UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-12
NEUBERGER BERMAN REAL ESTATE INCOME FUND INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
____________________
| | |
| NEUBERGER | BERMAN |
|___________|________|
A LEHMAN BROTHERS COMPANY
NEUBERGER BERMAN REAL ESTATE INCOME FUND INC.
605 THIRD AVENUE
NEW YORK, NEW YORK 10158-0180
_____________________
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
_____________________
Dear Stockholder:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders ("Meeting")
of Neuberger Berman Real Estate Income Fund Inc. (the "Fund") will be held on
Tuesday, August 28, 2007, at 11:00 a.m. eastern time at the offices of Neuberger
Berman, LLC, 605 Third Avenue, 41st Floor, New York, New York 10158-3698, for
the following purposes:
(1) To elect five Class I Directors to serve until the annual meeting of
stockholders in 2009, or until their successors are elected and
qualified;
(2) To approve a proposal to liquidate and dissolve the Fund, as set forth
in the Plan of Liquidation and Dissolution (the "Plan") adopted by the
Board of Directors of the Fund; and
(3) To consider and act upon any other business that may properly come
before the Meeting or any adjournments thereof.
Stockholders are being asked to elect five Class I Directors to hold office
for a term stated above (or until the Fund is liquidated, if sooner) and until
their successors are duly elected and qualified.
The Board of Directors has unanimously determined that a complete
liquidation and dissolution of the Fund in accordance with the terms of the Plan
is in the best interests of the Fund and its stockholders. The Board of
Directors recommends that the stockholders approve the Plan. PLEASE SEE PAGE 30
OF THE PROXY STATEMENT REGARDING POTENTIAL CHANGES IN CIRCUMSTANCES THAT MAY
LEAD TO THE FUND ADJOURNING THE MEETING PRIOR TO CONSIDERING THE PROPOSAL TO
LIQUIDATE AND DISSOLVE THE FUND AND/OR WITHDRAWING THIS PROPOSAL. Subject to
receipt of the requisite stockholder approval and the determination that the
Fund has sufficient liquid assets to meet its existing and anticipated
liabilities, stockholders remaining in the Fund can expect to receive one or
more liquidating distributions, in cash, as soon as reasonably practicable.
However, there is no minimum distribution to stockholders.
When and if the Plan becomes effective, the Fund's shares of common stock
will cease to be traded on the New York Stock Exchange.
You are entitled to vote at the Meeting of the Fund and any adjournments
thereof if you owned Fund shares at the close of business on May 30, 2007
("Record Date"). If you attend the Meeting, you may vote your shares in person.
IF YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE REVIEW THE ENCLOSED MATERIALS
AND FOLLOW THE INSTRUCTIONS THAT APPEAR ON THE ENCLOSED PROXY CARD(S). If you
have any questions about the proposals or the voting instructions, please call
the Fund at 877-461-1899.
The Fund will admit to the Meeting (1) all stockholders of record of the
Fund as of the Record Date, (2) persons holding proof of beneficial ownership at
the Record Date, such as a letter or account statement from a broker, (3)
persons who have been granted proxies, and (4) such other persons that the Fund,
in its sole discretion, may elect to admit. ALL PERSONS WISHING TO BE ADMITTED
TO THE MEETING MUST PRESENT PHOTO IDENTIFICATION. IF YOU PLAN TO ATTEND THE
MEETING, PLEASE CONTACT THE FUND AT 877-461-1899.
Unless proxy cards submitted by corporations and partnerships are signed by
the appropriate persons as indicated in the voting instructions on the proxy
cards, they will not be voted.
By order of the Board of Directors,
/s/ Claudia A. Brandon
Claudia A. Brandon
Secretary
Dated: August 16, 2007
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance to
you and avoid the time and expense to the Fund involved in validating your vote
if you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Any party may sign, but the name of the party signing
should conform exactly to the name shown in the registration on the
proxy card.
3. Other Accounts: The capacity of the individual signing the proxy card
should be indicated unless it is reflected in the form of registration.
For example:
REGISTRATION VALID SIGNATURE
_________________________________________________________________________________________
CORPORATE ACCOUNTS
(1) ABC Corp. ABC Corp.
(2) ABC Corp. John Doe, Treasurer
(3) ABC Corp. c/o John Doe, Treasurer John Doe
(4) ABC Corp. Profit Sharing Plan John Doe, Trustee
TRUST ACCOUNTS
(1) ABC Trust Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee u/t/d 12/28/78 Jane B. Doe
CUSTODIAN OR ESTATE ACCOUNTS
(1) John B. Smith, Cust. f/b/o John B. Smith, Jr. UGMA John B. Smith
(2) John B. Smith John B. Smith, Jr., Executor
_________________________________________________________________________________________
________________________________________________________________________________
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY
SHARES OF STOCK YOU OWN.
PLEASE RETURN YOUR PROXY CARD PROMPTLY.
IF YOU OWN SHARES OF BOTH COMMON STOCK AND PREFERRED STOCK OF THE FUND,
THERE WILL BE MORE THAN ONE PROXY CARD ENCLOSED. PLEASE FILL OUT AND RETURN EACH
PROXY CARD.
STOCKHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. ANY STOCKHOLDER
WHO DOES NOT EXPECT TO ATTEND THE MEETING IS URGED TO REVIEW THE ENCLOSED
MATERIALS AND FOLLOW THE INSTRUCTIONS THAT APPEAR ON THE ENCLOSED PROXY CARD(S).
TO AVOID THE ADDITIONAL EXPENSE TO THE FUND OF FURTHER SOLICITATION, WE ASK
YOUR COOPERATION IN VOTING YOUR PROXY PROMPTLY, NO MATTER HOW LARGE OR SMALL
YOUR HOLDINGS MAY BE.
________________________________________________________________________________
This page is intentionally left blank.
____________________
| | |
| NEUBERGER | BERMAN |
|___________|________|
A LEHMAN BROTHERS COMPANY
NEUBERGER BERMAN REAL ESTATE INCOME FUND INC.
605 THIRD AVENUE
NEW YORK, NEW YORK 10158-0180
___________________
PROXY STATEMENT
___________________
SPECIAL MEETING OF STOCKHOLDERS
AUGUST 28, 2007
INTRODUCTION
This Proxy Statement is furnished to the stockholders of Neuberger Berman
Real Estate Income Fund Inc. (the "Fund") by the Fund's Board of Directors in
connection with the solicitation of stockholder votes by proxy to be voted at
the Special Meeting of Stockholders ("Meeting") to be held on Tuesday, August
28, 2007, at 11:00 a.m. eastern time at the offices of Neuberger Berman, LLC
("Neuberger Berman"), 605 Third Avenue, 41st Floor, New York, New York
10158-3698, or any adjournments thereof. The matters to be acted upon at the
Meeting are set forth in the accompanying Notice of Special Meeting. It is
expected that the Notice of Special Meeting, this Proxy Statement and form of
proxy first will be mailed to stockholders on or about August 17, 2007.
If an enclosed proxy card is executed properly and returned, shares
represented thereby will be voted at the Meeting in accordance with the
instructions on the proxy card. A proxy may be revoked at any time prior to its
use by written notification received by the Secretary of the Fund, by the
execution of a subsequently dated proxy card or by attending the Meeting and
voting in person. If the proxy card is signed but no instructions are specified
on the proxy card, shares will be voted "FOR" the election of each nominee for
Director listed on the card, "FOR" the proposal to liquidate and dissolve the
Fund and "FOR," "ABSTAIN" or "AGAINST" any other matters acted upon at the
Meeting in the discretion of the persons named as proxies.
The close of business on May 30, 2007, has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at the
Meeting ("Record Date"). On that date, the Fund had 4,157,116.626 shares of
common stock ("Common Shares") and 1,680 shares of preferred stock ("Preferred
Shares") outstanding and entitled to vote.
Holders of the Fund's outstanding Common Shares and Preferred Shares
(together, "Shares") will vote together as a single class to (1) elect five
Class I Directors and (2) approve a proposal to liquidate and dissolve the Fund.
As to any other business that may properly come before the Meeting, holders of
Common Shares and Preferred Shares may vote together as a single class or
separately, depending on the requirements of the Investment Company Act of 1940,
as amended ("1940 Act"), the Maryland General Corporation Law, as amended
("MGCL"), and the Fund's charter with respect to said item of business. Each
full Share is entitled to one vote and each fractional Share is entitled to a
proportionate part of one vote.
Solicitation is made primarily by the mailing of this Proxy Statement and
the accompanying proxy card(s). Supplementary solicitations may be made by mail,
telephone and electronic transmission or in person by regular employees of
Neuberger Berman Management Inc. ("NB Management"), affiliates of NB Management
or other representatives of the Fund. NB Management serves as the Fund's
investment manager and administrator. In addition, the Fund has engaged
Georgeson Inc., a proxy solicitation firm, to assist in the solicitation of
proxies. The aggregate cost of retaining Georgeson Inc. is expected to be about
$25,000 plus expenses in connection with the solicitation of proxies; this cost
could increase if there is a contested election. All expenses in connection with
preparing this Proxy Statement and its enclosures, and additional solicitation
expenses including reimbursement of brokerage firms and others for their
expenses in forwarding proxy solicitation material to the beneficial owners of
shares, will be borne by the Fund.
The presence at the Meeting, in person or by proxy, of stockholders
entitled to vote at least 33 1/3% of the shares outstanding and entitled to vote
at the Meeting is required for a quorum. The affirmative vote of a plurality of
the votes cast of the Fund's Common Shares and Preferred Shares, voting as a
single class, is required to elect five Class I Directors. The affirmative vote
of a majority of the Fund's outstanding Common Shares and Preferred Shares
entitled to vote on the matter, voting as a single class, is required to approve
the liquidation and dissolution of the Fund. With respect to other items of
business, the necessary affirmative vote will depend on the requirements of the
1940 Act, the MGCL and the Fund's charter with respect to said item of business.
If a quorum is not present at the Meeting, the persons named as proxies may
propose one or more adjournments of the Meeting to permit further solicitation
of proxies. Subject to the rules established by the Chairman of the Meeting, the
holders of a majority of the Shares entitled to vote at the Meeting and present
in person or by proxy may vote to adjourn, or, if no stockholder entitled to
vote is present in person or by proxy, any officer present entitled to preside
or act as secretary of the Meeting may adjourn the Meeting without determining
the date of the meeting. In the former case, the persons named as proxies will
vote in their discretion those proxies that they are entitled to vote "FOR" or
"AGAINST" any proposal. If a quorum is present at the Meeting, the Chairman of
the Meeting may adjourn the Meeting if sufficient votes are not received or for
any other reason. A stockholder vote may be taken on the nominations in this
Proxy Statement prior to any such adjournment if sufficient votes have been
received and it is otherwise appropriate.
2
The Fund expects that broker-dealer firms holding Shares in "street name"
for the benefit of their customers and clients will request the instructions of
such customers and clients on how to vote their Shares on each proposal at the
Meeting. The Fund understands that, under the rules of the New York Stock
Exchange ("NYSE") and the American Stock Exchange, if no instructions have been
received prior to the date specified in the broker-dealer firm's request for
voting instructions, such broker-dealers may have the authority to vote these
proxies on an uncontested election of Directors for the Fund but will not have
the authority to vote on a contested election of Directors for the Fund or on
the proposal to liquidate and dissolve the Fund. Certain broker-dealer firms may
exercise discretion over Shares held in their names for which no instructions
are received by voting such Shares in the same proportion as they have voted
Shares for which they have received instructions.
In tallying stockholder votes, abstentions and "broker non-votes" (i.e.,
Shares held by brokers or nominees as to which instructions have not been
received from the beneficial owners or the persons entitled to vote and either
(i) the broker or nominee does not have discretionary voting power or (ii) the
broker or nominee returns the proxy but expressly declines to vote on a
particular matter) effectively will be a vote against the proposal to liquidate
and dissolve the Fund because the required vote is a majority of the Fund's
outstanding Common Shares and Preferred Shares entitled to be cast, voting
together. However, abstentions and broker non-votes will have no effect on the
election of the Directors because the required vote is a plurality of the votes
cast.
As of May 30, 2007, the Fund does not know of any person who owns
beneficially more than 5% of its outstanding Common Shares or Preferred Shares
other than those listed below.
AMOUNT AND
NATURE* OF
BENEFICIAL PERCENT
CLASS OF STOCK NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
________________________________________________________________________________
Common Shares Lola Brown Trust No. 1B 463,200** 11.14%
c/o Badlands Trust Company
P.O. Box 801 (614 Broadway)
Yankton, SD 57078
________________________________________________________________________________
Common Shares Bulldog Investors General Partnership 742,400*** 17.86%
Phillip Goldstein
60 Heritage Drive
Pleasantville, NY 10570
________________________________________________________________________________
Common Shares Western Investment LLC 248,200**** 5.97%
Arthur D. Lipson
2855 East Cottonwood Parkway, Suite 110
Salt Lake City, UT 84121
________________________________________________________________________________
* Unless otherwise noted, each owner has sole voting and investment power
over its shares.
