Neuberger
Berman Equity Funds
|
|
Investor
Class |
Neuberger
Berman Focus Fund |
|
NBSSX |
Neuberger
Berman Genesis Fund |
|
NBGNX |
Neuberger
Berman International Equity Fund |
|
NIQVX |
Neuberger
Berman Large Cap Growth Fund |
|
NGUAX |
Neuberger
Berman Large Cap Value Fund |
|
NPRTX |
Neuberger
Berman Mid Cap Growth Fund |
|
NMANX |
Neuberger
Berman Mid Cap Intrinsic Value Fund |
|
NBRVX |
Neuberger
Berman Small Cap Growth Fund |
|
NBMIX |
Neuberger
Berman Sustainable Equity Fund |
|
NBSRX |
Prospectus
December 18, 2023
These
securities, like the securities of all mutual funds, have not been approved or
disapproved by the Securities and Exchange Commission, and the Securities and
Exchange Commission has not determined if this prospectus is accurate or
complete. Any representation to the contrary is a criminal offense.
Contents
Neuberger
Berman Equity Funds
Fund
Summaries
Neuberger
Berman Focus Fund
Investor
Class Shares (NBSSX)
GOAL
The Fund
seeks long-term growth of capital.
Fees and
Expenses
These tables
describe the fees and expenses that you may pay if you buy, hold or sell shares
of the Fund. You may pay other fees, such as brokerage commissions and other
fees to financial intermediaries, which are not reflected in the table and
example below.
Shareholder Fees (fees paid
directly from your investment) |
|
None |
Annual Fund Operating Expenses
(expenses that you pay each year as a % of the value of your
investment) |
|
|
Management
fees |
|
0.79 |
Distribution
and/or shareholder service (12b-1) fees |
|
None |
Other
expenses |
|
0.13 |
Total
annual operating expenses |
|
0.92 |
Expense
Example
The expense
example can help you compare costs among mutual funds. The example assumes that
you invested $10,000 for the periods shown, that you redeemed all of your shares
at the end of those periods, that the Fund earned a hypothetical 5% total return
each year, and that the Fund’s expenses were those in the table. Actual
performance and expenses may be higher or lower.
|
|
1
Year |
|
3
Years |
|
5
Years |
|
10
Years |
Investor
Class |
|
$94 |
|
$293 |
|
$509 |
|
$1,131 |
Portfolio
Turnover
The 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 Fund shares are
held in a taxable account. These costs, which are not reflected in annual
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was 78% of the average
value of its portfolio.
Principal Investment
Strategies
To pursue
its goal, the Fund invests in a concentrated portfolio, consisting mainly of
common stocks of companies of any size that are selected using a fundamental,
research driven approach.
Under normal
market conditions, the Fund typically holds a limited number of stocks of U.S.
and non-U.S. companies, including companies in emerging markets. Because of
this, the Fund may at times be substantially over- and under-weighted in certain
economic sectors.
The
Portfolio Managers, with the assistance of Neuberger Berman research analysts,
look for what they believe to be undervalued companies. Factors in identifying
these firms may include depressed valuations, a history of above-average
returns, an established market niche, and a belief that the company has sound
future business prospects. This approach is designed to let the Fund benefit
from potential increases in stock prices, while endeavoring to limit the risks
typically associated with investing in a smaller number of stocks.
The Fund may
invest in restricted securities, including private placements, which are
securities that are subject to legal restrictions on their sale and may not be
sold to the public unless registered under the applicable securities law or
pursuant to an applicable exemption.
The Fund may
also use options, including, but not limited to, buying and selling (writing)
put and call options on individual stocks, to attempt to enhance returns. The
Fund will only sell (write) call options on individual stocks if it
simultaneously holds an equivalent position in the stock underlying the option
(“covered call option”).
The Fund may
invest in depositary receipts.
In an effort
to achieve its goal, the Fund may engage in active and frequent
trading.
As part of
their fundamental investment analysis the Portfolio Managers consider
Environmental, Social and Governance (ESG) factors they believe are financially
material to individual investments, where applicable, as described below. While
this analysis is inherently subjective and may be informed by both internally
generated and third-party metrics, data and other information, the Portfolio
Managers believe that the consideration of financially material ESG factors,
alongside traditional financial metrics, may enhance the Fund’s overall
investment process. The consideration of ESG factors does not apply to certain
instruments, such as certain derivative instruments, other registered investment
companies, cash and cash equivalents. The consideration of ESG factors as part
of the investment process does not mean that the Fund pursues a specific
“impact” or “sustainable” investment strategy.
The
Portfolio Managers follow a disciplined selling strategy and may sell a security
when it reaches a target valuation, if a company’s business fails to perform as
expected, or when other opportunities appear more
attractive.
PRINCIPAL INVESTMENT
RISKS
Most of the
Fund’s performance depends on what happens in the stock market, the Portfolio
Managers’ evaluation of those developments, and the success of the Portfolio
Managers in implementing the Fund’s investment strategies. The market’s behavior
can be difficult to predict, particularly in the short term. There can be no
guarantee that the Fund will achieve its goal. The Fund may take temporary
defensive and cash management positions; to the extent it does, it will not be
pursuing its principal investment strategies.
The actual
risk exposure taken by the Fund in its investment program will vary over time,
depending on various factors including the Portfolio Managers’ evaluation of
issuer, political, regulatory, market, or economic developments. There can be no
guarantee that the Portfolio Managers will be successful in their attempts to
manage the risk exposure of the Fund or will appropriately evaluate or weigh the
multiple factors involved in investment decisions, including issuer, market
and/or instrument-specific analysis, valuation and ESG factors.
The Fund is a mutual fund, not a bank deposit, and is not
guaranteed or insured by the Federal Deposit Insurance Corporation or any other
government agency. The value of your investment may fall, sometimes sharply,
and you could lose money by investing in the
Fund.
Each of the
following risks, which are described in alphabetical order and not in order of
any presumed importance, can significantly affect the Fund’s performance. The
relative importance of, or potential exposure as a result of, each of these
risks will vary based on market and other investment-specific
considerations.
Currency
Risk. Currency risk is the risk that foreign currencies will decline in
value relative to the U.S. dollar. To the extent that the Fund invests in
securities or other instruments denominated in or indexed to foreign currencies,
changes in currency exchange rates could adversely impact investment gains or
add to investment losses. Currency exchange rates may fluctuate significantly
over short periods of time and can be affected unpredictably by various factors,
including investor perception and changes in interest rates; intervention, or
failure to intervene, by U.S. or foreign governments, central banks, or
supranational entities; or by currency controls or political developments in the
U.S. or abroad.
Depositary
Receipts Risk. Depositary receipts are certificates issued by a financial
institution evidencing ownership of underlying foreign securities. Depositary
receipts involve many of the same risks of investing directly in the underlying
foreign securities. Depositary receipts are subject to the risk of fluctuation
in the currency exchange rate if, as is often the case, the underlying foreign
securities are denominated in foreign currency, and there may be an imperfect
correlation between the market value of depositary receipts and the underlying
foreign securities.
Foreign
and Emerging Market Risk. Foreign securities involve risks in addition to
those associated with comparable U.S. securities. Additional risks include
exposure to less developed or less efficient trading markets; social, political,
diplomatic, or economic instability; trade barriers and other protectionist
trade policies (including those of the U.S.); imposition of economic sanctions
against a particular country or countries, organizations, companies, entities
and/or individuals; significant government involvement in an economy and/or
market structure; fluctuations in foreign currencies or currency redenomination;
potential for default on sovereign debt; nationalization or expropriation of
assets; settlement, custodial or other operational risks; higher transaction
costs; confiscatory withholding or other taxes; and less stringent auditing and
accounting, corporate disclosure, governance, and legal standards. As a result,
foreign securities may fluctuate more widely in price, and may also be less
liquid, than
comparable
U.S. securities. Regardless of where a company is organized or its stock is
traded, its performance may be affected significantly by events in regions from
which it derives its profits or in which it conducts significant
operations.
Investing in
emerging market countries involves risks in addition to and greater than those
generally associated with investing in more developed foreign countries. The
governments of emerging market countries may be more unstable and more likely to
impose capital controls, nationalize a company or industry, place restrictions
on foreign ownership and on withdrawing sale proceeds of securities from the
country, intervene in the financial markets, and/or impose burdensome taxes that
could adversely affect security prices. To the extent a foreign security is
denominated in U.S. dollars, there is also the risk that a foreign government
will not let U.S. dollar-denominated assets leave the country. In addition, the
economies of emerging market countries may be dependent on relatively few
industries that are more susceptible to local and global changes. Emerging
market countries may also have less developed legal and accounting systems, and
their legal systems may deal with issuer bankruptcies and defaults differently
than U.S. law would. Securities markets in emerging market countries are also
relatively small and have substantially lower trading volumes. Securities of
issuers in emerging market countries may be more volatile and less liquid than
securities of issuers in foreign countries with more developed economies or
markets and the situation may require that the Fund fair value its holdings in
those countries.
Securities
of issuers traded on foreign exchanges may be suspended, either by the issuers
themselves, by an exchange, or by governmental authorities. The likelihood of
such suspensions may be higher for securities of issuers in emerging or
less-developed market countries than in countries with more developed markets.
Trading suspensions may be applied from time to time to the securities of
individual issuers for reasons specific to that issuer, or may be applied
broadly by exchanges or governmental authorities in response to market events.
Suspensions may last for significant periods of time, during which trading in
the securities and in instruments that reference the securities, such as
derivative instruments, may be halted. In the event that the Fund holds material
positions in such suspended securities or instruments, the Fund’s ability to
liquidate its positions or provide liquidity to investors may be compromised and
the Fund could incur significant losses.
High
Portfolio Turnover Risk. The Fund may engage in active and frequent trading
and may have a high portfolio turnover rate, which may increase the Fund’s
transaction costs, may adversely affect the Fund’s performance and may generate
a greater amount of capital gain distributions to shareholders than if the Fund
had a low portfolio turnover rate.
Issuer-Specific
Risk. An individual security may be more volatile, and may perform
differently, than the market as a whole.
The Fund’s
portfolio may contain fewer securities than the portfolios of other funds, which
increases the risk that the value of the Fund could go down because of the poor
performance of one or a few investments.
Liquidity
Risk. From time to time, the trading market for a particular investment in
which the Fund invests, or a particular type of instrument in which the Fund is
invested, may become less liquid or even illiquid. Illiquid investments
frequently can be more difficult to purchase or sell at an advantageous price or
time, and there is a greater risk that the investments may not be sold for the
price at which the Fund is carrying them. Certain investments that were liquid
when the Fund purchased them may become illiquid, sometimes abruptly.
Additionally, market closures due to holidays or other factors may render a
security or group of securities (e.g., securities tied to a particular country
or geographic region) illiquid for a period of time. An inability to sell a
portfolio position can adversely affect the Fund’s value or prevent the Fund
from being able to take advantage of other investment opportunities. Market
prices for such securities or other investments may be volatile. During periods
of substantial market volatility, an investment or even an entire market segment
may become illiquid, sometimes abruptly, which can adversely affect the Fund’s
ability to limit losses.
Unexpected
episodes of illiquidity, including due to market or political factors,
instrument or issuer-specific factors and/or unanticipated outflows or other
factors, may limit the Fund’s ability to pay redemption proceeds within the
allowable time period. To meet redemption requests during periods of
illiquidity, the Fund may be forced to sell securities at an unfavorable time
and/or under unfavorable conditions.
Market
Capitalization Risk. To the extent the Fund invests in securities of small-,
mid-, or large-cap companies, it takes on the associated risks. At times, any of
these market capitalizations may be out of favor with investors. Compared to
small- and mid-cap companies, large-cap companies may be unable to respond as
quickly to changes and opportunities and may grow at a slower rate. Compared to
large-cap companies, small- and mid-cap companies may depend on a more limited
management group, may have a shorter history of operations, less publicly
available information, less stable earnings, and limited product lines, markets
or financial resources. The securities of small- and mid-cap companies are often
more volatile, which at times can be rapid and unpredictable, and less liquid
than the securities of larger companies and may be more affected than other
types of securities by the underperformance of a sector, during market
downturns, or by adverse publicity and investor perceptions.
Market
Volatility Risk. Markets may be volatile and values of individual securities
and other investments, including those of a particular type, may decline
significantly in response to adverse issuer, political, regulatory, market,
economic or other developments that may cause broad changes in market value,
public perceptions concerning these developments, and adverse investor sentiment
or publicity. Geopolitical and other risks, including environmental and public
health risks may add to instability in world economies and markets generally.
Changes in value may be temporary or may last for extended periods. If the Fund
sells a portfolio position before it reaches its market peak, it may miss out on
opportunities for better performance.
Options
Risk. The use of options involves investment strategies and risks different
from those associated with ordinary portfolio securities transactions. If a
strategy is applied at an inappropriate time or market conditions or trends are
judged incorrectly, the use of options may lower the Fund’s return. There can be
no guarantee that the use of options will increase the Fund’s return or income.
In addition, there may be an imperfect correlation between the movement in
prices of options and the securities underlying them and there may at times not
be a liquid secondary market for various options. An abrupt change in the price
of an underlying security could render an option worthless. The prices of
options are volatile and are influenced by, among other things, actual and
anticipated changes in the value of the underlying instrument, or in interest or
currency exchange rates, including the anticipated volatility of the underlying
instrument (known as implied volatility), which in turn are affected by the
performance of the issuer of the underlying instrument, by fiscal and monetary
policies and by national and international political and economic events. As
such, prior to the exercise or expiration of the option, the Fund is exposed to
implied volatility risk, meaning the value, as based on implied volatility, of
an option may increase due to market and economic conditions or views based on
the sector or industry in which issuers of the underlying instrument
participate, including company-specific factors.
By writing
put options, the Fund takes on the risk of declines in the value of the
underlying instrument, including the possibility of a loss up to the entire
strike price of each option it sells, but without the corresponding opportunity
to benefit from potential increases in the value of the underlying instrument.
When the Fund writes a put option, it assumes the risk that it must purchase the
underlying instrument at a strike price that may be higher than the market price
of the instrument. If there is a broad market decline and the Fund is not able
to close out its written put options, it may result in substantial losses to the
Fund. By writing a call option, the Fund may be obligated to deliver instruments
underlying an option at less than the market price. When the Fund writes a
covered call option, it gives up the opportunity to profit from a price increase
in the underlying instrument above the strike price. If a covered call option
that the Fund has written is exercised, the Fund will experience a gain or loss
from the sale of the underlying instrument, depending on the price at which the
Fund purchased the instrument and the strike price of the option. The Fund will
receive a premium from writing options, but the premium received may not be
sufficient to offset any losses sustained from exercised options. In the case of
a covered call, the premium received may be offset by a decline in the market
value of the underlying instrument during the option period. If an option that
the Fund has purchased is never exercised or closed out, the Fund will lose the
amount of the premium it paid and the use of those funds.
Private
Placements and Other Restricted Securities Risk. Private placements and
other restricted securities, including securities for which Fund management has
material non-public information, are securities that are subject to legal and/or
contractual restrictions on their sales. These securities may not be sold to the
public unless certain conditions are met, which may include registration under
the applicable securities laws. As a result of the absence of a public trading
market, the prices of these securities may be more difficult to determine than
publicly traded securities and these securities may involve heightened risk as
compared to investments in securities of publicly traded companies. Private
placements and other restricted securities may be illiquid, and it frequently
can be difficult to sell them at a time when it may otherwise be desirable to do
so or the Fund may be able to sell them only at prices that are less than what
the Fund regards as their fair market value. Transaction costs may be higher for
these securities. In addition, the Fund may get only limited information about
the issuer of a private placement or other restricted security.
Recent
Market Conditions. Both U.S. and international markets have experienced
significant volatility in recent months and years. As a result of such
volatility, investment returns may fluctuate significantly. National economies
are substantially interconnected, as are global financial markets, which creates
the possibility that conditions in one country or region might adversely impact
issuers in a different country or region. However, the interconnectedness of
economies and/or markets may be diminishing, which may impact such economies and
markets in ways that cannot be foreseen at this time.
Although
interest rates were unusually low in recent years in the U.S. and abroad,
recently, the Federal Reserve and certain foreign central banks raised interest
rates as part of their efforts to address rising inflation. It is difficult to
accurately predict the pace at which interest rates might increase, the timing,
frequency or magnitude of any such increases in interest rates, or when such
increases might stop. Additionally, various economic and political factors could
cause the Federal Reserve or other foreign central banks to change their
approach in the future and such actions may result in an economic slowdown both
in the U.S. and abroad. Unexpected changes in interest rates could lead to
market volatility or reduce liquidity in certain sectors of the
market.
Deteriorating
economic fundamentals may, in turn, increase the risk of default or insolvency
of particular issuers, negatively impact market value, cause credit spreads to
widen, and reduce bank balance sheets. Any of these could cause an increase in
market volatility, or reduce liquidity across various markets or decrease
confidence in the markets.
Some
countries, including the U.S., have adopted more protectionist trade policies.
Slowing global economic growth, the rise in protectionist trade policies,
changes to some major international trade agreements, risks associated with the
trade agreement between the United Kingdom and the European Union, and the risks
associated with trade negotiations between the U.S. and China, could affect the
economies of many nations in ways that cannot necessarily be foreseen at the
present time. In addition, the current strength of the U.S. dollar may decrease
foreign demand for U.S. assets, which could have a negative impact on certain
issuers and/or industries.
Regulators
in the U.S. have proposed and adopted a number of changes to regulations
involving the markets and issuers, some of which apply to the Fund. The full
effect of various newly adopted regulations is not currently known.
Additionally, it is not currently known whether any of the proposed regulations
will be adopted. However, due to the scope of regulations being proposed and
adopted, certain of these changes to regulation could limit the Fund’s ability
to pursue its investment strategies or make certain investments, may make it
more costly for it to operate, or adversely impact performance.
Tensions,
war, or open conflict between nations, such as between Russia and Ukraine, in
the Middle East, or in eastern Asia could affect the economies of many nations,
including the United States. The duration of ongoing hostilities and any
sanctions and related events cannot be predicted. Those events present material
uncertainty and risk with respect to markets globally and the performance of the
Fund and its investments or operations could be negatively impacted.
High public
debt in the U.S. and other countries creates ongoing systemic and market risks
and policymaking uncertainty. There is no assurance that the U.S. Congress will
act to raise the nation’s debt ceiling; a failure to do so could cause market
turmoil and substantial investment risks that cannot now be fully predicted.
Unexpected political, regulatory and diplomatic events within the U.S. and
abroad may affect investor and consumer confidence and may adversely impact
financial markets and the broader economy.
There is
widespread concern about the potential effects of global climate change on
property and security values. Certain issuers, industries and regions may be
adversely affected by the impact of climate change in ways that cannot be
foreseen. The impact of legislation, regulation and international accords
related to climate change may negatively impact certain issuers and/or
industries.
Redemption
Risk. The Fund may experience periods of large or frequent redemptions that
could cause the Fund to sell assets at inopportune times, which could have a
negative impact on the Fund’s overall liquidity, or at a loss or depressed
value. Redemption risk is greater to the extent that one or more investors or
intermediaries control a large percentage of investments in the Fund and the
risk is heightened during periods of declining or illiquid markets. Large
redemptions could hurt the Fund’s performance, increase transaction costs, and
create adverse tax consequences.
Securities
Lending Risk. Securities lending involves a possible delay in recovery of
the loaned securities or a possible loss of rights in the collateral should the
borrower fail financially. The Fund could also lose money if the value of the
collateral decreases.
Sector
Risk. From time to time, based on market or economic conditions, the Fund
may have significant positions in one or more sectors of the market. To the
extent the Fund invests more heavily in particular sectors, its performance will
be especially sensitive to developments that significantly affect those sectors.
Individual sectors or sub-sectors may be more volatile, and may perform
differently, than the broader market. The industries that constitute a sector
may all react in the same way to economic, political or regulatory
events.
Value
Stock Risk. Value stocks may remain undervalued for extended periods of
time, may decrease in value during a given period, may not ever realize what the
portfolio management team believes to be their full value, or the portfolio
management team’s assumptions about intrinsic value or potential for
appreciation may be incorrect. This may happen, among other reasons, because of
a failure to anticipate which stocks or industries would benefit from changing
market or economic conditions or investor preferences.
A summary
of the Fund’s additional principal investment risks is as
follows:
Risk of
Increase in Expenses. A decline in the Fund’s average net assets during the
current fiscal year due to market volatility or other factors could cause the
Fund’s expenses for the current fiscal year to be higher than the expense
information presented in “Fees and Expenses.”
Operational
and Cybersecurity Risk. The Fund and its service providers, and your ability
to transact with the Fund, may be negatively impacted due to operational matters
arising from, among other problems, human errors, systems and technology
disruptions or failures, or cybersecurity incidents. Cybersecurity incidents may
allow an unauthorized party to gain access to fund assets, customer data, or
proprietary information, or cause the Fund or its service providers, as well as
the securities trading venues and their service providers, to suffer data
corruption or lose operational functionality. Cybersecurity incidents can result
from deliberate attacks or unintentional events. It is not possible for the
Manager or the other Fund service providers to identify all of the cybersecurity
or other operational risks that may affect the Fund or to develop processes and
controls to completely eliminate or mitigate their occurrence or effects. Most
issuers in which the Fund invests are heavily dependent on computers for data
storage and operations, and require ready access to the internet to conduct
their business. Thus, cybersecurity incidents could also affect issuers of
securities in which the Fund invests, leading to significant loss of
value.
Risk
Management. Risk is an essential part of investing. No risk management
program can eliminate the Fund’s exposure to adverse events; at best, it may
only reduce the possibility that the Fund will be affected by such events, and
especially those risks that are not intrinsic to the Fund’s investment program.
The Fund could experience losses if judgments about risk prove to be
incorrect.
Valuation
Risk. The Fund may not be able to sell an investment at the price at which
the Fund has valued the investment. Such differences could be significant,
particularly for illiquid securities and securities that trade in relatively
thin markets and/or markets that experience extreme volatility. If market or
other conditions make it difficult to value an investment, the Fund may be
required to value such investments using more subjective methods, known as fair
value methodologies. Using fair value methodologies to price investments may
result in a value that is different from an investment’s most recent price and
from the prices used by other funds to calculate their NAVs. The Fund uses
pricing services to provide values for certain securities and there is no
assurance that the Fund will be able to sell an investment at the price
established by such pricing services. The Fund’s ability to value its
investments in an accurate and timely manner may be impacted by technological
issues and/or errors by third party service providers, such as pricing services
or accounting agents.
PERFORMANCE
The
following bar chart and table provide an indication of the risks of investing in
the Fund. The bar chart
shows how the Fund’s performance has varied from year to year. The table below the bar chart shows
what the returns would equal if you averaged out actual performance over various
lengths of time and compares the returns with the returns of a broad-based
market index. The index, which is
described in “Descriptions of Indices” in the prospectus, has characteristics
relevant to the Fund’s investment strategy.
Returns
would have been lower if the Manager had not reimbursed certain expenses and/or
waived a portion of the investment management fees during certain of the periods
shown.
