ck0001002537-20231231
Prospectus
THE
NEEDHAM FUNDS, INC.
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Fund |
Ticker
Symbol |
NEEDHAM
GROWTH FUND |
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Retail
Class |
NEEGX |
Institutional
Class |
NEEIX |
NEEDHAM
AGGRESSIVE GROWTH FUND |
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Retail
Class |
NEAGX |
Institutional
Class |
NEAIX |
NEEDHAM
SMALL CAP GROWTH FUND |
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Retail
Class |
NESGX |
Institutional
Class |
NESIX |
250
Park Avenue, 10th
Floor
New
York, New York 10177
1-800-625-7071
PROSPECTUS
April 29,
2024
The
Securities and Exchange Commission has not approved or disapproved of these
securities or passed upon the adequacy of this Prospectus. Any representation to
the contrary is a criminal offense.
Table
of Contents
(This
page intentionally left blank.)
Summary
Section
Needham Growth
Fund
Investment
Objective
The
Needham Growth Fund (the “Growth Fund”) seeks long-term, tax-efficient capital
appreciation.
Fees and Expenses of the
Growth Fund
This
table describes the fees and expenses you may pay if you buy, hold and sell
shares of the Growth Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the tables and examples
below.
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| Retail
Class |
Institutional
Class |
Annual Fund
Operating Expenses |
| |
(expenses
that you pay each year as a percentage of the value of your
investment) |
| |
Management
Fees |
1.25 |
% |
1.25 |
% |
Distribution
and/or Service (12b-1) Fees |
0.25 |
% |
None |
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| |
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| |
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| |
Other
Expenses(a) |
0.29 |
% |
0.25 |
% |
Total
Annual Fund Operating Expenses |
1.79 |
% |
1.50 |
% |
Fee
Waiver/Expense Reimbursement(b) |
-0.04 |
% |
-0.29 |
% |
Total
Annual Fund Operating Expenses after Fee Waiver/
Expense
Reimbursement |
1.75 |
% |
1.21 |
% |
(a)Acquired
Fund Fees and Expenses (“AFFE”) are indirect fees and expenses that the Growth
Fund incurs from investing in shares of other funds, including money market
funds. Please note that the amount of Total Annual Fund Operating Expenses shown
in the above table will differ from the "Financial Highlights" section of the
Prospectus, which reflects the operating expenses of the Fund and does not
include indirect expenses such as
AFFE.
(b)Reflects
a contractual agreement by Needham Investment Management LLC (the “Adviser”) to
waive its fee and, if necessary, reimburse the Growth Fund until April 29, 2025 to the extent Total Annual Fund
Operating Expenses exceed 1.95% and 1.21% of the average daily net assets of
Retail Class shares and Institutional Class shares, respectively, of the Growth
Fund (the “Expense Cap”). To the extent that it is necessary for the Adviser to
waive receipt of its management fee or reimburse the Growth Fund’s common
expenses, the amount of the waiver or reimbursement will be applied equally to
each share class of the Fund. This agreement can only be amended or terminated
by agreement of The Needham Funds, Inc. (the “Company”), upon approval of the
Company’s Board of Directors and the Adviser, and will terminate automatically
in the event of termination of the Investment Advisory Agreement between the
Adviser and the Company, on behalf of the Growth Fund. For a period of up to 36
months (the “Recoupment Period”) from the time of any waiver or reimbursement
pursuant to this agreement, the Adviser may recoup from the Growth Fund fees
waived and expenses reimbursed to the extent that such recoupment would not
cause the Total Annual Fund Operating Expenses of the Growth Fund to exceed the
lesser of the Expense Cap in effect (i) at the time of the waiver or
reimbursement, or (ii) at the time of recoupment, during each 12-month period
ended April 30 in the Recoupment Period. Any such recoupment will not include
interest. The Expense Cap limitation on Total Annual Fund Operating Expenses
excludes taxes, interest, brokerage, dividends on short positions, fees and
expenses of “acquired funds” and extraordinary items but includes the management
fee.
Example
This
example is intended to help you compare the cost of investing in the Growth Fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Growth Fund for the
time periods indicated and then hold or redeem all of your shares at the end of
those periods. The example also assumes that your investment has a 5% return
each year, that all dividends and distributions have been reinvested, and that
the Growth Fund’s operating expenses remain the same (after giving effect to the
fee waiver and expense reimbursement arrangement in year one
only). Although your actual
costs may be higher or lower, based on these assumptions your costs would
be:
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| 1
Year |
3
Years |
5
Years |
10
Years |
Retail
Class |
$178 |
$559 |
$966 |
$2,102 |
Institutional
Class |
$123 |
$446 |
$791 |
$1,766 |
Portfolio
Turnover
The
Growth Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs and may result in higher taxes when Growth
Fund shares are held in a taxable account. These costs, which are not reflected
in annual fund operating expenses or in the example, affect the Growth Fund’s
performance. During the fiscal year ended December 31, 2023,
the Growth Fund’s portfolio turnover rate was 9% of the average value of its portfolio.
Principal Investment
Strategies
Under normal
conditions, the Growth Fund invests at least 65% of its total assets in the
equity securities (principally, common stock) of domestic issuers listed on a
nationally recognized securities exchange. The Growth Fund
considers domestic issuers of equity securities to be companies located,
organized, or with a majority of assets or business in the United States. The
Growth Fund may, but is not required to, invest in the securities of companies
of any market capitalization and from a variety of industries included in the
technology, healthcare, energy and industrials, specialty retailing,
media/leisure/cable/entertainment and business and consumer services sectors.
These are some of the sectors within the economy which the Adviser believes will
have significant long-term growth rates and often include the stocks of rapidly
growing companies with a variety of market capitalizations. Although the Growth
Fund’s investments have typically been most heavily weighted in the information
technology and healthcare sectors, the allocation of the Growth Fund’s assets
among the various sectors may change at any time. The Growth Fund may engage in
short sales. The Growth Fund may make a profit or loss depending upon whether
the market price of the security sold short decreases or increases between the
date of the short sale and the date on which the Growth Fund replaces the
borrowed security.
It is the policy of the Growth Fund generally to not engage in trading
for short-term gains, and the Adviser employs other measures to maximize tax
efficiency to the extent consistent with the Growth Fund’s investment
strategies, including using: (a) the specific identification method to calculate
the tax basis for shares of Growth Fund portfolio holdings to seek to minimize
taxable gains or offset other gains; and (b) net short-term capital gains to
offset Growth Fund expenses which would otherwise be non-deductible by the
Growth Fund. During certain periods, market forces may cause the Adviser,
seeking to act in the best interests of the Growth Fund, to manage the Growth
Fund in a manner that may not maximize tax efficiency, such as if the Growth
Fund experiences extreme inflows and outflows from an unusually high volume of
purchase and redemption activity, resulting in high portfolio turnover. The
Adviser seeks to balance tax efficiency with the overall best interests of the
Growth Fund.
Principal Investment
Risks
Stock
Investing and Market Risks.
The Growth Fund invests primarily in equity securities that fluctuate in value.
There is no guarantee that the Growth Fund will achieve its investment objective
of long-term, tax-efficient capital appreciation. Fund losses may be incurred
due to declines in one or more markets in which Fund investments are made. These
declines may be the result of, among other things, political, regulatory,
market, economic or social developments affecting the relevant market(s). In
addition, turbulence and reduced liquidity in financial markets may negatively
affect many issuers, which could have an adverse effect on your Fund investment.
Global economies and financial markets are increasingly interconnected, and
conditions and events in one country, region or financial market may adversely
impact issuers worldwide. As a result, local, regional or global events such as
war, acts of terrorism, the spread of infectious illness or other public health
issues, recessions or other events could have a significant negative impact on
global economic and market conditions. The coronavirus disease 2019 (COVID-19)
global pandemic and the aggressive responses taken by many governments or
voluntarily imposed by private parties, including closing borders, restricting
travel and imposing prolonged quarantines or similar restrictions, as well as
the closure of, or operational changes to, many retail and other businesses,
have had negative impacts, and in many cases severe negative impacts, on
markets
worldwide. It is not known how long such impacts, or any future impacts of other
significant events described above, will or would last, but there could be a
prolonged period of global economic slowdown, which may impact your Fund
investment.
Growth
Investing Risks. The Growth Fund invests in stocks believed by the Adviser to have the
potential for growth, but that may not realize such perceived potential for
extended periods of time or may never realize such perceived growth potential.
Such stocks may be more volatile than other stocks because they can be more
sensitive to investor perceptions of the issuing company’s growth
potential.
Small
Company Investment Risks. The Growth Fund often invests in smaller companies that may have
limited product lines, markets or financial resources. These smaller companies
may trade at a lower volume than more widely held securities and may fluctuate
in value more sharply than those of other securities.
Focus
Risks. Although the Growth Fund is classified as “diversified” under the
Investment Company Act of 1940, as amended (the “1940 Act”), the Growth Fund may
invest its assets in a smaller number of issuers than other, more diversified,
funds. The Growth Fund’s net asset value (“NAV”) may be more vulnerable to
changes in the market value of a single issuer or group of issuers and may be
relatively more susceptible to adverse effects from any single corporate,
industry, economic, market, political or regulatory occurrence than if the
Growth Fund’s investments consisted of securities issued by a larger number of
issuers.
Market
Capitalization Risks. To the extent the Growth Fund emphasizes stocks of small, mid or
large cap companies, it will assume the associated risks. At any given time, any
of these market capitalizations may be out of favor with investors. Larger
companies may be less responsive to changes and opportunities affecting their
business than are small and mid cap companies, though small and mid cap
companies tend to have less established operating histories, less predictable
earnings and revenues (some companies may be experiencing significant losses),
and more volatile share prices than those of larger companies.
Sector
Risks. Business
and economic developments affecting a market sector, such as technology or
healthcare companies, or a portion of a market sector in which the Growth Fund
invests a significant portion of its assets would likely have a greater effect
on the Growth Fund than those same developments would have on a fund invested in
a wider spectrum of market sectors.
Companies
in the technology sector or portions of the technology sector such as
semiconductors and/or semiconductor equipment generally operate in intensely
competitive markets. This level of competition can put pressure on the prices of
their products and services, which could adversely affect their profitability.
Also, because technological development in many areas increases at a rapid rate,
these companies often produce products with very short life cycles and face the
risk of product obsolescence. Other risks of investments in technology
companies, including semiconductor and semiconductor equipment companies,
include worldwide competition, changes in consumer preferences, problems with
product compatibility, the effects of economic slowdowns, and changes in
government regulation.
The value of equity securities of healthcare companies may fluctuate
because of changes in the regulatory and competitive environment in which they
operate. Many healthcare companies offer products and services that are subject
to governmental regulation and may be adversely affected by changes in
governmental policies or laws. Failure to obtain regulatory approvals or changes
in governmental policies regarding funding or subsidies may also adversely
affect the value of the equity securities of healthcare companies. Healthcare
companies may also be strongly affected by scientific or technological
developments and their products may quickly become obsolete. Furthermore, these
companies may be adversely affected by product liability-related lawsuits. The
securities of companies in these sectors may experience more price volatility
than securities of companies in other sectors.
Short
Sales Risks. Short sales present the risk that the price of the security sold short
will increase in value between the time of the short sale and the time the
Growth Fund must purchase the security to return it to the lender. The Growth
Fund may not be able to close a short position at a favorable price or time and
the loss of value on a short sale is potentially unlimited.
Tax-Efficiency
Management Risks. Because
the Adviser balances investment considerations and tax-efficiency
considerations, the pretax performance of the Growth Fund may be lower than the
performance of similar funds that are not managed for tax-efficiency. Even
though tax-efficient strategies are being used, they may not
actually reduce the amount of taxable income and capital gains
distributed by the Growth Fund to shareholders. For example, at times a high
percentage of the Growth Fund’s net asset value may consist of unrealized
capital gains, which represent a potential future tax liability to shareholders,
or during certain periods market forces may cause the Adviser, seeking to act in
the best interests of the Growth Fund, to manage the Growth Fund in a manner
that may not maximize tax efficiency.
Loss of money is
a risk of investing in the Growth Fund.
Bar Chart
and Performance Table
The information in the bar chart and table that follows
provides some indication of the risks of investing in the Growth Fund by showing
changes in the performance of the Growth Fund’s Retail Class shares from year to
year and by showing how the Growth Fund’s average annual returns for 1, 5 and 10
years and for the life of the Growth Fund compare to those of broad measures of
market performance.
The
Growth Fund’s past performance (before and after taxes) is not necessarily an
indication of how the Growth Fund will perform in the future.
Updated performance information is available on the Growth Fund’s website at
www.needhamfunds.com.
Calendar Year Total Returns
as of December 31 – Retail Class
During
the ten-year period shown in the above chart, the highest quarterly
return was 30.69% (for the quarter ended
June 30,
2020) and the lowest quarterly
return was
-22.34% (for the quarter ended June 30,
2022).
Average
annual total returns for the periods ended December 31, 2023
The
following table shows the average annual returns of the Growth Fund’s shares,
and the change in value of certain broad-based market indices over various
periods ended December 31, 2023.
The index information is intended to permit you to compare the Growth Fund’s
performance to several broad measures of market performance.
After-tax returns are calculated using the historical highest
individual federal marginal income tax rates and do not include the impact of
state and local taxes.
Your actual after-tax returns depend on your tax situation
and may differ from those shown. After-tax returns shown are not relevant to
investors who hold their shares in a tax-deferred account (including a 401(k)
or IRA), or to investors who are tax-exempt.
After-tax returns are shown only for Retail Class shares.
After-tax returns for Institutional Class shares will
vary.
Average annual total returns for the periods ended December
31, 2023
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Class
(Inception Date) |
1 Year |
5 Years |
10 Years |
Since
Inception (1/1/96) |
Since
Inception (12/30/16) |
Retail
Class (1/1/1996) |
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Return Before
Taxes |
26.85% |
16.71% |
9.18% |
12.44% |
N/A |
Return After
Taxes on Distributions |
26.85% |
15.31% |
7.50% |
11.06% |
N/A |
Return After Taxes on
Distributions
and
Redemption |
15.89% |
13.34% |
7.01% |
10.59% |
N/A |
Institutional
Class (12/30/16) |
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Return Before
Taxes |
27.30% |
17.24% |
N/A |
N/A |
11.73% |
S&P
500®
Index* |
26.29% |
15.69% |
12.03% |
9.61% |
13.41% |
S&P
MidCap 400®
Index* |
16.44% |
12.62% |
9.27% |
11.08% |
9.37% |
Russell
2000®
Index* |
16.93% |
9.97% |
7.16% |
8.30% |
7.33% |
* Comparative indices reflect no deductions for fees, expenses,
or taxes.
Source:
London Stock Exchange Group plc and its group undertakings (collectively, the
“LSE Group”). © LSE Group 2022. All rights in the Russell 2000®
Index (the “Index”) vest in the relevant LSE Group company which owns the Index.
The Index is calculated by or on behalf of FTSE International Limited or its
affiliate, agent or partner. Neither the LSE Group nor its licensors accept any
liability for any errors or omissions in the Index; no party may rely on the
Index returns shown; and the LSE Group makes no claim, prediction, warranty or
representation about the Needham Growth Fund or the suitability of the Index
with respect to the Needham Growth Fund. No further distribution of data from
the LSE Group is permitted without the relevant LSE Group company’s express
written consent. The LSE Group is not connected to the Needham Growth Fund and
does not promote, sponsor or endorse the Needham Growth Fund or the content of
this prospectus.
Investment
Adviser
Needham
Investment Management LLC is the investment adviser of the Growth Fund.
Portfolio
Managers
The
co-portfolio managers of the Growth Fund are John O. Barr and Chris Retzler, who
are jointly and primarily responsible for the day-to-day management of the
Growth Fund. Mr. Barr is Executive Vice President and has been Portfolio Manager
of the Growth Fund since 2010. Mr. Retzler is Executive Vice President and has
been Portfolio Manager of the Growth Fund since 2009.
Purchase,
Exchange and Redemption of Fund Shares
You
may purchase, exchange, or redeem shares of the Growth Fund at any time by
sending a written request to The Needham Funds, c/o U.S. Bancorp Fund
Services, LLC, P.O. Box 701, Milwaukee, WI 53201-0701, by calling
1-800-625-7071, or by wire transfer.
The
minimum initial and subsequent investment amounts are shown below.
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Type
of Account |
To
Open Your Account |
To
Add to Your Account |
Retail
Class |
| |
Individuals,
Corporations, Partnerships, Trusts |
$2,000 |
$100 |
IRAs |
$1,000 |
None |
Institutional
Class |
| |
All
Accounts |
$100,000 |
None |
Tax
Information
The
Growth Fund intends to make distributions each year. The Growth Fund’s
distributions are taxable, and will be taxed as ordinary income or capital
gains, unless you are investing through a tax-deferred arrangement, such as a
401(k) plan or an IRA. Such tax-deferred arrangements may be taxed later upon
withdrawal of monies from those arrangements.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase the Growth Fund through a broker-dealer or other financial
intermediary (such as a bank), the Funds’ distributor and its related companies
may pay the intermediary for the sale of Growth Fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your salesperson to recommend the Growth
Fund over another investment. Ask your salesperson or visit your financial
intermediary’s website for more information.
Needham Aggressive Growth
Fund
Investment
Objective
The
Needham Aggressive Growth Fund (the “Aggressive Growth Fund”) seeks long-term,
tax-efficient capital appreciation.
Fees and Expenses of the
Aggressive Growth Fund
This
table describes the fees and expenses you may pay if you buy, hold and sell
shares of the Aggressive Growth Fund. You may pay other fees, such as brokerage commissions and other fees
to financial intermediaries, which are not reflected in the tables and examples
below.
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| Retail
Class |
| Institutional
Class |
Annual Fund
Operating Expenses |
|
| |
(expenses
that you pay each year as a percentage of the value of your
investment) |
|
| |
Management
Fees |
1.25 |
% |
| 1.25 |
% |
Distribution
and/or Service (12b-1) Fees |
0.25 |
% |
| None |
Other
Expenses |
|
| |
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| |
Recoupment
of waived fees and/or reimbursements(a) |
0.08 |
% |
| None |
All Remaining Other Expenses |
0.28 |
% |
| 0.27 |
% |
Total
Other Expenses |
0.36 |
% |
| 0.27 |
% |
Acquired
Fund Fees and Expenses(b) |
0.04 |
% |
| 0.04 |
% |
Total
Annual Fund Operating Expenses |
1.90 |
% |
| 1.56 |
% |
Fee
Waiver/Expense Reimbursement(a) |
-0.08 |
% |
| -0.34 |
% |
Total
Annual Fund Operating Expenses after Fee Waiver/
Expense
Reimbursement |
1.82 |
% |
| 1.22 |
% |
(a)Reflects
a contractual agreement by Needham Investment Management LLC (the “Adviser”) to
waive its fee and, if necessary, reimburse the Aggressive Growth Fund until
April 29, 2025 to the extent Total Annual Fund
Operating Expenses exceed 1.85% and 1.18% of the average daily net assets of
Retail Class shares and Institutional Class shares, respectively, of the
Aggressive Growth Fund (the “Expense Cap”). To the extent that it is necessary
for the Adviser to waive receipt of its management fee or reimburse the
Aggressive Growth Fund’s common expenses, the amount of the waiver or
reimbursement will be applied equally to each share class of the Fund. This
agreement can only be amended or terminated by agreement of The Needham Funds,
Inc. (the “Company”), upon approval of the Company’s Board of Directors and the
Adviser, and will terminate automatically in the event of termination of the
Investment Advisory Agreement between the Adviser and the Company, on behalf of
the Aggressive Growth Fund. For a period of up to 36 months (the “Recoupment
Period”) from the time of any waiver or reimbursement pursuant to this
agreement, the Adviser may recoup from the Aggressive Growth Fund fees waived
and expenses reimbursed to the extent that such recoupment would not cause the
Total Annual Fund Operating Expenses of the Aggressive Growth Fund to exceed the
lesser of the Expense Cap in effect (i) at the time of the waiver or
reimbursement, or (ii) at the time of recoupment, during each 12-month period
ended April 30 in the Recoupment Period. Any such recoupment will not include
interest. The Expense Cap limitation on Total Annual Fund Operating Expenses
excludes taxes, interest, brokerage, dividends on short positions, AFFE, and
extraordinary items but includes the management fee.
