peralta community college district€¦ · nb secondary opportunities fund* 100,367 0.0% total...

Neuberger Berman Trust Company N.A.

Peralta Community College District June 12, 2014

Table of Contents

I. INVESTMENT PERFORMANCE REVIEW AS OF MAY 31, 2014

II. MARKET OUTLOOK

III. ASSET ALLOCATION REVIEW

IV. FOSSIL FUEL DIVESTMENT

APPENDICES

INVESTMENT PERFORMANCE REVIEW AS OF MAY 31, 2014

Executive Summary as of May 31, 2014

Peralta Community College District

Market Value % of Total

Cash and Fixed IncomeCash and Equivalents 2,583,597 1.2%Investment Grade Fixed Income 51,392,686 24.0%High Yield Corporates 18,242,585 8.5%Non-U.S. Fixed Income 8,635,702 4.0%

Subtotal 80,854,570$ 37.8%

EquityU.S. Large Cap 57,949,512 27.1%U.S. Small & Mid Cap 18,860,280 8.8%Developed International Equities 29,936,513 14.0%Emerging Market Equities 9,645,858 4.5%Public Real Estate 8,247,288 3.9%

Subtotal 124,639,451$ 58.3%

Real & Alternative AssetsHedge Funds 8,131,043 3.8%Private Equity 100,367 0.0%

Subtotal 8,231,410$ 3.9%

TOTAL PORTFOLIO 213,725,431$ 100.0%

Trailing Trailing Year- Trailing Annualized Cumulative1 Month 3 Months to-Date 1 Year Since Inception Since Inception

Total Portfolio (1/31/2006) 1.58 2.49 3.11 11.55 6.11 63.95Investment Policy Benchmark (1/31/2006) (1) ^ 1.32 2.04 3.97 10.90 5.99 61.63

From 5/31/2012 to 10/31/2013 consists of: 35% Barclays Capital Aggregate, 5% Barclays Capital US Corporate High Yield, 23% Russell 1000, 8% Russell 2500, 15% MSCI EAFE, 7% MSCI Emerging Markets, 4% NAREIT Equity, and 3.0% DJ-UBS Commodity Index. From 1/31/2006 to 5/31/2012 consists of: 35% Barclays Capital Aggregate, 30% S&P 500 Index, 10% Russell 2000, 20% MSCI EAFE, and 5% NAREIT Equity.

(1) From 10/31/2013 to present consists of: 30% Barclays Capital Aggregate, 5% Barclays Capital US Corporate High Yield, 3% Barclays Capital Global Aggregate ex USD, 21% Russell 1000, 7% Russell 2500, 10% MSCI EAFE, 5% MSCI Emerging Markets, 4% NAREIT Equity, 3% DJ-UBS Commodity Index, 6% HFRI FoF Composite Index, and 6% ThomsonOne Private Equity. ThomsonOne Private Equity data is not available until 45 days after quarter-end.

NET PERFORMANCE SUMMARY

Asset Class

PORTFOLIO COMPOSITION

Cash and Fixed Income37.8%

Equity58.3%

Real & Alternative Assets3.9%

^HFRI FoF Composite Index and Thomson One Private Equity Index components are currently not available and not included in the calculation.

See Additional Disclosures at the end of this material, which are an important part of this presentation. 1

Allocation by Investment Manager as of May 31, 2014


*4Q 2013 market value is reflected as the 1Q 2014 statement is not available.

Manager/Asset Class Market Value % Of

JP Morgan US Treasury Money Market Fund - VPIXZ 574,284 0.3%

Total Cash and Equivalents 574,284$ 0.3%

NB Fixed Income Structure Core 51,392,686 24.0%Total Investment Grade Fixed Income 51,392,686 24.0%

NB High Income Bond Fund - NHILX 10,632,800 5.0%NB Floating Rate Income Fund - NFIIX 7,609,785 3.6%Total High Yield Fixed Income 18,242,585 8.5%

Dreyfus EM Debt Fund - DDBIX 8,635,702 4.0%Total Non-U.S. Fixed Income 8,635,702 4.0%

Total Fixed Income 78,270,973$ 36.6%

NB Large Cap Disciplined Growth 10,481,428 4.9%NB Large Cap Value 25,270,086 11.8%NB Socially Responsible Investing Group 23,543,264 11.0%Total U.S. Large Cap 59,294,778 27.7%

NB Genesis Fund - NBGIX 9,552,451 4.5%Pinnacle Associates Small Cap Growth 9,597,214 4.5%

Total U.S. Small & Mid Cap 19,149,665 9.0%

Harding Loevner International Equity ADR 14,220,311 6.7%NB International Fund - NBIIX 15,921,601 7.4%

Total Developed Equities 30,141,912 14.1%

NB Emerging Markets Fund - NEMIX 9,645,858 4.5%Total Emerging Equities 9,645,858 4.5%

NB REITs 8,416,551 3.9%Total Public Real Estate 8,416,551 3.9%

Total Equity 126,648,764$ 59.3%

NB Absolute Return Multi-Manager Fund - NABIX 8,131,043 3.8%Total Low Vol Hedge Funds 8,131,043 3.8%

NB Secondary Opportunities Fund* 100,367 0.0%Total Private Equity 100,367 0.0%

Total Real & Alternative Assets 8,231,410$ 3.9%

Total Portfolio 213,725,431$ 100.0%

Cash and Equivalents

0.3%Investment Grade

Fixed Income24.0%

High Yield Fixed Income8.5%

Non-U.S. Fixed Income4.0%

U.S. Large Cap 27.7%

U.S. Small & Mid Cap9.0%

Developed International

Equities14.1%

Emerging Market Equities

4.5%

Public Real Estate3.9%

Hedge Funds3.8%


Composite Performance Summary (Net) as of May 31, 2014 October , 2013


Note: Benchmark inception dates correspond with that of the respective manager. Performance shown for periods of less than one year is cumulative. ^HFRI FoF Composite Index and Thomson One Private Equity Index components are currently not available and not included in the calculation. * May 2014 benchmark return not available.

Trailing Trailing Year-Composite / Index (Inception) Market Value % of 1 Month 3 Months to-Date 1 Year 3 Years Inception

Total Portfolio (1/31/2006) 213,725,431$ 100% 1.58 2.49 3.11 11.55 8.35 6.11 Investment Policy Benchmark (1) ^ 1.32 2.04 3.97 10.90 7.89 5.99

Total Fixed Income (1/31/2006) 78,270,973$ 36.6% 1.19 2.19 3.67 3.47 4.81 5.70 Barclays Capital U.S. Aggregate Bond Index 1.14 1.82 3.87 2.71 3.55 5.17

Total Equity (1/31/2006) 126,648,764$ 59.3% 1.90 2.91 2.98 16.00 10.37 5.94 MSCI All Country World Index 2.21 3.75 4.49 17.75 9.58 6.55

Total U.S. Equity (1/31/2006) 86,860,994$ 40.6% 1.84 2.45 3.44 18.72 13.67 7.37 Russell 3000 Index 2.18 2.85 4.32 20.57 14.80 7.76

Total Real & Alternative Assets (11/8/2013) 8,231,410$ 3.9% 0.54 (0.73) 0.72 - - 2.41 HFRI FoF Composite* n/a n/a n/a - - 2.10

Trailing Annualized Performance

(1) From 10/31/2013 to present consists of: 30% Barclays Capital Aggregate, 5% Barclays Capital US Corporate High Yield, 3% Barclays Capital Global Aggregate ex USD, 21% Russell 1000, 7% Russell 2500, 10% MSCI EAFE, 5% MSCI Emerging Markets, 4% NAREIT Equity, 3% DJ-UBS Commodity Index, 6% HFRI FoF Composite Index, and 6% ThomsonOne Private Equity. ThomsonOne Private Equity data is not available until 45 days after quarter-end.

From 5/31/2012 to 10/31/2013 consists of: 35% Barclays Capital Aggregate, 5% Barclays Capital US Corporate High Yield, 23% Russell 1000, 8% Russell 2500, 15% MSCI EAFE, 7% MSCI Emerging Markets, 4% NAREIT Equity, and 3.0% DJ-UBS Commodity Index.

From 1/31/2006 to 5/31/2012 consists of: 35% Barclays Capital Aggregate, 30% S&P 500 Index, 10% Russell 2000, 20% MSCI EAFE, and 5% NAREIT Equity.

1.6%2.5%

3.1%

11.5%

8.3%

6.1%

1.3%2.0%

4.0%

10.9%

7.9%

6.0%

--

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Trailing 1 Month Trailing 3 Months Year-to-Date Trailing 1 Year Trailing 3 Years Since Inception

Total Portfolio Investment Policy Index


Net Performance by Investment Manager as of May 31, 2014 , 2013


Note: Benchmark inception dates correspond with that of the respective manager. Performance shown for periods of less than one year is cumulative.

