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
[X] Definitive Proxy Statement Commission Only (as permitted by
[ ] Definitive Additional Materials Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-12
----------
LEHMAN BROTHERS FIRST TRUST INCOME OPPORTUNITY FUND
(Name of Registrant as Specified in its Charter)
----------
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:
LEHMAN BROTHERS
LEHMAN BROTHERS FIRST TRUST INCOME OPPORTUNITY FUND
605 THIRD AVENUE
NEW YORK, NEW YORK 10158-0180
___________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
___________________
Dear SHAREHOLDER:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders ("Annual
Meeting") of Lehman Brothers First Trust Income Opportunity Fund, a Delaware
statutory trust (the "Fund"), will be held on April 14, 2008, at 9:30 a.m.
Eastern time at the offices of Neuberger Berman, LLC, an affiliate of Neuberger
Berman Management Inc., at 605 Third Avenue, 41st Floor, New York, New York
10158-3698 for the following purposes:
(1) To elect six Class III Trustees as outlined below:
(a) Five Class III Trustees, 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 shares (the "Common Shares") and
Money Market Cumulative Preferred Shares (the "MMP Shares"),
voting together as a single class, such trustees to serve until
the annual meeting of shareholders in 2011, or until their
successors are elected and qualified; and
(b) One Class III Trustee, Howard A. Mileaf, to be elected by the
holders of MMP Shares only, voting separately as a single class,
such trustee to serve until the annual meeting of shareholders in
2011, or until such trustee's successors are elected and
qualified; and
(2) To consider and act upon any other business that may properly come
before the Annual Meeting or any adjournments thereof.
You are entitled to vote at the Annual Meeting of the Fund and any
adjournments thereof if you owned Fund shares at the close of business on
February 20, 2008 (the "Record Date"). If you attend the Annual Meeting, you may
vote your shares in person. IF YOU DO NOT EXPECT TO ATTEND THE ANNUAL 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 proposal or the
voting instructions, please call us at 877-461-1899. Any proposal submitted to a
vote at the Annual Meeting by anyone other than the officers or trustees of the
Fund may be voted on only in person or by written proxy.
The Fund will admit to the Annual Meeting (1) all shareholders of record of
the Fund as of the Record Date, (2) persons holding proof of beneficial
ownership at the Record Date such as a letter or account statement from a
broker, (3) persons who have been granted proxies, and (4) such other persons
that the Fund, in its sole discretion, may elect to admit. ALL PERSONS WISHING
TO BE ADMITTED TO THE ANNUAL MEETING MUST PRESENT PHOTO IDENTIFICATION. IF YOU
PLAN TO ATTEND THE ANNUAL 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 Trustees,
/s/ Claudia A. Brandon
Claudia A. Brandon
Secretary
Dated: March 13, 2008
New York, New York
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 THE FUND YOU OWN.
PLEASE RETURN YOUR PROXY CARD(S) PROMPTLY
IF YOU OWN BOTH COMMON SHARES AND MMP SHARES OF THE FUND, THERE WILL BE
MORE THAN ONE PROXY CARD ENCLOSED. PLEASE FILL OUT AND RETURN EACH PROXY CARD.
SHAREHOLDERS ARE INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. ANY
SHAREHOLDER WHO DOES NOT EXPECT TO ATTEND THE ANNUAL MEETING IS URGED TO REVIEW
THE ENCLOSED MATERIALS AND FOLLOW THE INSTRUCTIONS THAT APPEAR ON THE ENCLOSED
PROXY CARD(S).
TO AVOID 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.
_______________________________________________________________________________
LEHMAN BROTHERS
LEHMAN BROTHERS FIRST TRUST INCOME OPPORTUNITY FUND
605 THIRD AVENUE
NEW YORK, NEW YORK 10158-0180
_____________________
PROXY STATEMENT
_____________________
ANNUAL MEETING OF SHAREHOLDERS
APRIL 14, 2008
INTRODUCTION
This Proxy Statement is furnished to the shareholders of the Lehman
Brothers First Trust Income Opportunity Fund, a Delaware statutory trust (the
"Fund"), by the Board of Trustees (the "Board") of the Fund in connection with
the solicitation of shareholder votes by proxy to be voted at the Annual Meeting
of Shareholders or any adjournments thereof ("Annual Meeting"). The Annual
Meeting is expected to be held on April 14, 2008, at 9:30 a.m. Eastern time at
605 Third Avenue, 41st Floor, New York, New York 10158-3698, at the offices of
Neuberger Berman, LLC ("Neuberger Berman"), an affiliate of Neuberger Berman
Management Inc. ("NB Management").
The matters to be acted upon at the Annual Meeting are set forth in the
accompanying Notice of Annual Meeting. It is expected that the Notice of Annual
Meeting, this Proxy Statement and form of proxy first will be mailed to
shareholders on or about March 13, 2008.
If the enclosed proxy card is executed properly and returned, shares
represented thereby will be voted at the Annual 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 Annual
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 Trustee
and "FOR," "ABSTAIN" or "AGAINST" any other matters acted upon at the Annual
Meeting in the discretion of the persons named as proxies.
The close of business on February 20, 2008, has been fixed as the record
date for the determination of shareholders entitled to notice of and to vote at
the Annual Meeting ("Record Date"). On that date, the Fund had 12,254,584.6520
common shares ("Common Shares") and 3,600 Money Market Cumulative Preferred
Shares ("MMP Shares") outstanding and entitled to vote.
1
Each shareholder will have one vote for each dollar, and a proportionate
fraction of a vote for each fraction of a dollar, of the net asset value per
share of each share held on the Record Date. On the Record Date, the net asset
value of the Common Shares was $12.53 per share and the liquidation preference
of the MMP Shares was $25,000 per share.
Holders of the Fund's outstanding shares will vote to elect a total of six
Trustees: Common Shares and MMP Shares will vote together as a single class to
elect five Class III Trustees, while holders of the Fund's outstanding MMP
Shares will vote as a single class to elect one Class III Trustee. As to any
other business that may properly come before the Annual Meeting or any
adjournments thereof, holders of the Common Shares and MMP 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"), applicable law
governing Delaware statutory business trusts, and the Fund's charter with
respect to said item of business.
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 NB
Management, Lehman Brothers Asset Management LLC ("LBAM LLC"), the Fund's
sub-adviser, or affiliates of these entities. Such solicitations may also be
made by other authorized representatives of the Fund. 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.
QUORUM; ADJOURNMENT
A quorum of shareholders is necessary to take action at the Annual Meeting.
A quorum will exist for the election of the five Class III Trustees to be
elected by holders of Common Shares and MMP shares entitled to vote if 25% of
all such shares (Common Shares and MMP Shares) outstanding on the Record Date
are present in person or by proxy. A quorum will exist for the election of the
single Class III Trustee to be elected by holders of the MMP Shares entitled to
vote if 25% of all such MMP Shares outstanding on the Record Date are present in
person or by proxy. THE FAILURE OF A QUORUM TO BE PRESENT AT THE ANNUAL MEETING
WILL NECESSITATE ADJOURNMENT AND WILL SUBJECT THE FUND TO ADDITIONAL EXPENSE.