** Based on Amendment No. 13 to Schedule TO filed by Lola Brown Trust No. 1B
on April 2, 2007. Based on a prior Schedule 13D filed September 2, 2004
which indicates that, because of the relationship
(FOOTNOTES CONTINUE ON NEXT PAGE)
3
between Mr. Horejsi and the trust, Mr. Horejsi may be deemed to share
indirect beneficial ownership of such shares. Due to this relationship,
Lola Brown Trust No. 1B and Mr. Horejsi could be viewed as a group and Mr.
Horejsi could be deemed to be the beneficial owner of the shares.
*** Based on Amendment No. 9 to Schedule 13D filed by Bulldog Investors General
Partnership and Mr. Goldstein on December 4, 2006. The amendment indicates
that Bulldog Investors General Partnership has sole voting and investment
power with respect to 547,600 shares and that Mr. Goldstein has sole voting
and investment power over 194,800 shares which are held in accounts jointly
with his wife, or in accounts managed by Mr. Goldstein. Mr. Goldstein may
also be deemed the beneficial owner over all the shares listed including
the shares owned by Bulldog Investors General Partnership since Mr.
Goldstein is the President of Kimball and Winthrop, Inc. and Kimball and
Winthrop, Inc. is the managing general partner of Bulldog Investors General
Partnership.
**** Based on Amendment No. 3 to Schedule 13D filed by Western Investment LLC
and Mr. Lipson on November 9, 2005. The amendment indicates that Western
Investment LLC has sole voting and investment power with respect to 247,200
shares and Mr. Lipson has sole voting and investment power with respect to
1,000 shares held for his personal account. Mr. Lipson may also be deemed
the beneficial owner over all the shares listed including the shares owned
by Western Investment LLC since Mr. Lipson is the managing member of
Western Investment LLC.
In addition, the Directors and officers of the Fund, in the aggregate,
owned less than 1% of each class of the Fund's outstanding Shares as of May 30,
2007.
By resolution of the Board of Directors, in September 2004, the Fund opted
into the Maryland Control Share Acquisition Act ("MCSAA"). In an opinion dated
May 8, 2007, the Federal District Court for the District of Maryland (the
"Court") upheld the Fund's reliance on the MCSAA. Generally, the MCSAA provides
that holders of "control shares" of a Maryland corporation acquired in a control
share acquisition may not vote those shares except to the extent approved by
stockholders at a special meeting by a vote of two-thirds of the votes entitled
to be cast on the matter (excluding shares owned by the acquiror and by officers
or directors who are employees of the corporation). "Control shares" are voting
shares of stock which, if aggregated with all other shares of stock owned by the
acquiror or in respect of which the acquiror is able to exercise or direct the
exercise of voting power (except solely by virtue of a revocable proxy), would
entitle the acquiror to exercise voting power in electing directors within
certain statutorily-defined ranges (one-tenth but less than one-third, one-third
but less than a majority, and more than a majority of the voting power).
Accordingly, except as provided in the Court's May 8, 2007 opinion, the Fund
will not deem any votes submitted by or on behalf of any Person, as defined in
the MCSAA, with respect to Shares in excess of ten percent of the outstanding
Shares, as being voted on any proposal properly before the Meeting.
NB Management serves as the investment manager and administrator to the
Fund. NB Management provides investment management and advisory services to
mutual funds and closed-end funds and to private accounts of institutional and
individual clients. NB Management is located at 605 Third Avenue, New York, New
York 10158-0180. NB Management retains Neuberger Berman, 605 Third Avenue, New
York, New York 10158-3698, as sub-adviser with respect to the Fund. As of June
30, 2007, Neuberger Berman affiliates had more than $145 billion in assets under
management. Neuberger Berman and NB Management are indirect wholly owned
subsidiaries of Lehman Brothers Holdings Inc., a publicly held company.
4
STOCKHOLDERS OF RECORD OR BENEFICIAL OWNERS AS OF THE RECORD DATE MAY
OBTAIN A FREE COPY OF THE ANNUAL REPORT FOR THE FISCAL YEAR ENDED OCTOBER 31,
2006, WHICH INCLUDES AUDITED FINANCIAL STATEMENTS FOR THE FUND, AND THE
SEMIANNUAL REPORT FOR THE FISCAL PERIOD ENDED APRIL 30, 2007, BY WRITING NB
MANAGEMENT AT 605 THIRD AVENUE, 2ND FLOOR, NEW YORK, NEW YORK 10158-0180, OR
BY CALLING TOLL FREE 877-461-1899.
Stockholders may send communications that they would like to direct to the
Board of Directors or to an individual director of the Fund to the attention of
Chamaine Williams, Chief Compliance Officer of the Fund, Neuberger Berman Funds,
605 Third Avenue, 21st Floor, New York, NY, 10158-0180. The Board has directed
Ms. Williams to send such communications to the chairperson of the Fund's Ethics
and Compliance Committee. Nominee recommendations and stockholder proposals
should be directed to the attention of Claudia A. Brandon, Secretary of the
Fund, Neuberger Berman Funds, 605 Third Avenue, 21st Floor, New York, NY,
10158-0180 as described in this Proxy Statement under "Information Regarding the
Fund's Process for Nominating Director Candidates" and "Stockholder Proposals."
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
The Board of Directors of the Fund is divided into three classes (Class I,
Class II and Class III). Effective February 28, 2007, the Fund's Board of
Directors expanded the size of the Board from thirteen(1) to fifteen and
appointed Michael M. Knetter as a Class I Director and George W. Morriss as a
Class II Director to fill the vacancies created by the expansion. Effective June
1, 2007, the Fund's Board of Directors expanded the size of the Board from
fifteen to sixteen and appointed Martha C. Goss as a Class III Director to fill
the vacancy created by the expansion.
The terms of office of Class I, Class II and Class III Directors will
expire at the special meeting of stockholders held in 2007 and the annual
meeting of stockholders held in 2007 and 2008, respectively, and at each third
annual meeting of stockholders thereafter (except for Class I which will expire
in 2009 and at each third annual meeting of stockholders thereafter). Each
Director shall hold office until his or her successor is elected and qualified
or until his or her earlier death, resignation or removal, unless the Fund is
earlier dissolved. The classification of the Fund's Directors helps to promote
the continuity and stability of the Fund's management and policies because the
majority of the Directors at any given time will have prior experience as
Directors of the Fund. At least two stockholder meetings, instead of one, are
required to effect a change in a majority of the Directors, except in the event
of vacancies resulting from removal for cause or other reasons, in which case
the remaining Directors may fill the vacancies so created, to the extent
permitted by the 1940 Act.
(1) Following the death of Barry Hirsch, a Class II Director, the Board of the
Fund determined to reduce the number of Directors on the Board from 14 to
13 and to reclassify C. Anne Harvey, a Class I Director, as a Class II
Director. Ms. Harvey was reclassified as a Class II Director of the Board
so that each class of the Board would have as close to the same number of
Directors as possible.
5
Each incumbent Class I Director has expressed his or her willingness to
serve another term as Director of the Fund if nominated by the Board of
Directors. The Governance and Nominating Committee of the Fund reviewed the
qualifications, experience and background of each incumbent Director. Based upon
this review, the Committee determined that nominating the incumbents would be in
the best interests of the Fund's stockholders. The Fund's Board believes that
the incumbents are well suited for service on the Board due to their familiarity
with the Fund as a result of their prior service as Directors, their knowledge
of the financial services sector, and their substantial experience in serving as
directors or trustees, officers or advisers of public companies and business
organizations, including other investment companies.
At a meeting in May 2007, the Board of Directors received the
recommendations of the Governance and Nominating Committee. After discussion and
consideration of, among other things, the backgrounds of the incumbents, the
Fund's Board voted to nominate Faith Colish, Michael M. Knetter, Cornelius T.
Ryan, Peter P. Trapp and Peter E. Sundman for election as Class I Directors with
a term expiring in 2009. The Fund has a policy that at least three-fourths of
all Directors be Independent Fund Directors. Independent Fund Directors are
those who are not associated with the Fund's investment adviser or sub-adviser
or their affiliates, or with any broker-dealer used by the Fund, the investment
adviser or the sub-adviser in the past six months.
It is the intention of the persons named on the enclosed proxy card(s) to
vote in favor of the election of each nominee named in this Proxy Statement.
Each nominee has consented to be named in this Proxy Statement and to serve as
Director if elected. The Fund's Board of Directors has no reason to believe that
any nominee will become unavailable for election as a Director, but if that
should occur before the Meeting, the proxies will be voted for such other
nominees as the Board of Directors may recommend.
None of the Directors is related to any other. The following tables set
forth certain information regarding each Director of the Fund. Unless otherwise
noted, each Director has engaged in the principal occupation listed in the
following table for five years or more. The business address of each listed
person is 605 Third Avenue, New York, New York 10158.
6
INFORMATION REGARDING NOMINEES
FOR ELECTION AT 2007 SPECIAL MEETING
________________________________________________________________________________________________________________
NUMBER OF
PORTFOLIOS IN
NAME, AGE, POSITION, FUND COMPLEX OTHER DIRECTORSHIPS HELD
TERMS OF OFFICE (1), AND OVERSEEN BY OUTSIDE FUND COMPLEX
LENGTH OF TIME SERVED PRINCIPAL OCCUPATION(S) DIRECTOR(2) BY DIRECTOR
________________________________________________________________________________________________________________
CLASS I
________________________________________________________________________________________________________________
Independent Fund Directors
________________________________________________________________________________________________________________
Faith Colish (71) Counsel, Carter 60 Formerly, Director
Director Ledyard & Milburn (1997 to 2003)
Since inception LLP (law firm) and Advisory
since October Director (2003
2002; formerly, to 2006), ABA
Attorney-at-Law Retirement Funds
and President, Faith (formerly, American
Colish, A Professional Bar Retirement
Corporation, 1980 to Association)
2002. (not-for-profit
membership
corporation).
________________________________________________________________________________________________________________
Michael M. Knetter (47) Dean, School of 60 Trustee,
Director Business, University of Northwestern
Since February 2007 Wisconsin - Madison; Mutual Series Fund,
formerly, Professor Inc. since February
of International 2007; Director,
Economics and Wausau Paper since
Associate Dean, 2005; Director,
Amos Tuck School of Great Wolf Resorts
Business - Dartmouth since 2004.
College, 1998 to 2002.
________________________________________________________________________________________________________________
Cornelius T. Ryan (75) Founding General 60 None.
Director Partner, Oxford
Since inception Partners and Oxford
Bioscience Partners
(venture capital
investing) and
President, Oxford
Venture Corporation
since 1981.
________________________________________________________________________________________________________________
7
__________________________________________________________________________________________________________________
NUMBER OF
PORTFOLIOS IN
NAME, AGE, POSITION, FUND COMPLEX OTHER DIRECTORSHIPS HELD
TERMS OF OFFICE (1), AND OVERSEEN BY OUTSIDE FUND COMPLEX
LENGTH OF TIME SERVED PRINCIPAL OCCUPATION(S) DIRECTOR (2) BY DIRECTOR
__________________________________________________________________________________________________________________
Peter P. Trapp (62) Retired; formerly, 60 None.
Director Regional Manager for
Since inception Mid-Southern Region,
Ford Motor Credit
Company, September
1997 to 2007; formerly,
President, Ford Life
Insurance Company,
April 1995 to August
1997.
________________________________________________________________________________________________________________
Director who is an "Interested Person"*
________________________________________________________________________________________________________________
Peter E. Sundman* (48) Executive Vice 60 Director and
Chief Executive Officer, President, Neuberger Vice President,
Director and Chairman Berman Inc. (holding Neuberger &
of the Board company) since 1999; Berman Agency,
Since inception Head of Neuberger Inc. since 2000;
Berman Inc.'s Mutual formerly, Director,
Funds Business Neuberger Berman
(since 1999) and Inc. (holding
Institutional Business company), October
(1999 to October 1999 to March 2003;
2005); responsible Trustee, Frost Valley
for Managed YMCA; Trustee,
Accounts Business College of Wooster.
and intermediary
distribution since
October 1999;
President and Director,
NB Management
since 1999; Managing
Director, Neuberger
Berman since 2005;
formerly, Executive
Vice President,
Neuberger Berman,
1999 to December
2005; formerly,
Principal, Neuberger
Berman, 1997 to
1999; formerly, Senior
Vice President, NB
Management, 1996 to
1999.
________________________________________________________________________________________________________________
8
INFORMATION REGARDING DIRECTORS
WHOSE CURRENT TERMS CONTINUE
________________________________________________________________________________________________________________
NUMBER OF
PORTFOLIOS IN
NAME, AGE, POSITION, FUND COMPLEX OTHER DIRECTORSHIPS HELD
TERMS OF OFFICE (1), AND OVERSEEN BY OUTSIDE FUND COMPLEX
LENGTH OF TIME SERVED PRINCIPAL OCCUPATION(S) DIRECTOR (2) BY DIRECTOR
________________________________________________________________________________________________________________
CLASS II
________________________________________________________________________________________________________________
Independent Fund Directors
________________________________________________________________________________________________________________
John Cannon (77) Consultant; formerly, 60 Independent
Director Chairman, CDC Trustee or Director
Since inception Investment Advisers of three series of
(registered investment Oppenheimer Funds:
adviser), 1993 to Limited Term New
January 1999; formerly, York Municipal
President and Chief Fund, Rochester
Executive Officer, AMA Fund Municipals,
Investment Advisors, an and Oppenheimer
affiliate of the American Convertible Securities
Medical Association. Fund since 1992.
