of loss regarding that position reduced by reason of certain specified
transactions with respect to substantially identical or related property, such
as having an option to sell, being contractually obligated to sell, making a
short sale, or granting an option to buy substantially identical stock or
securities).
Gains or losses attributable to fluctuations in exchange rates which
occur between the time the Portfolio accrues income or other receivables or
accrues expenses or other liabilities denominated in a foreign currency and the
time the Portfolio actually collects such receivables or pays such liabilities
generally are treated as ordinary income or ordinary loss. Similarly, on
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disposition of some investments, including debt securities and certain forward
contracts denominated in a foreign currency, gains or losses attributable to
fluctuations in the value of the foreign currency between the acquisition and
disposition of the position also are treated as ordinary gain or loss. These
gains and losses, referred to under the Code as "Section 988" gains or losses,
increase or decrease the amount of the Portfolio's investment company taxable
income available to be distributed to its shareholders as ordinary income. If
Section 988 losses exceed other investment company taxable income during a
taxable year, the Portfolio would not be able to make any ordinary dividend
distributions, or distributions made before the losses were realized would be
recharacterized as a return of capital to shareholders, rather than as an
ordinary dividend, reducing each shareholder's basis in his or her Portfolio's
shares.
The Portfolio may acquire zero coupon or other securities issued with
original issue discount ("OID"). As the holder of those securities, the
Portfolio must take into income the OID and other non-cash income that accrues
on the securities during the taxable year, even if no corresponding payment on
the securities is received during the year. Because the Portfolio annually must
distribute substantially all of its investment company taxable income to satisfy
the Distribution Requirement and avoid imposition of the excise tax, it 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 it actually receives. Those
distributions will be made from the Portfolio's cash assets or, if necessary,
from the proceeds of the sale of portfolio securities. The Portfolio may realize
capital gains or losses from those sales, which would increase or decrease its
corresponding investment company taxable income and/or net capital gain.
PORTFOLIO TRANSACTIONS
Neuberger Berman acts as each Portfolio's principal broker to the
extent a broker is used in the purchase and sale of portfolio securities (other
than certain securities traded on the OTC market). Neuberger Berman receives
brokerage commissions for these services. Transactions in portfolio securities
for which Neuberger Berman serves as broker will be effected in accordance with
Rule 17e-1 under the 1940 Act.
To the extent a broker is not used, purchases and sales of portfolio
securities generally are transacted with the issuers, underwriters, or dealers
serving as primary market-makers acting 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), each Portfolio's policy is to seek
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, the reliability, integrity, financial condition, and
general execution and operational capabilities of
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competing broker-dealers, and may consider the brokerage and research services
they provide to the Portfolio or NB Management. Some of these research services
may be of value to NB Management in advising its various clients (including the
Portfolios) although not all of these services are necessarily used by NB
Management in managing the Portfolio. Under certain conditions, the Portfolio
may pay higher brokerage commissions in return for brokerage and research
services, although no Portfolio has a current arrangement to do so. In any case,
each 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 may otherwise deal with any dealer in
connection with the acquisition of securities in underwritings.
Portfolio securities may, from time to time, be loaned by the Portfolio
to Neuberger Berman in accordance with the terms and conditions of an order
issued by the SEC. The order exempts such transactions from provisions of the
1940 Act that would otherwise prohibit such transactions, subject to certain
conditions. In accordance with the order, securities loans made by the Portfolio
to Neuberger Berman are fully secured by cash collateral. The portion of the
income on the cash collateral which may be shared with Neuberger Berman is to be
determined by reference to concurrent arrangements between Neuberger Berman and
non-affiliated lenders with which it engages in similar transactions. In
addition, where Neuberger Berman borrows securities from the Portfolio in order
to re-lend them to Other NB Funds, Neuberger Berman may be required to pay that
Portfolio, on a quarterly basis, certain of the earnings that Neuberger Berman
otherwise has derived from the re-lending of the borrowed securities. When
Neuberger Berman desires to borrow a security that the Portfolio has indicated a
willingness to lend, Neuberger Berman must borrow such security from that
Portfolio, rather than from a unaffiliated lender, unless the unaffiliated
lender is willing to lend such security on more favorable terms (as specified in
the order) than that Portfolio. If, in any month, the Portfolio's expense exceed
its income in any securities loan transaction with Neuberger Berman, Neuberger
Berman must reimburse that Portfolio for such loss.
A committee of Independent Trustees from time to time reviews, among
other things, information relating to securities loans by the Portfolio.
