SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
----------
NEUBERGER BERMAN REAL ESTATE SECURITIES INCOME FUND INC.
----------
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:
(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 SECURITIES INCOME FUND INC.
605 THIRD AVENUE
NEW YORK, NEW YORK 10158-0180
____________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
____________________
Dear Stockholder:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ("Meeting")
of Neuberger Berman Real Estate Securities Income Fund Inc. (the "Fund"), will
be held on Wednesday, May 28, 2008, at 2:00 p.m. Eastern time at the offices of
Neuberger Berman, LLC, 605 Third Avenue, 41(st) Floor, New York, New York
10158-3698 for the following purposes:
(1) To elect six Class III Directors as outlined below:
(a) Five Class III Directors, Martha C. Goss, Robert A. Kavesh, Edward
I. O'Brien, William E. Rulon and Candace L. Straight to be elected by
the holders of common stock and preferred stock, voting together as a
single class, such Directors to serve until the annual meeting of
stockholders in 2011, or until their successors are elected and
qualified; and
(b) One Class III Director, Howard A. Mileaf, to be elected by the
holders of preferred stock only, voting separately as a single class,
such Director to serve until the annual meeting of stockholders in
2011, or until his successor is elected and qualified; and
(2) To consider, if properly presented at this meeting, a stockholder
proposal to request that the Board of Directors establish a special
committee to investigate suitable alternatives to replace the Fund's
current investment manager, Neuberger Berman Management Inc.
(3) To consider and act upon any other business that may properly come
before the Meeting or any adjournments thereof.
THIS MEETING IS EXTREMELY IMPORTANT IN LIGHT OF THE STOCKHOLDER
PROPOSAL, INCLUDED IN THIS PROXY STATEMENT AS PROPOSAL 2, WHICH YOUR
BOARD OF DIRECTORS STRONGLY OPPOSES.
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 March 27, 2008
("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 us at
877-461-1899. Any proposal submitted to a vote at the Meeting by anyone other
than the officers or Directors of the Fund may be voted only in person or by
written proxy.
We 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 we, in our 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 US 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: April 29, 2008
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(S) 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 SECURITIES INCOME FUND INC.
605 THIRD AVENUE
NEW YORK, NEW YORK 10158-0180
____________________
PROXY STATEMENT
____________________
ANNUAL MEETING OF STOCKHOLDERS
MAY 28, 2008
INTRODUCTION
This Proxy Statement is furnished to the stockholders of Neuberger Berman
Real Estate Securities Income Fund Inc. (the "Fund"), by the Board of Directors
of the Fund in connection with the solicitation of stockholder votes by proxy to
be voted at the Annual Meeting of Stockholders ("Meeting") or any adjournments
thereof to be held on Wednesday, May 28, 2008, at 2:00 p.m. Eastern time at the
offices of Neuberger Berman, LLC ("Neuberger Berman"), 605 Third Avenue, 41(st)
Floor, New York, New York 10158-3698. The matters to be acted upon at the
Meeting are set forth in the accompanying Notice of Annual Meeting of
Stockholders. It is expected that the Notice of Annual Meeting of Stockholders,
this Proxy Statement and form of proxy first will be mailed to stockholders on
or about April 29, 2008.
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 nevertheless 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. However, if no instructions are specified on a proxy card,
shares will be voted "FOR" the election of each nominee for Director, "AGAINST"
the stockholder proposal 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 March 27, 2008, 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 71,883,782.851 shares of
common stock ("Common Shares") and 18,920 shares of preferred stock ("Preferred
Shares") outstanding and entitled to vote.
Holders of the Fund's outstanding Common Shares and Preferred Shares will
vote together as a single class to elect five Class III Directors. As described
herein under the section entitled "Election of Directors - Proposal," holders of
the Fund's
Preferred Shares will vote separately from holders of the Common Shares to elect
one additional Class III Director. As to any other business that may properly
come before the Meeting, including the stockholder proposal described herein
under "Stockholder Proposal," 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 ("MGCL") and the Fund's charter with respect to said
item of business. Each full share of the Fund's Common Shares or Preferred
Shares is entitled to one vote and each fractional share of the Fund's Common
Shares or Preferred Shares is entitled to a proportionate share 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
$7,500 plus expenses in connection with the solicitation of proxies. 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.
With respect to the Fund, the presence at the Meeting, in person or by
proxy, of stockholders entitled to vote 33 1/3% of the shares outstanding and
entitled to vote at the Meeting is required for a quorum. The affirmative vote
of the holders of a majority of the Fund's outstanding Common Shares and
Preferred Shares, voting as a single class, is required to elect five of the
Fund's Class III Directors. The affirmative vote of the holders of a majority of
the Fund's outstanding Preferred Shares, voting separately from the Common
Shares, is required to elect one additional Class III Director. The affirmative
vote of a majority of the votes cast by the Common Shares and Preferred Shares,
voting together, is required to approve the stockholder proposal. 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 items of business. If a quorum is not present at the Meeting or for any
other reason, the persons named as proxies may propose one or more adjournments
of such 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. In the former case, the persons named as
proxies will vote those proxies that they are entitled to vote "FOR" or
"AGAINST" any proposal and those proxies they are required to "WITHHOLD" on all
nominees in their discretion. 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 purpose. 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 of the Fund 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 ("AMEX"), such
broker-dealers may grant authority to the proxies designated by the Fund to vote
on the election of Directors for the Fund if no instructions have been received
prior to the date specified in the broker-dealer firm's request for voting
instructions because under the rules of the NYSE the election of Directors is
considered a "routine" proposal. Certain broker-dealer firms may exercise
discretion over shares held in their names for which no instructions are
received on a routine proposal, such as the election of directors, by voting
such shares in the same proportion as they have voted shares for which they have
received instructions. With respect to the stockholder proposal, the rules of
the NYSE do not permit broker-dealer firms to vote the shares unless they have
received instructions from their customers and clients as to how to vote such
shares. Failure to provide your broker-dealer firm with instructions on the
stockholder proposal will result in a "broker non-vote."
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 election of Directors
and against the stockholder proposal.
Pursuant to the rules of the NYSE, Preferred Shares of the Fund held in
"street name" may be voted under certain conditions by broker-dealer firms and
counted for purposes of establishing a quorum of the Fund if no instructions are
received by the date specified in the broker-dealer's statement accompanying the
proxy materials. These conditions include, among others, that (i) at least 30%
of the Fund's Preferred Shares outstanding have voted on the proposal, and (ii)
less than 10% of the Fund's Preferred Shares outstanding have voted against such
proposal. In such instance, the broker-dealer firm may vote such uninstructed
Preferred Shares on the proposal in the same proportion as the votes cast by all
Preferred Shares voted on such proposal. The Fund will include shares held of
record by broker-dealers as to which such authority has been granted in its
tabulation of the total number of shares present for purposes of determining
whether the necessary quorum of stockholders of the Fund exists.
As of March 27, 2008, the Fund knows of no person who owns beneficially
more than 5% of its outstanding Common Shares or Preferred Shares other than
those listed below.