(b)Acquired Fund Fees and Expenses (“AFFE”) are indirect fees and
expenses that the Aggressive Growth Fund incurs from investing in shares of
other funds, including money market funds. Please note that the amount of Total
Annual Fund Operating Expenses shown in the above table will differ from the
"Financial Highlights" section of the Prospectus, which reflects the operating
expenses of the Fund and does not include indirect expenses such as
AFFE.
Example
This
example is intended to help you compare the cost of investing in the Aggressive
Growth Fund with the cost of investing in other mutual funds.
The
example assumes that you invest $10,000 in the Aggressive Growth Fund for the
time periods indicated and then hold or redeem all of your shares at the end of
those periods. The example also assumes that your investment has a 5% return
each year, that all dividends and distributions have been reinvested, and that
the Aggressive Growth Fund’s operating expenses remain the same (after giving
effect to the fee waiver and expense reimbursement arrangement in
year one only). Although your actual
costs may be higher or lower, based on these assumptions your costs would
be:
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| 1
Year |
3
Years |
5
Years |
10
Years |
Retail
Class |
$185 |
$589 |
$1,019 |
$2,216 |
Institutional
Class |
$124 |
$459 |
$818 |
$1,828 |
Portfolio
Turnover
The
Aggressive Growth Fund pays transaction costs, such as commissions, when it buys
and sells securities (or “turns over” its portfolio). A higher portfolio
turnover rate may indicate higher transaction costs and may result in higher
taxes when Aggressive Growth Fund shares are held in a taxable account. These
costs, which are not reflected in annual fund operating expenses or in the
example, affect the Aggressive Growth Fund’s performance. During the fiscal year
ended December 31, 2023,
the Aggressive Growth Fund’s portfolio turnover rate was 7% of the average value of its portfolio.
Principal Investment
Strategies
Under normal
conditions, the Aggressive Growth Fund invests at least 65% of its total assets
in the equity securities (principally, common stock) of domestic issuers listed
on a nationally recognized securities exchange. The Aggressive Growth Fund
considers domestic issuers of equity securities to be companies located,
organized, or with a majority of assets or business in the United
States. The Aggressive Growth Fund invests principally in
markets and industries with strong growth potential, focusing primarily on the
market leaders in these areas as these companies often garner a disproportionate
share of the positive financial returns. Although the Aggressive Growth Fund may
invest in companies of any size, the Aggressive Growth Fund’s investment
strategy may result in a focus on smaller companies. The Aggressive Growth Fund
may, but is not required to, invest in stocks from a variety of industries
included in the technology, healthcare, energy and industrials, specialty
retailing, media/leisure/cable/entertainment and business and consumer services
sectors. Although the Aggressive Growth Fund’s investments have typically been
most heavily weighted in the information technology and healthcare sectors, the
allocation of the Aggressive Growth Fund’s assets among the various sectors may
change at any time. The Aggressive Growth Fund may engage in short sales. The
Aggressive Growth Fund may make a profit or loss depending upon whether the
market price of the security sold short decreases or increases between the date
of the short sale and the date on which the Aggressive Growth Fund replaces the
borrowed security.
It is the policy of the Aggressive Growth Fund
generally to not engage in trading for short-term gains, and the Adviser employs
other measures to maximize tax efficiency to the extent consistent with the
Aggressive Growth Fund’s investment strategies, including using: (a) the
specific identification method to calculate the tax basis for shares of
Aggressive Growth Fund portfolio holdings to seek to minimize taxable gains or
offset other gains; and (b) net short-term capital gains to offset Aggressive
Growth Fund expenses which would otherwise be non-deductible by the Aggressive
Growth Fund. During certain periods, market forces may cause the Adviser,
seeking to act in the best interests of the Aggressive Growth Fund, to manage
the Aggressive Growth Fund in a manner that may not maximize tax efficiency,
such as if the Aggressive Growth Fund experiences extreme inflows and outflows
from an unusually high volume of purchase and redemption activity, resulting in
high portfolio turnover. The Adviser seeks to balance tax efficiency with the
overall best interests of the Aggressive Growth
Fund.
Principal Investment
Risks
Stock
Investing and Market Risks. The
Aggressive Growth Fund invests primarily in equity securities that fluctuate in
value. There is no guarantee that the Aggressive Growth Fund will achieve its
investment objective of long-term, tax-efficient capital appreciation. Fund
losses may be incurred due to declines in one or more markets in which Fund
investments are made. These declines may be the result of, among other things,
political, regulatory, market, economic or social developments affecting the
relevant market(s). In addition, turbulence and reduced liquidity in financial
markets may negatively affect many issuers, which could have an adverse effect
on your Fund investment. Global economies and financial markets are increasingly
interconnected, and conditions and events in one country, region or financial
market may adversely impact issuers worldwide. As a result, local, regional or
global events such as war, acts of terrorism, the spread of infectious illness
or other public health issues, recessions or other events could have a
significant negative
impact on global economic and market conditions. The coronavirus
disease 2019 (COVID-19) global pandemic and the aggressive responses taken by
many governments or voluntarily imposed by private parties, including closing
borders, restricting travel and imposing prolonged quarantines or similar
restrictions, as well as the closure of, or operational changes to, many retail
and other businesses, have had negative impacts, and in many cases severe
negative impacts, on markets worldwide. It is not known how long such impacts,
or any future impacts of other significant events described above, will or would
last, but there could be a prolonged period of global economic slowdown, which
may impact your Fund investment.
Growth
Investing Risks. The Aggressive Growth Fund invests in stocks believed by the Adviser
to have the potential for growth, but that may not realize such perceived
potential for extended periods of time or may never realize such perceived
growth potential. Such stocks may be more volatile than other stocks because
they can be more sensitive to investor perceptions of the issuing company’s
growth potential.
Small
Company Investment Risks. Investments in smaller companies may offer greater opportunities for
capital appreciation than larger companies, but may also involve certain special
risks. These companies may have limited product lines, limited operating
histories, markets or financial resources and may be dependent on small or
inexperienced management groups. The trading volume of small company securities
(which tends to be lower than that of securities of larger companies) may make
such securities more difficult to sell than securities of larger companies, and
the lack of an efficient market for small company securities may make them
difficult to value. Securities of smaller companies also may fluctuate in value
more sharply than those of larger companies.
Focus
Risks. Although the Aggressive Growth Fund is classified as “diversified”
under the 1940 Act, the Aggressive Growth Fund may invest its assets in a
smaller number of issuers than other, more diversified, funds. The Aggressive
Growth Fund’s NAV may be more vulnerable to changes in the market value of a
single issuer or group of issuers and may be relatively more susceptible to
adverse effects from any single corporate, industry, economic, market, political
or regulatory occurrence than if the Aggressive Growth Fund’s investments
consisted of securities issued by a larger number of issuers.
Market
Capitalization Risks. To the extent the Aggressive Growth Fund emphasizes stocks of
small, mid or large cap companies, it will assume the associated risks. At any
given time, any of these market capitalizations may be out of favor with
investors. Larger companies may be less responsive to changes and opportunities
affecting their business than are small and mid cap companies, though small and
mid cap companies tend to have less established operating histories, less
predictable earnings and revenues (some companies may be experiencing
significant losses), and more volatile share prices than those of larger
companies.
Sector
Risks. Business
and economic developments affecting a market sector, such as technology or
healthcare companies, or a portion of a market sector in which the Aggressive
Growth Fund invests a significant portion of its assets would likely have a
greater effect on the Aggressive Growth Fund than those same developments would
have on a fund invested in a wider spectrum of market sectors.
Companies
in the technology sector or portions of the technology sector such as
semiconductors and/or semiconductor equipment generally operate in intensely
competitive markets. This level of competition can put pressure on the prices of
their products and services, which could adversely affect their profitability.
Also, because technological development in many areas increases at a rapid rate,
these companies often produce products with very short life cycles and face the
risk of product obsolescence. Other risks of investments in technology
companies, including semiconductor and semiconductor equipment companies,
include worldwide competition, changes in consumer preferences, problems with
product compatibility, the effects of economic slowdowns, and changes in
government regulation.
The
value of equity securities of healthcare companies may fluctuate because of
changes in the regulatory and competitive environment in which they operate.
Many healthcare companies offer products and services that are subject to
governmental regulation and may be adversely affected by changes in governmental
policies or laws. Failure to obtain regulatory approvals or changes in
governmental policies regarding funding or subsidies may also adversely affect
the value of the equity securities of healthcare companies. Healthcare companies
may also be strongly affected by scientific or technological developments and
their products may quickly become obsolete. Furthermore, these companies may be
adversely affected by product liability-related lawsuits. The
securities of companies in these sectors may experience more price
volatility than securities of companies in other sectors.
Short
Sales Risks. Short sales present the risk that the price of the security sold
short will increase in value between the time of the short sale and the time the
Aggressive Growth Fund must purchase the security to return it to the lender.
The Aggressive Growth Fund may not be able to close a short position at a
favorable price or time and the loss of value on a short sale is potentially
unlimited.
Tax-Efficiency
Management Risks. Because
the Adviser balances investment considerations and tax-efficiency
considerations, the pretax performance of the Aggressive Growth Fund may be
lower than the performance of similar funds that are not managed for
tax-efficiency. Even though tax-efficient strategies are being used, they may
not actually reduce the amount of taxable income and capital gains distributed
by the Aggressive Growth Fund to shareholders. For example, at times a high
percentage of the Aggressive Growth Fund’s net asset value may consist of
unrealized capital gains, which represent a potential future tax liability to
shareholders, or during certain periods market forces may cause the Adviser,
seeking to act in the best interests of the Aggressive Growth Fund, to manage
the Aggressive Growth Fund in a manner that may not maximize tax
efficiency.
Loss of money
is a risk of investing in the Aggressive Growth Fund.
Bar
Chart and Performance Table
The information in the bar chart and table that follows
provides some indication of the risks of investing in the Aggressive Growth Fund
by showing changes in the performance of the Aggressive Growth Fund’s Retail
Class shares from year to year and by showing how the Aggressive Growth Fund’s
average annual returns for 1, 5 and 10 years and for the life of the Aggressive
Growth Fund compare to those of broad measures of market
performance.
The
Aggressive Growth Fund’s past performance (before and after taxes) is not
necessarily an indication of how the Aggressive Growth Fund will perform in the
future. Updated performance information is available on the
Aggressive Growth Fund’s website at www.needhamfunds.com.
Calendar Year Total Returns
as of December 31 – Retail Class
During
the ten-year period shown in the above chart, the highest quarterly
return was 34.85% (for the quarter ended
June 30,
2020) and the lowest quarterly
return was -19.72% (for the quarter
ended June 30,
2022).
Average
annual total returns for the periods ended December 31, 2023
The
following table shows the average annual returns of the Aggressive Growth Fund’s
shares and the change in value of certain broad-based market indices over
various periods ended December 31, 2023.
The index information is intended to permit you to compare the Aggressive Growth
Fund’s performance to several broad measures of market performance.
After-tax returns are calculated using the historical highest
individual federal marginal income tax rates and do not include the impact of
state and local taxes.
Your actual after-tax returns depend on your tax situation and
may differ from those shown. After-tax returns shown are not relevant to
investors who hold their shares in a tax-deferred account (including a 401(k) or
IRA), or to investors who are tax-exempt. After-tax returns are shown only for Retail Class shares.
After-tax returns for Institutional Class shares may
vary.
Average
annual total returns for the periods ended December 31, 2023
|
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|
|
|
|
| |
Class
(Inception Date) |
1 Year |
5 Years |
10
Years |
Since
Inception (9/4/01) |
Since
Inception (12/30/16) |
Retail
Class (9/4/01) |
|
|
|
|
|
Return Before
Taxes |
37.65% |
24.49% |
12.78% |
11.39% |
N/A |
Return After
Taxes on Distributions |
37.65% |
23.23% |
11.18% |
10.36% |
N/A |
Return After
Taxes on Distributions and Redemption |
22.29% |
19.90% |
9.98% |
9.58% |
N/A |
Institutional
Class (12/30/16) |
|
|
|
| |
Return Before
Taxes |
38.37% |
25.26% |
N/A |
N/A |
16.16% |
Russell
2000®
Growth Index* |
18.66% |
9.22% |
7.16% |
7.87% |
8.07% |
Russell
2000®
Index* |
16.93% |
9.97% |
7.16% |
8.24% |
7.33% |
* Comparative indices reflect no deductions for fees, expenses,
or taxes.
Source:
London Stock Exchange Group plc and its group undertakings (collectively, the
“LSE Group”). © LSE Group 2022. All rights in the Russell 2000®
Index and Russell 2000® Growth Index (each, the “Index”) vest in the relevant LSE Group
company which owns the Index. The Index is calculated by or on behalf of FTSE
International Limited or its affiliate, agent or partner. Neither the LSE Group
nor its licensors accept any liability for any errors or omissions in the Index;
no party may rely on the Index returns shown; and the LSE Group makes no claim,
prediction, warranty or representation about the Needham Aggressive Growth Fund
or the suitability of the Index with respect to the Needham Aggressive Growth
Fund. No further distribution of data from the LSE Group is permitted without
the relevant LSE Group company’s express written consent. The LSE Group is not
connected to the Needham Aggressive Growth Fund and does not promote, sponsor or
endorse the Needham Aggressive Growth Fund or the content of this
prospectus.
Investment
Adviser
Needham
Investment Management LLC is the investment adviser of the Aggressive Growth
Fund.
Portfolio
Manager
The
portfolio manager of the Aggressive Growth Fund is John O. Barr. Mr. Barr is
Executive Vice President and has been Portfolio Manager of the Aggressive Growth
Fund since 2010.
Purchase,
Exchange, and Redemption of Fund Shares
You
may purchase, exchange, or redeem shares of the Aggressive Growth Fund at any
time by sending a written request to The Needham Funds, c/o U.S. Bancorp
Fund Services, LLC, P.O. Box 701, Milwaukee, WI 53201-0701, by calling
1-800-625-7071, or by wire transfer.
The
minimum initial and subsequent investment amounts are shown below.
|
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|
|
|
| |
Type
of Account |
To
Open Your Account |
To
Add to Your Account |
Retail
Class |
| |
Individuals,
Corporations, Partnerships, Trusts |
$2,000 |
$100 |
IRAs |
$1,000 |
None |
Institutional
Class |
| |
All
Accounts |
$100,000 |
None |
Tax
Information
The
Aggressive Growth Fund intends to make distributions each year. The Aggressive
Growth Fund’s distributions are taxable, and will be taxed as ordinary income or
capital gains, unless you are investing through a tax-deferred arrangement, such
as a 401(k) plan or an IRA. Such tax-deferred arrangements may be taxed later
upon withdrawal of monies from those arrangements.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase the Aggressive Growth Fund through a broker-dealer or other
financial intermediary (such as a bank), the Funds’ distributor and its related
companies may pay the intermediary for the sale of Aggressive Growth Fund shares
and related services. These payments may create a conflict of interest by
influencing the broker-dealer or other intermediary and your salesperson to
recommend the Aggressive Growth Fund over another investment. Ask your
salesperson or visit your financial intermediary’s website for more information.
Needham Small Cap Growth
Fund
Investment
Objective
The
Needham Small Cap Growth Fund (the “Small Cap Growth Fund”) seeks long-term,
tax-efficient capital appreciation.
Fees and Expenses of the
Small Cap Growth Fund
This
table describes the fees and expenses you may pay if you buy, hold and sell
shares of the Small Cap Growth Fund. You may pay other fees, such as brokerage commissions and other fees
to financial intermediaries, which are not reflected in the tables and examples
below.
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| |
| Retail
Class |
Institutional
Class |
Annual Fund
Operating Expenses |
| |
(expenses
that you pay each year as a percentage of the value of your
investment) |
| |
Management
Fees |
1.25 |
% |
1.25 |
% |
Distribution
and/or Service (12b-1) Fees |
0.25 |
% |
None |
|
| |
|
| |
|
| |
Other
Expenses |
| |
Recoupment
of Waived Fees and/or Reimbursements(a) |
0.04 |
% |
None |
All
Remaining Other Expenses |
0.34 |
% |
0.32 |
% |
Total
Other Expenses |
0.38 |
% |
0.32 |
% |
Acquired
Fund Fees and Expenses(b) |
0.04 |
% |
0.04 |
% |
Total
Annual Fund Operating Expenses |
1.92 |
% |
1.61 |
% |
Fee
Waiver/Expense Reimbursement(a) |
-0.09 |
% |
-0.39 |
% |
Total
Annual Fund Operating Expenses after Fee Waiver/
Expense
Reimbursement |
1.83 |
% |
1.22 |
% |
(a)Reflects
a contractual agreement by Needham Investment Management LLC {the “Adviser”) to
waive its fee and, if necessary, reimburse the Small Cap Growth Fund until
April 29, 2025 to the extent Total Annual Fund
Operating Expenses exceed 1.85% and 1.18% of the average daily net assets of
Retail Class shares and Institutional Class shares, respectively, of the Small
Cap Growth Fund (the “Expense Cap”). To the extent that it is necessary for the
Adviser to waive receipt of its management fee or reimburse the Small Cap Growth
Fund’s common expenses, the amount of the waiver or reimbursement will be
applied equally to each share class of the Fund. This agreement can only be
amended or terminated by agreement of The Needham Funds, Inc. (the “Company”),
upon approval of the Company’s Board of Directors and the Adviser, and will
terminate automatically in the event of termination of the Investment Advisory
Agreement between the Adviser and the Company, on behalf of the Small Cap Growth
Fund. For a period of up to 36 months (the “Recoupment Period”) from the time of
any waiver or reimbursement pursuant to this agreement, the Adviser may recoup
from the Small Cap Growth Fund fees waived and expenses reimbursed to the extent
that such recoupment would not cause the Total Annual Fund Operating Expenses of
the Small Cap Growth Fund to exceed the lesser of the Expense Cap in effect (i)
at the time of the waiver or reimbursement, or (ii) at the time of recoupment,
during each 12-month period ended April 30 in the Recoupment Period. Any such
recoupment will not include interest. The Expense Cap limitation on Total Annual
Fund Operating Expenses excludes taxes, interest, brokerage, dividends on short
positions, AFFE, and extraordinary items but includes the management
fee.
(b)Acquired Fund Fees and Expenses (“AFFE”) are indirect fees and
expenses that the Small Cap Growth Fund incurs from investing in shares of other
funds, including money market funds. Please note that the amount of Total Annual
Fund Operating Expenses shown in the above table will differ from the “Financial
Highlights” section of the Prospectus, which reflects the operating expenses of
the Fund and does not include indirect expenses such as AFFE.
