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ANNUAL REPORT
August 31, 1996
Neuberger&Berman
EQUITY FUNDS -Registered Trademark-
Neuberger&Berman
FOCUS FUND
Neuberger&Berman
GENESIS FUND
Neuberger&Berman
GUARDIAN FUND
Neuberger&Berman
INTERNATIONAL FUND
Neuberger&Berman
MANHATTAN FUND
Neuberger&Berman
PARTNERS FUND
Neuberger&Berman
SOCIALLY RESPONSIVE FUND
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
THE FUNDS
CHAIRMAN'S LETTER 4
PORTFOLIO MANAGERS'
COMMENTARY
Focus Fund 6
Genesis Fund 9
Guardian Fund 12
International Fund 15
Manhattan Fund 18
Partners Fund 21
Socially Responsive
Fund 23
GROWTH OF A DOLLAR
CHARTS
COMPARISON OF A
$10,000
INVESTMENT
Focus Fund 25
Genesis Fund 26
Guardian Fund 27
International Fund 28
Manhattan Fund 29
Partners Fund 30
Socially Responsive
Fund 31
FINANCIAL
STATEMENTS 32
FINANCIAL
HIGHLIGHTS
PER SHARE DATA
Focus Fund 44
Genesis Fund 45
Guardian Fund 46
International Fund 47
Manhattan Fund 48
Partners Fund 49
Socially Responsive
Fund 50
REPORT OF
INDEPENDENT
ACCOUNTANTS/AUDITORS 53
THE PORTFOLIOS
SCHEDULE OF
INVESTMENTS
TOP TEN EQUITY
HOLDINGS
Focus Portfolio 55
Genesis Portfolio 57
Guardian Portfolio 60
International Portfolio 64
Manhattan Portfolio 69
Partners Portfolio 71
Socially Responsive
Portfolio 74
FINANCIAL
STATEMENTS 78
FINANCIAL
HIGHLIGHTS 93
REPORT OF
INDEPENDENT
ACCOUNTANTS/AUDITORS 97
DIRECTORY 100
OFFICERS AND
TRUSTEES 101
</TABLE>
3
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CHAIRMAN'S LETTER August 31, 1996
Dear Fellow Shareholder,
When we reported to you last year, the stock market was enjoying broad
gains -- across big companies and small, from one industry to another.
Late in 1995, however, the general bullishness started to wane. Cautious
investors feared a slowing economy and took flight to safety -- favoring
blue-chip stocks selling at high multiples.
Early in 1996, the fears of recession were eclipsed by fears of an overheating
economy. In February, the government reported much higher-than-expected growth
in employment. This created uncertainty in the markets, renewing speculation of
future interest rate hikes. In this volatile context, Wall Street sentiment
shifted toward fast-growing smaller companies.
Not for long, though. In July, when a number of high-tech companies reported
lower-than-expected quarterly earnings, the market got battered badly. Scores of
issues hit lows for the year, and the terrific gains earned just months earlier
were erased.
Fortunately, calm was restored in August. Economic reports indicated that
earlier anxieties about inflation were unwarranted, and as we are writing to you
today, the market appears to be reaching new highs once again.
In the following letters, our portfolio managers will explain why they have
outperformed or underperformed the market indices. In broad strokes, here is the
key explanation:
/ / In the last quarter of 1995, Wall Street favored high-multiple blue
chips -- stocks that few of our primarily value-oriented equity fund
managers hold. This underweighting adversely affected some of our funds'
performance.
Despite these temporary setbacks, we remain committed to our primarily
value-oriented investment approach. It's a strategy that has produced consistent
long-term results for almost half a century (though, of course, past performance
is no guarantee of future results).
In fact, it's heartening to us that even with the current volatility, investor
interest in our funds has continued to grow. On August 31,
4
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1995, our equity and income shareholders had entrusted us with $10.7 billion.
Only a year later, that amount has grown to $13.2 billion -- a 23.4% jump and
one of the biggest increases in our history.
We remain confident in the long-term performance of our mutual funds and thank
you for your continued support.
Sincerely,
/s/ Stanley Egener
Stanley Egener
Chairman of the Board
Neuberger&Berman Equity Funds
5
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PORTFOLIO MANAGERS' COMMENTARY
Neuberger&Berman
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Focus Fund
OBJECTIVE AND STRATEGY
Seeks long-term capital appreciation by investing principally in common
stocks selected from 13 leading sectors of the economy believed to offer
the greatest potential for capital growth.
Dear Fellow Shareholder,
For the fiscal year ended August 31, 1996, Focus' net asset value increased
3.70%. After the sharp gains of last year, the increases in both the overall
stock market and the Fund have moderated somewhat this year. This is not
unusual.
Focus' performance in fiscal 1996 did not match that of the benchmark we
measure ourselves against, the Standard & Poor's "500".* (See page 25 for a
comparison of a $10,000 investment and average annual returns as of August 31,
1996). This was due to two basic factors. In the first place, over the last 9 to
12 months, investors have grown increasingly nervous about exposing themselves
to an uncertain economy. Earnings disappointments in individual companies have
been met with instant and significant price declines, and with the economy
perceived to be in a decelerating trend, investors have sought protection
against this by buying those stocks thought to be immune to any economic
slowdown. Therefore, the stocks of companies in such industries as
pharmaceuticals, soft drinks, food and household products have done relatively
better than the market overall. Because of their valuations, these names are
unattractive to value investors such as ourselves. These stocks have accounted
for a disproportionate amount of the increase in the S&P, and not owning them
has been detrimental to our relative performance.
The other factor was the underperformance of two of our larger sectors:
technology and health care. In each case the primary culprit has been earnings
disappointments; but in both industries we think the reaction has been both
overdone in terms of stock price declines and
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Focus Fund (Cont'd)
overdramatized in terms of its implications. We believe technology will be an
ever-increasing part of the economy in the years to come and its future is
extremely bright. As value managers, we do not often get a chance to buy stocks
in high-growth industries at attractive P/E ratios, and when we do, we take
advantage of the opportunity. Similarly, our holdings in health care, which are
all HMO stocks, have been held back by some earnings shortfalls which we believe
are temporary. Two facts are central to our HMO investment thesis: one, the
percentage of the population enrolled in HMOs continues to increase steadily and
dramatically, and two, the managements of virtually all the companies in the
industry are addressing the problem of insufficient rates, which was the cause
of recent earnings disappointments.
We focus on these two areas of under-performance for two reasons. First, we
believe in being candid with our shareholders, and second, it is indicative of
how we run the Portfolio. Our adherence to the value discipline is total, and to
get above-average companies at below-average valuations means we must often buy
companies when their fortunes are perceived to be diminished and their stocks
are out of favor. This approach has served us well over time as evidenced by
Focus' average annual return since August 31, 1991 of 15.90%, comfortably ahead
of the S&P's return of 13.59% over the same five-year period.
Of the six sectors we are focused on at the present time, financial services
remains our largest. We continue to find both individual stocks, such as
CITICORP and Fannie Mae, and whole industries, such as the credit card business,
that we think offer earnings prospects much superior to the market while selling
at significant valuation discounts. As the three of us look at our holdings, we
like what we see. Our overall valuation level is lower than that of virtually
all other mutual funds, yet the earnings growth rates of our stocks are well
above average. This combination has been a winning strategy in the past; we are
sticking with it. Of course, past performance is no guarantee of future results.
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Focus Fund (Cont'd)
We appreciate your continued confidence in Neuberger&Berman Focus Fund, and we
look forward to keeping you informed about your Fund.
Sincerely,
<TABLE>
<S> <C> <C>
/s/ Kent Simons /s/ Lawrence Marx III /s/ Kevin Risen
Kent Simons Lawrence Marx III Kevin Risen
Portfolio Co-Managers
</TABLE>
The composition, industries and holdings of the Fund are subject to change.
Focus Fund's portfolio is invested in a wide array of stocks and no single
holding makes up more than a small fraction of the portfolio's total assets.
While the value-oriented approach is intended to limit risks, the
Portfolio -- with its concentration in sectors -- may be more greatly affected
by any single economic, political or regulatory development than a more
diversified mutual fund.
Before November 1, 1991, the investment policies of Neuberger&Berman Focus Fund
required that a substantial percentage of its assets be invested in the energy
field; accordingly, performance results prior to that time do not necessarily
reflect the level of performance that may be expected under the Fund's current
policies.
* The S&P "500" Index is an unmanaged index generally considered to be
representative of stock market activity. Please note that indices do not take
into account any fees and expenses of investing in the individual securities
that they track, and that individuals cannot invest directly in any index. Data
about the performance of this index are prepared or obtained by Neuberger&Berman
Management Inc. and include reinvestment of all dividends and capital gain
distributions. The Portfolio invests in many securities not included in the
above-described index.
8
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PORTFOLIO MANAGER'S COMMENTARY
Neuberger&Berman
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Genesis Fund
OBJECTIVE AND STRATEGY
Seeks capital appreciation by investing primarily in common stocks of
companies with small-market capitalizations ("small-cap").
Dear Fellow Shareholder,
For the fiscal year ended August 31, 1996, Genesis Fund had a return of
21.32% -- comparing favorably with both the general market's unmanaged Standard
& Poor's "500" Stock Index (up 18.70%) and the small-cap market's unmanaged
Russell 2000 Index (up 10.82%) (see page 26 for comparison of a $10,000
investment and average annual total returns as of August 31, 1996).*
Over the fiscal year, the Fund registered gains across a wide variety of
industry sectors. Energy stocks performed notably well as a group, following
higher gas and oil prices which encouraged increased drilling activity. Oil
service companies including Smith International and Oceaneering International
showed strong revenue and earnings growth. Interest-rate-sensitive stocks, such
as those of banks and insurance companies, were weaker as rates began to rise
during 1996.
This year's strong results demonstrate that attractive investments can still
be found among less glamorous, little-known small-cap issues that do not command
premium prices. Too many investors, we believe, focus only on the high-tech
companies among small-cap issues and ignore opportunities that can be found in
more mundane industries. Such businesses are a safer investment because the
greater the growth expectations, the greater the risk of disappointment.
Following are a few examples of stocks that demonstrate Genesis Fund's "boring
is beautiful" philosophy:
/ / BMC Industries.
BMC, the portfolio's largest holding, manufactures low-cost aperture masks
that are used for color televisions and computer monitors, as well as eyewear
lenses. Since 1991, reported earnings have grown at an annually compounded rate
of 24%, and earnings from existing operations have grown even more, over 30%
annually.
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Genesis Fund (Cont'd)
We are pleased that a shift in demand to larger aperture masks and to
polycarbonate lenses -- both of which have superior profit margins -- is
spurring rapid earnings growth. Expanded capacity for aperture masks is also
benefiting cash flow.
Thanks to enlarged capacity and a more profitable product mix, we believe
earnings for BMC Industries show promise over the next two years. Investors have
increasingly recognized the company's growth potential, and BMC's stock price
has appreciated in value.
/ / Texas Industries.
One of the lowest-cost producers of cement and steel, as well as a major
manufacturer of aggregates and related building materials, Texas Industries
(TXI) is benefiting from strong demand and tight supply conditions in its main
business lines.
TXI is using its healthy cash flow to reduce its debt, buy back its stock, and
consider possible acquisitions. TXI's balance sheet has improved substantially
from several years ago and currently shows a modest 31% debt-to-capitalization
ratio. Return on equity has risen above 18%, and it is our belief that it will
continue to go up.
/ / DH Technology.
DH Technology designs and manufactures transaction printers, bar-code
printers, and other equipment. It has successfully introduced new products since
1995, and the new sales have helped quarterly revenues and earnings to grow over
20%. We believe these gains should continue, with improving margins.
We are pleased with the company's excellent balance sheet showing that DH
Technology has no debt. The company expects to have approximately $35 million in
cash at the end of this quarter. Currently, the company is considering using its
excess cash flow to make possible acquisitions.
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Genesis Fund (Cont'd)
These are just a few examples of the little-known companies that have
performed strongly over the past fiscal year. We will continue in our search for
further "undiscovered gems" in the future, and we look forward to keeping you
informed about the Fund.
Sincerely,
/s/ Judith Value
Judith Vale
Portfolio Manager
The risks involved in seeking capital appreciation from investments principally
in companies with small market capitalizations are set forth in the prospectus.
The composition, industries and holdings of the Fund are subject to change.
Genesis Fund's portfolio is invested in a wide array of stocks and no single
holding makes up more than a small fraction of the portfolio's total assets.
* The S&P "500" Index is an unmanaged index generally considered to be
representative of stock market activity; the Russell 2000 Index is an unmanaged
index generally considered to be representative of small-cap stock market
activity. Please note that indices do not take into account any fees and
expenses of investing in the individual securities that they track, and that
individuals cannot invest directly in any index. Data about the performance of
these indices are prepared or obtained by Neuberger&Berman Management Inc. and
include reinvestment of all dividends and capital gain distributions. The
Portfolio invests in many securities not included in the above-described
indices.