AMOUNT OF
NAME AND ADDRESS OF BENEFICIAL BENEFICIAL PERCENT OF
CLASS OF STOCK OWNER OWNERSHIP CLASS
________________________________________________________________________________
Common Shares Western Investment LLC*
7050 S. Union Park Center, Suite 2,096,871 6.3%
590 Midvale, UT 84047
________________________________________________________________________________
* Based upon information obtained from an amended Schedule 13D filed by
Western Investment LLC with the Securities and Exchange Commission ("SEC")
on February 13, 2008; includes beneficial ownership of shares owned by
Arthur D. Lipson, Western Investment Hedged Partners LP, Western
3
Investment Activism Partners LLC, Benchmark Plus Institutional Partners,
L.L.C., Benchmark Plus Partners, L.L.C., Benchmark Plus Management, L.L.C.,
Robert Ferguson, Scott Franzblau, Robert Wood, D. James Daras and Matthew
Crouse. The amount of beneficial ownership and percent of class owned does
not include shares held by Western Investment LLC of Neuberger Berman
Realty Income Fund Inc. that were converted into shares of the Fund
pursuant to the terms of the merger on March 10, 2008. Based on information
obtained from an amended Schedule 13D filed by Western Investment LLC with
the SEC on March 11, 2008, it owned 2,315,169 shares of Neuberger Berman
Realty Income Fund Inc. on March 10, 2008, the date that the merger was
completed.
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 March
27, 2008.
NB Management serves as the investment manager and administrator to the
Fund. NB Management provides investment management and advisory services to
private accounts of institutional and individual clients and to mutual funds. 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 December 31, 2007,
Neuberger Berman affiliates had approximately $258.1 billion in assets under
management. Neuberger Berman and NB Management are indirect wholly owned
subsidiaries of Lehman Brothers Holdings Inc., a publicly held company.
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,
2007, WHICH INCLUDES AUDITED FINANCIAL STATEMENTS FOR THE FUND, BY WRITING NB
MANAGEMENT AT 605 THIRD AVENUE, 2(ND) 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 ("CCO") of the Fund, Neuberger
Berman Funds, 605 Third Avenue, 21(st) 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, 21(st) 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."
ELECTION OF DIRECTORS
Proposal 1
The Board of Directors of the Fund is divided into three classes (Class I,
Class II and Class III). At a meeting of the Board on March 22, 2007, the Fund's
Board expanded the size of the Board from fifteen to sixteen members and
appointed Martha C. Goss as a Class III Director effective June 1, 2007.
4
The terms of office of Class I, Class II and Class III Directors will
expire at the annual meeting of stockholders held in 2009, 2010 and 2008,
respectively, 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. The classification of
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.
Holders of the Fund's Preferred Shares are entitled, as a class, to the
exclusion of the holders of all other classes of stock of the Fund, to elect two
Directors of the Fund (regardless of the total number of Directors serving on
the Fund's Board of Directors). One of those two Directors, Howard A Mileaf, is
a Class III Director currently up for election. The other is a Class II Director
up for election in 2010. The Class II Director is not a nominee to be considered
at the Meeting.
The term of each current Class III Director expires in 2008, but each
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 Class III incumbent Director.
Based upon this review, the Committee determined that nominating the incumbent
Class III Directors 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 December 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
Board voted to nominate Martha C. Goss, Robert A. Kavesh, Howard A. Mileaf,
Edward I. O'Brien, William E. Rulon and Candace L. Straight for election as
Class III Directors with a term expiring in 2011. 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
manager or sub-adviser or their affiliates, or with any broker-dealer used by
the Fund, the investment manager or the sub-adviser in the past six months.
It is the intention of the persons named as proxies 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.
5
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.
INFORMATION REGARDING NOMINEES
FOR ELECTION AT 2008 ANNUAL MEETING
______________________________________________________________________________________________________
NUMBER OF
PORTFOLIOS
IN FUND
NAME, AGE, POSITION, COMPLEX OTHER DIRECTORSHIPS
TERM OF OFFICE (1), AND PRINCIPAL OVERSEEN BY HELD OUTSIDE FUND
LENGTH OF TIME SERVED OCCUPATION(S) DIRECTOR (2) COMPLEX BY DIRECTOR
______________________________________________________________________________________________________
CLASS III
______________________________________________________________________________________________________
Independent Fund Directors
______________________________________________________________________________________________________
Martha C. Goss (58) President, Woodhill 62 Director, Ocwen
Director Enterprises Inc. / Financial Corporation
Since June 2007 Chase Hollow (mortgage servicing),
Associates LLC since 2005; Director,
(personal investment American Water (water
vehicle), since 2006; utility), since 2003;
Chief Operating and Director, Channel
Financial Officer, Reinsurance (financial
Hopewell Holdings, guaranty reinsurance),
LLC/Amwell since 2006; Director,
Holdings, LLC (a Allianz Life of New
holding company York (insurance), since
for investments 2005; Director, Financial
in the health care Women's Association of
space), since 2003; New York (not for profit
formerly, Consultant, association), since 2003;
Resources Connection Trustee Emerita, Brown
(temporary staffing), University, since 1998
2002 to 2006.
______________________________________________________________________________________________________
Robert A. Kavesh (80) Marcus Nadler 62 Formerly, Director, The
Director Professor Emeritus Caring Community (not-
Since inception of Finance and for-profit) from 1997 to
Economics, New 2006; formerly, Director,
York University Stern DEL Laboratories,
School of Business; Inc. (cosmetics and
formerly, Executive pharmaceuticals), 1978 to
Secretary-Treasurer, 2004; formerly, Director,
American Finance Apple Bank for Savings,
Association, 1961 to 1979 to 1990; formerly,
1979. Director, Western Pacific
Industries, Inc., 1972 to
1986 (public company).
______________________________________________________________________________________________________
6
______________________________________________________________________________________________________
NUMBER OF
PORTFOLIOS
IN FUND
NAME, AGE, POSITION, COMPLEX OTHER DIRECTORSHIPS
TERM OF OFFICE (1), AND PRINCIPAL OVERSEEN BY HELD OUTSIDE FUND
LENGTH OF TIME SERVED OCCUPATION(S) DIRECTOR (2) COMPLEX BY DIRECTOR
______________________________________________________________________________________________________
Howard A. Mileaf (71) Retired; formerly, 62 Formerly, Director,
Director Vice President and Webfinancial Corporation
Since inception General Counsel, (holding company)
WHX Corporation (December 2002
(holding company), to February 2008);
1993 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.
______________________________________________________________________________________________________
Edward I. O'Brien (79) Formerly, Member, 62 Director, Legg Mason,
Director Investment Policy Inc. (financial services
Since inception Committee, Edward holding company) since
Jones, 1993 to 1993; formerly, Director,
2001; President, Boston Financial Group
Securities Industry (real estate and tax
Association ("SIA") shelters), 1993 to 1999.
(securities industry's
representative in
government relations
and regulatory
matters at the federal
and state levels), 1974
to 1992; Adviser to
SIA, November 1992
to November 1993.
______________________________________________________________________________________________________
William E. Rulon (75) Retired; formerly, 62 Formerly, Director, Pro-
Director Senior Vice President, Kids Golf and Learning
Since inception Foodmaker, Inc. Academy (teach golf
(operator and and computer usage
franchiser of to "at risk" children),
restaurants) until 1998 to 2006; formerly,
January 1997. Director, Prandium, Inc.