________________________________________________________________________________________________________________
C. Anne Harvey (69) President, C.A. Harvey 60 Formerly, President,
Director Associates since Board of Associates
Since inception October 2001; formerly, to The National
Director, AARP, 1978 to Rehabilitation
December 2001. Hospital's Board
of Directors, 2001
to 2002; formerly,
Member, Individual
Investors Advisory
Committee to the
New York Stock
Exchange Board of
Directors, 1998 to
June 2002.
________________________________________________________________________________________________________________
George W. Morriss (59) Formerly, Executive 60 Manager, Old Mutual
Director Vice President and 2100 fund complex
Since February 2007 Chief Financial (consisting of six
Officer, People's Bank funds) since October
(a financial services 2006 for four funds
company), 1991 to 2001. and since February
2007 for two funds.
________________________________________________________________________________________________________________
9
________________________________________________________________________________________________________________
NUMBER OF
PORTFOLIOS IN
NAME, AGE, POSITION, FUND COMPLEX OTHER DIRECTORSHIPS HELD
TERMS OF OFFICE (1), AND OVERSEEN BY OUTSIDE FUND COMPLEX
LENGTH OF TIME SERVED PRINCIPAL OCCUPATION(S) DIRECTOR (2) BY DIRECTOR
________________________________________________________________________________________________________________
Tom D. Seip (57) General Partner, Seip 60 Director, H&R
Director Investments LP (a private Block, Inc.
Since inception; investment partnership); (financial services
Lead Independent formerly, President company) since May
Director and CEO, Westaff, Inc. 2001; Chairman,
Since 2006 (temporary staffing), Compensation
May 2001 to January Committee, H&R
2002; formerly, Senior Block, Inc. since
Executive at the Charles 2006; Director,
Schwab Corporation, America One
1983 to 1998, including Foundation since
Chief Executive 1998; formerly,
Officer, Charles Chairman,
Schwab Investment Governance
Management, Inc. and and Nominating
Trustee, Schwab Family Committee, H&R
of Funds and Schwab Block, Inc., 2004
Investments, 1997 to to 2006; formerly,
1998, and Executive Director, Forward
Vice President-Retail Management, Inc.
Brokerage, Charles (asset management
Schwab & Co., Inc., 1994 company), 1999
to 1997. to 2006; formerly
Director, E-Bay
Zoological Society,
1999 to 2003;
formerly, Director,
General Magic
(voice recognition
software), 2001
to 2002; formerly,
Director, E-Finance
Corporation (credit
decisioning services),
1999 to 2003;
formerly, Director,
Save-Daily.com
(micro investing
services), 1999 to
2003.
________________________________________________________________________________________________________________
10
________________________________________________________________________________________________________________
NUMBER OF
PORTFOLIOS IN
NAME, AGE, POSITION, FUND COMPLEX OTHER DIRECTORSHIPS HELD
TERMS OF OFFICE (1), AND OVERSEEN BY OUTSIDE FUND COMPLEX
LENGTH OF TIME SERVED PRINCIPAL OCCUPATION(S) DIRECTOR (2) BY DIRECTOR
________________________________________________________________________________________________________________
Director who is an "Interested Person"*
________________________________________________________________________________________________________________
Jack L. Rivkin* (66) Executive Vice 60 Director, Dale
President and Director President and Chief Carnegie and
Since December 2002. Investment Officer, Associates, Inc.
Neuberger Berman (private company)
Inc. (holding company) since 1998; Director,
since 2002 and 2003, Solbright, Inc.
respectively; Managing (private company)
Director and Chief since 1998.
Investment Officer,
Neuberger Berman
since December 2005
and 2003, respectively;
formerly, Executive Vice
President, Neuberger
Berman, December
2002 to 2005; Director
and Chairman, NB
Management since
December 2002;
formerly, Executive
Vice President,
Citigroup Investments,
Inc., September 1995
to February 2002;
formerly, Executive Vice
President, Citigroup
Inc., September 1995 to
February 2002.
________________________________________________________________________________________________________________
11
________________________________________________________________________________________________________________
NUMBER OF
PORTFOLIOS IN
NAME, AGE, POSITION, FUND COMPLEX OTHER DIRECTORSHIPS HELD
TERMS OF OFFICE (1), AND OVERSEEN BY OUTSIDE FUND COMPLEX
LENGTH OF TIME SERVED PRINCIPAL OCCUPATION(S) DIRECTOR (2) BY DIRECTOR
________________________________________________________________________________________________________________
CLASS III
________________________________________________________________________________________________________________
Independent Fund Directors
________________________________________________________________________________________________________________
Martha C. Goss (58) President, Woodhill 60 Director, Ocwen
Director Enterprises Inc./Chase Financial Corporation
Since June 2007 Hollow Associates LLC (mortgage servicing),
(personal investment since 2005; Director,
vehicle), since 2006; American Water
Chief Operating and (water utility), since
Financial Officer, 2003; Director,
Hopewell Holdings LLC/ Channel Reinsurance
Amwell Holdings, LLC (financial guaranty
(a holding company for reinsurance), since
a healthcare reinsurance 2006; Advisory Board
company start-up), Member, Attensity
since 2003; formerly, (software developer),
Consultant, Resources since 2005; Director,
Connection (temporary Allianz Life of New
staffing), 2002 to 2006. York (insurance),
since 2005; Director,
Financial Women's
Association of
New York (not for
profit association),
since 2003; Trustee
Emerita, Brown
University, since
1998.
________________________________________________________________________________________________________________
12
________________________________________________________________________________________________________________
NUMBER OF
PORTFOLIOS IN
NAME, AGE, POSITION, FUND COMPLEX OTHER DIRECTORSHIPS HELD
TERMS OF OFFICE (1), AND OVERSEEN BY OUTSIDE FUND COMPLEX
LENGTH OF TIME SERVED PRINCIPAL OCCUPATION(S) DIRECTOR (2) BY DIRECTOR
________________________________________________________________________________________________________________
Robert A. Kavesh (79) Marcus Nadler Professor 60 Formerly, Director,
Director Emeritus of Finance and The Caring
Since inception Economics, New York Community (not-for-
University Stern School profit), 1997 to 2006;
of Business; formerly, formerly, Director,
Executive Secretary- DEL Laboratories,
Treasurer, American Inc. (cosmetics and
Finance Association, pharmaceuticals),
1961 to 1979. 1978 to 2004;
formerly, Director,
Apple Bank for
Savings, 1979 to
1990; formerly,
Director, Western
Pacific Industries,
Inc., 1972 to 1986
(public company).
________________________________________________________________________________________________________________
Howard A. Mileaf (70) Retired; formerly, 60 Director,
Director Vice President and Webfinancial
Since inception General Counsel, Corporation (holding
WHX Corporation company) since
(holding company), 1993 December 2002;
to 2001. formerly, Director
WHX Corporation
(holding company),
January 2002 to
June 2005; formerly,
Director, State
Theatre of New
Jersey (not-for-profit
theater), 2000 to
2005.
________________________________________________________________________________________________________________
13
________________________________________________________________________________________________________________
NUMBER OF
PORTFOLIOS IN
NAME, AGE, POSITION, FUND COMPLEX OTHER DIRECTORSHIPS HELD
TERMS OF OFFICE (1), AND OVERSEEN BY OUTSIDE FUND COMPLEX
LENGTH OF TIME SERVED PRINCIPAL OCCUPATION(S) DIRECTOR (2) BY DIRECTOR
________________________________________________________________________________________________________________
Edward I. O'Brien (78) Formerly, Member, 60 Director, Legg
Director Investment Policy Mason, Inc. (financial
Since inception Committee, Edward services holding
Jones, 1993 to 2001; company) since 1993;
President, Securities formerly, Director,
Industry Association Boston Financial
("SIA") (securities Group (real estate and
industry's representative tax shelters), 1993 to
in government relations 1999.
and regulatory matters
at the federal and
state levels), 1974 to
1992; Adviser to SIA,
November 1992 to
November 1993.
________________________________________________________________________________________________________________
William E. Rulon (74) Retired; formerly, 60 Formerly, Director,
Director Senior Vice President, Pro-Kids Golf and
Since inception Foodmaker, Inc. Learning Academy
(operator and franchiser (teach golf and
of restaurants) until computer usage to "at
January 1997. risk" children), 1998
to 2006; formerly,
Director, Prandium,
Inc. (restaurants),
March 2001 to July
2002.
________________________________________________________________________________________________________________
14
________________________________________________________________________________________________________________
NUMBER OF
PORTFOLIOS
IN FUND
NAME, AGE, POSITION, COMPLEX OTHER DIRECTORSHIPS
TERM OF OFFICE (1), AND OVERSEEN BY HELD OUTSIDE FUND
LENGTH OF TIME SERVED PRINCIPAL OCCUPATION(S) DIRECTOR(2) COMPLEX BY DIRECTOR
________________________________________________________________________________________________________________
Candace L. Straight (59) Private investor and 60 Director, Montpelier
Director consultant specializing Re (reinsurance
Since inception in the insurance company) since 2006;
industry; formerly, Director, National
Advisory Director, Atlantic Holdings
Securitas Capital Corporation (property
LLC (a global private and casualty
equity investment firm insurance company)
dedicated to making since 2004; Director,
investments in the The Proformance
insurance sector), 1998 Insurance Company
to December 2003. (property and
casualty insurance
company) since
March 2004;
formerly, Director,
Providence
Washington
Insurance Company
(property and
casualty insurance
company), December
1998 to March 2006;
formerly, Director,
Summit Global
Partners (insurance
brokerage firm), 2000
to 2005.
________________________________________________________________________________________________________________
(1) The Board of Directors shall at times be divided as equally as possible into three classes of Directors
designated Class I, Class II, and Class III. The terms of office of Class I, Class II, and Class III
Directors shall expire at the special meeting of stockholders held in 2007 and the annual meeting of
stockholders held in 2007 and 2008, respectively, and at each third annual meeting of stockholders
thereafter (except for Class I, which will expire at the annual meeting of stockholders in 2009 and at
each third annual meeting of stockholders thereafter).
(2) For funds organized in a master-feeder structure, we count the master fund and its associated feeder
funds as a single portfolio.
* Indicates a Director who is an "interested person" within the meaning of the 1940 Act. Mr. Sundman and
Mr. Rivkin are interested persons of the Fund by virtue of the fact that they are officers and/or
directors of NB Management and Managing Directors of Neuberger Berman.
15
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Securities Exchange Act of 1934, as amended
("1934 Act"), Section 30(h) of the 1940 Act and Securities and Exchange
Commission ("SEC") regulations thereunder, certain of the Fund's officers and
the Fund's Directors and portfolio managers, persons owning more than 10% of the
Fund's common stock and certain officers and directors of the Fund's investment
manager and sub-adviser are required to report their transactions in the Fund's
stock to the SEC and the NYSE. Based solely on the review by the Fund of the
copies of Forms 3, 4 and 5 under the 1934 Act received by the Fund during its
fiscal year ended October 31, 2006, the Fund does not know of any such person
who failed to report these transactions on a timely basis.
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
The Fund's Board met 13 times during the fiscal year ended October 31,
2006. Each Director attended at least 75% of the total number of meetings of the
Board and of any committee of which he or she was a member during that year.
The Board has established several standing committees to oversee particular
aspects of the Fund's management. The standing committees of the Board are
described below. The Board does not have a standing compensation committee.
AUDIT COMMITTEE. The purposes of the Fund's Audit Committee are (a) to
oversee the accounting and financial reporting processes of the Fund and its
internal control over financial reporting and, as the Committee deems
appropriate, to inquire into the internal control over financial reporting of
certain third-party service providers; (b) to oversee the quality and integrity
of the Fund's financial statements and the independent audit thereof; (c) to
oversee, or, as appropriate, assist Board oversight of, the Fund's compliance
with legal and regulatory requirements that relate to the Fund's accounting and
financial reporting, internal control over financial reporting and independent
audits; (d) to approve prior to appointment the engagement of the Fund's
independent registered public accounting firm and, in connection therewith, to
review and evaluate the qualifications, independence and performance of the
Fund's independent registered public accounting firm; (e) to act as a liaison
between the Fund's independent registered public accounting firm and the full
Board; and (f) to prepare an audit committee report as required by Item 407 of
Regulation S-K to be included in proxy statements relating to the election of
directors/trustees. The independent registered public accounting firm for the
Fund shall report directly to the Audit Committee. The Fund has adopted a
written charter for its Audit Committee. The charter of the Audit Committee is
available on NB Management's website at www.nb.com. The Audit Committee of the
Fund has delegated the authority to grant pre-approval of permissible non-audit
services and all audit, review or attest engagements of the Fund's independent
registered public accounting firm to the Chairman of the Audit Committee, and,
if the Committee Chair is not available, to any other member of the Audit
Committee.