In effecting securities transactions, the Portfolio generally seeks to
obtain the best price and execution of orders. Commission rates, being a
component of price, are considered along with other relevant factors. The
Portfolio plans to continue to use Neuberger Berman as its broker where, in the
judgment of NB Management, that firm is able to obtain a price and execution at
least as favorable as other qualified brokers. To the Portfolio's knowledge,
however, no affiliate of any Portfolio receives give-ups or reciprocal business
in connection with their securities transactions.
The use of Neuberger Berman as a broker for the Portfolio is subject to
the requirements of Section 11(a) of the Securities Exchange Act of 1934
("Section 11(a)"). Section 11(a) prohibits members of national securities
exchanges from retaining compensation for executing exchange transactions for
accounts that they or their affiliates manage, except where they have the
authorization of the persons authorized to transact business for the account and
comply with certain annual reporting requirements. The Board of Trustees has
expressly authorized Neuberger Berman to retain such compensation and Neuberger
Berman has agreed to comply with the reporting requirements of Section 11(a).
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Under the 1940 Act, commissions paid by the Portfolio to Neuberger
Berman in connection with a purchase or sale of securities offered on a
securities exchange may not exceed the usual and customary broker's commission.
Accordingly, it is the Portfolio's policy that the commissions to be paid to
Neuberger Berman must, in NB Management's judgment be (1) at least as favorable
as those that would be charged by other brokers having comparable execution
capability, and (2) at least as favorable as commissions contemporaneously
charged by Neuberger Berman on comparable transactions for its most favored
unaffiliated customers, except for accounts for which Neuberger Berman acts as a
clearing broker for another brokerage firm and customers of Neuberger Berman
considered by a majority of the Independent Trustees not to be comparable to the
Portfolio. The Portfolio does not deem it practicable and in its best interest
to solicit competitive bids for commissions on each transaction. However,
consideration regularly is given to information concerning the prevailing level
of commissions charged on comparable transactions by other brokers during
comparable periods of time. The 1940 Act generally prohibits Neuberger Berman
from acting as principal in the purchase or sale of securities for the
Portfolio's account, unless an appropriate exemption is available.
A committee of Independent Trustees from time to time reviews, among
other things, information relating to the commissions charged by Neuberger
Berman to the and to its other customers and information concerning the
prevailing level of commissions charged by other brokers having comparable
execution capability. In addition, the procedures pursuant to which Neuberger
Berman effects brokerage transactions for the Portfolio must be reviewed and
approved no less often than annually by a majority of the Independent Trustees.
To ensure that accounts of all investment clients, including the
Portfolio, are treated fairly in the event that Neuberger Berman receives
transaction instructions regarding a security for more than one investment
account at or about the same time, Neuberger Berman may combine orders placed on
behalf of clients, including advisory accounts in which affiliated persons have
an investment interest, for the purpose of negotiating brokerage commissions or
obtaining a more favorable price. Where appropriate, securities purchased or
sold may be allocated, in terms of amount, to a client according to the
proportion that the size of the order placed by that account bears to the
aggregate size of orders contemporaneously placed by the other accounts, subject
to de minimis exceptions. All participating accounts will pay or receive the
same price.
Under policies adopted by the Board of Trustees, Neuberger Berman may
enter into agency cross-trades on behalf of the Portfolio. An agency cross-trade
is a securities transaction in which the same broker acts as agent on both sides
of the trade and the broker or an affiliate has discretion over one of the
participating accounts. In this situation, Neuberger Berman would receive
brokerage commissions from both participants in the trade. The other account
participating in an agency cross-trade with the Portfolio cannot be an account
over which Neuberger Berman exercises investment discretion. A member of the
Board of Trustees who is not affiliated with Neuberger Berman reviews
confirmations of each agency cross-trade that the Portfolio participates in.
The Portfolio expects that it will continue to execute a portion of its
transactions through brokers other than Neuberger Berman. In selecting those
brokers, NB Management will consider the quality and reliability of brokerage
services, including execution capability and performance and
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financial responsibility, and may consider the research and other investment
information provided by those brokers, and the willingness of particular brokers
to sell the Variable Contracts issued by the Life Companies.