11
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PORTFOLIO MANAGERS' COMMENTARY
Neuberger&Berman
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Guardian Fund
OBJECTIVE AND STRATEGY
Seeks long-term capital appreciation and, secondarily, current income. It
invests primarily in long-established, high-quality companies, considering
factors such as low price-to-earnings ratios, strong balance sheets, and
consistent earnings.
Dear Fellow Shareholder,
After the unusually high returns of 1995, some diminution in 1996 in both the
overall stock market and in the Fund is not out of the ordinary. On the other
hand, it has been frustrating to us to have the Fund's performance lag that of
our traditional benchmark, the Standard & Poor's "500" (S&P).* Guardian's return
for the fiscal year was 5.27% versus 18.70% for the S&P "500". (See page 27 for
a comparison of a $10,000 investment and average annual total returns as of
August 31, 1996).
There were two primary reasons for this. Firstly, we did not own the large
capitalization consumer non-durable stocks that accounted for a significant part
of the S&P "500's" advance. These stocks, such as Coca-Cola, Gillette and
Johnson & Johnson, have been aggressively sought by investors seeking to isolate
themselves from any earnings disappointments that a slowdown in the economy
might bring. In the process, these issues have been bid up to levels that we
find unattractive, and therefore -- while we have owned many of these stocks in
the past -- we own virtually none now.
Secondly, two of our larger areas of emphasis -- technology and managed care
(HMOs) -- were out of favor for much of the fiscal year. Both sectors were hurt
by earnings disappointments in several companies which investors extrapolated to
all companies in the business and, moreover, assumed to be long lasting. As a
result, the price declines in these sectors hampered our overall performance,
but at the same time caused the stocks to reach valuation measures which we
found compelling. Therefore we have gradually increased our holdings in these
areas
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Guardian Fund (Cont'd)
throughout the year. We think that technology will be an increasing force in the
economy for many years to come and will experience above-average growth as a
result. As value managers, we do not often get the chance to buy companies in
high-growth industries at below-average P/E ratios, but when we do, we take
advantage of the opportunity. Similarly, in the HMO industry, overly aggressive
pricing by some companies last year caused earnings disappointments this year,
which some investors assumed to be more lasting than we do. The percentage of
the population enrolled in HMOs has been increasing rapidly for many years and
shows no sign of abating, and we believe that this remains a high-growth
industry. Therefore, as in the case of technology, when presented with the
opportunity to buy above-average earnings prospects at below-average P/E ratios,
we took advantage of it.
Since its inception, Guardian has been managed using the value investing
approach. In order to buy companies with above-average earnings prospects at
below-average P/E ratios, we are often seeking either companies or industries
that are out of favor with most investors. This is the case in the examples
cited above. While this can be a wearing experience for your fund managers, over
the life of the Fund it has been a rewarding experience for its shareholders.
Since its inception (June 1, 1950), its average annual return of 12.92% has
exceeded that of the S&P's 12.31%. Given that our approach has worked for over
forty years, we are inclined to stick with it. Of course, past peformance is no
guarantee of future results.
As of this writing, our valuation level (as measured by the overall
price-earnings ratio) is lower than that of over 95% of all equity mutual funds
in the U.S. At the same time, the return on equity and earnings growth rate of
the holdings are above average. This combination of low valuations and high
returns is what has produced superior long-term results. As the three of us look
at our holdings today, we like what we see, and we believe the strategy will be
successful.
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Guardian Fund (Cont'd)
We appreciate your continued confidence in Neuberger&Berman Guardian Fund, and
we look forward to keeping you informed about your Fund.
Sincerely,
<TABLE>
<S> <C> <C>
/s/ Kent Simons /s/ Lawrence Marx III /s/ Kevin Risen
Kent Simons Lawrence Marx III Kevin Risen
Portfolio Co-Managers
</TABLE>
The composition, industries and holdings of the Fund are subject to change.
Guardian Fund's portfolio is invested in a wide array of stocks and no single
holding makes up more than a small fraction of the portfolio's total assets.
* The S&P "500" Index is an unmanaged index generally considered to be
representative of stock market activity. Please note that indices do not take
into account any fees and expenses of investing in the individual securities
that they track, and that individuals cannot invest directly in any index. Data
about the performance of this index are prepared or obtained by Neuberger&Berman
Management Inc. and include reinvestment of all dividends and capital gain
distributions. The Portfolio invests in many securities not included in the
above-described index.
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PORTFOLIO MANAGER'S COMMENTARY
Neuberger&Berman
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International Fund
OBJECTIVE AND STRATEGY
Seeks long-term capital appreciation by investing primarily in a
diversified portfolio of equity securities of foreign issuers.
Dear Fellow Shareholder,
For the fiscal year ended August 31, 1996, your Fund had a return of 11.73%,
comparing favorably with a return of 8.19% for the EAFE-Registered Trademark-
Index, the benchmark for international stocks (see page 28 for comparison of a
$10,000 investment and average annual total returns as of August 31, 1996.)*
We attribute the Fund's stronger relative performance to two factors. First of
all, while more than 40% of the EAFE-Registered Trademark- Index is based in
Japan -- which had modestly favorable results for the fiscal year -- your Fund's
portfolio currently has invested only 6.3% of its assets in Japanese companies.
In addition, the Fund's weighting towards Scandinavia and other
better-performing world markets helped us in the year just ended.
We were heavily invested in Scandinavia -- 14% of the portfolio's assets
compared to only 4% for the EAFE-Registered Trademark- Index -- because we were
able to find so many good values in Sweden, Finland, and Norway for the
reporting period. Uncertainties about the health of the local economies and the
outcomes of the national referenda on joining the Common Market enabled us to
buy many issues in the region at seemingly bargain prices.
Turning to specific stocks, Scandinavian software companies such as Caran, WM
Data, and Frontec benefited from the strong global market for information and
technology companies -- and contributed to the Fund's performance. We had also
invested in Dahl, Sweden's leader in wholesale plumbing and heating products. In
our judgment, the company is well positioned to deliver low double-digit
earnings growth, as the industry enters a consolidation phase.
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International Fund (Cont'd)
While we found the best bargains in Scandinavia, we seek value wherever it can
be found around the world, without favoring any particular continents, countries
or industries. Today, your Fund invests approximately two-thirds of its assets
in the established countries of Western Europe and Japan, with one-third in the
emerging markets of Latin America, Asia, Eastern Europe, Africa, and the Middle
East.
Israel is a country where -- like the Scandinavian region -- uncertainty over
local conditions caused stock prices to be discounted. We were not overly
concerned about declines. In our judgment, the technological strength and brain
power in Israel make the Israeli economy truly global, and local political
conditions are not so important since firms in Israel are exporting everywhere.
Taking advantage of the apparent values in the Israeli stock market, we
invested in such companies as NICE-Systems, a world leader in voice recording
for air traffic control, financial institutions, and intelligence agencies; and
Technomatix, a company whose software products help automate and rationalize
manufacturing operations, especially in the aerospace and automotive sectors.
Following Neuberger&Berman's value tradition, we buy when we see bargain
opportunities -- and sell when our holdings become fully valued. Over the past
fiscal year, we sold our positions in three Italian companies -- Telecom Italia,
Brembo, and Bulgari -- after each company's stock price had appreciated nicely.
We also sold our holdings in Peugeot because recessions in Europe (particularly
France) led to declining sales.
Looking forward, we are excited about opportunities in the world marketplace.
This year, for the first time, we invested in new capitalist countries such as
Hungary and the Czech Republic. We also foresee tremendous opportunities
globally in telecommunications.
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International Fund (Cont'd)
We appreciate your continued confidence in Neuberger&Berman International
Fund, and we look forward to keeping you informed about the Fund.
Sincerely,
/s/ Felix Rovelli
Felix Rovelli
Portfolio Manager
Investing in foreign securities involves greater risks than investing in
securities of U.S. issuers, including currency fluctuation.
The composition, industries and holdings of the Fund are subject to change.
International Fund's portfolio is invested in a wide array of stocks and no
single holding makes up more than a small fraction of the portfolio's total
assets.
* The EAFE-Registered Trademark- Index is an unmanaged index of over 1,000
foreign stock prices, translated into U.S. dollars. Please note that indices do
not take into account any fees and expenses of investing in the individual
securities that they track, and that individuals cannot invest directly in any
index. Data about the performance of this index are prepared or obtained by
Neuberger& Berman Management Inc. and include reinvestment of all dividends and
capital gain distributions. The Portfolio invests in many securities not
included in the above-described index.
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PORTFOLIO MANAGER'S COMMENTARY
Neuberger&Berman
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Manhattan Fund
OBJECTIVE AND STRATEGY
This broadly diversified growth fund seeks long-term capital appreciation.
Manhattan Fund follows a "growth at a reasonable price" philosophy and
searches for financially sound, growing companies with a special
competitive advantage that are attractively valued.
Dear Fellow Shareholder,
Manhattan Fund ended fiscal 1995 up 26.00% -- one of its highest returns since
Neuberger&Berman Management Inc. started managing it 17 years ago.
Unfortunately, many of the factors which aided the Fund's performance in the
previous year were not present in fiscal 1996. As a growth fund, Manhattan Fund
has historically performed best when inflation fears are steady, bond yields
fall, economic growth slows down, and corporate earnings grow. These conditions
were not met in fiscal 1996. The Fund ended its year down 2.91% -- only the
third down year ending August 31 in our 17 years of running the Fund (see page
29 for comparison of a $10,000 investment and average annual total returns as of
August 31, 1996).
In contrast to 1995, 1996 was a year of apprehension in the markets as
investors worried about both the sensitivity of the overall market to
inflationary pressures and the heightened sensitivity of individual stocks to
earnings disappointments. As such, many of the large capitalization blue-chip
stocks, such as food and drug names, which are viewed as resistant to these
concerns, did very well. Manhattan Fund, which has sought to buy stocks trading
at a discount to their earnings growth as opposed to these stocks which
typically trade at a premium, did not own many of these "in favor" names.
Also contributing to the decline was weakness in technology stocks in the
fourth quarter of 1995, after considerable strengths in earlier quarters.
Oversupplies of semiconductor memories from the Far East caused most high-tech
stocks to tumble. Not every company in the sector, however, showed
weakness -- Intel, a leading computer peripherals company, and SAP, a software
company, had year-long strength.
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Manhattan Fund (Cont'd)
On a more positive note, Manhattan Fund benefited from strong returns in our
financial services and insurance holdings (25% of assets). Morgan Stanley
(investment banking) and Travelers Group (investment banking, commercial credit,
retail brokerage, and insurance) registered strong gains. So, too, did our
credit card holdings, FirstUSA, Inc., MBNA Corporation and Capital One Financial
Corporation. Each of these has been growing credit card balances 30% per year
while the traditional banks have been scaling back in the business. Outside of
the financial services sector, Manhattan Fund was helped by its restaurant-chain
investments and selected consumer and retail stocks, including the office
products companies, Viking and Staples.
We are in no way discouraged by the reversals for the fiscal year. As
long-term investors, we expect occasional setbacks caused by changes in market
conditions. They are a small price to pay for the benefits of a mutual fund
specializing in common stocks with strong growth records and, in our judgment,
strong prospects; and we remain proud of Manhattan Fund's lifetime average
annual total return of 16.39% (compared to the S&P "500's" 15.88% over the same
period).*
Moreover, in a year of significant volatility, Manhattan Fund took advantage
of market declines, on a selective basis, to increase positions in some existing
holdings and to establish new ones. We believe that we are well-positioned as we
enter fiscal 1997.
Among the new holdings in the Fund are two UK cable stocks, International
CableTel and Comcast UK. While the market has been neglecting the UK cable
business, we believe it offers considerable potential at this time. Comcast UK
is halfway through building its cable system in the UK. It is also offering
telephone service competitive with British Telecom, the principal UK telephone
service supplier. In addition, the company is beginning to offer on-line
services. With a business offering three state-of-the-art services -- and
operating far ahead of competition -- we think Comcast UK is positioned to
generate positive cash flow later this year. International CableTel is similarly
well-positioned.
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Manhattan Fund (Cont'd)
While the fiscal year has been frustrating, we believe a long-term outlook can
reward the patient investor. We appreciate your continued confidence in
Manhattan Fund and look forward to keeping you informed about the Fund.
Sincerely,
/s/ Mark Goldstein
Mark Goldstein
Portfolio Manager
The composition, industries and holdings of the Fund are subject to change.
Manhattan Fund's portfolio is invested in a wide array of stocks and no single
holding makes up more than a small fraction of the portfolio's total assets.
* The S&P "500" Index is an unmanaged index generally considered to be
representative of stock market activity. Please note that indices do not take
into account any fees and expenses of investing in the individual securities
that they track, and that individuals cannot invest directly in any index. Data
about the performance of this index are prepared or obtained by Neuberger&Berman
Management Inc. and include reinvestment of all dividends and capital gain
distributions. The Portfolio invests in many securities not included in the
above-described index.
