•	Strong Growth Potential. The Aggressive Growth Fund seeks markets and industries with strong growth potential. Finding the areas with the greatest unmet needs leads one to the companies attempting to satisfy those needs, and often delivers strong growth opportunities. The Aggressive Growth Fund concentrates on market and industry niche opportunities with large, multi-year growth prospects.

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Market Leaders. The Aggressive Growth Fund focuses on the leaders in these growth markets which often garner a disproportionate share of the positive financial returns. The Aggressive Growth Fund seeks to identify these leaders as they are emerging or re-emerging and before they are widely recognized. At times, this may require investing in private companies in various stages of development, subject to the investment restrictions set forth in this Prospectus and in the Statement of Additional Information. In selecting private companies for initial or continued inclusion in the Aggressive Growth Fund, the Fund employs the same investment strategies

 

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High Operating Margins. The Aggressive Growth Fund concentrates on industries or companies with the potential to deliver strong profits, not just high revenue growth. The Aggressive Growth Fund focuses on companies with the potential for high profit margins and strong cash generation. Often, high margins are a sign that a company’s products and services have a high perceived value to its customers. High operating margins are also often indicative of companies with strong execution capabilities and provide companies with the financial flexibility to invest for future growth.

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Long-Term, Sustainable Growth. The Aggressive Growth Fund will focus on the sustainability of strong growth, not just the absolute rate of change. The Aggressive Growth Fund considers the best growth stocks to be those that can sustain strong growth over long periods of time. Many companies can grow rapidly over short periods of time; far fewer have the resources, positioning and execution abilities to deliver superior growth records over time.

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Companies Addressing Unmet Needs. The Aggressive Growth Fund will invest in a company in any industry or geographic market where it believes that the company’s new or differentiated product or service is addressing a substantially unmet need. Most high growth companies are in high growth markets, but others arise in mature sectors of the economy where new products and services, particularly those that are technologically driven, present new growth opportunities. The Aggressive Growth Fund seeks to diversify among industries to moderate risk but will not do so at the expense of limiting growth opportunities.

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Strong Management Strategy and Performance. Quality of management and balance sheets will play key roles in the Aggressive Growth Fund’s investment decision process. A key part of sustainability is having the managerial and financial resources to fund strong growth. Balance sheet trends are also an important indicator as to the health of a business. Beyond a management’s historical performance record, the Aggressive Growth Fund focuses on the overall strategic vision and tactical decisions in assessing a company’s growth potential.

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Small Cap Growth Fund - Principal Investment Objective and Strategies

The Small Cap Growth Fund seeks long-term, tax-efficient capital appreciation by primarily investing in the equity securities of smaller growth companies which the Fund believes are trading at a discount to their underlying value yet have the potential for significant long-term growth. Typically, these above-average growth rates are exhibited by companies addressing the challenges of rapid and fundamental changes in the world economy resulting from demographic, political and technological change. In this manner, the Small Cap Growth Fund seeks to build wealth for long-term investors. The Small Cap Growth Fund strives to balance tax efficiency with the inherent volatility in rapid growth markets and industries. The central premise of the Small Cap Growth Fund’s investment style is growth, and, more specifically, growth stocks trading at a discount to their underlying value where a catalyst is in place to

 

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Strong, Incentivized Management Team. The Small Cap Growth Fund focuses, above all, on the quality and capability of a company’s management team because it believes that management is the most critical element in determining the success of a business. The Small Cap Growth Fund also focuses on management’s ownership of the company’s stock and what appropriate stock option plans are in place to incentivize all levels of management at the company.

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No Financial Leverage. The Small Cap Growth Fund strongly prefers companies that take risks in their business and not on their balance sheet. The Small Cap Growth Fund prefers to invest in small cap companies that are debt free. The Small Cap Growth Fund believes that financing availability for small cap companies is so limited that to add leverage to the balance sheet is both unwise and unacceptable.

•	Coherent, Well-Thought-Out Strategy. The Small Cap Growth Fund seeks companies that have well-defined plans to penetrate their markets and to grow their businesses. The company’s management must be able to articulate that strategy to its shareholders and the investment community.

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Strong, Long-Term Growth Potential. The Small Cap Growth Fund seeks markets and industries with strong growth potential. Finding the areas with the greatest unmet needs leads one to the companies attempting to satisfy those needs, and often delivers strong growth opportunities. The Small Cap Growth Fund concentrates on market and industry niche opportunities with large, multi-year growth prospects.