A committee, comprised of officers of NB Management and employees of
Neuberger Berman who are portfolio managers of some of the Portfolios and Other
NB Funds (collectively, "NB Funds") and some of Neuberger Berman's managed
accounts ("Managed Accounts") evaluates semi-annually the nature and quality of
the brokerage and research services provided by other brokers. Based on this
evaluation, the committee establishes a list and projected rankings of preferred
brokers for use in determining the relative amounts of commissions to be
allocated to those brokers. Ordinarily the brokers on the list effect a large
portion of the brokerage transactions for the NB Funds and the Managed Accounts
that are not effected by Neuberger Berman. However, in any semi-annual period,
brokers not on the list may be used, and the relative amounts of brokerage
commissions paid to the brokers on the list may vary substantially from the
projected rankings. These variations reflect the following factors, among
others: (1) brokers not on the list or ranking below other brokers on the list
may be selected for particular transactions because they provide better price
and/or execution, which is the primary consideration in allocating brokerage;
and (2) adjustments may be required because of periodic changes in the execution
or research capabilities of particular brokers, or in the execution or research
needs of the NB Funds and/or the Managed Accounts; and (3) the aggregate amount
of brokerage commissions generated by transactions for the NB Funds and the
Managed Accounts may change substantially from one semi-annual period to the
next.
The commissions paid to a broker other than Neuberger Berman may be
higher than the amount another firm might charge if NB Management determines in
good faith that the amount of those commissions is reasonable in relation to the
value of the brokerage and research services provided by the broker. NB
Management believes that those research services provide the Portfolio with
benefits by supplementing the information otherwise available to NB Management.
That research information may be used by NB Management in servicing their
respective funds and, in some cases, by Neuberger Berman in servicing the
Managed Accounts. On the other hand, research information received by NB
Management from brokers effecting portfolio transactions on behalf of the Other
NB Funds and by Neuberger Berman from brokers executing portfolio transactions
on behalf of the Managed Accounts may be used for the Portfolio's benefit.
Robert I. Gendelman, Vice President of NB Management, is the person
primarily responsible for making decisions as to specific action to be taken
with respect to the investment portfolio of the Portfolio. Mr. Gendelman has
full authority to take action with respect to portfolio transactions and may or
may not consult with other personnel of NB Management prior to taking such
action. Mr. Gendelman is a principal of Neuberger Berman, LLC.
PORTFOLIO TURNOVER
The portfolio turnover rate is calculated by dividing the lesser of the
cost of the securities purchased or the proceeds from the securities sold by the
Portfolio during the fiscal year (other than securities, including options,
foreign financial futures contracts and forward contracts, whose
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maturity or expiration date at the time of acquisition was one year or less),
divided by the month-end average monthly value of such securities owned by the
Portfolio during the year.
REPORTS TO SHAREHOLDERS
Shareholders of the Portfolio receive unaudited semi-annual financial
statements, as well as year-end financial statements audited by the independent
auditors for the Portfolio. Each Portfolio's report shows the investments owned
by it and the market values thereof and provides other information about the
Portfolio and its operations. In addition, the report contains the Portfolio's
financial statements.
INFORMATION REGARDING ORGANIZATION,
CAPITALIZATION, AND OTHER MATTERS
The Portfolio
The Portfolio is a separate series of the Trust, a Delaware business
trust organized pursuant to a Trust Instrument dated May 23, 1994. 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 nine separate
Portfolios. The Trustees may establish additional portfolios or classes of
shares, without the approval of shareholders. The assets of each Portfolio
belong only to that Portfolio, and the liabilities of each Portfolio are borne
solely by that Portfolio and no other.
NB Management and Neuberger Berman serve as investment manager and
sub-advisor, respectively, to other mutual funds, and the investments for the
Portfolio (through their corresponding series) are managed by the same portfolio
manager who manages one or more other mutual funds, that have similar names,
investment objectives and investment styles as the Portfolio and are offered
directly to the public by means of separate prospectuses. These other mutual
funds are not part of the Trust. You should be aware that the Portfolio is
likely to differ from the other mutual funds in size, cash flow pattern, and
certain tax matters, and may differ in risk/return characteristics. Accordingly,
the portfolio holdings and performance of the Portfolio may vary from those of
the other mutual funds with similar names.
Description of Shares. The Portfolio is authorized to issue an
unlimited number of shares of beneficial interest (par value $0.001 per share).
Shares of the Portfolio represent equal proportionate interests in the assets of
that Portfolio only and have identical voting, dividend, redemption,
liquidation, and other rights. All shares issued are fully paid and
non-assessable under Delaware law, and shareholders have no preemptive or other
right to subscribe to any additional shares.
Shareholder Meetings. The Trustees do not intend to hold annual
meetings of shareholders of the Portfolio. The Trustees will call special
meetings of shareholders of the Portfolio only if required under the 1940 Act or
in their discretion or upon the written request of holders of 10% or more of the
outstanding shares of that Portfolio entitled to vote. Pursuant to current
interpretations of the 1940 Act, the Life Companies will solicit voting
instructions from Variable Contract owners with respect to any matters that are
presented to a vote of shareholders of the Portfolio.