(restaurants), March 2001
to July 2002.
______________________________________________________________________________________________________
7
______________________________________________________________________________________________________
NUMBER OF
PORTFOLIOS
IN FUND
NAME, AGE, POSITION, COMPLEX OTHER DIRECTORSHIPS
TERM OF OFFICE (1), AND PRINCIPAL OVERSEEN BY HELD OUTSIDE FUND
LENGTH OF TIME SERVED OCCUPATION(S) DIRECTOR (2) COMPLEX BY DIRECTOR
______________________________________________________________________________________________________
Candace L. Straight (60) Private investor and 62 Director, Montpelier Re
Director consultant specializing (reinsurance company)
Since inception in the insurance since 2006; Director,
industry; formerly, National Atlantic Holdings
Advisory Director, Corporation (property
Securitas Capital and casualty insurance
LLC (a global private company) since 2004;
equity investment firm Director, The Proformance
dedicated to making Insurance Company
investments in the (property and casualty
insurance sector), 1998 insurance company) since
to December 2003. 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.
______________________________________________________________________________________________________
8
INFORMATION REGARDING DIRECTORS WHOSE CURRENT TERMS CONTINUE
______________________________________________________________________________________________________
NUMBER OF
PORTFOLIOS
IN FUND
NAME, AGE, POSITION, COMPLEX OTHER DIRECTORSHIPS
TERM OF OFFICE (1), AND PRINCIPAL OVERSEEN BY HELD OUTSIDE FUND
LENGTH OF TIME SERVED OCCUPATION(S) DIRECTOR (2) COMPLEX BY DIRECTOR
______________________________________________________________________________________________________
CLASS I
______________________________________________________________________________________________________
Independent Fund Directors
______________________________________________________________________________________________________
Faith Colish (72) Counsel, Carter 62 Formerly, Director (1997
Director Ledyard & Milburn to 2003) and Advisory
Since inception LLP (law firm) since Director (2003 to 2006),
October 2002; formerly, ABA Retirement Funds
Attorney-at-Law and (formerly, American Bar
President, Faith Colish, Retirement Association)
A Professional (not-for-profit membership
Corporation, 1980 corporation).
to 2002.
______________________________________________________________________________________________________
Michael M. Knetter (48) Dean, School of 62 Trustee, Northwestern
Director Business, University Mutual Series Fund, Inc.,
Since February 2007 of Wisconsin - since February 2007;
Madison; formerly, Director, Wausau Paper,
Professor of since 2005; Director,
International Great Wolf Resorts,
Economics and since 2004.
Associate Dean,
Amos Tuck School
of Business -
Dartmouth College,
1998 to 2002.
______________________________________________________________________________________________________
Cornelius T. Ryan (76) Founding General 62 Supply Pro, Inc., since
Director Partner, Oxford 1997; Norwalk Hospital
Since inception Partners and Oxford Foundation, since 1998.
Bioscience Partners
(venture capital
investing) and
President, Oxford
Venture Corporation
since 1981.
______________________________________________________________________________________________________
9
______________________________________________________________________________________________________
NUMBER OF
PORTFOLIOS
IN FUND
NAME, AGE, POSITION, COMPLEX OTHER DIRECTORSHIPS
TERM OF OFFICE (1), AND PRINCIPAL OVERSEEN BY HELD OUTSIDE FUND
LENGTH OF TIME SERVED OCCUPATION(S) DIRECTOR (2) COMPLEX BY DIRECTOR
______________________________________________________________________________________________________
Peter P. Trapp (63) Retired; formerly, 62 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 62 Director and Vice
Chief Executive President, Neuberger President, Neuberger &
Officer, Director and Berman Inc. (holding Berman Agency, Inc.
Chairman of the Board company) since 1999; since 2000; formerly,
Since inception Head of Neuberger Director, Neuberger
Berman Inc.'s Mutual Berman Inc. (holding
Funds Business company), October 1999
(since 1999) and to March 2003; Trustee,
Institutional Business Frost Valley YMCA;
(1999 to October Trustee, College of
2005); responsible Wooster.
for Managed
Accounts Business
and intermediary
distribution (October
1999 to 2008);
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.
______________________________________________________________________________________________________
10
______________________________________________________________________________________________________
NUMBER OF
PORTFOLIOS
IN FUND
NAME, AGE, POSITION, COMPLEX OTHER DIRECTORSHIPS
TERM OF OFFICE (1), AND PRINCIPAL OVERSEEN BY HELD OUTSIDE FUND
LENGTH OF TIME SERVED OCCUPATION(S) DIRECTOR (2) COMPLEX BY DIRECTOR
______________________________________________________________________________________________________
CLASS II
______________________________________________________________________________________________________
Independent Fund Directors
______________________________________________________________________________________________________
John Cannon (78) Consultant. Formerly, 62 Independent Trustee or
Director Chairman, CDC Director of three series
Since inception Investment Advisers of Oppenheimer Funds:
(registered investment Oppenheimer Limited
adviser), 1993 to Term New York Municipal
January 1999; Fund, Rochester Fund
formerly, President Municipals, and
and Chief Executive Oppenheimer Convertible
Officer, AMA Securities Fund, since
Investment Advisors, 1992.
an affiliate of the
American Medical
Association.
______________________________________________________________________________________________________
C. Anne Harvey (70) President, C.A. 62 Formerly, President,
Director Harvey Associates Board of Associates
Since inception since October 2001; to The National
formerly, Director, Rehabilitation Hospital's
AARP, 1978 to Board of Directors,
December 2001. 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 (60) Formerly, Executive 62 Member, Old Mutual 2100
Director Vice President and fund complex (consisting
Since February 2007 Chief Financial of six funds) since October
Officer, People's 2006 for four funds and
Bank (a financial since February 2007 for
services company), two funds.
1991 to 2001.
______________________________________________________________________________________________________
11
______________________________________________________________________________________________________
NUMBER OF
PORTFOLIOS
IN FUND
NAME, AGE, POSITION, COMPLEX OTHER DIRECTORSHIPS
TERM OF OFFICE (1), AND PRINCIPAL OVERSEEN BY HELD OUTSIDE FUND
LENGTH OF TIME SERVED OCCUPATION(S) DIRECTOR (2) COMPLEX BY DIRECTOR
______________________________________________________________________________________________________
Tom D. Seip (58) General Partner, Seip 62 Director, H&R Block,
Director Investments LP (a Inc. (financial services
Since inception; private investment company) since May 2001;
Lead Independent partnership); Chairman, Compensation
Director formerly, President Committee, H&R
Since 2006 and CEO, Westaff, Block, Inc. since 2006;
Inc. (temporary Director, America One
staffing), May 2001 Foundation since 1998;
to January 2002; formerly, Chairman,
formerly, Senior Governance and
Executive at the Nominating Committee,
Charles Schwab H&R Block, Inc., 2004 to
Corporation, 1983 2006; formerly, Director,
to 1998, including Forward Management,
Chief Executive Inc. (asset management
Officer, Charles company), 1999 to 2006;
Schwab Investment formerly Director, E-Bay
Management, Inc. Zoological Society,
and Trustee, Schwab 1999 to 2003; formerly,
Family of Funds and Director, General Magic
Schwab Investments, (voice recognition
1997 to 1998, and software), 2001 to 2002;
Executive Vice formerly, Director,
President-Retail E-Finance Corporation
Brokerage, Charles (credit decisioning
Schwab & Co., Inc., services), 1999 to 2003;
1994 to 1997. formerly, Director,
Save-Daily.com (micro
investing services), 1999
to 2003.