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PORTFOLIO MANAGERS' COMMENTARY
Neuberger&Berman
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Partners Fund
OBJECTIVE AND STRATEGY
Seeks capital growth through investing principally in common stocks of
medium-to-large capitalization companies.
Dear Fellow Shareholder,
Despite a more volatile market, Partners Fund advanced 13.86% in the fiscal
year ended August 31, 1996 (see page 30 for comparison of a $10,000 investment
and average annual total returns as of August 31, 1996). Though less than the
striking upward move of the prior fiscal year, when the Fund gained 21.53%, it
was a respectable result in the sometimes difficult conditions encountered as
the year progressed.
Results were helped, once again, by the financial services sector. Wells
Fargo, one of our largest portfolio holdings, performed strongly due to solid
earnings. Consumer non-durables (particularly food and drug stocks) also posted
solid gains, although their price-to-earnings ratios were too high for us to
consider making additional purchases. For the market at large, however, they
were attractive to cautious investors who feared market declines and inflation.
On the negative side, the Portfolio's technology and health-services related
issues suffered declines in response to over-production and price pressures,
respectively. We sold out our investment in Humana, a health care provider that
got caught up in the general negativism and increased cost pressure affecting
the industry.
We continue to value companies as a business executive would, comparing a
company's quoted trading price to a hypothetical off-market offer to buy the
entire company. In the second quarter, this practice was positively put to the
test in literal terms as several portfolio holdings were the subject of purchase
offers, including Stop & Shop, Loral, and Revco (a merger later disallowed by
the Justice Department).
Following are a few examples of the companies whose stocks we bought or sold
over the past fiscal year:
/ / Anheuser Busch
We bought Anheuser Busch, America's largest brewer, because the company
continues to gain market share and has enjoyed a more favorable pricing
environment. This market leader is using its positive cash flow to further
reduce costs and to buy back stock.
21
<PAGE>
- ----------------------------------------------------------------------
Partners Fund (Cont'd)
/ / Tyson Foods
We sold our shares in this consumer foods company because it was faced with
continuing run ups in the prices of corn and soy meal, its two main raw material
costs. Importing difficulties involving foreign governments, a politically
sensitive area, were also a concern.
/ / Harley-Davidson
We bought Harley-Davidson when the company had problems with its recreational
vehicles unit. While this affected Harley-Davidson's stock price significantly,
its dominant business, motorcycles, continued to be very profitable. In an
owner-oriented move, the company initiated a stock buy-back. With the
recreational vehicle business sold in 1996 (and the main business holding a full
order book and waiting list), Harley-Davidson's stock price appreciated
strongly. We no longer believed the stock to be undervalued and therefore sold
our position.
We appreciate your continued confidence in Neuberger&Berman Partners Fund, and
we look forward to keeping you informed about your Fund.
Sincerely,
<TABLE>
<S> <C>
/s/ Michael Kassen /s/ Robert Gendelman
Michael Kassen Robert Gendelman
Portfolio Co-Managers
</TABLE>
The composition, industries and holdings of the Fund are subject to change.
Partners Fund's portfolio is invested in a wide array of stocks and no single
holding makes up more than a small fraction of the portfolio's total assets.
22
<PAGE>
PORTFOLIO MANAGER'S COMMENTARY
Neuberger&Berman
- ----------------------------------------------------------------------
Socially Responsive Fund
OBJECTIVE AND STRATEGY
Seeks long-term capital appreciation by investing primarily in stocks of
companies that meet both financial and social criteria. In particular, the
Fund follows a "value" investment approach, favoring well-managed
companies with low price-to-earnings multiples, and searches for companies
that demonstrate leadership in any of three areas: concern for the
environment, workplace diversity, and enlightened workplace practices.
Dear Fellow Shareholder,
In its second full year of operations, your Fund continued to perform well.
Its return of 20.19%, for the fiscal year ended August 31, 1996, was a
particularly strong result in the context of the changing conditions met
throughout the year, and was ahead of the S&P "500" Stock Index at 18.70% (see
page 31 for comparison of a $10,000 investment and average annual total returns
as of August 31, 1996).*
Throughout the 12 months ended August 31, 1996, the Fund continued to select
its stocks one at a time, on their individual merits and market fundamentals. As
a reminder, our work is done on a financial basis first, and if the company is
deemed attractive financially we then put it through our social screens.
Although we have no bias toward any stock sector, we will discuss stocks by
sector here.
NATURAL GAS
Our Portfolio's performance was helped by the stocks of companies producing
natural gas -- a fuel that has comparatively low impact environmentally. Among
these, Louisiana Land & Exploration, an independent crude oil and gas production
company added to the Portfolio during the year at an apparently bargain price (4
times cash flow), was a stand-out.
ENSERCH Corp., a large Dallas-based natural gas company, was purchased for its
capital gain potential. Here we were rewarded quickly when Texas Utilities
offered to buy the regulated part of the business and it was decided to spin off
the exploration company. After the merger, we will just keep the exploration
company in the Portfolio.
23
<PAGE>
- ----------------------------------------------------------------------
Socially Responsive Fund (Cont'd)
TECHNOLOGY
This area was volatile during the period. We had excellent performance from
Intel Corp., but Digital Equipment declined due to fears of disappointing
earning results.
TELECOMMUNICATIONS, MEDIA AND CABLE
We have fairly large exposure in the converging telecommunications, cable and
media industries. Regulatory and competitive uncertainties have hindered stock
performance, but we still expect dynamic growth from this group. One new holding
this period is Viacom (listed as a consumer goods and services company), which
participates in the desirable programming area of the industry. On the social
side Viacom has an impressive array of family related benefits, giving full
support to their employees as they balance their work-life obligations.
CHEMICALS, INDUSTRIAL AND COMMERCIAL PRODUCTS
In the chemical area where we also have many commitments, the Fund benefited
from several corporate restructurings, such as Raychem. Raychem's margins
continue to improve, leading us to believe that we may still see earning
progress in the next couple of years. Raychem has supported its workers with an
in-house training center to help them find new jobs both within and outside the
company.
We appreciate your continued confidence in Neuberger&Berman Socially
Responsive Fund, and we look forward to keeping you informed about your Fund.
Sincerely,
/s/ Janet Prindle
Janet Prindle
Portfolio Manager
The composition, industries and holdings of the Fund are subject to change.
Socially Responsive Fund's portfolio is invested in a wide array of stocks and
no single holding makes up more than a small fraction of the portfolio's total
assets.
* The S&P "500" Index is an unmanaged index generally considered to be
representative of stock market activity. Please note that indices do not take
into account any fees and expenses of investing in the individual securities
that they track, and that individuals cannot invest directly in any index. Data
about the performance of this index are prepared or obtained by Neuberger&Berman
Management Inc. and include reinvestment of all dividends and capital gain
distributions. The Portfolio invests in many securities not included in the
above-described index.
24
<PAGE>
COMPARISON OF A $10,000 INVESTMENT
Neuberger&Berman August 31, 1996
- ----------------------------------------------------------------------
Focus Fund
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C>
Average Annual Total Return*
Focus S&P "500"
1 Year +3.70% +18.70%
5 Year +15.90% +13.59%
10 Year +13.40% +13.35%
Life of Fund +11.75% +10.97%
Focus Fund S&P "500"
1986 $10000 $10000
1987 $13206 $13464
1988 $11213 $11043
1989 $15065 $15373
1990 $14503 $14585
1991 $16818 $18522
1992 $18804 $19992
1993 $24115 $23029
1994 $26612 $24298
1995 $33922 $29503
1996 $35176 $35019
</TABLE>
The inception date of Neuberger&Berman Focus Fund is 10/19/55.
The Fund's name prior to January 1, 1995 was Neuberger&Berman Selected
Sectors Fund. Prior to November 1, 1991, the investment policies of Neuberger&
Berman Focus Fund required that a substantial percentage of its assets be
invested in the energy field; accordingly, performance results prior to that
time do not necessarily reflect the level of performance that may be expected
under the Fund's current investment policies. While the Fund's value-oriented
approach is intended to limit risks, the Portfolio, with its concentration in
sectors, may be more greatly affected by any single economic, political or
regulatory development than a more diversified mutual fund.
*"Total Return" includes reinvestment of all income dividends and capital gain
distributions. Results represent past performance and do not indicate future
results. The value of an investment in the Fund and the return on the investment
both will fluctuate, and redemption proceeds may be higher or lower than an
investor's original cost.
The S&P "500" Index is an unmanaged index generally considered to be
representative of stock market activity. Please note that indices do not take
into account any fees and expenses of investing in the individual securities
that they track, and that individuals cannot invest directly in any index. Data
about the performance of this index are prepared or obtained by Neuberger&Berman
Management Inc. and include reinvestment of all dividends and capital gain
distributions. The Portfolio invests in many securities not included in the
above-described index.
25
<PAGE>
COMPARISON OF A $10,000 INVESTMENT
Neuberger&Berman August 31, 1996
- ----------------------------------------------------------------------
Genesis Fund
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C>
Average Annual Total Return*
Genesis Russell 2000
1 Year +21.32% +10.82%
5 Year +14.71% +15.05%
Life of Fund +13.61% +12.64%
Genesis Fund Russell 2000
9/27/88 $10000 $10000
1989 $13045 $12113
1990 $10236 $9714
1991 $13856 $12749
1992 $14562 $13680
1993 $18087 $18130
1994 $18949 $19193
1995 $22680 $23191
1996 $27516 $25701
</TABLE>
The inception date of Neuberger&Berman Genesis Fund is 9/27/88.
Effective May 1, 1995, Neuberger&Berman Management Inc. has voluntarily
agreed to waive a portion of the management fee borne directly by Neuberger&
Berman Genesis Portfolio and indirectly by Neuberger&Berman Genesis Fund to
reduce that fee by 0.10% of the Portfolio's average daily net assets per annum.
Absent such waiver the total returns would have been less.
*"Total Return" includes reinvestment of all income dividends and capital gain
distributions. Results represent past performance and do not indicate future
results. The value of an investment in the Fund and the return on the investment
both will fluctuate, and redemption proceeds may be higher or lower than an
investor's original cost.
The Russell 2000 Index is an unmanaged index generally considered to be
representative of the 2,000 issuers having the smallest capitalization in the
Russell 3000 Index, representing approximately 7% of the Russell 3000 total
market capitalization. The smallest company's market capitalization is roughly
$13 million. The risks involved in seeking capital appreciation from investments
principally in companies with small market capitalization are set forth in the
prospectus. Please note that indices do not take into account any fees and
expenses of investing in the individual securities that they track, and that
individuals cannot invest directly in any index. Data about the performance of
this index are prepared or obtained by Neuberger&Berman Management Inc. and
include reinvestment of all dividends and capital gain distributions. The
Portfolio invests in many securities not included in the above-described index.
26
<PAGE>
COMPARISON OF A $10,000 INVESTMENT
Neuberger&Berman August 31, 1996
- ----------------------------------------------------------------------
Guardian Fund
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C>
Average Annual Total Return*
Guardian S&P "500"
1 Year +5.27% +18.70%
5 Year +15.09% +13.59%
10 Year +13.32% +13.35%
Life of Fund +12.92% +12.31%
Guardian Fund S&P "500"
1986 $10000 $10000
1987 $12667 $13464
1988 $11313 $11043
1989 $15148 $15373
1990 $13255 $14585
1991 $17296 $18522
1992 $19698 $19992
1993 $24511 $23029
1994 $26745 $24298
1995 $33180 $29503
1996 $34928 $35019
</TABLE>
The inception date of Neuberger&Berman Guardian Fund is 6/1/50.
*"Total Return" includes reinvestment of all income dividends and capital gain
distributions. Results represent past performance and do not indicate future
results. The value of an investment in the Fund and the return on the investment
both will fluctuate, and redemption proceeds may be higher or lower than an
investor's original cost.
The S&P "500" Index is an unmanaged index generally considered to be
representative of stock market activity. Please note that indices do not take
into account any fees and expenses of investing in the individual securities
that they track, and that individuals cannot invest directly in any index. Data
about the performance of this index are prepared or obtained by Neuberger&Berman
Management Inc. and include reinvestment of all dividends and capital gain
distributions. The Portfolio invests in many securities not included in the
above-described index.
27
<PAGE>
COMPARISON OF A $10,000 INVESTMENT
Neuberger&Berman August 31, 1996
- ----------------------------------------------------------------------
International Fund
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C>
Average Annual Total Return*
International EAFE-R- Index
1 Year +11.73% +8.19%
Life of Fund +8.55% +5.67%
International Fund EAFE-R- Index
6/15/1994 $10000 $10000
8/31/1994 $10460 $10360
1995 $10732 $10442
1996 $11991 $11298
</TABLE>
The inception date of Neuberger&Berman International Fund is 6/15/94.
Neuberger&Berman Management Inc. has voluntarily undertaken to reimburse
International Fund for its operating expenses and its pro rata share of its
Portfolio's operating expenses which, in the aggregate, exceed 1.70% per annum
of International Fund's average daily net assets, until December 31, 1997.