The Audit Committee of the Fund, established in accordance with Section
3(a)(58)(A) of the 1934 Act, is composed entirely of Independent Fund Directors
who are also considered independent under the listing standards applicable to
the
16
Fund. Its members are Martha C. Goss, Howard A. Mileaf, George W. Morriss,
Cornelius T. Ryan (Chairman), Tom D. Seip and Peter P. Trapp. Members of the
Audit Committee receive additional compensation for serving on this committee.
The Report of the Audit Committee relating to the audit of Fund financial
statements for the fiscal year ended October 31, 2006 is attached hereto as
Appendix A. During the fiscal year ended October 31, 2006, the Committee met
seven times.
CLOSED-END FUNDS COMMITTEE. The Fund's Closed-End Funds Committee is
responsible for consideration and evaluation of issues specific to the Neuberger
Berman closed-end funds. Its members are George W. Morriss, Edward I. O'Brien,
Jack L. Rivkin, William E. Rulon, and Tom D. Seip. All members other than Mr.
Rivkin are Independent Fund Directors. During the fiscal year ended October 31,
2006, the Committee met once.
CONTRACT REVIEW COMMITTEE. The Contract Review Committee of the Fund is
responsible for overseeing and guiding the process by which the Independent Fund
Directors annually consider whether to continue the Fund's principal contractual
arrangements. Its members are Faith Colish (Chairwoman), Martha C. Goss, Robert
A. Kavesh, William E. Rulon and Candace L. Straight. All members are Independent
Fund Directors. During the fiscal year ended October 31, 2006, the Committee met
two times.
ETHICS AND COMPLIANCE COMMITTEE. The Ethics and Compliance Committee of the
Fund oversees: (a) the Fund's program for compliance with Rule 38a-1 under the
1940 Act and the Fund's implementation and enforcement of its compliance
policies and procedures; (b) compliance with the Fund's Code of Ethics (which
restricts the personal securities transactions, including transactions in Fund
shares, of employees, officers, and Directors), and (c) the activities of the
Fund's Chief Compliance Officer ("CCO"). The Committee shall not assume
oversight duties to the extent that such duties have been assigned by the Board
expressly to another Committee of the Board (such as oversight of internal
controls over financial reporting, which has been assigned to the Audit
Committee.) The Committee's primary function is oversight. Each investment
adviser, sub-adviser, administrator and transfer agent (collectively, "Service
Providers") is responsible for its own compliance with the federal securities
laws and for devising, implementing, maintaining and updating appropriate
policies, procedures and codes of ethics to ensure compliance with applicable
laws and regulations. The CCO is responsible for administering the Fund's
Compliance Program, including devising and implementing appropriate methods of
testing compliance by the Fund and its Service Providers. Its members are John
Cannon (Chairman), Faith Colish, C. Anne Harvey, Michael M. Knetter, and Edward
I. O'Brien. All members are Independent Fund Directors. The Board receives at
least annually a report on the compliance programs of the Fund and Service
Providers and the required annual reports on the administration of the Codes of
Ethics and the required annual certifications from the Fund, Neuberger Berman
and NB Management. During the fiscal year ended October 31, 2006, the Committee
met four times.
17
EXECUTIVE COMMITTEE. The Executive Committee of the Fund is responsible for
acting in an emergency when a quorum of the Board of Directors is not available;
the Committee has all the powers of the Board of Directors when the Board is not
in session to the extent permitted by Maryland law. Its members are John Cannon,
Robert A. Kavesh, Howard A. Mileaf, Tom D. Seip and Peter E. Sundman (Chairman).
All members except for Mr. Sundman are Independent Fund Directors. During the
fiscal year ended October 31, 2006, the Committee did not meet.
GOVERNANCE AND NOMINATING COMMITTEE. The Governance and Nominating
Committee of the Fund is responsible for: (a) considering and evaluating the
structure, composition and operation of the Board of Directors and each
committee thereof, including the operation of the annual self-evaluation by the
Board; (b) evaluating and nominating individuals to serve as Directors,
including as Independent Fund Directors, as members of committees, as Chair of
the Board and as officers of the Fund; and (c) considering and making
recommendations relating to the compensation of Independent Fund Directors and
of those officers as to whom the Board is charged with approving compensation.
The Committee met to discuss matters relating to the nomination of Class I
Directors. Its members are C. Anne Harvey (Chairwoman), Robert A. Kavesh,
Michael M. Knetter, Howard A. Mileaf and Tom D. Seip. All members are
Independent Fund Directors. During the fiscal year ended October 31, 2006, the
Committee met two times.
INVESTMENT PERFORMANCE COMMITTEE. The Investment Performance Committee of
the Fund is responsible for overseeing and guiding the process by which the
Board reviews Fund performance. Its members are Martha C. Goss, Robert A.
Kavesh, Edward I. O'Brien, Jack L. Rivkin (Vice Chairman), Cornelius T. Ryan and
Peter P. Trapp (Chairman). All members except for Mr. Rivkin are Independent
Fund Directors. During the fiscal year ended October 31, 2006, the Committee of
the Fund met two times.
PORTFOLIO TRANSACTIONS AND PRICING COMMITTEE. The Portfolio Transactions
and Pricing Committee of the Fund (a) monitors the operation of policies and
procedures reasonably designed to ensure that each portfolio holding is valued
in an appropriate and timely manner, reflecting information known to the manager
about current market conditions ("Pricing Procedures"); (b) considers and
evaluates, and recommends to the Board when the Committee deems it appropriate,
amendments to the Pricing Procedures proposed by management, counsel, the
independent registered public accounting firm and others; (c) from time to time,
as required or permitted by the Pricing Procedures, establishes or ratifies a
method of determining the fair value of portfolio securities for which market
prices are not readily available; (d) oversees the program by which the manager
seeks to monitor and improve the quality of execution for portfolio
transactions; and (e) oversees the adequacy and fairness of the arrangements for
securities lending; in each case with special emphasis on any situations in
which the Fund deals with the manager or any affiliate of the manager as
principal or agent.
18
The members of the Committee are Faith Colish, George W. Morriss, Jack L.
Rivkin (Vice Chairman), William E. Rulon, Cornelius T. Ryan and Candace L.
Straight (Chairwoman). All members except for Mr. Rivkin are Independent Fund
Directors. During the fiscal year ended October 31, 2006, the Committee met four
times.
INFORMATION REGARDING THE FUND'S PROCESS FOR NOMINATING DIRECTOR CANDIDATES
GOVERNANCE AND NOMINATING COMMITTEE CHARTER. A copy of the Governance and
Nominating Committee Charter is available to stockholders on the NB Management's
website at www.nb.com.
STOCKHOLDER COMMUNICATIONS. The Fund's Governance and Nominating Committee
will consider nominees recommended by stockholders; stockholders may send
resumes of recommended persons to the attention of Claudia A. Brandon,
Secretary, Neuberger Berman Funds, 605 Third Avenue, 21st Floor, New York, NY,
10158-0180. No nominee recommendation has been received from a stockholder
within the past 120 days.
NOMINEE QUALIFICATIONS. The Governance and Nominating Committee will
consider nominees recommended by stockholders on the basis of the same criteria
used to consider and evaluate candidates recommended by other sources. While
there is no formal list of qualifications, the Governance and Nominating
Committee considers, among other things, whether prospective nominees have
distinguished records in their primary careers, unimpeachable integrity, and
substantive knowledge in areas important to the Board's operations, such as
background or education in finance, auditing, securities law, the workings of
the securities markets, or investment advice. For candidates to serve as
independent directors, independence from the Fund's investment adviser, its
affiliates and other principal service providers is critical, as is an
independent and questioning mindset. The Committee also considers whether the
prospective candidates' workloads would allow them to attend the vast majority
of Board meetings, be available for service on Board committees, and devote the
additional time and effort necessary to keep up with Board matters and the
rapidly changing regulatory environment in which the Fund operates. Different
substantive areas may assume greater or lesser significance at particular times,
in light of the Board's present composition and the Committee's (or the Board's)
perceptions about future issues and needs.
IDENTIFYING NOMINEES. The Governance and Nominating Committee considers
prospective candidates from any reasonable source. The Committee initially
evaluates prospective candidates on the basis of their resumes, considered in
light of the criteria discussed above. Those prospective candidates that appear
likely to be able to fill a significant need of the Board would be contacted by
a Committee member by telephone to discuss the position; if there appeared to be
sufficient interest, an in-person meeting with one or more Committee members
would be arranged. If the Committee, based on the results of these contacts,
believed it had identified a viable candidate, they would air the matter with
the full group of independent Board members for input.
19
Any request by management to meet with the prospective candidate would be given
appropriate consideration. The Fund has not paid a fee to third parties to
assist in finding nominees.
DIRECTOR ATTENDANCE AT ANNUAL MEETINGS
The Fund does not have a policy on Director attendance at the annual
meeting of stockholders. Three Board members attended the 2005 annual meeting of
stockholders.
OWNERSHIP OF SECURITIES
Set forth below is the dollar range of equity securities owned by each
Director.
AGGREGATE DOLLAR RANGE
OF EQUITY SECURITIES IN ALL
REGISTERED INVESTMENT
DOLLAR RANGE OF COMPANIES OVERSEEN BY
EQUITY SECURITIES DIRECTOR IN FAMILY OF
NAME OF DIRECTOR OWNED IN THE FUND* INVESTMENT COMPANIES*
_________________________________________________________________________________________
Independent Fund Directors
_________________________________________________________________________________________
John Cannon None Over $100,000
Faith Colish $1-$10,000** Over $100,000
Martha C. Goss None $10,001-$50,000
C. Anne Harvey None $50,001-$100,000
Robert A. Kavesh None $10,001-$50,000
Michael M. Knetter None None
Howard A. Mileaf None Over $100,000
George W. Morriss None $10,001-$50,000
Edward I. O'Brien None Over $100,000
William E. Rulon None Over $100,000
Cornelius T. Ryan None $10,001-$50,000***
Tom D. Seip None Over $100,000
Candace L. Straight None Over $100,000
Peter P. Trapp None Over $100,000
_________________________________________________________________________________________
Directors who are "Interested Persons"
_________________________________________________________________________________________
Jack L. Rivkin None None
Peter E. Sundman None Over $100,000
_________________________________________________________________________________________
* Valuation as of June 28, 2007.
** Ms. Colish owns 100 shares of common stock of the Fund, constituting less
than 1% of the Fund's outstanding shares of common stock.
*** Valuation as of August 16, 2007.
20
INDEPENDENT FUND DIRECTORS' OWNERSHIP OF SECURITIES
As of May 30, 2007 no Independent Fund Director (or his/her immediate
family members) owned securities of NB Management or Neuberger Berman or
securities in an entity controlling, controlled by or under common control with
NB Management or Neuberger Berman (not including registered investment
companies).
OFFICERS OF THE FUND
The following table sets forth certain information regarding the officers
of the Fund. Except as otherwise noted, each individual has held the positions
shown in the table below for at least the last five years. The business address
of each listed person is 605 Third Avenue, New York, New York 10158. Officers of
the Fund are appointed by the Directors and serve at the pleasure of the Board.
_____________________________________________________________________________________________
POSITION AND
LENGTH OF
NAME AND AGE TIME SERVED PRINCIPAL OCCUPATION(S)
_____________________________________________________________________________________________
Andrew B. Allard (46) Anti-Money Senior Vice President, Neuberger
Laundering Berman since 2006; Deputy General
Compliance Counsel, Neuberger Berman since
Officer since 2004; formerly, Vice President,
inception Neuberger Berman, 2000 to 2005;
formerly, Associate General Counsel,
Neuberger Berman, 1999 to 2004;
Anti-Money Laundering Compliance
Officer, seventeen registered investment
companies for which NB Management
acts as investment manager and
administrator (seven since 2002, three
since 2003, four since 2004, one since
2005 and two since 2006).
_____________________________________________________________________________________________
Michael J. Bradler (37) Assistant Vice President, Neuberger Berman since
Treasurer 2006; Employee, NB Management since
since 2005 1997; Assistant Treasurer, seventeen
registered investment companies
for which NB Management acts as
investment manager and administrator
(fifteen since 2005 and two since 2006).
_____________________________________________________________________________________________
21
_____________________________________________________________________________________________
POSITION AND
LENGTH OF
NAME AND AGE TIME SERVED PRINCIPAL OCCUPATION(S)
_____________________________________________________________________________________________
Claudia A. Brandon (50) Secretary Senior Vice President, Neuberger
since Berman since 2007; Vice President-
inception Mutual Fund Board Relations, NB
Management since 2000 and Assistant
Secretary since 2004; formerly,
Vice President, Neuberger Berman,
2002 to 2006 and Employee since
1999; Secretary, seventeen registered
investment companies for which NB
Management acts as investment manager
and administrator (three since 1985,
four since 2002, three since 2003, four
since 2004, one since 2005 and two since
2006).
_____________________________________________________________________________________________
Robert Conti (51) Vice Managing Director, Neuberger Berman
President since 2007; formerly, Senior Vice
since President, Neuberger Berman, 2003
inception to 2006; formerly, Vice President,
Neuberger Berman, 1999 to 2003;
Senior Vice President, NB Management
since 2000; Vice President, seventeen
registered investment companies
for which NB Management acts as
investment manager and administrator
(three since 2000, four since 2002, three
since 2003, four since 2004, one since
2005 and two since 2006).