Example
This
example is intended to help you compare the cost of investing in the Small Cap
Growth Fund with the cost of investing in other mutual funds.
The
example assumes that you invest $10,000 in the Small Cap Growth Fund for the
time periods indicated and then hold or redeem all of your shares at the end of
those periods. The example also assumes that your investment has a 5% return
each year, that all dividends and distributions have been reinvested, and that
the Small Cap Growth Fund’s operating expenses remain the same (after giving
effect to the fee waiver and expense reimbursement arrangement in
year one only). Although your actual
costs may be higher or lower, based on these assumptions, your costs would
be:
|
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|
|
|
|
|
|
|
| |
| 1
Year |
3
Years |
5
Years |
10
Years |
Retail
Class |
$186 |
$594 |
$1,028 |
$2,236 |
Institutional
Class |
$124 |
$470 |
$839 |
$1,878 |
Portfolio
Turnover
The
Small Cap Growth Fund pays transaction costs, such as commissions, when it buys
and sells securities (or “turns over” its portfolio). A higher portfolio
turnover rate may indicate higher transaction costs and may result in higher
taxes when Small Cap Growth Fund shares are held in a taxable account. These
costs, which are not reflected in annual fund operating expenses or in the
example, affect the Small Cap Growth Fund’s performance. During the fiscal year
ended December 31, 2023,
the Small Cap Growth Fund’s portfolio turnover rate was 126% of the average value of its portfolio.
Principal Investment
Strategies
Under normal
conditions, the Small Cap Growth Fund invests at least 80% of its net assets,
plus the amount of any borrowings for investment purposes, in the equity
securities (principally, common stock) of domestic issuers listed on a
nationally recognized securities exchange that, at the time of investment by the
Small Cap Growth Fund, have market capitalizations not exceeding $8 billion (the
“80% Policy”). The Small Cap Growth Fund considers domestic
issuers of equity securities to be companies located, organized, or with a
majority of assets or business in the United States. For purposes of the 80%
Policy, the Small Cap Growth Fund may continue to hold securities of an issuer
if, after the time of the Small Cap Growth Fund’s investment, the issuer’s
market capitalization exceeds $8 billion. Although the Adviser will seek to
invest the Small Cap Growth Fund’s assets in accordance with its 80% Policy,
during certain periods, which may be prolonged periods of time, market
conditions, the availability of attractive investment opportunities that the
Adviser believes are appropriate investments for the Small Cap Growth Fund
and/or high levels of new investments into the Small Cap Growth Fund can lead to
periods of higher cash levels that cause the Small Cap Growth Fund’s investments
to be constituted of less than 80% of its net assets in accordance with the 80%
Policy. During such periods, the Small Cap Growth Fund may not achieve its
investment objective.
The
Small Cap Growth Fund invests, in general, in companies with strong growth
potential that, for a variety of reasons, including the market’s inefficiencies,
are trading at a discount to their underlying value where a catalyst is in place
to eliminate that discount. The Small Cap Growth Fund may, but is not required
to, invest in stocks from a variety of industries included in the technology,
healthcare, energy and industrials, specialty retailing,
media/leisure/cable/entertainment and business and consumer services sectors.
These are some of the sectors within the economy which the Adviser believes will
have significant long-term growth rates and often include the stocks of rapidly
growing companies. Although the Small Cap Growth Fund’s investments have
typically been most heavily weighted in the information technology and
healthcare sectors, the allocation of the Small Cap Growth Fund’s assets among
the various sectors may change at any time. The Small Cap Growth Fund may engage
in active and frequent trading of portfolio securities.The Small Cap Growth Fund
may engage in short sales. The Small Cap Growth Fund may make a profit or loss
depending upon whether the market price of the security sold short decreases or
increases between the date of the short sale and the date on which the Small Cap
Growth Fund replaces the borrowed security.
The Adviser employs certain
measures to maximize tax efficiency to the extent consistent with the Small Cap
Growth Fund’s investment strategies, including using: (a) the specific
identification method to calculate the tax basis for shares of Small Cap Growth
Fund portfolio holdings to seek to minimize taxable gains or offset other gains;
and (b) net short-term capital gains to offset Small Cap Growth Fund expenses
which would otherwise be non-deductible by the Small Cap Growth Fund. During
certain periods, market forces may cause the Adviser, seeking to act in the best
interests of the Small Cap Growth Fund, to manage the Small Cap Growth Fund in a
manner that may not maximize tax efficiency, such as if the Small Cap Growth
Fund experiences extreme inflows and outflows from an unusually high volume of
purchase and redemption activity, resulting in high portfolio turnover. The
Adviser seeks to balance tax efficiency with the overall best interests of the
Small Cap Growth Fund.
Principal Investment
Risks
Stock
Investing and Market Risks.
The Small Cap Growth Fund invests primarily in equity securities that fluctuate
in value. There is no guarantee that the Small Cap Growth Fund will achieve its
investment objective of long-term, tax-efficient capital appreciation. Fund
losses may be incurred due to declines in one or more markets in which Fund
investments are made. These declines may be the result of, among other things,
political, regulatory, market, economic or social developments affecting the
relevant market(s). In addition, turbulence and reduced liquidity in financial
markets may negatively affect many issuers, which could have an adverse effect
on your Fund investment. Global economies and financial markets are increasingly
interconnected, and conditions and events in one country, region or financial
market may adversely impact issuers worldwide. As a result, local, regional or
global events such as war, acts of terrorism, the spread of infectious illness
or other public health issues, recessions or other events could have a
significant negative impact on global economic and market conditions. The
coronavirus disease 2019 (COVID-19) global pandemic and the aggressive responses
taken by many governments or voluntarily imposed by private parties, including
closing borders, restricting travel and imposing prolonged quarantines or
similar restrictions, as well as the closure of, or operational changes to, many
retail and other businesses, have had negative impacts, and in many cases severe
negative impacts, on markets worldwide. It is not known how long such impacts,
or any future impacts of other significant events described above, will or would
last, but there could be a prolonged period of global economic slowdown, which
may impact your Fund investment.
Small
Company Investment Risks. Investments in smaller companies may offer greater opportunities for
capital appreciation than larger companies, but may also involve certain special
risks. These companies may have limited product lines, limited operating
histories, markets or financial resources and may be dependent on small or
inexperienced management groups. The trading volume of small company securities
(which tends to be lower than that of securities of larger companies) may make
such securities more difficult to sell than securities of larger companies, and
the lack of an efficient market for small company securities may make them
difficult to value. Securities of smaller companies also may fluctuate in value
more sharply than those of larger companies.
Growth
Investing Risks. The Small Cap Growth Fund invests in stocks believed by the Adviser
to have the potential for growth, but that may not realize such perceived
potential for extended periods of time or may never realize such perceived
growth potential. Such stocks may be more volatile than other stocks because
they can be more sensitive to investor perceptions of the issuing company’s
growth potential.
Focus
Risks. Although the Small Cap Growth Fund is classified as “diversified”
under the 1940 Act, the Small Cap Growth Fund may invest its assets in a smaller
number of issuers than other, more diversified, funds. The Small Cap Growth
Fund’s NAV may be more vulnerable to changes in the market value of a single
issuer or group of issuers and may be relatively more susceptible to adverse
effects from any single corporate, industry, economic, market, political or
regulatory occurrence than if the Small Cap Growth Fund’s investments consisted
of securities issued by a larger number of issuers.
Sector
Risks. To
the extent that the Small Cap Growth Fund focuses its investments in securities
of issuers in a particular market sector, such as technology companies or
healthcare companies, the Small Cap Growth Fund will be significantly affected
by developments in that sector.
Technology
companies generally operate in intensely competitive markets. This level of
competition can put pressure on the prices of their products and services which
could adversely affect their profitability. Also, because technology development
in many areas increases at a rapid rate, these companies often produce products
with very short life cycles and face the risk of product obsolescence. Other
risks include worldwide competition, changes in consumer preferences, problems
with product compatibility, the effects of economic slowdowns, and changes in
government regulation.
The
value of equity securities of healthcare companies may fluctuate because of
changes in the regulatory and competitive environment in which they operate.
Many healthcare companies offer products and services that are subject to
governmental regulation and may be adversely affected by changes in governmental
policies or laws. Failure to obtain regulatory approvals or changes in
governmental policies regarding funding or subsidies may also adversely affect
the value of the equity securities of healthcare companies. Healthcare companies
may also be strongly affected by scientific or technological developments and
their products may quickly become obsolete. Furthermore, these companies may be
adversely affected by product liability-related lawsuits. The
securities
of companies in these sectors may experience more price volatility than
securities of companies in other sectors.
Short
Sales Risks. Short sales present the risk that the price of the security sold
short will increase in value between the time of the short sale and the time the
Small Cap Growth Fund must purchase the security to return it to the lender. The
Small Cap Growth Fund may not be able to close a short position at a favorable
price or time and the loss of value on a short sale is potentially
unlimited.
Portfolio
Turnover Risk. The Small Cap Growth Fund may engage in short-term trading, which
could produce higher transaction costs and taxable distributions, and lower the
Small Cap Growth Fund’s after-tax performance.
Tax-Efficiency
Management Risks. Because the Adviser balances investment considerations and
tax-efficiency considerations, the pretax performance of the Small Cap Growth
Fund may be lower than the performance of similar funds that are not managed for
tax-efficiency. Even though tax-efficient strategies are being used, they may
not actually reduce the amount of taxable income and capital gains distributed
by the Small Cap Growth Fund to shareholders. For example, at times a high
percentage of the Small Cap Growth Fund’s net asset value may consist of
unrealized capital gains, which represent a potential future tax liability to
shareholders, or during certain periods market forces may cause the Adviser,
seeking to act in the best interests of the Small Cap Growth Fund, to manage the
Small Cap Growth Fund in a manner that may not maximize tax
efficiency.
Loss of money
is a risk of investing in the Small Cap Growth Fund.
Bar
Chart and Performance Table
The information in the bar chart and table that follow
provides some indication of the risks of investing in the Small Cap Growth Fund
by showing changes in the performance of the Small Cap Growth Fund’s Retail
Class shares from year to year and by showing how the Small Cap Growth Fund’s
average annual returns for 1, 5 and 10 years and for the life of the Small Cap
Growth Fund compare to those of broad measures of market
performance.
The
Small Cap Growth Fund’s past performance (before and after taxes) is not
necessarily an indication of how the Small Cap Growth Fund will perform in the
future. Updated performance information is available on the
Small Cap Growth Fund’s website at www.needhamfunds.com.
Calendar Year Total Returns
as of December 31 – Retail Class
During
the ten-year period shown in the above chart, the highest quarterly
return was 36.32% (for the quarter ended
December 31,
2020) and the lowest quarterly
return was -26.13% (for the quarter
ended June 30,
2022).
Average
annual total returns for the periods ended December 31, 2023
The
following table shows the average annual returns of the Small Cap Growth Fund’s
shares and the change in value of certain broad-based market indices over
various periods ended December 31, 2023. The index information is intended to
permit you to compare the Small Cap Growth Fund’s performance to several broad
measures of market performance.
After-tax returns are calculated using the historical highest
individual federal marginal income tax rates and do not include the impact of
state and local taxes.
Your actual
after-tax returns depend on your tax situation and may differ from those shown.
After-tax returns shown are not relevant to investors who hold their shares in a
tax-deferred account (including a 401(k) or IRA), or to investors who are
tax-exempt. After-tax
returns are shown only for Retail Class shares. After-tax returns for
Institutional Class shares will vary. Return
after taxes on distributions and redemption of Fund shares may be higher than
returns before taxes or returns after taxes on distributions due to an assumed
tax benefits from losses on a redemptions of the Fund’s shares at the end of the
period.
Average annual total returns for the periods ended
December 31, 2023
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|
|
|
|
| |
Class
(Inception Date) |
1
Year |
5
Years |
10
Years
|
Since
Inception (5/22/02) |
Since
Inception (12/30/16) |
Retail
Class (5/22/02) |
|
|
|
|
|
Return Before
Taxes |
5.68% |
16.68% |
10.70% |
11.04% |
N/A |
Return After
Taxes on Distributions |
5.68% |
12.87% |
7.39% |
8.92% |
N/A |
Return After Taxes on Distributions and
Redemption |
3.36% |
12.38% |
7.47% |
8.78% |
N/A |
Institutional
Class (12/30/16) |
|
|
|
| |
Return Before
Taxes |
5.85% |
17.33% |
N/A |
N/A |
13.23% |
Russell
2000®
Growth Index* |
18.66% |
9.22% |
7.16% |
8.23% |
8.07% |
* Comparative indices reflect no deductions for fees, expenses,
or taxes.
Source:
London Stock Exchange Group plc and its group undertakings (collectively, the
“LSE Group”). © LSE Group 2022. All rights in the Russell 2000® Growth Index (the “Index”) vest in the relevant LSE Group company
which owns the Index. The Index is calculated by or on behalf of FTSE
International Limited or its affiliate, agent or partner. Neither the LSE Group
nor its licensors accept any liability for any errors or omissions in the Index;
no party may rely on the Index returns shown; and the LSE Group makes no claim,
prediction, warranty or representation about the Small Cap Growth Fund or the
suitability of the Index with respect to the Small Cap Growth Fund. No further
distribution of data from the LSE Group is permitted without the relevant LSE
Group company’s express written consent. The LSE Group is not connected to the
Small Cap Growth Fund and does not promote, sponsor or endorse the Small Cap
Growth Fund or the content of this prospectus.
Investment
Adviser
Needham
Investment Management LLC is the investment adviser of the Small Cap Growth
Fund.
Portfolio
Manager
The
portfolio manager of the Small Cap Growth Fund is Chris Retzler. Mr. Retzler is
Executive Vice President and has been Portfolio Manager of the Small Cap Growth
Fund since 2008.
Purchase,
Exchange, and Redemption of Fund Shares
You
may purchase, exchange, or redeem shares of the Small Cap Growth Fund at any
time by sending a written request to The Needham Funds, c/o U.S. Bancorp
Fund Services, LLC, P.O. Box 701, Milwaukee, WI 53201-0701, by calling
1-800-625-7071, or by wire transfer.
The
minimum initial and subsequent investment amounts are shown below.
|
|
|
|
|
|
|
| |
Type
of Account |
To
Open Your Account |
To
Add to Your Account |
Retail
Class |
| |
Individuals,
Corporations, Partnerships, Trusts |
$2,000 |
$100 |
IRAs |
$1,000 |
None |
Institutional
Class |
| |
All
Accounts |
$100,000 |
None |
Tax
Information
The
Small Cap Growth Fund intends to make distributions each year. The Small Cap
Growth Fund’s distributions are taxable, and will be taxed as ordinary income or
capital gains, unless you are investing through a tax-deferred arrangement, such
as a 401(k) plan or an IRA. Such tax-deferred arrangements may be taxed later
upon withdrawal of monies from those arrangements.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase the Small Cap Growth Fund through a broker-dealer or other
financial intermediary (such as a bank), the Funds’ distributor and its related
companies may pay the intermediary for the sale of Small Cap Growth Fund shares
and related services. These payments may create a conflict of interest by
influencing the broker-dealer or other intermediary and your salesperson to
recommend the Small Cap Growth Fund over another investment. Ask your
salesperson or visit your financial intermediary’s website for more information.
Investment
Objectives, Strategies, Policies and Risks
Growth
Fund - Principal Investment Objective and Strategies
The
Growth
Fund
seeks long-term, tax-efficient capital appreciation by primarily investing in
the equity securities of public companies with above-average prospective
long-term growth rates at value prices. These above-average growth rates are
exhibited by companies at the vortex of rapid and fundamental changes in the
world economy resulting from technological or demographic change. In this
manner, the Growth Fund seeks to build wealth for long-term investors. The
Growth Fund strives for maximum tax efficiency by balancing gains and losses.
The central premise of the Growth Fund’s investment style is growth, but more
specifically, “Growth At a Reasonable Price” or “GARP.” This style has become
more popular as the markets have exhibited unprecedented levels of volatility
and as investors have come to understand some of the dangers and disadvantages
of momentum investing.
The
Growth
Fund
generally seeks to invest in companies which exhibit the following
characteristics:
•Long-Term
Value.
In the short term, equity markets often incorrectly value stocks. Good companies
are often undervalued based on short-term factors such as a disappointing
quarter that is not representative of the strength of the business, undue
general or industry-specific pessimism, institutions wishing to exit a large
position in the stock or a lack of knowledge and support for the stock. The
Growth Fund believes that these undervalued situations represent buying
opportunities and that real underlying value does eventually assert
itself.
•Strong
Growth Potential.
The Growth Fund invests in companies that are likely to be beneficiaries of
long-lasting economic trends resulting from fundamental technological change.
•Strong,
Incentivized Management Team.
The Growth Fund focuses on the quality of a company’s management team because it
believes that management is the most critical element in determining the success
of a business. The Growth Fund also considers management’s ownership of the
company’s stock and what appropriate stock option plans are in place to
incentivize all levels of management at the company.
•High
Operating Margins.
The Growth Fund concentrates on industries or companies with the potential to
deliver strong profits, not just high revenue growth. The Growth Fund focuses on
companies with the potential for high profit margins and strong cash generation.
Often, high margins are a sign that a company’s products and services have a
high perceived value to its customers. High operating margins are also often
indicative of companies with strong execution capabilities and provide companies
with the financial flexibility to invest for future growth.
Under
normal conditions, the Growth Fund invests at least 65% of its total assets in
the equity securities of domestic issuers listed on a nationally recognized
securities exchange. The Growth Fund considers domestic issuers of equity
securities to be companies located, organized, or with a majority of assets or
business in the United States. The Growth Fund may, but is not required to,
invest in the securities of companies of any market capitalization. The Growth
Fund may, but is not required to, invest in stocks from a variety of industries
included in the technology, healthcare, energy and industrials, specialty
retailing, media/leisure/cable/entertainment and business and consumer services
sectors, which are some of the sectors within the economy that the Adviser
believes will have significant long-term growth rates based on its market
research and company analysis and which often include the stocks of rapidly
growing companies with a variety of market capitalizations. When investing in
technology, the Adviser focuses on product cycles and unit growth. When
investing in healthcare, the Adviser focuses heavily on demographic, regulatory
and lifestyle trends. The Adviser considers overall growth prospects, financial
conditions, competitive positions, technology, research and development,
productivity, labor costs, raw materials costs and sources, competitive
operating margins, return
on
investment, managements and various other factors.
Aggressive
Growth Fund - Principal Investment Objective and Strategies
The
Aggressive
Growth Fund
seeks long-term, tax-efficient capital appreciation by primarily investing in
the equity securities of public companies with above-average prospective
long-term growth rates. While focusing on capital appreciation, the Aggressive
Growth Fund also seeks tax efficiency and lowered risk exposure through the use
of hedging instruments and techniques such as short sales and options.
Typically, these above-average growth rates are exhibited by companies
addressing the challenges of rapid and fundamental changes in the world economy
resulting from demographic, political and technological change. In this manner,
the Aggressive Growth Fund seeks to build wealth for long-term investors. The
Aggressive Growth Fund strives to balance tax efficiency with the inherent
volatility in rapid growth markets and industries. The central premise of the
Aggressive Growth Fund’s investment style is growth, but more specifically to
move early into emerging areas of rapid growth, to stay with the leaders in
established growth markets and to exit or sell short areas and/or companies that
the Aggressive Growth Fund believes can no longer sustain strong, above-average
growth and profitability.