Absent such arrangement, the average annual total returns for the one year ended
8/31/96 and for the period from 6/15/94 to 8/31/96 would have been +11.15% and
+8.12%, respectively.
*"Total Return" includes reinvestment of all income dividends and capital gain
distributions. Results represent past performance and do not indicate future
results. The value of an investment in the Fund and the return on the investment
both will fluctuate, and redemption proceeds may be higher or lower than an
investor's original cost.
The EAFE-Registered Trademark- Index, also known as the Morgan Stanley Capital
International Europe, Australia, Far East Index, is an unmanaged index of over
1,000 foreign stock prices. The index is translated into U.S. dollars and
includes reinvestment of all dividends and capital gain distributions. The risks
involved in seeking capital appreciation from investments principally in
companies based outside the United States are set forth in the prospectus.
Please note that indices do not take into account any fees and expenses of
investing in the individual securities that they track, and that individuals
cannot invest directly in any index. Data about the performance of this index
are prepared or obtained by Neuberger&Berman Management Inc. and include
reinvestment of all dividends and capital gain distributions. The Portfolio
invests in many securities not included in the above-described index.
28
<PAGE>
COMPARISON OF A $10,000 INVESTMENT
Neuberger&Berman August 31, 1996
- ----------------------------------------------------------------------
Manhattan Fund
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C>
Average Annual Total Return*
Manhattan S&P "500"
1 Year -2.91% +18.70%
5 Year +11.12% +13.59%
10 Year +11.12% +13.35%
Life of Fund +16.39% +15.88%
Manhattan Fund S&P "500"
1986 $10000 $10000
1987 $13435 $13464
1988 $10776 $11043
1989 $15347 $15373
1990 $13434 $14585
1991 $16949 $18522
1992 $17753 $19992
1993 $22680 $23029
1994 $23472 $24298
1995 $29574 $29503
1996 $28714 $35019
</TABLE>
The inception date of Neuberger&Berman Manhattan Fund is 3/1/79 when
Neuberger&Berman Management Inc. first became its investment adviser.
*"Total Return" includes reinvestment of all income dividends and capital gain
distributions. Results represent past performance and do not indicate future
results. The value of an investment in the Fund and the return on the investment
both will fluctuate, and redemption proceeds may be higher or lower than an
investor's original cost.
The S&P "500" Index is an unmanaged index generally considered to be
representative of stock market activity. Please note that indices do not take
into account any fees and expenses of investing in the individual securities
that they track, and that individuals cannot invest directly in any index. Data
about the performance of this index are prepared or obtained by Neuberger&Berman
Management Inc. and include reinvestment of all dividends and capital gain
distributions. The Portfolio invests in many securities not included in the
above-described index.
29
<PAGE>
COMPARISON OF A $10,000 INVESTMENT
Neuberger&Berman August 31, 1996
- ----------------------------------------------------------------------
Partners Fund
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C>
Average Annual Total Return*
Partners S&P "500"
1 Year +13.86% +18.70%
5 Year +15.22% +13.59%
10 Year +12.59% +13.35%
Life of Fund +17.50% +15.24%
Partners Fund S&P "500"
1986 $10000 $10000
1987 $12618 $13464
1988 $11130 $11043
1989 $14656 $15373
1990 $13657 $14585
1991 $16119 $18522
1992 $17489 $19992
1993 $22410 $23029
1994 $23656 $24298
1995 $28749 $29503
1996 $32734 $35019
</TABLE>
The inception date of Neuberger&Berman Partners Fund is 1/20/75 when
Neuberger&Berman Management Inc. first became its investment adviser.
*"Total Return" includes reinvestment of all income dividends and capital gain
distributions. Results represent past performance and do not indicate future
results. The value of an investment in the Fund and the return on the investment
both will fluctuate, and redemption proceeds may be higher or lower than an
investor's original cost.
The S&P "500" Index is an unmanaged index generally considered to be
representative of stock market activity. Please note that indices do not take
into account any fees and expenses of investing in the individual securities
that they track, and that individuals cannot invest directly in any index. Data
about the performance of this index are prepared or obtained by Neuberger&Berman
Management Inc. and include reinvestment of all dividends and capital gain
distributions. The Portfolio invests in many securities not included in the
above-described index.
30
<PAGE>
COMPARISON OF A $10,000 INVESTMENT
Neuberger&Berman August 31, 1996
- ----------------------------------------------------------------------
Socially Responsive Fund
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C>
Average Annual Total Return*
Socially Responsive S&P "500"
1 Year +20.19% +18.70%
Life of Fund +15.50% +17.32%
Socially Responsive Fund S&P "500"
3/16/1994 $10000 $10000
8/31/1994 $10070 $10279
8/31/1995 $11865 $12481
8/31/1996 $14261 $14815
</TABLE>
The inception date of Neuberger&Berman Socially Responsive Fund is 3/16/94.
Neuberger&Berman Management Inc. has voluntarily undertaken to reimburse
Socially Responsive Fund for its operating expenses and its pro rata share of
its Portfolio's operating expenses which, in the aggregate, exceed 1.50% per
annum of Socially Responsive Fund's average daily net assets, until December 31,
1997. Absent such arrangement, the average annual total returns would have been
less.
*"Total Return" includes reinvestment of all income dividends and capital gain
distributions. Results represent past performance and do not indicate future
results. The value of an investment in the Fund and the return on the investment
both will fluctuate, and redemption proceeds may be higher or lower than an
investor's original cost.
The S&P "500" Index is an unmanaged index generally considered to be
representative of stock market activity. Please note that indices do not take
into account any fees and expenses of investing in the individual securities
that they track, and that individuals cannot invest directly in any index. Data
about the performance of this index are prepared or obtained by Neuberger&Berman
Management Inc. and include reinvestment of all dividends and capital gain
distributions. The Portfolio invests in many securities not included in the
above-described index.
31
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
Neuberger&Berman
- ----------------------------------------------------------------------
Equity Funds
<TABLE>
<CAPTION>
FOCUS GENESIS GUARDIAN
(000'S OMITTED EXCEPT PER SHARE AMOUNTS) FUND FUND FUND
------------------------------------
<S> <C> <C> <C>
ASSETS
Investment in corresponding Portfolio, at
value (Note A) $1,068,206 $ 194,678 $4,897,929
Deferred organization costs (Note A) -- -- --
Receivable for Trust shares sold 4,316 1,399 13,047
------------------------------------
1,072,522 196,077 4,910,976
------------------------------------
LIABILITIES
Payable for Trust shares redeemed 709 598 3,927
Payable to administrator -- net (Note B) 234 41 1,081
Accrued expenses 199 59 799
------------------------------------
1,142 698 5,807
------------------------------------
NET ASSETS at value $1,071,380 $ 195,379 $4,905,169
------------------------------------
NET ASSETS consist of:
Par value $ 38 $ 18 $ 206
Paid-in capital in excess of par value 728,724 142,457 3,704,113
Accumulated undistributed net investment
income 7,155 -- 24,429
Accumulated net realized gains (losses) on
investment 51,474 3,230 249,689
Net unrealized appreciation in value of
investment 283,989 49,674 926,732
------------------------------------
NET ASSETS at value $1,071,380 $ 195,379 $4,905,169
------------------------------------
SHARES OUTSTANDING
($.001 par value; unlimited shares
authorized) 37,641 17,908 206,284
------------------------------------
NET ASSET VALUE, offering and redemption price per
share $28.46 $10.91 $23.78
------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
32
<PAGE>
August 31, 1996
- ----------------------------------------------------------------------
Equity Funds
<TABLE>
<CAPTION>
SOCIALLY
INTERNATIONAL MANHATTAN PARTNERS RESPONSIVE
FUND FUND FUND FUND
---------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investment in corresponding Portfolio, at
value (Note A) $ 56,983 $ 517,214 $1,870,987 $ 32,856
Deferred organization costs (Note A) 56 -- -- 40
Receivable for Trust shares sold 52 190 2,767 84
---------------------------------------------------
57,091 517,404 1,873,754 32,980
---------------------------------------------------
LIABILITIES
Payable for Trust shares redeemed -- 869 1,112 12
Payable to administrator -- net (Note B) 24 116 412 13
Accrued expenses 79 180 286 31
---------------------------------------------------
103 1,165 1,810 56
---------------------------------------------------
NET ASSETS at value $ 56,988 $ 516,239 $1,871,944 $ 32,924
---------------------------------------------------
NET ASSETS consist of:
Par value $ 5 $ 43 $ 78 $ 2
Paid-in capital in excess of par value 50,912 386,569 1,458,516 29,964
Accumulated undistributed net investment
income 26 -- 11,934 28
Accumulated net realized gains (losses) on
investment (599) 49,542 181,185 951
Net unrealized appreciation in value of
investment 6,644 80,085 220,231 1,979
---------------------------------------------------
NET ASSETS at value $ 56,988 $ 516,239 $1,871,944 $ 32,924
---------------------------------------------------
SHARES OUTSTANDING
($.001 par value; unlimited shares
authorized) 4,784 43,230 78,380 2,372
---------------------------------------------------
NET ASSET VALUE, offering and redemption price per
share $11.91 $11.94 $23.88 $13.88
---------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
33
<PAGE>
STATEMENTS OF OPERATIONS
Neuberger&Berman
- ----------------------------------------------------------------------
Equity Funds
<TABLE>
<CAPTION>
FOCUS GENESIS GUARDIAN
(000'S OMITTED) FUND FUND FUND
--------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Investment income from corresponding Portfolio
(Note A) $ 16,716 $ 1,540 $ 101,456
--------------------------------------
Expenses:
Administration fee (Note B) 2,764 361 12,093
Amortization of deferred organization and
initial offering expenses (Note A) -- -- --
Auditing fees 8 8 8
Custodian fees 10 10 10
Legal fees 18 18 18
Registration and filing fees 139 33 586
Shareholder reports 113 34 371
Shareholder servicing agent fees (Note B) 616 142 3,296
Trustees' fees and expenses 19 5 56
Miscellaneous 11 1 31
Expenses from corresponding Portfolio (Notes
A & B) 5,718 1,172 21,488
--------------------------------------
Total expenses 9,416 1,784 37,957
Deduct -- expenses reimbursed by
administrator (Note B) -- -- --
--------------------------------------
Total net expenses 9,416 1,784 37,957
--------------------------------------
Net investment income (loss) 7,300 (244 ) 63,499
--------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
FROM CORRESPONDING PORTFOLIO (NOTE A)
Net realized gain on investment securities 52,305 4,476 289,099
Net realized loss on option contracts written (291) -- (5,720)
Net realized gain on financial futures
contracts -- -- --
Net realized gain on foreign currency
transactions -- -- --
Change in net unrealized appreciation of
investment securities, option contracts
written, translation of assets and
liabilities in foreign currencies, and
foreign currency contracts (22,215) 21,117 (119,590)
Change in net unrealized appreciation
(depreciation) of financial futures
contracts -- -- --
--------------------------------------
Net gain (loss) on investments from
corresponding Portfolio (Note A) 29,799 25,593 163,789
--------------------------------------
Net increase (decrease) in net assets
resulting from operations $ 37,099 $ 25,349 $ 227,288
--------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
34
<PAGE>
For the Year Ended August 31, 1996
- ----------------------------------------------------------------------
Equity Funds
<TABLE>
<CAPTION>
SOCIALLY
INTERNATIONAL MANHATTAN PARTNERS RESPONSIVE
FUND FUND FUND FUND
----------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Investment income from corresponding Portfolio
(Note A) $ 788 $ 4,220 $ 31,240 $ 305
----------------------------------------------------------------
Expenses:
Administration fee (Note B) 125 1,555 4,593 47
Amortization of deferred organization and
initial offering expenses (Note A) 20 -- -- 15
Auditing fees 8 10 8 7
Custodian fees 10 10 10 10
Legal fees 59 18 19 27
Registration and filing fees 35 43 95 31
Shareholder reports 65 115 150 24
Shareholder servicing agent fees (Note B) 42 624 899 26
Trustees' fees and expenses 5 12 26 1
Miscellaneous 1 13 16 1
Expenses from corresponding Portfolio (Notes
A & B) 555 3,443 8,940 116
----------------------------------------------------------------
Total expenses 925 5,843 14,756 305
Deduct -- expenses reimbursed by
administrator (Note B) (234) -- -- (34)
----------------------------------------------------------------
Total net expenses 691 5,843 14,756 271
----------------------------------------------------------------
Net investment income (loss) 97 (1,623) 16,484 34
----------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
FROM CORRESPONDING PORTFOLIO (NOTE A)
Net realized gain on investment securities 260 57,804 232,938 1,075
Net realized loss on option contracts written -- -- -- --
Net realized gain on financial futures
contracts 283 -- -- --
Net realized gain on foreign currency
transactions 66 -- -- --
Change in net unrealized appreciation of
investment securities, option contracts
written, translation of assets and
liabilities in foreign currencies, and
foreign currency contracts 4,239 (70,811) (30,428) 962
Change in net unrealized appreciation
(depreciation) of financial futures
contracts (275) -- -- --
----------------------------------------------------------------
Net gain (loss) on investments from
corresponding Portfolio (Note A) 4,573 (13,007) 202,510 2,037
----------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $ 4,670 $ (14,630) $ 218,994 $ 2,071