_____________________________________________________________________________________________
Brian J. Gaffney (54) Vice Managing Director, Neuberger Berman
President since 1999; Senior Vice President, NB
since Management since 2000; Vice President,
inception seventeen registered investment
companies for which NB Management
acts as investment manager and
administrator (three since 2000, four
since 2002, three since 2003, four since
2004, one since 2005 and two since
2006).
_____________________________________________________________________________________________
22
_____________________________________________________________________________________________
POSITION AND
LENGTH OF
NAME AND AGE TIME SERVED PRINCIPAL OCCUPATION(S)
_____________________________________________________________________________________________
Maxine L. Gerson (56) Chief Legal Senior Vice President, Neuberger
Officer since Berman since 2002; Deputy General
2005 (only Counsel and Assistant Secretary,
for purposes Neuberger Berman since 2001; Senior
of sections Vice President, NB Management since
307 and 2006; Secretary and General Counsel,
406 of the NB Management since 2004; Chief
Sarbanes- Legal Officer (only for purposes of
Oxley Act of sections 307 and 406 of the Sarbanes-
2002) Oxley Act of 2002), seventeen registered
investment companies for which NB
Management acts as investment manager
and administrator (fifteen since 2005
and two since 2006).
_____________________________________________________________________________________________
Sheila R. James (42) Assistant Assistant Vice President, Neuberger
Secretary Berman since 2007 and Employee since
since 1999; Assistant Secretary, seventeen
inception registered investment companies
for which NB Management acts as
investment manager and administrator
(seven since 2002, three since 2003, four
since 2004, one since 2005 and two since
2006).
_____________________________________________________________________________________________
Kevin Lyons (52) Assistant Employee, Neuberger Berman since
Secretary 1999; Assistant Secretary, seventeen
since 2003 registered investment companies
for which NB Management acts as
investment manager and administrator
(ten since 2003, four since 2004, one
since 2005 and two since 2006).
_____________________________________________________________________________________________
23
_____________________________________________________________________________________________
POSITION AND
LENGTH OF
NAME AND AGE TIME SERVED PRINCIPAL OCCUPATION(S)
_____________________________________________________________________________________________
John M. McGovern (37) Treasurer Senior Vice President, Neuberger
and Principal Berman since 2007; formerly, Vice
Financial President, Neuberger Berman, 2004 to
and 2006; Employee, NB Management since
Accounting 1993; Treasurer and Principal Financial
Officer since and Accounting Officer, seventeen
2005; prior registered investment companies
thereto, for which NB Management acts as
Assistant investment manager and administrator
Treasurer (fifteen since 2005 and two since
since 2006); formerly, Assistant Treasurer,
inception fifteen registered investment companies
for which NB Management acts as
investment manager and administrator,
2002 to 2005.
_____________________________________________________________________________________________
Frank Rosato (36) Assistant Vice President, Neuberger Berman since
Treasurer 2006; Employee, NB Management since
since 2005 1995; Assistant Treasurer, seventeen
registered investment companies
for which NB Management acts as
investment manager and administrator
(fifteen since 2005 and two since 2006).
_____________________________________________________________________________________________
Frederic B. Soule (61) Vice Senior Vice President, Neuberger
President Berman since 2003; formerly, Vice
since President, Neuberger Berman, 1999
inception to 2002; Vice President, seventeen
registered investment companies
for which NB Management acts as
investment manager and administrator
(three since 2000, four since 2002, three
since 2003, four since 2004, one since
2005 and two since 2006).
_____________________________________________________________________________________________
24
_____________________________________________________________________________________________
POSITION AND
LENGTH OF
NAME AND AGE TIME SERVED PRINCIPAL OCCUPATION(S)
_____________________________________________________________________________________________
Chamaine Williams Chief Senior Vice President, Neuberger
(36) Compliance Berman since 2007; Chief Compliance
Officer since Officer, NB Management since 2006; Senior
2005 Vice President, Lehman Brothers Inc. since
2007; formerly, Vice President, Lehman
Brothers Inc., 2003 to 2006; Chief Compliance
Officer, seventeen registered investment
companies for which NB Management acts as
investment manager and administrator (sixteen
since 2005 and one since 2006); Chief Compliance
Officer, Lehman Brothers Asset Management Inc.
since 2003; Chief Compliance Officer, Lehman
Brothers Alternative Investment Management
LLC since 2003; formerly, Vice President,
UBS Global Asset Management (US) Inc.
(formerly, Mitchell Hutchins Asset Management,
a wholly-owned subsidiary of PaineWebber Inc.),
1997 to 2003.
_____________________________________________________________________________________________
COMPENSATION OF DIRECTORS
The following table sets forth information concerning the compensation of
the Fund's Directors. The Fund does not have any pension or retirement plan for
its Directors. For the fiscal year ended October 31, 2006, the Directors
received the amounts set forth in the following table from the Fund. Since April
2005, the Directors have agreed to forego their directors' fees for an
indefinite period to help offset expenses incurred by the Fund in resisting the
unsolicited partial tender offer launched by two trusts advised by Stewart R.
Horejsi. For the calendar year ended December 31, 2006, the Directors received
the compensation set forth in the following table for serving as Trustees or
Directors of investment companies in the "Fund Complex." Each officer and
Director who is a director, officer or employee of NB Management, Neuberger
Berman or any entity controlling, controlled by or under common control with NB
Management or Neuberger Berman serves as a Director and/or officer without any
compensation from the Fund.
25
TABLE OF COMPENSATION
TOTAL COMPENSATION FROM REGISTERED
COMPENSATION FROM INVESTMENT COMPANIES IN THE NEUBERGER
NAME AND POSITION THE FUND FOR FISCAL BERMAN FUND COMPLEX PAID TO DIRECTORS
WITH THE FUND YEAR ENDED 10/31/06 FOR CALENDAR YEAR ENDED 12/31/06
_______________________________________________________________________________________________
Independent Fund Directors*
_______________________________________________________________________________________________
John Cannon
Director $0 $109,719
Faith Colish
Director $0 $102,864
C. Anne Harvey
Director $0 $102,864
Robert A. Kavesh
Director $0 $102,864
Michael M. Knetter**
Director $0 $ 6,077
Howard A. Mileaf
Director $0 $109,719
George W. Morriss**
Director $0 $ 6,375
Edward I. O'Brien
Director $0 $102,864
William E. Rulon
Director $0 $102,864
Cornelius T. Ryan
Director $0 $113,645
Tom D. Seip
Lead Independent
Director $0 $128,341
Candace L. Straight
Director $0 $102,864
Peter P. Trapp
Director $0 $102,372
_______________________________________________________________________________________________
Directors who are "Interested Persons"
_______________________________________________________________________________________________
Jack L. Rivkin
Director and President $0 $0
Peter E. Sundman
Director, Chairman of the
Board and Chief Executive
Officer $0 $0
_______________________________________________________________________________________________
* Ms. Goss joined the Board in June 2007. She did not receive any compensation from the Fund for its fiscal year ended October 31,
2006 or from the Neuberger Berman Fund Complex for the calendar year ended December 31, 2006.
** Dr. Knetter and Mr. Morriss joined the Board in February 2007. They served on the board of another fund managed by an affiliate
of NB Management during part of 2006.
26
VOTE REQUIRED
Faith Colish, Michael M. Knetter, Cornelius T. Ryan, Peter P. Trapp and
Peter E. Sundman each must be elected by the holders of a plurality of the votes
cast of the Fund's outstanding Common Shares and Preferred Shares, voting
together. Unless a contrary specification is made on executed proxy card(s),
shares will be voted FOR each Nominee.
THE BOARD OF DIRECTORS OF THE FUND UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"
EACH NOMINEE.
PROPOSAL NO. 2:
APPROVAL OF A PROPOSAL TO LIQUIDATE AND DISSOLVE THE FUND,
AS SET FORTH IN THE PLAN OF LIQUIDATION AND DISSOLUTION
BACKGROUND
Your Board of Directors is proposing that the Fund be liquidated and
dissolved. As you know, beginning in September 2004, an unsolicited partial
tender offer has been made to holders of Common Shares, initially by two trusts,
and more recently by a single trust, Lola Brown Trust No. 1B, advised by Stewart
R. Horejsi (the "Horejsi Trust"). The Board of Directors determined that this
offer, if successful, would be harmful to the Fund's stockholders. Accordingly,
the Board pursued several defensive measures, including litigation. In an
opinion issued in May 2007, the United States District Court for the District of
Maryland decided most of the pending claims in that litigation and upheld the
Fund's principal takeover defenses, including, among other things, the Fund's
adoption of "poison pills" and the Fund's decision to opt into the MCSAA. As
discussed below, the Horejsi Trust may revise the terms of its tender offer to
address several concerns raised by the Board and, if so revised and consummated
on a date sufficiently in advance of September 27, 2007, the Board may determine
to withdraw its liquidation proposal.
The Board continues to believe that it has been in the stockholders' best
interest to defend against the takeover on its original terms. The partial
nature of the tender offer did not afford all stockholders the opportunity to
exit the Fund, despite the significant changes to, among other things, the
Fund's investment objective being proposed by the Horejsi Trust. The Horejsi
Trust, for example, indicated that, if successful in its bid, it would consider
naming Boulder Investment Advisers LLC ("Boulder") as the investment adviser to
the Fund as well as taking the Fund in a new direction. The Board has observed
that, since the announcement of the tender offer, the two closed-end funds
advised by Boulder - Boulder Growth & Income Fund, Inc. ("BIF") and Boulder
Total Return Fund, Inc. ("BTF" and, together, the "Boulder Funds") - have
incurred markedly higher advisory fees and higher overall expense ratios. The
advisory fees paid to Boulder and its affiliates are 1.25% of each Boulder
Fund's average monthly net assets (including the principal amount of leverage,
if any). In contrast, the Fund's
27
normal stated management fee is 0.60%(2) of its average daily managed assets
(including assets attributable to leverage). In addition, the Board continues to
believe that the original price offered by the Horejsi Trust, which initially
equaled the last sale price per Common Share reported by the NYSE the day before
the tender offer and was lower than the net asset value per Common Share and has
been, since September 2004, below the net asset value per Common Share, was not
adequate.
At regular intervals since the announcement of the tender offer, the Board
has considered, among other things, the terms, conditions and any changes in the
Horejsi Trust's tender offer, the potential impact on the Fund and its
stockholders of the actions proposed by the Horejsi Trust in its tender offer
documents, the performance of the Fund, both in absolute terms and relative to
the funds managed by Mr. Horejsi, ways to minimize the costs incurred in
defending the Fund and its stockholders, and alternatives to the course of
action that the Board was pursuing. Throughout this process, the Fund's
independent Directors had the opportunity to confer separately from management
and were represented by experienced 1940 Act counsel, and the Fund was advised
by experienced take-over counsel.
Defending the Fund and its stockholders against the tender offer and
related matters has involved significant time and effort but the Board and NB
Management have taken several measures to minimize the impact of the costs of
these efforts: NB Management and Neuberger Berman have waived all fees since
September 2004; the Fund's Directors have waived their Directors' fees; the Fund
has sought and received insurance proceeds to offset litigation costs incurred
in defending claims by the Horejsi Trust and another party in a related lawsuit;
the Fund conducted a self-tender offer in October 2004, as part of the Fund's
defense against the tender offer, which had an accretive positive impact on the
Fund; and the Fund issued Common Shares in a private placement to Neuberger
Berman to raise funds in connection with the self-tender. As of June 30, 2007,
these measures have offset all but approximately 7.5% of the expenses incurred
in defending the Fund and its stockholders, representing approximately $0.16 per
Common Share.
The Board, however, has observed that the Fund's stockholder base has
evolved since the announcement of the tender offer to include a greater
concentration of institutional investors interested in realizing full net asset
value for their Common Shares through open-ending or liquidating the Fund. The
Board has considered the views of these investors. One of these investors
instituted legal action against the Fund in an effort to impose an agenda upon
the Fund not supported by the Fund's Board. The Fund has prevailed on all the
motions made in that litigation and, as described below, has since settled the
litigation.
Notwithstanding the Fund's success in resisting the Horejsi Trust's tender
offer and the litigation initiated against it, the Board has come to the
conclusion that the Fund's small size and current stockholder composition leave
it vulnerable to difficulties and to a risk of mounting expenses in the future.
Over several meetings, the Board
(2) Due to a contractual fee waiver entered into at the inception of the Fund,
the management fee actually paid by the Fund when the tender offer commenced
was 0.20% of average daily managed assets.
28
carefully evaluated alternatives to liquidation but determined that liquidation
was the best option available for the Fund and its stockholders. The potential
courses of action the Board considered include, among other things, converting
to an open-end fund, converting to an interval fund, converting to an
exchange-traded fund, making a onetime self tender offer to give all
stockholders a chance to redeem at net asset value, converting to a non-fund
structure and attempting to continue the Fund as it is. The Board considered the
projected cost of each option and other information provided by management,
including management's analysis of the impact of such options on various factors
affecting stockholders and their investments.