The
Aggressive
Growth Fund
generally seeks to invest in companies which exhibit the following
characteristics:
•Strong
Growth Potential.
The Aggressive Growth Fund seeks markets and industries with strong growth
potential. Finding the areas with the greatest unmet needs leads one to the
companies attempting to satisfy those needs, and often delivers strong growth
opportunities. The Aggressive Growth Fund concentrates on market and industry
niche opportunities with large, multi-year growth prospects.
•Market
Leaders.
The Aggressive Growth Fund focuses on the leaders in these growth markets which
often garner a disproportionate share of the positive financial returns. The
Aggressive Growth Fund seeks to identify these leaders as they are emerging or
re-emerging and before they are widely recognized. At times, this may require
investing in private companies in various stages of development, subject to the
investment restrictions set forth in this Prospectus and in the Statement of
Additional Information. In selecting
private
companies for initial or continued inclusion in the Aggressive Growth Fund, the
Fund employs the same investment strategies and standards used when selecting a
publicly-held company.
•High
Operating Margins.
The Aggressive Growth Fund concentrates on industries or companies with the
potential to deliver strong profits, not just high revenue growth. The
Aggressive Growth Fund focuses on companies with the potential for high profit
margins and strong cash generation. Often, high margins are a sign that a
company’s products and services have a high perceived value to its customers.
High operating margins are also often indicative of companies with strong
execution capabilities and provide companies with the financial flexibility to
invest for future growth.
•Long-Term,
Sustainable Growth.
The Aggressive Growth Fund will focus on the sustainability of strong growth,
not just the absolute rate of change. The Aggressive Growth Fund considers the
best growth stocks to be those that can sustain strong growth over long periods
of time. Many companies can grow rapidly over short periods of time; far fewer
have the resources, positioning and execution abilities to deliver superior
growth records over time.
•Companies
Addressing Unmet Needs.
The Aggressive Growth Fund will invest in a company in any industry or
geographic market where it believes that the company’s new or differentiated
product or service is addressing a substantially unmet need. Most high growth
companies are in high growth markets, but others arise in mature sectors of the
economy where new products and services, particularly those that are
technologically driven, present new growth opportunities. The Aggressive Growth
Fund seeks to diversify among industries to moderate risk but will not do so at
the expense of limiting growth opportunities.
•Strong
Management Strategy and Performance.
Quality of management and balance sheets will play key roles in the Aggressive
Growth Fund’s investment decision process. A key part of sustainability is
having the managerial and financial resources to fund strong growth. Balance
sheet trends are also an important indicator as to the health of a business.
Beyond a management’s historical performance record, the Aggressive Growth Fund
focuses on the overall strategic vision and tactical decisions in assessing a
company’s growth potential.
Under
normal conditions, the Aggressive Growth Fund invests at least 65% of its total
assets in the equity securities of domestic issuers listed on a nationally
recognized securities exchange. The Aggressive Growth Fund considers domestic
issuers of equity securities to be companies located, organized, or with a
majority of assets or business in the United States. The Aggressive Growth Fund
invests principally in markets and industries with strong growth potential,
focusing primarily on the market leaders in these areas as these companies often
garner a disproportionate share of the positive financial returns. Although the
Aggressive Growth Fund may invest in companies of any size, the Aggressive
Growth Fund’s investment strategy may result in a focus on smaller
companies.
The
Aggressive Growth Fund may, but is not required to, invest in stocks from a
variety of industries included in the technology, healthcare, energy and
industrials, specialty retailing, media/leisure/cable/entertainment
and
business
and consumer services sectors which are some of the sectors within the economy
that the Adviser believes will have significant long-term
growth
rates based on its market research and company analysis. When investing in
technology, the Adviser focuses on product cycles and unit growth. When
investing in healthcare, the Adviser focuses heavily on demographic, regulatory
and lifestyle trends. The Adviser will consider overall growth prospects,
financial conditions, competitive positions, technology, research and
development, productivity, labor costs, raw materials costs and sources,
competitive operating margins, return on investment, managements and various
other factors.
Small
Cap Growth Fund - Principal Investment Objective and Strategies
The
Small
Cap Growth Fund
seeks long-term, tax-efficient capital appreciation by primarily investing in
the equity securities of smaller growth companies which the Fund believes are
trading at a discount to their underlying value yet have the potential for
significant long-term growth. Typically, these above-average growth rates are
exhibited by companies addressing the challenges of rapid and fundamental
changes in the world economy resulting from demographic, political and
technological change. In this manner, the Small Cap Growth Fund seeks to build
wealth for long-term investors. The Small Cap Growth Fund strives
to
balance tax efficiency with the inherent volatility in rapid growth markets and
industries. The central premise of the Small Cap Growth Fund’s investment style
is growth, and, more specifically, growth stocks trading at a discount to their
underlying value where a catalyst is in place to eliminate the discount through
acceleration of revenues and earnings over a period of twelve months or more.
The
Small
Cap Growth Fund
generally seeks to invest in companies which exhibit the following
characteristics:
•Strong,
Incentivized Management Team.
The Small Cap Growth Fund focuses, above all, on the quality and capability of a
company’s management team because it believes that management is the most
critical element in determining the success of a business. The Small Cap Growth
Fund also focuses on management’s ownership of the company’s stock and what
appropriate stock option plans are in place to incentivize all levels of
management at the company.
•No
Financial Leverage.
The Small Cap Growth Fund strongly prefers companies that take risks in their
business and not on their balance sheet. The Small Cap Growth Fund prefers to
invest in small cap companies that are debt free. The Small Cap Growth Fund
believes that financing availability for small cap companies is so limited that
to add leverage to the balance sheet is both unwise and
unacceptable.
•Coherent,
Well-Thought-Out Strategy.
The Small Cap Growth Fund seeks companies that have well-defined plans to
penetrate their markets and to grow their businesses. The company’s management
must be able to articulate that strategy to its shareholders and the investment
community.
•Strong,
Long-Term Growth Potential.
The Small Cap Growth Fund seeks markets and industries with strong growth
potential. Finding the areas with the greatest unmet needs leads one to the
companies attempting to satisfy those needs, and often delivers strong growth
opportunities. The Small Cap Growth Fund concentrates on market and industry
niche opportunities with large, multi-year growth prospects.
•Market
Leaders.
The Small Cap Growth Fund focuses on the leaders in these growth markets which
often garner a disproportionate share of the positive financial returns. The
Small Cap Growth Fund seeks to identify these leaders as
they
are emerging or re-emerging and before they are widely recognized. At times,
this may require investing in private companies in various stages of
development, subject to the investment restrictions set forth in this Prospectus
and in the Statement of Additional Information. In selecting private companies
for initial or continued inclusion in the Small Cap Growth Fund, the Fund
employs the same investment strategies and standards used when selecting a
publicly-held company.
•High
Operating Margins.
The Small Cap Growth Fund concentrates on industries or companies with the
potential to deliver strong profits, not just high revenue growth. The Small Cap
Growth Fund focuses on companies with the potential for high profit margins and
strong cash generation. Often, high margins are a sign that a company’s products
and services have a high perceived value to its customers. High operating
margins are also often indicative of companies with strong execution
capabilities and provide companies with the financial flexibility to invest for
future growth.
•Companies
Addressing Unmet Needs.
The Small Cap Growth Fund invests in companies that are developing new or
differentiated products or services to address a substantially unmet need. Some
high growth companies arise in mature sectors of the economy where new products
and services, particularly those that are technologically driven, present new
growth opportunities. The Small Cap Growth Fund seeks to diversify among
industries to moderate risk but will not do so at the expense of limiting growth
opportunities.
Under
normal conditions, the Small Cap Growth Fund invests at least 80% of its net
assets in the equity securities of domestic issuers listed on a nationally
recognized securities exchange that, at the time of initial investment by the
Small Cap Growth Fund, have market capitalizations not exceeding $8 billion. The
Small Cap Growth Fund considers domestic issuers of equity securities to be
companies located, organized, or with a majority of assets or business in the
United States. Although the Adviser will seek to invest the Small Cap Growth
Fund’s assets in accordance with the Small Cap Growth Fund’s policy with respect
to the investment of at least 80% of its net assets (the “80% Policy”), during
certain periods, which may be prolonged periods of time, market conditions, the
availability of attractive investment opportunities that the Adviser believes
are appropriate investments for the Small Cap Growth Fund and/or high levels of
new investments into
the
Small Cap Growth Fund can lead to periods of higher cash levels that cause the
Small Cap Growth Fund’s investments to be constituted of less than 80% of its
net assets pursuant to the 80% Policy.
The
Small Cap Growth Fund invests, in general, in companies with strong growth
potential that, for a variety of reasons, including the market’s inefficiencies,
are trading at a discount to their underlying value where a catalyst is in place
to eliminate that discount. The Small Cap Growth Fund may, but is not required
to, invest in stocks from a variety of industries included in the technology,
healthcare, energy and industrials, specialty retailing,
media/leisure/cable/entertainment and
business
and consumer services sectors, which are some of the sectors within the economy
that the Adviser believes will have significant long-term
growth
rates based on its market research and company analysis. When investing in
technology, the Adviser focuses on product cycles and unit growth. When
investing in healthcare, the Adviser focuses heavily on demographic, regulatory
and lifestyle trends. The Adviser considers overall growth prospects, financial
conditions, competitive positions, technology, research and development,
productivity, labor costs, raw materials costs and sources, competitive
operating margins, return on investment, managements and various other factors.
The Small Cap Growth Fund may engage in active and frequent trading of portfolio
securities.
In
the short term, equity markets often incorrectly value stocks. Good companies
are often undervalued based on short-term factors such as a disappointing
quarter for the company not representative of the strength of the business,
undue general or industry-specific pessimism, institutions wishing to exit a
large position in the stock or a lack of knowledge and support of the stock. The
Small Cap Growth Fund believes that these undervalued situations represent
buying opportunities. Lower quality companies are often overvalued based on
short-term factors such as inordinate optimism about a new industry or
technology, aggressive forecasts, investment banks promoting their clients, an
earnings spike, momentum investors driving up prices or accounting gimmicks.
These overvalued situations represent opportunities for short selling as, in the
long term, real underlying value will eventually assert itself.
Principal
Investment Strategies – All Funds
The
following principal investment strategies are common to each of the Needham
Funds (each a “Fund” and collectively, the “Funds”):
•Fundamental
Company and Market Analysis.
The Funds rely foremost on fundamental company and market analysis and
secondarily on macroeconomic analysis, including trends in gross domestic
product (“GDP”), interest rates and inflation, to arrive at investment
decisions. The Funds put a premium on in-depth company and industry analysis.
The Fund managers intend to visit with company managements frequently, attend
trade shows and other industry conferences and develop other sources of
independent insight. The Funds track key economic and political events as they
affect the relative attractiveness and growth prospects of the portfolio
companies. However, given the uneven history of economic forecasting and the
fact that many of the best growth companies can continue to grow even in a
challenging economic environment, the Funds will rely foremost on finding the
best positioned companies and not on market-timing.
•Disciplined
Approach to Valuation.
The Funds seek to enhance shareholder returns with a disciplined approach to
valuations, both relative and absolute. Since the markets’ valuations fluctuate
due to many factors, including economic and political uncertainties, inflation
perceptions and competition from other asset classes, the Funds look to value
stocks both relative to the market and relative to other growth companies,
seeking to pay the least for the most amount of sustainable growth. While growth
stocks have generally carried high relative valuations to the market, even the
best growth companies can become overvalued. The Funds will seek to find growth
stocks typically trading at a discount, not a premium, to the market. However,
the Funds intend to sell any holding if the absolute level of valuation, in
their opinion, outstrips the growth potential of that company.
•Issuer
and Market Sector Focus.
Although the Funds are classified as “diversified” under the 1940 Act, the Funds
may invest their assets in a smaller number of issuers than other, more
diversified, funds. To the extent the Funds invest a significant portion of
their assets in a few issuers’ securities, the performance of the Funds could be
significantly affected by the performance of those issuers. As a fundamental
policy, each Fund will not invest more than 25%
of
its net assets in issuers conducting their principal business in the same
industry. See Statement of Additional Information — “Investment Restrictions.”
However, each Fund at times may invest more than 25% of its total assets in
securities of issuers in one or more market sectors, including the technology
and healthcare sectors. A market sector may be made up of companies in a number
of related industries.
•Short
Selling.
The Funds may engage in short sales. In a short sale of a security, a Fund sells
stock which it does not own, making delivery with securities borrowed from a
broker. The Fund is then obligated to replace the security borrowed by
purchasing it at the market price at the time of replacement. The Funds may make
a profit or loss depending upon whether the market price of the security
decreases or increases between the date of the short sale and the date on which
the Funds replace the borrowed security.
Until
the security is replaced, the Fund is required to pay the lender any dividends
or interest which accrues during the period of the loan. In order to borrow the
security, a Fund may also have to pay a premium and/or interest which would
increase the cost of the security sold. The proceeds of the short sale will be
retained by the broker, to the extent necessary to meet margin requirements,
until the short position is closed. In addition, the broker may require the
deposit of collateral.
A
Fund will incur a loss as a result of the short sale if the price of the
security increases between the date of the short sale and the date on which the
Fund replaces the borrowed security. A Fund will realize a gain if the security
declines in price between those two dates. The amount of any gain will be
decreased and the amount of any loss will be increased by any premium or
interest the Fund may be required to pay in connection with the short sale. When
a cash dividend is declared on a security in which the Fund has a short
position, the Fund incurs the obligation to pay an amount equal to that dividend
to the lender of the shorted security. However, any such dividend on a security
sold short generally reduces the market value of the shorted security, thus
increasing a Fund’s unrealized gain or reducing a Fund’s unrealized loss on its
short-sale transaction. Whether a Fund will be successful in utilizing a short
sale will depend, in part, on the Adviser’s ability to correctly predict whether
the price of a security it borrows to sell short will decrease.
The
Funds may short highly valued companies in high growth sectors with challenged
cost structures and balance sheets, eroding competitive positions and rapidly
decelerating end demand. High growth markets invite numerous competitors, many
of which do not survive. In the early stages of new markets, it is not always
clear who the real winners will be. As the better companies emerge, the Funds
look to short the weaker competitors when the Funds believe their valuations do
not yet reflect their weaker status.
All
short sales must be fully collateralized and none of the Funds will sell short
securities the underlying value of which exceeds 10%
of the value of the net assets of the Fund. The Funds will also limit short
sales in any one issuer’s
securities
to 2% of the respective Fund’s net assets and will not sell short more than 2%
of any one class of the issuer’s securities.
Non-Principal
Investment Strategies – All Funds
As
a non-principal technique, each of the Funds may participate in initial public
offerings (“IPOs”).
In
summary, the keys to successful investing by the Funds include an understanding
of macroeconomic and political trends, an evaluation of the high growth sectors
of the economy, identifying a sector’s leaders and laggards, frequent visits
with company management and analyses of companies’ business fundamentals,
quality of management and competitive position. After finding an attractive
growth candidate for the Funds, the specific company’s valuation is evaluated
relative to its prospects and competing candidates, both current holdings and
other potential investments, to determine if enough price appreciation potential
is available to warrant inclusion in the Funds.
The
Funds will seek to reduce their risks with in-depth fundamental analysis, a
focused assessment of risk versus return, a view for the catalyst in the
individual stock and reliable monitoring of positions to be responsive to
changes in industry and market fundamentals. The Funds will also attempt to
reduce their risk by taking short positions in companies where they believe
market fundamentals have been exceeded, as well as by the use of options to
hedge positions.
The
Funds may invest in exchange-traded funds (“ETFs”), generally those that pursue
a passive index-based strategies, and also may transact in short sales of ETFs.
Each
Fund may temporarily invest up to 100% of its assets in cash or cash
equivalents, investment grade debt securities or repurchase agreements for
defensive purposes, which is inconsistent with the Fund’s principal investment
strategies, in attempting to respond to adverse market, economic, political or
other conditions. To the extent a Fund takes a defensive position, it may not
achieve its investment objective.
The
Funds will engage in an ongoing analysis of the existing Fund investments to
ensure that the growth, profitability and valuation of the investments warrant
their remaining in the Funds’ respective portfolios. Positions will be sold when
they no longer meet the respective long-term investment objectives of the Funds.
The Funds have adopted certain investment restrictions which are fundamental and
may not
be
changed without a shareholder vote. Except as specifically noted, the Funds’
investment objectives and policies described in the preceding pages are not
fundamental policies and may be changed or modified by the Board of Directors of
The Needham Funds, Inc. (the “Board of Directors”) without shareholder approval.
However, neither the Growth Fund nor the Aggressive Growth Fund will change its
investment objective without first providing written notice to its shareholders
at least 30 days in advance. The Small Cap Growth Fund will not change its
investment objective or 80% investment strategy without first providing written
notice to its shareholders at least 60 days in advance. A complete list of the
Funds’ investment restrictions, both fundamental and non-fundamental, and
certain other policies not described in the Prospectus may be found in the
Statement of Additional Information.
Principal
Risk Factors
The
following principal risk factors are common to each of the Funds, unless
otherwise indicated.
Stock
Investing and Market Risks. The
Funds invest primarily in equity securities, which fluctuate in value.
Therefore, shares of the Funds will also fluctuate in value. Loss of money is a
risk of investing in the Funds. The strategies used by the Funds’ portfolio
managers may fail to produce the intended result, and stock selection may
underperform the stock market, the Funds’
benchmarks
or other funds with similar objectives. There is no guarantee that the Funds
will achieve their investment objective of long-term, tax-efficient capital
appreciation.
Fund
losses may be incurred due to declines in one or more markets in which Fund
investments are made. These declines may be the result of, among other things,
political, regulatory, market, economic or social developments affecting the
relevant market(s). In addition, turbulence and reduced liquidity in financial
markets may negatively affect many issuers, which could have an adverse effect
on your Fund investment. Global economies and financial markets are increasingly
interconnected, and conditions and events in one country, region or financial
market may adversely impact issuers in a different country, region or financial
market. These risks may be magnified if certain events or developments adversely
interrupt the global supply chain; in these and other circumstances, such risks
might affect companies worldwide. As a result, local, regional or global events
such as war, acts of terrorism, the spread of infectious illness or other public
health issues, recessions or other events could have a significant negative
impact on global economic and market conditions. The coronavirus (COVID-19)
global pandemic and the aggressive responses taken by many governments,
including closing borders, restricting international and domestic travel and
imposing prolonged quarantines or similar restrictions, as well as the closure
of, or operational changes to, many retail and other businesses, have had
negative impacts, and in many cases severe negative impacts, on markets
worldwide. It is not known how long such impacts, or any future impacts of other
significant events described above, will or would last, but there could be a
prolonged period of global economic slowdown, which may impact your Fund
investment.
Focus
Risks. Although
the Funds are classified as “diversified” under the 1940 Act, the Funds may
invest their assets in a smaller number of issuers than other, more diversified,
funds. A Fund’s NAV may be more vulnerable to changes in the market value of a
single issuer or group of issuers and may be relatively more susceptible to
adverse effects from any single corporate, industry, economic, market, political
or regulatory occurrence than if the Fund’s investments consisted of securities
issued by a larger number of issuers. While political and economic news can
influence market-wide trends, other factors may be ignored by the market as a
whole but may cause price swings in a
single
company’s stock or the stocks of the companies within a given industry.
Growth
Investing Risks. The
Funds invest in stocks believed by the Adviser to have the potential for growth,
but that may not realize such perceived potential for extended periods of time
or may never realize such perceived growth potential. Such stocks may be more
volatile than other stocks because they can be more sensitive to investor
perceptions of the issuing company’s growth potential.
