*According to Institutional Investor, the winners of its 6th Annual US Investment Management Awards were chosen from a short list of top-performing managers across a range of investment strategies identified by the magazine’s editorial and research teams in conjunction with eVestment. Investment strategies were evaluated based on such factors as one-, three- and five-year performance, Sharpe ratio, information ratio, standard deviation and upside market capture. More than 1,000 leading U.S. pension plans, foundations, endowments and other institutional investors were also surveyed and voted for the top-performing managers in each strategy over the past year.
An investor should consider the Fund’s investment objectives, risks and fees and expenses carefully before investing. This and other important information can be found in the Fund’s prospectus and summary prospectus, which you can obtain by calling 877.628.2583. Please read the prospectus and summary prospectus carefully before making an investment. The prospectus contains a more complete discussion of the risk of investing in the Fund. Investments could result in loss of principal.
For each retail mutual fund with at least a three-year history, Morningstar calculates a Morningstar Rating based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive five stars, the next 22.5% receive four stars, the next 35% receive three stars, the next 22.5% receive two stars and the bottom 10% receive one star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) The Overall Morningstar Rating for a retail mutual fund is derived from a weighted average of the performance figures associated with its three-, five- and ten-year (if applicable) Morningstar Rating metrics. Ratings are ©2016 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.
The Fund’s performance will largely depend on what happens in the equity and fixed income markets. Shares of the Fund may be worth more or less upon redemption. The actual risk exposure taken by the Fund will vary over time, depending on various factors, including Neuberger Berman’s methodology and decisions in allocating the Fund’s assets to subadvisers, and its selection and oversight of subadvisers.
The subadvisers’ investment styles may not always be complementary, which could adversely affect the performance of the Fund. Some subadvisers have little experience managing registered investment companies which, unlike the hedge funds these managers have been managing, are subject to daily inflows and outflows of investor cash and are subject to certain legal and tax-related restrictions on their investments and operations.
The Fund’s returns may deviate from overall market returns to a greater degree than other mutual funds that do not employ an absolute return focus. Thus, the Fund might not benefit as much as funds following other strategies during periods of strong market performance. A subadviser may use strategies intended to protect against losses (i.e., hedged strategies), but there is no guarantee that such hedged strategies will be used or, if used, that they will protect against losses, perform better than non-hedged strategies or provide consistent returns.
Event-driven strategies that invest in companies in anticipation of an event carry the risk that the event may not happen or may take considerable time to unfold, it may happen in modified or conditional form, or the market may react differently than expected to the event, in which case the Fund may experience losses. Additionally, event-driven strategies may fail if adequate information about the event is not obtained or such information is not properly analyzed. The actions of other market participants may also disrupt the events on which event-driven strategies depend. Arbitrage Strategies involve the risk that underlying relationships between securities in which investment positions are taken may change in an adverse manner or in a manner not anticipated, in which case the Fund may realize losses. The Fund’s use of event-driven and arbitrage strategies will cause it to invest in actual or anticipated special situations – i.e., acquisitions, spin-offs, reorganizations and liquidations, tender offers and bankruptcies. These transactions may not be completed as anticipated or may take an excessive amount of time to be completed. They may also be completed on different terms than the subadviser anticipates, resulting in a loss to the Fund. Some special situations are sufficiently uncertain that the Fund may lose its entire investment in the situation.
The Fund’s performance could be affected if borrowers pay back principal on certain debt securities, such as mortgage- or asset-backed securities, before or after the market anticipates such payments, shortening or lengthening their duration.
Small- and mid-capitalization stocks trade less frequently and in lower volume than larger company stocks and thus may be more volatile and more vulnerable to financial and other risks.
The Fund may invest more heavily in one sector, industry or sub-sector of the market presenting a more concentrated risk and potentially making the Fund’s performance more sensitive to market movements that affect those sectors, industry or sub-sector. Two of the Funds’ subadvisers invest primarily in securities of companies in the health care and energy sectors, and the Fund’s performance may be adversely affected by downturns in those two sectors.
Generally, bond values will decline as interest rates rise. You may have a gain or a loss if you sell your bonds prior to maturity. Bonds are subject to the credit risk of the issuer.
Foreign securities involve risks in addition to those associated with comparable U.S. securities, including exposure to less developed or less efficient trading markets; social, political or economic instability; fluctuations in foreign currencies; nationalization or expropriation of assets; settlement, custodial or other operational risks; and less stringent auditing and legal standards. Exchange rate exposure and currency fluctuations could erase or augment investment results. Because an investment strategy used by a subadviser invests primarily in companies in Japan, the Fund’s performance may be closely tied to social, political, and economic conditions within Japan.
Derivatives involve risks different from, or greater than, the risks associated with investing in more traditional investments, as derivatives can be highly complex and volatile, difficult to value, highly illiquid, and a Fund may not be able to close out or sell a derivative position at a particular time or at an anticipated price. Non-U.S. currency forward contracts, options, swaps, or other derivatives contracts on non-U.S. currencies or securities involve a risk of loss, even if used for hedging purposes, if currency exchange rates move against the Fund.