In the event that a quorum is not present at the Annual Meeting, or for any
other reason, the persons named as proxies may propose one or more adjournments
of the Annual Meeting to permit further solicitation of proxies. Under the
Fund's by-laws (the "By-Laws"), any meeting of shareholders may be adjourned
from time to time by: (a) the vote of the majority of the shares represented at
that meeting, either in person or by proxy, or (b) in his or her sole discretion
by the chair of the meeting. The persons named as proxies will vote those
proxies which they are entitled to vote "FOR" the election of any nominee and
those proxies which they are required to "WITHHOLD" on all of the nominees in
2
their discretion. A shareholder vote may be taken on one or more of the
proposals prior to any adjournment if sufficient votes have been received for
approval and it is otherwise appropriate.
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 Annual 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 Trustees for the Fund if no instructions have been
received prior to the date specified in the broker-dealer firm's request for
voting instructions. Certain broker-dealer firms may exercise discretion over
shares held in their names for which no instructions are received by voting such
shares in the same proportion as they have voted shares for which they have
received instructions.
In tallying shareholder 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) will be counted as shares that are present and entitled to
vote for purposes of determining the presence of a quorum. Accordingly,
abstentions and broker non-votes effectively will have no impact on the election
of the Class III Trustee Nominees because the required vote is the plurality of
votes cast.
Pursuant to the rules of the NYSE, MMP 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 identified in the broker dealer's statement accompanying
the proxy materials. These conditions include, among others, that (i) at least
30% of the Fund's MMP Shares outstanding have voted on the proposal, and (ii)
less than 10% of the Fund's MMP Shares outstanding have voted against such
proposal. In such instance, the broker-dealer firm may vote such uninstructed
Fund's MMP Shares on the proposal in the same proportion as the votes cast by
all MMP 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 shareholders of the Fund exists.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS ARE
THEREFORE URGED TO COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD(S) AS SOON AS
POSSIBLE IN THE MANNER DESCRIBED ON THE ENCLOSED PROXY CARD(S). A SHAREHOLDER
HOLDING SHARES IN "STREET NAME" MAY ALSO VOTE HIS OR HER PROXY BY TELEPHONE OR
THE INTERNET AS DESCRIBED ON THE ENCLOSED PROXY CARD(S).
3
As of February 20, 2008, the Fund knows of no person who owns beneficially
more than 5% of its outstanding Common Shares or MMP Shares other than those
listed below. *
AMOUNT OF
NAME AND ADDRESS OF BENEFICIAL BENEFICIAL PERCENT OF
CLASS OF STOCK OWNER OWNERSHIP CLASS
________________________________________________________________________________
Common Claymore Securities Inc.
Shares 250 North Rock Road
Suite 150
Wichita, KS 67206-2241
Claymore Securities 625,722 5.10%
Defined Portfolios,
Series 192, 224, 297, 311,
324, 349, 358, 367, 376,
384, 387,
399, 406, 419, 427, 433, 441
& 446.
2455 Corporate West Dr.
Lisle, IL 60532
________________________________________________________________________________
* Based on Schedule 13G filed by Claymore Securities Inc. on January 31, 2008.
In addition, the Trustees and officers of the Fund, in the aggregate, owned
less than 1% of the Fund's outstanding shares as of February 20, 2008.
NB Management serves as the Fund's investment adviser and administrator and
LBAM LLC serves as the Fund's sub-adviser. In addition, NB Management provides
investment management and advisory services to private accounts of institutional
and individual clients and to mutual funds, as well as the NB Family of Funds.
NB Management is located at 605 Third Avenue, New York, New York 10158-0180. As
of December 31, 2007, Neuberger Berman affiliates had approximately $258.1
billion in assets under management. NB Management and LBAM LLC are wholly-owned
subsidiaries of Lehman Brothers Holdings Inc. ("LBHI"), a publicly held company.
SHAREHOLDERS OF RECORD OR BENEFICIAL OWNERS AS OF THE RECORD DATE MAY
OBTAIN A FREE COPY OF THE ANNUAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31,
2007, WHICH INCLUDES AUDITED FINANCIAL STATEMENTS FOR THE FUND, BY WRITING NB
MANAGEMENT AT 605 THIRD AVENUE, 2ND FLOOR, NEW YORK, NEW YORK 10158-0180, OR BY
CALLING TOLL FREE 877-461-1899.
Shareholders may also send communications that they would like to direct to
the Fund's Board of Trustees to the attention of Chamaine Williams, Chief
Compliance Officer ("CCO"), Neuberger Berman Funds, 605 Third Avenue, 21st
Floor, New York, NY, 10158-0180. The Board has directed Ms. Williams to send
such communications to the chairperson of the Fund's Ethics and Compliance
Committee. Nominee recommendations and shareholder proposals should be directed
to the attention of Claudia A. Brandon, Secretary, Neuberger Berman Funds, 605
4
Third Avenue, 21st Floor, New York, NY, 10158-0180 as described in this Proxy
Statement under "Information Regarding the Fund's Process for Nominating Trustee
Candidates" and "Shareholder Proposals."
ELECTION OF TRUSTEES
PROPOSAL
The Fund's Board is divided into three classes (Class I, Class II and Class
III). At a meeting held on March 22, 2007, the Fund's Board expanded the size of
its Board from fifteen to sixteen members and appointed Martha C. Goss as a
Class III Trustee effective June 1, 2007.
The terms of office of Class I, Class II and Class III Trustees will expire
at the annual meeting of shareholders held in 2009, 2010 and 2008, respectively,
and at each third annual meeting of shareholders thereafter. Each Trustee 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 the Fund's
Trustees helps to promote the continuity and stability of the Fund's management
and policies because the majority of the Trustees at any given time will have
prior experience as Trustees of the Fund. At least two shareholder meetings,
instead of one, are required to effect a change in a majority of the Trustees,
except in the event of vacancies resulting from removal for cause or other
reasons, in which case the remaining Trustees may fill the vacancies so created,
to the extent permitted by the 1940 Act.
At the Annual Meeting, five Class III Trustees are to be voted upon by the
holders of Common Shares and MMP Shares, voting together as a single class, and
one Class III Trustee is to be voted upon by the holders of MMP Shares only,
voting separately as a single class. In accordance with the provisions of the
1940 Act and the Fund's By-Laws, under normal circumstances the holders of
outstanding MMP Shares are entitled, as a class, and to the exclusion of the
holders of Common Shares, to elect two Trustees. One of those two Trustees,
Howard A. Mileaf, is a Class III Trustee currently up for election. The other is
a Class II Trustee up for election in 2010. The holders of outstanding Common
Shares and MMP Shares, voting together as a single class, elect the balance of
the Trustees. The Class I and II Trustees are not nominees to be considered at
the Annual Meeting.
The term of each current Class III Trustee expires at the Annual Meeting of
Shareholders, but each expressed his or her willingness to serve another term as
Trustee of the Fund if nominated by the Board.