Manager (Inception) Market Value

Annualized Perf. (%)

Since Inception% of Tot. Port. 1 MonthTrailing 3 Months Year-to-Date Trailing 1 Year Trailing 3 Years

Investment Grade Fixed IncomeNB Fixed Income Structure Core (1/31/2006) 51,392,686$ 24.1% 1.15 1.89 3.93 3.17 3.86 5.41Barclays Capital US Aggregate Bond Index 1.14 1.82 3.87 2.71 3.55 5.17Variance from Index 0.01 0.07 0.06 0.47 0.32 0.24

High Yield Fixed Income

NB High Income Bond Fund - NHILX (5/31/2012) 10,632,800$ 5.0% 0.76 1.25 3.95 7.53 - 11.07BofA ML US High Yield Master II Constrained Index 0.99 1.93 4.73 7.92 - 11.32Variance from Index (0.23) (0.67) (0.78) (0.39) - (0.25)

NB Floating Rate Income Fund - NFIIX (11/8/2013) 7,609,785$ 3.6% 0.51 0.73 1.25 - - 1.59S&P/LSTA Leveraged Loan Index 0.68 1.16 2.00 - - 2.64Variance from Index (0.17) (0.43) (0.75) - - (1.04)

Non-U.S. Fixed Income

Dreyfus EM Debt Fund - DDBIX (5/31/2012) 8,635,702$ 4.1% 2.56 6.66 3.97 0.93 - 6.41JP Morgan GBI-EMG Core Index 2.08 5.88 4.94 (1.37) - 4.91Variance from Index 0.48 0.77 (0.97) 2.30 - 1.50

U.S. Large Cap NB Large Cap Disciplined Growth (1/31/2006) 10,481,428$ 4.9% 2.61 0.66 0.59 14.77 9.67 7.28Russell 1000 Growth Index 3.12 2.08 4.28 22.15 14.96 8.40Variance from Index (0.51) (1.42) (3.68) (7.38) (5.29) (1.12)

NB Large Cap Value (1/20/2006) 25,270,086$ 11.9% 1.98 6.28 7.09 24.98 17.81 7.68Russell 1000 Value Index 1.46 4.87 5.52 19.60 15.12 6.75Variance from Index 0.52 1.41 1.56 5.38 2.69 0.93

NB Socially Responsible Investing Group (5/31/2012) 23,543,264$ 11.0% 1.83 1.86 2.14 19.45 - 26.18S&P 500 Index 2.35 3.97 4.97 20.45 - 23.81Variance from Index (0.52) (2.11) (2.83) (1.00) - 2.37

U.S. Small & Mid Cap NB Genesis Fund - NBGIX (5/31/2012) 9,552,451$ 4.5% 0.42 (1.60) (3.66) 16.40 - 19.90Russell 2000 Value Index 0.63 (0.74) (0.21) 16.87 - 23.88Variance from Index (0.21) (0.86) (3.44) (0.47) - (3.98)


Net Performance by Investment Manager as of May 31, 2014


Note: Benchmark inception dates correspond with that of the respective manager. Performance shown for periods of less than one year is cumulative. *May 2014 benchmark return not available. **4Q 2013 market value is reflected as the 1Q 2014 market value, performance and benchmark return are not yet available.

Manager (Inception) Market Value

Annualized Perf. (%)

Since Inception% of Tot. Port. 1 MonthTrailing 3 Months Year-to-Date Trailing 1 Year Trailing 3 Years

Pinnacle Associates Small Cap Growth (5/29/2012) 9,597,214$ 4.5% 1.20 (2.32) 0.43 19.44 - 28.73Russell 2500 Growth Index 1.32 (4.33) (1.23) 18.51 - 22.36Variance from Index (0.12) 2.01 1.67 0.93 - 6.37

Developed EquityHarding Loevner International Equity ADR (5/29/2012) 14,220,311$ 6.7% 1.70 4.43 2.46 11.71 - 18.01MSCI EAFE Index 1.62 2.44 3.78 18.04 - 23.15Variance from Index 0.08 1.99 (1.32) (6.33) - (5.13)

NB International Fund - NBIIX (1/31/2006) 15,921,601$ 7.5% 1.32 1.67 2.30 15.84 5.05 3.81MSCI EAFE Index 1.62 2.44 3.78 18.04 7.30 4.14Variance from Index (0.30) (0.76) (1.48) (2.20) (2.26) (0.33)

Emerging EquityNB Emerging Markets Fund - NEMIX (5/28/2013) 9,645,858$ 4.5% 3.73 7.02 3.37 4.54 - 2.48MSCI Emerging Markets Index 3.49 7.02 3.39 4.27 - 2.12Variance from Index 0.24 0.00 (0.02) 0.27 - 0.36

Public Real EstateNB REITS (1/31/2006) 8,416,551$ 3.9% 2.87 6.37 14.33 8.72 8.83 7.73NAREIT All Equity REIT Index 2.91 6.37 15.02 9.38 10.35 6.31Variance from Index (0.04) (0.00) (0.69) (0.66) (1.52) 1.42

Low Vol Hedge FundsNB Absolute Return Multi-Manager Fund - NABIX (11/8/2013)* 8,131,043$ 3.8% 0.54 (0.63) 0.82 - - 2.51HFRX Absolute Return Index* n/a n/a n/a - - 1.79Variance from Index - - - - - 0.72

Private EquityNB Secondary Opportunities Fund (12/11/2013)** 100,367$ 0.0% n/a - - - - n/aThomsonOne Private Equity** n/a - - - - n/aVariance from Index - - - - - -


MARKET OUTLOOK

Index Performance Scorecard As of May 31, 2014

_______________________ *Dollar returns. **Municipal performance not adjusted for taxes. Sources: Standard and Poor’s; MSCI; Barclays. Indexes are unmanaged and are not available for direct investment. Investing entails risks, including possible loss of principal. Past performance is no guarantee of future results. See Disclosures section at the end of this material, which is an important part of this presentation.

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Developed Emerging

DEVELOPED AND EMERGING MARKET 2014 YTD PERFORMANCE (%) Asset Class May 14 QTD YTDDow 1.19 2.07 1.92S&P 500 2.35 3.10 4.97MSCI EAFE* 1.76 3.31 4.11MSCI Emerging Markets* 3.51 3.90 3.523 Month T-Bill 0.00 0.01 0.0210 Year Treasury 1.90 2.74 5.45Barclays Corporate 1.37 2.58 5.60Barclays High Yield 0.92 1.56 4.59Barclays Municipal** 1.29 2.51 5.91Alerian MLP Index 3.39 7.80 9.82

Equity Style May 14 QTD YTDRussell 1000 2.30 2.78 4.88Russell 1000 Growth 3.12 3.12 4.28Russell 1000 Value 1.46 2.43 5.52Russell 2000 0.80 -3.11 -2.02Russell 2000 Growth 0.97 -4.22 -3.75Russell 2000 Value 0.63 -1.95 -0.21

S&P 500 Sectors May 14 QTD YTDConsumer Discretionary 2.88 1.49 -1.36Consumer Staples 1.88 4.85 5.38Energy 1.48 6.70 7.54Financials 1.44 -0.12 2.49Health Care 2.78 2.27 8.22Industrials 1.94 3.52 3.67Information Technology 3.78 4.08 6.45Materials 2.99 3.86 6.83Telecommunications Services 3.39 4.98 5.47Utilities -1.05 3.16 13.57

6

Return outlook higher than previous quarter Return outlook essentially unchanged Return outlook lower

Asset Allocation Committee: Market Views Market views based on 1-year outlook for each asset class

_______________________ Views expressed herein are generally those of Neuberger Berman’s Asset Allocation Committee and do not reflect the views of the firm as a whole. Neuberger Berman advisors and portfolio managers may make recommendations or take positions contrary to the views expressed. Nothing herein constitutes a prediction or projection of future events or future market behavior. Due to a variety of factors, actual events or market behavior may differ significantly from any views expressed. See Additional Disclosures at the end of this material, which are an important part of this presentation.

Asset Class

Change from

Previous Outlook Commentary

Fixed Income

Investment Grade Fixed Income Municipals U.S. Government Securities Investment Grade Corporates Agency MBS CMBS / ABS

U.S. TIPS High Yield Corporates Global Fixed Income Emerging Markets Fixed Income Equity

U.S. All Cap Core U.S. Large Cap U.S. Small Cap Master Limited Partnerships Developed Market - Non-US Equities Emerging Market Equities Public Real Estate Real and Alternative Assets

Commodities Low er Volatility Hedge Funds Macro Hedge Funds Private Equity

The Committee upgraded low er volatility hedge funds to a slightly overw eight position as they believe the asset class provides an attractive risk-adjusted return profile w ith many traditional asset classes trading at historic highs and fuller valuations.

The Committee's overall preference for equities remains intact although emerging markets equities w as dow ngraded to a view that is in line w ith the asset class equilibrium return. Earnings are beginning to stabilize in emerging markets and relative valuations compared to developed markets are compelling, but grow th has leveled off and headline risks related to China and Russia/Ukraine have returned. The Committee believes US and European equities offer a better risk-adjusted return profile.