•

Market Leaders. The Small Cap Growth Fund focuses on the leaders in these growth markets which often garner a disproportionate share of the positive financial returns. The Small Cap Growth Fund seeks to identify these leaders as they are emerging or re-emerging and before they are widely recognized. At times, this may require investing in private companies in various stages of development, subject to the investment restrictions set forth in this Prospectus and in the Statement of Additional Information. In selecting

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High Operating Margins. The Small Cap Growth Fund concentrates on industries or companies with the potential to deliver strong profits, not just high revenue growth. The Small Cap Growth Fund focuses on companies with the potential for high profit margins and strong cash generation. Often, high margins are a sign that a company’s products and services have a high perceived value to its customers. High operating margins are also often indicative of companies with strong execution capabilities and provide companies with the financial flexibility to invest for future growth .

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Companies Addressing Unmet Needs. The Small Cap Growth Fund invests in companies that are developing new or differentiated products or services to address a substantially unmet need. Some high growth companies arise in mature sectors of the economy where new products and services, particularly those that are technologically driven, present new growth opportunities. The Small Cap Growth Fund seeks to diversify among industries to moderate risk but will not do so at the expense of limiting growth opportunities.

 

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Fundamental Company and Market Analysis. The Funds rely foremost on fundamental company and market analysis and secondarily on macroeconomic analysis, including trends in gross domestic product (“GDP”), interest rates and inflation, to arrive at investment decisions. The Funds put a premium on in-depth company and industry analysis. The Fund managers intend to visit with company managements frequently, attend trade shows and other industry conferences and develop other sources of independent insight. The Funds track key economic and political events as they affect the relative attractiveness and growth prospects of the portfolio companies. However, given the uneven history of economic forecasting and the fact that many of the best growth companies can continue to grow even in a challenging economic environment, the Funds will rely foremost on finding the best positioned companies and not on market-timing.

•	Disciplined Approach to Valuation. The Funds seek to enhance shareholder returns with a disciplined approach to valuations, both relative

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Issuer and Market Sector Focus. Although the Funds are classified as “diversified” under the 1940 Act, the Funds may invest their assets in a smaller number of issuers than other, more diversified, funds. To the extent the Funds invest a significant portion of their assets in a few issuers’ securities, the performance of the Funds could be significantly affected by the performance of those issuers. As a fundamental policy, each Fund will not invest more than 25% of its net assets in issuers conducting their principal business in the same industry. See Statement of Additional Information — “Investment Restrictions.” However, each Fund at times may invest more than 25% of its total assets in securities of issuers in one or more market sectors, including the technology and healthcare sectors. A market sector may be made up of companies in a number of related industries.

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Short Selling. The Funds may engage in short sales. In a short sale of a security, a Fund sells stock which it does not own, making delivery with securities borrowed from a broker. The Fund is then obligated to replace the security borrowed by purchasing it at the market price at the time of replacement. The Funds may make a profit or loss depending upon whether the market price of the security decreases or increases between the date of the short sale and the date on which the Funds replace the borrowed security.

 

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Exchange-Traded Funds. The Funds may invest in exchange-traded funds (“ETFs), including short sales of ETFs. For the Small Cap Growth Fund, investments in ETFs may be considered, for purposes of compliance with the Fund’s policy with respect to the investment of 80% of its net assets, equity securities of domestic issuers listed on a nationally recognized securities exchange or traded on the NASDAQ System that have market capitalizations not exceeding $5 billion at the time of investment if the ETFs have economic characteristics similar to such equity securities.

Non-Principal Investment Strategies – All Funds

As a non-principal technique, each of the Funds may participate in initial public offerings (“IPOs”).

In summary, the keys to successful investing by the Funds include an understanding of macroeconomic and political trends, an evaluation of the high growth sectors of the economy, identifying a sector’s leaders and laggards, frequent visits with company management and analyses of companies’ business fundamentals, quality of management and competitive position. After finding an attractive growth candidate for the Funds, the specific company’s valuation is evaluated relative to its prospects and competing candidates, both current holdings and other potential investments, to determine if enough price appreciation potential is available to warrant inclusion in the Funds.

The Funds will seek to reduce their risks with in-depth fundamental analysis, a focused assessment of risk versus return, a view for the catalyst in the individual stock and reliable monitoring of positions to be responsive to changes in industry and market fundamentals. The Funds will also attempt to reduce their risk by taking short positions in companies where they believe market fundamentals have been exceeded, as well as by the use of options to hedge positions.

Furthermore, each Fund may temporarily invest up to 100% of its assets in cash or cash equivalents, investment grade debt securities or repurchase agreements for defensive purposes. Consistent with the Funds’ investment objectives and policies, the Adviser may make changes to the Funds whenever it considers market, economic or political conditions to be unfavorable for profitable investing or it believes that doing so is in the best interest of the Funds. To the extent a Fund takes a defensive position, it may not achieve its investment objective.

 

Principal Risk Factors

The following principal risk factors are common to each of the Funds, unless otherwise indicated.