______________________________________________________________________________________________________
12
______________________________________________________________________________________________________
NUMBER OF
PORTFOLIOS
IN FUND
NAME, AGE, POSITION, COMPLEX OTHER DIRECTORSHIPS
TERM OF OFFICE (1), AND PRINCIPAL OVERSEEN BY HELD OUTSIDE FUND
LENGTH OF TIME SERVED OCCUPATION(S) DIRECTOR (2) COMPLEX BY DIRECTOR
______________________________________________________________________________________________________
Director who is an "Interested Person"
______________________________________________________________________________________________________
Jack L. Rivkin* (67) Executive Vice 62 Director, Dale Carnegie
President and Director President and and Associates, Inc.
Since December 2002 Chief Investment (private company) since
Officer, Neuberger 1998; Director, Solbright,
Berman Inc. Inc. (private company)
(holding company) since 1998.
since 2002 and
2003, respectively;
Managing Director
and Chief 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.
______________________________________________________________________________________________________
(1) The Board 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 annual meeting of stockholders held in 2009, 2010, and 2008,
respectively, 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.
13
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 AMEX.
Based solely on the review by the Fund of the copies of such reports it
received, the Fund believes that, during its fiscal year ended October 31, 2007,
Martha C. Goss inadvertently filed a Statement of Change in Beneficial Ownership
of Securities on Form 4 after the required time period.
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
The Fund's Board met nine times during the fiscal year ended October 31,
2007. 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
although the Governance and Nominating Committee does consider and make
recommendations relating to Independent Director compensation to the Board.
AUDIT COMMITTEE. The purposes of the Fund's Audit Committee are (a) in
accordance with exchange requirements and Rule 32a-4 under the 1940 Act, to
oversee the accounting and financial reporting processes of the Fund and, as the
Committee deems appropriate, to inquire into the internal control over financial
reporting of service providers; (b) in accordance with exchange requirements and
Rule 32a-4 under the 1940 Act, to oversee the quality and integrity of the
Fund's financial statements and the independent audit thereof; (c) in accordance
with exchange requirements and Rule 32a-4 under the 1940 Act, 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.
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
14
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 each member of the Audit Committee between meetings of
the 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 Fund. Its members are Martha C. Goss, Howard A. Mileaf, George W. Morriss,
Cornelius T. Ryan (Chairman), Tom D. Seip and Peter P. Trapp. The Chairman of
the Audit Committee receives 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, 2007 is attached
hereto as Appendix A. During the fiscal year ended October 31, 2007, the
Committee met six times.
CLOSED-END FUNDS COMMITTEE. The Fund's Closed-End Funds Committee is
responsible for consideration and evaluation of issues specific to the Fund. Its
members are George W. Morriss (Chairman), Edward I. O'Brien, Jack L. Rivkin,
William E. Rulon (Vice Chairman), and Tom D. Seip. All members other than Mr.
Rivkin are Independent Fund Directors. The Chairman of the Closed-End Fund
Committee receives additional compensation for serving on this Committee. During
the fiscal year ended October 31, 2007, the Committee met two times.
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. The Chairwoman of the Contract Review Committee receives
additional compensation for serving on this Committee. During the fiscal year
ended October 31, 2007, the Committee met five 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 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 manager, 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
15
and implementing appropriate methods of testing compliance by the Fund and its
Service Providers. The members of the Committee are John Cannon (Chairman),
Faith Colish, C. Anne Harvey, Michael M. Knetter and Edward I. O'Brien. All
members are Independent Fund Directors. The Chairman of the Ethics and
Compliance Committee receives additional compensation for serving on this
Committee. The Board will receive 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 Code of Ethics and the required annual certifications
from the Fund, Neuberger Berman and NB Management. During the fiscal year ended
October 31, 2007, the Committee met four times.
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, 2007, the Committee met once.
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 III
Directors with respect to the Fund. 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 and are not "interested parties" of the
Fund as defined in section 2(a)(19) of the 1940 Act. The Chairwoman of the
Governance and Nominating Committee receives additional compensation for serving
on this Committee. During the fiscal year ended October 31, 2007, the Committee
met three 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. The Chairman of the Investment Performance Committee receives
additional compensation for serving on this Committee. During the fiscal year
ended October 31, 2007, the Committee met two times.
16
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.
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. The Chairwoman of the Portfolio Transactions and Pricing Committee
receives additional compensation for serving on this Committee. During the
fiscal year ended October 31, 2007, the Committee met three 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 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, 21(st) 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 manager, its
affiliates and other principal service providers is critical, as is an
independent and questioning mindset. The Committee
17
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, it would air the matter with the
full group of independent Board members for input.
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. One Board member attended the 2007 annual meeting of
stockholders.
18
OWNERSHIP OF SECURITIES
Set forth below is the dollar range of equity securities owned by each
Director as of March 31, 2008.
AGGREGATE DOLLAR
RANGE OF EQUITY SECURITIES IN ALL
REGISTERED INVESTMENT
DOLLAR RANGE OF COMPANIES OVERSEEN BY
EQUITY SECURITIES OWNED DIRECTOR IN FAMILY OF
NAME OF DIRECTOR 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 None
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 Over $100,000
Edward I. O'Brien None Over $100,000
William E. Rulon None Over $100,000
Cornelius T. Ryan None Over $100,000
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 $1-$10,000
Peter E. Sundman None Over $100,000
_____________________________________________________________________________________________
* Valuation as of March 3, 2008.
** Ms. Colish owns 240 Common Shares of the Fund, constituting less than 1% of the Fund's
outstanding Common Shares.
INDEPENDENT FUND DIRECTORS' OWNERSHIP OF SECURITIES
As of March 27, 2008, 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).
19
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 Berman
Laundering since 2006; Deputy General Counsel,
Compliance Officer Neuberger Berman since 2004; formerly,
since inception (1) Vice President, Neuberger Berman,
2000 to 2005; formerly, Associate
General Counsel, Neuberger Berman,
1999 to 2004; Anti-Money Laundering
Compliance Officer, fifteen registered
investment companies for which NB
Management acts as investment manager
and administrator (six since 2002, two
since 2003, four since 2004, one since
2005 and two since 2006).
_____________________________________________________________________________________________
Michael J. Bradler (38) Assistant Treasurer Vice President, Neuberger Berman
since 2005 since 2006; Employee, NB Management
since 1997; Assistant Treasurer, fifteen
registered investment companies
for which NB Management acts as
investment manager and administrator
(thirteen since 2005 and two since 2006).
_____________________________________________________________________________________________
Claudia A. Brandon (51) Secretary since Senior Vice President, Neuberger Berman
inception (1) since 2007; Vice President-Mutual Fund
Board Relations, NB Management since
2000 and Assistant Secretary since 2004;
formerly, Vice President, Neuberger
Berman, 2002 to 2007 and Employee
since 1999; Secretary, fifteen registered
investment companies for which NB
Management acts as investment manager
and administrator (three since 1985,
three since 2002, two since 2003, four
since 2004, one since 2005 and two since
2006).