Fixed income asset class view s w ere unchanged from a quarter ago. Although interest rates have declined since the beginning of the year and inflation has been muted, the Committee continues to f ind the best value in the municipal, high yield corporate and emerging markets f ixed income segments. Within emerging markets f ixed income, volatility may be likely in the near term, how ever the Committee believes the recent scaling back of EM grow th has largely been priced in and creditw orthiness and f iscal discipline remain supportive. Overall, the Committee has a preference for hard currency over local currency bonds.

Above Normal Return Outlook

Below Normal Return Outlook

Long-Term (10-Yr+) Annual Return Outlook

7

UNITED STATES

Ongoing Recovery

• Accelerating economic growth • Modest inflation • Rising corporate earnings • Improving housing and labor

markets • Ongoing Fed support as needed

Asset Allocation Considerations • Equities: EPS and PE expansion • Credit: Spread tightening • Sovereign Credit: Underweight • Currency: Positive

2014 Macroeconomic Outlook

______________________ Source: Neuberger Berman. As of March 31, 2014. This material is provided for informational purposes only. Nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a

security. Views expressed herein are generally those of Neuberger Berman’s Investment Strategy Group and do not reflect the views of the firm as a whole. Neuberger Berman advisors and portfolio managers may make recommendations or take positions contrary to the views expressed. See Additional Disclosures at the end of this material, which are an important part of this presentation.

EMERGING ASIA & LATAM

Soft Landing

• Bottoming of decline in growth • Fiscal and monetary reforms • Stabilizing domestic demand

Asset Allocation Considerations • Equities: EPS and PE expansion;

Asian equities • Credit: LatAm credit • Sovereign Credit: Possibility of

further price appreciation • Currency: Positive real interest rate

currencies attractive

JAPAN

Slight Improvement

• Soft domestic demand • Focus on Abenomics follow-

through • Weak Yen Asset Allocation Considerations • Equities: Neutral • Credit: Underweight • Sovereign Credit: Underweight • Currency: Neutral

EUROPE

Emerging from Recession

• Stabilizing domestic demand • Pockets of disinflation • Ongoing ECB support

Asset Allocation Considerations • Equities: Favor multinationals • Credit: Spread tightening • Sovereign Credit: Underweight • Currency: Negative

A more synchronized global economic recovery and less policy uncertainty

8

Despite Resilient Global Growth, Developed Market Growth Has Been Secularly Lower

______________________ Sources: Neuberger Berman, Bloomberg. Annual data 1992– 2015.

1.2013 and 2014 annual GDP growth rate is the median of all responses Bloomberg data services received from professional forecasters. Note: Actual GDP growth rate for 1992 to 2013 and estimated GDP growth rate for 2014 and 2015 used to construct above chart. Real GDP is the Nominal GDP adjusted for inflation. It reflects the current value of all of the goods

and services produced in a year. It may also be called “inflation-adjusted” or “constant dollar GDP” by market participants.

Actual Forecasts1

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

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United States Euro Area United Kingdom

9

30

35

40

45

50

55

60

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2005 2006 2007 2008 2009 2010 2011 2013 2014

China Manufacturing PMI Europe Manufacturing PMI U.S. Manufacturing PMI Europe Serv ices PMI China Non-Manufacturing PMI U.S. Non-Manufacturing PMI

Global Manufacturing Trends Point to Economic Expansion

______________________ Source: Bloomberg. Monthly data May 2005 – March 2014.

U.S., EUROPE AND CHINA PURCHASING MANAGERS’ INDICES

However, we believe there is room for expanded capacity utilization

10

GLOBAL PURCHASING MANAGERS’ INDEX (PMI) HEATMAP Mar-14 Feb-14 Dec-13 Sep-13 Mar-13

Global 52.7 52.6 53.5 52.8 49.8

U.S. 53.7 53.2 56.5 56.0 51.5

Canada 53.3 52.9 53.5 54.2 49.3

Japan 53.9 55.5 55.2 52.5 50.4

UK 55.3 56.2 56.9 56.4 49.9

Euro Area 53.0 53.2 52.7 51.1 46.8

France 52.1 49.7 47.0 49.8 44.0

Germany 53.7 54.8 54.3 51.1 49.0

Italy 52.4 52.3 53.3 50.8 44.5

Spain 52.8 52.5 50.8 50.7 44.2

Emerging Markets – 50.3 51.1 50.5 51.6

Brazil 50.6 50.4 50.5 49.9 51.8

Russia 48.3 48.5 48.8 49.4 50.8

India 51.3 52.5 50.7 49.6 52.0

China 48.0 48.5 50.5 50.2 51.7 Expanding ≥ 52 52 > Neutral ≥ 50 Contracting < 50

______________________ Sources: Markit, Haver and RBC Capital Markets.

Note: Global PMI is ISM weighted.

Positive Developed Markets Outlook

A reading under 50 indicates contraction while a reading above 50 indicates expansion

11

A Rising Rate Environment May be Positive for Equities – to an Extent

___________________________ Sources: Bloomberg, Neuberger Berman, RBC Capital Markets.

Note: S&P 500 PE ratio is the trailing 12- month price-to-earnings ratio for S&P 500 provided by Bloomberg. Monthly data 1/1962 – 2/2011. U.S. 10-Yr Bond Yield is the yield for generic on the run ten year U.S. government bond index.

RELATIONSHIP BETWEEN BOND YIELDS AND P/E MULTIPLES

2.21% , 14.9x

2.51% , 14.2x

2.60% , 14.7x

2.66% , 13.0x

09/30/1974: 7.94% , 7.7x 14.44% , 7.4x

14.67% , 8.8x

15.41% , 8.9x

15.84% , 7.9x

0.x

4.x

8.x

12 .x

16 .x

20 .x

24 .x

28 .x

32 .x

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U.S. 10-Yr Bond Yield (Monthly Data)

1999/2000 Technology bubble Period of High Inflation 9/30/1981: 15.84%, 7.9x PE 8/31/1981: 15.41%, 8.9x PE 7/31/1981: 14.67%, 8.8x PE 6/30/1982: 14.44%, 7.4x PE

Period of Low Inflation 12/31/2008: 2.21%, 14.9x PE 9/30/2010: 2.51%, 14.2x PE 10/29/2010: 2.60%, 14.7x PE 3/31/2009: 2.66%, 13.0x PE

12

The Fed Is Expected to Keep Policy Rate on Hold Until at Least Mid 2015

______________________ Sources: Bloomberg, Neuberger Berman.

1.As of 3/31/2014. For illustrative purposes only. 2.Monthly data 1/1980–3/2014.

Thus, the long-term upward pressure on U.S. 10-year yields may not be as great as people fear

FED FUNDS 30 DAYS FUTURES CURVES1

1%

3%

5%

7%

9%

11%

13%

15%

1982 1986 1990 1994 1998 2002 2006 2010 2014

10-Y

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ond

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10-YEAR U.S. SOVEREIGN BOND YIELD2

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0.50

1.00

1.50

2.00

Oct

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Dec

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Feb-

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Jun-

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Oct

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Dec

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Jun-

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Oct

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Dec

-16

Feb-

17

Dec-13 Jan-14 Feb-14 Mar-14

13

Fundamentals Remain Strong

_______________________ Source: J.P. Morgan.

1.J.P. Morgan Credit strategy weekly update 2.2013 new issue volume data as of February 2014.

Our view is constructive given robust corporate sector balance sheets, historically low default rates and relatively high real yield for the asset class

HIGH YIELDS NEW ISSUE VOLUMES1,2 HIGH YIELD BOND DEFAULTS (BASED ON PAR AMOUNT)2

0

100

200

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400

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

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2012

2014

($bn)

14

Constructive Outlook on U.S. Large Cap Equities Profit growth could drive returns going forward

_______________________ Source: FactSet.

Views expressed herein are generally those of Neuberger Berman’s Asset Allocation Committee and do not reflect the views of the firm as a whole. Neuberger Berman advisors and portfolio managers may make recommendations or take positions contrary to the views expressed. Nothing herein constitutes a prediction or projection of future events or future market behavior. Due to a variety of factors, actual events or market behavior may differ significantly

from any views expressed. See Additional Disclosures at the end of this material, which are an important part of this presentation.

Despite the strong run-up in equity markets last year, the Committee believes valuations continue to be fair, albeit closer to long-term historical levels. Profit growth is expected to be the main driver of equity returns in 2014 and expectations of accelerated U.S. economic growth and an improving Europe could all be supportive of U.S. equities.

S&P 500 P/E Ratio

15

The Long-Term Case for Emerging Markets Economies

EMERGING ECONOMIES AS % OF TOTAL WORLD

______________________ Sources: World Bank (Population as of 2010, EME Market Cap as of 2012), CIA World Factbook (FX reserves as of 2012), IMF World Economic Outlook (GDP at PPP as of 2012).

See Additional Disclosures at the end of this piece, which are an important part of this presentation.