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Certain Provisions of the Trust Instrument. Under Delaware law, the
shareholders of the Portfolio will not be personally liable for the obligations
of any Portfolio; a shareholder is entitled to the same limitation of personal
liability extended to shareholders of corporations. To guard against the risk
that Delaware law might not be applied in other states, the Trust Instrument
requires that every written obligation of the Trust or the Portfolio contain a
statement that such obligation may be enforced only against the assets of the
Trust or Portfolio and provides for indemnification out of Trust or Portfolio
property of any shareholder nevertheless held personally liable for Trust or
Portfolio obligations, respectively.
CUSTODIAN AND TRANSFER AGENT
The Portfolio has selected State Street Bank and Trust Company ("State
Street"), 225 Franklin Street, Boston, Massachusetts 02110 as custodian for its
securities and cash. State Street also serves as the Portfolio's Transfer Agent
and shareholder servicing agent, administering purchases and redemptions of
Trust shares through its Boston Service Center.
INDEPENDENT AUDITORS
The Portfolio has selected _________________________________________ as
the independent auditors who will audit its financial statements.
LEGAL COUNSEL
Each Portfolio has selected Dechert, 1775 Eye Street, N.W., Washington,
D.C. 20006 as legal counsel.
REGISTRATION STATEMENT
This SAI and 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. Certain portions of the
registration statement have been omitted pursuant to SEC rules and regulations.
The registration statement, including the exhibits filed therewith, may be
examined at the SEC's offices in Washington, D.C. The SEC maintains a Website
(http://www.sec.gov) that contains this SAI, material incorporated by reference
and other information regarding the Portfolio.
Statements contained in this SAI and Prospectus as to the contents of
any contract or other document referred to are not necessarily complete. In each
instance reference is made to the copy of the contract or other document filed
as an exhibit to the registration statement, each such statement being qualified
in all respects by such reference.
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APPENDIX A: RATINGS OF CORPORATE BONDS AND COMMERCIAL PAPER
S&P corporate bond ratings
AAA - Bonds rated AAA have the highest rating assigned by S&P. Capacity
to pay interest and repay principal is extremely strong.
AA - Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the higher rated issues only in small degree.
A - Bonds rated A have a strong capacity to pay interest and repay
principal, although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher rated
categories.
BBB - Bonds rated BBB are regarded as having an adequate capacity to
pay principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in higher rated categories.
BB, B, CCC, CC, C - Bonds rated BB, B, CCC, CC, and C are regarded, on
balance, as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB indicates
the lowest degree of speculation and C the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
CI - The rating CI is reserved for income bonds on which no interest is
being paid.
D - Bonds rated D are in default, and payment of interest and/or
repayment of principal is in arrears.
Plus (+) or Minus (-) - The ratings above may be modified by the
addition of a plus or minus sign to show relative standing within the major
categories.
Moody's corporate bond ratings
Aaa - Bonds rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or an exceptionally stable
margin, and principal is secure. Although the various protective elements are
likely to change, the changes that can be visualized are most unlikely to impair
the fundamentally strong position of the issuer.
Aa - Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as "high
grade bonds." They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa-rated securities,
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fluctuation of protective elements may be of greater amplitude, or there may be
other elements present that make the long-term risks appear somewhat larger than
in Aaa-rated securities.
A - Bonds rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present that
suggest a susceptibility to impairment sometime in the future.
Baa - Bonds which are rated Baa are considered as medium grade
obligations; i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. These bonds lack outstanding
investment characteristics and in fact have speculative characteristics as well.
Ba - Bonds rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period 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 (+).
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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; and
-Well-established access to a range of financial markets and assured
sources of alternate liquidity.
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NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
POST-EFFECTIVE AMENDMENT NO. 33 ON FORM N-1A
PART C
OTHER INFORMATION
Item 23. Exhibits
Exhibit Number Description
-------------- -----------
(a) (1) Trust Instrument of Registrant.(1)
(2) Amended and Restated Certificate of Trust of the Registrant.(8)
(3) Amendment to Trust Instrument dated November 9, 1998.(8)
(4) Schedule A to Trust Instrument of Registrant designating Series
of Registrant (to be filed by amendment)
(b) (1) By-laws of Registrant.(1)
(2) Amendment to By-laws dated November 11, 1997.(5)
(3) Amendment to By-laws dated November 9, 1998.(8)
(c) (1) Trust Instrument of Registrant, Articles IV, V and VI.(1)
(2) By-laws of Registrant, Articles V, VI and VIII.(1)
(d) (1) Management Agreement Between Registrant and Neuberger Berman
Management Inc. (to be filed by amendment)
(2) Sub-Advisory Agreement Between Neuberger Berman Management Inc.
and Neuberger Berman, LLC with Respect to Registrant (to be
filed by amendment)
(e) Distribution Agreement Between Registrant and Neuberger Berman
Management Inc., and Distribution Plan of Registrant (to be
filed by amendment)
(f) Bonus or Profit Sharing Contracts. None.