5
The following table indicates which shareholders are solicited with respect
to each of these Nominees:
NOMINEE COMMON SHARES MMP SHARES
________________________________________________________________________________
Martha C. Goss X X
Robert A. Kavesh X X
Howard A. Mileaf X
Edward I. O'Brien X X
William E. Rulon X X
Candace L. Straight X X
________________________________________________________________________________
The Governance and Nominating Committee of the Fund reviewed the
qualifications, experience and background of each incumbent Class III Trustee.
Based upon this review, the Committee determined that nominating the incumbent
Class III Trustees listed above (the "Nominees") would be in the best interests
of the Fund's shareholders. The Fund's Board believes that the Nominees are well
suited for service on the Board due to their knowledge of the financial services
sector, their substantial experience in serving as directors or trustees,
officers or advisers of public companies and business organizations, including
other investment companies, and due to their familiarity with the Fund as a
result of their prior service as Trustees.
At a meeting in December 2007, the Board received the recommendations of
the Governance and Nominating Committee. After discussion and consideration of,
among other things, the backgrounds of the incumbents, the Fund's Board voted to
nominate 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 Trustees with
a term expiring in 2011. The Fund has a policy that at least three-fourths of
all Trustees be Independent Fund Trustees. Independent Fund Trustees are those
who are not associated with the Fund's investment adviser or sub-adviser or
their affiliates, or with any broker-dealer used by the Fund, the investment
adviser or the sub-adviser in the past six months.
It is the intention of the persons named in the enclosed proxy card(s) to
vote in favor of the election of each Nominee. Each Nominee has consented to be
named in this Proxy Statement and to serve as Trustee if elected. The Fund's
Board has no reason to believe that any Nominee will become unavailable for
election as a Trustee, but if that should occur before the Annual Meeting, the
proxies will be voted for such other nominees as the Board may recommend.
None of the Trustees is related to any other. The following tables set
forth certain information regarding each Trustee. Unless otherwise noted, each
Trustee has engaged in the principal occupation listed in the following table
for five years or more. The business address of each listed person is 605 Third
Avenue, New York, New York 10158.
6
INFORMATION REGARDING NOMINEES
FOR ELECTION AT 2008 ANNUAL MEETING
________________________________________________________________________________________________________________
NUMBER OF
NAME, AGE, POSITION, PORTFOLIOS IN
TERM OF OFFICE, AND FUND COMPLEX OTHER DIRECTORSHIPS HELD
LENGTH OF TIME OVERSEEN BY OUTSIDE FUND COMPLEX BY
SERVED (1) PRINCIPAL OCCUPATION(S) TRUSTEE (2) TRUSTEE
________________________________________________________________________________________________________________
CLASS III
________________________________________________________________________________________________________________
Independent Fund Trustees
________________________________________________________________________________________________________________
Martha C. Goss (58) President, Woodhill 62 Director, Ocwen
Trustee Enterprises Inc. /Chase Financial Corporation
Since June 2007 Hollow Associates LLC (mortgage servicing),
(personal investment since 2005; Director,
vehicle), since 2006; American Water (water
Chief Operating and utility), since 2003;
Financial Officer, Non-Executive Chair
Hopewell Holdings, LLC/ and Director, Channel
Amwell Holdings, LLC Reinsurance (financial
(a holding company guaranty reinsurance),
for investments in since 2006; Director,
the healthcare space), Allianz Life of New
since 2003; formerly, York (insurance),
Consultant, Resources since 2005; Director,
Connection (temporary Financial Women's
staffing), 2002 to 2006. Association of New
York (not for profit
association), since 2003;
Trustee Emerita, Brown
University, since 1998.
________________________________________________________________________________________________________________
7
________________________________________________________________________________________________________________
NUMBER OF
NAME, AGE, POSITION, PORTFOLIOS IN
TERM OF OFFICE, AND FUND COMPLEX OTHER DIRECTORSHIPS HELD
LENGTH OF TIME OVERSEEN BY OUTSIDE FUND COMPLEX BY
SERVED (1) PRINCIPAL OCCUPATION(S) TRUSTEE (2) TRUSTEE
________________________________________________________________________________________________________________
Robert A. Kavesh Marcus Nadler Professor 62 Formerly, Director, The
(80) Emeritus of Finance and Caring Community
Trustee Economics, New York (not-for-profit),
Since April 2006 University Stern School 1997 to 2006;
of Business; formerly, formerly, Director,
Executive Secretary- DEL Laboratories,
Treasurer, American Inc. (cosmetics and
Finance Association, 1961 pharmaceuticals), 1978
to 1979. to 2004; formerly,
Director, Apple Bank
for Savings1979
to 1990; formerly,
Director, Western
Pacific Industries, Inc.,
1972 to 1986 (public
company).
________________________________________________________________________________________________________________
Howard A. Mileaf Retired; formerly, 62 Formerly, Director,
(71) Vice President and Webfinancial
Trustee General Counsel, WHX Corporation (holding
Since April 2006 Corporation (holding company) December
company), 1993 to 2001. 2002 to February 2008;
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.
________________________________________________________________________________________________________________
8
________________________________________________________________________________________________________________
NUMBER OF
NAME, AGE, POSITION, PORTFOLIOS IN
TERM OF OFFICE, AND FUND COMPLEX OTHER DIRECTORSHIPS HELD
LENGTH OF TIME OVERSEEN BY OUTSIDE FUND COMPLEX BY
SERVED (1) PRINCIPAL OCCUPATION(S) TRUSTEE (2) TRUSTEE
________________________________________________________________________________________________________________
Edward I. O'Brien Formerly, Member, 62 Director, Legg Mason,
(79) Investment Policy Inc. (financial services
Trustee Committee, Edward holding company)
Since April 2006 Jones, 1993 to 2001; since 1993; formerly,
President, Securities Director, Boston
Industry Association Financial Group (real
("SIA") (securities estate and tax shelters),
industry's representative in 1993 to 1999.
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 Retired; formerly, 62 Formerly, Director,
(75) Senior Vice President, Pro-Kids Golf and
Trustee Foodmaker, Inc. (operator Learning Academy
Since April 2006 and franchiser of (teach golf and
restaurants) until January computer usage to "at
1997. risk" children), 1998
to 2006; formerly,
Director, Prandium,
Inc. (restaurants),
March 2001 to July
2002.
________________________________________________________________________________________________________________
9
________________________________________________________________________________________________________________
NUMBER OF
NAME, AGE, POSITION, PORTFOLIOS IN
TERM OF OFFICE, AND FUND COMPLEX OTHER DIRECTORSHIPS HELD
LENGTH OF TIME OVERSEEN BY OUTSIDE FUND COMPLEX BY
SERVED (1) PRINCIPAL OCCUPATION(S) TRUSTEE (2) TRUSTEE
________________________________________________________________________________________________________________
Candace L. Straight Private investor and 62 Director, Montpelier Re
(60) consultant specializing in (reinsurance company)
Trustee the insurance industry; since 2006; Director,
Since April 2006 formerly, Advisory National Atlantic
Director, Securitas Capital Holdings Corporation
LLC (a global private (property and casualty
equity investment firm insurance company)
dedicated to making since 2004; Director,
investments in the The Proformance
insurance sector), 1998 to Insurance Company
December 2003. (property and casualty
insurance company)
since March 2004;
formerly, Director,
Providence Washington
Insurance Company
(property and casualty
insurance company),
December 1998 to
March 2006; formerly,
Director, Summit
Global Partners
(insurance brokerage
firm), 2000 to 2005.