Past performance (before and
after taxes) is not a prediction of future results. Visit
www.nb.com
or call 800-877-9700 for
updated performance information.
year-by-year % Returns as of 12/31 each
year
Years |
Returns |
2013 |
35.45% |
2014 |
10.51% |
2015 |
0.20% |
2016 |
7.01% |
2017 |
19.34% |
2018 |
-8.88% |
2019 |
28.37% |
2020 |
24.45% |
2021 |
20.28% |
2022 |
-31.74% |
Best
quarter: 2020-06-30Q2 2020 23.08%
Worst
quarter: 2022-06-30Q2 2022 -20.14%
Year to Date performance as
of: 9/30/2023 10.12%
average annual total % returns as of
12/31/22
Focus
Fund |
|
1
Year |
|
5
Years |
|
10
Years |
Return
Before Taxes |
|
-31.74 |
|
3.63 |
|
8.63 |
Return
After Taxes on Distributions |
|
-31.75 |
|
1.39 |
|
6.17 |
Return
After Taxes on Distributions and Sale of Fund Shares |
|
-18.79 |
|
2.83 |
|
6.66 |
MSCI All
Country World Index (Net) (reflects reinvested dividends net of
withholding taxes, but reflects no deduction for fees, expenses or
taxes) |
|
-18.36 |
|
5.23 |
|
7.98 |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates and do not reflect the impact of state and local
taxes. Actual after-tax returns depend on an investor’s
tax situation and may differ from those shown. After-tax returns are not
relevant to investors who hold their Fund shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement
accounts. Return After Taxes on
Distributions and Sale of Fund Shares may be higher than other returns for the
same period due to a tax benefit of realizing a capital loss upon the sale of
Fund shares.
INVESTMENT
MANAGER
Neuberger
Berman Investment Advisers LLC (“Manager”) is the Fund’s investment
manager.
PORTFOLIO
MANAGERS
The Fund is
managed by Timothy Creedon, CFA (Managing Director of the Manager) and Hari
Ramanan (Managing Director of the Manager). They have managed the Fund since
2011 and 2019, respectively.
Buying
and Selling Shares
Investor
Class of the Fund is closed to new investors. Only certain investors are
allowed to purchase Investor Class shares of the Fund. See “Maintaining Your
Account” in the prospectus.
You may
purchase, redeem (sell) or exchange shares of the Fund on any day the New York
Stock Exchange is open, at the Fund’s net asset value per share next determined
after your order is received in proper form. Shares of the Fund generally are
available only through certain investment providers, such as banks, brokerage
firms, workplace retirement programs, and financial advisers. Contact any
investment provider authorized to sell the Fund’s shares.
For certain
investors, shares of the Fund may be available directly from Neuberger Berman BD
LLC by regular, first class mail (Neuberger Berman Funds, P.O. Box 219189,
Kansas City, MO 64121-9189), by express delivery, registered mail, or
certified
mail
(Neuberger Berman Funds, 430 West 7th Street, Suite 219189, Kansas
City, MO 64105-1407), or by wire, fax, telephone, exchange, or systematic
investment or withdrawal (call 800-877-9700 for instructions). See “Maintaining
Your Account” in the prospectus for instructions on buying and redeeming
(selling) shares directly.
The minimum
initial investment in Investor Class is $1,000. Additional investments can be as
little as $100. These minimums may be waived in certain cases.
Tax
Information
Unless you
invest in the Fund through a tax-advantaged retirement plan or account or are a
tax-exempt investor, you will be subject to tax on Fund distributions to you of
ordinary income and/or net capital gains. Those distributions generally are not
taxable to such a plan or account or a tax-exempt investor, although withdrawals
from certain retirement plans and accounts generally are subject to federal
income tax.
Payments
to Investment Providers and Other Financial Intermediaries
If you
purchase shares of the Fund through an investment provider or other financial
intermediary, such as a bank, brokerage firm, workplace retirement program, or
financial adviser (who may be affiliated with Neuberger Berman), the Fund and/or
Neuberger Berman BD LLC and/or its affiliates may pay the intermediary for the
sale of Fund shares and related services. These payments may create a conflict
of interest by influencing the investment provider or other financial
intermediary and its employees to recommend the Fund over another investment.
Ask your investment provider or visit its website for more
information.
Neuberger
Berman Genesis Fund
Investor
Class Shares (NBGNX)
GOAL
The Fund
seeks growth of capital.
Fees and
Expenses
These tables
describe the fees and expenses that you may pay if you buy, hold or sell shares
of the Fund. You may pay other fees, such as brokerage commissions and other
fees to financial intermediaries, which are not reflected in the table and
example below.
Shareholder Fees (fees paid
directly from your investment) |
|
None |
Annual Fund Operating Expenses
(expenses that you pay each year as a % of the value of your
investment) |
|
|
Management
fees |
|
0.92 |
Distribution
and/or shareholder service (12b-1) fees |
|
None |
Other
expenses |
|
0.08 |
Total
annual operating expenses |
|
1.00 |
Expense
Example
The expense
example can help you compare costs among mutual funds. The example assumes that
you invested $10,000 for the periods shown, that you redeemed all of your shares
at the end of those periods, that the Fund earned a hypothetical 5% total return
each year, and that the Fund’s expenses were those in the table. Actual
performance and expenses may be higher or lower.
|
|
1
Year |
|
3
Years |
|
5
Years |
|
10
Years |
Investor
Class |
|
$102 |
|
$318 |
|
$552 |
|
$1,225 |
Portfolio
Turnover
The 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 Fund shares are
held in a taxable account. These costs, which are not reflected in annual
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was 17% of the average
value of its portfolio.
Principal Investment
Strategies
To pursue
its goal, the Fund invests mainly in common stocks of small-capitalization
companies, which it defines as those with a total market capitalization within
the market capitalization range of companies in the Russell 2000®
Index at the time of initial purchase. The market capitalization of the
companies in the Fund’s portfolio and the Russell 2000 Index changes over time
and the Fund may continue to hold or add to a position in a company after its
market capitalization has moved outside the range of the Russell 2000
Index.
The Fund
seeks to reduce risk by diversifying among many companies and industries. At
times, the Portfolio Managers may emphasize certain sectors that they believe
will benefit from market or economic trends.
Although the
Fund invests primarily in domestic stocks, it may also invest in stocks of
foreign companies.
The
Portfolio Managers generally look for what they believe to be undervalued
companies whose current market shares and balance sheets are strong. In
addition, the Portfolio Managers tend to focus on companies whose financial
strength is largely based on existing business lines rather than on projected
growth. Factors in identifying these firms may include: a history of
above-average returns; an established market niche; circumstances that would
make it difficult for new competitors to enter the market; the ability to
finance their own growth; and a belief that the company has sound future
business prospects. This approach is designed to let the Fund benefit from
potential increases in stock prices, while endeavoring to limit the risks
typically associated with small-cap stocks.
As part of
their fundamental investment analysis the Portfolio Managers consider
Environmental, Social and Governance (ESG) factors they believe are financially
material to individual investments, where applicable, as described below. While
this analysis is inherently subjective and may be informed by both internally
generated and third-party metrics, data and other information, the
Portfolio
Managers believe that the consideration of financially material ESG factors,
alongside traditional financial metrics, may enhance the Fund’s overall
investment process. The consideration of ESG factors does not apply to certain
instruments, such as certain derivative instruments, other registered investment
companies, cash and cash equivalents. The consideration of ESG factors as part
of the investment process does not mean that the Fund pursues a specific
“impact” or “sustainable” investment strategy.
The
Portfolio Managers follow a disciplined selling strategy and may sell a security
when it reaches a target price, if a company’s business fails to perform as
expected, or when other opportunities appear more attractive.
PRINCIPAL INVESTMENT
RISKS
Most of the
Fund’s performance depends on what happens in the stock market, the Portfolio
Managers’ evaluation of those developments, and the success of the Portfolio
Managers in implementing the Fund’s investment strategies. The market’s behavior
can be difficult to predict, particularly in the short term. There can be no
guarantee that the Fund will achieve its goal. The Fund may take temporary
defensive and cash management positions; to the extent it does, it will not be
pursuing its principal investment strategies.
The actual
risk exposure taken by the Fund in its investment program will vary over time,
depending on various factors including the Portfolio Managers’ evaluation of
issuer, political, regulatory, market, or economic developments. There can be no
guarantee that the Portfolio Managers will be successful in their attempts to
manage the risk exposure of the Fund or will appropriately evaluate or weigh the
multiple factors involved in investment decisions, including issuer, market
and/or instrument-specific analysis, valuation and ESG factors.
The Fund is a mutual fund, not a bank deposit, and is not
guaranteed or insured by the Federal Deposit Insurance Corporation or any other
government agency. The value of your investment may fall, sometimes sharply,
and you could lose money by investing in the
Fund.
Each of the
following risks, which are described in alphabetical order and not in order of
any presumed importance, can significantly affect the Fund’s performance. The
relative importance of, or potential exposure as a result of, each of these
risks will vary based on market and other investment-specific
considerations.
Foreign
Risk. Foreign securities involve risks in addition to those associated with
comparable U.S. securities. Additional risks include exposure to less developed
or less efficient trading markets; social, political, diplomatic, or economic
instability; trade barriers and other protectionist trade policies (including
those of the U.S.); imposition of economic sanctions against a particular
country or countries, organizations, companies, entities and/or individuals;
significant government involvement in an economy and/or market structure;
fluctuations in foreign currencies or currency redenomination; potential for
default on sovereign debt; nationalization or expropriation of assets;
settlement, custodial or other operational risks; higher transaction costs;
confiscatory withholding or other taxes; and less stringent auditing and
accounting, corporate disclosure, governance, and legal standards. As a result,
foreign securities may fluctuate more widely in price, and may also be less
liquid, than comparable U.S. securities. World markets, or those in a particular
region, may all react in similar fashion to important economic or political
developments. In addition, foreign markets may perform differently than the U.S.
markets. The effect of economic instability on specific foreign markets or
issuers may be difficult to predict or evaluate. Regardless of where a company
is organized or its stock is traded, its performance may be affected
significantly by events in regions from which it derives its profits or in which
it conducts significant operations.
Securities
of issuers traded on foreign exchanges may be suspended, either by the issuers
themselves, by an exchange, or by governmental authorities. Trading suspensions
may be applied from time to time to the securities of individual issuers for
reasons specific to that issuer, or may be applied broadly by exchanges or
governmental authorities in response to market events. In the event that the
Fund holds material positions in such suspended securities or instruments, the
Fund’s ability to liquidate its positions or provide liquidity to investors may
be compromised and the Fund could incur significant losses.
Issuer-Specific
Risk. An individual security may be more volatile, and may perform
differently, than the market as a whole.
Market
Volatility Risk. Markets may be volatile and values of individual securities
and other investments, including those of a particular type, may decline
significantly in response to adverse issuer, political, regulatory, market,
economic or other developments that may cause broad changes in market value,
public perceptions concerning these developments, and adverse investor sentiment
or publicity. Geopolitical and other risks, including environmental and public
health risks may add to instability in world economies and markets generally.
Changes in value may be temporary or may last for extended periods. If the Fund
sells a portfolio position before it reaches its market peak, it may miss out on
opportunities for better performance.
Recent
Market Conditions. Both U.S. and international markets have experienced
significant volatility in recent months and years. As a result of such
volatility, investment returns may fluctuate significantly. National economies
are substantially interconnected, as are global financial markets, which creates
the possibility that conditions in one country or region might adversely impact
issuers in a different country or region. However, the interconnectedness of
economies and/or markets may be diminishing, which may impact such economies and
markets in ways that cannot be foreseen at this time.
Although
interest rates were unusually low in recent years in the U.S. and abroad,
recently, the Federal Reserve and certain foreign central banks raised interest
rates as part of their efforts to address rising inflation. It is difficult to
accurately predict the pace at which interest rates might increase, the timing,
frequency or magnitude of any such increases in interest rates, or when such
increases might stop. Additionally, various economic and political factors could
cause the Federal Reserve or other foreign central banks to change their
approach in the future and such actions may result in an economic slowdown both
in the U.S. and abroad. Unexpected changes in interest rates could lead to
market volatility or reduce liquidity in certain sectors of the market.
Deteriorating economic fundamentals may, in turn, increase the risk of default
or insolvency of particular issuers, negatively impact market value, cause
credit spreads to widen, and reduce bank balance sheets. Any of these could
cause an increase in market volatility, or reduce liquidity across various
markets or decrease confidence in the markets.
Some
countries, including the U.S., have adopted more protectionist trade policies.
Slowing global economic growth, the rise in protectionist trade policies,
changes to some major international trade agreements, risks associated with the
trade agreement between the United Kingdom and the European Union, and the risks
associated with trade negotiations between the U.S. and China, could affect the
economies of many nations in ways that cannot necessarily be foreseen at the
present time. In addition, the current strength of the U.S. dollar may decrease
foreign demand for U.S. assets, which could have a negative impact on certain
issuers and/or industries.
Regulators
in the U.S. have proposed and adopted a number of changes to regulations
involving the markets and issuers, some of which apply to the Fund. The full
effect of various newly adopted regulations is not currently known.
Additionally, it is not currently known whether any of the proposed regulations
will be adopted. However, due to the scope of regulations being proposed and
adopted, certain of these changes to regulation could limit the Fund’s ability
to pursue its investment strategies or make certain investments, may make it
more costly for it to operate, or adversely impact performance.
Tensions,
war, or open conflict between nations, such as between Russia and Ukraine, in
the Middle East, or in eastern Asia could affect the economies of many nations,
including the United States. The duration of ongoing hostilities and any
sanctions and related events cannot be predicted. Those events present material
uncertainty and risk with respect to markets globally and the performance of the
Fund and its investments or operations could be negatively impacted.
High public
debt in the U.S. and other countries creates ongoing systemic and market risks
and policymaking uncertainty. There is no assurance that the U.S. Congress will
act to raise the nation’s debt ceiling; a failure to do so could cause market
turmoil and substantial investment risks that cannot now be fully predicted.
Unexpected political, regulatory and diplomatic events within the U.S. and
abroad may affect investor and consumer confidence and may adversely impact
financial markets and the broader economy.
There is
widespread concern about the potential effects of global climate change on
property and security values. Certain issuers, industries and regions may be
adversely affected by the impact of climate change in ways that cannot be
foreseen. The impact of legislation, regulation and international accords
related to climate change may negatively impact certain issuers and/or
industries.
Redemption
Risk. The Fund may experience periods of large or frequent redemptions that
could cause the Fund to sell assets at inopportune times, which could have a
negative impact on the Fund’s overall liquidity, or at a loss or depressed
value. Redemption risk is greater to the extent that one or more investors or
intermediaries control a large percentage of investments in the Fund and the
risk is heightened during periods of declining or illiquid markets. Large
redemptions could hurt the Fund’s performance, increase transaction costs, and
create adverse tax consequences.
Sector
Risk. From time to time, based on market or economic conditions, the Fund
may have significant positions in one or more sectors of the market. To the
extent the Fund invests more heavily in particular sectors, its performance will
be especially sensitive to developments that significantly affect those sectors.
Individual sectors or sub-sectors may be more volatile, and may perform
differently, than the broader market. The industries that constitute a sector
may all react in the same way to economic, political or regulatory
events.
Small-
and Mid-Cap Companies Risk. At times, small- and mid-cap companies may be
out of favor with investors. Compared to larger companies, small- and mid-cap
companies may depend on a more limited management group, may have a shorter
history of operations, less publicly available information, less stable
earnings, and limited product lines, markets or financial resources.
The
securities of small- and mid-cap companies are often more volatile, which at
times can be rapid and unpredictable, and less liquid than the securities of
larger companies and may be more affected than other types of securities by the
underperformance of a sector, during market downturns, or by adverse publicity
and investor perceptions. To the extent the Fund holds securities of mid-cap
companies, the Fund will be subject to their risks.
Value
Stock Risk. Value stocks may remain undervalued for extended periods of
time, may decrease in value during a given period, may not ever realize what the
portfolio management team believes to be their full value, or the portfolio
management team’s assumptions about intrinsic value or potential for
appreciation may be incorrect. This may happen, among other reasons, because of
a failure to anticipate which stocks or industries would benefit from changing
market or economic conditions or investor preferences.
A summary
of the Fund’s additional principal investment risks is as
follows:
Risk of
Increase in Expenses. A decline in the Fund’s average net assets during the
current fiscal year due to market volatility or other factors could cause the
Fund’s expenses for the current fiscal year to be higher than the expense
information presented in “Fees and Expenses.”
Operational
and Cybersecurity Risk. The Fund and its service providers, and your ability
to transact with the Fund, may be negatively impacted due to operational matters
arising from, among other problems, human errors, systems and technology
disruptions or failures, or cybersecurity incidents. Cybersecurity incidents may
allow an unauthorized party to gain access to fund assets, customer data, or
proprietary information, or cause the Fund or its service providers, as well as
the securities trading venues and their service providers, to suffer data
corruption or lose operational functionality. Cybersecurity incidents can result
from deliberate attacks or unintentional events. It is not possible for the
Manager or the other Fund service providers to identify all of the cybersecurity
or other operational risks that may affect the Fund or to develop processes and
controls to completely eliminate or mitigate their occurrence or effects. Most
issuers in which the Fund invests are heavily dependent on computers for data
storage and operations, and require ready access to the internet to conduct
their business. Thus, cybersecurity incidents could also affect issuers of
securities in which the Fund invests, leading to significant loss of
value.
Risk
Management. Risk is an essential part of investing. No risk management
program can eliminate the Fund’s exposure to adverse events; at best, it may
only reduce the possibility that the Fund will be affected by such events, and
especially those risks that are not intrinsic to the Fund’s investment program.
The Fund could experience losses if judgments about risk prove to be
incorrect.
Valuation
Risk. The Fund may not be able to sell an investment at the price at which
the Fund has valued the investment. Such differences could be significant,
particularly for illiquid securities and securities that trade in relatively
thin markets and/or markets that experience extreme volatility. If market or
other conditions make it difficult to value an investment, the Fund may be
required to value such investments using more subjective methods, known as fair
value methodologies. Using fair value methodologies to price investments may
result in a value that is different from an investment’s most recent price and
from the prices used by other funds to calculate their NAVs. The Fund uses
pricing services to provide values for certain securities and there is no
assurance that the Fund will be able to sell an investment at the price
established by such pricing services. The Fund’s ability to value its
investments in an accurate and timely manner may be impacted by technological
issues and/or errors by third party service providers, such as pricing services
or accounting agents.
PERFORMANCE
The
following bar chart and table provide an indication of the risks of investing in
the Fund. The bar chart
shows how the Fund’s performance has varied from year to year. The table below
the bar chart shows what the returns would equal if you averaged out actual
performance over various lengths of time and compares the returns with the
returns of a broad-based market index. The index, which
is described in “Descriptions of Indices” in the prospectus, has characteristics
relevant to the Fund’s investment strategy.
Returns
would have been lower if the Manager had not reimbursed certain expenses and/or
waived a portion of the investment management fees during certain of the periods
shown.
Past performance (before and
after taxes) is not a prediction of future results. Visit
www.nb.com
or call 800-877-9700 for
updated performance information.
year-by-year % Returns as of 12/31 each
year
Years |
Returns |
2013 |
36.99% |
2014 |
-0.22% |
2015 |
0.26% |
2016 |
18.14% |
2017 |
15.59% |
2018 |
-6.67% |
2019 |
29.44% |
2020 |
24.84% |
2021 |
18.17% |
2022 |
-19.25% |
Best
quarter: Q2 2020 24.83%
Worst
quarter: Q1 2020 -21.01%
Year to Date performance as
of: 9/30/2023 5.92%
average annual total % returns as of
12/31/22
Genesis
Fund |
|
1
Year |
|
5
Years |
|
10
Years |
Return
Before Taxes |
|
-19.25 |
|
7.55 |
|
10.41 |
Return
After Taxes on Distributions |
|
-21.15 |
|
5.49 |
|
7.75 |
Return
After Taxes on Distributions and Sale of Fund Shares |
|
-10.02 |
|
5.83 |
|
7.71 |
Russell
2000® Index (reflects no deduction for
fees, expenses or taxes) |
|
-20.44 |
|
4.13 |
|
9.01 |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates and do not reflect the impact of state and local
taxes. Actual after-tax returns depend on an investor’s
tax situation and may differ from those shown. After-tax returns are not
relevant to investors who hold their Fund shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement
accounts. Return After Taxes on
Distributions and Sale of Fund Shares may be higher than other returns for the
same period due to a tax benefit of realizing a capital loss upon the sale of
Fund shares.
INVESTMENT
MANAGER
Neuberger
Berman Investment Advisers LLC (“Manager”) is the Fund’s investment
manager.
PORTFOLIO
MANAGERS
The Fund is
managed by Robert W. D’Alelio, Brett S. Reiner and Gregory G. Spiegel (each a
Managing Director of the Manager). Mr. D’Alelio has managed the Fund since 1997.
Mr. Reiner joined as an Associate Portfolio Manager in 2005 and became
co-Portfolio Manager in August 2019. Mr. Spiegel joined as an Associate
Portfolio Manager in 2015 and became co-Portfolio Manager in
August 2019.
Buying
and Selling Shares
You may
purchase, redeem (sell) or exchange shares of the Fund on any day the New York
Stock Exchange is open, at the Fund’s net asset value per share next determined
after your order is received in proper form. Shares of the Fund generally are
available only through certain investment providers, such as banks, brokerage
firms, workplace retirement programs, and financial advisers. Contact any
investment provider authorized to sell the Fund’s shares.
For certain
investors, shares of the Fund may be available directly from Neuberger Berman BD
LLC by regular, first class mail (Neuberger Berman Funds, P.O. Box 219189,
Kansas City, MO 64121-9189), by express delivery, registered mail, or certified
mail (Neuberger Berman Funds, 430 West 7th Street, Suite 219189,
Kansas City, MO 64105-1407), or by wire, fax, telephone,
exchange, or
systematic investment or withdrawal (call 800-877-9700 for instructions). See
“Maintaining Your Account” in the prospectus for instructions on buying and
redeeming (selling) shares directly.
The minimum
initial investment in Investor Class is $1,000. Additional investments can be as
little as $100. These minimums may be waived in certain cases.
Tax
Information
Unless you
invest in the Fund through a tax-advantaged retirement plan or account or are a
tax-exempt investor, you will be subject to tax on Fund distributions to you of
ordinary income and/or net capital gains. Those distributions generally are not
taxable to such a plan or account or a tax-exempt investor, although withdrawals
from certain retirement plans and accounts generally are subject to federal
income tax.
Payments
to Investment Providers and Other Financial Intermediaries
If you
purchase shares of the Fund through an investment provider or other financial
intermediary, such as a bank, brokerage firm, workplace retirement program, or
financial adviser (who may be affiliated with Neuberger Berman), the Fund and/or
Neuberger Berman BD LLC and/or its affiliates may pay the intermediary for the
sale of Fund shares and related services. These payments may create a conflict
of interest by influencing the investment provider or other financial
intermediary and its employees to recommend the Fund over another investment.
Ask your investment provider or visit its website for more
information.