(g) (1) Custodian Contract Between Registrant and State Street Bank and
<PAGE>
Exhibit Number Description
-------------- -----------
Trust Company.(2)
(2) Letter Agreement adding the International Portfolio of
Registrant to the Custodian Contract.(1)
(3) Schedule A to the Custodian Contract designating approved
foreign banking institutions and securities depositories.(11)
(4) Custodian Fee Schedule.(3)
(5) Letter Agreement adding the Mid-Cap Growth and Guardian
Portfolios of Registrant to the Custodian Contract and Transfer
Agency Agreement.(4)
(6) Schedule designating Series of Registrant subject to Custodian
Contract.(7)
(7) Letter Agreement adding the Socially Responsive Portfolio of
Registrant to the Custodian Contract and Transfer Agency
Agreement.(7)
(8) Letter Agreement adding the Regency Portfolio of Registrant to
the Custodian Contract and Transfer Agency Agreement (to be
filed by amendment)
(h) (1) Transfer Agency Agreement Between Registrant and State Street
Bank and Trust Company.(2)
(2) Administration Agreement Between Registrant and Neuberger
Berman Management Inc. (to be filed by amendment)
(3) Form of Fund Participation Agreement.(11)
(4) Letter Agreement adding the International Portfolio of
Registrant to the Transfer Agency Agreement.(1)
(5) Letter Agreement adding the Mid-Cap Growth and Guardian
Portfolios of Registrant to the Transfer Agency Agreement.(4)
(6) Expense Limitation Agreement between Registrant, on behalf of
the Mid-Cap Growth and Guardian Portfolios, and Neuberger
Berman Management Inc.(11)
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(7) Schedule designating series of Registrant subject to the
Transfer Agency Agreement.(7)
(8) Expense Limitation Agreement between Registrant, on behalf of
the Socially Responsive Portfolio, and Neuberger Berman
Management, Inc.(11)
(9) Letter Agreement adding the Socially Responsive Portfolio of
Registrant to the Transfer Agency Agreement.(7)
(10) Expense Limitation Agreement between Registrant, on behalf of
the Liquid Asset, Balanced, Growth, Partners, and Limited
Maturity Bond Portfolios, and Neuberger Berman Management
Inc.(11)
(11) Expense Limitation Agreement between Registrant, on behalf of
the International Portfolio, and Neuberger Berman Management
Inc.(11)
(12) Expense Limitation Agreement between Registrant, on behalf of
Regency Portfolio, and Neuberger Berman Management Inc.
(filed herewith)
(i) (1) Legal Opinion.(9)
(2) Consent of Counsel. (to be filed by amendment)
(j) (1) Consent of Independent Auditors. (to be filed by amendment)
(2) Powers of Attorney. (filed herewith)
(k) Financial Statements Omitted from Prospectus. None.
(l) Initial Capital Agreements. None.
(m) Plan Pursuant to Rule 12b-1.(11)
(n) Rule 18f-3 Plan. None
(p) Code of Ethics.(11)
-----------------
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1. Incorporated by reference to Post-Effective Amendment No. 22 to
Registrant's Registration Statement, File Nos. 2-88566 and 811-4255, EDGAR
Accession No. 0000943663-97-000091.
2. Incorporated by reference to Post-Effective Amendment No. 20 to
Registrant's Registration Statement, File Nos. 2-88566 and 811-4255, EDGAR
Accession No. 0000943663-96-000107.
3. Incorporated by reference to Post-Effective Amendment No. 23 to
Registrant's Registration Statement, File Nos. 2-88566 and 811-4255, EDGAR
Accession No. 0000943663-97-000094.
4. Incorporated by reference to Post-Effective Amendment No. 25 to
Registrant's Registration Statement, File Nos. 2-88566 and 811-4255, EDGAR
Accession No. 0000943663-97-000256.