Stock Investing and Market Risks. The Funds invest primarily in equity securities, which fluctuate in value. Therefore, shares of the Funds will also fluctuate in value. Loss of money is a risk of investing in the Funds. The strategies used by the Funds’ portfolio managers may fail to produce the intended result, and stock selection may underperform the stock market, the Funds’ benchmarks or other funds with similar objectives. There is no guarantee that the Funds will achieve their investment goals of long-term, tax-efficient capital appreciation.

Focus Risks. Although the Funds are classified as “diversified” under the 1940 Act, the Funds may invest their assets in a smaller number of issuers than other, more diversified, funds. A Fund’s NAV may be more vulnerable to changes in the market value of a single issuer or group of issuers and may be relatively more susceptible to adverse effects from any single corporate, industry, economic, market, political or regulatory occurrence than if

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Non-Principal Risk Factors – All Funds

Exchange-Traded Fund Risks. The risks of investing in ETFs typically reflect the risks associated with the types of instruments in which the ETFs invest. When a Fund invests in an ETF, shareholders of the Fund will bear indirectly their proportionate share of the expenses of the ETF (including management fees) in addition to the expenses of the Fund. ETFs are exchange-traded investment companies that are, in many cases, designed to provide investment results corresponding to an index. The value of the underlying securities can fluctuate in response to activities of individual companies or in response to general market and/or economic conditions. Additional risks of investments in ETFs include: (i) the market price of an ETF’s shares may trade at a discount to its net asset value; (ii) an active trading market for an ETF’s shares may not develop or be maintained; or (iii) trading may be halted if the listing exchanges’ officials deem such action appropriate, the shares are delisted from the exchange, or the activation of market-wide “circuit breakers” (which are tied to large decreases in stock prices) halts trading generally.  A Fund will incur brokerage costs when purchasing and selling shares of ETFs.

 

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Who Should Invest in the Funds

The Funds are not intended to provide a balanced investment program. The Funds are most suitable for an investor who is willing to accept a higher degree of risk than is present in many fixed-income or certain other equity mutual funds.

Portfolio Holdings

The Funds generally make their complete portfolio holdings available on their website, after a 10-day lag following the end of the most recent calendar quarter, at www.needhamfunds.com under “Mutual Funds” then “Portfolios” . The ten largest equity holdings of each Fund also include the percentage of that Fund’s total investments that each holding represents.

A description of the Funds’ policies and procedures with respect to the disclosure of the Funds’ portfolio securities is available in the Funds’ Statement of Additional Information and on the Funds’ website at www.needhamfunds.com. Currently, disclosure of the Funds’ holdings is required to be made quarterly within 60 days of the end of each fiscal quarter, in the Funds’ Annual Report and Semi-Annual Report to shareholders and in the quarterly holdings report on Form N-Q. The Annual and Semi-Annual Reports are available by contacting the Funds c/o U.S. Bank Global

 

Investment Adviser

Needham Investment Management LLC, 250 Park Avenue, 10 ^th Floor, New York, NY, 10177, was formed in 1995 and is registered as an investment adviser with the Securities and Exchange Commission. The Adviser is an affiliate of Needham & Company, LLC. Needham & Company, LLC is the Funds’ distributor and is an investment banking firm specializing in growth companies and their investors.

The Adviser directs investments of the Funds pursuant to a Restated Investment Advisory Agreement dated October 21, 2004 between the Funds and the Adviser (the “Advisory Agreement”). Each Fund pays the Adviser a fee at the annual rate of 1.25% of the respective average daily net assets of the Fund. The Adviser or persons employed by or associated with the Adviser are, subject to the authority of the Board of Directors, responsible for the overall management of the Funds’ affairs.

The Adviser has contractually agreed, until April 30, 2020, to waive its management fee for, and to reimburse expenses of, the Retail Class and Institutional Class shares of each Fund in an amount that limits annual operating expenses (excluding taxes, interest, brokerage, dividends on short positions, fees and expenses of “acquired funds” (as defined in Form N-1A) and extraordinary items but including the management fee stated in the Advisory Agreement) to not more than 1.95% and 1.40% (or, for the Small Cap Growth Fund only, 1.85% and 1.18%) of the average daily net assets of the Retail Class and Institutional Class shares, respectively, of the relevant Fund . For a period of up to 36 months from the time of any waiver or reimbursement pursuant to this agreement, the Adviser may recover from a Fund fees waived and expenses reimbursed to the extent that such recovery would not cause the Total Annual Fund Operating Expenses (as used in Form N-1A) of the Fund to exceed 1.95% or 1.40% (or, for the Small Cap Growth Fund only, 1.85% and 1.18%) of the average daily net assets of the Retail Class or Institutional Class, respectively, of the Fund, but any such recovery will not include interest.