Demographics and healthy balance sheets drive the potential for greater global stock market representation

15.0%

41.0%

49.6%

64.0%

75.1%

82.9%

85.0%

59.0%

51.4%

36.0%

24.9%

17.1%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Market Cap (Float Adjusted)

GDP at Market Rates

GDP at PPP

Foreign Ex change Reserv es

Land Mass

Population

Emerging Markets Dev eloped Markets

16

Growing Significance of Emerging Markets Consumption

15

20

25

30

35

40

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

(%)

U.S. EM

EM AND U.S. CONSUMPTION AS % OF GLOBAL CONSUMPTION1

0

5

10

15

20

25

Jan 2004 Jan 2005 Jan 2006 Jan 2007 Jan 2008 Jan 2009 Jan 2010

Millio

n

U.S. EU Japan BIC

VEHICLE SALES3 EM VS. DM RETAIL SALES2

-10

-5

0

5

10

15

Jun 2000 Dec 2001 Jun 2003 Dec 2004 Jun 2006 Dec 2007 Jun 2009

(%)

Developed Retail Sales Emerging Retail Sales

7.5

4.9

EM consumption has been growing at a faster pace compared to that of DM

______________________ 1. Source: J.P. Morgan.

2. Source: J.P. Morgan economics, January 2010. Dashed horizontal lines are the average 3m/3m saar growth since June 2000. 3. Source: J.P. Morgan, February 2010. Yellow line is the aggregate for Brazil, India and China. Note: The sales are annualized and are in million units.

See Additional Disclosures at the end of this presentation, which are an important part of this presentation.

17

05

101520253035

Dec-03

Mar-04

Jun-04

Sep-04Dec-04

Mar-05

Jun-05Sep-05

Dec-05M

ar-06

Jun-06

Sep-06Dec-06

Mar-07

Jun-07Sep-07

Dec-07M

ar-08

Jun-08

Sep-08Dec-08

Mar-09

Jun-09

Sep-09

Dec-09M

ar-10

Jun-10Sep-10

Dec-10

Mar-11

Jun-11

Sep-11

Dec-11M

ar-12

Jun-12Sep-12

Dec-12

Mar-13

Jun-13

Sep-13Dec-13

Mar-14

MSCI World MSCI Emerging Markets

0

5

10

15

20

25

Dec

-03

Mar

-04

Jun-

04

Sep-

04

Dec

-04

Mar

-05

Jun-

05

Sep-

05

Dec

-05

Mar

-06

Jun-

06

Sep-

06

Dec

-06

Mar

-07

Jun-

07

Sep-

07

Dec

-07

Mar

-08

Jun-

08

Sep-

08

Dec

-08

Mar

-09

Jun-

09

Sep-

09

Dec

-09

Mar

-10

Jun-

10

Sep-

10

Dec

-10

Mar

-11

Jun-

11

Sep-

11

Dec

-11

Mar

-12

Jun-

12

Sep-

12

Dec

-12

Mar

-13

Jun-

13

Sep-

13

Dec

-13

Mar

-14

MSCI World MSCI Emerging Markets______________________ Sources: MSCI, FactSet, RIMES. Any ratios or other measurements using a factor of forecasted earnings of a company discussed herein are based on consensus estimates, not Neuberger Berman's own estimates, and may not

be realized. In addition, any revision to a forecast could affect the market price of a security. Indexes are unmanaged and are not available for direct investment. Past performance is no guarantee of future results. See Additional Disclosures at the end of this presentation, which are an important part of this presentation.

1. Based on FY1 P/E estimates, as of March 31, 2014. 2. Based on 3–5 EPS growth rates, as of March 31, 2014.

FORWARD P/E1

Current Valuations Reflect Slower Earnings Growth

Emerging markets have maintained greater long-term growth prospects

%

11.65%

12.74%

FORWARD EPS GROWTH RATES2

15.43x

11.65x

18

ASSET ALLOCATION & IMPLEMENTATION REVIEW

Current Allocation

As of May 28, 2014

Manager / Asset ClassJP Morgan US Treasury Money Mkt Fund - VPIXZ 574,284$ 0.3% -$ 574,284 0.3%Total Cash 574,284$ 0.3% -$ 574,284$ 0.3%NB Fixed Income Structure Core 51,438,570 24.1% - 51,438,570 24.1%Total Investment Grade Fixed Income 51,438,570 24.1% - 51,438,570 24.1%NB Floating Rate Income Fund - NFIIX 7,609,785 3.6% - 7,609,785 3.6%NB High Income Bond Fund - NHILX 10,621,643 5.0% - 10,621,643 5.0%Total High Yield Fixed Income 18,231,428 8.5% - 18,231,428 8.5%

Dreyfus EM Debt Fund - DDBIX 8,611,748 4.0% - 8,611,748 4.0%Total Non-US Fixed Income 8,611,748 4.0% - 8,611,748 4.0%Total Fixed Income 78,281,746$ 36.7% -$ 78,281,746$ 36.7%NB Large Cap Disciplined Growth 10,394,542 4.9% - 10,394,542 4.9%NB Large Cap Value 25,133,749 11.8% - 25,133,749 11.8%NB Socially Responsible Investing Group 23,415,345 11.0% - 23,415,345 11.0%Total U.S. Large Cap 58,943,636 27.6% - 58,943,636 27.6%NB Genesis Fund - NBGIX 9,552,451 4.5% - 9,552,451 4.5%Pinnacle Associates Small Cap Growth 9,585,814 4.5% - 9,585,814 4.5%Total U.S. Small & Mid Cap 19,138,265 9.0% - 19,138,265 9.0%Harding Loevner International Equity ADR 14,214,553 6.7% - 14,214,553 6.7%NB International Fund - NBIIX 15,866,222 7.4% - 15,866,222 7.4%Total Developed Equities 30,080,775 14.1% - 30,080,775 14.1%NB Emerging Markets Fund - NEMIX 9,735,482 4.6% - 9,735,482 4.6%Total Emerging Equities 9,735,482 4.6% - 9,735,482 4.6%NB REITs 8,355,915 3.9% - 8,355,915 3.9%Total Public Real Estate 8,355,915 3.9% - 8,355,915 3.9%Total Equities 126,254,073$ 59.2% -$ 126,254,073$ 59.2%NB Absolute Return Multi-Manager Fund - NABIX 8,079,720 3.8% - 8,079,720 3.8%Total Low Vol Hedge Funds 8,079,720 3.8% - 8,079,720 3.8%Total Hedge Funds 8,079,720$ 3.8% -$ 8,079,720$ 3.8%NB Secondary Opportunities Fund 116,324 0.1% - 116,324 0.1%Total Private Equity 116,324 0.1% - 116,324 0.1%Total Private Equity 116,324$ 0.1% -$ 116,324$ 0.1%Total Portfolio 213,306,147$ 100.0% -$ 213,306,147$ 100.0%

Market Value as of 5/28/2014 % Of Proposed Change Proposed Value % Of


Investment Policy Statement

As of May 28, 2014

Minimum Long-Term Target Maximum Proposed Current

Cash & Fixed Income 25.0% 38.0% 55.0% 37.0% 37.0%

Cash & Equivalents 0.0% 0.0% 10.0% 0.3% 0.3%

Investment Grade Fixed Income 15.0% 30.0% 45.0% 24.1% 24.1%

High Yield Corporates 0.0% 5.0% 10.0% 8.5% 8.5%

Non-U.S. Fixed Income 0.0% 3.0% 10.0% 4.0% 4.0%

Equities 30.0% 47.0% 60.0% 59.2% 59.2%

U.S. Large Cap 5.0% 21.0% 35.0% 27.6% 27.6%

U.S. SMID Cap 0.0% 7.0% 15.0% 9.0% 9.0%

Master Limited Partnerships 0.0% 0.0% 10.0% 0.0% 0.0%

Developed International Equities* 0.0% 10.0% 20.0% 14.1% 14.1%

Emerging Market Equities* 0.0% 5.0% 10.0% 4.6% 4.6%

Public Real Estate 0.0% 4.0% 10.0% 3.9% 3.9%

Real & Alternative Assets 5.0% 15.0% 30.0% 3.8% 3.8%

Commodities 0.0% 3.0% 10.0% 0.0% 0.0%

Hedge Funds 0.0% 6.0% 15.0% 3.8% 3.8%

Private Equity 0.0% 6.0% 15.0% 0.1% 0.1%

* The combined maximum allocation to Developed International Equities and Emerging Market Equities is 22.5%.


FOSSIL FUEL DIVESTMENT

Fossil Fuel Divestment – Context and Framework

___________________________ Sources: Carbon Tracker, Unburnable Carbon (March 2012). The Fossil Free campaign. http://gofossilfree.org/about/. McKibben, Bill. Global Warming’s Terrifying New Math. Rolling Stone Magazine (July 19, 2012). This material is intended as a broad overview of the Portfolio Manager’s style, philosophy and investment process and is subject to change without notice. Portfolio Manager’s views may differ from those of other Portfolio Managers as well as the views of Neuberger Berman LLC. Of course, all accounts are managed based upon each client’s needs and objectives.