Market
Capitalization Risks.
To the extent a Fund emphasizes stocks of small, mid or large cap companies, it
will assume the associated risks. At any given time, any of these market
capitalizations may be out of favor with investors. Compared to small and mid
cap companies, larger companies may be less responsive to changes and
opportunities affecting their business. To the extent a Fund invests in small
and mid cap companies, it will be subject to additional risks because the
operating histories of these companies tend to be more limited, their earnings
and revenues less predictable (and some companies may be experiencing
significant losses), and their share prices more volatile than those of larger
companies. The shares of smaller companies tend to trade less frequently than
those of larger companies, which can adversely affect the pricing of these
securities and a Fund’s ability to sell these securities.
Sector
Risks. Business
and economic developments affecting a market sector or portion of a market
sector in which the Funds invest a significant portion of their assets would
likely have a greater effect on the Funds than those same developments would
have on a fund invested in a wider spectrum of market sectors.
A
Fund may, but is not required to, focus its investments in companies in the
technology sector or portions of the technology sector such as semiconductors
and/or semiconductor equipment. Technology companies generally operate in
intensely competitive markets. This level of competition can put pressure on the
prices of their products and services, which could adversely affect their
profitability. Also, because technological development in many areas increases
at a rapid rate, these companies often produce products with very short life
cycles and face the risk of product obsolescence. Other risks of investments in
technology companies, including semiconductor and semiconductor equipment
companies, include worldwide competition, changes in consumer preferences,
problems with product compatibility, the effects of economic slowdowns, and
changes in
government
regulation. The securities of companies in the technology sector may experience
more price volatility than securities of companies in other
sectors.
A
Fund may, but is not required to, focus its investments in companies in the
healthcare sector. The value of equity securities of these companies may
fluctuate because of changes in the regulatory and competitive environment in
which they operate. Many healthcare companies offer products and services that
are subject to governmental regulation and may be adversely affected by changes
in governmental policies or laws. Failure to obtain regulatory approvals or
changes in governmental policies regarding funding or subsidies may also
adversely affect the value of the equity securities of healthcare companies.
Healthcare companies may also be strongly affected by scientific or
technological developments and their products may quickly become obsolete.
Furthermore, these companies may be adversely affected by product
liability-related lawsuits.
The
securities of companies in the healthcare sector may experience more price
volatility than securities of companies in other sectors.
Additionally,
a Fund may, but is not required to, invest in business and consumer services
companies. These companies may be affected by the performance of the economy as
a whole and may
also
be affected by increases in interest rates and decreases in disposable income
and consumer confidence.
Small
Company Investment Risks.
Investments in smaller companies may offer greater opportunities for capital
appreciation than larger companies, but may also involve certain special risks.
These companies may have limited product lines, limited operating histories,
markets or financial resources and may be dependent on small or inexperienced
management groups. There may be less available information about these issuers
or less market interest than is normally the case with respect to larger
companies. The trading volume of small company securities (which tends to be
lower than that of securities of larger companies) may make such securities more
difficult to sell than securities of larger companies, and the lack of an
efficient market for small company securities may make them difficult to value.
Securities of smaller companies also may fluctuate in value more sharply than
those of larger companies. Furthermore, investments based on the anticipated
long-term growth of a small company may decline in value if such growth does not
occur.
Short
Sales Risks. Short
sales present the risk that the price of the security sold short will increase
in value between the time of the short sale and the time the Fund must purchase
the security to return it to the lender. The Fund may not be able to close a
short position at a favorable price or time and the loss of value on a short
sale is potentially unlimited. A Fund must borrow securities to enter into a
short sale. If the lender demands the return of the securities, the
Fund
must deliver them promptly, either by borrowing from another lender or buying
the securities. If this occurs at the same time other short-sellers are trying
to borrow or buy the securities, the stock
price
could rise, making it more likely that the Funds will have to cover their short
positions at an unfavorable price. This could happen regardless of whether or
not the prospects for an issuer are favorable or unfavorable.
Portfolio
Turnover Risk (Small Cap Growth Fund only). The
Small Cap Growth Fund may engage in short-term trading, which could produce
higher transaction costs and taxable distributions, and lower the Small Cap
Growth Fund’s after-tax performance.
Tax-Efficiency
Management Risks. Because
the Adviser balances investment considerations and tax-efficiency
considerations, the pretax performance of a Fund may be lower than the
performance of similar funds that are not managed for tax-efficiency. Even
though tax-efficient strategies are being used, they may not actually reduce the
amount of taxable income and capital gains distributed by a Fund to
shareholders. For example, at times a high percentage of a Fund’s net asset
value may consist of unrealized capital gains, which represent a potential
future tax liability to shareholders, or during certain periods market forces
may cause the Adviser, seeking to act in the best interests of a Fund, to manage
the Fund in a manner that may not maximize tax efficiency.
In
addition to the principal risks discussed above, an investment in the Funds may
be subject to additional risks which include those risks discussed below.
Non-Principal
Risk Factors – All Funds
Exchange-Traded
Fund Risks. The
risks of investing in ETFs typically reflect the risks associated with the types
of instruments in which the ETFs invest. When a Fund invests in an ETF,
shareholders of the Fund will bear indirectly their proportionate share of the
expenses of the ETF (including management fees) in addition to the expenses of
the Fund. ETFs are exchange-traded
investment
companies that are, in many cases, designed to provide investment results
corresponding to an index. The value of the underlying securities can
fluctuate in response to activities of individual companies or in response to
general market and/or economic conditions. Additional risks of investments
in ETFs include: (i) the market price of an ETF’s shares may trade at a discount
to its net asset value; (ii) an active trading market for an ETF’s shares may
not develop or be maintained; or (iii) trading may be halted if the listing
exchanges’ officials deem such action appropriate, the shares are delisted from
the exchange, or the activation of market-wide “circuit breakers” (which are
tied to large decreases in stock prices) halts trading generally. A Fund
will incur brokerage costs when purchasing and selling shares of ETFs.
IPO
Risks. The
Funds may purchase securities of a company that are offered pursuant to an IPO.
The market value of IPO shares may fluctuate considerably due to factors such as
the absence of a prior public market, unseasoned trading, the small number of
shares available for trading and limited information available about the issuer.
Private
Company Risks. Subject
to the Funds’ investment policies and restrictions on investments in illiquid
securities, the Funds may invest in privately-held companies. Investments in
companies in the early stages of development, particularly those companies which
have yet to offer securities to the public, may offer greater opportunities for
capital appreciation than longer-established or publicly-held companies.
However, investments in these companies are often riskier than investments in
longer-established or publicly-held companies. Typically, there is very little
public information available on these companies, their management philosophies
and strategies may be untested, their product lines, markets and financial
resources may be limited and the restrictions on resale of securities of such
companies imposed by U.S. securities laws and by market forces in general may
make it difficult for the Funds to liquidate any position it may have in such a
company. Even if the Funds are able to liquidate a position in such a company,
they may be forced to do so at prices which are not beneficial to the Funds.
Options
Risks.
A small investment in options, a type of derivative, could have a potentially
large impact on a Fund’s performance. The use of derivatives involves risks
different from, or possibly greater than, the risks associated with investing
directly in the underlying assets, and a
Fund’s
use of derivatives may result in losses to the Fund. Derivatives can be highly
volatile, illiquid and difficult to value, and there is the risk that changes in
the value of a derivative held by the Fund will not correlate with the
underlying assets or the Fund’s other investments in the manner intended.
Certain derivatives have the potential for unlimited loss, regardless of the
size of the initial investment, and involve greater risks than the underlying
assets because, in addition to general market risks, they are subject to
liquidity risk, credit and counterparty risk (failure of the counterparty to the
derivatives transaction to honor its obligation) and pricing risk (risk that the
derivative cannot or will not be accurately valued). Because some derivatives
have a leverage component, adverse changes in the value or level of the
underlying asset or reference rate can result in a loss substantially greater
than the amount invested in the derivative itself. Each Fund is required to
limit its derivatives exposure so that the total notional value of derivatives,
including the value of any assets sold short, does not exceed 10% of the Fund’s
net assets, and is subject to certain reporting requirements.
Securities
of Non-U.S. Issuers Risks.
The Funds may invest in the securities of non-U.S. issuers. To the extent the
Funds invest in securities of non-U.S. issuers, the Funds’ performance will be
influenced by political, social and economic factors affecting the non-U.S.
countries and companies in which the Funds invest. Securities of non-U.S.
issuers carry special risks, such as less developed or less efficient trading
markets, political instability, a lack of company information, differing
auditing and legal standards, and, potentially, less liquidity. Additionally,
certain non-U.S. markets may rely heavily on particular industries and are more
vulnerable to diplomatic developments, the imposition of economic sanctions
against a particular country or countries, organizations, entities and/or
individuals, changes in international trading patterns, trade barriers, and
other protectionist or retaliatory measures. International trade barriers or
economic sanctions against foreign countries, organizations, entities and/or
individuals may adversely affect the Funds' foreign holdings or
exposures.
Value
Investing Risk. Although
the Funds generally pursue a “growth” investment style, certain of the Funds’
investments also may be considered to have characteristics associated with a
“value” investing style. Depending on the degree and nature of an investment’s
value characteristics, the investment may respond differently to market and
other
developments
than investments without such characteristics. For example, an investment
believed by the Adviser to be undervalued may not realize its perceived value
for extended periods of time or may never realize its perceived
value.
Who
Should Invest in the Funds
The
Funds are not intended to provide a balanced investment program. The Funds are
most suitable for an investor who is willing to accept a higher degree of risk
than is present in many fixed-income or certain other equity mutual funds.
Portfolio
Holdings
Each
Fund will publicly disclose its portfolio holdings on a calendar quarter-end
basis, no earlier than 10 calendar days after such quarter end, on its website
accessible at www.needhamfunds.com under “Mutual Funds” then “Portfolio” under
the listed information for each Fund. The ten largest equity holdings of each
Fund also include the percentage of that Fund’s net assets that each holding
represents.
The
portfolio holdings information will remain accessible online at least until each
Fund files a report as an exhibit to Form N-PORT or on Form N-CSR for the period
that includes the date as of which the information was current. A description of
the Funds’ policies and procedures with respect to the disclosure of the Funds’
portfolio holdings is available in the Funds’ Statement of Additional
Information.
Investment
Adviser
Needham
Investment Management LLC, 250 Park Avenue, 10th
Floor, New York, NY, 10177, was formed in 1995 and is registered as an
investment adviser with the Securities and Exchange Commission. The Adviser is
an affiliate of Needham & Company, LLC. Needham & Company, LLC is the
Funds’ distributor and is an investment banking firm specializing in growth
companies and their investors.
The
Adviser directs investments of the Funds pursuant to a Restated Investment
Advisory Agreement dated October 21, 2004 between the Funds and the Adviser (the
“Advisory Agreement”). Each Fund has agreed to pay the Adviser a fee at the
annual rate of 1.25% of the respective average daily net assets of the Fund. The
Adviser or persons employed by or associated with the Adviser are, subject to
the authority of the
Board
of Directors, responsible for the overall management of the Funds’
affairs.
The
Adviser has contractually agreed, until April
29, 2025,
to waive its management fee for, and to reimburse expenses of, the Retail Class
and Institutional Class shares of each Fund in an amount that limits annual
operating expenses (excluding taxes, interest, brokerage, dividends on short
positions, fees and expenses of “acquired funds” (as defined in Form N-1A) and
extraordinary items but including the management fee stated in the Advisory
Agreement) to not more than 1.95% and 1.21%
(for the Growth Fund) or 1.85% and 1.18% (for the Aggressive Growth Fund and the
Small Cap Growth Fund) of the average daily net assets of the Retail Class and
Institutional Class shares, respectively, of the relevant Fund. For a period of
up to 36 months from the time of any waiver or reimbursement pursuant to this
agreement, the Adviser may recover from a Fund fees waived and expenses
reimbursed to the extent that such recovery would not cause the Total Annual
Fund Operating Expenses of the Fund to exceed the lesser of the Fund’s Expense
Cap in effect (i) at the time of the waiver or reimbursement, or (ii) at the
time of recoupment. Any such recovery will not include interest.
For
the fiscal year ended December 31, 2023, after applicable waivers and/or
reimbursements (or recoupment), the management fees paid by the Funds amounted
to the following: 1.20% of the average daily net assets of the Growth Fund;
1.05% of the average daily net assets of the Aggressive Growth Fund; and 0.97%
of the average daily net assets of the Small Cap Growth Fund.
A
discussion regarding the basis for the Board of Directors’ approval of the
Advisory Agreement is available in the Funds’ Annual Report to shareholders for
the period ended December 31, 2023.
Portfolio
Managers
Mr.
John O. Barr is a graduate of Harvard Business School and Colgate University.
From 1995 - 2000, Mr. Barr was a Managing Director and Senior Analyst at Needham
& Company. He was an Institutional Investor All-Star and was ranked by
Reuters as leader of one of the top software teams. He also served as Director
of Research. From 2000 - 2002, he was a Managing Director and Senior Analyst at
Robertson Stephens following semiconductor technology companies. From 2002 -
2008, Mr. Barr was a portfolio manager and analyst at Buckingham Capital
Management’s
diversified industry long/short domestic equity hedge fund. He
focused
on
telecom, semiconductors and software. He also has experience with financials,
energy, exploration and production and mining stocks. From 2008 - 2009, Mr. Barr
was the Founding and Managing Member of Oliver Investment Management, LLC, a
long-short hedge fund focused on small cap technology and exploration and mining
stocks. He rejoined Needham & Company in August 2009 as a Managing Director
and a portfolio manager of hedge funds. He serves as Executive Vice President
and Co-Portfolio Manager of the Growth Fund and as Executive Vice President and
the Portfolio Manager of the Aggressive Growth Fund. He engages in a variety of
portfolio management-related activities, including stock selection, research,
company visits and market analysis.
Mr.
Chris Retzler is the Co-Portfolio Manager of the Growth Fund and the Portfolio
Manager of the Small Cap Growth Fund. Mr. Retzler has been with Needham Asset
Management, LLC since 2005. Mr. Retzler is a graduate of the Columbia Business
School and was a Fulbright Scholar. He began his career in 1994 with Merrill
Lynch Investment Banking. When he left Merrill Lynch in 2002, Mr. Retzler was an
associate in Mergers and Acquisitions where he participated in numerous stock
and asset transactions across a wide range of domestic and global industries.
From 2002 until he joined Needham, he was in charge of Winterkorn, a privately
owned company. Prior to becoming Co-Portfolio Manager of the Growth Fund and the
Portfolio Manager of the Small Cap Growth Fund, Mr. Retzler was Managing
Director of Needham Asset Management, LLC. Mr. Retzler’s responsibilities at
Needham included examining and conducting due diligence on both existing and new
investment opportunities for the Needham Funds. He also serves as Executive Vice
President of the Growth Fund and the Small Cap Growth Fund. Mr. Retzler became
Co-Portfolio Manager of the Growth Fund in January 2009 and Portfolio Manager of
the Small Cap Growth Fund in January 2008. He engages in a variety of portfolio
management-related activities, including stock selection, research, company
visits and market analysis.
The
Statement of Additional Information provides additional information about the
Portfolio Managers’ compensation, other accounts managed by the Portfolio
Managers, and the Portfolio Managers’ ownership of shares in each
Fund.
Distribution
Arrangements
Needham
& Company, LLC (the “Distributor”), an affiliate of the Adviser, acts as a
distributor for the Funds.
The
Board of Directors has approved a Distribution and Services Agreement (the
“Distribution Agreement”) appointing the Distributor as a distributor of shares
of the Funds. Under the Distribution Agreement, the Distributor will bear the
cost and expense of preparing, printing and distributing any materials not
prepared by the Funds and other materials used by the Distributor in connection
with its offering shares of the Funds. Each Fund will pay all fees
and expenses in connection with registering and qualifying its shares under
Federal and state securities laws.
Rule
12b-1 under the 1940 Act permits an investment company to directly or indirectly
finance any activity associated with the sale and distribution of its shares
and/or shareholder-related services in accordance with a plan adopted by the
Board of Directors. Pursuant to this rule, the Directors of The Needham Funds,
Inc. have approved an Amended and Restated Plan of Distribution Pursuant to Rule
12b-1 (the “Rule 12b-1 Plan”) pursuant to which each Fund may pay a distribution
services and/or shareholder services fee to Needham & Company, LLC or others
at an annual rate of up to 0.25% of the aggregate average daily net assets of
Retail Class shares of such Fund which are attributable to the efforts of
Needham & Company, LLC or the various other distributors or service
providers, with respect to the Retail Class shares. These fees are paid out of
the assets of each Fund’s Retail Class shares on an ongoing basis, and thus over
time these fees will increase the cost of your investment in Retail Class shares
and may cost you more than paying other types of sales charges.
In
addition, the Adviser may pay amounts from its own resources, and not as an
additional charge to the Funds, to certain financial institutions in connection
with the sale and/or distribution of the Funds’ shares or the retention and/or
servicing of the Funds’ shareholders. These payments, which may include payments
for marketing support, are in addition to any distribution or servicing fees
payable pursuant to the Funds’ Rule 12b-1 Plan. Because these payments are not
made by shareholders or the Funds, the Funds’ total expense ratios will not be
affected by any such payments. These payments sometimes are referred to as
“revenue sharing.” In some cases, such payments may create an incentive for the
financial institution
to
recommend or make shares of the Funds available to its customers and may allow
the Funds greater access to the financial institution’s customers.
The
Needham Funds, Inc. and/or the Distributor may enter into related servicing
agreements appointing various firms, such as broker-dealers or banks, and
others, to provide all or any portion of the foregoing services for their
customers or clients through the Funds.
The
accounting and shareholder-related services provided by broker-dealers, banks
and other qualified financial institutions may include, but are not limited to,
establishing and maintaining shareholder accounts, sub-accounting, processing of
purchase and redemption orders, sending confirmation of transactions, forwarding
financial reports and other communications to shareholders, and responding to
shareholder inquiries regarding the Funds.
Net
Asset Value
The
price of each Fund’s shares is the net asset value (“NAV”) of each Fund. The NAV
per share of each Fund will generally be determined on each day when the New
York Stock Exchange (the “Exchange”) is open for business at the close of
regular session trading on the Exchange (usually 4:00 p.m. Eastern Time) and
will be computed by determining the aggregate market value of all assets of each
class of each Fund less its liabilities, and then dividing that amount by the
total number of its shares outstanding. Due to the fact that different expenses
are charged to the Retail Class and Institutional Class shares of a Fund, the
NAV of the two classes of a Fund will vary. On holidays or other days when the
Exchange is closed, the NAV is not calculated, and the Funds do not transact
purchase or redemption requests. The Exchange will not open in observance of the
following holidays: New Year’s Day, Martin Luther King, Jr. Day, Washington’s
Birthday, Good Friday, Memorial Day, Juneteenth National Independence Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. However, on
those days, the value of the Funds’ assets may be affected to the extent that
the Funds hold foreign securities that trade on foreign markets that are open.