Neuberger Berman International Equity Fund
Investor
Class Shares (NIQVX)
GOAL
The Fund
seeks long-term growth of capital by investing primarily in common stocks of
foreign companies.
Fees and
Expenses
These tables
describe the fees and expenses that you may pay if you buy, hold or sell shares
of the Fund. You may pay other fees, such as brokerage commissions and other
fees to financial intermediaries, which are not reflected in the table and
example below.
Shareholder Fees (fees paid
directly from your investment) |
|
None |
Annual Fund Operating Expenses
(expenses that you pay each year as a % of the value of your
investment) |
|
|
Management
fees |
|
1.07 |
Distribution
and/or shareholder service (12b-1) fees |
|
None |
Other
expenses |
|
0.15 |
Total
annual operating expenses |
|
1.22 |
Expense
Example
The expense
example can help you compare costs among mutual funds. The example assumes that
you invested $10,000 for the periods shown, that you redeemed all of your shares
at the end of those periods, that the Fund earned a hypothetical 5% total return
each year, and that the Fund’s expenses were those in the table. Actual
performance and expenses may be higher or lower.
|
|
1
Year |
|
3
Years |
|
5
Years |
|
10
Years |
Investor
Class |
|
$124 |
|
$387 |
|
$670 |
|
$1,477 |
Portfolio
Turnover
The 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 Fund shares are
held in a taxable account. These costs, which are not reflected in annual
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was 41% of the average
value of its portfolio.
Principal Investment
Strategies
To pursue
its goal, the Fund invests mainly in common stocks of foreign companies of any
size, including companies in developed and emerging markets. The Fund defines a
foreign company as one that is organized outside of the United States and
conducts the majority of its business abroad.
In picking
stocks, the Portfolio Managers look for what they believe to be well-managed and
profitable companies that show growth potential and whose stock prices are
undervalued. Factors in identifying these firms may include strong fundamentals,
such as attractive cash flows and balance sheets, as well as prices that are
attractive in light of projected returns. The Portfolio Managers also consider
the outlooks for various countries and regions around the world, examining
economic, market, social, and political conditions.
As part of
their fundamental investment analysis the Portfolio Managers consider
Environmental, Social and Governance (ESG) factors they believe are financially
material to individual investments, where applicable, as described below. While
this analysis is inherently subjective and may be informed by both internally
generated and third-party metrics, data and other information, the Portfolio
Managers believe that the consideration of financially material ESG factors,
alongside traditional financial metrics, may enhance the Fund’s overall
investment process. The consideration of ESG factors does not apply to certain
instruments, such as certain derivative instruments, other registered investment
companies, cash and cash equivalents. The consideration of ESG factors as part
of the investment process does not mean that the Fund pursues a specific
“impact” or “sustainable” investment strategy.
The Fund
seeks to reduce risk by diversifying among many companies and industries.
Although the Fund has the flexibility to invest a significant portion of its
assets in one country or region, it generally intends to invest across a broad
range of countries and
16
International Equity Fund
geographical
regions. At times, the Portfolio Managers may emphasize certain sectors or
industries that they believe offers a better risk/reward opportunity.
The
Portfolio Managers follow a disciplined selling strategy and may sell a security
when it reaches a target price, if a company’s business fails to perform as
expected, or when other opportunities appear more attractive.
The Fund
will not change its strategy of normally investing at least 80% of its net
assets, plus the amount of any borrowings for investment purposes, in equity
securities, without providing shareholders at least 60 days’ notice. This test
is applied at the time the Fund invests; later percentage changes caused by a
change in Fund assets, market values or company circumstances will not require
the Fund to dispose of a holding.
PRINCIPAL INVESTMENT
RISKS
Most of the
Fund’s performance depends on what happens in international stock markets, the
Portfolio Managers’ evaluation of those developments, and the success of the
Portfolio Managers in implementing the Fund’s investment strategies. The
markets’ behavior can be difficult to predict, particularly in the short term.
There can be no guarantee that the Fund will achieve its goal. The Fund may take
temporary defensive and cash management positions; to the extent it does, it
will not be pursuing its principal investment strategies.
The actual
risk exposure taken by the Fund in its investment program will vary over time,
depending on various factors including the Portfolio Managers’ evaluation of
issuer, political, regulatory, market, or economic developments. There can be no
guarantee that the Portfolio Managers will be successful in their attempts to
manage the risk exposure of the Fund or will appropriately evaluate or weigh the
multiple factors involved in investment decisions, including issuer, market
and/or instrument-specific analysis, valuation and ESG factors.
The Fund is a mutual fund, not a bank deposit, and is not
guaranteed or insured by the Federal Deposit Insurance Corporation or any other
government agency. The value of your investment may fall, sometimes sharply,
and you could lose money by investing in the
Fund.
Each of the
following risks, which are described in alphabetical order and not in order of
any presumed importance, can significantly affect the Fund’s performance. The
relative importance of, or potential exposure as a result of, each of these
risks will vary based on market and other investment-specific
considerations.
Currency
Risk. Currency risk is the risk that foreign currencies will decline in
value relative to the U.S. dollar. To the extent that the Fund invests in
securities or other instruments denominated in or indexed to foreign currencies,
changes in currency exchange rates could adversely impact investment gains or
add to investment losses. Currency exchange rates may fluctuate significantly
over short periods of time and can be affected unpredictably by various factors,
including investor perception and changes in interest rates; intervention, or
failure to intervene, by U.S. or foreign governments, central banks, or
supranational entities; or by currency controls or political developments in the
U.S. or abroad.
Foreign
and Emerging Market Risk. Foreign securities involve risks in addition to
those associated with comparable U.S. securities. Additional risks include
exposure to less developed or less efficient trading markets; social, political,
diplomatic, or economic instability; trade barriers and other protectionist
trade policies (including those of the U.S.); imposition of economic sanctions
against a particular country or countries, organizations, companies, entities
and/or individuals; significant government involvement in an economy and/or
market structure; fluctuations in foreign currencies or currency redenomination;
potential for default on sovereign debt; nationalization or expropriation of
assets; settlement, custodial or other operational risks; higher transaction
costs; confiscatory withholding or other taxes; and less stringent auditing and
accounting, corporate disclosure, governance, and legal standards. As a result,
foreign securities may fluctuate more widely in price, and may also be less
liquid, than comparable U.S. securities. Regardless of where a company is
organized or its stock is traded, its performance may be affected significantly
by events in regions from which it derives its profits or in which it conducts
significant operations.
Investing in
emerging market countries involves risks in addition to and greater than those
generally associated with investing in more developed foreign countries. The
governments of emerging market countries may be more unstable and more likely to
impose capital controls, nationalize a company or industry, place restrictions
on foreign ownership and on withdrawing sale proceeds of securities from the
country, intervene in the financial markets, and/or impose burdensome taxes that
could adversely affect security prices. To the extent a foreign security is
denominated in U.S. dollars, there is also the risk that a foreign government
will not let U.S. dollar-denominated assets leave the country. In addition, the
economies of emerging market countries may be dependent on relatively few
industries that are more susceptible to local and global changes. Emerging
market countries may also have less developed legal and accounting systems, and
their legal systems may deal with issuer bankruptcies and defaults differently
than U.S. law would. Securities markets in emerging market countries are also
relatively small and have
17
International Equity Fund
substantially
lower trading volumes. Securities of issuers in emerging market countries may be
more volatile and less liquid than securities of issuers in foreign countries
with more developed economies or markets and the situation may require that the
Fund fair value its holdings in those countries.
Securities
of issuers traded on foreign exchanges may be suspended, either by the issuers
themselves, by an exchange, or by governmental authorities. The likelihood of
such suspensions may be higher for securities of issuers in emerging or
less-developed market countries than in countries with more developed markets.
Trading suspensions may be applied from time to time to the securities of
individual issuers for reasons specific to that issuer, or may be applied
broadly by exchanges or governmental authorities in response to market events.
Suspensions may last for significant periods of time, during which trading in
the securities and in instruments that reference the securities, such as
derivative instruments, may be halted. In the event that the Fund holds material
positions in such suspended securities or instruments, the Fund’s ability to
liquidate its positions or provide liquidity to investors may be compromised and
the Fund could incur significant losses.
From time to
time, based on market or economic conditions, the Fund may invest a significant
portion of its assets in one country or geographic region. If the Fund does so,
there is a greater risk that economic, political, regulatory, diplomatic, social
and environmental conditions in that particular country or geographic region may
have a significant impact on the Fund’s performance and that the Fund’s
performance will be more volatile than the performance of more geographically
diversified funds.
Growth
Stock Risk. Because the prices of most growth stocks are based on future
expectations, these stocks tend to be more sensitive than value stocks to bad
economic news and negative earnings surprises. When these expectations are not
met or decrease, the prices of these stocks may decline, sometimes sharply, even
if earnings showed an absolute increase. The Fund attempts to lessen the risk of
such losses by seeking growth stocks that sell at what the adviser believes are
attractive prices. If the adviser is incorrect in its assessment of a stock’s
value, this may negatively impact the Fund. Bad economic news or changing
investor perceptions may adversely affect growth stocks across several sectors
and industries simultaneously.
Issuer-Specific
Risk. An individual security may be more volatile, and may perform
differently, than the market as a whole.
Liquidity
Risk. From time to time, the trading market for a particular investment in
which the Fund invests, or a particular type of instrument in which the Fund is
invested, may become less liquid or even illiquid. Illiquid investments
frequently can be more difficult to purchase or sell at an advantageous price or
time, and there is a greater risk that the investments may not be sold for the
price at which the Fund is carrying them. Certain investments that were liquid
when the Fund purchased them may become illiquid, sometimes abruptly.
Additionally, market closures due to holidays or other factors may render a
security or group of securities (e.g., securities tied to a particular country
or geographic region) illiquid for a period of time. An inability to sell a
portfolio position can adversely affect the Fund’s value or prevent the Fund
from being able to take advantage of other investment opportunities. Market
prices for such securities or other investments may be volatile. During periods
of substantial market volatility, an investment or even an entire market segment
may become illiquid, sometimes abruptly, which can adversely affect the Fund’s
ability to limit losses.
Unexpected
episodes of illiquidity, including due to market or political factors,
instrument or issuer-specific factors and/or unanticipated outflows or other
factors, may limit the Fund’s ability to pay redemption proceeds within the
allowable time period. To meet redemption requests during periods of
illiquidity, the Fund may be forced to sell securities at an unfavorable time
and/or under unfavorable conditions.
Market
Capitalization Risk. To the extent the Fund invests in securities of small-,
mid-, or large-cap companies, it takes on the associated risks. At times, any of
these market capitalizations may be out of favor with investors. Compared to
small- and mid-cap companies, large-cap companies may be unable to respond as
quickly to changes and opportunities and may grow at a slower rate. Compared to
large-cap companies, small- and mid-cap companies may depend on a more limited
management group, may have a shorter history of operations, less publicly
available information, less stable earnings, and limited product lines, markets
or financial resources. The securities of small- and mid-cap companies are often
more volatile, which at times can be rapid and unpredictable, and less liquid
than the securities of larger companies and may be more affected than other
types of securities by the underperformance of a sector, during market
downturns, or by adverse publicity and investor perceptions.
Market
Volatility Risk. Markets may be volatile and values of individual securities
and other investments, including those of a particular type, may decline
significantly in response to adverse issuer, political, regulatory, market,
economic or other developments that may cause broad changes in market value,
public perceptions concerning these developments, and adverse investor sentiment
or publicity. Geopolitical and other risks, including environmental and public
health risks may add to instability in world economies and markets generally.
Changes in value may be temporary or may last for extended periods. If the Fund
sells a portfolio position before it reaches its market peak, it may miss out on
opportunities for better performance.
18
International Equity Fund
Recent
Market Conditions. Both U.S. and international markets have experienced
significant volatility in recent months and years. As a result of such
volatility, investment returns may fluctuate significantly. National economies
are substantially interconnected, as are global financial markets, which creates
the possibility that conditions in one country or region might adversely impact
issuers in a different country or region. However, the interconnectedness of
economies and/or markets may be diminishing, which may impact such economies and
markets in ways that cannot be foreseen at this time.
Although
interest rates were unusually low in recent years in the U.S. and abroad,
recently, the Federal Reserve and certain foreign central banks raised interest
rates as part of their efforts to address rising inflation. It is difficult to
accurately predict the pace at which interest rates might increase, the timing,
frequency or magnitude of any such increases in interest rates, or when such
increases might stop. Additionally, various economic and political factors could
cause the Federal Reserve or other foreign central banks to change their
approach in the future and such actions may result in an economic slowdown both
in the U.S. and abroad. Unexpected changes in interest rates could lead to
market volatility or reduce liquidity in certain sectors of the market.
Deteriorating economic fundamentals may, in turn, increase the risk of default
or insolvency of particular issuers, negatively impact market value, cause
credit spreads to widen, and reduce bank balance sheets. Any of these could
cause an increase in market volatility, or reduce liquidity across various
markets or decrease confidence in the markets.
Some
countries, including the U.S., have adopted more protectionist trade policies.
Slowing global economic growth, the rise in protectionist trade policies,
changes to some major international trade agreements, risks associated with the
trade agreement between the United Kingdom and the European Union, and the risks
associated with trade negotiations between the U.S. and China, could affect the
economies of many nations in ways that cannot necessarily be foreseen at the
present time. In addition, the current strength of the U.S. dollar may decrease
foreign demand for U.S. assets, which could have a negative impact on certain
issuers and/or industries.
Regulators
in the U.S. have proposed and adopted a number of changes to regulations
involving the markets and issuers, some of which apply to the Fund. The full
effect of various newly adopted regulations is not currently known.
Additionally, it is not currently known whether any of the proposed regulations
will be adopted. However, due to the scope of regulations being proposed and
adopted, certain of these changes to regulation could limit the Fund’s ability
to pursue its investment strategies or make certain investments, may make it
more costly for it to operate, or adversely impact performance.
Tensions,
war, or open conflict between nations, such as between Russia and Ukraine, in
the Middle East, or in eastern Asia could affect the economies of many nations,
including the United States. The duration of ongoing hostilities and any
sanctions and related events cannot be predicted. Those events present material
uncertainty and risk with respect to markets globally and the performance of the
Fund and its investments or operations could be negatively impacted.
High public
debt in the U.S. and other countries creates ongoing systemic and market risks
and policymaking uncertainty. There is no assurance that the U.S. Congress will
act to raise the nation’s debt ceiling; a failure to do so could cause market
turmoil and substantial investment risks that cannot now be fully predicted.
Unexpected political, regulatory and diplomatic events within the U.S. and
abroad may affect investor and consumer confidence and may adversely impact
financial markets and the broader economy.
There is
widespread concern about the potential effects of global climate change on
property and security values. Certain issuers, industries and regions may be
adversely affected by the impact of climate change in ways that cannot be
foreseen. The impact of legislation, regulation and international accords
related to climate change may negatively impact certain issuers and/or
industries.
Redemption
Risk. The Fund may experience periods of large or frequent redemptions that
could cause the Fund to sell assets at inopportune times, which could have a
negative impact on the Fund’s overall liquidity, or at a loss or depressed
value. Redemption risk is greater to the extent that one or more investors or
intermediaries control a large percentage of investments in the Fund and the
risk is heightened during periods of declining or illiquid markets. Large
redemptions could hurt the Fund’s performance, increase transaction costs, and
create adverse tax consequences.
Sector
Risk. From time to time, based on market or economic conditions, the Fund
may have significant positions in one or more sectors of the market. To the
extent the Fund invests more heavily in particular sectors, its performance will
be especially sensitive to developments that significantly affect those sectors.
Individual sectors or sub-sectors may be more volatile, and may perform
differently, than the broader market. The industries that constitute a sector
may all react in the same way to economic, political or regulatory
events.
Securities
Lending Risk. Securities lending involves a possible delay in recovery of
the loaned securities or a possible loss of rights in the collateral should the
borrower fail financially. The Fund could also lose money if the value of the
collateral decreases.
19
International Equity Fund
Value
Stock Risk. Value stocks may remain undervalued for extended periods of
time, may decrease in value during a given period, may not ever realize what the
portfolio management team believes to be their full value, or the portfolio
management team’s assumptions about intrinsic value or potential for
appreciation may be incorrect. This may happen, among other reasons, because of
a failure to anticipate which stocks or industries would benefit from changing
market or economic conditions or investor preferences.
A summary
of the Fund’s additional principal investment risks is as
follows:
Risk of
Increase in Expenses. A decline in the Fund’s average net assets during the
current fiscal year due to market volatility or other factors could cause the
Fund’s expenses for the current fiscal year to be higher than the expense
information presented in “Fees and Expenses.”
Operational
and Cybersecurity Risk. The Fund and its service providers, and your ability
to transact with the Fund, may be negatively impacted due to operational matters
arising from, among other problems, human errors, systems and technology
disruptions or failures, or cybersecurity incidents. Cybersecurity incidents may
allow an unauthorized party to gain access to fund assets, customer data, or
proprietary information, or cause the Fund or its service providers, as well as
the securities trading venues and their service providers, to suffer data
corruption or lose operational functionality. Cybersecurity incidents can result
from deliberate attacks or unintentional events. It is not possible for the
Manager or the other Fund service providers to identify all of the cybersecurity
or other operational risks that may affect the Fund or to develop processes and
controls to completely eliminate or mitigate their occurrence or effects. Most
issuers in which the Fund invests are heavily dependent on computers for data
storage and operations, and require ready access to the internet to conduct
their business. Thus, cybersecurity incidents could also affect issuers of
securities in which the Fund invests, leading to significant loss of
value.
Risk
Management. Risk is an essential part of investing. No risk management
program can eliminate the Fund’s exposure to adverse events; at best, it may
only reduce the possibility that the Fund will be affected by such events, and
especially those risks that are not intrinsic to the Fund’s investment program.
The Fund could experience losses if judgments about risk prove to be
incorrect.
Valuation
Risk. The Fund may not be able to sell an investment at the price at which
the Fund has valued the investment. Such differences could be significant,
particularly for illiquid securities and securities that trade in relatively
thin markets and/or markets that experience extreme volatility. If market or
other conditions make it difficult to value an investment, the Fund may be
required to value such investments using more subjective methods, known as fair
value methodologies. Using fair value methodologies to price investments may
result in a value that is different from an investment’s most recent price and
from the prices used by other funds to calculate their NAVs. The Fund uses
pricing services to provide values for certain securities and there is no
assurance that the Fund will be able to sell an investment at the price
established by such pricing services. The Fund’s ability to value its
investments in an accurate and timely manner may be impacted by technological
issues and/or errors by third party service providers, such as pricing services
or accounting agents.
PERFORMANCE
The
following bar chart and table provide an indication of the risks of investing in
the Fund. The bar chart
shows how the Fund’s performance has varied from year to year. The table below
the bar chart shows what the returns would equal if you averaged out actual
performance over various lengths of time and compares the returns with the
returns of a broad-based market index. The index, which
is described in “Descriptions of Indices” in the prospectus, has characteristics
relevant to the Fund’s investment strategy.
The following
performance prior to January 28, 2013, is that of the Fund’s Institutional
Class. Because Institutional Class has lower expenses than Investor Class, its
performance typically would have been better than that of Investor
Class.
Returns
would have been lower if the Manager had not reimbursed certain expenses and/or
waived a portion of the investment management fees during certain of the periods
shown.
20
International Equity Fund
Past performance (before and
after taxes) is not a prediction of future results. Visit
www.nb.com
or call 800-877-9700 for
updated performance information.
year-by-year % Returns as of 12/31 each
year
Years |
Returns |
2013 |
17.80% |
2014 |
-2.12% |
2015 |
1.90% |
2016 |
-1.27% |
2017 |
27.36% |
2018 |
-16.65% |
2019 |
27.53% |
2020 |
13.57% |
2021 |
13.38% |
2022 |
-22.17% |
Best
quarter: Q2 2020 21.35%
Worst
quarter: Q1 2020 -23.35%
Year to Date performance as
of: 9/30/2023 3.14%
average annual total % returns as of
12/31/22
International Equity
Fund |
|
1
Year |
|
5
Years |
|
10
Years |
Return
Before Taxes |
|
-22.17 |
|
1.27 |
|
4.64 |
Return
After Taxes on Distributions |
|
-23.10 |
|
0.12 |
|
3.97 |
Return
After Taxes on Distributions and Sale of Fund Shares |
|
-12.47 |
|
1.08 |
|
3.77 |
MSCI
EAFE® Index (Net) (reflects reinvested dividends net of
withholding taxes, but reflects no deduction for fees, expenses or
taxes) |
|
-14.45 |
|
1.54 |
|
4.67 |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates and do not reflect the impact of state and local
taxes. Actual after-tax returns depend on an investor’s
tax situation and may differ from those shown. After-tax returns are not
relevant to investors who hold their Fund shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement
accounts. Return After Taxes on
Distributions and Sale of Fund Shares may be higher than other returns for the
same period due to a tax benefit of realizing a capital loss upon the sale of
Fund shares.
INVESTMENT
MANAGER
Neuberger
Berman Investment Advisers LLC (“Manager”) is the Fund’s investment
manager.
PORTFOLIO
MANAGERS
The Fund is
managed by Elias Cohen, CFA (Managing Director of the Manager) and Thomas Hogan,
CFA (Managing Director of the Manager). Mr. Cohen has managed the Fund since
January 2019. Mr. Hogan became an Associate Portfolio Manager in
January 2021 and became Portfolio Manager of the Fund in
December 2022.
Buying
and Selling Shares
Investor
Class of the Fund is closed to new investors. Only certain investors are
allowed to purchase Investor Class shares of the Fund. See “Maintaining Your
Account” in the prospectus.
You may
purchase, redeem (sell) or exchange shares of the Fund on any day the New York
Stock Exchange is open, at the Fund’s net asset value per share next determined
after your order is received in proper form. Shares of the Fund generally are
available only through certain investment providers, such as banks, brokerage
firms, workplace retirement programs, and financial advisers. Contact any
investment provider authorized to sell the Fund’s shares.
21
International Equity Fund
For certain
investors, shares of the Fund may be available directly from Neuberger Berman BD
LLC by regular, first class mail (Neuberger Berman Funds, P.O. Box 219189,
Kansas City, MO 64121-9189), by express delivery, registered mail, or certified
mail (Neuberger Berman Funds, 430 West 7th Street, Suite 219189,
Kansas City, MO 64105-1407), or by wire, fax, telephone, exchange, or systematic
investment or withdrawal (call 800-877-9700 for instructions). See “Maintaining
Your Account” in the prospectus for instructions on buying and redeeming
(selling) shares directly.
The minimum
initial investment in Investor Class is $1,000. Additional investments can be as
little as $100. These minimums may be waived in certain cases.
Tax
Information
Unless you
invest in the Fund through a tax-advantaged retirement plan or account or are a
tax-exempt investor, you will be subject to tax on Fund distributions to you of
ordinary income and/or net capital gains. Those distributions generally are not
taxable to such a plan or account or a tax-exempt investor, although withdrawals
from certain retirement plans and accounts generally are subject to federal
income tax.