_____________________________________________________________________________________________
20
_____________________________________________________________________________________________
POSITION AND
LENGTH OF
NAME AND AGE TIME SERVED PRINCIPAL OCCUPATION(S)
_____________________________________________________________________________________________
Robert Conti (51) Vice President Managing Director, Neuberger Berman
since inception (1) since 2007; formerly, Senior Vice
President, Neuberger Berman, 2003
to 2006; formerly, Vice President,
Neuberger Berman, 1999 to 2003; Senior
Vice President, NB Management since
2000; Vice President, fifteen registered
investment companies for which NB
Management acts as investment manager
and administrator (three since 2000,
three since 2002, two since 2003, four
since 2004, one since 2005 and two since
2006).
_____________________________________________________________________________________________
Brian J. Gaffney (54) Vice President Managing Director, Neuberger Berman
since inception (1) since 1999; Senior Vice President, NB
Management since 2000; Vice President,
fifteen registered investment companies
for which NB Management acts as
investment manager and administrator
(three since 2000, three since 2002, two
since 2003, four since 2004, one since
2005 and two since 2006).
_____________________________________________________________________________________________
Maxine Gerson (57) Chief Legal Officer Senior Vice President, Neuberger Berman
since 2005 (only since 2002; Deputy General Counsel and
for purposes Assistant Secretary, Neuberger Berman
of sections 307 since 2001; Senior Vice President, NB
and 406 of the Management since 2006; Secretary
Sarbanes-Oxley and General Counsel, NB Management
Act of 2002) since 2004; Chief Legal Officer (only
for purposes of sections 307 and 406
of the Sarbanes-Oxley Act of 2002),
fifteen registered investment companies
for which NB Management acts as
investment manager and administrator
(thirteen since 2005 and two since 2006).
_____________________________________________________________________________________________
Sheila R. James (42) Assistant Secretary Vice President, Neuberger Berman since
since inception (1) 2008 and Employee since 1999; formerly
Assistant Vice President 2007-2008;
Assistant Secretary, fifteen registered
investment companies for which NB
Management acts as investment manager
and administrator (six since 2002, two
since 2003, four since 2004, one since
2005 and two since 2006.
_____________________________________________________________________________________________
21
_____________________________________________________________________________________________
POSITION AND
LENGTH OF
NAME AND AGE TIME SERVED PRINCIPAL OCCUPATION(S)
_____________________________________________________________________________________________
Kevin Lyons (52) Assistant Secretary Assistant Vice President, Neuberger
since 2003 Berman since 2008 and Employee
since 1999; Assistant Secretary, fifteen
registered investment companies
for which NB Management acts as
investment manager and administrator
(eight since 2003, four since 2004, one
since 2005 and two since 2006).
_____________________________________________________________________________________________
John M. McGovern (38) Treasurer and Senior Vice President, Neuberger Berman
Principal Financial since 2007; formerly, Vice President,
and Accounting Neuberger Berman, 2004 to 2006;
Officer since 2005; Employee, NB Management since 1993;
prior thereto, Treasurer and Principal Financial and
Assistant Treasurer Accounting Officer, sixteen registered
since inception (1) investment companies for which NB
Management acts as investment manager
and administrator (fourteen since 2005
and two since 2006); formerly, Assistant
Treasurer, thirteen registered investment
companies for which NB Management
acts as investment manager and
administrator, 2002 to 2005.
_____________________________________________________________________________________________
Frank Rosato (37) Assistant Treasurer Vice President, Neuberger Berman
since 2005 since 2006; Employee, NB Management
since 1995; Assistant Treasurer, fifteen
registered investment companies
for which NB Management acts as
investment manager and administrator
(thirteen since 2005 and two since 2006).
_____________________________________________________________________________________________
Frederic B. Soule (61) Vice President Senior Vice President, Neuberger
since inception (1) Berman since 2003; formerly, Vice
President, Neuberger Berman, 1999 to
2002; Vice President, fifteen registered
investment companies for which NB
Management acts as investment manager
and administrator (three since 2000,
three since 2002, two 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)
_____________________________________________________________________________________________
Chamaine Williams (37) Chief Compliance Senior Vice President, Neuberger Berman
Officer since 2005 since 2007; Chief Compliance Officer,
NB Management since 2006; Senior Vice
President, Lehman Brothers Inc. since
2007; formerly, Vice President, Lehman
Brothers Inc. from 2003 to 2006; Chief
Compliance Officer, fifteen registered
investment companies for which
NB Management acts as investment
manager and administrator (fourteen
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.
_____________________________________________________________________________________________
(1) The officer has served since the Fund's inception in 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, 2007, the Directors
received the amounts set forth in the following table from the Fund. For the
calendar year ended December 31, 2007, the Directors received the compensation
set forth in the following table for serving as Trustees or Directors of
investment companies in the "Neuberger Berman 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.
23
TABLE OF COMPENSATION
TOTAL COMPENSATION FROM
REGISTERED INVESTMENT COMPANIES
COMPENSATION FROM IN THE NEUBERGER BERMAN FUND
THE FUND FOR FISCAL COMPLEX PAID TO DIRECTORS FOR
NAME AND POSITION WITH THE FUND YEAR ENDED 10/31/07 CALENDAR YEAR ENDED 12/31/07
_____________________________________________________________________________________________
Independent Fund Directors
_____________________________________________________________________________________________
John Cannon
Director $1,889 $104,536
Faith Colish
Director $1,853 $103,553
Martha C. Goss*
Director $ 774 $ 68,170
C. Anne Harvey
Director $1,720 $ 96,186
Robert A. Kavesh
Director $1,853 $103,553
Michael M. Knetter*
Director $1,128 $ 86,688
Howard A. Mileaf
Director $1,958 $109,483
George W. Morriss*
Director $1,197 $ 91,635
Edward I. O'Brien
Director $1,853 $103,553
William E. Rulon
Director $1,853 $103,553
Cornelius T. Ryan
Director $2,046 $113,417
Tom D. Seip
Lead Independent
Director $2,311 $129,219
Candace L. Straight
Director $1,853 $103,553
Peter P. Trapp
Director $1,958 $109,483
_____________________________________________________________________________________________
24
TOTAL COMPENSATION FROM
REGISTERED INVESTMENT COMPANIES
COMPENSATION FROM IN THE NEUBERGER BERMAN FUND
THE FUND FOR FISCAL COMPLEX PAID TO DIRECTORS FOR
NAME AND POSITION WITH THE FUND YEAR ENDED 10/31/07 CALENDAR YEAR ENDED 12/31/07
_____________________________________________________________________________________________
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
_____________________________________________________________________________________________
* Dr. Knetter and Mr. Morriss joined the Fund's Board in February 2007 and
Ms. Goss joined the Board in June 2007.
VOTE REQUIRED
Martha C. Goss, Robert A. Kavesh, Edward I O'Brien, William E. Rulon and
Candace L. Straight each must be elected by the holders of a majority of the
Fund's outstanding Common Shares and Preferred Shares, voting together. Howard
A. Mileaf must be elected by the holders of a majority of the outstanding
Preferred Shares, voting separately from the holders of the Common Shares.