Investments in the over-the-counter market introduce counterparty risk due to the possibility that the dealer providing the derivative may fail to timely satisfy its obligations. Investments in the futures markets also introduce the risk that its futures commission merchant (FCM) may default on its obligations, which include returning margin posted to a Fund. Derivative instruments can create leverage, which can amplify changes in the Fund’s net asset value and can result in losses that exceed the amount originally invested.
The Fund’s investments in ETFs subject it to such ETF’s risks as well as expenses. ETFs are subject to tracking error and may be unable to sell poorly performing stocks that are included in their index. ETFs may trade in the secondary market at prices below the value of their underlying portfolios and may not be liquid.
The Fund may engage in active and frequent trading and may have a high portfolio turnover rate, which may increase its transaction costs and may adversely affect performance.
The Managed Futures strategy employed by the Fund has significant exposure to the commodities markets and may subject the Fund to greater volatility than investments in traditional securities. The commodities markets are impacted by a variety of factors, including changes in overall market movements, domestic and foreign political and economic events and policies, war, acts of terrorism, changes in domestic or foreign interest rates and/or investor expectations concerning interest rates, domestic and foreign inflation rates and investment and trading activities in commodities.
To qualify as a regulated investment company (“RIC”), the Fund must derive at least 90% of its gross income for each taxable year from sources treated as “qualifying income” under the Internal Revenue Code of 1986, as amended. Although qualifying income does not include income derived directly from commodities, including certain commodity-linked derivative instruments, the Fund nevertheless has received an opinion of counsel, which is not binding on the Internal Revenue Service (the “Service”) or the courts, that income the Fund derives from their investments in a subsidiary should constitute qualifying income. This tax treatment may be adversely affected by future legislation, Treasury Regulations, and/or guidance issued by the Service that could affect the character, timing, and/or amount of the Fund’s taxable income or capital gains and distributions it makes. If the Fund’s income from the subsidiary was not qualifying income, the Fund could be unable to qualify as a RIC for one or more years. If the Fund failed to so qualify for any taxable year but was eligible to and did cure the failure, it would incur potentially significant additional federal income tax expense. By investing in the subsidiary, the Fund is indirectly exposed to the risks associated with the subsidiary’s investments and operations.
The Managed Futures and Global Macro strategies employed by the Fund uses quantitative algorithms that rely heavily on the use of proprietary and non-proprietary data, software and intellectual property. The quality of the investment selections produced by the portfolio construction process depends on a number of factors including the accuracy of data inputs, the mathematical and analytical underpinnings of the coding, the accuracy in translating those analytics into program code, the speed that market conditions change and the successful integration of the various quantitative models in the portfolio selection process. To a significant extent, the performance of the strategy will depend on the success of implementing and managing the investment models that assist in allocating the Fund’s and the subsidiary’s assets. Models that have been formulated on the basis of past market data may not be predictive of future price movements.
All data, other than performance, is from HedgeMark Risk Analytics.
The Barclays U.S. Aggregate Bond Index represents securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities.
The HFRX Absolute Return Index is designed to be representative of the overall composition of the hedge fund universe. It comprises all eligible hedge fund strategies, including but not limited to convertible arbitrage, distressed securities, equity hedge, equity market neutral, event driven, macro, merger arbitrage, and relative value arbitrage. As a component of the optimization process, the index selects constituents which characteristically exhibit lower volatilities and lower correlations to standard directional benchmarks of equity market and hedge fund industry performance.
The S&P 500 Index consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value-weighted index (stock price times number of shares outstanding), with each stock’s weight in the Index proportionate to its market value. The S&P 500 Index® is one of the most widely used benchmarks of U.S. equity performance.
Beta is a measure of the market-related risk (expressed between 0-1%) of a portfolio compared to that of the overall market, as represented by an index. The lower the beta the lower the sensitivity to the movements of the market, as represented by the index. Standard Deviation (Risk/Volatility) is a statistical measure of the historical volatility of a mutual fund or portfolio. Beta and Volatility figures are based on daily returns for the Institutional Class with dividends reinvested for the period of May 15, 2012 through quarter end.
Gross expenses include acquired fund fees and expenses in the amount of 0.03% and dividend and interest expenses relating to short sales in the amount of 0.74%.Total (net) expense represents the total annual operating expenses that shareholders pay (after the effect of fee waivers and/or expense reimbursement). The Fund’s Investment Manager (the “Manager”) contractually caps certain direct expenses of the Fund (excluding interest, taxes, brokerage commissions, acquired fund fees and expenses, dividend expenses relating to short sales, and extraordinary expenses, if any; consequently, total (net) expenses may exceed the contractual cap) through 10/31/2019 for Class A at 2.33%, Class C at 3.08% and Institutional Class at 1.97% (each as a % of average net assets). Absent such arrangements, which cannot be changed without Board approval, the returns may have been lower. Information as of the most recent prospectus dated February 29, 2016.
The “Neuberger Berman” name and logo are registered service marks of Neuberger Berman Group LLC. The individual fund names in this piece are either service marks or registered service marks of Neuberger Berman Investment Advisers LLC, an affiliate of Neuberger Berman LLC, member FINRA.