Payments
to Investment Providers and Other Financial Intermediaries
If you
purchase shares of the Fund through an investment provider or other financial
intermediary, such as a bank, brokerage firm, workplace retirement program, or
financial adviser (who may be affiliated with Neuberger Berman), the Fund and/or
Neuberger Berman BD LLC and/or its affiliates may pay the intermediary for the
sale of Fund shares and related services. These payments may create a conflict
of interest by influencing the investment provider or other financial
intermediary and its employees to recommend the Fund over another investment.
Ask your investment provider or visit its website for more
information.
22
International Equity Fund
Neuberger Berman Large Cap Growth Fund
Investor
Class Shares (NGUAX)
GOAL
The Fund
seeks long-term growth of capital.
Fees and
Expenses
These tables
describe the fees and expenses that you may pay if you buy, hold or sell shares
of the Fund. You may pay other fees, such as brokerage commissions and other
fees to financial intermediaries, which are not reflected in the table and
example below.
Shareholder Fees (fees paid
directly from your investment) |
|
None |
Annual Fund Operating Expenses
(expenses that you pay each year as a % of the value of your
investment) |
|
|
Management
fees |
|
0.74 |
Distribution
and/or shareholder service (12b-1) fees |
|
None |
Other
expenses |
|
0.09 |
Total
annual operating expenses |
|
0.83 |
Expense
Example
The expense
example can help you compare costs among mutual funds. The example assumes that
you invested $10,000 for the periods shown, that you redeemed all of your shares
at the end of those periods, that the Fund earned a hypothetical 5% total return
each year, and that the Fund’s expenses were those in the table. Actual
performance and expenses may be higher or lower.
|
|
1
Year |
|
3
Years |
|
5
Years |
|
10
Years |
Investor
Class |
|
$85 |
|
$265 |
|
$460 |
|
$1,025 |
Portfolio
Turnover
The 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 Fund shares are
held in a taxable account. These costs, which are not reflected in annual
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was 35% of the average
value of its portfolio.
Principal Investment
Strategies
To pursue
its goal, the Fund normally invests at least 80% of its net assets in equity
securities of large-capitalization companies, which it defines as those with a
market capitalization within the market capitalization range of the Russell
1000® Growth Index at the time of purchase.
The
Portfolio Managers employ a research driven approach to stock selection, with a
long term perspective that combines both quantitative analysis and qualitative
judgment. The Portfolio Managers generally seek to identify what they believe to
be faster-growing companies with attractive sales growth and competitive returns
on equity relative to their peers. In doing so, the Portfolio Managers analyze
such factors as: balance sheet metrics; profit margin profiles; market share and
competitive leadership of the company’s products; sales; cash flow and earnings
growth relative to competitors; and market valuation in comparison to a stock’s
own historical norms and the stocks of other large-capitalization
companies.
As part of
their fundamental investment analysis the Portfolio Managers consider
Environmental, Social and Governance (ESG) factors they believe are financially
material to individual investments, where applicable, as described below. While
this analysis is inherently subjective and may be informed by both internally
generated and third-party metrics, data and other information, the Portfolio
Managers believe that the consideration of financially material ESG factors,
alongside traditional financial metrics, may enhance the Fund’s overall
investment process. The consideration of ESG factors does not apply to certain
instruments, such as certain derivative instruments, other registered investment
companies, cash and cash equivalents. The consideration of ESG factors as part
of the investment process does not mean that the Fund pursues a specific
“impact” or “sustainable” investment strategy.
Although the
Fund invests primarily in domestic stocks, it may also invest in stocks of
foreign companies.
The Fund may
invest in restricted securities, including private placements, which are
securities that are subject to legal restrictions on their sale and may not be
sold to the public unless registered under the applicable securities law or
pursuant to an applicable exemption. The Fund may also invest in private
companies, including companies that have not yet issued securities publicly in
an initial public offering.
The Fund may
also use options, including, but not limited to, buying and selling (writing)
put and call options on individual stocks, to attempt to enhance returns. The
Fund will only sell (write) call options on individual stocks if it
simultaneously holds an equivalent position in the stock underlying the option
(“covered call option”).
The Fund
seeks to reduce risk by investing across many companies, sectors and industries.
At times, the Portfolio Managers may emphasize certain sectors or industries
that they believe may benefit from market or economic trends.
The
Portfolio Managers follow a disciplined selling strategy that utilizes a process
analyzing macroeconomic and/or security-specific circumstances, and may sell a
security when it reaches a target price, if a company’s business fails to
perform as expected, or when other opportunities appear more
attractive.
The Fund
will not change its strategy of normally investing at least 80% of its net
assets in equity securities of large-capitalization companies, without providing
shareholders at least 60 days’ notice. This test is applied at the time the Fund
invests; later percentage changes caused by a change in Fund assets, market
values or company circumstances will not require the Fund to dispose of a
holding.
PRINCIPAL INVESTMENT
RISKS
Most of the
Fund’s performance depends on what happens in the stock market, the Portfolio
Managers’ evaluation of those developments, and the success of the Portfolio
Managers in implementing the Fund’s investment strategies. The market’s behavior
can be difficult to predict, particularly in the short term. There can be no
guarantee that the Fund will achieve its goal. The Fund may take temporary
defensive and cash management positions; to the extent it does, it will not be
pursuing its principal investment strategies.
The actual
risk exposure taken by the Fund in its investment program will vary over time,
depending on various factors including the Portfolio Managers’ evaluation of
issuer, political, regulatory, market, or economic developments. There can be no
guarantee that the Portfolio Managers will be successful in their attempts to
manage the risk exposure of the Fund or will appropriately evaluate or weigh the
multiple factors involved in investment decisions, including issuer, market
and/or instrument-specific analysis, valuation and ESG factors.
The Fund is a mutual fund, not a bank deposit, and is not
guaranteed or insured by the Federal Deposit Insurance Corporation or any other
government agency. The value of your investment may fall, sometimes sharply,
and you could lose money by investing in the
Fund.
Each of the
following risks, which are described in alphabetical order and not in order of
any presumed importance, can significantly affect the Fund’s performance. The
relative importance of, or potential exposure as a result of, each of these
risks will vary based on market and other investment-specific
considerations.
Currency
Risk. Currency risk is the risk that foreign currencies will decline in
value relative to the U.S. dollar. To the extent that the Fund invests in
securities or other instruments denominated in or indexed to foreign currencies,
changes in currency exchange rates could adversely impact investment gains or
add to investment losses. Currency exchange rates may fluctuate significantly
over short periods of time and can be affected unpredictably by various factors,
including investor perception and changes in interest rates; intervention, or
failure to intervene, by U.S. or foreign governments, central banks, or
supranational entities; or by currency controls or political developments in the
U.S. or abroad.
Foreign
Risk. Foreign securities involve risks in addition to those associated with
comparable U.S. securities. Additional risks include exposure to less developed
or less efficient trading markets; social, political, diplomatic, or economic
instability; trade barriers and other protectionist trade policies (including
those of the U.S.); imposition of economic sanctions against a particular
country or countries, organizations, companies, entities and/or individuals;
significant government involvement in an economy and/or market structure;
fluctuations in foreign currencies or currency redenomination; potential for
default on sovereign debt; nationalization or expropriation of assets;
settlement, custodial or other operational risks; higher transaction costs;
confiscatory withholding or other taxes; and less stringent auditing and
accounting, corporate disclosure, governance, and legal standards. As a result,
foreign securities may fluctuate more widely in price, and may also be less
liquid, than comparable U.S. securities. World markets, or those in a particular
region, may all react in similar fashion to important economic or political
developments. In addition, foreign markets may perform differently than the U.S.
markets. The effect of economic instability on specific foreign
markets or
issuers may be difficult to predict or evaluate. Regardless of where a company
is organized or its stock is traded, its performance may be affected
significantly by events in regions from which it derives its profits or in which
it conducts significant operations.
Securities
of issuers traded on foreign exchanges may be suspended, either by the issuers
themselves, by an exchange, or by governmental authorities. Trading suspensions
may be applied from time to time to the securities of individual issuers for
reasons specific to that issuer, or may be applied broadly by exchanges or
governmental authorities in response to market events. In the event that the
Fund holds material positions in such suspended securities or instruments, the
Fund’s ability to liquidate its positions or provide liquidity to investors may
be compromised and the Fund could incur significant losses.
Growth
Stock Risk. Because the prices of most growth stocks are based on future
expectations, these stocks tend to be more sensitive than value stocks to bad
economic news and negative earnings surprises. When these expectations are not
met or decrease, the prices of these stocks may decline, sometimes sharply, even
if earnings showed an absolute increase. Bad economic news or changing investor
perceptions may adversely affect growth stocks across several sectors and
industries simultaneously.
Issuer-Specific
Risk. An individual security may be more volatile, and may perform
differently, than the market as a whole.
The Fund’s
portfolio may contain fewer securities than the portfolios of other funds, which
increases the risk that the value of the Fund could go down because of the poor
performance of one or a few investments.
Liquidity
Risk. From time to time, the trading market for a particular investment in
which the Fund invests, or a particular type of instrument in which the Fund is
invested, may become less liquid or even illiquid. Illiquid investments
frequently can be more difficult to purchase or sell at an advantageous price or
time, and there is a greater risk that the investments may not be sold for the
price at which the Fund is carrying them. Certain investments that were liquid
when the Fund purchased them may become illiquid, sometimes abruptly.
Additionally, market closures due to holidays or other factors may render a
security or group of securities (e.g., securities tied to a particular country
or geographic region) illiquid for a period of time. An inability to sell a
portfolio position can adversely affect the Fund’s value or prevent the Fund
from being able to take advantage of other investment opportunities. Market
prices for such securities or other investments may be volatile. During periods
of substantial market volatility, an investment or even an entire market segment
may become illiquid, sometimes abruptly, which can adversely affect the Fund’s
ability to limit losses.
Unexpected
episodes of illiquidity, including due to market or political factors,
instrument or issuer-specific factors and/or unanticipated outflows or other
factors, may limit the Fund’s ability to pay redemption proceeds within the
allowable time period. To meet redemption requests during periods of
illiquidity, the Fund may be forced to sell securities at an unfavorable time
and/or under unfavorable conditions.
Market
Volatility Risk. Markets may be volatile and values of individual securities
and other investments, including those of a particular type, may decline
significantly in response to adverse issuer, political, regulatory, market,
economic or other developments that may cause broad changes in market value,
public perceptions concerning these developments, and adverse investor sentiment
or publicity. Geopolitical and other risks, including environmental and public
health risks may add to instability in world economies and markets generally.
Changes in value may be temporary or may last for extended periods. If the Fund
sells a portfolio position before it reaches its market peak, it may miss out on
opportunities for better performance.
Mid- and
Large-Cap Companies Risk. At times, mid- and large-cap companies may be out
of favor with investors. Compared to smaller companies, large-cap companies may
be unable to respond as quickly to changes and opportunities and may grow at a
slower rate. Compared to larger companies, mid-cap companies may depend on a
more limited management group, may have a shorter history of operations, less
publicly available information, less stable earnings, and limited product lines,
markets or financial resources. The securities of mid-cap companies are often
more volatile and less liquid than the securities of larger companies and may be
more affected than other types of securities by the underperformance of a
sector, during market downturns, or by adverse publicity and investor
perceptions.
Options
Risk. The use of options involves investment strategies and risks different
from those associated with ordinary portfolio securities transactions. If a
strategy is applied at an inappropriate time or market conditions or trends are
judged incorrectly, the use of options may lower the Fund’s return. There can be
no guarantee that the use of options will increase the Fund’s return or income.
In addition, there may be an imperfect correlation between the movement in
prices of options and the securities underlying them and there may at times not
be a liquid secondary market for various options. An abrupt change in the price
of an underlying security could render an option worthless. The prices of
options are volatile and are influenced by, among other things, actual and
anticipated changes in the value of the underlying instrument, or in interest or
currency exchange rates, including the anticipated volatility of the underlying
instrument (known as implied volatility), which in turn are affected by the
performance of
the issuer
of the underlying instrument, by fiscal and monetary policies and by national
and international political and economic events. As such, prior to the exercise
or expiration of the option, the Fund is exposed to implied volatility risk,
meaning the value, as based on implied volatility, of an option may increase due
to market and economic conditions or views based on the sector or industry in
which issuers of the underlying instrument participate, including
company-specific factors.
By writing
put options, the Fund takes on the risk of declines in the value of the
underlying instrument, including the possibility of a loss up to the entire
strike price of each option it sells, but without the corresponding opportunity
to benefit from potential increases in the value of the underlying instrument.
When the Fund writes a put option, it assumes the risk that it must purchase the
underlying instrument at a strike price that may be higher than the market price
of the instrument. If there is a broad market decline and the Fund is not able
to close out its written put options, it may result in substantial losses to the
Fund. By writing a call option, the Fund may be obligated to deliver instruments
underlying an option at less than the market price. When the Fund writes a
covered call option, it gives up the opportunity to profit from a price increase
in the underlying instrument above the strike price. If a covered call option
that the Fund has written is exercised, the Fund will experience a gain or loss
from the sale of the underlying instrument, depending on the price at which the
Fund purchased the instrument and the strike price of the option. The Fund will
receive a premium from writing options, but the premium received may not be
sufficient to offset any losses sustained from exercised options. In the case of
a covered call, the premium received may be offset by a decline in the market
value of the underlying instrument during the option period. If an option that
the Fund has purchased is never exercised or closed out, the Fund will lose the
amount of the premium it paid and the use of those funds.
Private
Companies and Pre-IPO Investments Risk. Investments in private companies,
including companies that have not yet issued securities publicly in an initial
public offering (“IPO”) (“pre-IPO shares”), involve greater risks than
investments in securities of companies that have traded publicly on an exchange
for extended periods of time. Investments in these companies are generally less
liquid than investments in securities issued by public companies and may be
difficult for the Fund to value. Compared to public companies, private companies
may have a more limited management group and limited operating histories with
narrower, less established product lines and smaller market shares, which may
cause them to be more vulnerable to competitors’ actions, market conditions and
consumer sentiment with respect to their products or services, as well as
general economic downturns. In addition, private companies may have limited
financial resources and may be unable to meet their obligations. The Fund may
only have limited access to a private company’s actual financial results and
there is no assurance that the information obtained by the Fund is reliable.
These companies may not ever issue shares in an IPO and a liquid market for
their shares may never develop, which could adversely affect the Fund’s
liquidity. If the company does issue shares in an IPO, IPOs are risky and
volatile and may cause the value of the Fund’s investment to decrease
significantly. Moreover, because securities issued by private companies are
generally not freely or publicly tradable, the Fund may not have the opportunity
to purchase, or the ability to sell, these securities in the amounts, or at the
prices, the Fund desires.
Private
Placements and Other Restricted Securities Risk. Private placements and
other restricted securities, including securities for which Fund management has
material non-public information, are securities that are subject to legal and/or
contractual restrictions on their sales. These securities may not be sold to the
public unless certain conditions are met, which may include registration under
the applicable securities laws. As a result of the absence of a public trading
market, the prices of these securities may be more difficult to determine than
publicly traded securities and these securities may involve heightened risk as
compared to investments in securities of publicly traded companies. Private
placements and other restricted securities may be illiquid, and it frequently
can be difficult to sell them at a time when it may otherwise be desirable to do
so or the Fund may be able to sell them only at prices that are less than what
the Fund regards as their fair market value. Transaction costs may be higher for
these securities. In addition, the Fund may get only limited information about
the issuer of a private placement or other restricted security.
Recent
Market Conditions. Both U.S. and international markets have experienced
significant volatility in recent months and years. As a result of such
volatility, investment returns may fluctuate significantly. National economies
are substantially interconnected, as are global financial markets, which creates
the possibility that conditions in one country or region might adversely impact
issuers in a different country or region. However, the interconnectedness of
economies and/or markets may be diminishing, which may impact such economies and
markets in ways that cannot be foreseen at this time.
Although
interest rates were unusually low in recent years in the U.S. and abroad,
recently, the Federal Reserve and certain foreign central banks raised interest
rates as part of their efforts to address rising inflation. It is difficult to
accurately predict the pace at which interest rates might increase, the timing,
frequency or magnitude of any such increases in interest rates, or when such
increases might stop. Additionally, various economic and political factors could
cause the Federal Reserve or other foreign central banks to change their
approach in the future and such actions may result in an economic slowdown both
in the U.S. and abroad. Unexpected changes in interest rates could lead to
market volatility or reduce liquidity in certain sectors of the
market.
Deteriorating
economic fundamentals may, in turn, increase the risk of default or insolvency
of particular issuers, negatively impact market value, cause credit spreads to
widen, and reduce bank balance sheets. Any of these could cause an increase in
market volatility, or reduce liquidity across various markets or decrease
confidence in the markets.
Some
countries, including the U.S., have adopted more protectionist trade policies.
Slowing global economic growth, the rise in protectionist trade policies,
changes to some major international trade agreements, risks associated with the
trade agreement between the United Kingdom and the European Union, and the risks
associated with trade negotiations between the U.S. and China, could affect the
economies of many nations in ways that cannot necessarily be foreseen at the
present time. In addition, the current strength of the U.S. dollar may decrease
foreign demand for U.S. assets, which could have a negative impact on certain
issuers and/or industries.
Regulators
in the U.S. have proposed and adopted a number of changes to regulations
involving the markets and issuers, some of which apply to the Fund. The full
effect of various newly adopted regulations is not currently known.
Additionally, it is not currently known whether any of the proposed regulations
will be adopted. However, due to the scope of regulations being proposed and
adopted, certain of these changes to regulation could limit the Fund’s ability
to pursue its investment strategies or make certain investments, may make it
more costly for it to operate, or adversely impact performance.
Tensions,
war, or open conflict between nations, such as between Russia and Ukraine, in
the Middle East, or in eastern Asia could affect the economies of many nations,
including the United States. The duration of ongoing hostilities and any
sanctions and related events cannot be predicted. Those events present material
uncertainty and risk with respect to markets globally and the performance of the
Fund and its investments or operations could be negatively impacted.
High public
debt in the U.S. and other countries creates ongoing systemic and market risks
and policymaking uncertainty. There is no assurance that the U.S. Congress will
act to raise the nation’s debt ceiling; a failure to do so could cause market
turmoil and substantial investment risks that cannot now be fully predicted.
Unexpected political, regulatory and diplomatic events within the U.S. and
abroad may affect investor and consumer confidence and may adversely impact
financial markets and the broader economy.
There is
widespread concern about the potential effects of global climate change on
property and security values. Certain issuers, industries and regions may be
adversely affected by the impact of climate change in ways that cannot be
foreseen. The impact of legislation, regulation and international accords
related to climate change may negatively impact certain issuers and/or
industries.
Redemption
Risk. The Fund may experience periods of large or frequent redemptions that
could cause the Fund to sell assets at inopportune times, which could have a
negative impact on the Fund’s overall liquidity, or at a loss or depressed
value. Redemption risk is greater to the extent that one or more investors or
intermediaries control a large percentage of investments in the Fund and the
risk is heightened during periods of declining or illiquid markets. Large
redemptions could hurt the Fund’s performance, increase transaction costs, and
create adverse tax consequences.
Sector
Risk. From time to time, based on market or economic conditions, the Fund
may have significant positions in one or more sectors of the market. To the
extent the Fund invests more heavily in particular sectors, its performance will
be especially sensitive to developments that significantly affect those sectors.
Individual sectors or sub-sectors may be more volatile, and may perform
differently, than the broader market. The industries that constitute a sector
may all react in the same way to economic, political or regulatory
events.
Securities
Lending Risk. Securities lending involves a possible delay in recovery of
the loaned securities or a possible loss of rights in the collateral should the
borrower fail financially. The Fund could also lose money if the value of the
collateral decreases.
A summary
of the Fund’s additional principal investment risks is as
follows:
Risk of
Increase in Expenses. A decline in the Fund’s average net assets during the
current fiscal year due to market volatility or other factors could cause the
Fund’s expenses for the current fiscal year to be higher than the expense
information presented in “Fees and Expenses.”
Operational
and Cybersecurity Risk. The Fund and its service providers, and your ability
to transact with the Fund, may be negatively impacted due to operational matters
arising from, among other problems, human errors, systems and technology
disruptions or failures, or cybersecurity incidents. Cybersecurity incidents may
allow an unauthorized party to gain access to fund assets, customer data, or
proprietary information, or cause the Fund or its service providers, as well as
the securities trading venues and their service providers, to suffer data
corruption or lose operational functionality. Cybersecurity incidents can result
from deliberate attacks or unintentional events. It is not possible for the
Manager or the other Fund service providers to identify all of the cybersecurity
or other operational risks that may affect the Fund or to develop processes and
controls to completely eliminate
or mitigate
their occurrence or effects. Most issuers in which the Fund invests are heavily
dependent on computers for data storage and operations, and require ready access
to the internet to conduct their business. Thus, cybersecurity incidents could
also affect issuers of securities in which the Fund invests, leading to
significant loss of value.
Risk
Management. Risk is an essential part of investing. No risk management
program can eliminate the Fund’s exposure to adverse events; at best, it may
only reduce the possibility that the Fund will be affected by such events, and
especially those risks that are not intrinsic to the Fund’s investment program.
The Fund could experience losses if judgments about risk prove to be
incorrect.
Valuation
Risk. The Fund may not be able to sell an investment at the price at which
the Fund has valued the investment. Such differences could be significant,
particularly for illiquid securities and securities that trade in relatively
thin markets and/or markets that experience extreme volatility. If market or
other conditions make it difficult to value an investment, the Fund may be
required to value such investments using more subjective methods, known as fair
value methodologies. Using fair value methodologies to price investments may
result in a value that is different from an investment’s most recent price and
from the prices used by other funds to calculate their NAVs. The Fund uses
pricing services to provide values for certain securities and there is no
assurance that the Fund will be able to sell an investment at the price
established by such pricing services. The Fund’s ability to value its
investments in an accurate and timely manner may be impacted by technological
issues and/or errors by third party service providers, such as pricing services
or accounting agents.
PERFORMANCE
The
following bar chart and table provide an indication of the risks of investing in
the Fund. The bar chart
shows how the Fund’s performance has varied from year to year. The table below
the bar chart shows what the returns would equal if you averaged out actual
performance over various lengths of time and compares the returns with the
returns of a broad-based market index. The index, which
is described in “Descriptions of Indices” in the prospectus, has characteristics
relevant to the Fund’s investment strategy.
Returns
would have been lower if the Manager had not reimbursed certain expenses and/or
waived a portion of the investment management fees during certain of the periods
shown.