----------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
35
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
Neuberger&Berman
- ----------------------------------------------------------------------
Equity Funds
<TABLE>
<CAPTION>
FOCUS FUND GENESIS FUND
Year Year
Ended Ended
August 31, August 31,
(000'S OMITTED) 1996 1995 1996 1995
------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 7,300 $ 5,295 $ (244) $ (183)
Net realized gain (loss) on
investments from corresponding
Portfolio (Note A) 52,014 50,620 4,476 6,185
Change in net unrealized
appreciation (depreciation) of
investments from corresponding
Portfolio (Note A) (22,215) 138,207 21,117 12,511
------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 37,099 194,122 25,349 18,513
------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (3,873) (5,224) -- --
Net realized gain on investments (47,524) (38,655) (6,609) (4,105)
------------------------------------------------------
Total distributions to shareholders (51,397) (43,879) (6,609) (4,105)
------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 349,715 209,593 112,606 29,275
Proceeds from reinvestment of
dividends and distributions 44,921 37,993 5,892 3,647
Payments for shares redeemed (264,997) (85,655) (53,380) (71,413)
------------------------------------------------------
Net increase (decrease) from Trust
share transactions 129,639 161,931 65,118 (38,491)
------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 115,341 312,174 83,858 (24,083)
NET ASSETS:
Beginning of year 956,039 643,865 111,521 135,604
------------------------------------------------------
End of year $ 1,071,380 $ 956,039 $ 195,379 $ 111,521
------------------------------------------------------
Accumulated undistributed net
investment income at end of year $ 7,155 $ 3,728 $ -- $ --
------------------------------------------------------
NUMBER OF TRUST SHARES:
Sold 12,148 8,507 10,855 3,551
Issued on reinvestment of dividends
and distributions 1,608 1,761 628 467
Redeemed (9,219) (3,534) (5,295) (8,690)
------------------------------------------------------
Net increase (decrease) in shares
outstanding 4,537 6,734 6,188 (4,672)
------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
36
<PAGE>
- ----------------------------------------------------------------------
Equity Funds
<TABLE>
<CAPTION>
GUARDIAN FUND INTERNATIONAL FUND MANHATTAN FUND
Year Year Year
Ended Ended Ended
August 31, August 31, August 31,
1996 1995 1996 1995 1996 1995
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 63,499 $ 39,864 $ 97 $ 138 $ (1,623) $ 165
Net realized gain (loss) on
investments from corresponding
Portfolio (Note A) 283,379 119,369 609 (1,230) 57,804 43,765
Change in net unrealized
appreciation (depreciation) of
investments from corresponding
Portfolio (Note A) (119,590) 539,076 3,964 2,468 (70,811) 80,224
----------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 227,288 698,309 4,670 1,376 (14,630) 124,154
----------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (53,306) (34,262) (125) (53) -- (434)
Net realized gain on investments (139,952) (30,092) -- -- (43,799) (30,398)
----------------------------------------------------------------------------------
Total distributions to shareholders (193,258) (64,354) (125) (53) (43,799) (30,832)
----------------------------------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 1,770,255 1,313,150 39,066 27,433 136,492 124,949
Proceeds from reinvestment of
dividends and distributions 175,356 57,644 106 48 40,659 28,495
Payments for shares redeemed (1,021,992) (473,776) (13,165) (8,547) (214,451) (145,126)
----------------------------------------------------------------------------------
Net increase (decrease) from Trust
share transactions 923,619 897,018 26,007 18,934 (37,300) 8,318
----------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 957,649 1,530,973 30,552 20,257 (95,729) 101,640
NET ASSETS:
Beginning of year 3,947,520 2,416,547 26,436 6,179 611,968 510,328
----------------------------------------------------------------------------------
End of year $ 4,905,169 $ 3,947,520 $ 56,988 $ 26,436 $ 516,239 $ 611,968
----------------------------------------------------------------------------------
Accumulated undistributed net
investment income at end of year $ 24,429 $ 13,763 $ 26 $ 99 $ -- $ 54
----------------------------------------------------------------------------------
NUMBER OF TRUST SHARES:
Sold 74,621 64,070 3,475 2,705 10,683 11,050
Issued on reinvestment of dividends
and distributions 7,570 3,056 10 5 3,349 2,847
Redeemed (43,128) (23,714) (1,172) (830) (16,906) (13,048)
----------------------------------------------------------------------------------
Net increase (decrease) in shares
outstanding 39,063 43,412 2,313 1,880 (2,874) 849
----------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
37
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS(Cont'd)
Neuberger&Berman
- ----------------------------------------------------------------------
Equity Funds
<TABLE>
<CAPTION>
SOCIALLY
PARTNERS FUND RESPONSIVE FUND
Year Year
Ended Ended
August 31, August 31,
(000'S OMITTED) 1996 1995 1996 1995
------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 16,484 $ 11,137 $ 34 $ 18
Net realized gain (loss) on
investments from corresponding
Portfolio (Note A) 232,938 162,141 1,075 137
Change in net unrealized
appreciation (depreciation) of
investments from corresponding
Portfolio (Note A) (30,428) 101,941 962 936
------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 218,994 275,219 2,071 1,091
------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (13,359) (6,799) (17) (9)
Net realized gain on investments (180,347) (98,890) (268) --
------------------------------------------------------
Total distributions to shareholders (193,706) (105,689) (285) (9)
------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 457,620 199,058 25,132 5,547
Proceeds from reinvestment of
dividends and distributions 181,772 101,349 254 8
Payments for shares redeemed (356,696) (241,908) (2,471) (691)
------------------------------------------------------
Net increase (decrease) from Trust
share transactions 282,696 58,499 22,915 4,864
------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 307,984 228,029 24,701 5,946
NET ASSETS:
Beginning of year 1,563,960 1,335,931 8,223 2,277
------------------------------------------------------
End of year $ 1,871,944 $ 1,563,960 $ 32,924 $ 8,223
------------------------------------------------------
Accumulated undistributed net
investment income at end of year $ 11,934 $ 8,809 $ 28 $ 11
------------------------------------------------------
NUMBER OF TRUST SHARES:
Sold 19,230 9,597 1,843 534
Issued on reinvestment of dividends
and distributions 8,210 5,472 19 1
Redeemed (14,990) (11,807) (184) (67)
------------------------------------------------------
Net increase (decrease) in shares
outstanding 12,450 3,262 1,678 468
------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
38
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Neuberger&Berman August 31, 1996
- ----------------------------------------------------------------------
Equity Funds
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1) GENERAL: Neuberger&Berman Focus Fund ("Focus," formerly Neuberger&
Berman Selected Sectors Fund), Neuberger&Berman Genesis Fund ("Genesis"),
Neuberger&Berman Guardian Fund ("Guardian"), Neuberger&Berman International
Fund ("International"), Neuberger&Berman Manhattan Fund ("Manhattan"),
Neuberger&Berman Partners Fund ("Partners"), and Neuberger& Berman Socially
Responsive Fund ("Socially Responsive") (collectively, the "Funds") are
separate operating series of Neuberger&Berman Equity Funds (the "Trust"), a
Delaware business trust organized pursuant to a Trust Instrument dated
December 23, 1992. The Trust is registered as a diversified, open-end
management investment company under the Investment Company Act of 1940, as
amended, and its shares are registered under the Securities Act of 1933, as
amended. The trustees of the Trust changed the name of Neuberger&Berman
Selected Sectors Fund to Neuberger&Berman Focus Fund, effective January 1,
1995. The trustees of the Trust may establish additional series or classes of
shares without the approval of shareholders.
The assets of each series belong only to that series, and the liabilities
of each series are borne solely by that series and no other.
Each Fund seeks to achieve its investment objective by investing all of
its net investable assets in its corresponding Portfolio of Equity Managers
Trust (Global Managers Trust with respect to International) (each a
"Portfolio") having the same investment objective and policies as the Fund.
The value of each Fund's investment in its corresponding Portfolio reflects
that Fund's proportionate interest in the net assets of that Portfolio
(95.17%, 74.92%, 78.59%, 100.00%, 91.15%, 93.57%, and 20.73%, for Focus,
Genesis, Guardian, International, Manhattan, Partners, and Socially
Responsive, respectively, at August 31, 1996). Another regulated investment
company, which has only a single shareholder and is sponsored by
Neuberger&Berman Management Incorporated ("Management"), also invests in
Neuberger&Berman Socially Responsive Portfolio. The performance of each Fund
is directly affected by the performance of its corresponding Portfolio. The
financial statements of each Portfolio, including the Schedule of
Investments, are included elsewhere in this report and should be read in
conjunction with the corresponding Fund's financial statements.
2) PORTFOLIO VALUATION: Each Fund records its investment in its corresponding
Portfolio at value. Investment securities held by each Portfolio are valued
as indicated in the notes following the Portfolios' Schedule of Investments.
39
<PAGE>
3) FEDERAL INCOME TAXES: Each series of the Trust is treated as a separate
entity for Federal income tax purposes. It is the policy of each Fund to
continue to qualify as a regulated investment company by complying with the
provisions available to certain investment companies, as defined in
applicable sections of the Internal Revenue Code, and to make distributions
of investment company taxable income and net capital gains (after reduction
for any amounts available for Federal income tax purposes as capital loss
carryforwards) sufficient to relieve it from all, or substantially all,
Federal income taxes. Accordingly, each Fund paid no Federal income taxes and
no provision for Federal income taxes was required.
4) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Each Fund earns income, net
of Portfolio expenses, daily on its investment in its corresponding
Portfolio. Dividends and distributions from net realized capital gains, if
any, are normally distributed in December. Guardian generally distributes
substantially all of its net investment income at the end of each calendar
quarter. Income dividends and capital gain distributions to shareholders are
recorded on the ex-dividend date. To the extent each Fund's net realized
capital gains, if any, can be offset by capital loss carryforwards ($15,585
and $758,366 expiring in 2003 and 2004, respectively, for International,
determined as of August 31, 1996), it is the policy of each Fund not to
distribute such gains.
Each Fund distinguishes between dividends on a tax basis and a financial
reporting basis and only distributions in excess of tax basis earnings and
profits are reported in the financial statements as a return of capital.
Differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes are classified as
distributions in excess of net investment income or accumulated net realized
gains.
5) ORGANIZATION EXPENSES: Expenses incurred by International and Socially
Responsive in connection with their organization are being amortized on a
straight-line basis over a five-year period. At August 31, 1996, the
unamortized balance of such expenses amounted to $55,841 and $39,643, for
International and Socially Responsive, respectively.
6) EXPENSE ALLOCATION: Each Fund bears all costs of its operations. Expenses
incurred by the Trust with respect to any two or more Funds are allocated in
proportion to the net assets of such Funds, except where a more appropriate
allocation of expenses to each Fund can otherwise be made fairly. Expenses
directly attributable to a Fund are charged to that Fund.
7) OTHER: All net investment income and realized and unrealized capital gains
and losses of each Portfolio are allocated pro rata among its respective
Funds and any other investors in the Portfolio.
40
<PAGE>
NOTE B -- ADMINISTRATION FEES, DISTRIBUTION ARRANGEMENTS, AND OTHER TRANSACTIONS
WITH AFFILIATES:
Each Fund retains Management as its administrator under an Administration
Agreement ("Agreement"). Pursuant to this Agreement each Fund pays Management an
administration fee at the annual rate of .26% (.15% prior to May 1, 1995 with
the exception of International which paid 0.67% prior to November 1, 1995 and
0.63% prior to May 1, 1995) of that Fund's average daily net assets and
indirectly pays for investment management services through its investment in its
corresponding Portfolio (see Note B of Notes to Financial Statements of the
Portfolios). The Agreement provides that, if with respect to any fiscal year of
each Fund, its total operating expenses plus its pro rata portion of its
corresponding Portfolio's operating expenses (including the fees payable to
Management but excluding interest, taxes, brokerage commissions, and
extraordinary expenses) ("Operating Expenses") exceed the most restrictive of
the expense limitations imposed by securities laws of the states in which such
Fund's shares are qualified for sale, the administration fees for that fiscal
year will be reduced by the amount of such excess, provided that Management has
no obligation to reimburse the Fund for any such expenses that exceed the
administration fee. The most restrictive expense limitation to which each Fund
is currently subject is 2 1/2% of the first $30 million of average daily net
assets, 2% of the next $70 million of average daily net assets, and 1 1/2% of
any additional average daily net assets. No reduction in the administration fee
as a result of the state expense limitation was required for the year ended
August 31, 1996.