For the fiscal year ended December 31, 2018 , after applicable waivers and/or reimbursements (or recoupment), the management fees paid by the Funds amounted to the following: 1.16 % of the average

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Mr. Chris Retzler is the Co-Portfolio Manager of the Growth Fund and the Portfolio Manager of the Small Cap Growth Fund. Mr. Retzler has been with Needham Asset Management, LLC since 2005. Mr. Retzler is a graduate of the Columbia Business School and was a Fulbright Scholar. He began his career in 1994 with Merrill Lynch Investment Banking. When he left Merrill Lynch in 2002, Mr. Retzler was an associate in Mergers and Acquisitions where he participated in numerous stock and asset transactions across a wide range of domestic and global industries. From 2002 until he joined Needham, he was in charge of Winterkorn, a

 

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•	Fund name and account number;

•	Amount of the transaction (in dollars or shares);

•	A completed account application or investment stub;

•	Corporate/Institutional accounts only: A certified corporate resolution dated within the last six months (or a certified corporate resolution and letter of indemnity) must be on file with the Transfer Agent;

•	Any supporting legal documentation that may be required; and

•	When opening a new account, a check payable to Needham Funds.

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•	The signatures of all registered shareholders with signature guarantees, if applicable.

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Additional Information on Redemptions

The Board of Directors has adopted policies and procedures with respect to frequent purchases and redemptions of the Funds’ shares by the Funds’ shareholders. The Funds discourage, and do not accommodate, frequent purchases and redemptions of the Funds’ shares by the Funds’ shareholders. The Funds restrict or reject such trading or take other action if, in the judgment of the Adviser or the Funds’ Transfer Agent, such trading may interfere with the efficient management of the Funds’ portfolios, may materially increase the Funds’ transaction costs, administrative costs or taxes, or may otherwise be detrimental to the interests of the Funds and their shareholders. The steps the Funds utilize to discourage frequent transactions may include monitoring trading activity and imposing trading restrictions on certain accounts. Transactions placed in violation of the Funds’ market-timing trading policy may be cancelled or revoked by the Funds on the next business day following receipt by the Funds.

While the Funds (directly and with the assistance of their service providers) identify and restrict frequent trading, there is no guarantee that the Funds will be able to detect frequent purchases and redemptions or the participants engaged in such activity, or, if it is detected, to prevent its recurrence. The Funds receive purchase and sale orders through financial intermediaries and cannot always detect frequent trading that may be facilitated by the use of such intermediaries or by the use of group or omnibus accounts maintained by those intermediaries. In situations in which the Funds become aware of possible market-timing activity, it will notify the financial intermediary in order to help facilitate the enforcement of its

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Tax Status, Dividends and Distributions

Each Fund intends to make annual distributions to its shareholders of record of substantially all of its realized net capital gains (the excess of realized net long-term capital gains over realized net short-term capital losses), any realized net gains from foreign currency transactions, net investment income and the excess, if any, of realized net short-term capital gains over realized net long-term capital losses. The Funds may make additional distributions, if necessary, to avoid a 4% excise tax on certain undistributed ordinary income and capital gain net income. Certain distributions made to shareholders of record as of a date in October, November or December of a given year which are paid by the Funds in January of the immediately subsequent year will be taxable to shareholders as if received on December 31 of such given year.

Unless an investment in a Fund is through a tax-exempt account or plan, such as an IRA or qualified retirement plan, distributions are generally taxable to shareholders at different rates depending on the length of time the Fund holds its assets and the type of income that the Fund earns.

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(1)	automatic reinvestment of capital gain distributions in Fund shares and payment of dividends in cash;

(2)	payment of all distributions and dividends in cash; or

(3)	payment of capital gains distributions in cash and automatic reinvestment of dividends in Fund shares.

 

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Additional Information

Independent Registered Public Accounting Firm

KPMG LLP, 345 Park Avenue, New York, New York 10154 serves as the Funds’ independent registered public accounting firm.

Counsel

Proskauer Rose LLP, Eleven Times Square
New York, NY 10036, serves as the Funds’ legal counsel.

Index Descriptions

A direct investment in the following indices is not possible.

Russell 2000 ^® Index

The Russell 2000 ^® Index measures the performance of the small-cap segment of the U.S. equity universe. The Russell 2000 ^® Index is a subset of the Russell 3000 ^® Index representing approximately 8% of the total market capitalization of that index. The Russell 2000 ^® Index includes approximately 2,000 of the smallest securities based on a combination of their market cap and current index membership.

The Funds have been developed solely by the Adviser. The Funds are not in any way connected to or sponsored, endorsed, sold or promoted by the LSE Group. FTSE Russell is a trading name of certain of the LSE Group companies.

All rights in the Russell 2000 Index and the Russell 3000 Index (together, the "Indexes") vest in the relevant LSE Group company which owns the Index. "Russell®" is a trade mark of the relevant LSE Group company and is used by any other LSE Group company under license.

 

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