Past performance (before and
after taxes) is not a prediction of future results. Visit
www.nb.com
or call 800-877-9700 for
updated performance information.
year-by-year % Returns as of 12/31 each
year
Years |
Returns |
2013 |
38.92% |
2014 |
9.27% |
2015 |
-4.76% |
2016 |
9.19% |
2017 |
25.20% |
2018 |
-6.93% |
2019 |
36.61% |
2020 |
34.58% |
2021 |
27.61% |
2022 |
-24.34% |
Best
quarter: Q2 2020 25.19%
Worst
quarter: Q4 2018 -16.86%
Year to Date performance as
of: 9/30/2023 19.67%
average annual total % returns as of
12/31/22
Large Cap Growth
Fund |
|
1
Year |
|
5
Years |
|
10
Years |
Return
Before Taxes |
|
-24.34 |
|
10.56 |
|
12.56 |
Return
After Taxes on Distributions |
|
-25.43 |
|
8.23 |
|
9.93 |
Return
After Taxes on Distributions and Sale of Fund Shares |
|
-13.60 |
|
8.00 |
|
9.65 |
Russell
1000® Growth Index (reflects no deduction for
fees, expenses or taxes) |
|
-29.14 |
|
10.96 |
|
14.10 |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates and do not reflect the impact of state and local
taxes. Actual after-tax returns depend on an investor’s
tax situation and may differ from those shown. After-tax returns are not
relevant to investors who hold their Fund shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement
accounts. Return After Taxes on
Distributions and Sale of Fund Shares may be higher than other returns for the
same period due to a tax benefit of realizing a capital loss upon the sale of
Fund shares.
INVESTMENT
MANAGER
Neuberger
Berman Investment Advisers LLC (“Manager”) is the Fund’s investment
manager.
PORTFOLIO
MANAGERS
The Fund is
managed by Charles Kantor (Managing Director of the Manager) and Marc Regenbaum
(Managing Director of the Manager). Mr. Kantor has managed the Fund since
October 2015. Mr. Regenbaum joined as an Associate Portfolio Manager in
February 2017 and became Portfolio Manager in
December 2020.
Buying
and Selling Shares
Investor
Class of the Fund is closed to new investors. Only certain investors are
allowed to purchase Investor Class shares of the Fund. See “Maintaining Your
Account” in the prospectus.
You may
purchase, redeem (sell) or exchange shares of the Fund on any day the New York
Stock Exchange is open, at the Fund’s net asset value per share next determined
after your order is received in proper form. Shares of the Fund generally are
available only through certain investment providers, such as banks, brokerage
firms, workplace retirement programs, and financial advisers. Contact any
investment provider authorized to sell the Fund’s shares.
For certain
investors, shares of the Fund may be available directly from Neuberger Berman BD
LLC by regular, first class mail (Neuberger Berman Funds, P.O. Box 219189,
Kansas City, MO 64121-9189), by express delivery, registered mail, or certified
mail (Neuberger Berman Funds, 430 West 7th Street, Suite 219189,
Kansas City, MO 64105-1407), or by wire, fax, telephone, exchange, or systematic
investment or withdrawal (call 800-877-9700 for instructions). See “Maintaining
Your Account” in the prospectus for instructions on buying and redeeming
(selling) shares directly.
The minimum
initial investment in Investor Class is $1,000. Additional investments can be as
little as $100. These minimums may be waived in certain cases.
Tax
Information
Unless you
invest in the Fund through a tax-advantaged retirement plan or account or are a
tax-exempt investor, you will be subject to tax on Fund distributions to you of
ordinary income and/or net capital gains. Those distributions generally are not
taxable to such a plan or account or a tax-exempt investor, although withdrawals
from certain retirement plans and accounts generally are subject to federal
income tax.
Payments
to Investment Providers and Other Financial Intermediaries
If you
purchase shares of the Fund through an investment provider or other financial
intermediary, such as a bank, brokerage firm, workplace retirement program, or
financial adviser (who may be affiliated with Neuberger Berman), the Fund and/or
Neuberger Berman BD LLC and/or its affiliates may pay the intermediary for the
sale of Fund shares and related services. These payments may create a conflict
of interest by influencing the investment provider or other financial
intermediary and its employees to recommend the Fund over another investment.
Ask your investment provider or visit its website for more
information.
Neuberger
Berman Large Cap Value Fund
Investor
Class Shares (NPRTX)
GOAL
The Fund
seeks long-term growth of capital.
Fees and
Expenses
These tables
describe the fees and expenses that you may pay if you buy, hold or sell shares
of the Fund. You may pay other fees, such as brokerage commissions and other
fees to financial intermediaries, which are not reflected in the table and
example below.
Shareholder Fees (fees paid
directly from your investment) |
|
None |
Annual Fund Operating Expenses
(expenses that you pay each year as a % of the value of your
investment) |
|
|
Management
fees |
|
0.68 |
Distribution
and/or shareholder service (12b-1) fees |
|
None |
Other
expenses |
|
0.08 |
Total
annual operating expenses |
|
0.76 |
Expense
Example
The expense
example can help you compare costs among mutual funds. The example assumes that
you invested $10,000 for the periods shown, that you redeemed all of your shares
at the end of those periods, that the Fund earned a hypothetical 5% total return
each year, and that the Fund’s expenses were those in the table. Actual
performance and expenses may be higher or lower.
|
|
1
Year |
|
3
Years |
|
5
Years |
|
10
Years |
Investor
Class |
|
$78 |
|
$243 |
|
$422 |
|
$942 |
Portfolio
Turnover
The 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 Fund shares are
held in a taxable account. These costs, which are not reflected in annual
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was 81% of the average
value of its portfolio.
Principal Investment
Strategies
To pursue
its goal, the Fund normally invests at least 80% of its net assets in equity
securities of large-capitalization companies, which it defines as those with a
market capitalization within the market capitalization range of the Russell
1000® Value Index at the time of purchase.
The
Portfolio Managers look for what they believe to be well-managed companies whose
stock prices are undervalued. The Portfolio Managers seek to identify companies
with catalysts that they believe have the potential to improve the companies’
earnings from depressed levels. Such catalysts may include: management changes,
restructurings, new products, new services, or new markets. The Portfolio
Managers may also look for other characteristics in a company, such as a strong
market position relative to competitors, a high level of stock ownership among
management, and a recent sharp decline in stock price that appears to be the
result of a short-term market overreaction to negative news.
Although the
Fund invests primarily in domestic stocks, it may also invest in stocks of
foreign companies. The Fund may also invest in real estate investment trusts
(“REITs”).
The Fund
seeks to reduce risk by diversifying among many companies and industries. At
times, the Portfolio Managers may emphasize certain sectors or industries that
they believe are undervalued relative to their historical valuations.
The Fund may
also use options, including, but not limited to, buying and selling (writing)
put and call options on individual stocks, to attempt to enhance returns. The
Fund will only sell (write) call options on individual stocks if it
simultaneously holds an equivalent position in the stock underlying the option
(“covered call option”).
The
Portfolio Managers follow a disciplined selling strategy and may sell a security
when it reaches a target price, if a company’s business fails to perform as
expected, or when other opportunities appear more attractive. In an effort to
achieve its goal, the Fund may have elevated portfolio turnover.
The Fund
will not change its strategy of normally investing at least 80% of its net
assets in equity securities of large-capitalization companies, without providing
shareholders at least 60 days’ notice. This test is applied at the time the Fund
invests; later percentage changes caused by a change in Fund assets, market
values or company circumstances will not require the Fund to dispose of a
holding.
PRINCIPAL INVESTMENT
RISKS
Most of the
Fund’s performance depends on what happens in the stock market, the Portfolio
Managers’ evaluation of those developments, and the success of the Portfolio
Managers in implementing the Fund’s investment strategies. The market’s behavior
can be difficult to predict, particularly in the short term. There can be no
guarantee that the Fund will achieve its goal. The Fund may take temporary
defensive and cash management positions; to the extent it does, it will not be
pursuing its principal investment strategies.
The actual
risk exposure taken by the Fund in its investment program will vary over time,
depending on various factors including the Portfolio Managers’ evaluation of
issuer, political, regulatory, market, or economic developments. There can be no
guarantee that the Portfolio Managers will be successful in their attempts to
manage the risk exposure of the Fund or will appropriately evaluate or weigh the
multiple factors involved in investment decisions, including issuer, market
and/or instrument-specific analysis and valuation.
The Fund is a mutual fund, not a bank deposit, and is not
guaranteed or insured by the Federal Deposit Insurance Corporation or any other
government agency. The value of your investment may fall, sometimes sharply,
and you could lose money by investing in the
Fund.
Each of the
following risks, which are described in alphabetical order and not in order of
any presumed importance, can significantly affect the Fund’s performance. The
relative importance of, or potential exposure as a result of, each of these
risks will vary based on market and other investment-specific
considerations.
Catalyst
Risk. Investing in companies in anticipation of a catalyst carries the risk
that the catalyst may not happen as anticipated, or the market may react to the
catalyst differently than expected. Certain catalysts, such as emergence from,
or restructuring as a result of, bankruptcy, carry additional risks and the
securities of such companies may be more likely to lose value than the
securities of more stable companies. Securities of issuers undergoing such an
event may be more volatile than other securities, may at times be illiquid, and
may be difficult to value, and management of such a company may be addressing a
situation with which it has little experience.
Currency
Risk. Currency risk is the risk that foreign currencies will decline in
value relative to the U.S. dollar. To the extent that the Fund invests in
securities or other instruments denominated in or indexed to foreign currencies,
changes in currency exchange rates could adversely impact investment gains or
add to investment losses. Currency exchange rates may fluctuate significantly
over short periods of time and can be affected unpredictably by various factors,
including investor perception and changes in interest rates; intervention, or
failure to intervene, by U.S. or foreign governments, central banks, or
supranational entities; or by currency controls or political developments in the
U.S. or abroad.
Foreign
Risk. Foreign securities involve risks in addition to those associated with
comparable U.S. securities. Additional risks include exposure to less developed
or less efficient trading markets; social, political, diplomatic, or economic
instability; trade barriers and other protectionist trade policies (including
those of the U.S.); imposition of economic sanctions against a particular
country or countries, organizations, companies, entities and/or individuals;
significant government involvement in an economy and/or market structure;
fluctuations in foreign currencies or currency redenomination; potential for
default on sovereign debt; nationalization or expropriation of assets;
settlement, custodial or other operational risks; higher transaction costs;
confiscatory withholding or other taxes; and less stringent auditing and
accounting, corporate disclosure, governance, and legal standards. As a result,
foreign securities may fluctuate more widely in price, and may also be less
liquid, than comparable U.S. securities. World markets, or those in a particular
region, may all react in similar fashion to important economic or political
developments. In addition, foreign markets may perform differently than the U.S.
markets. The effect of economic instability on specific foreign markets or
issuers may be difficult to predict or evaluate. Regardless of where a company
is organized or its stock is traded, its performance may be affected
significantly by events in regions from which it derives its profits or in which
it conducts significant operations.
Securities
of issuers traded on foreign exchanges may be suspended, either by the issuers
themselves, by an exchange, or by governmental authorities. Trading suspensions
may be applied from time to time to the securities of individual issuers for
reasons specific to that issuer, or may be applied broadly by exchanges or
governmental authorities in response to market events. In the event that the
Fund holds material positions in such suspended securities or instruments, the
Fund’s ability to liquidate its positions or provide liquidity to investors may
be compromised and the Fund could incur significant losses.
High
Portfolio Turnover Risk. The Fund may engage in active and frequent trading
and may have a high portfolio turnover rate, which may increase the Fund’s
transaction costs, may adversely affect the Fund’s performance and may generate
a greater amount of capital gain distributions to shareholders than if the Fund
had a low portfolio turnover rate.
Issuer-Specific
Risk. An individual security may be more volatile, and may perform
differently, than the market as a whole.
Market
Volatility Risk. Markets may be volatile and values of individual securities
and other investments, including those of a particular type, may decline
significantly in response to adverse issuer, political, regulatory, market,
economic or other developments that may cause broad changes in market value,
public perceptions concerning these developments, and adverse investor sentiment
or publicity. Geopolitical and other risks, including environmental and public
health risks may add to instability in world economies and markets generally.
Changes in value may be temporary or may last for extended periods. If the Fund
sells a portfolio position before it reaches its market peak, it may miss out on
opportunities for better performance.
Mid- and
Large-Cap Companies Risk. At times, mid- and large-cap companies may be out
of favor with investors. Compared to smaller companies, large-cap companies may
be unable to respond as quickly to changes and opportunities and may grow at a
slower rate. Compared to larger companies, mid-cap companies may depend on a
more limited management group, may have a shorter history of operations, less
publicly available information, less stable earnings, and limited product lines,
markets or financial resources. The securities of mid-cap companies are often
more volatile and less liquid than the securities of larger companies and may be
more affected than other types of securities by the underperformance of a
sector, during market downturns, or by adverse publicity and investor
perceptions.
Options
Risk. The use of options involves investment strategies and risks different
from those associated with ordinary portfolio securities transactions. If a
strategy is applied at an inappropriate time or market conditions or trends are
judged incorrectly, the use of options may lower the Fund’s return. There can be
no guarantee that the use of options will increase the Fund’s return or income.
In addition, there may be an imperfect correlation between the movement in
prices of options and the securities underlying them and there may at times not
be a liquid secondary market for various options. An abrupt change in the price
of an underlying security could render an option worthless. The prices of
options are volatile and are influenced by, among other things, actual and
anticipated changes in the value of the underlying instrument, or in interest or
currency exchange rates, including the anticipated volatility of the underlying
instrument (known as implied volatility), which in turn are affected by the
performance of the issuer of the underlying instrument, by fiscal and monetary
policies and by national and international political and economic events. As
such, prior to the exercise or expiration of the option, the Fund is exposed to
implied volatility risk, meaning the value, as based on implied volatility, of
an option may increase due to market and economic conditions or views based on
the sector or industry in which issuers of the underlying instrument
participate, including company-specific factors.
By writing
put options, the Fund takes on the risk of declines in the value of the
underlying instrument, including the possibility of a loss up to the entire
strike price of each option it sells, but without the corresponding opportunity
to benefit from potential increases in the value of the underlying instrument.
When the Fund writes a put option, it assumes the risk that it must purchase the
underlying instrument at a strike price that may be higher than the market price
of the instrument. If there is a broad market decline and the Fund is not able
to close out its written put options, it may result in substantial losses to the
Fund. By writing a call option, the Fund may be obligated to deliver instruments
underlying an option at less than the market price. When the Fund writes a
covered call option, it gives up the opportunity to profit from a price increase
in the underlying instrument above the strike price. If a covered call option
that the Fund has written is exercised, the Fund will experience a gain or loss
from the sale of the underlying instrument, depending on the price at which the
Fund purchased the instrument and the strike price of the option. The Fund will
receive a premium from writing options, but the premium received may not be
sufficient to offset any losses sustained from exercised options. In the case of
a covered call, the premium received may be offset by a decline in the market
value of the underlying instrument during the option period. If an option that
the Fund has purchased is never exercised or closed out, the Fund will lose the
amount of the premium it paid and the use of those funds.
Recent
Market Conditions. Both U.S. and international markets have experienced
significant volatility in recent months and years. As a result of such
volatility, investment returns may fluctuate significantly. National economies
are substantially interconnected, as are global financial markets, which creates
the possibility that conditions in one country or region might
adversely
impact issuers in a different country or region. However, the interconnectedness
of economies and/or markets may be diminishing, which may impact such economies
and markets in ways that cannot be foreseen at this time.
Although
interest rates were unusually low in recent years in the U.S. and abroad,
recently, the Federal Reserve and certain foreign central banks raised interest
rates as part of their efforts to address rising inflation. It is difficult to
accurately predict the pace at which interest rates might increase, the timing,
frequency or magnitude of any such increases in interest rates, or when such
increases might stop. Additionally, various economic and political factors could
cause the Federal Reserve or other foreign central banks to change their
approach in the future and such actions may result in an economic slowdown both
in the U.S. and abroad. Unexpected changes in interest rates could lead to
market volatility or reduce liquidity in certain sectors of the market.
Deteriorating economic fundamentals may, in turn, increase the risk of default
or insolvency of particular issuers, negatively impact market value, cause
credit spreads to widen, and reduce bank balance sheets. Any of these could
cause an increase in market volatility, or reduce liquidity across various
markets or decrease confidence in the markets.
Some
countries, including the U.S., have adopted more protectionist trade policies.
Slowing global economic growth, the rise in protectionist trade policies,
changes to some major international trade agreements, risks associated with the
trade agreement between the United Kingdom and the European Union, and the risks
associated with trade negotiations between the U.S. and China, could affect the
economies of many nations in ways that cannot necessarily be foreseen at the
present time. In addition, the current strength of the U.S. dollar may decrease
foreign demand for U.S. assets, which could have a negative impact on certain
issuers and/or industries.
Regulators
in the U.S. have proposed and adopted a number of changes to regulations
involving the markets and issuers, some of which apply to the Fund. The full
effect of various newly adopted regulations is not currently known.
Additionally, it is not currently known whether any of the proposed regulations
will be adopted. However, due to the scope of regulations being proposed and
adopted, certain of these changes to regulation could limit the Fund’s ability
to pursue its investment strategies or make certain investments, may make it
more costly for it to operate, or adversely impact performance.
Tensions,
war, or open conflict between nations, such as between Russia and Ukraine, in
the Middle East, or in eastern Asia could affect the economies of many nations,
including the United States. The duration of ongoing hostilities and any
sanctions and related events cannot be predicted. Those events present material
uncertainty and risk with respect to markets globally and the performance of the
Fund and its investments or operations could be negatively impacted.
High public
debt in the U.S. and other countries creates ongoing systemic and market risks
and policymaking uncertainty. There is no assurance that the U.S. Congress will
act to raise the nation’s debt ceiling; a failure to do so could cause market
turmoil and substantial investment risks that cannot now be fully predicted.
Unexpected political, regulatory and diplomatic events within the U.S. and
abroad may affect investor and consumer confidence and may adversely impact
financial markets and the broader economy.
There is
widespread concern about the potential effects of global climate change on
property and security values. Certain issuers, industries and regions may be
adversely affected by the impact of climate change in ways that cannot be
foreseen. The impact of legislation, regulation and international accords
related to climate change may negatively impact certain issuers and/or
industries.
Redemption
Risk. The Fund may experience periods of large or frequent redemptions that
could cause the Fund to sell assets at inopportune times, which could have a
negative impact on the Fund’s overall liquidity, or at a loss or depressed
value. Redemption risk is greater to the extent that one or more investors or
intermediaries control a large percentage of investments in the Fund and the
risk is heightened during periods of declining or illiquid markets. Large
redemptions could hurt the Fund’s performance, increase transaction costs, and
create adverse tax consequences.
REITs and
Other Real Estate Companies Risk. REITs and other real estate company
securities are subject to risks similar to those of direct investments in real
estate and the real estate industry in general, including, among other risks:
general and local economic conditions; changes in interest rates; declines in
property values; defaults by mortgagors or other borrowers and tenants;
increases in property taxes and other operating expenses; overbuilding in their
sector of the real estate market; fluctuations in rental income; lack of
availability of mortgage funds or financing; extended vacancies of properties,
especially during economic downturns; changes in tax and regulatory
requirements; losses due to environmental liabilities; casualty or condemnation
losses; changing social trends regarding working arrangements; or other
economic, social, political, or regulatory matters affecting the real estate
industry. REITs also are dependent upon the skills of their managers and are
subject to heavy cash flow dependency or self-liquidation.
Regardless
of where a REIT is organized or traded, its performance may be affected
significantly by events in the region where its properties are located. Domestic
REITs could be adversely affected by failure to qualify for tax-free
“pass-through” of distributed
net
investment income and net realized gains under the Internal Revenue Code of
1986, as amended, (“Code”) or to maintain their exemption from registration
under the Investment Company Act of 1940, as amended. The value of REIT common
shares may decline when interest rates rise. REITs and other real estate company
securities tend to be small- to mid-cap securities and are subject to the risks
of investing in small- to mid-cap securities.
Sector
Risk. From time to time, based on market or economic conditions, the Fund
may have significant positions in one or more sectors of the market. To the
extent the Fund invests more heavily in particular sectors, its performance will
be especially sensitive to developments that significantly affect those sectors.
Individual sectors or sub-sectors may be more volatile, and may perform
differently, than the broader market. The industries that constitute a sector
may all react in the same way to economic, political or regulatory
events.
Securities
Lending Risk. Securities lending involves a possible delay in recovery of
the loaned securities or a possible loss of rights in the collateral should the
borrower fail financially. The Fund could also lose money if the value of the
collateral decreases.
Value
Stock Risk. Value stocks may remain undervalued for extended periods of
time, may decrease in value during a given period, may not ever realize what the
portfolio management team believes to be their full value, or the portfolio
management team’s assumptions about intrinsic value or potential for
appreciation may be incorrect. This may happen, among other reasons, because of
a failure to anticipate which stocks or industries would benefit from changing
market or economic conditions or investor preferences.
A summary
of the Fund’s additional principal investment risks is as
follows:
Risk of
Increase in Expenses. A decline in the Fund’s average net assets during the
current fiscal year due to market volatility or other factors could cause the
Fund’s expenses for the current fiscal year to be higher than the expense
information presented in “Fees and Expenses.”
Operational
and Cybersecurity Risk. The Fund and its service providers, and your ability
to transact with the Fund, may be negatively impacted due to operational matters
arising from, among other problems, human errors, systems and technology
disruptions or failures, or cybersecurity incidents. Cybersecurity incidents may
allow an unauthorized party to gain access to fund assets, customer data, or
proprietary information, or cause the Fund or its service providers, as well as
the securities trading venues and their service providers, to suffer data
corruption or lose operational functionality. Cybersecurity incidents can result
from deliberate attacks or unintentional events. It is not possible for the
Manager or the other Fund service providers to identify all of the cybersecurity
or other operational risks that may affect the Fund or to develop processes and
controls to completely eliminate or mitigate their occurrence or effects. Most
issuers in which the Fund invests are heavily dependent on computers for data
storage and operations, and require ready access to the internet to conduct
their business. Thus, cybersecurity incidents could also affect issuers of
securities in which the Fund invests, leading to significant loss of
value.
Risk
Management. Risk is an essential part of investing. No risk management
program can eliminate the Fund’s exposure to adverse events; at best, it may
only reduce the possibility that the Fund will be affected by such events, and
especially those risks that are not intrinsic to the Fund’s investment program.
The Fund could experience losses if judgments about risk prove to be
incorrect.
Valuation
Risk. The Fund may not be able to sell an investment at the price at which
the Fund has valued the investment. Such differences could be significant,
particularly for illiquid securities and securities that trade in relatively
thin markets and/or markets that experience extreme volatility. If market or
other conditions make it difficult to value an investment, the Fund may be
required to value such investments using more subjective methods, known as fair
value methodologies. Using fair value methodologies to price investments may
result in a value that is different from an investment’s most recent price and
from the prices used by other funds to calculate their NAVs. The Fund uses
pricing services to provide values for certain securities and there is no
assurance that the Fund will be able to sell an investment at the price
established by such pricing services. The Fund’s ability to value its
investments in an accurate and timely manner may be impacted by technological
issues and/or errors by third party service providers, such as pricing services
or accounting agents.
PERFORMANCE
The
following bar chart and table provide an indication of the risks of investing in
the Fund. The bar chart
shows how the Fund’s performance has varied from year to year. The table below
the bar chart shows what the returns would equal if you averaged out actual
performance over various lengths of time and compares the returns with the
returns of a broad-based market index. The index, which
is described in “Descriptions of Indices” in the prospectus, has characteristics
relevant to the Fund’s investment strategy.
