Neuberger Berman Short Duration Bond

Objective And Strategy

Objective
Highest available current income consistent with liquidity and low risk to principal; total return is a secondary goal.

Strategy
Invests mainly in investment grade bonds and other debt securities from U.S. Government and corporate issuers. To enhance yield and add diversification may invest up to 10% of assets in below investment grade securities, if, at the time of purchase they are rated at least B by Moody's or Standard & Poor's or if unrated by either of these, deemed by the investment manager to be of comparable quality. The Fund seeks to reduce credit risk by diversifying among many issuers and different types of securities. Although it may invest in securities of any maturity, under normal circumstances it maintains an average Portfolio duration of three years or less. The portfolio managers monitor national trends in the corporate and Government securities markets, as well as a range of economic and financial factors. If particular sectors of the bond market appear relatively inexpensive, the portfolio managers may increase the Fund’s exposure in those sectors and decrease exposure in other sectors. The portfolio managers look for securities that appear underpriced compared to securities of similar structure and credit quality. In choosing lower-rated securities, the managers generally look for bonds from issuers whose financial health appears comparatively strong, and that may have their credit ratings raised. The Fund may sell securities if the portfolio managers find an opportunity they believe is more compelling or if the portfolio managers’ outlook on the investment or the market changes.
Tax Inefficient Fund

Principle Risks

* This portfolio invests in securities of foreign issuers which involves risks not typically associated with domestic issuers, including currency fluctuations and the possibility of political and economic instability. Emerging markets involve risks in addition to those generally associated with foreign securities, because political and economic structures in many emerging markets may be undergoing significant evolution and rapid development.

* This fund has a risk of prepayment and extension. A mortgage backed bond, unlike other bonds can be hurt when interest rates fall because homeowners refinance and prepay principal. Receiving increasing prepayments in a falling interest rate environment cause the average maturity of the portfolio to shorten, reducing its potential for price gains. It requires the fund to reinvest at lower interest rates, which reduced the portfolio's total return and yield, and may cause certain bond prices to fall below the level the fund paid for them, resulting in a capital loss.