The Board noted that converting the Fund to an open-end structure would
require that the Fund redeem all Preferred Shares and offer all holders of
Common Shares the right to redeem at any time at a price based on net asset
value - steps that would substantially reduce the size of the Fund and thus
increase the per-share costs for the remaining stockholders to levels that are
likely to be unacceptable. Furthermore, the complete redemption of the Preferred
Shares and ongoing redemption of Common Shares would require the Fund to bear
considerable transaction costs and recognize substantial net capital gains,
which indirectly would be borne and recognized (through capital gain
distributions) by all holders of Common Shares, whether or not they chose to
redeem. These significant changes would also disrupt the Fund's portfolio
strategy.
Similarly, the Board determined that converting the Fund to an interval
fund, which would make periodic self-tenders, would not be in the stockholders'
best interests because the substantial number of Common Shares held by
institutional investors would likely mean that the Fund's self-tenders would be
fully subscribed until those investors were satisfied, again reducing the size
of the Fund to a point where fixed costs would likely produce an unacceptable
level of per-share expenses. The Board also noted that most interval funds are
not exchange listed, in part to prevent arbitrageurs from buying Common Shares
at a discount on the exchange and selling into the funds' periodic self-tender
offers. However, delisting reduces the liquidity available to all investors.
Furthermore, although interval funds are able to use leverage just as are other
closed-end funds, the expected shrinkage of the Fund in the early self-tenders
and the periodic need for cash in connection with ongoing repurchases would
introduce considerable uncertainty into the leverage process.
The Board also determined that, under present SEC requirements, converting
the Fund to an exchange-traded fund would involve significant changes to the
Fund's investment strategy, eliminate active management of the portfolio, and
require the Fund to terminate its program of leverage through Preferred Shares.
Finally, the Board is concerned that a one-time self tender offer may increase
stockholder costs due to shrinkage of Fund assets and may disrupt the Fund's
leverage and investment programs.
The Board considered that liquidation would require the Fund to realize and
distribute net capital gain that some holders of Common Shares might not have
intended to realize at the present time. As of August 10, 2007, we estimate the
gain to total approximately $42,287,637, or approximately $10.17 per Common
Share. The Board
29
also considered whether liquidation of the Fund's portfolio could have an
adverse effect on the prices of its portfolio securities, but determined that
any such effect would not likely be material because the Fund's average holdings
in each issuer are relatively small. The Board was aware that upon liquidation
both management's and the Board members' voluntary agreements to waive their
fees to offset certain expenses that have been incurred to defend against the
tender offer and related matters would terminate. On the other hand, the
liquidation of assets and dissolution of the Fund will have the effect of
permitting the Fund's stockholders to invest the distributions to be received by
them upon the Fund's liquidation in investment vehicles of their own choice.
Since announcing liquidation, the Board received several inquiries from
multiple sources regarding alternatives to liquidation, including a suggestion
to replace the adviser, which would have resulted in a new investment strategy
and a partial tender offer, and a proposal by the Horejsi Trust to revise the
terms of its existing tender offer. The Board delayed the mailing of the proxy
statement and the date of the stockholder meeting in order to give each
alternative thorough consideration.
POSSIBLE REVISED TENDER OFFER
The Fund, the Horejsi Trust and related defendants are currently engaged in
settlement discussions to fully resolve their ongoing litigation. As part of the
contemplated settlement, the Board anticipates that the Horejsi Trust may amend
its existing tender offer to be significantly more favorable to stockholders
than its initial offer. Should that occur, the Board intends to cause the Fund
to POSTPONE UNTIL SEPTEMBER 27, 2007 THE VOTE ON LIQUIDATING AND DISSOLVING THE
FUND. If such a revised tender offer is made and closes (which will occur only
if the Horejsi Trust would thereby own more than 50% of the outstanding shares
of the Fund) on a date sufficiently in advance of September 27, 2007 for the
Horejsi Trust to demonstrate the required ownership ("Potential Closing Date"),
the Fund would expect to withdraw the proposal to vote on liquidation and
abandon the Plan. Conversely, if the revised tender offer has not closed by the
Potential Closing Date, the liquidation vote would be conducted at the adjourned
meeting on September 27, 2007.
If a revised tender offer is made, holders of Common Shares will receive
tender offer documents from the Horejsi Trust regarding the terms of the tender
offer and should review them carefully.
Absent a tender offer on terms acceptable to the Board successfully closing
by the Potential Closing Date, the Board has unanimously concluded that the
liquidation and subsequent dissolution of the Fund is advisable and in the best
interests of the Fund's stockholders. This decision is based on the foregoing
considerations and other relevant factors, and despite the Fund's performance
record and the Board's belief that the Fund has offered stockholders a
significant opportunity to invest in income-producing equity securities of real
estate companies.
30
SUMMARY OF PLAN OF LIQUIDATION AND DISSOLUTION
The Board, including all of the Directors who are not "interested persons"
(as that term is described in the 1940 Act) of the Fund, has approved the Plan
of Liquidation and Dissolution. The following summary of the Plan does not
purport to be complete and is subject in all respects to the provisions of, and
is qualified in its entirety by reference to, the Plan, a copy of which is
attached hereto as Appendix B. Stockholders are urged to read the Plan in its
entirety.
EFFECTIVE DATE OF THE PLAN AND CESSATION OF THE FUND'S ACTIVITIES AS AN
INVESTMENT COMPANY. The Plan will become effective only upon its approval by the
holders of a majority of the outstanding Shares of the Fund entitled to be cast
thereon (the "Effective Date"). As soon as practicable after this event, (i) the
Fund will redeem the Preferred Shares in accordance with the Fund's Articles
Supplementary Creating and Fixing the Rights of Auction Preferred Shares, Series
A ("Articles Supplementary"), and pay all distributions due to Preferred Shares,
(ii) the Fund will cease its business as an investment company, (iii) the Fund's
affairs will be wound up as the Board authorizes and directs and (iv) the Fund
will liquidate and dissolve in accordance with the Plan and Maryland law
(including filing Articles of Dissolution) and will file a Form N-8F to
de-register under the 1940 Act. The Fund will, nonetheless, continue to meet the
source of income, asset diversification and distribution requirements applicable
to regulated investment companies through the last day of its final taxable
year. (See "Federal Income Tax Consequences" below.)
LIQUIDATING DISTRIBUTIONS, CLOSING OF BOOKS AND RESTRICTION ON TRANSFER OF
SHARES. The Plan provides that, as soon as reasonably practicable after (1)
receiving stockholder approval, (2) paying or adequately providing for the
payment of the Fund's charges, taxes, expenses, and liabilities, whether due,
accrued, or anticipated, as the Board determines including all dividends due to
Preferred Shares, (3) redeeming the Preferred Shares in accordance with the
Fund's Articles Supplementary, and (4) receiving releases, indemnities, and
refunding agreements, which the Board deems necessary for its protection, the
Fund's remaining assets will be converted to cash, which will be distributed in
one or more (if necessary) distributions to its stockholders of record as of the
Effective Date (each, a "Stockholder") in redemption and cancellation of their
Common Shares or to the Trust (as defined below). At the time such distribution
(or, if there is more than one distribution, the last such distribution) is
made, each Stockholder's interest in the Fund will be fixed and its books will
be closed. Thereafter, unless the books of the Fund are reopened because the
Plan cannot be carried into effect under the laws of the State of Maryland or
otherwise, the Stockholders' respective interests in the Fund's assets will not
be transferable and the Fund's Common Shares will cease to be traded on the
NYSE.
The amount of the liquidating distribution(s) will be made to each
Stockholder who holds Common Shares in proportion to the number of such Common
Shares held thereby at that time.
31
If the Board, in its discretion, determines that it is necessary or prudent
to withhold cash from the distribution(s) to Stockholders pursuant to the
foregoing paragraphs in an amount that the Board determines is reasonably
sufficient to discharge (i) any liabilities that may result from any ongoing
litigation involving the Fund that remains unsettled at the initial distribution
date, (ii) unpaid liabilities of the Fund on its books on such date and (iii)
any other liabilities of the Fund the Board or the officers of the Fund
reasonably determine to exist that are not on its books on such date, then such
amount of cash shall be distributed to the trustees of a liquidating trust for
the benefit of the Stockholders ("Trust"); the Board currently estimates that
$500,000 will be distributed to the Trust. The expenses of the Trust will be
charged against the assets therein. As soon as possible after the conclusion, by
court order, settlement, or otherwise, of any such litigation and payment of any
amount required thereby and payment of the liabilities described in clauses (ii)
and (iii), the remaining assets in the Trust, if any, will be distributed to the
Stockholders in the same proportion as distributions pursuant to the foregoing
paragraphs (provided that distributions will be made to the Stockholders who
hold Preferred Shares only if, and to the extent, the liquidation preference
applicable to those Shares exceeds the amount(s) previously distributed pursuant
to the foregoing description).
EXPENSES OF LIQUIDATION AND DISSOLUTION. Except for the expenses of the
Trust (as discussed above), the Fund will bear all the expenses incurred in
connection with carrying out the Plan, including the cost of liquidating its
assets and dissolving its existence. The Fund does not expect these costs to
exceed one half of one percent of net asset value.
AMENDMENT OR ABANDONMENT OF THE PLAN. The Board may authorize variations
from, or amendments of, the provisions of the Plan (other than the terms of the
liquidating distribution(s)) that it deems necessary or appropriate to effect
the distribution(s) and the Fund's liquidation and dissolution.
FEDERAL INCOME TAX CONSEQUENCES
The following is only a general summary of certain federal income tax
consequences of the Fund's liquidation and dissolution pursuant to the Plan and
is limited in scope. It is based on current provisions of the Internal Revenue
Code of 1986, as amended ("Code"), the regulations promulgated thereunder,
judicial decisions and administrative pronouncements, all of which are subject
to change, possibly with retroactive effect. The Fund has not sought a ruling
from the Internal Revenue Service ("IRS") with respect to the consequences of
its liquidation and dissolution. The statements below, therefore, are not
binding on the IRS, and there can be no assurance that the IRS will concur with
this summary or that the federal income tax consequences to any stockholder of
receiving a liquidating distribution will be as set forth below. Neither state
nor local tax consequences thereof are discussed herein, and implementing the
Plan may affect certain stockholders differently, depending on their particular
tax situations. Stockholders thus should consult their own tax advisers
regarding the application of the federal income tax law to their particular
situation and the state, local, foreign and other tax consequences of the Fund's
liquidation.
32
The Fund currently qualifies, and expects to continue to qualify during the
liquidation period, as a regulated investment company under the Code ("RIC"). It
therefore expects to not be taxed on any ordinary income it earns or any of the
net capital gains it realizes from the sale of its assets pursuant to its
liquidation. In the unlikely event that the Fund loses its status as a RIC
during the liquidation period, it would be subject to federal income tax.
The liquidating distribution(s) received by a stockholder who is a "United
States person" (as defined in the Code) should be treated as payment in exchange
for the stockholder's Shares. As a result, each such stockholder would recognize
gain or loss in an amount equal to the difference between the stockholder's
adjusted tax basis in his or her Shares and the liquidating distribution(s) he
or she receives. If the Shares are held as capital assets, such gain or loss
generally would be characterized as capital gain or loss, which would be
long-term capital gain - taxable to individual stockholders at a maximum federal
income tax rate of 15% - or loss if the Shares have been held for more than one
year. Corporate stockholders should note that no preferential federal income tax
rate applies to a corporation's net capital gain (i.e., the excess of net
long-term capital gain over net short-term capital loss), so all income and gain
a corporate stockholder recognizes pursuant to the Fund's liquidation (including
any described in the following paragraph) will be subject to tax at the same
federal income tax rate.
Under certain circumstances, such as if the Fund becomes a personal holding
company for federal income tax purposes during the liquidation period, the Fund
might be required to designate some parts of the liquidating distribution(s) as
ordinary and/or capital gain dividends to maintain its status in liquidation as
a RIC. In that event, the liquidating distribution(s) a stockholder receives
could consist, for those purposes, of one or more of the following three
elements: (1) a capital gain dividend (designated as such) to the extent of any
undistributed net capital gain the Fund recognizes during its final taxable
year, taxable to the stockholder as long-term capital gain; (2) an ordinary
income dividend to the extent of the Fund's undistributed net investment income
(over and above expenses) earned and the excess of net short-term capital gain
over net long-term capital loss realized, during that year, taxable as ordinary
income; and (3) a distribution treated as in payment for the stockholder's
Shares, taxable as described above. The Fund will notify its stockholders as to
the portions, if any, of the liquidating distribution(s) that constitute a
capital gain dividend and an ordinary income dividend, respectively, pursuant to
the foregoing within 60 days after the close of 2007.
The Fund must withhold and remit to the U.S. Treasury 28% of liquidating
distributions (regardless of the extent to which gain or loss may be realized)
otherwise payable to any individual or certain other non-corporate stockholder
who fails to certify that the taxpayer identification number furnished to the
Fund is correct or who furnishes an incorrect number (together with the
withholding described in the next sentence, "backup withholding"). If any part
of the liquidating distribution(s) is treated as ordinary and/or capital gain
dividends pursuant to the preceding paragraph, withholding at that rate also
would be required from such part that is otherwise payable to such a stockholder
who is subject to backup withholding for any other reason.