Returns
would have been lower if the Manager had not reimbursed certain expenses and/or
waived a portion of the investment management fees during certain of the periods
shown.
Past performance (before and
after taxes) is not a prediction of future results. Visit
www.nb.com
or call 800-877-9700 for
updated performance information.
year-by-year % Returns as of 12/31 each
year
Years |
Returns |
2013 |
31.39% |
2014 |
11.02% |
2015 |
-12.30% |
2016 |
28.22% |
2017 |
13.40% |
2018 |
-0.93% |
2019 |
23.94% |
2020 |
14.47% |
2021 |
28.12% |
2022 |
-1.22% |
Best
quarter: Q4 2020 28.65%
Worst
quarter: Q1 2020 -26.83%
Year to Date performance as
of: 9/30/2023 -5.31%
average annual total % returns as of
12/31/22
Large Cap Value
Fund |
|
1
Year |
|
5
Years |
|
10
Years |
Return
Before Taxes |
|
-1.22 |
|
12.21 |
|
12.71 |
Return
After Taxes on Distributions |
|
-1.59 |
|
10.83 |
|
10.41 |
Return
After Taxes on Distributions and Sale of Fund Shares |
|
-0.47 |
|
9.37 |
|
9.53 |
Russell
1000® Value Index (reflects no deduction for
fees, expenses or taxes) |
|
-7.54 |
|
6.67 |
|
10.29 |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates and do not reflect the impact of state and local
taxes. Actual after-tax returns depend on an investor’s
tax situation and may differ from those shown. After-tax returns are not
relevant to investors who hold their Fund shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement
accounts. Return After Taxes on
Distributions and Sale of Fund Shares may be higher than other returns for the
same period due to a tax benefit of realizing a capital loss upon the sale of
Fund shares.
INVESTMENT
MANAGER
Neuberger
Berman Investment Advisers LLC (“Manager”) is the Fund’s investment
manager.
PORTFOLIO
MANAGERS
The Fund is
managed by Portfolio Manager Eli M. Salzmann (Managing Director of the Manager)
and Associate Portfolio Manager David Levine, CFA (Managing Director of the
Manager). Mr. Salzmann has managed the Fund since December 2011 and Mr.
Levine has managed the Fund since April 2021.
Buying
and Selling Shares
Investor
Class of the Fund is closed to new investors. Only certain investors are
allowed to purchase Investor Class shares of the Fund. See “Maintaining Your
Account” in the prospectus.
You may
purchase, redeem (sell) or exchange shares of the Fund on any day the New York
Stock Exchange is open, at the Fund’s net asset value per share next determined
after your order is received in proper form. Shares of the Fund generally are
available only through certain investment providers, such as banks, brokerage
firms, workplace retirement programs, and financial advisers. Contact any
investment provider authorized to sell the Fund’s shares.
For certain
investors, shares of the Fund may be available directly from Neuberger Berman BD
LLC by regular, first class mail (Neuberger Berman Funds, P.O. Box 219189,
Kansas City, MO 64121-9189), by express delivery, registered mail, or certified
mail (Neuberger Berman Funds, 430 West 7th Street, Suite 219189,
Kansas City, MO 64105-1407), or by wire, fax, telephone, exchange, or systematic
investment or withdrawal (call 800-877-9700 for instructions). See “Maintaining
Your Account” in the prospectus for instructions on buying and redeeming
(selling) shares directly.
The minimum
initial investment in Investor Class is $1,000. Additional investments can be as
little as $100. These minimums may be waived in certain cases.
Tax
Information
Unless you
invest in the Fund through a tax-advantaged retirement plan or account or are a
tax-exempt investor, you will be subject to tax on Fund distributions to you of
ordinary income and/or net capital gains. Those distributions generally are not
taxable to such a plan or account or a tax-exempt investor, although withdrawals
from certain retirement plans and accounts generally are subject to federal
income tax.
Payments
to Investment Providers and Other Financial Intermediaries
If you
purchase shares of the Fund through an investment provider or other financial
intermediary, such as a bank, brokerage firm, workplace retirement program, or
financial adviser (who may be affiliated with Neuberger Berman), the Fund and/or
Neuberger Berman BD LLC and/or its affiliates may pay the intermediary for the
sale of Fund shares and related services. These payments may create a conflict
of interest by influencing the investment provider or other financial
intermediary and its employees to recommend the Fund over another investment.
Ask your investment provider or visit its website for more
information.
Neuberger Berman Mid Cap Growth Fund
Investor
Class Shares (NMANX)
GOAL
The Fund
seeks growth of capital.
Fees and
Expenses
These tables
describe the fees and expenses that you may pay if you buy, hold or sell shares
of the Fund. You may pay other fees, such as brokerage commissions and other
fees to financial intermediaries, which are not reflected in the table and
example below.
Shareholder Fees (fees paid
directly from your investment) |
|
None |
Annual Fund Operating Expenses
(expenses that you pay each year as a % of the value of your
investment) |
|
|
Management
fees |
|
0.75 |
Distribution
and/or shareholder service (12b-1) fees |
|
None |
Other
expenses |
|
0.11 |
Total
annual operating expenses |
|
0.86 |
Expense
Example
The expense
example can help you compare costs among mutual funds. The example assumes that
you invested $10,000 for the periods shown, that you redeemed all of your shares
at the end of those periods, that the Fund earned a hypothetical 5% total return
each year, and that the Fund’s expenses were those in the table. Actual
performance and expenses may be higher or lower.
|
|
1
Year |
|
3
Years |
|
5
Years |
|
10
Years |
Investor
Class |
|
$88 |
|
$274 |
|
$477 |
|
$1,061 |
Portfolio
Turnover
The 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 Fund shares are
held in a taxable account. These costs, which are not reflected in annual
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was 101% of the
average value of its portfolio.
Principal Investment
Strategies
To pursue
its goal, the Fund normally invests at least 80% of its net assets in common
stocks of mid-capitalization companies, which it defines as those with a market
capitalization within the market capitalization range of the Russell
Midcap® Index at the time of initial purchase. Although the Fund
invests primarily in domestic securities, it may also invest in securities of
foreign companies.
The Fund’s
strategy utilizes a qualitative, bottom-up research driven approach to identify
companies that the Portfolio Managers believe have catalysts for growth which
are underappreciated by the market. The Portfolio Managers seek to invest in
underappreciated companies with the following characteristics: durable and
potentially unique business models and/or proficient management capable of
advancing the development of and/or strengthening of sustainable and consistent
revenue growth, cash flow growth, earnings growth and/or overall balance sheet
strength. Such catalysts may include a new technology, product or service, a
regulatory update, market share gains, cyclical inflections (e.g. companies
whose returns are driven by macro-economic factors), corporate restructurings or
self-help initiatives (e.g. internal operating efforts to increase company
efficiencies). The Portfolio Managers may also invest in anticipation of a
catalyst.
In analyzing
catalysts, the Portfolio Managers evaluate each catalyst’s uniqueness, timing,
growth potential and sustainability, as well as assessing execution risks,
competitive barriers and threats. The Portfolio Managers are also attempting to
exploit market inefficiencies that potentially may exist within the
small-to-mid-capitalization market, due to the number of companies that comprise
the investable universe and the limited amount of available research that exists
for some of those companies. Investable companies emerging from the Portfolio
Manager’s bottom-up fundamental, qualitative and valuation analysis fall into
the following investment classifications:
Core
investments: are typically more mature companies, engaged with, and
participating in, compelling secular growth trends, that the Portfolio Managers
believe offer a demonstrated history of consistent execution and results. These
tend to represent multi-year holdings of the strategy.
Turn
investments: represent holdings in a wide range of corporate development and
maturity stages and are generally driven by what the Portfolio Managers believe
to be a distinct developing catalyst, such as a new product or service, market
share gains or internal corporate self-help opportunities to improve operating
efficiencies.
Tactical
investments: represent holdings with a shorter-term investment horizon due
to catalysts the Portfolio Managers believe are typically associated with
cyclical trends and opportunities, a disconnect with market expectations
providing an opportunity on valuation or a new product, or financial or
regulatory developments that could have a material impact on the
company.
Tactical
investments have the potential to grow into Turn investments, while compelling
Turn investments will ideally develop into Core investments.
The Fund
seeks to reduce risk by diversifying among many companies, sectors and
industries. At times, the Portfolio Managers may emphasize certain sectors that
they believe will benefit from market or economic trends.
The
Portfolio Managers constantly monitor their holdings and are focused on
maintaining what they believe is an appropriate and attractive risk/reward
balance with a disciplined sell process that acts quickly and dispassionately to
address both positive and negative outcomes. A position is typically trimmed or
exited for the following reasons: to harvest gains from significant short-term
price appreciation, the positive realization of a catalyst, the achievement of a
price target or elevated valuations, identification of a better idea, to
minimize potential risks, to address an absence of near-term drivers or
catalysts, a significant deterioration of fundamentals, a change in management
or operating strategy or the failure of a catalyst to develop.
The Fund
will not change its strategy of normally investing at least 80% of its net
assets in mid-capitalization companies, without providing shareholders at least
60 days’ notice. This test is applied at the time the Fund invests; later
percentage changes caused by a change in Fund assets, market values or company
circumstances will not require the Fund to dispose of a
holding.
PRINCIPAL INVESTMENT
RISKS
Most of the
Fund’s performance depends on what happens in the stock market, the Portfolio
Managers’ evaluation of those developments, and the success of the Portfolio
Managers in implementing the Fund’s investment strategies. The market’s behavior
can be difficult to predict, particularly in the short term. There can be no
guarantee that the Fund will achieve its goal. The Fund may take temporary
defensive and cash management positions; to the extent it does, it will not be
pursuing its principal investment strategies.
The actual
risk exposure taken by the Fund in its investment program will vary over time,
depending on various factors including the Portfolio Managers’ evaluation of
issuer, political, regulatory, market, or economic developments. There can be no
guarantee that the Portfolio Managers will be successful in their attempts to
manage the risk exposure of the Fund or will appropriately evaluate or weigh the
multiple factors involved in investment decisions, including issuer, market
and/or instrument-specific analysis and valuation.
The Fund is a mutual fund, not a bank deposit, and is not
guaranteed or insured by the Federal Deposit Insurance Corporation or any other
government agency. The value of your investment may fall, sometimes sharply,
and you could lose money by investing in the
Fund.
Each of the
following risks, which are described in alphabetical order and not in order of
any presumed importance, can significantly affect the Fund’s performance. The
relative importance of, or potential exposure as a result of, each of these
risks will vary based on market and other investment-specific
considerations.
Catalyst
Risk. Investing in companies in anticipation of a catalyst carries the risk
that the catalyst may not happen as anticipated, or the market may react to the
catalyst differently than expected. Certain catalysts, such as emergence from,
or restructuring as a result of, bankruptcy, carry additional risks and the
securities of such companies may be more likely to lose value than the
securities of more stable companies. Securities of issuers undergoing such an
event may be more volatile than other securities, may at times be illiquid, and
may be difficult to value, and management of such a company may be addressing a
situation with which it has little experience.
Foreign
Risk. Foreign securities involve risks in addition to those associated with
comparable U.S. securities. Additional risks include exposure to less developed
or less efficient trading markets; social, political, diplomatic, or economic
instability; trade barriers and other protectionist trade policies (including
those of the U.S.); imposition of economic sanctions against a particular
country or countries, organizations, companies, entities and/or individuals;
significant government involvement in an economy and/or market structure;
fluctuations in foreign currencies or currency redenomination; potential for
default on sovereign debt; nationalization or expropriation of assets;
settlement, custodial or other operational risks; higher transaction costs;
confiscatory withholding or other taxes; and less stringent auditing and
accounting, corporate disclosure, governance, and legal standards. As a result,
foreign securities may fluctuate more widely in price, and may also be less
liquid, than comparable U.S. securities. World markets, or those in a particular
region, may all react in similar fashion to important economic or political
developments. In addition, foreign markets may perform differently than the U.S.
markets. The effect of economic instability on specific foreign markets or
issuers may be difficult to predict or evaluate. Regardless of where a company
is organized or its stock is traded, its performance may be affected
significantly by events in regions from which it derives its profits or in which
it conducts significant operations.
Securities
of issuers traded on foreign exchanges may be suspended, either by the issuers
themselves, by an exchange, or by governmental authorities. Trading suspensions
may be applied from time to time to the securities of individual issuers for
reasons specific to that issuer, or may be applied broadly by exchanges or
governmental authorities in response to market events. In the event that the
Fund holds material positions in such suspended securities or instruments, the
Fund’s ability to liquidate its positions or provide liquidity to investors may
be compromised and the Fund could incur significant losses.
Foreign
Exposure Risk. Securities issued by U.S. entities with substantial foreign
operations or holdings, or issued by foreign entities listed on a U.S. exchange,
may involve additional risks relating to political, economic, or regulatory
conditions in foreign countries, as well as currency exchange rates.
Growth
Stock Risk. Because the prices of most growth stocks are based on future
expectations, these stocks tend to be more sensitive than value stocks to bad
economic news and negative earnings surprises. When these expectations are not
met or decrease, the prices of these stocks may decline, sometimes sharply, even
if earnings showed an absolute increase. Bad economic news or changing investor
perceptions may adversely affect growth stocks across several sectors and
industries simultaneously.
Issuer-Specific
Risk. An individual security may be more volatile, and may perform
differently, than the market as a whole.
Market
Volatility Risk. Markets may be volatile and values of individual securities
and other investments, including those of a particular type, may decline
significantly in response to adverse issuer, political, regulatory, market,
economic or other developments that may cause broad changes in market value,
public perceptions concerning these developments, and adverse investor sentiment
or publicity. Geopolitical and other risks, including environmental and public
health risks may add to instability in world economies and markets generally.
Changes in value may be temporary or may last for extended periods. If the Fund
sells a portfolio position before it reaches its market peak, it may miss out on
opportunities for better performance.
Mid-Cap
Companies Risk. At times, mid-cap companies may be out of favor with
investors. Compared to larger companies, mid-cap companies may depend on a more
limited management group, may have a shorter history of operations, less
publicly available information, less stable earnings, and limited product lines,
markets or financial resources. The securities of mid-cap companies are often
more volatile, which at times can be rapid and unpredictable, and less liquid
than the securities of larger companies and may be more affected than other
types of securities by the underperformance of a sector, during market
downturns, or by adverse publicity and investor perceptions.
Recent
Market Conditions. Both U.S. and international markets have experienced
significant volatility in recent months and years. As a result of such
volatility, investment returns may fluctuate significantly. National economies
are substantially interconnected, as are global financial markets, which creates
the possibility that conditions in one country or region might adversely impact
issuers in a different country or region. However, the interconnectedness of
economies and/or markets may be diminishing, which may impact such economies and
markets in ways that cannot be foreseen at this time.
Although
interest rates were unusually low in recent years in the U.S. and abroad,
recently, the Federal Reserve and certain foreign central banks raised interest
rates as part of their efforts to address rising inflation. It is difficult to
accurately predict the pace at which interest rates might increase, the timing,
frequency or magnitude of any such increases in interest rates, or when such
increases might stop. Additionally, various economic and political factors could
cause the Federal Reserve or other foreign central banks to change their
approach in the future and such actions may result in an economic slowdown both
in the U.S. and abroad. Unexpected changes in interest rates could lead to
market volatility or reduce liquidity in certain sectors of the market.
Deteriorating economic fundamentals may, in turn, increase the risk of default
or insolvency of particular issuers, negatively impact market value, cause
credit spreads to widen, and reduce bank balance sheets. Any of these could
cause an increase in market volatility, or reduce liquidity across various
markets or decrease confidence in the markets.
Some
countries, including the U.S., have adopted more protectionist trade policies.
Slowing global economic growth, the rise in protectionist trade policies,
changes to some major international trade agreements, risks associated with the
trade agreement between the United Kingdom and the European Union, and the risks
associated with trade negotiations between the U.S. and China, could affect the
economies of many nations in ways that cannot necessarily be foreseen at the
present time. In addition, the current strength of the U.S. dollar may decrease
foreign demand for U.S. assets, which could have a negative impact on certain
issuers and/or industries.
Regulators
in the U.S. have proposed and adopted a number of changes to regulations
involving the markets and issuers, some of which apply to the Fund. The full
effect of various newly adopted regulations is not currently known.
Additionally, it is not currently known whether any of the proposed regulations
will be adopted. However, due to the scope of regulations being proposed and
adopted, certain of these changes to regulation could limit the Fund’s ability
to pursue its investment strategies or make certain investments, may make it
more costly for it to operate, or adversely impact performance.
Tensions,
war, or open conflict between nations, such as between Russia and Ukraine, in
the Middle East, or in eastern Asia could affect the economies of many nations,
including the United States. The duration of ongoing hostilities and any
sanctions and related events cannot be predicted. Those events present material
uncertainty and risk with respect to markets globally and the performance of the
Fund and its investments or operations could be negatively impacted.
High public
debt in the U.S. and other countries creates ongoing systemic and market risks
and policymaking uncertainty. There is no assurance that the U.S. Congress will
act to raise the nation’s debt ceiling; a failure to do so could cause market
turmoil and
substantial
investment risks that cannot now be fully predicted. Unexpected political,
regulatory and diplomatic events within the U.S. and abroad may affect investor
and consumer confidence and may adversely impact financial markets and the
broader economy.
There is
widespread concern about the potential effects of global climate change on
property and security values. Certain issuers, industries and regions may be
adversely affected by the impact of climate change in ways that cannot be
foreseen. The impact of legislation, regulation and international accords
related to climate change may negatively impact certain issuers and/or
industries.
Redemption
Risk. The Fund may experience periods of large or frequent redemptions that
could cause the Fund to sell assets at inopportune times, which could have a
negative impact on the Fund’s overall liquidity, or at a loss or depressed
value. Redemption risk is greater to the extent that one or more investors or
intermediaries control a large percentage of investments in the Fund and the
risk is heightened during periods of declining or illiquid markets. Large
redemptions could hurt the Fund’s performance, increase transaction costs, and
create adverse tax consequences.
Sector
Risk. From time to time, based on market or economic conditions, the Fund
may have significant positions in one or more sectors of the market. To the
extent the Fund invests more heavily in particular sectors, its performance will
be especially sensitive to developments that significantly affect those sectors.
Individual sectors or sub-sectors may be more volatile, and may perform
differently, than the broader market. The industries that constitute a sector
may all react in the same way to economic, political or regulatory
events.
Securities
Lending Risk. Securities lending involves a possible delay in recovery of
the loaned securities or a possible loss of rights in the collateral should the
borrower fail financially. The Fund could also lose money if the value of the
collateral decreases.
A summary
of the Fund’s additional principal investment risks is as
follows:
Risk of
Increase in Expenses. A decline in the Fund’s average net assets during the
current fiscal year due to market volatility or other factors could cause the
Fund’s expenses for the current fiscal year to be higher than the expense
information presented in “Fees and Expenses.”
Operational
and Cybersecurity Risk. The Fund and its service providers, and your ability
to transact with the Fund, may be negatively impacted due to operational matters
arising from, among other problems, human errors, systems and technology
disruptions or failures, or cybersecurity incidents. Cybersecurity incidents may
allow an unauthorized party to gain access to fund assets, customer data, or
proprietary information, or cause the Fund or its service providers, as well as
the securities trading venues and their service providers, to suffer data
corruption or lose operational functionality. Cybersecurity incidents can result
from deliberate attacks or unintentional events. It is not possible for the
Manager or the other Fund service providers to identify all of the cybersecurity
or other operational risks that may affect the Fund or to develop processes and
controls to completely eliminate or mitigate their occurrence or effects. Most
issuers in which the Fund invests are heavily dependent on computers for data
storage and operations, and require ready access to the internet to conduct
their business. Thus, cybersecurity incidents could also affect issuers of
securities in which the Fund invests, leading to significant loss of
value.
Risk
Management. Risk is an essential part of investing. No risk management
program can eliminate the Fund’s exposure to adverse events; at best, it may
only reduce the possibility that the Fund will be affected by such events, and
especially those risks that are not intrinsic to the Fund’s investment program.
The Fund could experience losses if judgments about risk prove to be
incorrect.
Valuation
Risk. The Fund may not be able to sell an investment at the price at which
the Fund has valued the investment. Such differences could be significant,
particularly for illiquid securities and securities that trade in relatively
thin markets and/or markets that experience extreme volatility. If market or
other conditions make it difficult to value an investment, the Fund may be
required to value such investments using more subjective methods, known as fair
value methodologies. Using fair value methodologies to price investments may
result in a value that is different from an investment’s most recent price and
from the prices used by other funds to calculate their NAVs. The Fund uses
pricing services to provide values for certain securities and there is no
assurance that the Fund will be able to sell an investment at the price
established by such pricing services. The Fund’s ability to value its
investments in an accurate and timely manner may be impacted by technological
issues and/or errors by third party service providers, such as pricing services
or accounting agents.
PERFORMANCE
The
following bar chart and table provide an indication of the risks of investing in
the Fund. The bar chart
shows how the Fund’s performance has varied from year to year. The table below the bar chart shows
what the returns would equal if you averaged out actual performance over various
lengths of time and compares the returns with the returns of one or more
broad-based market indices. The
indices, which are described in “Descriptions of Indices” in the prospectus,
have characteristics relevant to the Fund’s investment strategy.
Returns
would have been lower if the Manager had not reimbursed certain expenses and/or
waived a portion of the investment management fees during certain of the periods
shown.
Past performance (before and
after taxes) is not a prediction of future results. Visit
www.nb.com
or call 800-877-9700 for
updated performance information.
year-by-year % Returns as of 12/31 each
year
Years |
Returns |
2013 |
31.93% |
2014 |
7.75% |
2015 |
1.42% |
2016 |
4.71% |
2017 |
25.34% |
2018 |
-5.98% |
2019 |
33.56% |
2020 |
39.44% |
2021 |
12.70% |
2022 |
-28.73% |
Best
quarter: Q2 2020 30.24%
Worst
quarter: Q2 2022 -20.70%
Year to Date performance as
of: 9/30/2023 6.20%
average annual total % returns as of
12/31/22
Mid Cap Growth
Fund |
|
1
Year |
|
5
Years |
|
10
Years |
Return
Before Taxes |
|
-28.73 |
|
7.06 |
|
10.28 |
Return
After Taxes on Distributions |
|
-29.51 |
|
4.76 |
|
7.98 |
Return
After Taxes on Distributions and Sale of Fund Shares |
|
-16.44 |
|
5.59 |
|
8.06 |
Russell
Midcap® Growth Index (reflects no deduction for
fees, expenses or taxes) |
|
-26.72 |
|
7.64 |
|
11.41 |
Russell
Midcap® Index (reflects no deduction for fees, expenses or
taxes) |
|
-17.32 |
|
7.10 |
|
10.96 |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates and do not reflect the impact of state and local
taxes. Actual after-tax returns depend on an investor’s
tax situation and may differ from those shown. After-tax returns are not
relevant to investors who hold their Fund shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement
accounts. Return After Taxes on
Distributions and Sale of Fund Shares may be higher than other returns for the
same period due to a tax benefit of realizing a capital loss upon the sale of
Fund shares.