STOCKHOLDER PROPOSAL
PROPOSAL 2
The Fund received notice that a stockholder intends to present the
following proposal at the Meeting. The proposal was submitted by Arthur Lipson,
Western Investment LLC ("Western"), 7050 S. Union Park Center, Suite 590,
Midvale, Utah 84047. Western and its affiliates collectively reported beneficial
ownership of 2,973,249 Common Shares of the Fund as of December 21, 2007.
YOUR BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT FUND DIRECTORS, STRONGLY
OPPOSES ADOPTION OF THE RESOLUTION PROPOSED BELOW AND URGES YOU TO VOTE AGAINST
THE STOCKHOLDER PROPOSAL FOR THE REASONS DISCUSSED BELOW IN THE DIRECTORS'
STATEMENT IN OPPOSITION, WHICH FOLLOWS THE STOCKHOLDER PROPOSAL.
STOCKHOLDER PROPOSAL AND SUPPORTING STATEMENT
"RESOLVED, that the stockholders of Neuberger Berman Real Estate Securities
Income Fund Inc. (the "Fund") hereby request that the Board of Directors
immediately establish a special committee consisting solely of independent
directors to investigate suitable alternatives to replace the Fund's current
investment manager, Neuberger Berman Management Inc."
25
The proposal provides stockholders with the opportunity to advise the Board
of Directors of their serious concerns regarding the performance of the Fund's
investment manager, NB Management. As an owner, together with our affiliates, of
approximately 8.9% of the Fund's common shares outstanding, we believe that in
order to improve investment results and maximize stockholder value the Fund
should replace its investment manager.
In our view, NB Management's performance over the life of the Fund has been
extremely disappointing. NB Management has from the Fund's inception through
December 19, 2007, the date immediately prior to the submission of this
proposal, significantly underperformed the REIT market as measured by a readily
available alternative, the iShares Dow Jones U.S. Real Estate Index Fund
("IYR"). Total return for the Fund over the time was approximately 21.95%. Over
the same period, however, the IYR returned approximately 71.23%, over 200% more
than the Fund(1). We believe this performance, which spans the life of the Fund
and shows no signs of improving, necessitates change beginning with the
replacement of the party responsible for the Fund's performance, NB Management.
In light of the Board of Directors' fiduciary obligations to stockholders,
we believe it is incumbent upon the Board to take immediate action to replace NB
Management with an investment manager for the Fund that will, at a minimum,
bring the Fund's returns in line with the market. While the adoption of this
proposal will not legally bind the Board of Directors, we believe its adoption
will send the Board an important message.
If you believe the Fund should immediately explore alternatives to replace
NB Management with a truly first-rate fund manager in order to better maximize
the value of your shares, please vote FOR this proposal.
THE BOARD OF DIRECTORS' STATEMENT IN OPPOSITION TO PROPOSAL 2
Your Board, including the Independent Fund Directors, strongly recommends
that you vote AGAINST Western's proposal. Before you vote, please consider the
following points:
1. Over the long term your Fund has achieved its objective of high
current income and has performed in line with its benchmark and peer
groups chosen by independent fund rating organizations.
2. Western's entire case is based on an inappropriate comparison between
your Fund and one other fund that pursues a different investment
strategy.
3. Western fails to mention that changing managers is costly and
disruptive.
4. Your Board, every year, thoroughly reviews performance and many other
factors in determining whether NB Management should continue to serve
as the Fund's investment manager.
(1) Source: Bloomberg
26
5. The existing committees are a more appropriate structure for
overseeing the Fund's manager and reviewing Fund performance than the
single-purpose committee proposed by Western.
6. NB Management has shown a strong ongoing commitment to the Fund and
its stockholders and has worked closely with your Board to assist the
Fund, notably with measures intended to narrow the discount.
Before we discuss these points in greater detail, a few facts about Mr.
Lipson and Western. Western is a closed-end fund arbitrageur. While we do not
know the specifics of Western's position, such arbitrageurs often hedge their
closed-end fund investments against the risks of the underlying investment
portfolio. They make money by purchasing fund shares at a discount from NAV, and
then forcing the fund to take measures that temporarily reduce the discount, at
which point they sell their shares. Thus, their interest in a fund is not the
same as that of long-term stockholders.
In December, Mr. Lipson met with the Board's Closed-end Funds Committee and
pressed Committee members to approve a buyback of 25% of the Fund's outstanding
Common Shares at full NAV. This would have allowed Mr. Lipson, Western and their
affiliates to cash out of the Fund at a tidy profit. Having researched the
matter, however, your Board determined that while such buyback programs may
increase the share price temporarily, they generally do not benefit long-term
investors and can in fact harm the fund. When the Board did not promptly accept
Mr. Lipson's self-serving request, the current proposal, which is designed to
bring about a change in managers, followed.
As explained in more detail below, your Board and NB Management have worked
together to reduce the Fund's discount. According to SEC filings, Western and
its affiliates have taken advantage of the opportunity thus created to sell a
substantial number of their Fund shares over the past few months. So if their
proposal winds up burdening your Fund with the costly and disruptive process of
searching for a new manager, will Western care, or will much of their money be
somewhere else by that time?
1. OVER THE LONG TERM YOUR FUND HAS ACHIEVED ITS OBJECTIVE OF HIGH CURRENT
INCOME AND HAS PERFORMED IN LINE WITH ITS BENCHMARK AND PEER GROUPS CHOSEN BY
INDEPENDENT FUND RATING ORGANIZATIONS.
While the short-term market has been difficult, over the longer term the
Fund has provided investors with high current income, which is the Fund's
primary investment objective, and has earned strong returns. For example, as of
December 31, 2007, the Fund had an annualized distribution yield of 15.96% of
its market price and 15.00% of its net asset value.(2) Additionally, for the
three-year period and the quarter ended December 31, 2007, the Fund has
outperformed the average
(2) As Western refers to performance as of December 19, 2007, we have included
performance information as of the closest calendar quarter, December 31,
2007.
27
total return of its peer group(3) as determined by Lipper, Inc. ("Peer Group")
and the average total return of the Morningstar Closed-End Specialty-Real Estate
Category ("Morningstar Category")(4) on an NAV and market price basis, and for
the one-year period ended December 31, 2007 outperformed the average total
return of the Peer Group and the Morningstar Category on a market price
basis.(5)
Your Board understands that performance is of paramount importance to
stockholders, and the Board's Investment Performance Committee evaluates
performance on an ongoing basis. Your Board also recognizes, however, that over
the short term the market has been difficult, especially for closed-end real
estate funds that are leveraged to provide high current income.(6) The Board
does not believe that a slowdown in performance in any one period - especially a
period of considerable dislocation in the real estate markets nationwide -
should be used as a justification to disrupt the Fund and remove a manager that
has been successful in meeting the Fund's objective over the long term.
2. WESTERN'S ENTIRE CASE IS BASED ON AN INAPPROPRIATE COMPARISON BETWEEN YOUR
FUND AND ONE OTHER FUND THAT PURSUES A DIFFERENT INVESTMENT STRATEGY.