Carbon Tracker’s Unburnable Carbon report states coal and oil company reserves exceed the world’s ‘carbon budget’ by a factor of five: − to stay within a 2°C scenario, the world ‘carbon budget’ cannot exceed emitting 886 GtCO2 into the atmosphere, leaving room to burn only

565 more GtCO2 to 2050 − proven reserves of fossil fuel producing companies total 2,860 GtCO2 (five times more than the allowable ‘carbon budget’) − only 20% can be burned, therefore, 80% is ‘unburnable carbon’ and companies may find themselves with ‘stranded assets’

Coal, oil and gas reserves exceed the world’s carbon budget of 565 Gt CO2

21

http://gofossilfree.org/about/

Fossil Fuel Companies Targeted for Divestment Represent Just 12% of Global Equities

___________________________ Source: Standard & Poor’s, Carbon Tracker. Based on S&P Global BMI index as of 16 April 2014 measuring 10,531 companies totaling appr. $57 trillion in market capitalization. This material is intended as a broad overview of the Portfolio Manager’s style, philosophy and investment process and is subject to change without notice. Portfolio Manager’s views may differ from those of other Portfolio Managers as well as the views of Neuberger Berman LLC. Of course, all accounts are managed based upon each client’s needs and objectives.

Divestment campaign omits 88% of market cap, including other energy-intensive industries

S&P Global BMI by Market Cap (as of 4/16/2014) • Hydrocarbon producers represent Approximately 12% of global equity market • Narrow focus on hydrocarbon producers ignores impact associated with the

other 88% of global equity market

The other 88%

22

Energy Consuming Industries are Significant Sources of C02 Emissions More than 80% of emissions disclosed to CDP are from hydrocarbon consuming industries

___________________________ Source: Carbon Disclosure Project (CDP) 2013. This material is intended as a broad overview of the Portfolio Manager’s style, philosophy and investment process and is subject to change without notice. Portfolio Manager’s views may differ from those of other Portfolio Managers as well as the views of Neuberger Berman LLC. Of course, all accounts are managed based upon each client’s needs and objectives.

23

State Ownership of Fossil Fuel Reserves are Not Addressed by Divestment 77% of oil and gas production from state-owned oil companies in 2013

0 2 4 6 8 10 12 14

Saudi AramcoGazprom

National Iranian Oil CompanyExxonMobil

RosneftRoyal Dutch Shell

PetroChinaPemex

ChevronKuwait Petroleum

BPTotal

PetrobrasQatar Petroleum

Abu Dhabi National Oil CompanyLukoil

Iraqi Oil MinistrySonatrach (Algeria)

PDVSA (Venezuela)Statoil (Norway)

million barrels of oil and natural gas equivalents per day

Top 20 public companies account for 67% of Carbon Tracker Top 200, but only 23% of global oil/gas production

___________________________ Sources: Forbes, Wood Mackenzie. Carbon Tracker. This material is intended as a broad overview of the Portfolio Manager’s style, philosophy and investment process and is subject to change without notice. Portfolio Manager’s views may differ from those of other Portfolio Managers as well as the views of Neuberger Berman LLC. Of course, all accounts are managed based upon each client’s needs and objectives.

24

Sources: U.S. Energy Information Administration (EIA) Annual Energy Review 2012, EPA 2012 US Greenhouse Gas Inventory Report, U.S. Census Bureau (2012). This material is intended as a broad overview of the Portfolio Managers’ style, philosophy and process and is subject to change without notice. Portfolio Managers’ views may differ from those of other Portfolio Managers as well as the views of Neuberger Berman LLC. See Additional Disclosures at the end of this piece which are an important part of this presentation.

Efficiency investments and fuel mix can have real benefits today

Energy use/GDP

C02 Emissions/GDP

Per Capita Energy Consumption

Natural Gas and Renewables Consumption Surpasses Coal

Forecasted C02 Reductions Driven by Energy Efficiency Gains, Cleaner Energy Mix

25

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00Energy sector and long term performance

S&P Energy S&P 500

-12.00%-10.00%-8.00%-6.00%-4.00%-2.00%0.00%2.00%4.00%6.00%8.00%

S&P 500 vs S&P 500 ex-Energy SectorRolling 5 Year Relative Returns

Fossil fuel divestment – Fiduciary Perspectives

When examining energy sector returns, we have found that results vary by time horizon and by changes in oil price • Energy Sector returns follow oil prices • Energy Sector has materially outperformed since 2000 • Energy Sector relative performance has persistence • Energy Sector contribution to returns greater today with Energy at

+12% of market capitalization vs 5% 15 years ago • Absence of direct Energy exposure may expose a portfolio to

unhedgable exogenous risk from geopolitical events

Investment Considerations of Divestment Strategy

___________________________ Sources: Standard & Poor’s, Bloomberg, Factset This material is intended as a broad overview of the Portfolio Manager’s style, philosophy and investment process and is subject to change without notice. Portfolio Manager’s views may differ from those of other Portfolio Managers as well as the views of Neuberger Berman LLC. Of course, all accounts are managed based upon each client’s needs and objectives.

Energy Sector grew from 5% to 12% of the index across this sample period

Oil price vs S&P 500 Energy Relative Performance Energy Sector Performance is Correlated to the Commodity Price

Oil price peak

Performance effects have persistence

Energy Outperforms

Energy Underperforms

26

Studies by research consultants and asset managers have attempted to measure the impact to portfolio risk using − 1) US and Global equity benchmarks, − 2) different time periods, and − 3) different measures of risk

The increased portfolio risk of simply excluding the Energy sector, all else remaining equal, has been found to increase tracking error by 14-160 basis points across varying timeframes and benchmarks

___________________________ Sources: Standard & Poor’s. External studies include: Aperio Group, Cambridge Associates LLC, Impax Asset Management, MSCI ESG Research, NorthStar Asset Management.

Summary of various studies

Fossil Free portfolio vs. benchmark

Annual Return

(0.4) - 0.5 %

Standard Deviation

(0.6) - 0.4 %

Tracking Error

.14 - 1.60

“It would be almost impossible for a mainstream asset manager… to reduce her/his weighting to fossil fuel assets compared to the global average without seriously questioning the market risk this would involve given the way that risk is measured in terms of beta.” Source: Carbon Tracker, Unburnable Carbon (March 2012).

Current investment assessments lack robustness

Fossil Fuel Divestment – Fiduciary Perspectives

Factors to consider: 1. Upon implementation, does the investment approach being

considered promote a result consistent with the end goals of the organization (ie promoting CO2 reductions)?

2. How is the investment manager integrating relevant ESG analysis into company due diligence?

3. How might changes in investment policy impact the return profile of the plan’s investible assets?

27

APPENDICES

Statistic Definition of Statistic Alpha Represents the historical return from an asset, based on factors unrelated to the underlying factors affecting the market. As such,

alpha is a measure of the return for asset specific (or residual) risk. Alpha is used as measure of a manager’s contribution to performance due to security or sector selection. A positive (negative) alpha indicates that a portfolio was positively (negatively) rewarded for the residual risk taken for a given level of market exposure. If the market excess return is 2% and the portfolio beta is 1.1, then the manager would have to have an excess return greater than 2.2% for the manager to have contributed to the performance above and beyond the performance of the market.

Beta A statistical measure of the systematic risk of a security or portfolio. Beta measures the historical sensitivity of portfolio or security excess returns to movement in the excess return of the market index. The value for beta is expressed as a percentage of the market where the market beta is 1.0. A security or portfolio with a beta above the market has volatility greater than the market. If the beta of a security was 1.3, a 1 percent return in the market resulted, on average, in a 1.3 percent return in the security. A security or portfolio with beta below the market has lower volatility than the market and the return on the security will move less than the market return. If the beta of the security was .9, a 1 percent return in the market would typically result in a .9 percent return in the security.

Down Market Capture A statistical measure of an investment manager’s overall performance in down-markets. The down-market capture ratio is used to evaluate how well or poorly an investment manager performed relative to an index during periods when that index has dropped. The ratio is calculated by dividing the manager’s returns by the returns of the index for all return periods in a selected time window where the index return was negative, and multiplying that factor by 100. An investment manager who has a down-market ratio less than 100 has outperformed the index during the down-market. For example, a manager with a down-market capture ratio of 80 indicates that the manager's portfolio declined only 80% as much as the index during the period in question.

Information Ratio A ratio of portfolio returns above the returns of a benchmark to the volatility of those returns. The information ratio measures a portfolio manager’s ability to generate excess returns relative to a benchmark, but also attempts to identify the consistency of the investor. This ratio will identify if a manager has beaten the benchmark by a lot in a few months or a little every month. The higher the IR the more consistent a manager is and consistency is an ideal trait. [(Return of the portfolio – Return of the index or benchmark)/Tracking error]

Maximum 12-Month Drawdown The percentage loss that an investment incurs from its peak value to its lowest value. In this presentation we focus on twelve consecutive months. The maximum drawdown over a significant period is sometimes employed as a means of measuring the risk of a vehicle. Usually expressed as a percentage decline in value.