From time to time, the Funds may employ fair-value pricing to value securities
for which market quotations are not readily available or for which market
quotations are believed to be unrepresentative of fair market value. The
determination of NAV for a particular day is applicable to all applications for
the purchase of
shares
as well as all requests for the redemption of shares received by the Funds’
transfer agent, U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank
Global Fund Services (the “Transfer Agent” or “USBFS”), before the time at which
NAV is determined on that day. Therefore, the price at which a purchase or
redemption is effected is based on the next calculation of NAV after the order
is placed. All purchase orders received before 4:00 p.m. (Eastern Time) will be
processed on that same day. Purchase orders received after 4:00 p.m. (Eastern
Time) will receive the next business day’s NAV per share. The Funds may change
the time at which the price of each Fund’s shares is determined if the Exchange
closes at a different time or an emergency or other extraordinary situation
exists.
Portfolio
securities for which market quotations are readily available are stated at the
last sale price reported by the principal exchange for the security as of the
Exchange’s close of business. Securities for which no sale has taken place
during the day and securities which are not listed on an exchange are valued at
the mean of the highest closing bid and lowest asked prices.
All
other securities and assets for which (a) market quotations are not readily
available, such as in the case of a market or technical disruption that prevents
the normal trading of a security held by a Fund, (b) market quotations are
believed to be unrepresentative of fair market value, such as in the case of a
thinly traded security, or (c) valuation is normally made at the last sale price
on a foreign exchange and a significant event occurs after the close of that
exchange but before the Exchange closes, are valued at their fair value as
determined in good faith by the Adviser, as the Funds’ Valuation Designee,
pursuant to procedures adopted by the Board of Directors. Fair value may be
determined using a variety of factors, including the analysis of market
valuations of comparable securities, the analysis of market events which the
Adviser believes impacts the determination of fair value, the use of the most
recently traded price for a security, or any quantitative or qualitative
analysis which will allow a Fund to reasonably arrive, in good faith, at a fair
valuation.
When
fair-value pricing is employed, the prices of securities used by the Funds to
calculate its NAV may differ from quoted or published prices for the same
securities. In addition, due to the subjective and variable nature of fair-value
pricing, it is possible that the value determined for a particular asset may be
materially different from the value realized upon such asset’s sale.
How
to Purchase Shares
The
Funds currently offer two classes of shares: Retail Class shares and
Institutional Class shares.
Retail
Class Shares
Retail
Class shares are offered at their NAV without any sales or other charge. Retail
Class shares are subject to 12b-1 distribution fees of up to 0.25% of the
average daily net assets of Retail Class shares. Over time, fees paid under this
distribution and service plan will increase the cost of a Retail Class
shareholder’s investment and may cost more than other types of sales charges.
The minimum initial investment for Retail Class shares for individuals,
corporations, partnerships, and trusts is $2,000. There is a $100 minimum for
subsequent investments. For IRAs, the minimum initial investment is $1,000 and
there is no minimum for subsequent investments. Investors investing through a
securities dealer or other institution should consult that firm regarding share
class availability and applicable minimums.
Institutional
Class Shares
Institutional
Class shares are offered primarily for direct investments by institutional
investors, such as pension and profit-sharing plans, employee benefit trusts,
endowments, foundations, corporations, and high net worth individuals. The
minimum initial investment for Institutional Class shares is $100,000. The
Adviser may waive the initial minimum in certain circumstances, including, but
not limited to, the following:
•Certain
wrap or other fee based programs for the benefit of clients of investment
professionals or other financial intermediaries;
•Employees
and directors of the Adviser and its affiliates and their families;
•Employee
benefit plans sponsored by the Adviser;
•Directors
of The Needham Funds, Inc. and their families;
•Employer-sponsored
retirement plans, such as defined contribution plans (401(k) plans and 457
plans), defined benefit plans, pension and profit-sharing plans, employee
benefit trusts, employee benefit plan alliances and other retirement plans
established by financial
intermediaries
where the investment is expected to reach the $100,000 minimum within a
reasonable time period; and
•Certain
registered investment advisers, broker-dealers and individuals accessing
accounts through registered investment advisers.
Family
members include a spouse, parents, a spouse’s parents, children, children’s
spouses, brothers, sisters, and a domestic partner of the employee, Director of
The Needham Funds, Inc., or director of the Adviser. Investors investing through
a securities dealer or other institution should consult that firm regarding
share class availability and applicable minimums.
Factors
to Consider when Choosing a Share Class
When
deciding which class of shares of a Fund to purchase, you should consider your
investment goals, present and future amounts you may invest in the Fund, and the
length of time you intend to hold your shares. To help you make a determination
as to which class of shares to buy, please refer back to the examples of the
Funds’ expenses over time in the “Fees and Expenses of the Fund” section for
each Fund in this Prospectus. You also may wish to consult with your financial
adviser for advice with regard to which share class would be most appropriate
for you.
Purchasing
Shares
You
may purchase shares of the Funds by sending a completed application form and
check to:
The
Needham Funds, Inc.
c/o
U.S. Bank Global Fund Services
P.O.
Box 701
Milwaukee,
WI 53201-0701
However,
you should not send any correspondence by overnight courier to the above post
office box address. Correspondence sent by overnight courier should be sent
to:
The
Needham Funds, Inc.
c/o
U.S. Bank Global Fund Services
615
East Michigan Street, 3rd
Floor
Milwaukee,
WI 53202
The
Funds do not consider the U.S. Postal Service or other independent delivery
services to be its agents. Therefore, deposit in the mail or with such services,
or receipt at the Transfer Agent’s
post
office box of purchase applications or orders does not constitute receipt by the
Transfer Agent. Receipt of purchase applications or orders is based on when the
order is received at the Transfer Agent’s offices.
Please
make sure you indicate how much money you want invested in each
Fund.
You
may purchase additional Fund shares by telephone by calling 1-800-625-7071.
Telephone transactions may not be used for initial purchases. USBFS also serves
as the administrator to the Funds.
You
also may purchase shares of the Funds through authorized broker-dealers or other
institutions who may charge for their services. These sales agents have the
responsibility of transmitting purchase orders and funds, and of crediting their
customers’ accounts following redemptions, in a timely manner and in accordance
with their customer agreements and this Prospectus. The Funds may be deemed to
have received a purchase order when an authorized broker-dealer or, if
applicable, its authorized designee, receives the order.
The
Funds’ minimum investment requirements may be waived for certain fee-based
advisory accounts that are included in investment advisory products (for
example, wrap accounts). In addition, the Adviser, in its sole discretion, may
waive the minimum initial or subsequent investment amount on a case-by-case
basis. Shares of the Funds are offered on a continuous basis. The Funds,
however, reserve the right, in their sole discretion, to reject any application
to purchase shares. Purchases cannot be made without a completed application.
All checks must be in U.S. dollars drawn on a domestic bank. The Funds will not
accept payment in cash or money orders. To prevent check fraud, the Funds will
not accept third party checks, Treasury checks, credit card checks, traveler’s
checks or starter checks for the purchase of shares. The Funds are unable to
accept post dated checks or any conditional order or payment. The Transfer Agent
will charge a $25.00 fee against a shareholder’s account, in addition to any
loss sustained by the Fund, for any payment that is returned.
All
shares will be purchased at the NAV per share next determined after receipt of
your application in good order. “Good order” means that your purchase request
includes:
•Fund
name and account number;
•Amount
of the transaction (in dollars or shares);
•A
completed account application or investment stub;
•Corporate/Institutional
accounts only: A certified corporate resolution dated within the last six months
(or a certified corporate resolution and letter of indemnity) must be on file
with the Transfer Agent;
•Any
supporting legal documentation that may be required; and
•When
opening a new account, a check payable to Needham Funds.
After
you open an account, you may purchase additional shares by sending a check
payable to Needham Funds and using the address given above. Please include your
account number and the name of the Fund in which you wish to invest on the
check. Investors may purchase additional shares of a Fund by calling
1-800-625-7071. Unless you have declined telephone transaction options on your
account application, and if your account has been open for at least 7 business
days, telephone orders will be accepted via electronic funds transfer from your
bank account through the Automated Clearing House (“ACH”) network. You must have
submitted a voided check or savings deposit slip to have bank information
established on your account prior to making a purchase. Telephone trades must be
received by or prior to market close. If your order is received prior to 4:00
p.m. Eastern Time, your shares will be purchased at the net asset value
calculated on the day your order is placed. If your order is received after 4:00
p.m. Eastern Time, your shares will be purchased at the net asset value
calculated on the next business day. During periods of high market activity,
shareholders may encounter higher than usual call wait times. Please allow
sufficient time to place your telephone transaction. Once a telephone
transaction has been placed, it cannot be canceled or modified after the close
of regular trading on the Exchange (generally, 4:00 p.m. Eastern
time).
Wire
Transfer
If
you are making your first investment in the Funds, before you wire funds the
Transfer Agent must have a completed account application. You may mail or
overnight deliver your account application to the Transfer Agent. Upon receipt
of your completed account application, the Transfer Agent will establish an
account for you. The account number assigned will be required as part of the
instruction that should be provided to your bank to send the wire. Your bank
must include both the name of the Fund you are purchasing, the
account
number, and your name so that monies can be correctly applied. Your bank should
transmit funds by wire to the Fund’s custodian:
U.S.
Bank, N.A.
777
East Wisconsin Avenue
Milwaukee,
WI 53202
ABA
#075000022
Credit:
U.S.
Bancorp Fund Services, LLC
Account
#112-952-137
Further
Credit:
(name
of Fund to be purchased)
(shareholder
registration)
(shareholder
account number)
Before
sending your wire, please contact the Transfer Agent at 1-800-625-7071 to advise
it of your intent to wire funds. This will ensure prompt and accurate credit
upon receipt of your wire. Wired funds must be received prior to 4:00 p.m.
(Eastern Time) to be eligible for same day pricing. The Funds and U.S. Bank,
N.A. are not responsible for the consequences of delays resulting from the
banking or Federal Reserve wire system, or from incomplete wiring
instructions.
Exchanges
You
may exchange some or all of your shares in any Fund for the same class of shares
in an identically registered account of any other Funds of The Needham Funds,
Inc.
When
you exchange shares, you are really selling shares of one Fund and buying shares
of another Fund. Therefore, your sale price and
purchase
price will be based on the NAV next calculated after your exchange request is
received. Please note that any exchange may have tax consequences for you. You
may exchange your shares on any day on which the Exchange is open for trading by
contacting the Funds directly either by mail or telephone, if you did not
decline telephone transaction options on your application. You may also exchange
shares through your financial institution by mail or telephone. If you establish
a new account by exchange, the exchanged Retail Class shares must have a minimum
value of $2,000 ($1,000 for IRAs), and the exchanged Institutional Class Shares
must have a minimum value of $100,000. All subsequent exchanges must have a
minimum value of $500. There is no minimum value for subsequent exchanges made
by IRAs. However, the Adviser, in its sole discretion, may waive the minimum
value
of exchanged shares on a case-by-case basis. If you recently purchased shares by
check or electronic funds transfer through the ACH network, you may not be able
to exchange your shares until your purchase has cleared (which may take up to 12
calendar days from the date of purchase).
There
is currently no service fee for exchanges; however, the Funds may change or
terminate this privilege on 60 days’ notice. Broker-dealers may charge you a fee
for handling exchanges. Please note that exchanges may be made only four (4)
times in any twelve (12) month period. The exchange privilege is not intended as
a vehicle for short-term trading.
Conversions
You
may be able to convert your shares of one class of a Fund into the other class
of the same Fund, provided certain conditions are met, such as meeting the
applicable eligibility requirements for investment into the new share
class.
If
you wish to convert your shares of one class of a Fund into shares of the other
class of the Fund, you must contact the Fund at 1-800-625-7071. The conversion
will be effected on the basis of the relative net asset values of the two
classes as of the conversion date without the imposition of any fee or other
charges by a Fund. Please contact your financial intermediary about any fees
that it may charge. A conversion of shares of one class of a Fund into shares of
the other class of a Fund is not expected to result in realization of a capital
gain or loss for federal income tax purposes.
Automatic
Investment Program
Once
your account has been opened with the initial minimum investment you may make
additional purchases on the fifth or twentieth day of each month through the
Automatic Investment Plan. This Plan provides a convenient method to have monies
deducted from your bank account for investment into the Funds. In order to
participate in the Plan, each purchase must be in the amount of $100 or more for
Retail Class shares, and your financial institution must be a member of the ACH
network. If your bank rejects your payment, the Funds’ Transfer Agent will
charge a $25.00 fee to your account. To begin participating in the Plan, please
complete the Automatic Investment Plan section on the
account
application or call the Funds’ Transfer Agent at 1-800-625-7071 for additional
information. Any request to change or terminate your Automatic Investment Plan
should
be
submitted to the Transfer Agent 5 days prior to the effective date.
Anti-Money
Laundering Compliance
The
Funds, the Distributor, and certain financial intermediaries (the “AML
Entities”) are required to comply with various anti-money laundering laws and
regulations. Consequently, the AML Entities may request additional information
from you to verify your identity and source of funds. If the AML Entities
determine that the information submitted does not provide for adequate identity
verification, it reserves the right to reject the establishment of your account.
If at any time the AML Entities believe an investor may be involved in
suspicious activity or if certain account information matches information on
government lists of suspicious persons, they may choose not to establish a new
account or may be required to “freeze” a shareholder’s account. They also may be
required to provide a governmental agency or another financial institution with
information about transactions that have occurred in a shareholder’s account or
to transfer monies received to establish a new account, transfer an existing
account or transfer the proceeds of an existing account to a governmental
agency. In some circumstances, the law may not permit the AML Entities to inform
the shareholder that it has taken the actions described above.
Federal
law requires the Funds to obtain, verify and record identifying information,
which includes the name, residential or business street address, date of birth
(for an individual), social security or taxpayer identification number or other
identifying information for each investor who opens or reopens an account with a
Fund. If you are opening an account in the name of a legal entity (e.g.,
partnership, limited liability company, business trust, corporation, etc.), you
must also supply the identity of the beneficial owners of the legal entity.
Applications without the required information will not be accepted. After
acceptance, to the extent permitted by applicable law or its customer
identification program, a Fund reserves the right (a) to place limits on
transactions in any account until the identity of the investor is verified; or
(b) to refuse an investment in a Fund or to involuntarily redeem an investor’s
shares and close an account in the event that an investor’s identity is not
verified. A Fund and its agents will not be responsible for any loss in an
investor’s account resulting from the investor’s delay in providing all required
identifying information or from closing an account and redeeming an investor’s
shares when an investor’s identity cannot be verified. Shares of
the
Funds have not been registered for sale outside of the United States.
The
Funds generally do not sell shares to investors residing outside of the United
States, even if they are United States citizens or lawful permanent residents,
except to investors with United States military APO or FPO addresses.
Please
contact the Transfer Agent at 1-800-625-7071 if you need additional assistance
when completing your application.
How
to Redeem Shares
You
may redeem your shares at any time. You are entitled to redeem all or any
portion of the shares credited to your accounts by submitting a written request
for redemption by regular mail to:
The
Needham Funds, Inc.
c/o
U.S. Bank Global Fund Services
P.O.
Box 701
Milwaukee,
WI 53201-0701
Redemption
requests sent by overnight courier should be sent to:
The
Needham Funds, Inc.
c/o
U.S. Bank Global Fund Services
615
East Michigan Street, 3rd
Floor
Milwaukee,
WI 53202
The
Funds do not consider the U.S. Postal Service or other independent delivery
services to be its agents. Therefore, deposit in the mail or with such services,
or receipt at the Transfer Agent’s post office box, of purchase orders or
redemption requests does not constitute receipt by the Transfer Agent of the
Funds. Receipt of purchase orders or redemption requests is based on when the
order is received at the Transfer Agent’s offices.
Please
make sure you indicate how much money you want to redeem from each
Fund.
Upon
receipt of a redemption request in good order, your shares will be redeemed at
the next determined NAV. If any portion of the shares to be redeemed represents
an investment made by check or electronic funds transfer through the ACH
network, the Funds may delay payment of the redemption proceeds until the
Transfer Agent is reasonably satisfied that your purchase has cleared. This may
take up to twelve (12) calendar days from the purchase date. Shareholders can
avoid this delay by utilizing the wire purchase option.
Payment
for shares redeemed will be mailed to you typically within one or two business
days, but no later than the seventh calendar day after receipt
of
the redemption request by the Transfer Agent. If payment of redemption proceeds
is to be made by wire transfer to a predetermined bank account, a $15.00 wire
fee will be applied. Investors may also have proceeds sent via electronic funds
transfer through the ACH network, to a previously designated bank account. There
is no charge to have proceeds sent via the ACH system and credit is available
within 2-3 days.
The
Funds typically send redemption proceeds on the next business day (a day when
the Exchange is open for normal business) after the redemption request in good
order is received by the Transfer Agent, regardless of whether the request is
made in writing, by telephone, wire, or an ACH transfer. Payment of redemption
proceeds may take longer than the Funds typically expect and may take up to
seven calendar days after a redemption request in good order is received by the
Transfer Agent, particularly during periods of stressed market conditions or
very large redemptions or excessive trading.
The
processing of redemptions may be suspended, and the delivery of redemption
proceeds may be delayed beyond seven days, depending on the circumstances, for
any period: (a) during which the Exchange is closed (other than on holidays or
weekends), or during which trading on the Exchange is restricted; (b) when an
emergency exists that makes the disposal of securities owned by a Fund or the
determination of the fair value of a Fund’s net assets not reasonably
practicable; or (c) as permitted by order of the Securities and Exchange
Commission for the protection of fund shareholders. For these purposes, the
Securities and Exchange Commission determines the conditions under which trading
shall be deemed to be restricted and an emergency shall be deemed to
exist.
Under
normal circumstances, the Funds expect to meet redemption requests through cash
holdings and/or the sale of cash equivalents or investment assets. Each Fund
further reserves the right to distribute “in kind” securities from the Fund’s
portfolio in lieu (in whole or in part) of cash under certain circumstances,
including under stressed market conditions.
It
is not expected that a Fund would do so except during unusual or stressed market
conditions. A redemption, whether in cash or in-kind, is a taxable event to you.
If a Fund pays redemption proceeds by a distribution of securities, you could
incur brokerage or other charges in converting the securities to cash and will
bear any
market
risks associated with such securities until they are converted into
cash.
Your
written redemption request will be considered to have been received in “good
order” if it includes:
•The
shareholder’s name;
•The
name of the Fund;
•The
account number;
•The
share or dollar amount to be redeemed; and
•The
signatures of all registered shareholders with signature guarantees, if
applicable.
The
Transfer Agent may request additional documentation from corporations,
executors, administrators, trustees, guardians, agents or an
attorney-in-fact.
A
signature guarantee, from either a Medallion program member or a non-Medallion
program member, is required in the following situations:
•If
ownership is being changed on your account;
•When
redemption proceeds are payable or sent to any person, address or bank account
not on record;
•When
a redemption request is received by the Transfer Agent and the account address
has changed within the last
60
calendar days;
•For
all redemptions in excess of $25,000 from any shareholder account.
In
addition to the situations described above, the Funds and/or Transfer Agent
reserve the right to require a signature guarantee or other acceptable signature
verification in other instances based on the circumstances relative to the
particular situation. The Funds reserve the right to waive any signature
requirement at their discretion.
Signature
guarantees will generally be accepted from domestic banks, brokers, dealers,
credit unions, national securities exchanges, registered securities
associations, clearing agencies and savings associations, as well as from
participants in the New York Stock Exchange Medallion Signature Program and the
Securities Transfer Agents Medallion Program (“STAMP”).
A
notary public is not an acceptable signature guarantor.
Non-financial
transactions, including establishing or modifying certain services on an
account, may require signature guarantee, signature verification from a
Signature Validation Program member, or other acceptable form of authentication
from a financial institution source.