________________________________________________________________________________________________________________
10
INFORMATION REGARDING TRUSTEES
WHOSE CURRENT TERMS CONTINUE
________________________________________________________________________________________________________________
NUMBER OF
NAME, AGE, POSITION, PORTFOLIOS IN
TERMS OF OFFICE, AND FUND COMPLEX OTHER DIRECTORSHIPS HELD
LENGTH OF TIME OVERSEEN BY OUTSIDE FUND COMPLEX BY
SERVED (1) PRINCIPAL OCCUPATION(S) TRUSTEE (2) TRUSTEE
________________________________________________________________________________________________________________
CLASS I
________________________________________________________________________________________________________________
Independent Fund Trustees
________________________________________________________________________________________________________________
Faith Colish (72) Counsel, Carter 62 Formerly, Director
Trustee Ledyard & Milburn (1997 to 2003) and
Since April 2006 LLP (law firm) since Advisory Director
October 2002; formerly, (2003 to 2006), ABA
Attorney-at-Law and Retirement Funds
President, Faith Colish, A (formerly, American
Professional Corporation, Bar Retirement
1980 to 2002. Association)
(not-for-profit
membership
corporation).
________________________________________________________________________________________________________________
Michael M. Knetter Dean, School of 62 Trustee, Northwestern
(47) Business, University of Mutual Series Fund
Trustee Wisconsin - Madison; Inc., since February
Since February 2007 formerly, Professor of 2007; Director, Wausau
International Economics Paper, since 2005;
and Associate Dean, Amos Director, Great Wolf
Tuck School of Business - Resorts since 2004.
Dartmouth College, 1998
to 2002.
________________________________________________________________________________________________________________
Cornelius T. Ryan Founding General 62 Supply Pro, Inc., since
(76) Partner, Oxford Partners 2007; Norwalk Hospital
Trustee and Oxford Bioscience Foundation, since 1998.
Since April 2006 Partners (venture
capital investing) and
President, Oxford Venture
Corporation since 1981.
________________________________________________________________________________________________________________
11
________________________________________________________________________________________________________________
NUMBER OF
NAME, AGE, POSITION, PORTFOLIOS IN
TERMS OF OFFICE, AND FUND COMPLEX OTHER DIRECTORSHIPS HELD
LENGTH OF TIME OVERSEEN BY OUTSIDE FUND COMPLEX BY
SERVED (1) PRINCIPAL OCCUPATION(S) TRUSTEE (2) TRUSTEE
________________________________________________________________________________________________________________
Peter P. Trapp (63) Retired; formerly, 62 None.
Trustee Regional Manager for
Since April 2006 Mid-Southern Region,
Ford Motor Credit
Company, September
1997 to 2007; formerly,
President, Ford Life
Insurance Company, April
1995 to August 1997.
________________________________________________________________________________________________________________
Trustee who is an "Interested Person"
________________________________________________________________________________________________________________
Peter E. Sundman * Executive Vice President, 62 Director and Vice
(48) Neuberger Berman President, Neuberger &
Chief Executive Inc. (holding company) Berman Agency, Inc.
Officer, Trustee and since 1999; Head of since 2000; formerly,
Chairman of the Neuberger Berman Director, Neuberger
Board Since April Inc.'s Mutual Funds Berman Inc. (holding
2006 Business (since 1999) and company), October
Institutional Business 1999 to March 2003;
(1999 to October 2005); Trustee, Frost Valley
responsible for Managed YMCA; Trustee,
Accounts Business and College of Wooster.
intermediary distribution
(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.
________________________________________________________________________________________________________________
12
________________________________________________________________________________________________________________
NUMBER OF
NAME, AGE, POSITION, PORTFOLIOS IN
TERMS OF OFFICE, AND FUND COMPLEX OTHER DIRECTORSHIPS HELD
LENGTH OF TIME OVERSEEN BY OUTSIDE FUND COMPLEX BY
SERVED (1) PRINCIPAL OCCUPATION(S) TRUSTEE (2) TRUSTEE
________________________________________________________________________________________________________________
CLASS II
________________________________________________________________________________________________________________
Independent Fund Trustees
________________________________________________________________________________________________________________
John Cannon (78) Consultant; formerly, 62 Independent Trustee
Trustee Chairman, CDC or Director of three
Since April 2006 Investment Advisers series of Oppenheimer
(registered investment Funds: Oppenheimer
adviser), 1993 to January Limited Term New
1999; formerly, President York Municipal
and Chief Executive Fund, Rochester
Officer, AMA Investment Fund Municipals,
Advisors, an affiliate of and Oppenheimer
the American Medical Convertible Securities
Association. Fund, since 1992.
________________________________________________________________________________________________________________
C. Anne Harvey (70) President, C.A. Harvey 62 Formerly, President,
Trustee Associates since October Board of Associates
Since April 2006 2001; formerly, Director, to The National
AARP, 1978 to December Rehabilitation
2001. Hospital's Board of
Directors, 2001 to 2002;
formerly, Member,
Individual Investors
Advisory Committee
to the New York Stock
Exchange Board of
Directors, 1998 to June
2002.
________________________________________________________________________________________________________________
George W. Morriss Formerly, Executive 62 Member, Old Mutual
(60) Vice President and Chief 2100 fund complex
Trustee Financial Officer, People's (consisting of six funds)
Since February 2007 Bank (a financial services since October 2006 for
company), 1991 to 2001. four funds and since
February 2007 for two
funds.
________________________________________________________________________________________________________________
13
________________________________________________________________________________________________________________
NUMBER OF
NAME, AGE, POSITION, PORTFOLIOS IN
TERMS OF OFFICE, AND FUND COMPLEX OTHER DIRECTORSHIPS HELD
LENGTH OF TIME OVERSEEN BY OUTSIDE FUND COMPLEX BY
SERVED (1) PRINCIPAL OCCUPATION(S) TRUSTEE (2) TRUSTEE
________________________________________________________________________________________________________________
Tom D. Seip (58) General Partner, Seip 62 Director, H&R Block,
Trustee Investments LP (a private Inc. (financial services
Since April 2006; investment partnership); company) since May
Lead Independent formerly, President 2001; Chairman,
Trustee and CEO, Westaff, Inc. Compensation
Since April 2006 (temporary staffing), May Committee, H&R
2001 to January 2002; Block, Inc. since 2006;
formerly, Senior Executive Director, America
at the Charles Schwab One Foundation
Corporation, 1983 to 1998, since 1998; formerly,
including Chief Executive Chairman, Governance
Officer, Charles Schwab and Nominating
Investment Management, Committee, H&R
Inc. and Trustee, Schwab Block, Inc., 2004
Family of Funds and to 2006; formerly,
Schwab Investments, 1997 Director, Forward
to 1998, and Executive Management, Inc. (asset
Vice President-Retail management company),
Brokerage, Charles 1999 to 2006;
Schwab & Co., Inc., 1994 formerly Director,
to 1997. E-Bay Zoological
Society, 1999 to 2003;
formerly, Director,
General Magic (voice
recognition software),
2001 to 2002; formerly,
Director, E-Finance
Corporation (credit
decisioning services),
1999 to 2003; formerly,
Director, Save-Daily.
com (micro investing
services), 1999 to 2003.