In addition, Management has voluntarily undertaken to reimburse International
and Socially Responsive for their Operating Expenses which exceed, in the
aggregate, 1.70% and 1.50%, respectively, per annum of its average daily net
assets (the "Expense Limitation"). Each undertaking is subject to termination by
Management after December 31, 1997. For the year ended August 31, 1996, such
excess expenses amounted to $233,577 and $34,074, for International and Socially
Responsive, respectively. International and Socially Responsive have each agreed
to repay Management through December 31, 1998 and March 14, 1998, respectively,
for its excess Operating Expenses previously reimbursed by Management, so long
as its annual Operating Expenses during that period do not exceed the Expense
Limitation. For the year ended August 31, 1996, there were no reimbursed
expenses repaid to Management.
All of the capital stock of Management is owned by individuals who are also
general partners of Neuberger&Berman, L.P. ("Neuberger"), a member firm of The
New York Stock Exchange and sub-adviser to each Portfolio. Several individuals
who are officers and/or trustees of the Trust are also partners of Neuberger
and/or officers and/or directors of Management.
Under a service agreement, which was in effect through April 30, 1995, each
Fund had retained Management to provide certain shareholder, shareholder-related
41
<PAGE>
and other services not furnished by the shareholder servicing agent. Pursuant to
the service agreement, each Fund paid Management a monthly fee at the annual
rate of .04% of the average daily net assets of the Fund as compensation for
such services. As of May 1, 1995, the service agreement and the administration
agreement, then in effect, were combined into a single agreement, and the
combined fees were increased from .19% to .26% for each Fund, with the exception
of the agreements for International which were combined with no fee increase.
Each Fund also has a distribution agreement with Management, which receives
no compensation therefor and no commissions for sales or redemptions of shares
of beneficial interest of each Fund.
Each Portfolio has an expense offset arrangement in connection with its
custodian contract. The impact of this arrangement, reflected in the Statement
of Operations, under the caption Expenses from corresponding Portfolio, is less
than .01% of each Fund's average daily net assets.
Each Fund has an expense offset arrangement in connection with its
shareholder servicing agent contract. The impact of this arrangement, reflected
in the Statement of Operations, is less than .01% of each Fund's average daily
net assets.
NOTE C -- INVESTMENT TRANSACTIONS:
During the year ended August 31, 1996, additions and reductions in each
Fund's investment in its corresponding Portfolio were as follows:
<TABLE>
<CAPTION>
ADDITIONS REDUCTIONS
- -------------------------------------------------------------
<S> <C> <C>
FOCUS $182,413,752 $109,751,052
GENESIS 82,287,423 25,106,697
GUARDIAN 902,000,391 181,454,304
INTERNATIONAL 30,617,757 4,847,421
MANHATTAN 50,406,700 130,874,986
PARTNERS 246,155,564 162,259,187
SOCIALLY RESPONSIVE 23,021,099 578,707
</TABLE>
At August 31, 1996, Neuberger&Berman International Portfolio's cost of
investments for U.S. Federal income tax purposes was $50,946,000. Gross
unrealized appreciation of investments was $8,075,000 and gross unrealized
depreciation of investments was $1,256,000, resulting in net unrealized
appreciation of $6,819,000, based on cost for U.S. Federal income tax purposes.
42
<PAGE>
(This page has been left blank intentionally.)
43
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Focus Fund(1)
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
October 1,
1992 to
Year Ended August 31, August 31, Year Ended September 30,
1996(2) 1995(2) 1994(2) 1993(2) 1992 1991 1990 1989 1988 1987
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $ 28.88 $ 24.42 $ 24.00 $ 19.31 $ 18.91 $ 16.66 $ 19.01 $ 16.60 $ 20.10 $ 17.96
------------------------------------------------------------------------------------------------------
Income From Investment
Operations
Net Investment Income .19 .17 .21 .23 .29 .38 .44 .46 .46 .48
Net Gains or Losses
on Securities (both
realized and
unrealized) .85 5.97 2.16 4.65 2.62 2.96 (1.84) 4.83 (2.98) 5.46
------------------------------------------------------------------------------------------------------
Total From
Investment
Operations 1.04 6.14 2.37 4.88 2.91 3.34 (1.40) 5.29 (2.52) 5.94
------------------------------------------------------------------------------------------------------
Less Distributions
Dividends (from net
investment income) (.11) (.20) (.25) (.04) (.31) (.37) (.39) (.49) (.47) (.49)
Distributions (from
capital gains) (1.35) (1.48) (1.70) (.15) (2.20) (.72) (.56) (2.39) (.51) (3.31)
------------------------------------------------------------------------------------------------------
Total Distributions (1.46) (1.68) (1.95) (.19) (2.51) (1.09) (.95) (2.88) (.98) (3.80)
------------------------------------------------------------------------------------------------------
Net Asset Value, End of
Year $ 28.46 $ 28.88 $ 24.42 $ 24.00 $ 19.31 $ 18.91 $ 16.66 $ 19.01 $ 16.60 $ 20.10
------------------------------------------------------------------------------------------------------
Total Return+ +3.70% +27.47% +10.35% +25.39%(3) +15.51% +20.20% -7.54% +32.23% -12.44% +33.07%
------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of
Year (in millions) $ 1,071.4 $ 956.0 $ 643.9 $ 573.9 $ 439.2 $ 399.2 $ 368.6 $ 441.3 $ 375.2 $ 481.1
------------------------------------------------------------------------------------------------------
Ratio of Expenses to
Average Net Assets .89% .87% .85% .92%(4) .91% .93% .92% .99% 1.01% .86%
------------------------------------------------------------------------------------------------------
Ratio of Net
Investment Income to
Average Net Assets .69% .75% .89% 1.18%(4) 1.46% 2.01% 2.34% 2.39% 2.64% 2.21%
------------------------------------------------------------------------------------------------------
Portfolio Turnover
Rate(5) -- -- -- 52% 77% 60% 66% 60% 66% 88%
------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
44
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Genesis Fund
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period From
Period from September
August 1, 27,
1993 1988(6) to
Year Ended August 31, to August 31, Year Ended July 31, July 31,
1996(2) 1995(2) 1994(2) 1993(2) 1993 1992 1991 1990 1989
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $9.52 $8.27 $8.62 $ 8.30 $ 7.10 $ 6.41 $ 5.78 $ 6.25 $5.00
--------------------------------------------------------------------------------------------------
Income From Investment
Operations
Net Investment Income
(Loss) (.01) -- (.01) -- .01 (.01) .03 .02 .02
Net Gains or Losses
on Securities (both
realized and
unrealized) 1.95 1.56 .42 .32 1.19 .80 .64 (.35) 1.24
--------------------------------------------------------------------------------------------------
Total From
Investment
Operations 1.94 1.56 .41 .32 1.20 .79 .67 (.33) 1.26
--------------------------------------------------------------------------------------------------
Less Distributions
Dividends (from net
investment income) -- -- (.01) -- -- (.01) (.04) (.02) (.01)
Distributions (from
capital gains) (.55) (.31) (.75) -- -- (.09) -- (.12) --
--------------------------------------------------------------------------------------------------
Total Distributions (.55) (.31) (.76) -- -- (.10) (.04) (.14) (.01)
--------------------------------------------------------------------------------------------------
Net Asset Value, End of
Year $10.91 $9.52 $8.27 $ 8.62 $ 8.30 $ 7.10 $ 6.41 $ 5.78 $6.25
--------------------------------------------------------------------------------------------------
Total Return+ +21.32% +19.69% +4.77% +3.86%(3) +16.90% +12.38% +11.80% -5.33% +25.24%(3)
--------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of
Year (in millions) $195.4 $111.5 $135.6 $ 118.5 $ 113.5 $ 72.2 $ 27.8 $ 20.8 $18.1
--------------------------------------------------------------------------------------------------
Ratio of Expenses to
Average Net Assets 1.28%(7) 1.35%(7) 1.36% 1.51%(4) 1.65% 2.00%(7) 2.00%(7) 2.00%(7) 2.00%(4,7)
--------------------------------------------------------------------------------------------------
Ratio of Net
Investment Income
(Loss) to Average
Net Assets (.18%)(7) (.16%)(7) (.20%) (.08%)(4) .15% (.14%)(7) .60%(7) .41%(7) .51%(4,7)
--------------------------------------------------------------------------------------------------
Portfolio Turnover
Rate(5) -- -- -- -- 54% 23% 46% 37% 10%
--------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
45
<PAGE>
FINANCIAL HIGHLIGHTS(8)
Neuberger&Berman
- --------------------------------------------------------------------------------
Guardian Fund
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period
from
November
1, 1989
to August
Year Ended August 31, 31, Year Ended October 31,
1996(2) 1995(2) 1994(2) 1993(2) 1992 1991 1990 1989 1988 1987
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $ 23.61 $ 19.52 $ 18.57 $ 15.73 $ 14.90 $ 11.90 $13.20 $ 12.31 $ 11.08 $ 13.17
---------------------------------------------------------------------------------------------------
Income From Investment
Operations
Net Investment Income .31 .27 .24 .30 .29 .32 .31 .35 .35 .40
Net Gains or Losses
on Securities (both
realized and
unrealized) .90 4.30 1.41 3.45 1.71 3.20 (1.36) 2.08 2.55 (.77)
---------------------------------------------------------------------------------------------------
Total From
Investment
Operations 1.21 4.57 1.65 3.75 2.00 3.52 (1.05) 2.43 2.90 (.37)
---------------------------------------------------------------------------------------------------
Less Distributions
Dividends (from net
investment income) (.28) (.25) (.30) (.25) (.26) (.35) (.25) (.36) (.36) (.41)
Distributions (from
capital gains) (.76) (.23) (.40) (.66) (.91) (.17) -- (1.18) (1.31) (1.31)
---------------------------------------------------------------------------------------------------
Total Distributions (1.04) (.48) (.70) (.91) (1.17) (.52) (.25) (1.54) (1.67) (1.72)
---------------------------------------------------------------------------------------------------
Net Asset Value, End of
Year $ 23.78 $ 23.61 $ 19.52 $ 18.57 $ 15.73 $ 14.90 $11.90 $ 13.20 $ 12.31 $ 11.08
---------------------------------------------------------------------------------------------------
Total Return+ +5.27% +24.06% +9.12% +24.43% +13.88% +30.48% -8.08%(3) +19.91% +26.79% -3.05%
---------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of
Year (in millions) $ 4,905.2 $ 3,947.5 $ 2,416.5 $ 1,787.0 $ 802.9 $ 628.6 $496.3 $ 569.3 $ 539.1 $ 461.1
---------------------------------------------------------------------------------------------------
Ratio of Expenses to
Average Net Assets .82% .80% .80% .81% .82% .84% .86%(4) .84% .84% .74%
---------------------------------------------------------------------------------------------------
Ratio of Net
Investment Income to
Average Net Assets 1.37% 1.40% 1.36% 2.01% 1.90% 2.46% 2.89%(4) 2.59% 2.80% 2.72%
---------------------------------------------------------------------------------------------------
Portfolio Turnover
Rate(5) -- -- -- 27% 41% 59% 58% 52% 73% 91%
---------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
46
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
International Fund
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. The per share amounts and ratios which are shown reflect income and
expenses, including the Fund's proportionate share of its corresponding
Portfolio's income and expenses. It should be read in conjunction with its
corresponding Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
June 15,
1994(6) to
Year Ended August 31, August 31,
1996 1995 1994
----------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Year $ 10.70 $ 10.46 $10.00
----------------------------------------
Income From Investment Operations
Net Investment Income .01 .06 .01
Net Gains or Losses on Securities (both
realized and unrealized) 1.24 .21 .45
----------------------------------------
Total From Investment Operations 1.25 .27 .46
----------------------------------------
Less Distributions
Dividends (from net investment income) (.04) (.03) --
----------------------------------------
Net Asset Value, End of Year $ 11.91 $ 10.70 $10.46
----------------------------------------
Total Return+ +11.73% +2.60% +4.60%(3)
----------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $ 57.0 $ 26.4 $ 6.2
----------------------------------------
Ratio of Expenses to Average Net Assets(7) 1.70% 1.70% 1.70%(4)
----------------------------------------
Ratio of Net Investment Income to Average Net
Assets(7) .24% .73% .57%(4)
----------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
47
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Manhattan Fund
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Year Ended August 31, Year Ended December 31,
1996(2) 1995(2) 1994(2) 1993(2) 1992 1991 1990(9) 1989 1988 1987
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $13.27 $11.28 $12.94 $11.59 $ 11.55 $ 9.46 $10.44 $ 9.04 $ 7.81 $ 8.95
--------------------------------------------------------------------------------------------------------
Income From Investment
Operations
Net Investment
Income (Loss) (.04) -- .02 .02 .06 .13 .10 .18 .17 .14
Net Gains or Losses
on Securities
(both realized and
unrealized) (.33) 2.70 .40 3.06 .49 2.27 (1.08) 2.45 1.26 (.07)
--------------------------------------------------------------------------------------------------------
Total From
Investment
Operations (.37) 2.70 .42 3.08 .55 2.40 (.98) 2.63 1.43 .07
--------------------------------------------------------------------------------------------------------
Less Distributions
Dividends (from net
investment income) -- (.01) (.02) (.05) (.11) (.16) -- (.18) (.16) (.26)
Distributions (from
capital gains) (.96) (.70) (2.06) (1.68) (.40) (.15) -- (1.05) (.04) (.95)
--------------------------------------------------------------------------------------------------------
Total
Distributions (.96) (.71) (2.08) (1.73) (.51) (.31) -- (1.23) (.20) (1.21)
--------------------------------------------------------------------------------------------------------
Net Asset Value, End of
Year $11.94 $13.27 $11.28 $12.94 $ 11.59 $ 11.55 $ 9.46 $ 10.44 $ 9.04 $ 7.81
--------------------------------------------------------------------------------------------------------
Total Return+ -2.91% +26.00% +3.49% +27.76% +4.74% +26.17% -9.39%(3) +29.09% +18.31% +0.43%
--------------------------------------------------------------------------------------------------------