Telephone
Redemptions/Exchanges
The
Funds permit individual shareholders or a representative of record for an
account to redeem or exchange shares by telephone in amounts up to $25,000 by
calling 1-800-625-7071. If you have not declined telephone transaction options
on the account application, you may redeem or exchange shares by telephone.
Telephone redemptions or exchanges must be in amounts of $1,000 or more.
Instructions must include your account number and the name of the Fund. Checks
issued must be made payable to the owner of record and may only be mailed to the
address of record. The request cannot be honored if an address change has been
made for the account within 60 days of the telephone redemption request. If
there are multiple account owners, the Transfer Agent may rely on the
instructions of only one owner.
Shares
held in IRA or other retirement plan accounts may be redeemed by telephone at
1-800-625-7071. Investors will be asked whether to withhold taxes from any
distribution. The Administrator may record all calls.
Each
Fund or its agents will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. These procedures may
include, among other things, requiring some form of personal identification
prior to acting upon telephone instructions. If an account has more than one
owner or authorized person, the Fund or its agents will accept telephone
instructions from any one owner or authorized person. The Funds reserve the
right to refuse a telephone redemption or exchange if they believe it is
advisable to do so. Assuming the Funds’ security procedures are followed,
neither the Funds nor their agents (including the Transfer Agent) will be
responsible for the authenticity of redemption or exchange instructions received
by telephone and believed to be genuine and any loss therefrom will be borne by
the investor. During periods of substantial economic or market change, telephone
redemptions or exchanges may be difficult to complete. You may always redeem or
exchange
shares
by mail if you are unable to contact the Funds or their agents by telephone.
Telephone trades must be received by or prior to market close. During periods of
high market activity, shareholders may encounter higher than usual call waits.
Please allow sufficient time to place your telephone transaction. Once a
telephone transaction has been placed, it cannot be canceled or modified after
the close of regular trading on the Exchange (generally, 4:00 p.m. Eastern
time).
Additional
Information on Redemptions
The
Board of Directors has adopted policies and procedures with respect to frequent
purchases and redemptions of the Funds’ shares by the Funds’ shareholders. The
Funds discourage, and do not accommodate, frequent purchases and redemptions of
the Funds’ shares by the Funds’ shareholders. The Funds restrict or reject such
trading or take other action if, in the judgment of the Adviser or the Funds’
Transfer Agent, such trading may interfere with the efficient management of the
Funds’ portfolios, may materially increase the Funds’ transaction costs,
administrative costs or taxes, or may otherwise be detrimental to the interests
of the Funds and their shareholders. The steps the Funds utilize to discourage
frequent transactions may include monitoring trading activity and imposing
trading restrictions on certain accounts. Transactions placed in violation of
the Funds’ market-timing trading policy may be cancelled or revoked by the Funds
on the next business day following receipt by the Funds.
While
the Funds (directly and with the assistance of their service providers) identify
and restrict frequent trading, there is no guarantee that the Funds will be able
to detect frequent purchases and redemptions or the participants engaged in such
activity, or, if it is detected, to prevent its recurrence. The Funds receive
purchase and sale orders through financial intermediaries and cannot always
detect frequent trading that may be facilitated by the use of such
intermediaries or by the use of group or omnibus accounts maintained by those
intermediaries. In situations in which the Funds become aware of possible
market-timing activity, it will notify the financial intermediary in order to
help facilitate the enforcement of its market-timing policies and procedures.
These policies will be applied uniformly to all financial intermediaries.
However, there is no assurance that the financial intermediary will investigate
or stop any activity that proves to be inappropriate. There is a risk that the
Funds’ and the financial intermediary’s policies and procedures will prove
ineffective
in whole or in part to detect or prevent frequent trading. Whether or not the
Funds or the financial intermediaries detect it, if market-timing activity
occurs, then you should anticipate that you will be subject to the disruptions
and increased expenses discussed above.
You
may elect to have redemption proceeds of $1,000 or more wired to your brokerage
account or a commercial bank account designated by you. The current fee for this
service is $15.00.
If
you have an IRA or other retirement plan, you must indicate on your written
redemption request whether or not to withhold Federal income tax. Redemption
requests failing to indicate an election not to have Federal income tax withheld
will be subject to withholding.
You
may also redeem shares through broker-dealers holding such shares who have made
arrangements with the Funds permitting redemptions by telephone or facsimile
transmission. These broker-dealers may charge a fee for this service. The Funds
will be deemed to have received a redemption order when an authorized
broker-dealer, or, if applicable, its authorized designee, receives the
order.
If
your transactions in the Funds’ shares at any time reduce your account value to
below $1,000, the Funds may choose to notify you that, unless your account is
brought up to at least such minimum amount, the Funds may, within 90 days,
redeem all your shares in the account and close it by making payment to you of
the proceeds.
Your
Fund account may be transferred to the state government of your state of
residence if it fails to meet certain ownership or activity requirements as
specified in your state’s abandoned property laws.
It
is important that the Funds maintain a correct address for each investor. An
incorrect address may cause an investor’s account statements and other mailings
to be returned to the Funds. Based upon statutory requirements for returned
mail, the Funds will attempt to locate the investor or rightful owner of the
account. If the Funds are unable to locate the investor, then they will
determine whether the investor’s account can legally be considered abandoned.
The Funds are legally obligated to escheat (or transfer) abandoned property to
the appropriate state’s unclaimed property administrator in accordance with
statutory requirements. The investor’s last known address of record determines
which state has jurisdiction. Investors who are residents of the state of Texas
may designate a representative to receive
legislatively
required unclaimed property due diligence notifications. Please contact the Fund
to complete a Texas Designation of Representative form.
Shareholder
Services
Certain
tax-advantaged retirement plans are available through which you may purchase
shares, including IRAs (and “rollovers” from existing retirement plans) for you
and your spouse, SEP-IRAs and Roth IRAs. Shares of the Funds may also be
purchased by Qualified Retirement Plans such as profit-sharing and money
purchase plans, 401(k) Plans and other Defined Contribution Plans, and by
Defined Benefit Plans. These types of accounts may be established only upon
receipt of a written application form. Should you have questions on the purchase
of shares by retirement plans, please call 1-800-625-7071 for Shareholder
Services.
Tax
Status, Dividends and Distributions
Each
Fund intends to make annual distributions to its shareholders of record of
substantially all of its realized net capital gains (the excess of realized net
long-term capital gains over realized net short-term capital losses), any
realized net gains from foreign currency transactions, net investment income and
the excess, if any, of realized net short-term capital gains over realized net
long-term capital losses. The Funds may make additional distributions, if
necessary, to avoid a 4% excise tax on certain undistributed ordinary income and
capital gain net income. Certain distributions made to shareholders of record as
of a date in October, November or December of a given year which are paid by the
Funds in January of the immediately subsequent year will be taxable to
shareholders as if received on December 31 of such given year.
Unless
an investment in a Fund is through a tax-exempt account or plan, such as an IRA
or qualified retirement plan, distributions are generally taxable to
shareholders at different rates depending on the length of time the Fund holds
its assets and the type of income that the Fund earns. Different tax rates apply
to ordinary income, qualified dividend income and long-term capital gain
distributions, regardless of the shareholder’s holding period for the shares.
Distributions of net investment income and net capital gains are taxable whether
received in cash or reinvested in additional shares.
Unless
a shareholder elects to do otherwise, all dividends and capital gain
distributions from the Funds will be automatically reinvested in additional full
and fractional Fund shares. Shareholders who do not wish to have dividends and
distributions automatically reinvested in Fund shares may choose the following
options:
(1)automatic
reinvestment of capital gain distributions in Fund shares and payment of
dividends in cash;
(2)payment
of all distributions and dividends in cash; or
(3)payment
of capital gains distributions in cash and automatic reinvestment of dividends
in Fund shares.
If
you elect to receive capital gains and/or distributions paid in cash, and the
U.S. Postal Service cannot deliver the check, or if a check remains outstanding
for six months, the Funds reserve the right to reinvest the distribution check
in your account, at the respective Fund’s current net asset value, and to
reinvest all subsequent distributions.
Shareholders
may change this election at any time by notifying the Transfer Agent by
telephone or in writing at least five days prior to the record date of the
distribution. If the account is maintained at an eligible broker-dealer or bank
contact your account representative. Dividends and distributions will be
reinvested at the respective Fund’s per share NAV on the reinvestment date
established for the dividend or distribution.
The
Funds are required to withhold as “backup withholding” 24% of distributions and
redemption proceeds payable to any individuals and certain other non-corporate
shareholders who do not provide the Funds with a correct taxpayer identification
number and certain required certifications or who are otherwise subject to
backup withholding. Upon a redemption of Fund shares, a shareholder will
ordinarily recognize a taxable gain or loss, subject to certain Federal tax
rules.
The
Funds report their shareholders’ cost basis, gain or loss, and holding period to
the Internal Revenue Service on the Consolidated Form 1099 provided to the
shareholders of the Funds when “covered” shares of the Funds are redeemed.
Covered shares are any shares acquired (including shares acquired through
reinvestment of the Funds’ distributions) on or after January 1, 2012. Each of
the Funds has chosen the “average
cost”
method as its default tax method. The Funds will use this method for purposes of
reporting a shareholder’s cost basis unless a shareholder instructs the relevant
Fund in writing to use a different calculation method. A shareholder may choose
a method different from the default method chosen by the Funds at the time of
purchase or sale of covered shares. Shareholders should consult their tax
advisors with regard to their particular circumstances.
The
foregoing is only a summary of some of the important Federal tax considerations
generally affecting the Funds and shareholders. In addition to those
considerations, there may be other Federal, state, local or foreign tax
considerations applicable to a particular investor. Prospective shareholders are
therefore urged to consult their tax advisors with respect to the effects of the
investment on their own tax situations.
Administrator,
Shareholder Servicing Agent and Transfer Agent
The
Funds employ U.S. Bancorp Fund Services, LLC as administrator pursuant to a Fund
Administration Servicing Agreement (the “Agreement”), to provide administrative
services to the Funds. The services provided by the Administrator under the
Agreement are subject to the supervision of the officers and Directors of The
Needham Funds, Inc., and include day-to-day administration of matters related to
the corporate existence of the Funds, maintenance of records and preparation of
reports.
U.S.
Bank Global Fund Services also provides various shareholder services made
available to each shareholder, including performance of transfer agency and
registrar functions and as dividend paying agent. U.S. Bank Global Fund Services
acts as the Funds’ shareholder servicing agent and fund accountant, and
administrator. Its principal business
address
is 615 East Michigan Street, Milwaukee, Wisconsin 53202.
Custodian
U.S.
Bank, N.A. acts as custodian for the Funds. Its principal business address is
1555 North Rivercenter Dr., Suite 302, Milwaukee, Wisconsin 53212.
Additional
Information
Independent
Registered Public Accounting Firm
RSM
US LLP,
80 City Square, Boston, Massachusetts 02129, serves as the Funds’ independent
registered public accounting firm.
Counsel
Proskauer
Rose LLP, Eleven Times Square,
New York, New York 10036, serves as the
Funds’ legal counsel.
Index
Descriptions
A
direct investment in the following indices is not possible.
Russell
2000®
Index
The
Russell 2000®
Index measures the performance of the small-cap segment of the U.S. equity
universe. The Russell 2000®
Index is a subset of the Russell 3000®
Index representing approximately 10% of the total market capitalization of that
index. The Russell 2000®
Index includes approximately 2,000 of the smallest securities based on a
combination of their market cap and current index membership.
The
Funds have been developed solely by the Adviser. The Funds are not in any way
connected to or sponsored, endorsed, sold or promoted by the LSE Group. FTSE
Russell is a trading name of certain of the LSE Group companies.
All
rights in the Russell 2000 Index and the Russell 3000 Index (together, the
“Indexes”) vest in the relevant LSE Group company which owns the Index.
“Russell®”
is
a trade mark of the relevant LSE Group company and is used by any other LSE
Group company under license.
The
Indexes are calculated by or on behalf of FTSE International Limited or its
affiliate, agent or partner. The LSE Group does not accept any liability
whatsoever to any person arising out of (a) the use of, reliance on or any
error in the Indexes or (b) investment in or operation of the Funds. The LSE
Group makes no claim, prediction, warranty or representation either as to the
results to be obtained from the Funds or the suitability of the Indexes for the
purpose to which it is being put by the Adviser.
The
source of the data for each of the Indexes is the LSE Group. ©LSE Group 2021.
All rights in the Indexes or data vest in the relevant LSE Group company which
owns the Index or the data. Neither the LSE Group nor its licensors accept any
liability for any errors or omissions in the Indexes or data and no party may
rely on any Indexes or data contained in this communication. No further
distribution of data from the LSE Group is permitted without the relevant LSE
Group company’s express written consent. The LSE Group does not promote, sponsor
or endorse the content of this communication.
Russell
2000®
Growth Index
The
Russell 2000®
Growth Index measures the performance of the small-cap segment of the U.S.
equity universe. It includes those Russell 2000®
companies
with higher price-to-value ratios and higher forecasted growth
values.
S&P
500®
Index
The
S&P 500®
Index focuses on the large-cap sector of the market; however, since it includes
a significant portion of the total value of the market, it also represents the
market. Companies in the S&P 500®
are considered leading companies in leading industries.
S&P
MidCap 400®
Index
The
S&P MidCap 400®
Index provides investors with a benchmark for mid-sized companies. The index
seeks to remain an accurate measure of mid-sized companies, reflecting the risk
and return characteristics of the broader mid-cap universe on an on-going basis.
Household
Delivery of Shareholder Documents
To
reduce expenses, The Needham Funds, Inc. may mail only one copy of the Funds’
Prospectus, proxy, information statements and other similar documents to those
addresses shared by two or more accounts. If you wish to receive individual
copies of these documents, please call the Funds at 1-800-625-7071 or contact
your financial institution. You will begin receiving individual copies thirty
days after receiving your request.
Financial
Highlights
The
financial highlights table is intended to help you understand each
Fund’s
financial performance for the past five years. Certain information reflects
financial results for a single share. The total returns in the table represent
the rate that an investor would have earned (or lost) on an investment in the
Fund (assuming reinvestment of all dividends and distributions). The information
excerpted below is derived from the Funds’ financial statements and financial
highlights, which for the year-ended December 31, 2023,
2022,
and 2021, have been audited by RSM US LLP, the Funds' independent registered
public accounting firm. The financial highlights for the year-ended December 31,
2020,
and 2019
for the Funds’ were audited by other auditors. The 2023
Annual Report is available upon request and without charge by calling
1-800-625-7071.
Needham
Growth Fund
Financial
Highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Retail
Class |
| Year
Ended December 31, |
(For
a Share Outstanding Throughout each Year) |
2023 |
2022 |
| 2021 |
2020 |
2019 |
|
|
Net
Asset Value, Beginning of Year |
$43.63 |
$66.90 |
| $55.89 |
$41.99 |
$33.04 |
| |
|
Investment
Operations |
|
|
|
|
| |
|
|
Net
Investment Loss |
(0.53) |
(0.67) |
| (0.89) |
(0.56) |
| (0.48) |
|
| |
Net
Realized and Unrealized Gain (Loss) on Investments |
12.24 |
(21.82) |
| 16.53 |
17.66 |
| 14.18 |
| |
|
Total
from Investment Operations |
11.71 |
(22.49) |
| 15.64 |
17.10 |
| 13.70 |
| |
|
Less
Distributions |
|
|
|
|
| |
|
|
Net
Realized Gains |
— |
(0.78) |
| (4.63) |
(3.20) |
| (4.75) |
|
| |
Total
Distributions |
— |
(0.78) |
| (4.63) |
(3.20) |
| (4.75) |
|
| |
Net
Asset Value, End of Year |
$55.34 |
| $43.63 |
|
| $66.90 |
| $55.89 |
| $41.99 |
| |
|
Total
Return |
26.85 |
% |
(33.66) |
% |
| 27.68 |
% |
41.59 |
% |
42.31 |
% |
(1) |
|
Net
Assets, End of Year (000’s) |
$74,277 |
| $62,117 |
|
| $101,366 |
| $82,628 |
$65,526 |
| |
|
Ratios/Supplemental
Data |
|
|
|
|
| |
|
|
Ratio
of Net Expenses to |
|
|
|
|
| |
|
|
Average
Net Assets |
1.78% |
1.85% |
| 1.78% |
1.85 |
% |
1.98 |
% |
| |
Ratio
of Net Expenses to Average |
|
|
|
|
| |
|
|
Net
Assets (before interest |
|
|
|
|
| |
|
|
and
dividend expense)(2) |
1.78% |
1.85% |
| 1.78% |
1.85 |
% |
1.95 |
% |
| |
Ratio
of Gross Expenses to Average |
|
|
|
|
| |
|
|
Net
Assets (before waiver and |
|
|
|
|
| |
|
|
reimbursement
of expenses) |
1.78% |
1.85% |
| 1.78% |
1.83 |
% |
2.01 |
% |
| |
Ratio
of Net Investment Loss |
|
|
|
|
| |
|
|
to
Average Net Assets |
(1.07)% |
(1.34)% |
| (1.40)% |
(1.23) |
% |
(1.21) |
% |
| |
Ratio
of Net Investment Loss to |
|
|
|
|
| |
|
|
Average
Net Assets (before waivers |
|
|
|
|
| |
|
|
and
reimbursements of expenses) |
(1.07)% |
(1.34)% |
| (1.40)% |
(1.21) |
% |
(1.24) |
% |
| |
Portfolio
turnover rate |
9% |
14% |
| 15% |
15 |
% |
13 |
% |
| |
(1)The
return reflects the actual performance for the year and does not include the
impact of any adjustments made for financial reporting required by Generally
Accepted Accounting Principles (GAAP).
(2)The
Adviser has contractually agreed to waive its fee and, if necessary, reimburse
expenses of the Fund until May 1, 2024 to the extent Total Annual Fund Operating
Expenses exceed 1.95% of the average daily net assets of the Retail Class shares
of the Fund (“Expense Cap”). For a period of up to 36 months from the time of
any waiver or reimbursement pursuant to this agreement, the Adviser may recoup
from the Fund fees waived and expenses reimbursed to the extent that such
recover would not cause the Total Annual Fund Operating Expenses of the Fund to
exceed the lesser of the Expense Cap in effect (i) at the time of the waiver or
reimbursement, or (ii) at the time of recoupment.