________________________________________________________________________________________________________________
14
________________________________________________________________________________________________________________
NUMBER OF
NAME, AGE, POSITION, PORTFOLIOS IN
TERMS OF OFFICE, AND FUND COMPLEX OTHER DIRECTORSHIPS HELD
LENGTH OF TIME OVERSEEN BY OUTSIDE FUND COMPLEX BY
SERVED (1) PRINCIPAL OCCUPATION(S) TRUSTEE (2) TRUSTEE
________________________________________________________________________________________________________________
Trustee who is an "Interested Person"
________________________________________________________________________________________________________________
Jack L. Rivkin * (67) Executive Vice President 62 Director, Dale Carnegie
President and Trustee and Chief Investment and Associates, Inc.
Since April 2006 Officer, Neuberger (private company)
Berman Inc. (holding since 1998; Director,
company) since 2002 Solbright, Inc. (private
and 2003, respectively; company) since 1998.
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 majority of the current Board was elected in April 2006 as part of a proposal to streamline the
governance structure of the Fund. Prior to April 2006, Michael M. Knetter and George W. Morriss had
served as Trustees of the Fund. In February 2007, Dr. Knetter and Mr. Morriss became Board members
again and in June 2007 Ms. Goss joined the Board. The Board shall at all times be divided as equally
as possible into three classes of Trustees designated Class I, Class II, and Class III. The terms of
office of Class I, Class II, and Class III Trustees shall expire at the annual meeting of
shareholders held in 2009, 2010, and 2008, respectively, and at each third annual meeting of
shareholders 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 Trustee 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/or LBAM LLC.
15
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Securities Exchange Act of 1934, as amended
("1934 Act"), Section 30(h) of the 1940 Act and Securities and Exchange
Commission ("SEC") regulations thereunder, certain of the Fund's officers and
trustees, portfolio managers, persons owning more than 10% of the Fund's stock
and certain officers and directors of the Fund's investment adviser and
sub-adviser are required to report their transactions in the Fund's Common
Shares to the SEC and the NYSE. Based solely on the review by the Fund of the
copies of such reports received by it, the Fund believes that, during the fiscal
year ended December 31, 2007, all filing requirements applicable to such persons
were met.
BOARD OF TRUSTEES AND COMMITTEE MEETINGS
The Fund's Board met ten times during the fiscal year ended December 31,
2007. Each Trustee 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 Trustee 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 trustees. The
independent registered public accounting firm for the Fund shall report directly
to the Audit Committee. The Fund has adopted a written charter for its Audit
Committee. The charter of the Audit Committee is available on the Fund's website
at www.lbftincomeopportunity.com. The Audit Committee of the Fund has delegated
the authority to grant pre-approval of permissible non-audit services and all
audit, review or attest engagements of the Fund's independent registered public
16
accounting firm to the Chairman of the Audit Committee, and, if the Committee
Chair is not available, to each Member of the 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 Trustees
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 December 31, 2007 is attached
hereto as Appendix A. During the fiscal year ended December 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 Trustees. The Chairman of the Closed-End Funds
Committee receives additional compensation for serving on this Committee. During
the fiscal year ended December 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
Trustees 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 Trustees. The Chairwoman of the Contract Review Committee receives
additional compensation for serving on this Committee. During the fiscal year
ended December 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 Trustees), 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 adviser, sub-adviser, administrator and
transfer agent (collectively, "Service Providers") is responsible for its own
compliance with the federal securities laws and for devising, implementing,
maintaining and updating appropriate policies, procedures and codes of ethics to
ensure compliance with applicable laws and regulations. The CCO is responsible
for administering the Fund's Compliance Program, including devising and
implementing appropriate methods of testing compliance by the Fund and its
Service Providers. Its members are John Cannon (Chairman), Faith Colish, C. Anne
17
Harvey, Michael M. Knetter and Edward I. O'Brien. All members are Independent
Fund Trustees. 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, NB Management and
LBAM LLC. During the fiscal year ended December 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 is not available; the
Committee has all the powers of the Board when the Board is not in session to
the extent permitted by Delaware 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 Trustees. During the fiscal
year ended December 31, 2007, the Committee did not meet.
GOVERNANCE AND NOMINATING COMMITTEE. The Governance and Nominating
Committee of the Fund is responsible for: (a) considering and evaluating the
structure, composition and operation of the Board of Trustees and each committee
thereof, including the operation of the annual self-evaluation by the Board; (b)
evaluating and nominating individuals to serve as Trustees, including as
Independent Fund Trustees, 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 Trustees 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 Trustees 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
Trustees 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 December 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 Trustees. The Chairman of the Investment Performance Committee receives
additional compensation for serving on this Committee. During the fiscal year
ended December 31, 2007, the Committee met two times.
PORTFOLIO TRANSACTIONS AND PRICING COMMITTEE. The Portfolio Transactions
and Pricing Committee of the Fund (a) monitors the operation of policies and
procedures reasonably designed to ensure that each portfolio holding is valued
in an appropriate and timely manner, reflecting information known to the manager
about current market conditions ("Pricing Procedures"); (b) considers and
18
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
Trustees. The Chairwoman of the Portfolio Transactions and Pricing Committee
receives additional compensation for serving on this Committee. During the
fiscal year ended December 31, 2007, the Committee met five times.
INFORMATION REGARDING THE FUND'S PROCESS FOR NOMINATING TRUSTEE CANDIDATES
GOVERNANCE AND NOMINATING COMMITTEE CHARTER. A copy of the Governance and
Nominating Committee Charter is available to shareholders on the Fund's website
at www.lbftincomeopportunity.com.
SHAREHOLDER COMMUNICATIONS. The Fund's Governance and Nominating Committee
will consider nominees recommended by shareholders; shareholders may send
resumes of recommended persons to the attention of Claudia A. Brandon,
Secretary, Neuberger Berman Funds, 605 Third Avenue, 21st Floor, New York, NY,
10158-0180. No nominee recommendation has been received from a shareholder
within the past 120 days.
NOMINEE QUALIFICATIONS. The Governance and Nominating Committee will
consider nominees recommended by shareholders 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 trustees, independence from the Fund's investment adviser, its
affiliates and other principal service providers is critical, as is an
independent and questioning mindset. The Committees also consider 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,
19
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 they had identified a viable candidate, they 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.
TRUSTEE ATTENDANCE AT ANNUAL MEETINGS
The Fund does not have a policy on Trustee attendance at the annual meeting
of shareholders. One Board member attended the 2007 annual meeting of
shareholders.
20
OWNERSHIP OF SECURITIES
Set forth below is the dollar range of equity securities owned by each
Trustee as of January 31, 2008.