Ratios/Supplemental
Data
Net Assets, End of
Year (in millions) $516.2 $612.0 $510.3 $537.6 $ 400.7 $ 429.0 $355.6 $ 404.7 $ 341.7 $ 329.0
--------------------------------------------------------------------------------------------------------
Ratio of Expenses
to Average Net
Assets .98% .98% .96% 1.04% 1.07% 1.09% 1.14%(4) 1.12% 1.18% .98%
--------------------------------------------------------------------------------------------------------
Ratio of Net
Investment Income
(Loss) to Average
Net Assets (.27%) .03% .16% .20% .57% 1.28% 1.44%(4) 1.60% 1.55% 1.58%
--------------------------------------------------------------------------------------------------------
Portfolio Turnover
Rate(5) -- -- -- 76%(4) 83% 78% 91%(4) 77% 70% 111%
--------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
48
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Partners Fund
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
July 1, 1993
to August
Year Ended August 31, 31, Year Ended June 30,
1996(2) 1995(2) 1994(2) 1993(2) 1993 1992 1991 1990 1989 1988 1987
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $ 23.72 $ 21.32 $ 22.46 $ 20.98 $ 18.96 $ 17.80 $ 18.11 $ 19.04 $ 16.84 $ 20.83 $ 20.63
--------------------------------------------------------------------------------------------------------------
Income From
Investment
Operations
Net Investment
Income .22 .17 .10 .02 .16 .23 .50 .83 .71 .55 .44
Net Gains or
Losses on
Securities
(both realized
and unrealized) 2.84 3.94 1.07 1.46 3.84 2.05 .27 .68 2.14 (1.05) 2.45
--------------------------------------------------------------------------------------------------------------
Total From
Investment
Operations 3.06 4.11 1.17 1.48 4.00 2.28 .77 1.51 2.85 (.50) 2.89
--------------------------------------------------------------------------------------------------------------
Less Distributions
Dividends (from
net investment
income) (.20) (.11) (.11) -- (.19) (.34) (.74) (.76) (.65) (.70) (.44)
Distributions
(from capital
gains) (2.70) (1.60) (2.20) -- (1.79) (.78) (.34) (1.68) -- (2.79) (2.25)
--------------------------------------------------------------------------------------------------------------
Total
Distributions (2.90) (1.71) (2.31) -- (1.98) (1.12) (1.08) (2.44) (.65) (3.49) (2.69)
--------------------------------------------------------------------------------------------------------------
Net Asset Value, End
of Year $ 23.88 $ 23.72 $ 21.32 $ 22.46 $ 20.98 $ 18.96 $ 17.80 $ 18.11 $ 19.04 $ 16.84 $ 20.83
--------------------------------------------------------------------------------------------------------------
Total Return+ +13.86% +21.53% +5.56% +7.05%(3) +21.78% +13.23% +5.14% +8.11% +17.59% -2.73% +16.98%
--------------------------------------------------------------------------------------------------------------
Ratios/Supplemental
Data
Net Assets, End
of Year (in
millions) $ 1,871.9 $ 1,564.0 $ 1,335.9 $1,185.1 $ 1,085.6 $ 852.9 $ 823.5 $ 793.8 $ 743.0 $ 718.8 $ 757.7
--------------------------------------------------------------------------------------------------------------
Ratio of
Expenses to
Average Net
Assets .84% .83% .81% .84%(4) .86% .86% .88% .91% .97% .95% .86%
--------------------------------------------------------------------------------------------------------------
Ratio of Net
Investment
Income to
Average Net
Assets .93% .83% .48% .59%(4) .83% 1.23% 2.84% 4.53% 3.96% 3.28% 2.93%
--------------------------------------------------------------------------------------------------------------
Portfolio
Turnover
Rate(5) -- -- -- 6% 82% 97% 161% 136% 157% 210% 169%
--------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
49
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Socially Responsive Fund
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. The per share amounts and ratios which are shown reflect income and
expenses, including the Fund's proportionate share of its corresponding
Portfolio's income and expenses. It should be read in conjunction with its
corresponding Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
March 16,
1994(6)
to August
Year Ended August 31, 31,
1996 1995 1994
------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Year $ 11.84 $ 10.07 $ 10.00
------------------------------------------
Income From Investment Operations
Net Investment Income .02 .03 .01
Net Gains or Losses on Securities
(both realized and unrealized) 2.35 1.76 .06
------------------------------------------
Total From Investment Operations 2.37 1.79 .07
------------------------------------------
Less Distributions
Dividends (from net investment
income) (.02) (.02) --
Distributions (from capital gains) (.31) -- --
------------------------------------------
Total Distributions (.33) (.02) --
------------------------------------------
Net Asset Value, End of Year $ 13.88 $ 11.84 $ 10.07
------------------------------------------
Total Return+ +20.19% +17.82% +0.70%(3)
------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in
millions) $ 32.9 $ 8.2 $ 2.3
------------------------------------------
Ratio of Expenses to Average Net
Assets(7) 1.50% 1.51% 1.50%(4)
------------------------------------------
Ratio of Net Investment Income to
Average Net Assets(7) .19% .36% .50%(4)
------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
50
<PAGE>
NOTES TO FINANCIAL HIGHLIGHTS
Neuberger&Berman August 31, 1996
- ----------------------------------------------------------------------
Equity Funds
1)Prior to January 1, 1995, its name was Neuberger&Berman Selected Sectors
Fund.
2)The per share amounts and ratios which are shown reflect income and expenses,
including each Fund's proportionate share of its corresponding Portfolio's
income and expenses.
3)Not annualized.
4)Annualized.
5)Each Fund (except International and Socially Responsive) transferred all of
its investment securities into its respective Portfolio on August 2, 1993.
After that date each Fund invested only in its corresponding Portfolio, and
that Portfolio, rather than the Fund, engaged in securities transactions.
Therefore, after that date no Fund had a portfolio turnover rate. Portfolio
turnover rates for periods ending after August 2, 1993 are included elsewhere
in Neuberger&Berman Focus Portfolio's, Neuberger&Berman Genesis Portfolio's,
Neuberger&Berman Guardian Portfolio's, Neuberger&Berman Manhattan Portfolio's,
and Neuberger&Berman Partners Portfolio's Financial Highlights.
6)The date investment operations commenced.
7)After reimbursement of expenses by Management. Had Management not
undertaken such action the annualized ratios to average daily net assets would
have been:
<TABLE>
<CAPTION>
PERIOD FROM
SEPTEMBER 27,
YEAR ENDED JULY 1988
31, TO JULY 31,
GENESIS 1991 1990 1989
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Expenses 2.16% 2.40% 3.79%
-----------------------------------
Net Investment Income (Loss) .44% .01% (1.28%)
-----------------------------------
</TABLE>
Had Genesis not reimbursed Management, the annualized ratios to average
daily net assets would have been:
<TABLE>
<CAPTION>
YEAR ENDED
JULY 31,
1992
- --------------------------------------------------------------
<S> <C>
Expenses 1.65%
---------------
Net Investment Income .21%
---------------
</TABLE>
51
<PAGE>
Had Management not waived a portion of the management fee borne directly
by Neuberger&Berman Genesis Portfolio (see Note B of Notes to Financial
Statements of the Portfolios) the annualized ratios to average daily net
assets would have been:
<TABLE>
<CAPTION>
YEAR ENDED
AUGUST 31,
1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Expenses 1.38% 1.38%
---------------------------------
Net Investment Loss (.28%) (.19%)
---------------------------------
</TABLE>
After reimbursement of expenses by the administrator as described in Note B
of Notes to Financial Statements. Had the administrator not undertaken such
action the annualized ratios to average daily net assets would have been:
<TABLE>
<CAPTION>
PERIOD FROM
JUNE 15,
YEAR ENDED 1994
AUGUST 31, TO AUGUST
INTERNATIONAL 1996 1995 31, 1994
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Expenses 2.28% 2.31% 2.50%
------------------------------------------
Net Investment Income (Loss) (.34%) .12% (.23%)
------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PERIOD FROM
MARCH 16,
YEAR ENDED 1994
AUGUST 31, TO AUGUST
SOCIALLY RESPONSIVE 1996 1995 31, 1994
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Expenses 1.69% 2.50% 2.50%
------------------------------------------
Net Investment Income (Loss) .00% (.63%) (.50%)
------------------------------------------
</TABLE>
8)Adjusted for a 200% stock dividend effective January 20, 1993.
9)For the eight-month period ended August 31, 1990.
+ Total return based on per share net asset value reflects the effects of
changes in net asset value on the performance of each Fund during each year
and assumes dividends and capital gain distributions, if any, were reinvested.
Results represent past performance and do not guarantee future results.
Investment returns and principal may fluctuate and shares when redeemed may be
worth more or less than original cost. For International and Socially
Responsive, total return would have been lower if Management and/or BNP-N&B
Global Asset Management L.P. had not reimbursed certain expenses. For Genesis,
total return would have been lower if Management had not waived a portion of
the management fee.
52
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of Neuberger&Berman Equity Funds and
Shareholders of Neuberger&Berman Manhattan Fund and
Neuberger&Berman Socially Responsive Fund
We have audited the accompanying statements of assets and liabilities of
Neuberger&Berman Manhattan Fund and Neuberger&Berman Socially Responsive Fund
(collectively the "Funds"), as of August 31, 1996, and the related statements of
operations for the year then ended, and the statements of changes in net assets
for each of the two years in the period then ended, and the financial highlights
for each of the periods indicated therein. These financial statements and
financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Neuberger&Berman Manhattan Fund and Neuberger&Berman Socially Responsive Fund as
of August 31, 1996, the results of their operations for the year then ended, and
the changes in their net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods indicated therein,
in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
October 4, 1996
53
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Trustees
Neuberger&Berman Equity Funds and
Shareholders of:
Neuberger&Berman Focus Fund
Neuberger&Berman Genesis Fund
Neuberger&Berman Guardian Fund
Neuberger&Berman International Fund and
Neuberger&Berman Partners Fund
We have audited the accompanying statements of assets and liabilities
of the Neuberger&Berman Focus Fund, Neuberger&Berman Genesis Fund,
Neuberger&Berman Guardian Fund, Neuberger&Berman International Fund, and
Neuberger&Berman Partners Fund, five of the series comprising Neuberger&Berman
Equity Funds (the "Trust"), as of August 31, 1996, and the related statements of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the periods indicated therein. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the above mentioned series of Neuberger&Berman Equity Funds at August 31,
1996, the results of their operations for the year then ended, the changes in
their net assets for each of the two years in the period then ended, and the
financial highlights for each of the periods indicated therein, in conformity
with generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
October 3, 1996
54
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman August 31, 1996
- --------------------------------------------------------------------------------
Focus Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
--------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Neiman-Marcus Group 4.2%
2. CITICORP 3.7%
3. Compaq Computer 3.0%
4. Chrysler Corp. 3.0%
5. General Motors 2.9%
6. UCAR International 2.8%
7. Federal National Mortgage Association 2.7%
8. Federal Home Loan Mortgage 2.5%
9. Aetna Inc. 2.4%
10. Travelers Group 2.4%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ------------
<C> <S> <C>
COMMON STOCKS (96.1%)
AUTOMOTIVE (6.9%)
445,900 Cabot Corp. $ 12,262
1,146,000 Chrysler Corp. 33,377
645,000 General Motors 32,089
------------
77,728
------------
FINANCIAL SERVICES (31.8%)
330,000 ADVANTA Corp. Class B 14,685
231,700 Allmerica Property & Casualty 6,545
185,000 American International Group 17,575
300,000 Bank of Boston 15,825
690,000 Capital One Financial 20,786
495,000 CITICORP 41,209
1,100,000 Countrywide Credit Industries 26,537
200,000 Dean Witter, Discover 10,000
315,000 Federal Home Loan Mortgage 27,838
992,000 Federal National Mortgage
Association 30,752
410,000 First USA $ 21,730
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ------------
<C> <S> <C>
102,500 Horace Mann Educators 3,523
232,200 ITT Hartford Group 12,249
157,500 MBNA Corp. 4,784
250,000 Merrill Lynch 15,312
495,000 PartnerRe Ltd. 13,984
450,000 PennCorp Financial Group 13,725
226,800 Signet Banking 5,472
272,500 Sphere Drake Holdings 2,555
615,000 Travelers Group 26,676
100,000 Wells Fargo 24,875
------------
356,637
------------
HEALTH CARE (9.3%)
410,000 Aetna Inc. 27,111
705,000 FHP International 25,556 (2)
730,000 Foundation Health 21,900 (2)
220,000 Healthsource Inc. 3,300 (2)
860,000 Humana Inc. 16,125 (2)
815,000 Mid Atlantic Medical Services 11,003 (2)
------------
104,995
------------
HEAVY INDUSTRY (14.4%)
935,800 AGCO Corp. 22,108
150,000 Aluminum Co. of America 9,319
275,600 American Standard 9,405 (2)
80,000 Champion International 3,440
205,000 Cleveland-Cliffs 7,995
881,500 LTV Corp. 10,358
165,000 Mead Corp. 9,446
1,100,000 Rollins Truck Leasing 13,063
100,000 Temple-Inland 4,938
804,600 UCAR International 31,379 (2)
150,000 Union Camp 7,275
170,000 USFreightways Corp. 3,527
379,000 Varity Corp. 19,045 (2)
175,000 Willamette Industries 10,806
------------
162,104
------------
</TABLE>
55
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman August 31, 1996
- --------------------------------------------------------------------------------
Focus Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ------------
<C> <S> <C>
MEDIA & ENTERTAINMENT (10.9%)
178,000 A.H. Belo $ 7,142
445,000 Bell Cablemedia ADR 6,550 (2)
25,000 Comcast Corp. Class A 397
915,000 Comcast Corp. Class A Special 14,754
530,000 Comcast UK Cable Partners
Limited 5,698 (2)
325,000 Harcourt General 15,559
436,000 International CableTel 10,573 (2)
450,000 Jones Intercable Inc. Class A 5,738 (2)
310,000 Scandinavian Broadcasting
System 6,471 (2)
500,000 Tele-Communications, Inc.