INVESTMENT
MANAGER
Neuberger
Berman Investment Advisers LLC (“Manager”) is the Fund’s investment
manager.
PORTFOLIO
MANAGERS
The Fund is
co-managed by Portfolio Managers Chad Bruso (Managing Director of the Manager),
Trevor Moreno (Managing Director of the Manager) and Associate Portfolio Manager
Jennifer Blachford (Senior Vice President of the Manager). Messrs. Bruso and
Moreno joined as Associate Portfolio Managers in January 2020 and became
co-Portfolio Managers in December 2021. Ms. Blachford has managed the Fund
since December 2021.
Buying
and Selling Shares
Investor
Class of the Fund is closed to new investors. Only certain investors are
allowed to purchase Investor Class shares of the Fund. See “Maintaining Your
Account” in the prospectus.
You may
purchase, redeem (sell) or exchange shares of the Fund on any day the New York
Stock Exchange is open, at the Fund’s net asset value per share next determined
after your order is received in proper form. Shares of the Fund generally are
available only through certain investment providers, such as banks, brokerage
firms, workplace retirement programs, and financial advisers. Contact any
investment provider authorized to sell the Fund’s shares.
For certain
investors, shares of the Fund may be available directly from Neuberger Berman BD
LLC by regular, first class mail (Neuberger Berman Funds, P.O. Box 219189,
Kansas City, MO 64121-9189), by express delivery, registered mail, or certified
mail (Neuberger Berman Funds, 430 West 7th Street, Suite 219189,
Kansas City, MO 64105-1407), or by wire, fax, telephone, exchange, or systematic
investment or withdrawal (call 800-877-9700 for instructions). See “Maintaining
Your Account” in the prospectus for instructions on buying and redeeming
(selling) shares directly.
The minimum
initial investment in Investor Class is $1,000. Additional investments can be as
little as $100. These minimums may be waived in certain cases.
Tax
Information
Unless you
invest in the Fund through a tax-advantaged retirement plan or account or are a
tax-exempt investor, you will be subject to tax on Fund distributions to you of
ordinary income and/or net capital gains. Those distributions generally are not
taxable to such a plan or account or a tax-exempt investor, although withdrawals
from certain retirement plans and accounts generally are subject to federal
income tax.
Payments
to Investment Providers and Other Financial Intermediaries
If you
purchase shares of the Fund through an investment provider or other financial
intermediary, such as a bank, brokerage firm, workplace retirement program, or
financial adviser (who may be affiliated with Neuberger Berman), the Fund and/or
Neuberger Berman BD LLC and/or its affiliates may pay the intermediary for the
sale of Fund shares and related services. These payments may create a conflict
of interest by influencing the investment provider or other financial
intermediary and its employees to recommend the Fund over another investment.
Ask your investment provider or visit its website for more
information.
Neuberger Berman Mid Cap Intrinsic Value
Fund
Investor
Class Shares (NBRVX)
GOAL
The Fund
seeks growth of capital.
Fees and
Expenses
These tables
describe the fees and expenses that you may pay if you buy, hold or sell shares
of the Fund. You may pay other fees, such as brokerage commissions and other
fees to financial intermediaries, which are not reflected in the table and
example below.
Shareholder Fees (fees paid
directly from your investment) |
|
None |
Annual Fund Operating Expenses
(expenses that you pay each year as a % of the value of your
investment) |
|
|
Management
fees |
|
0.81 |
Distribution
and/or shareholder service (12b-1) fees |
|
None |
Other
expenses |
|
0.70 |
Total
annual operating expenses |
|
1.51 |
Fee
waivers and/or expense reimbursement |
|
0.01 |
Total
annual operating expenses after fee waivers and/or expense
reimbursement1 |
|
1.50 |
Expense
Example
The expense
example can help you compare costs among mutual funds. The example assumes that
you invested $10,000 for the periods shown, that you redeemed all of your shares
at the end of those periods, that the Fund earned a hypothetical 5% total return
each year, and that the Fund’s expenses were those in the table. Actual
performance and expenses may be higher or lower.
|
|
1
Year |
|
3
Years |
|
5
Years |
|
10
Years |
Investor
Class |
|
$153 |
|
$474 |
|
$821 |
|
$1,799 |
Portfolio
Turnover
The 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 Fund shares are
held in a taxable account. These costs, which are not reflected in annual
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was 15% of the average
value of its portfolio.
Principal Investment
Strategies
To pursue
its goal, the Fund normally invests at least 80% of its net assets in equity
securities of mid-capitalization companies, which it defines as those with a
total market capitalization within the market capitalization range of the
Russell Midcap® Value Index at the time of purchase.
The Fund’s
strategy consists of using a bottom-up, fundamental research driven approach to
identify stocks of companies that are trading below the Portfolio Managers’
estimate of their intrinsic value and that they believe have the potential for
appreciation over time. The Portfolio Managers’ estimate of a company’s
intrinsic value represents their view of the company’s true, long-term economic
worth, the market’s view of which may be currently distorted by market
inefficiencies. The intrinsic value estimate represents what the Portfolio
Managers believe a company could be worth if it is acquired, if its
profitability returns to its long-term average level, or if its valuation moves
in line with those companies that the Portfolio Managers see as its publicly
traded peers.
43
Mid Cap Intrinsic Value Fund
The
Portfolio Managers believe that while markets are often efficient, valuations of
certain types of companies are often distorted by market inefficiencies, which
can lead to attractive investment opportunities. The Portfolio Managers attempt
to exploit recurring market inefficiencies among the following types of
companies as the Portfolio Managers believe these types of companies are often
misunderstood and mispriced by investors.
| ■ |
Complex
Companies: These companies typically have multiple lines of business
that are in different industries or sectors and/or that have different
growth rates and profitability characteristics. |
| ■ |
Cyclical
Companies: These companies typically have ebbs and flows in their
business depending on demand patterns for their products, the length of
product cycles, or other transient factors. |
| ■ |
Companies
in a Period of Interrupted Growth: Typically, these are companies in
attractive, high growth markets that have suffered what the Portfolio
Managers believe is a temporary setback and/or are in transition to a more
mature, lower growth business model that focuses more on current earnings
than on rapid growth. |
In seeking
to identify potential investment opportunities, the Portfolio Managers perform
an initial screening to identify those companies that have stock prices that are
trailing the performance of the overall market and that they believe are
attractive relative to current cash flows. Next, the Portfolio Managers
establish an estimate of a company’s intrinsic value. The Portfolio Managers
will invest in a company based on its discount to their estimate of intrinsic
value and their belief in its potential for appreciation over time. In addition,
the Portfolio Managers may invest in anticipation of a catalyst that can be
expected to close the value/price gap, such as a merger, restructuring,
liquidation, spin-off, major management change, share repurchase, or capital
reallocation. The Portfolio Managers will typically visit a company and
interview its management team to help understand management’s incentives (such
as equity ownership in the company and compensation plans), the merits of its
strategic plan, and other factors that have the potential to increase the value
of the company’s stock.
The
Portfolio Managers establish an intrinsic value for a company’s stock when it is
purchased and then continues to evaluate the company’s stock price versus their
estimate of its intrinsic value to determine whether to maintain, add to, reduce
or eliminate the position. The Portfolio Managers typically reduce or eliminate
a position in a company’s stock if the stock’s price appreciates and the
company’s discount to their estimate of its intrinsic value narrows. The
Portfolio Managers’ decision to reduce or eliminate a position in a particular
stock may also be driven by their belief that another company’s stock has a
wider discount to their estimate of its intrinsic value. Changes in a company’s
management or corporate strategy, or the failure of a company to perform as
expected, may also cause the Portfolio Managers to reduce or eliminate a
position in that company’s stock.
Although the
Fund invests primarily in domestic stocks, it may also invest in stocks of
foreign companies. The Fund may also invest in real estate investment trusts
(“REITs”).
The Fund may
invest in restricted securities, including private placements, which are
securities that are subject to legal restrictions on their sale and may not be
sold to the public unless registered under the applicable securities law or
pursuant to an applicable exemption.
The Fund
seeks to reduce risk by diversifying among many companies, sectors and
industries. At times, the Portfolio Managers may emphasize certain sectors or
industries that they believe may benefit from market or economic
trends.
The Fund
will not change its strategy of normally investing at least 80% of its net
assets in equity securities of mid-capitalization companies, without providing
shareholders at least 60 days’ notice. This test is applied at the time the Fund
invests; later percentage changes caused by a change in Fund assets, market
values or company circumstances will not require the Fund to dispose of a
holding.
PRINCIPAL INVESTMENT
RISKS
Most of the
Fund’s performance depends on what happens in the stock market, the Portfolio
Managers’ evaluation of those developments, and the success of the Portfolio
Managers in implementing the Fund’s investment strategies. The market’s behavior
can be difficult to predict, particularly in the short term. There can be no
guarantee that the Fund will achieve its goal. The Fund may take temporary
defensive and cash management positions; to the extent it does, it will not be
pursuing its principal investment strategies.
The actual
risk exposure taken by the Fund in its investment program will vary over time,
depending on various factors including the Portfolio Managers’ evaluation of
issuer, political, regulatory, market, or economic developments. There can be no
guarantee that the Portfolio Managers will be successful in their attempts to
manage the risk exposure of the Fund or will appropriately evaluate or weigh the
multiple factors involved in investment decisions, including issuer, market
and/or instrument-specific analysis and valuation.
44
Mid Cap Intrinsic Value Fund
The Fund is a mutual fund, not a bank deposit, and is not
guaranteed or insured by the Federal Deposit Insurance Corporation or any other
government agency. The value of your investment may fall, sometimes sharply,
and you could lose money by investing in the
Fund.
Each of the
following risks, which are described in alphabetical order and not in order of
any presumed importance, can significantly affect the Fund’s performance. The
relative importance of, or potential exposure as a result of, each of these
risks will vary based on market and other investment-specific
considerations.
Catalyst
Risk. Investing in companies in anticipation of a catalyst carries the risk
that the catalyst may not happen as anticipated, or the market may react to the
catalyst differently than expected.
Currency
Risk. Currency risk is the risk that foreign currencies will decline in
value relative to the U.S. dollar. To the extent that the Fund invests in
securities or other instruments denominated in or indexed to foreign currencies,
changes in currency exchange rates could adversely impact investment gains or
add to investment losses. Currency exchange rates may fluctuate significantly
over short periods of time and can be affected unpredictably by various factors,
including investor perception and changes in interest rates; intervention, or
failure to intervene, by U.S. or foreign governments, central banks, or
supranational entities; or by currency controls or political developments in the
U.S. or abroad.
Foreign
Risk. Foreign securities involve risks in addition to those associated with
comparable U.S. securities. Additional risks include exposure to less developed
or less efficient trading markets; social, political, diplomatic, or economic
instability; trade barriers and other protectionist trade policies (including
those of the U.S.); imposition of economic sanctions against a particular
country or countries, organizations, companies, entities and/or individuals;
significant government involvement in an economy and/or market structure;
fluctuations in foreign currencies or currency redenomination; potential for
default on sovereign debt; nationalization or expropriation of assets;
settlement, custodial or other operational risks; higher transaction costs;
confiscatory withholding or other taxes; and less stringent auditing and
accounting, corporate disclosure, governance, and legal standards. As a result,
foreign securities may fluctuate more widely in price, and may also be less
liquid, than comparable U.S. securities. World markets, or those in a particular
region, may all react in similar fashion to important economic or political
developments. In addition, foreign markets may perform differently than the U.S.
markets. The effect of economic instability on specific foreign markets or
issuers may be difficult to predict or evaluate. Regardless of where a company
is organized or its stock is traded, its performance may be affected
significantly by events in regions from which it derives its profits or in which
it conducts significant operations.
Securities
of issuers traded on foreign exchanges may be suspended, either by the issuers
themselves, by an exchange, or by governmental authorities. Trading suspensions
may be applied from time to time to the securities of individual issuers for
reasons specific to that issuer, or may be applied broadly by exchanges or
governmental authorities in response to market events. In the event that the
Fund holds material positions in such suspended securities or instruments, the
Fund’s ability to liquidate its positions or provide liquidity to investors may
be compromised and the Fund could incur significant losses.
Issuer-Specific
Risk. An individual security may be more volatile, and may perform
differently, than the market as a whole.
Liquidity
Risk. From time to time, the trading market for a particular investment in
which the Fund invests, or a particular type of instrument in which the Fund is
invested, may become less liquid or even illiquid. Illiquid investments
frequently can be more difficult to purchase or sell at an advantageous price or
time, and there is a greater risk that the investments may not be sold for the
price at which the Fund is carrying them. Certain investments that were liquid
when the Fund purchased them may become illiquid, sometimes abruptly.
Additionally, market closures due to holidays or other factors may render a
security or group of securities (e.g., securities tied to a particular country
or geographic region) illiquid for a period of time. An inability to sell a
portfolio position can adversely affect the Fund’s value or prevent the Fund
from being able to take advantage of other investment opportunities. Market
prices for such securities or other investments may be volatile. During periods
of substantial market volatility, an investment or even an entire market segment
may become illiquid, sometimes abruptly, which can adversely affect the Fund’s
ability to limit losses.
Unexpected
episodes of illiquidity, including due to market or political factors,
instrument or issuer-specific factors and/or unanticipated outflows or other
factors, may limit the Fund’s ability to pay redemption proceeds within the
allowable time period. To meet redemption requests during periods of
illiquidity, the Fund may be forced to sell securities at an unfavorable time
and/or under unfavorable conditions.
Market
Volatility Risk. Markets may be volatile and values of individual securities
and other investments, including those of a particular type, may decline
significantly in response to adverse issuer, political, regulatory, market,
economic or other developments that may cause broad changes in market value,
public perceptions concerning these developments, and adverse
45
Mid Cap Intrinsic Value Fund
investor
sentiment or publicity. Geopolitical and other risks, including environmental
and public health risks may add to instability in world economies and markets
generally. Changes in value may be temporary or may last for extended periods.
If the Fund sells a portfolio position before it reaches its market peak, it may
miss out on opportunities for better performance.
Mid-Cap
Companies Risk. At times, mid-cap companies may be out of favor with
investors. Compared to larger companies, mid-cap companies may depend on a more
limited management group, may have a shorter history of operations, less
publicly available information, less stable earnings, and limited product lines,
markets or financial resources. The securities of mid-cap companies are often
more volatile, which at times can be rapid and unpredictable, and less liquid
than the securities of larger companies and may be more affected than other
types of securities by the underperformance of a sector, during market
downturns, or by adverse publicity and investor perceptions.
Private
Placements and Other Restricted Securities Risk. Private placements and
other restricted securities, including securities for which Fund management has
material non-public information, are securities that are subject to legal and/or
contractual restrictions on their sales. These securities may not be sold to the
public unless certain conditions are met, which may include registration under
the applicable securities laws. As a result of the absence of a public trading
market, the prices of these securities may be more difficult to determine than
publicly traded securities and these securities may involve heightened risk as
compared to investments in securities of publicly traded companies. Private
placements and other restricted securities may be illiquid, and it frequently
can be difficult to sell them at a time when it may otherwise be desirable to do
so or the Fund may be able to sell them only at prices that are less than what
the Fund regards as their fair market value. Transaction costs may be higher for
these securities. In addition, the Fund may get only limited information about
the issuer of a private placement or other restricted security.
Recent
Market Conditions. Both U.S. and international markets have experienced
significant volatility in recent months and years. As a result of such
volatility, investment returns may fluctuate significantly. National economies
are substantially interconnected, as are global financial markets, which creates
the possibility that conditions in one country or region might adversely impact
issuers in a different country or region. However, the interconnectedness of
economies and/or markets may be diminishing, which may impact such economies and
markets in ways that cannot be foreseen at this time.
Although
interest rates were unusually low in recent years in the U.S. and abroad,
recently, the Federal Reserve and certain foreign central banks raised interest
rates as part of their efforts to address rising inflation. It is difficult to
accurately predict the pace at which interest rates might increase, the timing,
frequency or magnitude of any such increases in interest rates, or when such
increases might stop. Additionally, various economic and political factors could
cause the Federal Reserve or other foreign central banks to change their
approach in the future and such actions may result in an economic slowdown both
in the U.S. and abroad. Unexpected changes in interest rates could lead to
market volatility or reduce liquidity in certain sectors of the market.
Deteriorating economic fundamentals may, in turn, increase the risk of default
or insolvency of particular issuers, negatively impact market value, cause
credit spreads to widen, and reduce bank balance sheets. Any of these could
cause an increase in market volatility, or reduce liquidity across various
markets or decrease confidence in the markets.
Some
countries, including the U.S., have adopted more protectionist trade policies.
Slowing global economic growth, the rise in protectionist trade policies,
changes to some major international trade agreements, risks associated with the
trade agreement between the United Kingdom and the European Union, and the risks
associated with trade negotiations between the U.S. and China, could affect the
economies of many nations in ways that cannot necessarily be foreseen at the
present time. In addition, the current strength of the U.S. dollar may decrease
foreign demand for U.S. assets, which could have a negative impact on certain
issuers and/or industries.
Regulators
in the U.S. have proposed and adopted a number of changes to regulations
involving the markets and issuers, some of which apply to the Fund. The full
effect of various newly adopted regulations is not currently known.
Additionally, it is not currently known whether any of the proposed regulations
will be adopted. However, due to the scope of regulations being proposed and
adopted, certain of these changes to regulation could limit the Fund’s ability
to pursue its investment strategies or make certain investments, may make it
more costly for it to operate, or adversely impact performance.
Tensions,
war, or open conflict between nations, such as between Russia and Ukraine, in
the Middle East, or in eastern Asia could affect the economies of many nations,
including the United States. The duration of ongoing hostilities and any
sanctions and related events cannot be predicted. Those events present material
uncertainty and risk with respect to markets globally and the performance of the
Fund and its investments or operations could be negatively impacted.
High public
debt in the U.S. and other countries creates ongoing systemic and market risks
and policymaking uncertainty. There is no assurance that the U.S. Congress will
act to raise the nation’s debt ceiling; a failure to do so could cause market
turmoil and
46
Mid Cap Intrinsic Value Fund
substantial
investment risks that cannot now be fully predicted. Unexpected political,
regulatory and diplomatic events within the U.S. and abroad may affect investor
and consumer confidence and may adversely impact financial markets and the
broader economy.
There is
widespread concern about the potential effects of global climate change on
property and security values. Certain issuers, industries and regions may be
adversely affected by the impact of climate change in ways that cannot be
foreseen. The impact of legislation, regulation and international accords
related to climate change may negatively impact certain issuers and/or
industries.
Redemption
Risk. The Fund may experience periods of large or frequent redemptions that
could cause the Fund to sell assets at inopportune times, which could have a
negative impact on the Fund’s overall liquidity, or at a loss or depressed
value. Redemption risk is greater to the extent that one or more investors or
intermediaries control a large percentage of investments in the Fund and the
risk is heightened during periods of declining or illiquid markets. Large
redemptions could hurt the Fund’s performance, increase transaction costs, and
create adverse tax consequences.
REITs and
Other Real Estate Companies Risk. REITs and other real estate company
securities are subject to risks similar to those of direct investments in real
estate and the real estate industry in general, including, among other risks:
general and local economic conditions; changes in interest rates; declines in
property values; defaults by mortgagors or other borrowers and tenants;
increases in property taxes and other operating expenses; overbuilding in their
sector of the real estate market; fluctuations in rental income; lack of
availability of mortgage funds or financing; extended vacancies of properties,
especially during economic downturns; changes in tax and regulatory
requirements; losses due to environmental liabilities; casualty or condemnation
losses; changing social trends regarding working arrangements; or other
economic, social, political, or regulatory matters affecting the real estate
industry. REITs also are dependent upon the skills of their managers and are
subject to heavy cash flow dependency or self-liquidation.
Regardless
of where a REIT is organized or traded, its performance may be affected
significantly by events in the region where its properties are located. Domestic
REITs could be adversely affected by failure to qualify for tax-free
“pass-through” of distributed net investment income and net realized gains under
the Internal Revenue Code of 1986, as amended, (“Code”) or to maintain their
exemption from registration under the Investment Company Act of 1940, as
amended. The value of REIT common shares may decline when interest rates rise.
REITs and other real estate company securities tend to be small- to mid-cap
securities and are subject to the risks of investing in small- to mid-cap
securities.
Sector
Risk. From time to time, based on market or economic conditions, the Fund
may have significant positions in one or more sectors of the market. To the
extent the Fund invests more heavily in particular sectors, its performance will
be especially sensitive to developments that significantly affect those sectors.
Individual sectors or sub-sectors may be more volatile, and may perform
differently, than the broader market. The industries that constitute a sector
may all react in the same way to economic, political or regulatory
events.
Value
Stock Risk. Value stocks may remain undervalued for extended periods of
time, may decrease in value during a given period, may not ever realize what the
portfolio management team believes to be their full value or intrinsic value, or
the portfolio management team’s assumptions about intrinsic value or potential
for appreciation may be incorrect. This may happen, among other reasons, because
of a failure to anticipate which stocks or industries would benefit from
changing market or economic conditions or investor preferences.
A summary
of the Fund’s additional principal investment risks is as
follows:
Risk of
Increase in Expenses. A decline in the Fund’s average net assets during the
current fiscal year due to market volatility or other factors could cause the
Fund’s expenses for the current fiscal year to be higher than the expense
information presented in “Fees and Expenses.”
Operational
and Cybersecurity Risk. The Fund and its service providers, and your ability
to transact with the Fund, may be negatively impacted due to operational matters
arising from, among other problems, human errors, systems and technology
disruptions or failures, or cybersecurity incidents. Cybersecurity incidents may
allow an unauthorized party to gain access to fund assets, customer data, or
proprietary information, or cause the Fund or its service providers, as well as
the securities trading venues and their service providers, to suffer data
corruption or lose operational functionality. Cybersecurity incidents can result
from deliberate attacks or unintentional events. It is not possible for the
Manager or the other Fund service providers to identify all of the cybersecurity
or other operational risks that may affect the Fund or to develop processes and
controls to completely eliminate or mitigate their occurrence or effects. Most
issuers in which the Fund invests are heavily dependent on computers for data
storage and operations, and require ready access to the internet to conduct
their business. Thus, cybersecurity incidents could also affect issuers of
securities in which the Fund invests, leading to significant loss of
value.
47
Mid Cap Intrinsic Value Fund
Risk
Management. Risk is an essential part of investing. No risk management
program can eliminate the Fund’s exposure to adverse events; at best, it may
only reduce the possibility that the Fund will be affected by such events, and
especially those risks that are not intrinsic to the Fund’s investment program.
The Fund could experience losses if judgments about risk prove to be
incorrect.
Valuation
Risk. The Fund may not be able to sell an investment at the price at which
the Fund has valued the investment. Such differences could be significant,
particularly for illiquid securities and securities that trade in relatively
thin markets and/or markets that experience extreme volatility. If market or
other conditions make it difficult to value an investment, the Fund may be
required to value such investments using more subjective methods, known as fair
value methodologies. Using fair value methodologies to price investments may
result in a value that is different from an investment’s most recent price and
from the prices used by other funds to calculate their NAVs. The Fund uses
pricing services to provide values for certain securities and there is no
assurance that the Fund will be able to sell an investment at the price
established by such pricing services. The Fund’s ability to value its
investments in an accurate and timely manner may be impacted by technological
issues and/or errors by third party service providers, such as pricing services
or accounting agents.