____________________________________________________________________________________________
AGGREGATE DOLLAR RANGE OF EQUITY
DOLLAR RANGE OF EQUITY SECURITIES IN ALL REGISTERED INVESTMENT
SECURITIES OWNED IN THE COMPANIES OVERSEEN BY TRUSTEE IN
NAME OF TRUSTEE FUND * FAMILY OF INVESTMENT COMPANIES *
____________________________________________________________________________________________
Independent Fund Trustees
____________________________________________________________________________________________
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 $10,001-$50,000 ** 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
____________________________________________________________________________________________
Trustees who are "Interested Persons"
____________________________________________________________________________________________
Jack L. Rivkin None $1-$10,000
Peter E. Sundman None Over $100,000
____________________________________________________________________________________________
* Valuation Date as of March 3, 2008.
** Ms. Colish owns 100 Common Shares and Mr. Morriss owns 1,363 Common Shares,
constituting less than 1% of the Fund's outstanding Common Shares.
INDEPENDENT FUND TRUSTEES' OWNERSHIP OF SECURITIES
As of January 31, 2008, no Independent Fund Trustee (or his/her immediate
family members) owned securities of NB Management or securities in an entity
controlling, controlled by or under common control with NB Management (not
including registered investment companies).
21
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 Board and serve at the pleasure of the Board.
____________________________________________________________________________________________
POSITION AND LENGTH OF
NAME AND AGE TIME SERVED (1) PRINCIPAL OCCUPATION(S)
____________________________________________________________________________________________
Andrew B. Allard Anti-Money Laundering Senior Vice President,
(46) Compliance Officer since April Neuberger Berman since 2006;
2006 Deputy General Counsel,
Neuberger Berman since 2004;
formerly, Vice President,
Neuberger Berman, 2000 to
2005; formerly, Associate
General Counsel, Neuberger
Berman, 1999 to 2004; Anti-
Money Laundering Compliance
Officer, sixteen registered
investment companies for
which NB Management acts
as investment manager and
administrator (six since 2002,
three since 2003, four since
2004, one since 2005 and two
since 2006).
____________________________________________________________________________________________
Michael J. Bradler Assistant Treasurer since April Vice President, Neuberger
(38) 2006 Berman since 2006; Employee,
NB Management since 1997;
Assistant Treasurer, sixteen
registered investment companies
for which NB Management
acts as investment manager and
administrator (fourteen since
2005 and two since 2006).
____________________________________________________________________________________________
22
______________________________________________________________________________________________
POSITION AND LENGTH OF
NAME AND AGE TIME SERVED (1) PRINCIPAL OCCUPATION(S)
______________________________________________________________________________________________
Claudia A. Brandon Secretary since April 2006 Senior Vice President,
(51) Neuberger Berman since
2007; Vice President-Mutual
Fund Board Relations,
NB Management since 2000
and Assistant Secretary since
2004; formerly, Vice President,
Neuberger Berman 2002 to
2006 and Employee since 1999;
Secretary, sixteen registered
investment companies for
which NB Management acts
as investment manager and
administrator (three since 1985,
three since 2002, three since
2003, four since 2004, one since
2005 and two since 2006).
______________________________________________________________________________________________
Robert Conti (51) Vice President since April 2006 Managing Director, Neuberger
Berman 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, sixteen registered
investment companies for
which NB Management acts
as investment manager and
administrator (three since 2000,
three since 2002, three since
2003, four since 2004, one since
2005 and two since 2006).
______________________________________________________________________________________________
Brian J. Gaffney (54) Vice President since April 2006 Managing Director, Neuberger
Berman since 1999; Senior Vice
President, NB Management since
2000; Vice President, sixteen
registered investment companies
for which NB Management
acts as investment manager and
administrator (three since 2000,
three since 2002, three since
2003, four since 2004, one since
2005 and two since 2006).
______________________________________________________________________________________________
23
______________________________________________________________________________________________
POSITION AND LENGTH OF
NAME AND AGE TIME SERVED (1) PRINCIPAL OCCUPATION(S)
______________________________________________________________________________________________
Maxine L. Gerson Chief Legal Officer since Senior Vice President,
(57) April 2006 (only for purposes Neuberger Berman since 2002;
of sections 307 and 406 of the Deputy General Counsel and
Sarbanes-Oxley Act of 2002) Assistant Secretary, Neuberger
Berman since 2001; Senior Vice
President, NB Management
since 2006; Secretary
and General Counsel, NB
Management since 2004; Chief
Legal Officer (only for purposes
of sections 307 and 406 of the
Sarbanes-Oxley Act of 2002),
sixteen registered investment
companies for which NB
Management acts as investment
manager and administrator
(fourteen since 2005 and two
since 2006).
______________________________________________________________________________________________
Sheila R. James (42) Assistant Secretary since April Vice President, Neuberger
2006 Berman since 2008, and
Employee since 1999; formerly,
Assistant Vice President,
2007-2008; Assistant Secretary,
sixteen registered investment
companies for which NB
Management acts as investment
manager and administrator (six
since 2002, three since 2003,
four since 2004, one since
2005and two since 2006).
______________________________________________________________________________________________
Kevin Lyons (52) Assistant Secretary since April Assistant Vice President,
2006 Neuberger Berman since 2008
and Employee since 1999;
Assistant Secretary, sixteen
registered investment companies
for which NB Management
acts as investment manager and
administrator (nine since 2003,
four since 2004, one since 2005
and two since 2006).
______________________________________________________________________________________________
24
______________________________________________________________________________________________
POSITION AND LENGTH OF
NAME AND AGE TIME SERVED (1) PRINCIPAL OCCUPATION(S)
______________________________________________________________________________________________
John M. McGovern Treasurer and Principal Senior Vice President,
(38) Financial and Accounting Neuberger Berman since 2007;
Officer since April 2006 formerly, Vice President,
Neuberger Berman, 2004
to 2006; Employee, NB
Management since 1993;
Treasurer and Principal
Financial and Accounting
Officer, sixteen registered
investment companies for
which NB Management acts
as investment manager and
administrator (fourteen since
2005 and two since 2006);
formerly, Assistant Treasurer,
fourteen registered investment
companies for which NB
Management acts as investment
manager and administrator,
2002 to 2005.
______________________________________________________________________________________________
Frank Rosato (37) Assistant Treasurer since April Vice President, Neuberger
2006 Berman since 2006; Employee,
NB Management since 1995;
Assistant Treasurer, sixteen
registered investment companies
for which NB Management
acts as investment manager and
administrator (fourteen since
2005 and two since 2006).
______________________________________________________________________________________________
Frederic B. Soule (61) Vice President since April 2006 Senior Vice President,
Neuberger Berman since 2003;
formerly, Vice President,
Neuberger Berman, 1999 to
2002; Vice President, sixteen
registered investment companies
for which NB Management
acts as investment manager and
administrator (three since 2000,
three since 2002, three since
2003, four since 2004, one since
2005 and two since 2006)
______________________________________________________________________________________________
25
_____________________________________________________________________________________________
POSITION AND LENGTH OF
NAME AND AGE TIME SERVED (1) PRINCIPAL OCCUPATION(S)
_____________________________________________________________________________________________
Chamaine Williams Chief Compliance Officer since Senior Vice President,
(37) 2005 Neuberger Berman 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, sixteen registered
investment companies for
which NB Management acts
as investment manager and
administrator (fifteen 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) In April, 2006, the Fund's shareholders elected the current Board as part of a proposal
to streamline the governance structure of the Fund. Except for Chamaine Williams, who
served as the Chief Compliance Officer since 2005, most officers have served since April
2006 and a few since June 2006.