Western's claim that the Fund has underperformed is based on a comparison
to only one other fund, the iShares Dow Jones U.S. Real Estate Index Fund
("IYR"), which is an exchange traded fund ("ETF"). At a recent meeting of the
Board's Investment Performance and Closed-End Fund Committees (each of which is
composed primarily of directors independent of NB Management), the committees
concluded that comparison of the Fund to ETFs is inappropriate because ETFs,
unlike the Fund, generally do not seek to provide significant income nor do they
typically make significant use of financial leverage. In addition, the Dow Jones
U.S. Real Estate Index, which is the underlying index for IYR, includes real
estate developers and real estate holding companies, while the Fund focuses on
REITs. In other words, IYR follows a different investment strategy than your
Fund and cannot be used as the basis for a valid comparison of performance.
(3) Lipper Real Estate Fund Category consists of 30 closed-end funds that
invest primarily in equity securities of domestic and foreign companies
engaged in the real estate industry. The Peer Group may contain a number of
closed-end funds that are not focused exclusively on domestic REITs but
also invest in non-U.S. REITs, operating company common and preferred
stocks as well as other non-REIT issues.
(4) Morningstar Closed-End Fund Specialty-Real Estate Category consists of 26
closed-end funds that invest primarily in REITs of various types. Some
funds in this category may also invest in real estate operating companies.
(5) During the first quarter of 2008, the Fund was more negatively impacted by
the continuing decline of the real estate market than the categories as a
whole, and performance has now slipped below the categories averages.
(6) Your Fund maintains leverage to generate additional income, in line with
its stated investment program. However, when the market declines, as it has
recently, leverage can magnify the negative effect on share value.
28
3. WESTERN FAILS TO MENTION THAT CHANGING MANAGERS IS COSTLY AND DISRUPTIVE.
NB Management has been the Fund's investment manager since its inception in
2003 and is responsible for managing the Fund's investment activities and its
business affairs. Neuberger Berman, an affiliate of NB Management, has been the
Fund's subadviser since its inception, and this relationship would automatically
terminate in the event that the Management Agreement with NB Management was
terminated.(7)
The termination of NB Management would force your Fund to incur substantial
expenses in connection with the hiring of a new investment manager. The Board
would have to conduct a search for a suitable replacement manager, a process
that would likely result in expense to the Fund, and then seek stockholder
approval of the new investment management agreement, which would force the Fund
to incur substantial additional costs. Assuming that a suitable alternative
investment manager could be identified and stockholder approval obtained, the
change would still require a period of time for the new manager to evaluate the
Fund's portfolio and become accustomed to managing the Fund and running its
daily investment and business activities.
If the Fund were to retain a new investment manager, the new manager may
want to restructure the investment portfolio, which would involve cost and
potentially adverse tax consequences to stockholders. The market for REIT shares
has recently been under considerable pressure and the Board does not believe
this is the time to engage in a wholesale restructuring of the portfolio.
While the Fund, like many other closed-end funds, has historically traded
at a discount to its NAV per share, there is no reason to believe that having a
new investment manager would reduce or eliminate the discount. To the contrary,
terminating NB Management and hiring a new investment manager may widen the
discount, as the market could react unfavorably to the uncertainty and
disruption caused by the change.
Furthermore, NB Management currently manages the Fund under a discounted
fee schedule established when the Fund was initially offered, which is slated to
continue until October 31, 2011. There is no assurance that a new manager would
be willing to do the same.
Your Board believes these costs and the risks of disruption in Fund
operations - all of which would arise if Western's proposal were to be approved
and the Board followed through on the stockholder recommendation contained in
the proposal - are entirely unnecessary and unjustified.
(7) NB Management pays for the services of Neuberger Berman out of the advisory
fee that NB Management receives from the Fund.
29
4. YOUR BOARD, EVERY YEAR, THOROUGHLY REVIEWS PERFORMANCE AND MANY OTHER FACTORS
IN DETERMINING WHETHER NB MANAGEMENT SHOULD CONTINUE TO SERVE AS THE FUND'S
INVESTMENT MANAGER.
The Fund's Management Agreement with NB Management automatically terminates
each year unless your Board, including a majority of the directors not
affiliated with NB Management, votes to renew it. As a part of this annual
reconsideration, the independent directors have established a rigorous process
to review not only investment performance, but the entire range of advisory and
administrative services provided by NB Management, the cost and benefits of
those services to the Fund and NB Management's profitability from its
relationship to the Fund.(8)
Your Board believes that this annual contract review process is rigorous
and fair, and can take into consideration that stockholders, by purchasing this
Fund, have opted for a fund managed by NB Management. Western's proposal, to the
contrary, contains a presumption that NB Management should be replaced. The
Board does not believe this presumption is justified since doing so would
deprive investors of the manager they have chosen.
5. THE EXISTING COMMITTEES ARE A MORE APPROPRIATE STRUCTURE FOR OVERSEEING THE
FUND'S MANAGER AND REVIEWING FUND PERFORMANCE.
The Board believes that the existing committee structure provides the Fund
with appropriate oversight. The Board's Investment Performance Committee is
responsible for overseeing and guiding the process by which the Board reviews
Fund performance and its Closed-End Funds Committee is responsible for
consideration of and evaluation of issues specific to the closed-end funds in
the Neuberger Berman Fund complex. Additionally, the Contract Review Committee
is responsible for overseeing and guiding the process by which the Independent
Fund Directors annually consider whether to renew the Fund's Management
Agreement.(9)
6. NB MANAGEMENT HAS SHOWN A STRONG ONGOING COMMITMENT TO THE FUND AND ITS
STOCKHOLDERS AND HAS WORKED CLOSELY WITH YOUR BOARD TO ASSIST THE FUND, NOTABLY
WITH MEASURES INTENDED TO NARROW THE DISCOUNT AT WHICH FUND SHARES TRADE.
Above and beyond the specific requirements of the Management Agreement, NB
Management has shown a strong ongoing commitment to the Fund and its
stockholders and works with the Board to assist your Fund. For example, your
Board recently approved the merger into the Fund of another closed-end real
estate fund advised by NB Management, thereby creating one of the largest
domestic closed-end
(8) The Board completed its most recent review of the advisory contract in
September 2007. You can read more about the factors your Board considered
and conclusions it reached in the Fund's Annual Report for the fiscal year
ended October 31, 2007.
(9) Western's proposal provides that the special committee consist solely of
Independent Directors. As required by each Committee's respective charter,
the Contract Review Committee is solely composed of Independent Directors
while each of the Investment Performance Committee and the Closed-End Fund
Committee are composed of a majority of Independent Directors.
30
real estate funds. NB Management recommended this merger because it believed
that the combined fund would: (i) draw increased attention from securities
analysts, thus possibly narrowing the discount; (ii) provide potential portfolio
management efficiencies, which would allow the fund to obtain better prices on
securities trades and achieve greater diversification of portfolio holdings; and
(iii) provide you with enhanced liquidity for your shares. NB Management made
this recommendation despite the fact that the merger was projected to result in
a slight decrease in the overall investment management fees paid to NB
Management. In addition, NB Management agreed to the Board's request to cap
expenses for the merger and undertook to pay any merger expenses that exceeded
the cap.