Needham
Growth Fund
Financial
Highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Institutional
Class |
| Year
Ended December 31, |
(For
a Share Outstanding Throughout each Year) |
2023 |
2022 |
| 2021 |
2020 |
2019 |
|
Net
Asset Value, Beginning of Year |
$45.27 |
$69.06 |
| $57.36 |
$42.83 |
| $33.45 |
| |
Investment
Operations |
|
|
|
|
| |
|
Net
Investment Loss |
(0.36) |
(0.47) |
| (0.68) |
(0.36) |
| (0.26) |
| |
Net
Realized and Unrealized Gain (Loss) on Investments |
12.72 |
(22.54) |
| 17.01 |
18.09 |
| 14.39 |
| |
Total
from Investment Operations |
12.36 |
(23.01) |
| 16.33 |
17.73 |
| 14.13 |
| |
Less
Distributions |
|
|
|
|
| |
|
Net
Realized Gains |
— |
(0.78) |
| (4.63) |
(3.20) |
| (4.75) |
| |
Total
Distributions |
— |
(0.78) |
| (4.63) |
(3.20) |
| (4.75) |
| |
Net
Asset Value, End of Year |
$57.63 |
| $45.27 |
|
| $69.06 |
| $57.36 |
| $42.83 |
| |
Total
Return |
27.30 |
% |
(33.34) |
% |
| 28.18 |
% |
42.24 |
% |
43.13 |
% |
|
Net
Assets, End of Year (000’s) |
$73,107 |
| $58,441 |
|
| $115,543 |
| $58,046 |
| $44,959 |
| |
Ratios/Supplemental
Data |
|
|
|
|
| |
|
Ratio
of Net Expenses to |
|
|
|
|
| |
|
Average
Net Assets |
1.40% |
1.40% |
| 1.40% |
1.40 |
% |
1.43 |
% |
|
Ratio
of Net Expenses to Average Net Assets |
|
|
|
|
| |
|
(before
interest and dividend expense)(1) |
1.40% |
1.40% |
| 1.40% |
1.40 |
% |
1.40 |
% |
|
Ratio
of Gross Expenses to Average Net Assets |
|
|
|
|
| |
|
(before
waiver and reimbursement of expenses) |
1.50% |
1.58% |
| 1.50% |
1.58 |
% |
1.73 |
% |
|
Ratio
of Net Investment Loss to |
|
|
|
|
| |
|
Average
Net Assets |
(0.69)% |
(0.90)% |
| (1.02)% |
(0.77) |
% |
(0.65) |
% |
|
Ratio
of Net Investment Loss to |
|
|
|
|
| |
|
Average
Net Assets (before waivers |
|
|
|
|
| |
|
and
reimbursements of expenses) |
(0.79)% |
(1.08)% |
| (1.12)% |
(0.96) |
% |
(0.95) |
% |
|
Portfolio
turnover rate |
9% |
14% |
| 15% |
15 |
% |
13 |
% |
|
(1)The
Adviser has contractually agreed to waive its fee and, if necessary, reimburse
expenses of the Fund until May 1, 2024 to the extent Total Annual Fund Operating
Expenses exceed 1.40% of the average daily net assets of the Institutional Class
shares of the Fund (“Expense Cap”). For a period of up to 36 months from the
time of any waiver or reimbursement pursuant to this agreement, the Adviser may
recoup from the Fund fees waived and expenses reimbursed to the extent that such
recover would not cause the Total Annual Fund Operating Expenses of the Fund to
exceed the lesser of the Expense Cap in effect (i) at the time of the waiver or
reimbursement, or (ii) at the time of recoupment.
Needham
Aggressive Growth Fund
Financial
Highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Retail
Class |
| Year
Ended December 31, |
(For
a Share Outstanding Throughout each Year) |
2023 |
2022 |
| 2021 |
| 2020 |
| 2019 |
|
Net
Asset Value, Beginning of Year |
$29.40 |
$40.56 |
| $31.58 |
| $21.77 |
|
| $16.86 |
| |
Investment
Operations |
|
|
|
|
|
|
| |
|
Net
Investment Loss |
(0.17) |
(0.43) |
| (0.59) |
| (0.37) |
|
| (0.30) |
| |
Net
Realized and Unrealized Gain (Loss) on Investments |
11.24 |
(10.73) |
| 12.45 |
| 11.41 |
|
| 7.53 |
| |
Total
from Investment Operations |
11.07 |
(11.16) |
| 11.86 |
| 11.04 |
|
| 7.23 |
| |
Less
Distributions |
|
|
|
|
|
|
| |
|
Net
Realized Gains |
— |
— |
| (2.88) |
| (1.23) |
|
| (2.32) |
| |
Total
Distributions |
— |
— |
| (2.88) |
| (1.23) |
|
| (2.32) |
| |
Net
Asset Value, End of Year |
$40.47 |
$29.40 |
| $40.56 |
| $31.58 |
|
| $21.77 |
| |
Total
Return |
37.65 |
% |
(27.53) |
% |
| 37.54 |
% |
| 51.39 |
% |
| 43.93 |
% |
|
Net
Assets, End of Year (000’s) |
$143,772 |
| $55,027 |
|
| $63,599 |
|
| $40,258 |
|
| $30,238 |
| |
Ratios/Supplemental
Data |
|
|
|
|
|
|
| |
|
Ratio
of Net Expenses to |
|
|
|
|
|
|
| |
|
Average
Net Assets |
1.79% |
1.85% |
| 1.86% |
| 1.95 |
% |
| 2.02 |
% |
|
Ratio
of Net Expenses to Average |
|
|
|
|
|
|
| |
|
Net
Assets (before interest |
|
|
|
|
|
|
| |
|
and
dividend expense)(1) |
1.79% |
1.85% |
| 1.86% |
| 1.95 |
% |
| 1.95 |
% |
|
Ratio
of Gross Expenses to Average |
|
|
|
|
|
|
| |
|
Net
Assets (before waiver and |
|
|
|
|
|
|
| |
|
reimbursement
of expenses or recoupment) |
1.78% |
1.82% |
| 1.82% |
| 1.96 |
% |
| 2.17 |
% |
|
Ratio
of Net Investment Loss |
|
|
|
|
|
|
| |
|
to
Average Net Assets |
(0.47)% |
(1.38)% |
| (1.62)% |
| (1.56) |
% |
| (1.46) |
% |
|
Ratio
of Net Investment Loss to |
|
|
|
|
|
|
| |
|
Average
Net Assets (before waivers |
|
|
|
|
|
|
| |
|
and
reimbursements of expenses) |
(0.45)% |
(1.35)% |
| (1.59)% |
| (1.57) |
% |
| (1.61) |
% |
|
Portfolio
turnover rate |
7% |
11% |
| 12% |
| 13 |
% |
| 9 |
% |
|
(1)The
Adviser has contractually agreed to waive its fee and, if necessary, reimburse
expenses of the Fund until May 1, 2024 to the extent Total Annual Fund Operating
Expenses exceed 1.85% of the average daily net assets of the Retail Class shares
of the Fund (“Expense Cap”). For a period of up to 36 months from the time of
any waiver or reimbursement pursuant to this agreement, the Adviser may recoup
from the Fund fees waived and expenses reimbursed to the extent that such
recover would not cause the Total Annual Fund Operating Expenses of the Fund to
exceed the lesser of the Expense Cap in effect (i) at the time of the waiver or
reimbursement, or (ii) at the time of recoupment.
Needham
Aggressive Growth Fund
Financial
Highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Institutional
Class |
| Year
Ended December 31, |
(For
a Share Outstanding Throughout each Year) |
2023 |
2022 |
2021 |
| 2020 |
| 2019 |
|
Net
Asset Value, Beginning of Year |
$30.73 |
| $42.11 |
| $32.49 |
|
| $22.23 |
|
| $17.08 |
| |
Investment
Operations |
|
|
|
|
|
| |
|
Net
Investment Loss |
0.08 |
| (0.23) |
| (0.36) |
|
| (0.22) |
|
| (0.19) |
| |
Net
Realized and Unrealized Gain (Loss) on Investments |
11.71 |
| (11.15) |
| 12.86 |
|
| 11.71 |
|
| 7.66 |
| |
Total
from Investment Operations |
11.79 |
| (11.38) |
| 12.50 |
|
| 11.49 |
|
| 7.47 |
| |
Less
Distributions |
|
|
|
|
|
| |
|
Net
Realized Gains |
— |
| — |
| (2.88) |
|
| (1.23) |
|
| (2.32) |
| |
Total
Distributions |
— |
| — |
| (2.88) |
|
| (1.23) |
|
| (2.32) |
| |
Net
Asset Value, End of Year |
$42.52 |
| $30.73 |
| $42.11 |
|
| $32.49 |
|
| $22.23 |
| |
Total
Return |
38.37 |
% |
(27.02) |
% |
38.43 |
% |
| 52.36 |
% |
| 44.79 |
% |
|
Net
Assets, End of Year (000’s) |
$254,313 |
| $79,891 |
| $76,778 |
|
| $34,132 |
|
| $25,821 |
| |
Ratios/Supplemental
Data |
|
|
|
|
|
| |
|
Ratio
of Net Expenses to |
|
|
|
|
|
| |
|
Average
Net Assets |
1.18 |
% |
1.18 |
% |
1.18 |
% |
| 1.33 |
% |
| 1.46 |
% |
|
Ratio
of Net Expenses to Average Net Assets |
|
|
|
|
|
| |
|
(before
interest and dividend expense)(1) |
1.18 |
% |
1.18 |
% |
1.18 |
% |
| 1.32 |
% |
| 1.40 |
% |
|
Ratio
of Gross Expenses to Average Net Assets |
|
|
|
|
|
| |
|
(before
waiver and reimbursement of expenses) |
1.52 |
% |
1.55 |
% |
1.53 |
% |
| 1.71 |
% |
| 1.90 |
% |
|
Ratio
of Net Investment Loss to |
|
|
|
|
|
| |
|
Average
Net Assets |
0.21 |
% |
(0.71) |
% |
(0.95) |
% |
| (0.94) |
% |
| (0.90) |
% |
|
Ratio
of Net Investment Loss to |
|
|
|
|
|
| |
|
Average
Net Assets (before waivers |
|
|
|
|
|
| |
|
and
reimbursements of expenses) |
(0.13) |
% |
(1.08) |
% |
(1.30) |
% |
| (1.32) |
% |
| (1.34) |
% |
|
Portfolio
turnover rate |
7 |
% |
11 |
% |
12 |
% |
| 13 |
% |
| 9 |
% |
|
(1)The
Adviser has contractually agreed to waive its fee and, if necessary, reimburse
expenses of the Fund until May 1, 2024 to the extent Total Annual Fund Operating
Expenses exceed 1.18% of the average daily net assets of the Institutional Class
shares of the Fund (“Expense Cap”). For a period of up to 36 months from the
time of any waiver or reimbursement pursuant to this agreement, the Adviser may
recoup from the Fund fees waived and expenses reimbursed to the extent that such
recover would not cause the Total Annual Fund Operating Expenses of the Fund to
exceed the lesser of the Expense Cap in effect (i) at the time of the waiver or
reimbursement, or (ii) at the time of recoupment.
Needham
Small Cap Growth Fund
Financial
Highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Retail
Class |
| Year
Ended December 31, |
(For
a Share Outstanding Throughout each Year) |
2023 |
2022 |
| 2021 |
2020 |
2019 |
|
| |
Net
Asset Value, Beginning of Year |
$15.50 |
$23.19 |
| $25.80 |
$17.59 |
| $12.40 |
|
|
| |
Investment
Operations |
|
|
|
|
| |
|
| |
Net
Investment Loss |
(0.07) |
(0.26) |
| (0.48) |
(0.32) |
| (0.22) |
|
|
| |
Net
Realized and Unrealized Gain (Loss) on Investments |
0.95 |
(6.79) |
| 3.69 |
12.06 |
| 6.89 |
|
|
| |
Total
from Investment Operations |
0.88 |
(7.05) |
| 3.21 |
11.74 |
| 6.67 |
|
|
| |
Less
Distributions |
|
|
|
|
| |
|
| |
Net
Realized Gains |
— |
(0.64) |
| (5.82) |
(3.53) |
| (1.48) |
|
|
| |
Total
Distributions |
— |
(0.64) |
| (5.82) |
(3.53) |
| (1.48) |
|
|
| |
Net
Asset Value, End of Year |
$16.38 |
| $15.50 |
|
| $23.19 |
| $25.80 |
| $17.59 |
|
|
| |
|
|
|
|
|
|
|
|
| |
Total
Return |
5.68 |
% |
(30.33) |
% |
| 10.98 |
% |
71.35 |
% |
54.45 |
% |
|
| |
Net
Assets, End of Year (000’s) |
$45,583 |
$59,054 |
| $112,830 |
$89,206 |
| $85,521 |
|
|
| |
Ratios/Supplemental
Data |
|
|
|
|
| |
|
| |
Ratio
of Net Expenses to |
|
|
|
|
| |
|
| |
Average
Net Assets |
1.80% |
1.85% |
| 1.85% |
1.85 |
% |
1.87 |
% |
|
| |
Ratio
of Net Expenses to Average |
|
|
|
|
| |
|
| |
Net
Assets (before interest |
|
|
|
|
| |
|
| |
and
dividend expense)(1) |
1.80% |
1.85% |
| 1.85% |
1.85 |
% |
1.87 |
% |
|
| |
Ratio
of Gross Expenses to Average |
|
|
|
|
| |
|
| |
Net
Assets (before waiver and |
|
|
|
|
| |
|
| |
reimbursement
of expenses) |
1.84% |
1.86% |
| 1.83% |
1.80 |
% |
2.07 |
% |
|
| |
Ratio
of Net Investment Loss |
|
|
|
|
| |
|
| |
to
Average Net Assets |
(0.48)% |
(1.47)% |
| (1.72)% |
(1.64) |
% |
(1.36) |
% |
|
| |
Ratio
of Net Investment Loss to |
|
|
|
|
| |
|
| |
Average
Net Assets (before waivers |
|
|
|
|
| |
|
| |
and
reimbursements of expenses) |
(0.51)% |
(1.48)% |
| (1.70)% |
(1.59) |
% |
(1.56) |
% |
|
| |
Portfolio
turnover rate |
126% |
109% |
| 133% |
191 |
% |
136 |
% |
|
| |
(1)The
Adviser has contractually agreed to waive its fee and, if necessary, reimburse
expenses of the Fund until May 1, 2024 to the extent Total Annual Fund Operating
Expenses exceed 1.85% of the average daily net assets of the Retail Class shares
of the Fund (“Expense Cap”). For a period of up to 36 months from the time of
any waiver or reimbursement pursuant to this agreement, the Adviser may recoup
from the Fund fees waived and expenses reimbursed to the extent that such
recover would not cause the Total Annual Fund Operating Expenses of the Fund to
exceed the lesser of the Expense Cap in effect (i) at the time of the waiver or
reimbursement, or (ii) at the time of recoupment.
Needham
Small Cap Growth Fund
Financial
Highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Institutional
Class |
| Year
Ended December 31, |
(For
a Share Outstanding Throughout each Year) |
2023 |
2022 |
| 2021 |
2020 |
2019 |
|
| |
Net
Asset Value, Beginning of Year |
$16.40 |
$24.32 |
| $26.64 |
$17.96 |
| $12.57 |
|
|
| |
Investment
Operations |
|
|
|
|
| |
|
| |
Net
Investment Loss |
0.03 |
(0.14) |
| (0.31) |
(0.20) |
| (0.12) |
|
|
| |
Net
Realized and Unrealized Gain (Loss) on Investments |
0.94 |
(7.14) |
| 3.81 |
12.41 |
| 6.99 |
|
|
| |
Total
from Investment Operations |
0.97 |
(7.28) |
| 3.50 |
12.21 |
| 6.87 |
|
|
| |
Less
Distributions |
|
|
|
|
| |
|
| |
Net
Realized Gains |
— |
(0.64) |
| (5.82) |
(3.53) |
| (1.48) |
|
|
| |
Total
Distributions |
— |
(0.64) |
| (5.82) |
(3.53) |
| (1.48) |
|
|
| |
Net
Asset Value, End of Year |
$17.37 |
| $16.40 |
|
| $24.32 |
| $26.64 |
| $17.96 |
|
|
| |
Total
Return |
5.91 |
% |
(29.82) |
% |
| 11.74 |
% |
72.51 |
% |
55.31 |
% |
|
| |
Net
Assets, End of Year (000’s) |
$120,715 |
| $137,578 |
|
| $173,855 |
| $127,943 |
| $46,589 |
|
|
| |
Ratios/Supplemental
Data |
|
|
|
|
| |
|
| |
Ratio
of Net Expenses to |
|
|
|
|
| |
|
| |
Average
Net Assets |
1.18 |
% |
1.18 |
% |
| 1.18 |
% |
1.18 |
% |
1.22 |
% |
|
| |
Ratio
of Net Expenses to Average Net Assets |
|
|
|
|
| |
|
| |
(before
interest and dividend expense)(1) |
1.18 |
% |
1.18 |
% |
| 1.18 |
% |
1.18 |
% |
1.22 |
% |
|
| |
Ratio
of Gross Expenses to Average Net Assets |
|
|
|
|
| |
|
| |
(before
waiver and reimbursement of expenses) |
1.57 |
% |
1.62 |
% |
| 1.54 |
% |
1.57 |
% |
1.83 |
% |
|
| |
Ratio
of Net Investment Loss |
|
|
|
|
| |
|
| |
to
Average Net Assets |
0.16 |
% |
(0.76) |
% |
| (1.04) |
% |
(0.97) |
% |
(0.72) |
% |
|
| |
Ratio
of Net Investment Loss to |
|
|
|
|
| |
|
| |
Average
Net Assets (before waivers |
|
|
|
|
| |
|
| |
and
reimbursements of expenses) |
(0.23) |
% |
(1.21) |
% |
| (1.40) |
% |
(1.35) |
% |
(1.33) |
% |
|
| |
Portfolio
turnover rate |
126 |
% |
109 |
% |
| 133 |
% |
191 |
% |
136 |
% |
|
| |
(1)The
Adviser has contractually agreed to waive its fee and, if necessary, reimburse
expenses of the Fund until May 1, 2024 to the extent Total Annual Fund Operating
Expenses exceed 1.18% of the average daily net assets of the Institutional Class
shares of the Fund (“Expense Cap”). For a period of up to 36 months from the
time of any waiver or reimbursement pursuant to this agreement, the Adviser may
recoup from the Fund fees waived and expenses reimbursed to the extent that such
recover would not cause the Total Annual Fund Operating Expenses of the Fund to
exceed the lesser of the Expense Cap in effect (i) at the time of the waiver or
reimbursement, or (ii) at the time of recoupment.
Needham
Growth Fund
Needham
Aggressive Growth Fund
Needham
Small Cap Growth Fund
Prospectus
April 29,
2024
For
investors who want more information about the Funds, the following documents are
available upon request:
Annual/Semi-Annual
Reports: Additional information about the Funds’ investments is available in the
Funds’ annual and semi-annual reports to shareholders and
in Form N-CSR.
In the annual report, you will find a discussion of the market conditions and
investment strategies that significantly affected the Funds’ performance during
the last fiscal year. In
Form N-CSR, you will find the Fund’s annual and semi-annual financial
statements.
Statement
of Additional Information: The Funds’ Statement of Additional Information
(“SAI”) provides more detailed information about the Funds and is incorporated
into this Prospectus by reference, making it legally part of this
Prospectus.
The
Funds’ Annual Report, Semi-Annual Report and SAI are available, without charge,
upon request by contacting the Funds at 1-800-625-7071. Shareholder inquiries
should be directed to The Needham Funds, Inc., P.O. Box 701, Milwaukee, WI
53201-0701.
Correspondence
sent by overnight courier should be sent to The Needham Funds, Inc., c/o U.S.
Bank Global Fund Services, 615 East Michigan Street, 3rd
Floor, Milwaukee, WI 53202. Shareholders may also make inquiries regarding the
Funds by telephone by calling 1-800-625-7071. The Funds make available the SAI
and annual and semi-annual reports, free of charge, on the Funds’ website at
www.needhamfunds.com. The SAI, annual and semi-annual reports, and other
information are available by e-mail request by sending an e-mail to
[email protected].
You
also can review the Funds’ Annual Report, Semi-Annual Report and SAI at the
Securities and Exchange Commission’s website at www.sec.gov. Text-only copies
can be obtained from the SEC for a fee by electronic request at
[email protected].
Investment
Company Act
File
No. 811-9114