5. Incorporated by reference to Post-Effective Amendment No. 26 to
Registrant's Registration Statement, File Nos. 2-88566 and 811-4255, EDGAR
Accession No. 0000943663-98-000094.
6. Incorporated by reference to Post-Effective Amendment No. 27 to
Registrant's Registration Statement, File Nos. 2-88566 and 811-4255, EDGAR
Accession No. 0000943663-98-000180.
7. Incorporated by reference to Post-Effective Amendment No. 28 to
Registrant's Registration Statement, File Nos. 2-88566 and 811-4255, EDGAR
Accession No. 0000943663-98-000266.
8. Incorporated by reference to Post-Effective Amendment No. 29 to
Registrant's Registration Statement, File Nos. 2-88566 and 811-4255, EDGAR
Accession No. 0000943663-99-000074.
9. Incorporated by reference to Post-Effective Amendment No. 30 to
Registrant's Registration Statement, File Nos. 2-88566 and 811-4255, EDGAR
Accession No. 0000891554-99-000822.
10. Incorporated by reference to Post-Effective Amendment No. 31 to
Registrant's Registration Statement, File Nos. 2-88566 and 811-4255, EDGAR
Accession No. 0001005477-00-001512.
11. Incorporated by reference to Post-Effective Amendment No. 32 to
Registrant's Registration Statement, File Nos. 2-88566 and 811-4255, EDGAR
Accession No. 0001005477-00-003567.
Item 24. Persons Controlled By or Under Common Control with Registrant
No person is controlled by or under common control with the Registrant
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Item 25. Indemnification:
A Delaware business trust may provide in its governing instrument for
indemnification of its officers and trustees from and against any and all claims
and demands whatsoever. Article IX, Section 2 of the Trust Instrument provides
that the Registrant shall indemnify any present or former trustee, officer,
employee or agent of the Registrant ("Covered Person") to the fullest extent
permitted by law against liability and all expenses reasonably incurred or paid
by him in connection with any claim, action, suit or proceeding ("Action") in
which he becomes involved as a party or otherwise by virtue of his being or
having been a Covered Person and against amounts paid or incurred by him in
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
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, of the Registrant ("Independent Trustees"), nor
are parties to the matter based upon a review of readily available facts; or
(iii) by written opinion of independent legal counsel based upon a review of
readily available facts.
Pursuant to Article IX, Section 3 of the Trust Instrument, if any
present or former shareholder of any series ("Series") of the Registrant shall
be held personally liable solely by reason of his being or having been a
shareholder and not because of his acts or omissions or for some other reason,
the present or former shareholder (or his heirs, executors, administrators or
other legal representatives or in the case of any entity, its general successor)
shall be entitled out of the assets belonging to the applicable Series to be
held harmless from and indemnified against all loss and expense arising 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 Advisers Managers Trust
and Neuberger 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 Advisers 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 Series
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 Advisers Managers Trust or a Series of Advisers Managers Trust
or its interest holders to which NB Management would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence in the performance
of NB Management's duties, or by reason of NB Management's
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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 Advisers Managers Trust against any liability to Advisers
Managers Trust or a Series or its interest holders to which such person would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of such
person's office with Advisers Managers Trust.
Section 1 of the Sub-Advisory Agreement between Advisers Managers Trust
and Neuberger Berman, LLC ("Sub-Adviser") 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, the Sub-Adviser will not be subject to liability for any act or
omission or any loss suffered by any Series of Advisers Managers Trust or its
interest holders in connection with the matters to which the Agreement relates.
Section 9.1 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 in good faith and
with due care in accordance with such instructions, or with the advice or
opinion, of legal counsel for a Portfolio of the Trust or for the Administrator
in respect of any matter arising in connection with the Administration
Agreement. NB Management shall be protected in acting upon any such
instructions, advice or opinion and upon any other paper or document delivered
by a Portfolio or such legal counsel which NB Management believes to be genuine
and to have been signed by the proper person or persons, and NB Management shall
not be held to have notice of any change of status or authority of any officer
or representative of the Trust, until receipt of written notice thereof from the
Portfolio. Section 12 of the Administration Agreement provides that each
Portfolio of 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 with respect to such Portfolio; or (ii) any
action taken or omission to act committed by NB Management in the performance of
its obligations under the Agreement with respect to such Portfolio; or (iii) any
action of NB Management upon instructions believed in good faith by it to have
been executed by a duly authorized officer or representative of the Trust with
respect to such Portfolio; 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 Portfolio, and not from assets
belonging to any other Portfolio of the Registrant. Section 13 of the
Administration Agreement provides that NB Management will indemnify each
Portfolio of the Registrant and hold it harmless from and against any and all
losses, damages and expenses, including reasonable attorneys' fees and expenses,
incurred by such Portfolio of 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,
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agents or contractors in connection with the Agreement. A Portfolio of the
Registrant shall not be entitled to such indemnification in respect of actions
or omissions constituting negligence or misconduct on the part of that Portfolio
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
Portfolio for the Registrant's performance of the Agreement by the Registrant on
behalf of such Portfolio, and neither the Trustees nor any of the Registrant's
officers, employees or agents, whether past, present or future, shall be
personally liable therefor.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 ("1933 Act") may be permitted to trustees, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the 1933 Act and will be governed by the final adjudication of such
issue.