In 2007, NB Management recommended to the Board an increased payout to
stockholders in an effort to narrow the discount. (This increased payout is
possible precisely because of the Fund's strong average annual total return
since inception.) Because this payout, at least in the short term, is, in
effect, shrinking the total assets of the Fund, it too has the effect of
reducing the fees payable to NB Management. NB Management has also consistently
supported the Fund's efforts to obtain exemptive relief under Section 19(b) of
the 1940 Act so that the Fund can establish a managed distribution plan. NB
Management has maintained its support despite anticipated changes in the
conditions for such exemptive relief that would impose additional duties and
expense on NB Management. Moreover, NB Management pays, from its own investment
management fees, compensation to certain underwriters to assist in maintaining
the Fund's profile in the market, in an effort to reduce the discount. There is
no assurance that any new investment manager would continue the same
arrangements or be willing to make the same commitment to the Fund that NB
Management has.
ACCORDINGLY, YOUR BOARD OF DIRECTORS UNANIMOUSLY AGREES THAT THIS STOCKHOLDER
PROPOSAL IS NOT IN THE BEST INTERESTS OF THE FUND OR ITS STOCKHOLDERS AND
UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS
VOTE AGAINST PROPOSAL NO. 2.
VOTING INFORMATION
The affirmative vote of a majority of the votes cast by the Common Shares
and Preferred Shares voting together is needed to approve the stockholder
proposal.
31
INFORMATION ON THE FUND'S INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Ernst & Young LLP ("Ernst & Young") audited the Fund's financial statements
for the fiscal year ended October 31, 2007. 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, 2008. 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, 2007 and
October 31, 2006 and for the review of the financial statements included in the
Fund's regulatory filings were $38,100 and $33,500, respectively.
AUDIT-RELATED FEES
The aggregate audit-related fees billed by Ernst & Young for the fiscal
years ended October 31, 2007 and October 31, 2006, for performing agreed-upon
procedures for the Preferred Shares of the Fund were $6,250 and $6,250,
respectively.
TAX FEES
The aggregate fees billed by Ernst & Young for the fiscal years ended
October 31, 2007 and October 31, 2006, for tax compliance, tax advice, and tax
planning were $9,700 and $9,500, respectively.
ALL OTHER FEES
Aggregate fees billed by Ernst & Young during the fiscal years ended
October 31, 2007 and October 31, 2006 for other services provided to the Fund
were $0 and $0, respectively.
32
Aggregate fees billed by Ernst & Young during the fiscal years ended
October 31, 2007 and October 31, 2006 for non-audit services to the Fund, NB
Management, Neuberger Berman and any entity controlling, controlled by or under
common control with NB Management or Neuberger Berman that provides ongoing
services to the Fund were $425,000 and $475,000, 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, Neuberger Berman or any entity controlling,
controlled by or under common control with NB Management or Neuberger Berman
that provides ongoing services to the Fund 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 as proxies 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. The Secretary
must receive the nomination or proposal not less than 90 days in advance of the
anniversary of the date the Fund's proxy statement was released to stockholders
in connection with the previous year's annual meeting. In order to be considered
at the Fund's 2009 annual meeting, stockholder nominations and proposals must be
received by the Fund no later than January 29, 2009 and 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.
33
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: April 29, 2008
34
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 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 auditors and reviewing the scope and results of
each Fund's annual audit with the Fund's independent auditors. 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
auditors for the Funds are responsible for planning and carrying out proper
audits and reviews.
The Audit Committees met on December 12, 2007 to review each Fund's audited
financial statements for the fiscal year ended October 31, 2007. In performing
this oversight function, the Audit Committees have reviewed and discussed the
audited financial statements with the Funds' management and their independent
auditors 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, 2007.
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.
Martha C. Goss
Howard A. Mileaf
George W. Morriss
Cornelius T. Ryan (Chairman)
Tom D. Seip
Peter P. Trapp
December 12, 2007
A-2
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____________________
| | |
| NEUBERGER | BERMAN |
|___________|________|
A Lehman Brothers Company
NEUBERGER BERMAN MANAGEMENT INC.
605 Third Avenue 2nd Floor
New York, New York 10158-0180
WWW.NB.COM
IO202 04/08
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 SECURITIES INCOME FUND INC.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS ON MAY 28, 2008
PROXY
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 in Neuberger Berman Real Estate
Securities Income Fund Inc. ("Fund") at the Annual Meeting of Stockholders
to be held on May 28, 2008, at 2:00 p.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 Annual 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 EACH NOMINEE FOR DIRECTOR AND
"AGAINST" THE STOCKHOLDER PROPOSAL. 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 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
- --------------------------------------------------------------------------------
PLEASE MARK
|X| VOTES AS IN
THIS EXAMPLE.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE NOMINEES IN
PROPOSAL 1 AND "AGAINST" PROPOSAL 2.
- --------------------------------------------------------------------------------
1. To elect five Class III Directors to serve until the annual meeting of
stockholders in 2011, or until their successors are elected and qualified:
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT*
( ) ( ) ( )
(01) Martha C. Goss (04) William E. Rulon
(02) Robert A. Kavesh (05) Candace L. Straight
(03) Edward I. O'Brien
*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.
________________________________________________________________________________
FOR AGAINST ABSTAIN
2. To consider, if properly presented at the ( ) ( ) ( )
Meeting, a stockholder proposal to request
that the Board of Directors establish a special
committee to investigate suitable alternatives
to replace the Fund's current investment manager,
Neuberger Berman Management Inc.
- --------------------------------------------------------------------------------
IF YOU PLAN TO ATTEND
THE MEETING, PLEASE CALL
1-877-461-1899.
Date:______________________________, 2008
__________________________________________
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
individual 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 SECURITIES INCOME FUND INC.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS ON MAY 28, 2008
PROXY
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 in Neuberger Berman Real Estate
Securities Income Fund Inc. ("Fund") at the Annual Meeting of Stockholders
to be held on May 28, 2008, at 2:00 p.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 Annual 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 EACH NOMINEE FOR DIRECTOR AND
"AGAINST" THE STOCKHOLDER PROPOSAL. 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 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|
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TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
- --------------------------------------------------------------------------------
PLEASE MARK
|X| VOTES AS IN
THIS EXAMPLE.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE NOMINEES IN
PROPOSAL 1 AND "AGAINST" PROPOSAL 2.
- --------------------------------------------------------------------------------
1. To elect six Class III Directors to serve until the annual meeting of
stockholders in 2011, or until their successors are elected and qualified:
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT*
(01) Martha C. Goss (04) William E. Rulon ( ) ( ) ( )
(02) Robert A. Kavesh (05) Candace L. Straight
(03) Edward I. O'Brien (06) Howard A. Mileaf
*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.
________________________________________________________________________________
FOR AGAINST ABSTAIN
2. To consider, if properly presented at the ( ) ( ) ( )
Meeting, a stockholder proposal to request that
the Board of Directors establish a special
committee to investigate suitable alternatives
to replace the Fund's current investment manager,
Neuberger Berman Management Inc.
- --------------------------------------------------------------------------------
IF YOU PLAN TO ATTEND
THE MEETING, PLEASE CALL
1-877-461-1899.
Date:______________________________, 2008
__________________________________________
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
individual signing the proxy card should
be indicated unless it is reflected in the
form of registration.