33
Backup withholding is not an additional tax, and any amounts so withheld may be
credited against a stockholder's federal income tax liability or refunded.
As noted, the Horejsi Trust may present to holders of Common Shares a
revised tender offer on significantly more favorable terms than it has in the
past. This tender offer would provide an alternative to liquidation for such
stockholders. If the Horejsi Trust revises its tender offer, holders of Common
Shares should review the Horejsi Trust's tender offer documents, which will be
filed with the SEC, regarding the income tax consequences of tendering to the
Horejsi Trust.
IMPACT OF THE PLAN ON THE FUND'S STATUS UNDER THE 1940 ACT
The Plan provides that, as soon as practicable after the Effective Date,
the Fund will cease doing business as a registered investment company and will
apply for deregistration under the 1940 Act. Accordingly, a vote in favor of the
Plan will constitute a vote in favor of such a course of action. It is expected
that the SEC will issue an order approving the deregistration of the Fund if the
Fund is no longer doing business as an investment company, although there can be
no assurance given that the SEC will issue such an order. Until the Fund's
deregistration becomes effective, the Fund, as a registered investment company,
will continue to be subject to and will comply with the 1940 Act.
PROCEDURE FOR DISSOLUTION UNDER MARYLAND LAW
After the Effective Date and following satisfaction of the requirements of
the MGCL, Articles of Dissolution will be executed, acknowledged and filed in
accordance with the MGCL.
Upon the filing and acceptance for recording of such Articles of
Dissolution, the Fund will be legally dissolved, but thereafter the Fund will
continue to exist for the purpose of paying, satisfying, and discharging any
existing debts or obligations, collecting and distributing its assets, and doing
all other acts required to liquidate and wind up its business and affairs, but
not for the purpose of continuing the business for which the Fund was organized.
The Fund's Board of Directors will be the trustees of its assets for purposes of
liquidation after the acceptance of the Articles of Dissolution, unless and
until a court appoints a receiver. The Director-trustees will be vested in their
capacity as trustees with full title to all the assets of the Fund.
LITIGATION SETTLEMENT
The Fund has entered into an agreement settling litigation filed by Full
Value Partners, L.P. ("Full Value") in the District Court of Maryland in October
2004 against the Fund and certain of its directors relating to takeover defenses
adopted by the Fund in September 2004 to defend against a hostile tender offer
by entities affiliated with Stuart R. Horejsi. The parties have entered into the
settlement to eliminate the burden, expense, and distraction of further
litigation. As part of the agreement, Full Value and other entities affiliated
with investor Phillip Goldstein have agreed that, at the
34
Meeting and any adjournments thereof, they will vote their Fund shares on each
matter in accordance with the Board of Directors' recommendation.
The Fund Board is currently engaged in settlement discussions with the
Horejsi Trust and related defendants to resolve their ongoing litigation,
described in part above.
VOTE REQUIRED
Approval of the Plan requires the affirmative vote of at least a majority
of the Fund's outstanding Common Shares and Preferred Shares entitled to vote on
the matter, voting together. Unless a contrary specification is made on executed
proxy card(s), shares will be voted FOR approval of the Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"
THE PROPOSAL TO LIQUIDATE AND DISSOLVE THE FUND.
INFORMATION ON THE FUND'S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Ernst & Young LLP ("Ernst & Young") audited the financial statements for
the fiscal year ended October 31, 2006 for the Fund. Ernst & Young, 200
Clarendon Street, Boston, MA 02116, serves as the independent registered public
accounting firm for the Fund and provides audit services, tax compliance
services and assistance and consultation in connection with the review of the
Fund's filings with the SEC. In the opinion of the Audit Committee, the services
provided by Ernst & Young are compatible with maintaining the independence of
the Fund's independent registered public accounting firm. The Board of Directors
of the Fund has selected Ernst & Young as the independent registered public
accounting firm for the Fund for the fiscal year ending October 31, 2007. Ernst
& Young has served as the Fund's independent registered public accounting firm
since the Fund's inception. Ernst & Young has informed the Fund that it has no
material direct or indirect financial interest in the Fund.
Representatives of Ernst & Young are not expected to be present at the
Meeting but have been given the opportunity to make a statement if they so
desire and will be available should any matter arise requiring their presence.
AUDIT FEES
The aggregate fees billed by Ernst & Young for the audit of the annual
financial statements of the Fund for the fiscal years ended October 31, 2006 and
October 31, 2005 and for the review of the financial statements included in the
Fund's regulatory filings were $33,500 and $31,250, respectively, for the fiscal
years ended October 31, 2006 and October 31, 2005.
AUDIT-RELATED FEES
The aggregate audit-related fees billed by Ernst & Young for the fiscal
years ended October 31, 2006 and October 31, 2005, for performing agreed-upon
procedures for the Preferred Shares of the Fund, were $6,250 and $6,000,
respectively.
35
TAX FEES
The aggregate fees billed by Ernst & Young for the fiscal years ended
October 31, 2006 and October 31, 2005, for tax compliance, tax advice, and tax
planning, were $9,500 and $8,700, respectively.
ALL OTHER FEES
Aggregate fees billed by Ernst & Young during the fiscal years ended
October 31, 2006 and October 31, 2005, for other services provided to the Fund,
were $0 and $0, respectively.
Aggregate fees billed by Ernst & Young during the fiscal years ended
October 31, 2006 and October 31, 2005, for non-audit services to the Fund, NB
Management and Neuberger Berman, were $141,750 and $175,350, respectively.
The Audit Committee has considered these fees and the nature of the
services rendered, and has concluded that they are compatible with maintaining
the independence of Ernst & Young. The Audit Committee did not approve any of
the services described above pursuant to the "de minimis exceptions" set forth
in Rule 2-01(c)(7)(i)(C) and Rule 2-01(c)(7)(ii) of Regulation S-X. Ernst &
Young did not provide any audit-related services, tax services or other
non-audit services to NB Management or Neuberger Berman that the Audit Committee
was required to approve pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X.
OTHER MATTERS
No business, other than as set forth above, is expected to come before the
Meeting. Should any other matters requiring a vote of stockholders properly come
before the Meeting, the persons named in the enclosed proxy will vote thereon in
accordance with their best judgment in the interests of the Fund.
STOCKHOLDER PROPOSALS
The Fund's Bylaws require stockholders wishing to nominate Directors or
make proposals to be voted on at the Fund's annual meeting to provide notice of
the nominations or proposals in writing delivered or mailed by first class
United States mail, postage prepaid, to the Secretary of the Fund. If the Fund
holds an annual meeting in 2007, the Secretary must receive any nomination or
proposal sought to be considered at that meeting no later than September 17,
2007 and such nomination or proposal must satisfy the other requirements of the
federal securities laws. Timely submission of a nomination or proposal does not
guarantee that such nomination or proposal will be included. The chairperson of
the Meeting may refuse to acknowledge a nomination or other proposal by a
stockholder that is not made in the manner described above.
36
NOTICE TO BANKS, BROKER-DEALERS AND VOTING
TRUSTEES AND THEIR NOMINEES
Please advise the Fund, c/o its Secretary, at 605 Third Avenue New York,
New York 10158, whether other persons are beneficial owners of shares for which
proxies are being solicited and, if so, the number of copies of the Proxy
Statement you wish to receive in order to supply copies to such beneficial
owners of shares.
By order of the Board of Directors,
/s/ Claudia A. Brandon
Claudia A. Brandon,
Secretary
Dated: August 16, 2007
37
APPENDIX A
AUDIT COMMITTEE REPORT
NEUBERGER BERMAN DIVIDEND ADVANTAGE FUND INC.
NEUBERGER BERMAN INCOME OPPORTUNITY FUND INC.
NEUBERGER BERMAN INTERMEDIATE MUNICIPAL FUND INC.
NEUBERGER BERMAN CALIFORNIA INTERMEDIATE MUNICIPAL FUND INC.
NEUBERGER BERMAN NEW YORK INTERMEDIATE MUNICIPAL FUND INC.
NEUBERGER BERMAN REAL ESTATE INCOME FUND INC.
NEUBERGER BERMAN REAL ESTATE SECURITIES INCOME FUND INC.
NEUBERGER BERMAN REALTY INCOME FUND INC.
(COLLECTIVELY, THE "FUNDS")
The Audit Committees of the Boards of Directors of the Funds operate
pursuant to a Charter, which sets forth the role of an Audit Committee in a
Fund's financial reporting process. Pursuant to the Charter, the role of the
Audit Committee is to oversee the Fund's accounting and financial reporting
processes and the quality and integrity of the Fund's financial statements and
the independent audit of those financial statements. The Committee is
responsible for, among other things, recommending the initial and ongoing
engagement of the independent registered public accounting firm and reviewing
the scope and results of each Fund's annual audit with the Fund's independent
registered public accounting firm. Fund management is responsible for the
preparation, presentation and integrity of the Funds' financial statements and
for the procedures designed to assure compliance with accounting standards and
applicable laws and regulations. The independent registered public accounting
firm for the Funds is responsible for planning and carrying out proper audits
and reviews.
The Audit Committees met on December 12, 2006 to review each Fund's audited
financial statements for the fiscal year ended October 31, 2006. In performing
this oversight function, the Audit Committees have reviewed and discussed the
audited financial statements with the Funds' management and their independent
registered public accounting firm, Ernst & Young LLP ("E&Y"). The Audit
Committees have discussed with E&Y the matters required to be discussed by
Statement on Auditing Standards No. 61, as amended, and have received the
written disclosures and the letter from E&Y required by Independence Standards
Board Standard No. 1. The Audit Committees also have discussed with E&Y its
independence.
The members of the Audit Committees are not employed by the Funds as
experts in the fields of auditing or accounting and are not employed by the
Funds for accounting, financial management or internal control purposes. Members
of the Audit Committees rely without independent verification on the information
provided and the representations made to them by management and E&Y.
A-1
Based upon this review and related discussions, and subject to the
limitation on the role and responsibilities of the Audit Committee set forth
above and in the Charter, the Audit Committees recommended to the Board of
Directors that the audited financial statements be included in each Fund's
Annual Report to Stockholders for the fiscal year ended October 31, 2006.
The members of the Audit Committees are listed below. Each has been
determined to be independent pursuant to American Stock Exchange Rule 121B(b)(1)
and New York Stock Exchange Rule 303.01.
John Cannon
Howard A. Mileaf
Cornelius T. Ryan (Chairman)
Tom D. Seip
Peter P. Trapp
December 12, 2006
A-2
APPENDIX B
PLAN OF LIQUIDATION AND DISSOLUTION
NEUBERGER BERMAN REAL ESTATE INCOME FUND INC.
THIS PLAN OF LIQUIDATION AND DISSOLUTION ("PLAN") is made by Neuberger
Berman Real Estate Income Fund Inc., a Maryland corporation that is registered
with the Securities and Exchange Commission ("COMMISSION") as a closed-end
management investment company under the Investment Company Act of 1940, as
amended ("1940 ACT") ("CORPORATION").
RECITALS
A. The Corporation's board of directors ("BOARD," and members thereof,
"DIRECTORS"), including the Directors who are not "INTERESTED PERSONS" (as that
term is defined in the 1940 Act) of the Corporation, has unanimously determined
that the Corporation's continuation is not in the best interests of the
Corporation or its stockholders.
B. Article ELEVENTH, paragraphs A and C, of the Corporation's Articles of
Incorporation, as supplemented by Articles Supplementary Creating and Fixing the
Rights of Auction Preferred Shares, Series A ("ARTICLES SUPPLEMENTARY")
("PREFERRED SHARES"), and amended by Certificates of Correction (collectively,
"CHARTER"), require the affirmative vote or consent of 75% of the Directors and
of the holders of 75% of the Corporation's outstanding shares of capital stock
("SHARES") for, among other things, the Corporation's dissolution or liquidation
(paragraph C.7. of such article).
C. Article ELEVENTH, paragraph D, of the Charter provides that the
provisions of that article shall not apply to any transaction described in
paragraph C thereof if the Board authorizes such transaction by an affirmative
vote of a majority of the Directors, including a majority of the Directors who
are not "interested persons" of the Corporation.
D. The Board, including the Directors who are not "interested persons" of
the Corporation, has unanimously determined that the Corporation's dissolution
and liquidation is in the best interests of the Corporation and of its
stockholders. Accordingly, Article ELEVENTH of the Charter does not apply
thereto.
E. Article TENTH of the Charter requires the affirmative vote of a majority
of the votes entitled to be cast thereon (or by a majority of the votes entitled
to be cast thereon by each class when the Corporation is required to obtain a
vote by one or more separate classes) to approve any action requiring
stockholder approval. Liquidation of the Corporation requires the affirmative
vote of more than 50% of the outstanding Shares ("REQUIRED VOTE").
B-1
PROVISIONS
This Plan, as set forth below, shall be effective from and after the date
the Required Vote is received ("EFFECTIVE DATE").
ARTICLE 1. LIQUIDATION AND DISSOLUTION; DIRECTORS' POWERS
(a) The Corporation is hereby liquidated and dissolved as soon as
practicable after the Effective Date, whereupon it shall cease its business as
an investment company and its affairs shall be wound up as the Board authorizes
and directs.