PERFORMANCE
The
following bar chart and table provide an indication of the risks of investing in
the Fund. The bar chart
shows how the Fund’s performance has varied from year to year. The table below the bar chart shows
what the returns would equal if you averaged out actual performance over various
lengths of time and compares the returns with the returns of one or more
broad-based market indices. The
indices, which are described in “Descriptions of Indices” in the prospectus,
have characteristics relevant to the Fund’s investment strategy.
Returns
would have been lower if the Manager had not reimbursed certain expenses and/or
waived a portion of the investment management fees during certain of the periods
shown.
Past performance (before and
after taxes) is not a prediction of future results. Visit
www.nb.com
or call 800-877-9700 for
updated performance information.
year-by-year % Returns as of 12/31 each
year
Years |
Returns |
2013 |
36.67% |
2014 |
13.15% |
2015 |
-8.04% |
2016 |
18.06% |
2017 |
16.70% |
2018 |
-14.80% |
2019 |
17.21% |
2020 |
-4.29% |
2021 |
32.67% |
2022 |
-9.73% |
Best
quarter: Q4 2020 28.35%
Worst
quarter: Q1 2020 -40.56%
Year to Date performance as
of: 9/30/2023 0.09%
48
Mid Cap Intrinsic Value Fund
average annual total % returns as of
12/31/22
Mid Cap Intrinsic Value
Fund |
|
1
Year |
|
5
Years |
|
10
Years |
Return
Before Taxes |
|
-9.73 |
|
2.74 |
|
8.41 |
Return
After Taxes on Distributions |
|
-9.92 |
|
2.13 |
|
7.20 |
Return
After Taxes on Distributions and Sale of Fund Shares |
|
-5.63 |
|
1.96 |
|
6.55 |
Russell
Midcap® Value Index (reflects no deduction for
fees, expenses or taxes) |
|
-12.03 |
|
5.72 |
|
10.11 |
Russell
Midcap® Index (reflects no deduction for fees, expenses or
taxes) |
|
-17.32 |
|
7.10 |
|
10.96 |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates and do not reflect the impact of state and local
taxes. Actual after-tax returns depend on an investor’s
tax situation and may differ from those shown. After-tax returns are not
relevant to investors who hold their Fund shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement
accounts. Return After Taxes on
Distributions and Sale of Fund Shares may be higher than other returns for the
same period due to a tax benefit of realizing a capital loss upon the sale of
Fund shares.
INVESTMENT
MANAGER
Neuberger
Berman Investment Advisers LLC (“Manager”) is the Fund’s investment
manager.
PORTFOLIO
MANAGERS
The Fund is
co-managed by Michael C. Greene (Managing Director of the Manager), Benjamin H.
Nahum (Managing Director of the Manager), James F. McAree (Managing Director of
the Manager), Amit Solomon (Managing Director of the Manager), and Rand W.
Gesing (Senior Vice President of the Manager). Mr. Greene has managed the Fund
since December 2011 and Messrs. Nahum, McAree, Solomon and Gesing have
managed the Fund since May 2021.
Buying
and Selling Shares
Investor
Class of the Fund is closed to new investors. Only certain investors are
allowed to purchase Investor Class shares of the Fund. See “Maintaining Your
Account” in the prospectus.
You may
purchase, redeem (sell) or exchange shares of the Fund on any day the New York
Stock Exchange is open, at the Fund’s net asset value per share next determined
after your order is received in proper form. Shares of the Fund generally are
available only through certain investment providers, such as banks, brokerage
firms, workplace retirement programs, and financial advisers. Contact any
investment provider authorized to sell the Fund’s shares.
For certain
investors, shares of the Fund may be available directly from Neuberger Berman BD
LLC by regular, first class mail (Neuberger Berman Funds, P.O. Box 219189,
Kansas City, MO 64121-9189), by express delivery, registered mail, or certified
mail (Neuberger Berman Funds, 430 West 7th Street, Suite 219189,
Kansas City, MO 64105-1407), or by wire, fax, telephone, exchange, or systematic
investment or withdrawal (call 800-877-9700 for instructions). See “Maintaining
Your Account” in the prospectus for instructions on buying and redeeming
(selling) shares directly.
The minimum
initial investment in Investor Class is $1,000. Additional investments can be as
little as $100. These minimums may be waived in certain cases.
Tax
Information
Unless you
invest in the Fund through a tax-advantaged retirement plan or account or are a
tax-exempt investor, you will be subject to tax on Fund distributions to you of
ordinary income and/or net capital gains. Those distributions generally are not
taxable to such a plan or account or a tax-exempt investor, although withdrawals
from certain retirement plans and accounts generally are subject to federal
income tax.
Payments
to Investment Providers and Other Financial Intermediaries
If you
purchase shares of the Fund through an investment provider or other financial
intermediary, such as a bank, brokerage firm, workplace retirement program, or
financial adviser (who may be affiliated with Neuberger Berman), the Fund and/or
Neuberger Berman BD LLC and/or its affiliates may pay the intermediary for the
sale of Fund shares and related services. These payments may create a conflict
of interest by influencing the investment provider or other financial
intermediary and its employees to recommend the Fund over another investment.
Ask your investment provider or visit its website for more
information.
49
Mid Cap Intrinsic Value Fund
Neuberger Berman Small Cap Growth Fund
Investor
Class Shares (NBMIX)
GOAL
The Fund
seeks growth of capital.
Fees and
Expenses
These tables
describe the fees and expenses that you may pay if you buy, hold or sell shares
of the Fund. You may pay other fees, such as brokerage commissions and other
fees to financial intermediaries, which are not reflected in the table and
example below.
Shareholder Fees (fees paid
directly from your investment) |
|
None |
Annual Fund Operating Expenses
(expenses that you pay each year as a % of the value of your
investment) |
|
|
Management
fees |
|
1.10 |
Distribution
and/or shareholder service (12b-1) fees |
|
None |
Other
expenses |
|
0.22 |
Total
annual operating expenses |
|
1.32 |
Fee
waivers and/or expense reimbursement |
|
0.01 |
Total
annual operating expenses after fee waivers and/or expense
reimbursement1 |
|
1.31 |
Expense
Example
The expense
example can help you compare costs among mutual funds. The example assumes that
you invested $10,000 for the periods shown, that you redeemed all of your shares
at the end of those periods, that the Fund earned a hypothetical 5% total return
each year, and that the Fund’s expenses were those in the table. Actual
performance and expenses may be higher or lower.
|
|
1
Year |
|
3
Years |
|
5
Years |
|
10
Years |
Investor
Class |
|
$133 |
|
$415 |
|
$720 |
|
$1,587 |
Portfolio
Turnover
The 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 Fund shares are
held in a taxable account. These costs, which are not reflected in annual
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was 129% of the
average value of its portfolio.
Principal Investment
Strategies
To pursue
its goal, the Fund normally invests at least 80% of its net assets in common
stocks of small-capitalization companies, which it defines as those with a
market capitalization within the market capitalization range of the Russell
2000® Index at the time of initial purchase. Although the Fund
invests primarily in domestic securities, it may also invest in securities of
foreign companies.
The Fund’s
strategy utilizes a qualitative, bottom-up research driven approach to identify
companies that the Portfolio Managers believe have catalysts for growth which
are underappreciated by the market. The Portfolio Managers seek to invest in
underappreciated companies with the following characteristics: durable and
potentially unique business models and/or proficient management capable of
advancing the development of and/or strengthening of sustainable and consistent
revenue growth, cash flow growth, earnings growth and/or overall balance sheet
strength. Such catalysts may include a new technology, product or service, a
regulatory update, market share gains, cyclical inflections (e.g. companies
whose returns are driven by macro-economic factors), corporate restructurings or
self-help initiatives (e.g. internal operating efforts to increase company
efficiencies). The Portfolio Managers may also invest in anticipation of a
catalyst.
In analyzing
catalysts, the Portfolio Managers evaluate each catalyst’s uniqueness, timing,
growth potential and sustainability, as well as assessing execution risks,
competitive barriers and threats. The Portfolio Managers are also attempting to
exploit market inefficiencies that potentially may exist within the
small-capitalization market, due to the number of companies that comprise the
investable universe and the limited amount of available research that exists for
some of those companies. Investable companies emerging from the Portfolio
Manager’s bottom-up fundamental, qualitative and valuation analysis fall into
the following investment classifications:
Core
investments: are typically more mature companies, engaged with, and
participating in, compelling secular growth trends, that the Portfolio Managers
believe offer a demonstrated history of consistent execution and results. These
tend to represent multi-year holdings of the strategy.
Turn
investments: represent holdings in a wide range of corporate development and
maturity stages and are generally driven by what the Portfolio Managers believe
to be a distinct developing catalyst, such as a new product or service, market
share gains or internal corporate self-help opportunities to improve operating
efficiencies.
Tactical
investments: represent holdings with a shorter-term investment horizon due
to catalysts the Portfolio Managers believe are typically associated with
cyclical trends and opportunities, a disconnect with market expectations
providing an opportunity on valuation or a new product, or financial or
regulatory developments that could have a material impact on the
company.
Tactical
investments have the potential to grow into Turn investments, while compelling
Turn investments will ideally develop into Core investments.
The Fund
seeks to reduce risk by diversifying among many companies, sectors and
industries. At times, the Portfolio Managers may emphasize certain sectors that
they believe will benefit from market or economic trends.
The
Portfolio Managers constantly monitor their holdings and are focused on
maintaining what they believe is an appropriate and attractive risk/reward
balance with a disciplined sell process that acts quickly and dispassionately to
address both positive and negative outcomes. A position is typically trimmed or
exited for the following reasons: to harvest gains from significant short-term
price appreciation, the positive realization of a catalyst, the achievement of a
price target or elevated valuations, identification of a better idea, to
minimize potential risks, to address an absence of near-term drivers or
catalysts, a significant deterioration of fundamentals, a change in management
or operating strategy or the failure of a catalyst to develop.
In an effort
to achieve its goal, the Fund may engage in active and frequent trading that
involves initiating new positions, resizing current positions in response to
material developments and in order to maintain an appropriate and attractive
risk/reward balance and fully exiting positions in favor of new
ideas.
The Fund
will not change its strategy of normally investing at least 80% of its net
assets in small-capitalization companies, without providing shareholders at
least 60 days’ notice. This test is applied at the time the Fund invests; later
percentage changes caused by a change in Fund assets, market values or company
circumstances will not require the Fund to dispose of a
holding.
PRINCIPAL INVESTMENT
RISKS
Most of the
Fund’s performance depends on what happens in the stock market, the Portfolio
Managers’ evaluation of those developments, and the success of the Portfolio
Managers in implementing the Fund’s investment strategies. The market’s behavior
can be difficult to predict, particularly in the short term. There can be no
guarantee that the Fund will achieve its goal. The Fund may take temporary
defensive and cash management positions; to the extent it does, it will not be
pursuing its principal investment strategies.
The actual
risk exposure taken by the Fund in its investment program will vary over time,
depending on various factors including the Portfolio Managers’ evaluation of
issuer, political, regulatory, market, or economic developments. There can be no
guarantee that the Portfolio Managers will be successful in their attempts to
manage the risk exposure of the Fund or will appropriately evaluate or weigh the
multiple factors involved in investment decisions, including issuer, market
and/or instrument-specific analysis and valuation.
The Fund is a mutual fund, not a bank deposit, and is not
guaranteed or insured by the Federal Deposit Insurance Corporation or any other
government agency. The value of your investment may fall, sometimes sharply,
and you could lose money by investing in the
Fund.
Each of the
following risks, which are described in alphabetical order and not in order of
any presumed importance, can significantly affect the Fund’s performance. The
relative importance of, or potential exposure as a result of, each of these
risks will vary based on market and other investment-specific
considerations.
Catalyst
Risk. Investing in companies in anticipation of a catalyst carries the risk
that the catalyst may not happen as anticipated, or the market may react to the
catalyst differently than expected. Certain catalysts, such as emergence from,
or restructuring as a result of, bankruptcy, carry additional risks and the
securities of such companies may be more likely to lose value than the
securities of more stable companies. Securities of issuers undergoing such an
event may be more volatile than other securities, may at times be illiquid, and
may be difficult to value, and management of such a company may be addressing a
situation with which it has little experience.
Foreign
Risk. Foreign securities involve risks in addition to those associated with
comparable U.S. securities. Additional risks include exposure to less developed
or less efficient trading markets; social, political, diplomatic, or economic
instability; trade barriers and other protectionist trade policies (including
those of the U.S.); imposition of economic sanctions against a particular
country or countries, organizations, companies, entities and/or individuals;
significant government involvement in an economy and/or market structure;
fluctuations in foreign currencies or currency redenomination; potential for
default on sovereign debt; nationalization or expropriation of assets;
settlement, custodial or other operational risks; higher transaction costs;
confiscatory withholding or other taxes; and less stringent auditing and
accounting, corporate disclosure, governance, and legal standards. As a result,
foreign securities may fluctuate more widely in price, and may also be less
liquid, than comparable U.S. securities. World markets, or those in a particular
region, may all react in similar fashion to important economic or political
developments. In addition, foreign markets may perform differently than the U.S.
markets. The effect of economic instability on specific foreign markets or
issuers may be difficult to predict or evaluate. Regardless of where a company
is organized or its stock is traded, its performance may be affected
significantly by events in regions from which it derives its profits or in which
it conducts significant operations.
Securities
of issuers traded on foreign exchanges may be suspended, either by the issuers
themselves, by an exchange, or by governmental authorities. Trading suspensions
may be applied from time to time to the securities of individual issuers for
reasons specific to that issuer, or may be applied broadly by exchanges or
governmental authorities in response to market events. In the event that the
Fund holds material positions in such suspended securities or instruments, the
Fund’s ability to liquidate its positions or provide liquidity to investors may
be compromised and the Fund could incur significant losses.
Foreign
Exposure Risk. Securities issued by U.S. entities with substantial foreign
operations or holdings, or issued by foreign entities listed on a U.S. exchange,
may involve additional risks relating to political, economic, or regulatory
conditions in foreign countries, as well as currency exchange rates.
Growth
Stock Risk. Because the prices of most growth stocks are based on future
expectations, these stocks tend to be more sensitive than value stocks to bad
economic news and negative earnings surprises. When these expectations are not
met or decrease, the prices of these stocks may decline, sometimes sharply, even
if earnings showed an absolute increase. Bad economic news or changing investor
perceptions may adversely affect growth stocks across several sectors and
industries simultaneously.
High
Portfolio Turnover Risk. The Fund may engage in active and frequent trading
and may have a high portfolio turnover rate, which may increase the Fund’s
transaction costs, may adversely affect the Fund’s performance and may generate
a greater amount of capital gain distributions to shareholders than if the Fund
had a low portfolio turnover rate.
Issuer-Specific
Risk. An individual security may be more volatile, and may perform
differently, than the market as a whole.
Market
Volatility Risk. Markets may be volatile and values of individual securities
and other investments, including those of a particular type, may decline
significantly in response to adverse issuer, political, regulatory, market,
economic or other developments that may cause broad changes in market value,
public perceptions concerning these developments, and adverse investor sentiment
or publicity. Geopolitical and other risks, including environmental and public
health risks may add to instability in world economies and markets generally.
Changes in value may be temporary or may last for extended periods. If the Fund
sells a portfolio position before it reaches its market peak, it may miss out on
opportunities for better performance.
Recent
Market Conditions. Both U.S. and international markets have experienced
significant volatility in recent months and years. As a result of such
volatility, investment returns may fluctuate significantly. National economies
are substantially interconnected, as are global financial markets, which creates
the possibility that conditions in one country or region might adversely impact
issuers in a different country or region. However, the interconnectedness of
economies and/or markets may be diminishing, which may impact such economies and
markets in ways that cannot be foreseen at this time.
Although
interest rates were unusually low in recent years in the U.S. and abroad,
recently, the Federal Reserve and certain foreign central banks raised interest
rates as part of their efforts to address rising inflation. It is difficult to
accurately predict the pace at which interest rates might increase, the timing,
frequency or magnitude of any such increases in interest rates, or when such
increases might stop. Additionally, various economic and political factors could
cause the Federal Reserve or other foreign central banks to change their
approach in the future and such actions may result in an economic slowdown both
in the U.S. and abroad. Unexpected changes in interest rates could lead to
market volatility or reduce liquidity in certain sectors of the market.
Deteriorating economic fundamentals may, in turn, increase the risk of default
or insolvency of particular issuers, negatively impact market value, cause
credit spreads to widen, and reduce bank balance sheets. Any of these could
cause an increase in market volatility, or reduce liquidity across various
markets or decrease confidence in the markets.
Some
countries, including the U.S., have adopted more protectionist trade policies.
Slowing global economic growth, the rise in protectionist trade policies,
changes to some major international trade agreements, risks associated with the
trade agreement between the United Kingdom and the European Union, and the risks
associated with trade negotiations between the U.S. and China, could affect the
economies of many nations in ways that cannot necessarily be foreseen at the
present time. In addition, the current strength of the U.S. dollar may decrease
foreign demand for U.S. assets, which could have a negative impact on certain
issuers and/or industries.
Regulators
in the U.S. have proposed and adopted a number of changes to regulations
involving the markets and issuers, some of which apply to the Fund. The full
effect of various newly adopted regulations is not currently known.
Additionally, it is not currently known whether any of the proposed regulations
will be adopted. However, due to the scope of regulations being proposed and
adopted, certain of these changes to regulation could limit the Fund’s ability
to pursue its investment strategies or make certain investments, may make it
more costly for it to operate, or adversely impact performance.
Tensions,
war, or open conflict between nations, such as between Russia and Ukraine, in
the Middle East, or in eastern Asia could affect the economies of many nations,
including the United States. The duration of ongoing hostilities and any
sanctions and related events cannot be predicted. Those events present material
uncertainty and risk with respect to markets globally and the performance of the
Fund and its investments or operations could be negatively impacted.
High public
debt in the U.S. and other countries creates ongoing systemic and market risks
and policymaking uncertainty. There is no assurance that the U.S. Congress will
act to raise the nation’s debt ceiling; a failure to do so could cause market
turmoil and substantial investment risks that cannot now be fully predicted.
Unexpected political, regulatory and diplomatic events within the U.S. and
abroad may affect investor and consumer confidence and may adversely impact
financial markets and the broader economy.
There is
widespread concern about the potential effects of global climate change on
property and security values. Certain issuers, industries and regions may be
adversely affected by the impact of climate change in ways that cannot be
foreseen. The impact of legislation, regulation and international accords
related to climate change may negatively impact certain issuers and/or
industries.
Redemption
Risk. The Fund may experience periods of large or frequent redemptions that
could cause the Fund to sell assets at inopportune times, which could have a
negative impact on the Fund’s overall liquidity, or at a loss or depressed
value. Redemption risk is greater to the extent that one or more investors or
intermediaries control a large percentage of investments in the Fund and the
risk is heightened during periods of declining or illiquid markets. Large
redemptions could hurt the Fund’s performance, increase transaction costs, and
create adverse tax consequences.
Sector
Risk. From time to time, based on market or economic conditions, the Fund
may have significant positions in one or more sectors of the market. To the
extent the Fund invests more heavily in particular sectors, its performance will
be especially sensitive to developments that significantly affect those sectors.
Individual sectors or sub-sectors may be more volatile, and may perform
differently, than the broader market. The industries that constitute a sector
may all react in the same way to economic, political or regulatory
events.
Securities
Lending Risk. Securities lending involves a possible delay in recovery of
the loaned securities or a possible loss of rights in the collateral should the
borrower fail financially. The Fund could also lose money if the value of the
collateral decreases.
Small-
and Mid-Cap Companies Risk. At times, small- and mid-cap companies may be
out of favor with investors. Compared to larger companies, small- and mid-cap
companies may depend on a more limited management group, may have a shorter
history of operations, less publicly available information, less stable
earnings, and limited product lines, markets or financial resources. The
securities of small- and mid-cap companies are often more volatile, which at
times can be rapid and unpredictable, and less liquid than the securities of
larger companies and may be more affected than other types of securities by the
underperformance of a sector, during market downturns, or by adverse publicity
and investor perceptions. To the extent the Fund holds securities of mid-cap
companies, the Fund will be subject to their risks.
A summary
of the Fund’s additional principal investment risks is as
follows:
Risk of
Increase in Expenses. A decline in the Fund’s average net assets during the
current fiscal year due to market volatility or other factors could cause the
Fund’s expenses for the current fiscal year to be higher than the expense
information presented in “Fees and Expenses.”
Operational
and Cybersecurity Risk. The Fund and its service providers, and your ability
to transact with the Fund, may be negatively impacted due to operational matters
arising from, among other problems, human errors, systems and technology
disruptions or failures, or cybersecurity incidents. Cybersecurity incidents may
allow an unauthorized party to gain access to fund assets, customer data, or
proprietary information, or cause the Fund or its service providers, as well as
the securities trading venues and their service providers, to suffer data
corruption or lose operational functionality. Cybersecurity incidents can result
from deliberate attacks or unintentional events. It is not possible for the
Manager or the other Fund service providers to identify all of the cybersecurity
or other operational risks that may affect the Fund or to develop processes and
controls to completely eliminate or mitigate their occurrence or effects. Most
issuers in which the Fund invests are heavily dependent on computers for data
storage and operations, and require ready access to the internet to conduct
their business. Thus, cybersecurity incidents could also affect issuers of
securities in which the Fund invests, leading to significant loss of
value.
Risk
Management. Risk is an essential part of investing. No risk management
program can eliminate the Fund’s exposure to adverse events; at best, it may
only reduce the possibility that the Fund will be affected by such events, and
especially those risks that are not intrinsic to the Fund’s investment program.
The Fund could experience losses if judgments about risk prove to be
incorrect.
Valuation
Risk. The Fund may not be able to sell an investment at the price at which
the Fund has valued the investment. Such differences could be significant,
particularly for illiquid securities and securities that trade in relatively
thin markets and/or markets that experience extreme volatility. If market or
other conditions make it difficult to value an investment, the Fund may be
required to value such investments using more subjective methods, known as fair
value methodologies. Using fair value methodologies to price investments may
result in a value that is different from an investment’s most recent price and
from the prices used by other funds to calculate their NAVs. The Fund uses
pricing services to provide values for certain securities and there is no
assurance that the Fund will be able to sell an investment at the price
established by such pricing services. The Fund’s ability to value its
investments in an accurate and timely manner may be impacted by technological
issues and/or errors by third party service providers, such as pricing services
or accounting agents.
PERFORMANCE
The
following bar chart and table provide an indication of the risks of investing in
the Fund. The bar chart
shows how the Fund’s performance has varied from year to year. The table below the bar chart shows
what the returns would equal if you averaged out actual performance over various
lengths of time and compares the returns with the returns of one or more
broad-based market indices. The
indices, which are described in “Descriptions of Indices” in the prospectus,
have characteristics relevant to the Fund’s investment strategy.