R-Squared R-Squared is a statistical measure that indicates the extent to which the variability of a security or portfolio’s returns is explained by the variability of the market. The value will be between 0 and 1. The higher the number, the greater the extent to which portfolio returns are related to the market return. An R-Squared value of .75 indicates that 75% of the fluctuation in a portfolio’s return is explained by market action. An R-Squared of 1.0 indicates that portfolio returns are entirely related to the market and are not influenced by other factors. An R-Squared of 0 indicates that no relationship exists between the portfolio’s returns and the market return.

Technical Statistics And Definitions

28

Statistic Definition of Statistic Sharpe Ratio A measure of the risk-adjusted return of a portfolio. The ratio represents the return gained per unit of risk taken. The Sharpe ratio can

be used to compare the performance of managers. Managers with the same excess return for a period but different levels of risk will have Sharpe ratios that reflect the difference in the level of risk. The performance of the manager with the lower Sharpe ratio would be interpreted as exhibiting comparatively more risk for the desired return compared to the other manager. If the two managers had the same level of risk but different levels of excess return, the manager with the higher Sharpe ratio would be preferable because the manager achieved a higher return with the same level of risk as the other manager. The Sharpe ratio is most helpful when comparing managers with both different returns and different levels of risk. In this case, the Sharpe ratio provides a per-unit measure of the two managers that enables a comparison. The ratio is equal to the excess return divided by the Standard Deviation of the portfolio.

Standard Deviation A statistical measure that indicates the width of a distribution around the mean. Standard Deviation, which is the square root of variance, measures the variability of a portfolio’s returns over a period of time. A higher Standard Deviation implies a riskier portfolio whose returns varied widely. If the Standard Deviation for Portfolio A and Portfolio B were 8% and 4%, respectively, then Portfolio A has experienced twice as much variability as Portfolio B. Standard Deviation is usually associated with a “normal distribution” or bell shaped curve. The curve is symmetrically centered on its mean with 68% (approximately two thirds) of the area underneath the curve lying within 1 Standard Deviation of the mean, and 95% lying within 2 Standard Deviations. For example, if we have a mean return of 10% and a Standard Deviation of 15% we know that the chances that the realized return will be between -5% and +25% are 68%. The probability that the returns will be in the range of –20% and +40% are 95%.

Tracking Error Tracking Error is the standard deviation of a portfolio’s relative returns to a benchmark. Whereas the standard risk measure of Standard Deviation measures the absolute return volatility, tracking error measures the volatility of the return differences between the portfolio and the benchmark over time. A portfolio that is actively managed in an aggressive manner would have a large amount of tracking error versus its index, whereas a portfolio that is more constrained to look like its index would have smaller amounts of tracking error.

Up Market Capture A statistical measure of an investment manager’s overall performance in up-markets. The up-market capture ratio is used to evaluate how well an investment manager performed relative to an index during periods when that index has risen. The ratio is calculated by dividing the manager’s returns by the returns of the index for all return periods in a selected time window where the index return was positive, and multiplying that factor by 100. An investment manager who has an up-market ratio greater than 100 has outperformed the index during the up-market. For example, a manager with an up-market capture ratio of 120 indicates that the manager outperformed the market by 20% during the positive return periods in the specified time window.

Technical Statistics And Definitions

Continued

29

Asset Class Benchmarks and Definitions

Asset Class Benchmark Definition of Benchmark

Cash Citigroup 3-month T-bill Index

The Citigroup 3-month T-bill Index measures monthly return equivalents of yield averages that are not marked to market. The index consists of the last three three-month Treasury bill issues.

Investment Grade Taxable Fixed Income

Barclays Capital U.S. Aggregate

The Barclays Capital U.S. Aggregate Index represents securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities. These major sectors are subdivided into more specific indices that are calculated and reported on a regular basis. Index rules: Must have at least one year to final maturity regardless of call features. Must have at least $250 million par amount outstanding. Asset-backed securities must have at least $500 million deal size and $25 million tranche size. For commercial mortgage-backed securities, the original transaction must have a minimum deal size of $500 million, and a minimum tranche size of $25 million; the current outstanding transaction size must be at least $300 million to remain in the index. Must be rated investment-grade (Baa3/BBB- or higher) by at least two of the following ratings agencies: Moody's, S&P, Fitch. If only two of the three agencies rate the security, the lower rating is used to determine index eligibility. If only one of the three agencies rates a security, the rating must be investment-grade. Must be fixed rate, although it can carry a coupon that steps up or changes according to a predetermined schedule. • Must be dollar-denominated and non-convertible. Must be publicly issued. However, 144A securities with Registration Rights and Reg-S issues are included.

U.S. Government/Agency

Barclays Capital U.S. Government

The U.S. Government Index is comprised of the U.S. Treasury and U.S. Agency Indices. The index includes Treasuries (public obligations of the U.S. Treasury that have remaining maturities of more than one year) and U.S. agency debentures (publicly issued debt of U.S. Government agencies, quasi-federal corporations, and corporate or foreign debt guaranteed by the U.S. Government). The index is a component of the U.S. Government/Credit Index and the U.S. Aggregate Index.

Investment Grade Corporates

Barclays Capital U.S. Corporate

The U.S. Corporate Index measures the investment grade, fixed-rate, taxable corporate bond market. It includes USD-denominated securities publicly issued by U.S. and non-U.S. industrial, utility and financial issuers that meet specified maturity, liquidity and quality requirements. Securities in the index roll up to the U.S. Credit and U.S. Aggregate Indices. The U.S. Corporate Index was launched on January 1, 1973.

Agency MBS Barclays Capital U.S. MBS

The U.S. Mortgage Backed Securities (MBS) Index covers agency mortgage-backed passthrough securities (both fixed-rate and hybrid ARM) issued by Ginnie Mae (GNMA), Fannie Mae (FNMA), and Freddie Mac (FHLMC). Introduced in 1986, the GNMA, FHLMC, and FNMA fixed-rate indices for 30- and 15- year securities were backdated to January 1976, May 1977, and November 1982, respectively. Balloon securities were added in 1992 and removed on January 1, 2008. 20-year securities were added in July 2000. On April 1, 2007, agency hybrid adjustable-rate mortgage (ARM) passthrough securities were added to the U.S. MBS Index. Hybrid ARMs are eligible until 1 year prior to their floating coupon date.

Securitized ABS/CMBS

Barclays Capital ABS + CMBS

The ABS + CMBS Index is a custom index including the investment grade ABS and CMBS components of the U.S. Aggregate index. Securities must be rated investment-grade by at least two of the following ratings agencies: Moody's, S&P, Fitch. If only two of the three agencies rate the security, the lower rating is used to determine index eligibility. If only one of the three agencies rates a security, the rating must be investment-grade. Securities must be ERISA eligible under the underwriter’s exemption. 144A securities are not included. The ABS index includes pass-through, bullet, and controlled amortization structures. The ABS index includes only the senior class of each ABS issue and the ERISA-eligible B and C tranche. Inherited Rules: must have an average life of at least one year, must have at least $500 million deal size and $25 million tranche size. Must be fixed rate, must be the senior class, ERISA-eligible B or C tranche of the deal. Must belong to one of the following categories of asset-backed securities: Credit Card and Charge Card, Auto Loan, Utility or must be issued from an eligible issuer as determined by Barclays Capital based on pricing availability.

30



High Yield Corporates Barclays Capital U.S. Corporate High-Yield Bond

The U.S. Corporate High-Yield Bond Index covers the USD-denominated, non-investment grade, fixed-rate, taxable corporate bond market. Securities are classified as high-yield if the middle rating of Moody’s Fitch, and S&P is Ba1/BB+/BB+ or below. The index excludes Emerging Markets debt. The index was created in 1986, with index history backfilled to January 1, 1983. The U.S> Corporate High-Yield Index is part of the U.S. Universal and Global High-Yield Indices.

Municipal Bonds Barclays Capital Municipal Bond

The U.S. Municipal Index covers the USD-denominated long term tax exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds, and prerefunded bonds. Many of the indices have historical data to January 1980. In addition, several subindices based on maturity and revenue source have been created, some with inception dates after January 1980 but no later than July 1, 1993. In January 1996, Barclays Capital also began publishing a non-investment grade municipal bond index and "enhanced" state-specific indices for Arizona, Connecticut, Maryland, Massachusetts, Minnesota and Ohio. These indices are published separately from the Barclays Capital Municipal Bond Index.

U.S. TIPS Barclays Capital U.S. Treasury Inflation Protected Securities (TIPS)

The U.S. Treasury Inflation-Protected Securities (TIPS) Index (Series-L) is a rules-based, market value-weighted index that tracks inflation protected securities issued by the U.S. Treasury. The index is a subset of the Global Inflation-Linked Index (Series-L), with a 36.4 market value weight in that index (as of December 31, 2009), but is not eligible for other nominal Treasury or Aggregate indices. To prevent the erosion of purchasing power, TIPS are indexed to the non-seasonally adjusted Consumer Price Index for All Urban Consumers, or the CPI-U (CPI).