COMPENSATION OF TRUSTEES AND OFFICERS
The following table sets forth information concerning the compensation of
the Fund's Trustees. The Fund does not have any pension or retirement plan for
its Trustees. For the fiscal year ended December 31, 2007, the Trustees received
the amounts set forth in the following table from the Fund. For the calendar
year ended December 31, 2007, the Trustees received the compensation set forth
in the following table for serving as Trustees or Directors of investment
companies in the "Fund Complex." Each officer and Trustee who is a director,
officer or employee of NB Management, LBAM LLC, or any entity controlling,
controlled by or under common control with NB Management or LBAM LLC, serves as
a Trustee and/or officer without any compensation from the Fund.
26
TABLE OF COMPENSATION
TOTAL COMPENSATION FROM REGISTERED
COMPENSATION FROM INVESTMENT COMPANIES IN THE NEUBERGER
NAME AND POSITION THE FUND FOR FISCAL BERMAN FUND COMPLEX PAID TO TRUSTEES FOR
WITH THE FUND YEAR ENDED 12/31/07 CALENDAR YEAR ENDED 12/31/07
_________________________________________________________________________________________________
Independent Fund Trustees
_________________________________________________________________________________________________
John Cannon
Trustee $1,835.36 $104,536.24
Faith Colish
Trustee $1,817.91 $103,553.63
Martha C. Goss *
Trustee $1,178.89 $ 68,170.29
C. Anne Harvey
Trustee $1,685.17 $ 96,186.37
Robert A. Kavesh
Trustee $1,817.91 $103,553.63
Michael M. Knetter *
Trustee $1,515.81 $ 86,688.49
Howard A. Mileaf
Trustee $1,921.25 $109,483.52
George W. Morriss *
Trustee $1,601.70 $ 91,635.77
Edward I. O'Brien
Trustee $1,817.91 $103,553.63
William E. Rulon
Trustee $1,817.91 $103,553.63
Cornelius T. Ryan
Trustee $1,990.99 $113,417.63
Tom D. Seip
Trustee $2,267.74 $129,219.96
Candace L. Straight
Trustee $1,817.91 $103,553.63
Peter P. Trapp
Trustee $1,921.25 $109,483.52
________________________________________________________________________________________________
Trustees who are "Interested Persons"
_________________________________________________________________________________________________
Jack L. Rivkin
Trustee and President $0 $0
Peter E. Sundman
Trustee, Chairman
of the Board and
Chief Executive
Officer $0 $0
_________________________________________________________________________________________________
27
* 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 a plurality of the votes cast by the
holders of the Fund's outstanding Common Shares and MMP Shares, voting together.
Howard A. Mileaf must be elected by a plurality of the votes cast by the holders
of the MMP Shares, voting separately from the holders of the Common Shares.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" EACH NOMINEE.
INFORMATION ON THE FUND'S INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
Ernst & Young LLP ("Ernst & Young") audited the financial statements for
the fiscal year ended December 31, 2007 for the Fund. Ernst & Young, 200
Clarendon Street, Boston, MA 02116, serves as the independent registered public
accounting firm for the Fund and provides audit services, tax compliance
services and assistance and consultation in connection with the review of the
Fund's filings with the SEC. In the opinion of the Audit Committee, the services
provided by Ernst & Young are compatible with maintaining the independence of
the Fund's independent registered public accounting firm. The Board has selected
Ernst & Young as the independent registered public accounting firm for the Fund
for the fiscal year ending December 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
Annual 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 December 31, 2006
and December 31, 2007 and for the review of the financial statements included in
the Fund's regulatory filings are as shown in the table below.
AUDIT FEES BILLED
_________________________________________
FISCAL YEAR ENDED FISCAL YEAR ENDED
FUND 12/31/06 12/31/07
________________________________________________________________________________
Lehman Brothers
First Trust Income Opportunity Fund $34,500 $34,500
________________________________________________________________________________
28
AUDIT-RELATED FEES
The aggregate audit-related fees billed by Ernst & Young for the fiscal
years ended December 31, 2006 and December 31, 2007, for performing agreed-upon
procedures for the MMP Shares of the Fund are as shown in the table below.
AUDIT-RELATED FEES BILLED
_________________________________________
FISCAL YEAR ENDED FISCAL YEAR ENDED
FUND 12/31/06 12/31/07
________________________________________________________________________________
Lehman Brothers
First Trust Income Opportunity Fund $6,250 $6,250
________________________________________________________________________________
TAX FEES
The aggregate fees billed by Ernst & Young for the fiscal years ended
December 31, 2006 and December 31, 2007, for tax compliance, tax advice, and tax
planning are as shown in the table below.
TAX FEES BILLED
_________________________________________
FISCAL YEAR ENDED FISCAL YEAR ENDED
FUND 12/31/06 12/31/07
________________________________________________________________________________
Lehman Brothers
First Trust Income Opportunity Fund $8,700 $8,900
________________________________________________________________________________
ALL OTHER FEES
Aggregate fees billed by Ernst & Young during the fiscal years ended
December 31, 2006 and December 31, 2007 for other services provided to the Fund
are as shown in the table below.
ALL OTHER FEES
_________________________________________
FISCAL YEAR ENDED FISCAL YEAR ENDED
FUND 12/31/06 12/31/07
________________________________________________________________________________
Lehman Brothers
First Trust Income Opportunity Fund $0 $0
________________________________________________________________________________
Aggregate fees billed by Ernst & Young during the fiscal years ended
December 31, 2006 and December 31, 2007, for non-audit services to the Fund, NB
Management, LBAM LLC and any entity controlling, controlled by or under common
control with NB Management or LBAM LLC that provides ongoing services to the
Fund are as shown in the table below.
AGGREGATE NON-AUDIT FEES
_________________________________________
FISCAL YEAR ENDED FISCAL YEAR ENDED
FUND 12/31/06 12/31/07
________________________________________________________________________________
Lehman Brothers
First Trust Income Opportunity Fund $489,950 $440,150
________________________________________________________________________________
29
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) of Regulation S-X. Ernst & Young did not provide any
audit-related services, tax services or other non-audit services to NB
Management, LBAM LLC or any entity controlling, controlled by or under common
control with NB Management or LBAM LLC 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
Annual Meeting. Should any other matters requiring a vote of shareholders
properly come before the Annual Meeting, the persons named in the enclosed proxy
will vote thereon in accordance with their best judgment in the interests of the
Fund.
SHAREHOLDER PROPOSALS
The Fund's By-laws require shareholders wishing to nominate Trustees 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 no more than 120 days and not less than
90 days in advance of the anniversary of the date of the Fund's proxy statement
released to shareholders in connection with the previous year's annual meeting.