Item 26. Business and Other Connections of Adviser and Sub-Adviser
There is set forth below information as to any other business,
profession, vocation or employment of a substantial nature in which each
director or officer of NB Management and each principal of the Sub-Adviser 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.
<TABLE>
<CAPTION>
NAME BUSINESS AND OTHER CONNECTIONS
---- ------------------------------
<S> <C>
Philip Ambrosio Senior Vice President and Chief Financial Officer, Neuberger Berman Inc.
Senior Vice President and Chief
Financial Officer, NB Management
Thomas J. Brophy Vice President and Portfolio Manager, Columbus Circle Investors.*
Vice President, NB Management
</TABLE>
-7-
<PAGE>
<TABLE>
<CAPTION>
NAME BUSINESS AND OTHER CONNECTIONS
---- ------------------------------
<S> <C>
Barbara DiGiorgio Assistant Treasurer, Neuberger Berman Advisers Management Trust;
Assistant Vice President, Assistant Treasurer, Neuberger Berman Income Funds; Assistant
NB Management Treasurer, Neuberger Berman Equity Funds.
Robert S. Franklin Vice President, High Yield Fixed Income Analyst, Prudential
Vice President, NB Management Insurance Company.*
Theodore P. Giuliano President and Trustee, Neuberger Berman Income Funds; President and
Vice President and Director, Trustee, Neuberger Berman Income Trust.
NB Management; Managing Director,
Neuberger Berman
Kevin Handwerker Senior Vice President, Secretary and General Counsel, Neuberger
Senior Vice President, General Berman, Inc.
Counsel and Secretary,
Neuberger Berman
Michael M. Kassen Executive Vice President, Chief Investment Officer and Director,
Executive Vice President, Neuberger Berman, Inc.
NB Management
Kelly M. Landron Assistant Portfolio Manager/Analyst, Neuberger Berman.*
Vice President, NB Management
Jeffrey B. Lane President, Chief Executive Officer and Director of Neuberger Berman, Inc.
President and Chief Executive
Officer, Neuberger Berman
Michael F. Malouf Portfolio Manager, Dresdner RCM Global Investors.*
Vice President, NB Management
Robert Matza Executive Vice President, Chief Administrative Officer and Director,
Executive Vice President and Chief Neuberger Berman, Inc.
Administrative Officer, Neuberger
Berman; Director, NB Management
S. Basu Mullick Portfolio Manager, Ark Asset Management.*
Vice President, NB Management
Richard Russell Treasurer and principal accounting officer, Neuberger Berman
Vice President, NB Management Advisers Management Trust; Treasurer, Neuberger Berman
Income Funds; Treasurer, Neuberger Berman Equity Funds.
Heidi L. Schneider Executive Vice President and Director, Neuberger Berman, Inc.
Executive Vice President,
Neuberger Berman
Benjamin E. Segal Assistant Portfolio Manager, GT Global Investment Management.*
Vice President, NB Management,
Managing Director, Neuberger
Berman
</TABLE>
-8-
<PAGE>
<TABLE>
<CAPTION>
NAME BUSINESS AND OTHER CONNECTIONS
---- ------------------------------
<S> <C>
Daniel J. Sullivan Vice President, Neuberger Berman Advisers Management Trust;
Senior Vice President, Vice President, Neuberger Berman Income Funds; Vice
NB Management President, Neuberger Berman Equity Funds.
Peter E. Sundman Executive Vice President and Director, Neuberger Berman Inc.;
President, NB Management; President and Chief Executive Officer, Neuberger Berman Income Funds.
Executive Vice President,
Neuberger Berman
Catherine Waterworth Managing Director, TCW Group, Inc.*
Vice President, NB Management
Allan R. White, III Portfolio Manager, Salomon Asset Management.*
Vice President, NB
Management; Managing Director,
Neuberger Berman
Celeste Wischerth Assistant Treasurer, Neuberger Berman Advisers Management Trust;
NB Management Assistant Treasurer, Neuberger Berman Income Funds; Assistant
Treasurer, Neuberger Berman Equity Funds.