Non-U.S. Investment Grade Fixed Income

Barclays Capital Global Aggregate x USD

The Global Aggregate ex-U.S. Index is a subindex of the Global Aggregate Bond Index, which contains the U.S. Aggregate, the Pan-European Aggregate and the Asian-Pacific Aggregate Indices. The index also includes Eurodollar and Euro-Yen corporate bonds, Canadian government and agency and corporate securities. Constituents must have a remaining maturity of at least one year. Mortgages and asset-backed securities must have a remaining average life of at least one year. Securities must be fixed rate, although zero coupon bonds and step-ups are permitted. Exclusions: Convertibles, floating-rate notes, fixed-rate perpetuals, warrants, linked bonds, and structured products, debt denominated in Swiss Francs and privately placed Japanese Government Bonds.

U.S. All Cap Core Russell 3000

The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies, representing approximately 98% of the investable U.S. equity market. As of the latest reconstitution, the weighted average market capitalization was approximately $58.2 billion; the median market capitalization was approximately $589 million. The index had a total market capitalization range from approximately $78 million to $338 billion.

U.S. Large Cap Russell 1000

The Russell 1000 Index measures the performance of the 1,000 largest companies in the Russell 3000® Index, which represents approximately 92% of the total market capitalization of the Russell 3000 Index. As of the latest reconstitution, the weighted average market capitalization was approximately $62.8 billion; the median market capitalization was approximately $3.4 billion. The smallest company in the index had an approximate market capitalization of $829 million.

Continued

31



U.S. Large Cap Growth Russell 1000 Growth

The Russell 1000 Growth Index measures the performance of those Russell 1000® companies with higher price-to-book ratios and higher forecasted growth values.

U.S. Large Cap Value Russell 1000 Value The Russell 1000 Value Index measures the performance of those Russell 1000® companies with lower price-to-book ratios and lower forecasted growth values.

U.S. Small Cap Russell 2000

The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index, which represents approximately 8% of the total market capitalization of the Russell 3000 Index. As of the latest reconstitution, the weighted average market capitalization was approximately $732 million; the median market capitalization was approximately $306 million. The largest company in the index had an approximate market capitalization of $1.7 billion and the smallest of $78 million.

U.S. Small Cap Growth Russell 2000 Growth The Russell 2000 Growth Index measures the performance of those Russell 2000® companies with higher price-to-book ratios and

higher forecasted growth values.

U.S. Small Cap Value Russell 2000 Value The Russell 2000 Value Index measures the performance of those Russell 2000® companies with lower price-to-book ratios and lower forecasted growth values.

Master Limited Partnerships Alerian MLP

The Alerian MLP Index is a market-cap weighted, float-adjusted index created to provide a comprehensive benchmark for investors to track the performance of the energy MLP sector. The index components are selected by Alerian Capital Management, LLC (“Alerian”). Alerian is a registered investment advisor that exclusively manages portfolios focused on midstream energy MLPs.

Developed International Equities

MSCI EAFE – Net Return

The MSCI EAFE Index is a free float-adjusted market capitalization index that is designed to measure developed market equity performance, excluding the US & Canada. As of June 2006 the MSCI EAFE Index consisted of the following 21 developed market country indices: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the United Kingdom.

Continued

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Emerging Market Equities

MSCI Emerging Markets – Net Return

The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets. As of June 2006 the index consisted of the following 25 emerging market country indices: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Jordan, Korea, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

Public Real Estate FTSE NAREIT REIT

The FTSE NAREIT REIT Index measures the performance of all publicly traded equity real estate investment trusts traded on U.S. exchanges. NAREIT is the National Association of Real Estate Investment Trusts®. It is the trade association for REITs and publicly traded real estate companies with an interest in the U.S. property and investment markets. Members are REITs and listed companies that own, operate and finance in-come-producing real estate, as well as those firms and individuals who advise, study and service these businesses. NAREIT’s responsibilities include industry representation before policymakers affecting the REIT and publicly traded real estate community and outreach to the investment community.

Commodities Dow Jones-UBS Commodity

The Dow Jones-UBS Commodity Index is composed of futures contracts on physical commodities. The index is composed of commodities traded on U.S. exchanges, with the exception of aluminum, nickel and zinc, which trade on the London Metal Exchange (LME). The index is designed to be a highly liquid and diversified benchmark for commodities investments. To ensure that no single commodity or commodity sector dominates the index, the index relies on several diversification rules. Among these rules are the following: no related group of commodities (eg., energy, precious metals, livestock or grains) may constitute more than 33% of the index. Also, no single commodity may constitute less than 2% of the index. The diversification rules are applied annually when the index is reweighted and rebalanced on a price-percentage basis.

Conservative Hedge Funds HFRI FOF Conservative

The HFRI FOF Conservative Index includes Fund-of-Funds (FOFs) classified as 'Conservative' which exhibit one or more of the following characteristics: seeks consistent returns by primarily investing in funds that generally engage in more 'conservative' strategies such as Equity Market Neutral, Fixed Income Arbitrage, and Convertible Arbitrage; exhibits a lower historical annual standard deviation than the HFRI Fund of Funds Composite Index. A fund in the HFRI FOF Conservative Index shows generally consistent performance regardless of market conditions.

Private Equity ThomsonOne Private Equity

The ThomsonOne Private Equity Index is a capitalization-weighted composite IRR of the buyout, venture, and special situations fund performances reported to Thomson; all historical IRRs are subject to, and regularly undergo, revision.

Continued

33

Additional Disclosures

Asset Class Universe: The asset classes are selected to represent the universe of normally available investments. They are not inclusive of all investments available to an investor and not all asset classes will be available to each investor. Each asset class is represented by a benchmark index, these are listed and described on the “Index Definitions” section on the following pages.

Asset Class Inputs: The asset class inputs are revised each quarter by the Neuberger Berman Investment Committee or more frequently if required by changing economic conditions. These inputs are hypothetical in nature and are not based on actual returns earned by any account, index or asset. These inputs are forward-looking and are subject to periodic revision.

Portfolio Hypothetical Return: Hypothetical return for the portfolio is the weighted average of the hypothetical returns of the asset classes used in the portfolio as shown on page three. It is determined by the given portfolio asset class weights and the hypothetical returns from the asset class inputs. After-tax hypothetical return reflects the impact of capital gains and income taxes at the rates given by the client. No effort is made to forecast future income tax rates or tax policy changes. Portfolio Hypothetical Standard Deviation: Standard deviation is a measure of risk that considers the dispersion of returns. Hypothetical expected standard deviation of the component asset classes is shown on page three. Hypothetical expected standard deviation of the portfolio is determined by the weights of the portfolio mix, the standard deviations of the individual asset classes shown on page three, and correlations of the assets calculated by historic correlations of the benchmark indices described on the “Index Definitions” section on the following pages. Post-tax standard deviation considers the effect of the given capital gains tax rate on portfolio standard deviation.

Portfolio Hypothetical Yield: Portfolio yield is the weighted average of the hypothetical yields of the asset classes used in the portfolio as shown on page three. Post-tax hypothetical yield considers the impact of the given client income tax rate on the yield of the account.

Estimated Annual Portfolio Turnover: Turnover represents the proportion of the portfolio that is assumed to be sold each year for purposes of estimating the Capital Gains Tax. This figure is provided by the Wealth Advisor. For example, if the turnover percentage is 20%, then one-fifth of the portfolio is turned over each year, resulting in capital gains exposure. A 20% turnover rate implies a five-year holding period for the portfolio to turn over 100%.

Monte Carlo Simulation: The Monte Carlo simulation engine is provided by Neuberger Berman. The simulation process generates 500 possible returns for each asset class for each time horizon of the simulation. Returns are randomly selected from a lognormal distribution based on asset class inputs. The simulation considers given cash flows and tax rates and generates wealth levels at each given time horizon and probability percentile. Because of the random element of return generation, results may not be exactly equal when re-running the simulation with the same inputs.