In order to be considered at the Fund's 2009 annual meeting, shareholder
nominations and proposals must be received by the Fund no earlier than November
13, 2008 and no later than December 13, 2008 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 Annual Meeting may refuse to acknowledge a
nomination or other proposal by a shareholder that is not made in the manner
described above.
30
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 Trustees,
/s/ Claudia A. Brandon
Secretary
Dated: March 13, 2008
31
(This page intentionally left blank.)
APPENDIX A
AUDIT COMMITTEE REPORT
LEHMAN BROTHERS FIRST TRUST INCOME OPPORTUNITY FUND (THE "FUND")
The Audit Committee of the Board of Trustees of the Fund operates pursuant
to a Charter, which sets forth the role of the Audit Committee in the Fund's
financial reporting process. Pursuant to the Charter, and in accordance with New
York Stock Exchange requirements and Rule 32a-4 under the Investment Company Act
of 1940, as amended, 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 the Fund's annual audit with the Fund's independent
auditors. Fund management is responsible for the preparation, presentation and
integrity of the Fund's financial statements and for the procedures designed to
assure compliance with accounting standards and applicable laws and regulations.
The independent auditors for the Fund are responsible for planning and carrying
out proper audits and reviews.
The Audit Committee met on February 19, 2008 to review the Fund's audited
financial statements for the fiscal year ended December 31, 2007. In performing
this oversight function, the Audit Committee has reviewed and discussed the
audited financial statements with the Fund's management and their independent
auditors, Ernst & Young, LLP ("E&Y"). The Audit Committee has discussed with E&Y
the matters required to be discussed by Statement on Auditing Standards No. 61,
and has received the written disclosures and the letter from E&Y required by
Independence Standards Board Standard No. 1. The Audit Committee also has
discussed with E&Y its independence.
The members of the Audit Committee are not employed by the Fund as experts
in the fields of auditing or accounting and are not employed by the Fund for
accounting, financial management or internal control purposes. Members of the
Audit Committee rely without independent verification on the information
provided and the representations made to them by management and E&Y.
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 Committee recommended to the Board of
Trustees that the audited financial statements be included in the Fund's Annual
Report to Shareholders for the fiscal year ended December 31, 2007.
A-1
The members of the Audit Committee are listed below. Each has been
determined to be independent pursuant to New York Stock Exchange Rules.
Martha C. Goss
Howard A. Mileaf
George W. Morriss
Cornelius T. Ryan (Chairman)
Tom D. Seip
Peter P. Trapp
February 19, 2008
A-2
____________________
| | |
| NEUBERGER | BERMAN |
|___________|________|
A Lehman Brothers Company
NEUBERGER BERMAN MANAGEMENT INC.
605 Third Avenue 2nd Floor
New York, New York 10158-0180
www.nb.com
P56684
I0039 03/08
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS ON APRIL 14, 2008
LEHMAN BROTHERS FIRST TRUST INCOME OPPORTUNITY FUND
COMMON SHARES
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 common shares in Lehman Brothers First Trust Income Opportunity
Fund (the "Fund") at the Annual Meeting of Shareholders to be held on April 14,
2008, at 9:30 a.m. Eastern Time at the offices of Neuberger Berman LLC, 605
Third Avenue, 41st Floor, New York, New York 10158-3698, and any adjournments
thereof ("Annual Meeting"), with all the power the undersigned would have if
personally present. Receipt of the Notice of Annual Meeting of Shareholders and
Proxy Statement is acknowledged by your execution of this proxy. THIS PROXY IS
BEING SOLICITED ON BEHALF OF THE FUND'S BOARD OF TRUSTEES.
The common shares 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 PROPOSAL SPECIFIED ON THE REVERSE SIDE. THIS PROXY ALSO GRANTS
DISCRETIONARY POWER TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE
THE ANNUAL MEETING.
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN.
PLEASE SIGN AND DATE THIS PROXY BELOW AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
Date:___________________, 2008
Signature (owner, trustee, custodian, etc.)
(Please sign in the box)
---------------------------------------------
---------------------------------------------
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.
CLB- JH-CMN
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES 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.
PLEASE FILL IN BOX AS SHOWN USING BLACK OR BLUE INK OR NUMBER 2 PENCIL.
PLEASE DO NOT USE FINE POINT PENS. (X)
1. To elect five Class III Trustees to serve until the annual meeting of
shareholders in 2011, or until their successors are elected and qualified:
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT*
(01) Martha C. Goss (03) Edward I. O'Brien (05) Candace L. Straight [ ] [ ] [ ]
(02) Robert A. Kavesh (04) William E. Rulon
*TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S), MARK THE BOX "FOR ALL
EXCEPT" AND WRITE ON THE LINE BELOW THE NUMBER(S) OF THE NOMINEE(S) FOR
WHOM YOU DO NOT WANT TO VOTE.
---------------------------------------------------------------------------
IF YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE CALL 1-877-461-1899.
PLEASE SIGN ON THE REVERSE SIDE.
CLB-JH-CMN
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS ON APRIL 14, 2008
LEHMAN BROTHERS FIRST TRUST INCOME OPPORTUNITY FUND
MONEY MARKET CUMULATIVE PREFERRED SHARES
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 preferred shares in Lehman Brothers First Trust Income Opportunity
Fund (the "Fund") at the Annual Meeting of Shareholders to be held on April 14,
2008, at 9:30 a.m. Eastern Time at the offices of Neuberger Berman LLC, 605
Third Avenue, 41st Floor, New York, New York 10158-3698, and any adjournments
thereof ("Annual Meeting"), with all the power the undersigned would have if
personally present. Receipt of the Notice of Annual Meeting of Shareholders and
Proxy Statement is acknowledged by your execution of this proxy. THIS PROXY IS
BEING SOLICITED ON BEHALF OF THE FUND'S BOARD OF TRUSTEES.
The preferred shares 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 PROPOSAL SPECIFIED ON THE REVERSE SIDE. THIS PROXY ALSO GRANTS
DISCRETIONARY POWER TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE
THE ANNUAL MEETING.
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN.
PLEASE SIGN AND DATE THIS PROXY BELOW AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
Date:___________________, 2008
Signature (owner, trustee, custodian, etc.)
(Please sign in the box)
-------------------------------------------
-------------------------------------------
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.
CLB-JH-PRE
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES 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.
PLEASE FILL IN BOX AS SHOWN USING BLACK OR BLUE INK OR NUMBER 2 PENCIL.
PLEASE DO NOT USE FINE POINT PENS. (X)
1. To elect six Class III Trustees to serve until the annual meeting of
shareholders in 2011, or until their successors are elected and qualified:
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT*
(01) Martha C. Goss (03) Edward I. O'Brien (05) Candace L. Straight [ ] [ ] [ ]
(02) Robert A. Kavesh (04) William E. Rulon (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.
-------------------------------------------------------------------------
IF YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE CALL 1-877-461- 1899.
PLEASE SIGN ON THE
REVERSE SIDE.
CLB-JH-PRE