[NEUBERGER & BERMAN LOGO]
EQUITY FUNDS(R)
Supplement to the Prospectus dated December 6, 1996
The following table shows the average annual total returns of
Neuberger&Berman International Fund for the one-year period ended August 31,
1996, and for the period from that Fund's inception (June 15, 1994) to August
31, 1996. The table also shows a comparison with the EAFE(R) Index. The EAFE
Index is the Morgan Stanley Capital International Europe, Australia, Far East
Index, an unmanaged index of non-U.S. equity market performance. Please note
that an index does not take into account any fees or expenses of investing in
the individual securities that it tracks.
One Since
Year Inception
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Neuberger&Berman International Fund 11.73% 8.55%
EAFE Index 8.19% 5.67%
Prior to the inception of Neuberger&Berman International Fund, the manager of
its corresponding Portfolio, Felix Rovelli, was the manager of Vontobel
EuroPacific Fund ("EuroPacific Fund") and of Penn Series International Equity
Fund ("International Equity Fund"), each of which had an investment objective,
policies and limitations substantially similar to those of Neuberger&Berman
International Fund. Mr. Rovelli used the same analytical methods when
identifying potential investments for those funds as he now uses for
Neuberger&Berman International Portfolio. Mr. Rovelli was primarily responsible
for the day-to-day management of EuroPacific Fund and International Equity Fund,
and no other person played a significant role in managing those funds. The
average annual total returns for EuroPacific Fund and International Equity Fund,
and the performance of the EAFE Index, for the one-year period ended April 30,
1994, and for a period that approximates Mr. Rovelli's tenure as portfolio
manager were as follows:
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One August 1, 1990
Year to April 30, 1994
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EuroPacific Fund*
Before deducting maximum sales load 22.14% 7.81%
After deducting maximum sales load N/A 6.35%
EAFE Index 16.62% 5.20%
One DECEMBER 1, 1992
Year to April 30, 1994
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Penn Mutual Cornerstone VUL
(an insurance separate account investing in
International Equity Fund)**
After charging certain separate account
expenses*** 19.68% 23.39%
EAFE Index 16.62% 29.19%
* Mr. Rovelli was the portfolio manager of EuroPacific Fund from July 6, 1990,
to April 30, 1994. Prior to March 1, 1993, shares of EuroPacific Fund were
sold with a maximum sales load of 5%.
** Mr. Rovelli was the portfolio manager of International Equity Fund from its
inception on November 2, 1992, to April 30, 1994. International Equity Fund
is an underlying investment vehicle to fund benefits under variable annuity
contracts and variable life insurance contracts issued by The Penn Mutual
Life Insurance Company ("Penn Mutual"). Shares of International Equity Fund
are sold only to Penn Mutual and its subsidiaries for their separate and
general accounts.
*** The performance of International Equity Fund shown above is based on the
performance of Penn Mutual Cornerstone VUL. Because of the deduction of
insurance expenses, as described below, the performance shown is lower than
the returns actually achieved by International Equity Fund. An investor in
Penn Mutual Cornerstone VUL pays certain expenses at the separate account
level, including insurance expenses (designed to cover mortality and expense
risk charges of 0.75% and miscellaneous administration costs), a contract
charge of $60 and a front-end sales load of 4%, and may pay a surrender
charge. The above performance results reflect insurance expenses but not
contract charges or sales loads. Insurance company separate accounts may be
subject to different requirements under federal tax laws and state insurance
laws than other investment companies, which may affect their performance.
EuroPacific Fund and International Equity Fund are separate funds and have
different fees and expenses than Neuberger&Berman International Fund. Their
historical performance is not indicative of the past or future performance of
Neuberger&Berman International Fund.
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MANAGEMENT AND ADMINISTRATION--Investment Manager, Administrator,
Distributor, and Sub-Adviser
Neuberger&Berman Focus Portfolio and Neuberger&Berman Guardian
Portfolio--Effective December 31, 1996, Lawrence Marx III will no longer have
responsibility for management of these Portfolios. Kent C. Simons and Kevin
Risen will continue to be responsible for day-to-day management.
The date of this Supplement is December 17, 1996.
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