RESULTS OF THIS SIMULATION MAY VARY WITH EACH USE AND OVER TIME

Criteria and Methodology

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Additional Disclosures (continued)

This material is provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. Before acting on any information furnished in this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek legal, tax or other professional advice. Information is obtained from sources deemed reliable, but there is no representation or warranty as to its accuracy, completeness or reliability. All information is current as of the date of this material and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Neuberger Berman products and services may not be available in all jurisdictions or to all client types. Investing entails risks, including possible loss of principal. Investments in hedge funds and private equity are speculative and involve a higher degree of risk than more traditional investments. Investments in hedge funds and private equity are intended for sophisticated investors only. Indexes are unmanaged and are not available for direct investment. Past performance is no guarantee of future results. All information as of the date indicated, except as otherwise noted. Firm data, including employee and assets under management figures, reflect collective data for the various affiliated investment advisers that are subsidiaries of Neuberger Berman Group LLC (the “firm”). Firm history/timeline information dates back to the 1939 founding of Neuberger & Berman (the predecessor to Neuberger Berman LLC). Investment professionals referenced include: Equity portfolio managers, research analysts/associates, traders, and product specialists; Fixed Income portfolio managers, research analysts/associates, traders, team dedicated economists/strategists and investment support (product specialists, portfolio analysts, and trading support); Alternatives investment professionals who are involved in the decisions concerning asset allocation, investment monitoring and making new investments (includes two consultants). Average years experience does not include Equity product specialists or Fixed Income investment support. Equity and Fixed Income AUM Benchmark Outperformance Note: For the period ending March 31, 2014, the percentage of total firm equity and fixed income Assets Under Management (“AUM”) that outperformed the benchmark on 10-yr; 5-yr and 3-yr basis was as follows: Total Equity and Fixed Income AUM: 10-year: 86%; 5-year: 42%; and 3-year: 36%; Total Equity AUM: 10-year: 93% [no change]; 5-year: 39%; and 3-year: 23%; and Total Fixed Income AUM: 10-year: 75%; 5-year: 48%; and 3-year: 59%. Firm equity and fixed income Assets Under Management (“AUM”) outperformance figures are based upon the aggregate assets for all Neuberger Berman LLC and Neuberger Berman Fixed Income LLC traditional equity and fixed income strategies that are included in the firm’s institutional separate account (“ISA”), managed account/wrap (“MAG”) and private asset management/high net worth (“PAM”) composites. The results are based on the overall performance of each individual investment strategy against its respective strategy benchmark, and results are asset weighted so strategies with the largest amount of assets under management have the largest impact on the results. As of 3/31/2014, eight equity teams/strategies accounted for approximately 50% [no change] of the total firm equity (PAM, ISA and MAG combined) assets reflected, and eight strategies accounted for approximately 60% of the total firm fixed income (PAM, ISA and MAG combined) assets reflected. The performance of the individual PAM equity teams/strategies is generally shown as a supplemental exhibit to the PAM Equity Composite. The respective ISA, MAG and PAM composite reports, as well as the PAM Management Team supplemental performance exhibits are available upon request. Individual strategies may have experienced negative performance during certain periods of time. Hedge fund, private equity and other private investment vehicle assets are not reflected in the AUM and product outperformance results shown. AUM outperformance for ISA, PAM and MAG strategies is based on gross of fee returns. Gross of fee returns do not reflect the deduction of investment advisory fees and other expenses. If such fees and expenses were reflected, AUM outperformance results would be lower. Investing entails risk, including possible loss of principal. Past performance is no guarantee of future results. Private Equity Outperformance Note: The performance information includes all funds, both commingled and custom, managed by NB Alternatives Advisers LLC with vintage years of 2000 – 2010, with the exception of a closed-end, public investment company registered under the laws of Guernsey. Percentages are asset-weighted, calculated as the total invested capital of the funds whose performance exceeds their respective benchmarks divided by the total invested capital of all funds with vintage years of 2000 through 2010. The Cambridge Secondary Index was used for secondary-focused funds, the Thomson Reuters Buyout Benchmark was used for co-investment focused funds and the Cambridge Fund of Funds Index was used for commingled fund of funds and NB custom fund of fund portfolios. Selection Criteria for Case Studies Referenced in This Presentation: The case studies in the presentation were selected because they are among the firm's largest strategic partnerships, representative across asset classes, and represent customized multi-strategy portfolios. All investments within the asset allocation represent products offered by Neuberger Berman, including investment advisory mandates for the various affiliated investment advisers that are wholly owned subsidiaries of Neuberger Berman Group LLC. The case studies were not selected based on performance. The mandates included may reflect client investment guidelines or restrictions. Other multi-strategy accounts will vary as investment objectives, tax considerations and other factors may vary from account to account. It is not known whether the referenced clients approve or disapprove of any investment adviser for such mandates or any of the investment advisory products and services provided CIO outsourcing, tax planning, and trust and estate administration services offered by Neuberger Berman Trust Company. “Neuberger Berman Trust Company” is a trade name used by Neuberger Berman Trust Company N.A. and Neuberger Berman Trust Company of Delaware N.A., which are affiliates of Neuberger Berman Group LLC. Affiliated investment products and services are available through the various investment advisers that are subsidiaries of Neuberger Berman Group LLC. Neuberger Berman Fixed Income LLC is a Registered Investment Advisor and affiliate of Neuberger Berman LLC, which is a Registered Investment Advisor and Broker-Dealer and member of FINRA/SIPC. The “Neuberger Berman” name and logo are registered service marks of Neuberger Berman Group LLC. ©2014 Neuberger Berman Group LLC. All rights reserved.

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Disclosures

THIS INFORMATION IS NOT INTENDED TO ADDRESS EVERY SITUATION, NOR IS IT INTENDED AS A SUBSTITUTE FOR LEGAL, ACCOUNTING OR FINANCIAL COUNSEL OF YOUR PROFESSIONAL ADVISORS WITH RESPECT TO YOUR INDIVIDUAL CIRCUMSTANCES.

This document is for information purposes only. No part of this document may be reproduced in any manner without the written permission of Neuberger Berman Trust Company. The information

expressed herein is subject to change without notice.

• Disclosures for Investment Performance Review • This information is being provided at your request as an accommodation to you in the review of your investment activity. The information in the report may include certain securities over which

Neuberger Berman Trust Company (“NBTC”) does not have investment discretion. This material is based upon information included in our records or information received from you, your agent, or third party portfolio managers and custodians. NBTC has not taken any steps to independently verify the information provided by you, your agent, or any third party for accuracy or completeness. We do not represent that such information is accurate or complete and it should not be relied upon as such. Prices shown do not necessarily reflect realizable values. In the event of any discrepancy between the information contained herein and the information contained in your account statements, the latter shall govern. Please immediately notify us of any discrepancies. Unless indicated otherwise, information is as of the date of this material only and is subject to change without notice.

• Neuberger Berman LLC (“Neuberger Berman”) or its affiliated companies may make a market or deal as principal in the securities mentioned in this document or in options or other derivatives based thereon. In addition, Neuberger Berman, its affiliated companies, shareholders, directors, officers or employees, may from time to time have long or short positions in such securities or in options, futures, or other derivative securities mentioned in this document.

• Individual account returns are calculated based on a time-weighted rate of return. Account composites, if applicable, are calculated based upon a dollar-weighted average. Performance information provided for by intervals is calculated to the most recently available month-end. Annualized return information for a certain length of time will be available only if the account has been open for at least that designated period of time. For example, an account open for eleven months will not display a one year annualized return.

• This report may contain aggregate information for multiple accounts. Aggregate information is provided for discussion purposes only and is not necessarily representative of any one of the individual accounts comprising this combined report. Clients should review each of their individual client statement(s) for specific holdings and performance information with respect to each account. The performance returns at the combined composite level are calculated using a beginning market value weighted average of the adjusted capital balance of the included portfolios that roll up into the combined portfolio. Market values may contain cash or cash equivalents in addition to equity or fixed income investments. The aggregate performance return for the combined portfolio is calculated by combining the market values and flows of each of the sub accounts, and arriving at a percentage change in value. In addition, the combined portfolio return is being provided as supplemental information. If this report is not in accordance with your records, please notify us immediately.

• Information regarding benchmarks used in this report is obtained from third party sources. We do not attest to the accuracy or reliability of these numbers nor the methods of calculation from which they are derived. Blended benchmarks which appear in this report have been chosen as default benchmarks for your account. These blended benchmarks should be suitable based upon your goals and risk tolerance. If you have reason to believe the blended benchmarks shown for your account are not appropriate or if you are unfamiliar with any blended benchmark listed in this report, please contact us.

• Valuations for limited partnerships, hedge funds or other pooled vehicles may be based on estimates provided from the manager or administrator. This valuation could differ from a final value that is reported in financial statements. Such valuations in this report are based upon the most recently available information and may be for a different time period than this report due to a fund’s or partnership’s delay in reporting to us, and may not reflect the final value reported by a fund or partnership for the period.

• Past performance is not indicative of future results, which may vary. Portfolio characteristics and positions held are as of the date of this report and are subject to change without notice. Indicative and analytical data for indices (i.e. the S&P 500) which appear in this report are obtained from third party sources. We do not attest to the accuracy or reliability of these numbers nor the methods of calculation from which they are derived. Indices are unmanaged, and the figures for an index shown include reinvestment of all income and capital gains distributions and do not reflect any fees or expenses. Investors can not invest directly in an index.

• Performance of the investments herein are reflected after the deduction of all applicable fees, but may not reflect any carried interest or other internal performance fees which may be specific to any investment.

• Neuberger Berman Trust Company is the trade name used by Neuberger Berman Trust Company N.A.

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