(b) The Board authorizes the appropriate parties to wind up the
Corporation's affairs. All powers of the Directors under the Charter and the
Corporation's Bylaws shall continue, including the powers to (1) fulfill and/or
discharge the Corporation's contracts, (2) collect the Corporation's assets, (3)
sell, convey, assign, exchange, transfer, and/or otherwise dispose of all or any
part of the Corporation's remaining property to one or more persons at public or
private sale for consideration that may consist in whole or in part of cash,
securities, or other property of any kind, (4) declare and pay final
distributions on the Preferred Shares and pay all cumulative declared dividends
thereon that remain unpaid as of immediately before the distribution described
in Article 3, (5) redeem the Preferred Shares in accordance with the Articles
Supplementary, (6) discharge and/or pay the Corporation's liabilities, (7)
prosecute, settle, and/or compromise claims of the Corporation to which it is
subject, (8) file final state and federal tax returns for the Corporation, (9)
mail notice to all known creditors and employees, if any, of the Corporation, at
their respective addresses shown on the Corporation's records, and (10) do all
other acts necessary or appropriate to wind up the Corporation's business.
ARTICLE 2. FILINGS WITH GOVERNMENTAL AUTHORITIES
(a) The Board authorizes the appropriate parties to prepare and execute
Articles of Dissolution and to file same for record with the Maryland State
Department of Assessments and Taxation.
(b) The Board authorizes the appropriate parties to file any other
documents required by any other applicable governmental authority, including
Internal Revenue Service Form 966 (entitled "Corporate Dissolution or
Liquidation").
(c) As soon as practicable after distribution of the Corporation's assets
pursuant to paragraph (b) of Article 3, the Corporation shall prepare and file a
Form N-8F with the Commission to de-register the Corporation under the 1940 Act.
The Corporation also shall file with the Commission, if required, a final Form
N-SAR.
ARTICLE 3. LIQUIDATION PROCEDURES
(a) The Board authorizes all actions to be taken such that the Corporation
will apply its assets to the payment of all its existing debts and obligations,
including necessary expenses of redeeming and canceling the Shares and its
liquidation and dissolution.
B-2
(b) The Board directs that, as soon as reasonably practicable after (1)
receiving the Required Vote, (2) paying or adequately providing for the payment
of the Corporation's charges, taxes, expenses, and liabilities, whether due,
accrued, or anticipated, as the Directors determine, including all the dividends
described in clause (4) of paragraph (b) of Article 1, (3) redeeming the
Preferred Shares in accordance with the Articles Supplementary, and (4)
receiving releases, indemnities, and refunding agreements the Board deems
necessary for its protection, the Corporation's remaining assets shall be
converted to cash, which shall be distributed in one or more (if necessary)
distributions to its stockholders of record as of the Effective Date (each, a
"Stockholder") in redemption and cancellation of their Shares of common stock of
the Corporation ("Common Shares") or to the Trust (as defined in the following
paragraph (c)). At the time such distribution (or, if there is more than one
distribution, the last such distribution) is made, each Stockholder's interest
in the Corporation shall be fixed and its books shall be closed. The amount of
the liquidating distribution(s) shall be made to each Stockholder who holds
Common Shares in proportion to the number of such Common Shares held thereby at
that time.
(c) If the Board, in its discretion, determines that it is necessary or
prudent to withhold cash from the distribution(s) to Stockholders pursuant to
paragraph (b) in an amount that the Board determines is reasonably sufficient to
discharge (i) any liabilities that may result from any ongoing litigation
involving the Corporation that remains unsettled at the initial distribution
date, (ii) unpaid liabilities of the Corporation on its books on such date, and
(iii) any other liabilities of the Corporation the Board or the officers of the
Corporation reasonably determine to exist that are not on its books on such
date, then such amount of cash shall be distributed to the trustees of a
liquidating trust for the benefit of the Stockholders ("Trust"). The expenses of
the Trust shall be charged against the assets therein. As soon as possible after
the conclusion, by court order, settlement, or otherwise, of any such litigation
and payment of any amount required thereby, and payment of the liabilities
described in clauses (ii) and (iii), the remaining assets in the Trust, if any,
shall be distributed to the Stockholders in the same proportion as distributions
pursuant to paragraph (b) (provided that distributions shall be made to the
Stockholders who hold Preferred Shares only if, and to the extent, the
liquidation preference applicable to those Shares exceeds the amount(s)
previously distributed pursuant to clause (i) of that paragraph).
(d) If the Board is unable to locate any Stockholder(s) to whom any
distribution pursuant to paragraphs (b) or (c) is payable, the Board may create,
in the name and on behalf of the Corporation, a trust with a financial
institution and, subject to applicable abandoned property laws, deposit any
remaining Corporation assets in that trust for the benefit of such
Stockholder(s). The expenses of that trust shall be charged against the assets
therein.
B-3
ARTICLE 4. AMENDMENT OF THIS PLAN
The Board may authorize variations from, or amendments of, the provisions
of this Plan (other than the terms of the liquidating distribution(s)) that it
deems necessary or appropriate to effect the distribution(s) and the
Corporation's liquidation and dissolution.
ARTICLE 5. EXPENSES
Except as provided in Article 3, paragraph (c), the Corporation shall bear
all the expenses incurred in connection with carrying out this Plan, including
the cost of liquidating its assets and dissolving its existence, subject to any
expense limitation arrangements in effect with its investment manager and
administrator.
B-4
____________________
| | |
| NEUBERGER | BERMAN |
|___________|________|
A LEHMAN BROTHERS COMPANY
NEUBERGER BERMAN MANAGEMENT INC.
605 Third Avenue 2nd Floor
New York, New York 10158-0180
www.nb.com
P06661
H0493 08/07
YOUR VOTE IS IMPORTANT NO MATTER HOW
MANY SHARES OF STOCK YOU OWN.
PLEASE SIGN AND DATE THE REVERSE SIDE
OF THIS PROXY CARD AND RETURN IT PROMPTLY
IN THE ENCLOSED ENVELOPE.
THIS PROXY CARD IS VALID ONLY
WHEN SIGNED AND DATED.
TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
- --------------------------------------------------------------------------------
NEUBERGER BERMAN REAL ESTATE INCOME FUND INC.
PROXY FOR THE SPECIAL MEETING OF STOCKHOLDERS
ON TUESDAY, AUGUST 28, 2007
The undersigned appoints as proxies Robert Conti, Frederic B. Soule and Claudia
A. Brandon, and each of them (with power of substitution), to vote all the
undersigned's shares of preferred stock of Neuberger Berman Real Estate Income
Fund Inc. at the Special Meeting of Stockholders to be held on Tuesday, August
28, 2007, at 11:00 a.m. Eastern Time at the Offices of Neuberger Berman, LLC,
605 Third Avenue, 41st Floor, New York, New York 10158-3698, and any
adjournments thereof ("Meeting"), with all the power the undersigned would have
if personally present.
Receipt of the Notice of Special Meeting of Stockholders and Proxy Statement is
acknowledged by your execution of this proxy. THIS PROXY IS BEING SOLICITED ON
BEHALF OF THE FUND'S BOARD OF DIRECTORS.
The shares of preferred stock represented by this proxy will be voted as
instructed. UNLESS INDICATED TO THE CONTRARY, THIS PROXY SHALL BE DEEMED TO
GRANT AUTHORITY TO VOTE "FOR" THE ELECTION OF DIRECTORS AND FOR THE PROPOSAL TO
LIQUIDATE AND DISSOLVE THE FUND. THIS PROXY ALSO GRANTS DISCRETIONARY POWER TO
VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. YOUR VOTE
IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN. PLEASE SIGN AND DATE THE REVERSE
SIDE OF THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE
- ---------------- ----------------
SEE REVERSE SIDE SEE REVERSE SIDE
- ---------------- ----------------
TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
- ------------------------------------------------------------------------------------------------------------------------------------
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
- ------------------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE NOMINEES IN THE PROPOSAL AND "FOR" PROPOSAL 2.
- ------------------------------------------------------------------------------------------------------------------------------------
1. To elect five Class I Directors to serve until the annual 2. TO APPROVE A PROPOSAL FOR AGAINST ABSTAIN
meeting of stockholders in 2009, or until their successors TO LIQUIDATE AND ___ ___ ___
are elected and qualified: DISSOLVE THE FUND, AS | | | | | |
SET FORTH IN THE PLAN |___| |___| |___|
(01) Faith Colish WITHHOLD FOR ALL OF LIQUIDATION AND
(02) Michael M. Knetter FOR ALL ALL EXCEPT DISSOLUTION.
(03) Cornelius T. Ryan ___ ___ ___
(04) Peter P. Trapp | | | | | |
(05) Peter E. Sundman |___| |___| |___|
*TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S) MARK THE
BOX "FOR ALL EXCEPT" AND WRITE ON THE LINE BELOW THE
NUMBER(S) OF THE NOMINEE(S) FOR WHOM YOU DO NOT WANT TO
VOTE.
----------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
If you plan to attend the meeting, please call
1-877-461-1899.
Date______________________________________________, 2007
-----------------------------------------------------------
Signature (owner, trustee, custodian etc.)
-----------------------------------------------------------
Signature, if held jointly
Please sign exactly as name appears hereon. If shares are
held in the name of two or more persons, any may sign. If
shares are held by a corporation, partnership, trust,
estate or similar account, the name and capacity of the
invididual signing the proxy card should be indicated
unless it is reflected in the form of registration.
YOUR VOTE IS IMPORTANT NO MATTER HOW
MANY SHARES OF STOCK YOU OWN.
PLEASE SIGN AND DATE THE REVERSE SIDE
OF THIS PROXY CARD AND RETURN IT PROMPTLY
IN THE ENCLOSED ENVELOPE.
THIS PROXY CARD IS VALID ONLY
WHEN SIGNED AND DATED.
TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
- --------------------------------------------------------------------------------
NEUBERGER BERMAN REAL ESTATE INCOME FUND INC.
PROXY FOR THE SPECIAL MEETING OF STOCKHOLDERS
ON TUESDAY, AUGUST 28, 2007
The undersigned appoints as proxies Robert Conti, Frederic B. Soule and Claudia
A. Brandon, and each of them (with power of substitution), to vote all the
undersigned's shares of common stock of Neuberger Berman Real Estate Income Fund
Inc. at the Special Meeting of Stockholders to be held on Tuesday, August 28,
2007, at 11:00 a.m. Eastern Time at the Offices of Neuberger Berman, LLC, 605
Third Avenue, 41st Floor, New York, New York 10158-3698, and any adjournments
thereof ("Meeting"), with all the power the undersigned would have if personally
present.
Receipt of the Notice of Special Meeting of Stockholders and Proxy Statement is
acknowledged by your execution of this proxy. THIS PROXY IS BEING SOLICITED ON
BEHALF OF THE FUND'S BOARD OF DIRECTORS.
The shares of common stock represented by this proxy will be voted as
instructed. UNLESS INDICATED TO THE CONTRARY, THIS PROXY SHALL BE DEEMED TO
GRANT AUTHORITY TO VOTE "FOR" THE ELECTION OF DIRECTORS AND FOR THE PROPOSAL TO
LIQUIDATE AND DISSOLVE THE FUND. THIS PROXY ALSO GRANTS DISCRETIONARY POWER TO
VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. YOUR VOTE
IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN. PLEASE SIGN AND DATE THE REVERSE
SIDE OF THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE
- ---------------- ----------------
SEE REVERSE SIDE SEE REVERSE SIDE
- ---------------- ----------------
TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
- ------------------------------------------------------------------------------------------------------------------------------------
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
- ------------------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE NOMINEES IN THE PROPOSAL AND "FOR" PROPOSAL 2.
- ------------------------------------------------------------------------------------------------------------------------------------
1. To elect five Class I Directors to serve until the annual 2. TO APPROVE A PROPOSAL FOR AGAINST ABSTAIN
meeting of stockholders in 2009, or until their successors TO LIQUIDATE AND ___ ___ ___
are elected and qualified: DISSOLVE THE FUND, AS | | | | | |
SET FORTH IN THE PLAN |___| |___| |___|
(01) Faith Colish WITHHOLD FOR ALL OF LIQUIDATION AND
(02) Michael M. Knetter FOR ALL ALL EXCEPT DISSOLUTION.
(03) Cornelius T. Ryan ___ ___ ___
(04) Peter P. Trapp | | | | | |
(05) Peter E. Sundman |___| |___| |___|
*TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S) MARK THE
BOX "FOR ALL EXCEPT" AND WRITE ON THE LINE BELOW THE
NUMBER(S) OF THE NOMINEE(S) FOR WHOM YOU DO NOT WANT TO
VOTE.
----------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
If you plan to attend the meeting, please call
1-877-461-1899.
Date______________________________________________, 2007
-----------------------------------------------------------
Signature (owner, trustee, custodian etc.)
-----------------------------------------------------------
Signature, if held jointly
Please sign exactly as name appears hereon. If shares are
held in the name of two or more persons, any may sign. If
shares are held by a corporation, partnership, trust,
estate or similar account, the name and capacity of the
invididual signing the proxy card should be indicated
unless it is reflected in the form of registration.