</TABLE>
------------------
* Until 1998.
Item 27. Principal Underwriters
(a) Neuberger Berman Management Inc., the principal underwriter
distributing securities of the Registrant, is also the principal underwriter and
distributor for each of the following investment companies:
Neuberger Berman Equity Funds
Neuberger Berman Income Funds
NB Management is also the investment adviser to the master funds in
which each of 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.
-9-
<PAGE>
NAME POSITIONS AND OFFICES POSITIONS AND OFFICES
---- WITH UNDERWRITER WITH REGISTRANT
---------------- ---------------
Ramesh Babu Vice President None
Richard A. Cantor Chairman of the Board None
Valerie Chang Vice President None
Brooke A. Cobb Vice President None
Robert Conti Treasurer None
Robert W. D'Alelio Vice President None
Clara Del Villar Vice President None
Robert S. Franklin Vice President None
Robert I. Gendelman Vice President None
Theodore P. Giuliano Vice President and Director None
Michael M. Kassen Vice President and Director President
Robert L. Ladd Vice President None
Josephine Mahaney Vice President None
Michael F. Malouf Vice President None
Robert Matza Director None
Ellen Metzger Secretary None
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 Chairman and Principal
Executive Officer
Judith M. Vale Vice President None
Josephine Velez Vice President None
Catherine Waterworth Vice President None
Allan R. White, III Vice President None
-10-
<PAGE>
(c) No commissions or 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 Investment Company Act of 1940, 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 Bylaws,
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 Registration
Statement, the Registrant is not a party to any management-related service
contract.
Item 30. Undertakings
None.
-11-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment No. 33 to its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of New
York, and the State of New York on the 11th day of , December, 2000.
NEUBERGER BERMAN
ADVISERS MANAGEMENT TRUST
By: /s/ Peter Sundman
-----------------
Peter Sundman
Chairman, Principal Executive Officer
and Trustee
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 33 to the Registration Statement of Neuberger
Berman Advisers Management Trust has been signed below by the following trustees
and officers of the Registrant in the capacities and on the date indicated.
Signature Title Date
/s/ Peter Sundman Chairman and Trustee December 11, 2000
----------------------- (Principal Executive Officer) -----------------
Peter Sundman
/s/ Michael M. Kassen President and Trustee December 11, 2000
----------------------- -----------------
Michael M. Kassen
/s/ Richard Russell Treasurer December 11, 2000
----------------------- (Principal Financial and -----------------
Richard Russell Accounting Officer)
/s/ John Cannon Trustee December 11, 2000
----------------------- -----------------
John Cannon
/s/ Faith Colish Trustee December 11, 2000
----------------------- -----------------
Faith Colish
/s/ Walter G. Ehlers Trustee December 11, 2000
----------------------- -----------------
Walter G. Ehlers
/s/ C. Anne Harvey Trustee December 11, 2000
----------------------- -----------------
C. Anne Harvey
/s/ Barry Hirsch Trustee December 11, 2000
----------------------- -----------------
Barry Hirsch
<PAGE>
/s/ Robert A. Kavesh Trustee December 11, 2000
----------------------- -----------------
Robert A. Kavesh
/s/ Howard A. Mileaf Trustee December 11, 2000
----------------------- -----------------
Howard A. Mileaf
/s/ Edward I. O'Brien Trustee December 11, 2000
----------------------- -----------------
Edward I. O'Brien
/s/ John P. Rosenthal Trustee December 11, 2000
----------------------- -----------------
John P. Rosenthal
/s/ William E. Rulon Trustee December 11, 2000
----------------------- -----------------
William E. Rulon
/s/ Cornelius T. Ryan Trustee December 11, 2000
----------------------- -----------------
Cornelius T. Ryan
/s/ Tom Decker Seip Trustee December 11, 2000
----------------------- -----------------
Tom Decker Seip
Trustee _________________
-----------------------
Gustave H. Shubert
/s/ Candace L. Straight Trustee December 11, 2000
----------------------- -----------------
Candace L. Straight
/s/ Peter P. Trapp Trustee December 11, 2000
----------------------- -----------------
Peter P. Trapp
<PAGE>
EXHIBIT INDEX
(h)(12) Expense Limitation Agreement between Registrant, on behalf of the
Regency Portfolio, and Neuberger Berman Management, Inc.
(j)(2) Powers of Attorney.