Class A 7,438 (2)
150,000 Time Warner 5,006
550,000 U.S. West Media Group 9,969 (2)
500,000 United International Holdings 6,875 (2)
300,000 Viacom Inc. Class B 9,450 (2)
276,600 Vodafone Group ADR 10,476
------------
122,096
------------
RETAIL (4.2%)
1,577,800 Neiman-Marcus Group 46,742 (2)
------------
TECHNOLOGY (18.4%)
425,000 Airtouch Communications 11,688 (2)
250,000 Altera Corp. 11,000 (2)
200,000 Applied Materials 4,850 (2)
330,000 Arrow Electronics 15,056 (2)
250,000 Avnet, Inc. 11,687
600,000 Compaq Computer 33,975 (2)
350,000 Digital Equipment 13,519 (2)
550,000 KLA Instruments 10,862 (2)
250,000 Komag, Inc. 5,312 (2)
375,000 MEMC Electronic Materials 13,219 (2)
400,000 Microchip Technology 14,700 (2)
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ------------
<C> <S> <C>
230,000 Micron Technology $ 5,232
200,000 Palmer Wireless 3,900(2)
197,500 PriCellular Corp. 2,642(2)
300,000 Seagate Technology 14,400(2)
670,000 Tele-Communications
International 11,139(2)
286,000 Texas Instruments 13,371
225,000 Varian Associates 10,266
------------
206,818
------------
UTILITIES (0.2%)
35,000 AT&T Corp. 1,837
------------
TOTAL COMMON STOCKS (COST
$792,860) 1,078,957
------------
<CAPTION>
Principal
Amount
- ----------
<C> <S> <C>
CONVERTIBLE BONDS (0.1%)
$1,000,000 Scandinavian Broadcasting
System SA, Cv. Sub. Deb.,
7.25%, due 8/1/05 (COST
$1,000) 985
------------
U.S. TREASURY SECURITIES (1.4%)
15,345,000 U.S. Treasury Bills, 4.965% &
5.24%, due 9/5/96 & 12/19/96
(COST $15,242) 15,250
------------
SHORT-TERM CORPORATE NOTES (2.6%)
29,400,000 General Electric Capital
Corp., 5.10%, due 9/3/96
(COST $29,400) 29,400 (3)
------------
TOTAL INVESTMENTS (100.2%)
(COST $838,502) 1,124,592 (4)
Liabilities, less cash,
receivables and other assets
[(0.2%)] (2,221 )
------------
TOTAL NET ASSETS (100.0%) $ 1,122,371
------------
</TABLE>
56
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman August 31, 1996
- --------------------------------------------------------------------------------
Genesis Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
--------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. BMC Industries 4.0%
2. Texas Industries 2.8%
3. DH Technology 2.5%
4. Wolverine Tube 2.4%
5. Dallas Semiconductor 2.1%
6. Reynolds & Reynolds 2.1%
7. SCI Systems 2.0%
8. Apogee Enterprises 1.9%
9. Prime Hospitality 1.9%
10. Alumax Inc. 1.8%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
COMMON STOCKS (96.4%)
AEROSPACE (2.9%)
180,300 AAR Corp. $ 3,899
80,100 Thiokol Corp. 3,594
-------------
7,493
-------------
AGRICULTURE (0.9%)
79,149 Delta & Pine Land 2,246
-------------
AUTOMOTIVE (2.5%)
108,400 Donaldson Co. 2,791
67,800 Monaco Coach 898 (2)
115,900 Tower Automotive 2,782 (2)
-------------
6,471
-------------
BANKING & FINANCIAL (7.2%)
107,100 Bank United 2,584 (2)
63,000 Charter One Financial 2,398
70,000 First Commerce 2,502
45,250 Mark Twain Bancshares 1,753
42,777 ONBANCorp, Inc. 1,380
155,000 Reliance Bancorp 2,654
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
70,500 Texas Regional Bancshares $ 2,027
105,200 Webster Financial 3,393
-------------
18,691
-------------
BUILDING, CONSTRUCTION & FURNISHINGS (6.5%)
142,500 Apogee Enterprises 4,881
73,000 Lincoln Electric Class A 1,989
125,000 Oakwood Homes 2,937
110,000 Texas Industries 7,164
-------------
16,971
-------------
CHEMICALS (2.5%)
112,000 Lawter International 1,330
232,000 Lilly Industries 3,683
85,400 McWhorter Technologies 1,527 (2)
-------------
6,540
-------------
COMMUNICATIONS (1.3%)
124,700 Black Box 3,289 (2)
-------------
CONSUMER PRODUCTS & SERVICES (7.1%)
92,000 Alltrista Corp. 2,070 (2)
51,500 Block Drug 2,292
60,800 Bush Boake Allen 1,368 (2)
108,200 Coachmen Industries 2,015
40,000 First Brands 910
24,000 Marcus Corp. 570
253,600 Prime Hospitality 4,818 (2)
89,000 Richfood Holdings 3,382
75,000 The First Years 1,003
-------------
18,428
-------------
DIAGNOSTIC EQUIPMENT (0.9%)
105,700 ADAC Laboratories 2,431
-------------
DIVERSIFIED (0.4%)
40,200 Raven Industries 915
-------------
ELECTRONICS (12.4%)
350,200 BMC Industries 10,506
</TABLE>
57
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Genesis Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
224,800 Continental Circuits $ 2,810(2)
291,900 Dallas Semiconductor 5,546
76,000 Fusion Systems 1,463(2)
136,900 Kent Electronics 3,029(2)
70,000 Nu Horizons 578(2)
232,500 Pioneer Standard Electronics 3,081
119,000 SCI Systems 5,310(2)
-------------
32,323
-------------
ENERGY (6.6%)
127,300 Aquila Gas Pipeline 1,559
623,000 Coho Energy 3,894 (2)
81,200 Cross Timbers Oil 1,847
108,100 Dreco Energy Services 2,784 (2)
247,000 Offshore Logistics 3,087 (2)
112,400 Smith International 3,906 (2)
-------------
17,077
-------------
ENTERTAINMENT (0.9%)
126,375 Casino Data Systems 2,322 (2)
-------------
INDUSTRIAL & COMMERCIAL
PRODUCTS & SERVICES (14.9%)
105,000 Alamo Group 1,549
80,500 AMTROL, Inc. 2,196
103,300 CLARCOR Inc. 2,221
88,200 Dionex Corp. 3,153 (2)
142,850 Holophane Corp. 2,179 (2)
54,000 Kaydon Corp. 2,423
79,300 Libbey Inc. 2,220
117,400 Material Sciences 1,878 (2)
191,700 NN Ball & Roller 2,876
107,000 Pentair, Inc. 2,916
40,000 Roper Industries 1,660
22,800 U.S. Can 345 (2)
149,800 W.H. Brady 3,408
50,000 Wallace Computer Services 1,356
153,000 Wolverine Tube 6,273 (2)
155,750 Woodhead Industries 2,005
-------------
38,658
-------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
INSURANCE (1.8%)
63,300 American Heritage Life $ 1,227
68,300 FBL Financial Group 1,383 (2)
40,000 Orion Capital 2,010
-------------
4,620
-------------
MACHINERY & EQUIPMENT (1.2%)
59,000 Allied Products 1,527
90,450 Graco Inc. 1,696
-------------
3,223
-------------
METALS (3.9%)
145,000 Alumax Inc. 4,785 (2)
92,800 Commonwealth Aluminum 1,485
118,500 Kentucky Electric Steel 844 (2)
105,000 Steel of West Virginia 682 (2)
104,170 Varlen Corp. 2,240
-------------
10,036
-------------
OFFICE EQUIPMENT (2.5%)
261,600 DH Technology 6,409 (2)
-------------
OIL & GAS (8.8%)
115,000 Apache Corp. 3,378
178,500 Cairn Energy USA 1,830 (2)
54,200 Flores & Rucks 1,782 (2)
288,100 Nabors Industries 4,285 (2)
267,300 Oceaneering International 4,577 (2)
310,800 Pride Petroleum Services 4,468 (2)
55,000 Production Operators 1,925
53,500 Tuboscope VETCO 669 (2)
-------------
22,914
-------------
PACKING & CONTAINERS (0.4%)
32,100 AptarGroup Inc. 1,124
-------------
PUBLISHING & BROADCASTING (3.1%)
86,000 Central Newspapers 3,139
25,000 Houghton Mifflin 1,187
</TABLE>
58
<PAGE>
August 31, 1996
- --------------------------------------------------------------------------------
Genesis Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
65,000 McClatchy Newspapers $ 1,812
34,250 Pulitzer Publishing 1,858
-------------
7,996
-------------
RETAILING (0.8%)
37,800 99 Cents Only Stores 557 (2)
119,000 Schultz Sav-O Stores 1,577
-------------
2,134
-------------
TECHNOLOGY (4.1%)
21,900 Analysts International 805
161,400 Auspex Systems 2,542 (2)
12,000 Computer Horizons 285
85,800 Methode Electronics Class A 1,630
109,000 Reynolds & Reynolds 5,464
-------------
10,726
-------------
TEXTILES & APPAREL (1.0%)
66,000 St. John Knits 2,632
-------------
TRANSPORTATION, SHIPPING & FREIGHT (1.8%)
52,250 Air Express International 1,457
120,000 Harmon Industries 2,040
213,600 Maritrans Inc. 1,308
-------------
4,805
-------------
TOTAL COMMON STOCKS (COST
$189,255) 250,474
-------------
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- --------- -------------
<C> <S> <C>
U.S. TREASURY SECURITIES (3.0%)
$7,800,000 U.S. Treasury Bills, 4.94% -
5.105%, due 10/10/96 -
11/14/96 (COST $7,742) $ 7,744
-------------
SHORT-TERM CORPORATE NOTES (0.8%)
2,200,000 General Electric Capital
Corp., 5.10%, due 9/3/96
(COST $2,200) 2,200 (3)
-------------
TOTAL INVESTMENTS (100.2%)
(COST $199,197) 260,418 (4)
Liabilities, less cash,
receivables and other assets
[(0.2%)] (554 )
-------------
TOTAL NET ASSETS (100.0%) $ 259,864
-------------
</TABLE>
59
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Guardian Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
--------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. CITICORP 2.4%
2. Chrysler Corp. 2.2%
3. Aetna Inc. 2.1%
4. General Motors 2.1%
5. Compaq Computer 2.0%
6. Federal National Mortgage Association 2.0%
7. Countrywide Credit Industries 1.9%
8. First USA 1.6%
9. IMC Global 1.6%
10. Wells Fargo 1.6%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
COMMON STOCKS (93.9%)
AUTO RELATED (3.3%)
2,500,000 Cabot Corp. $ 68,750
883,500 Magna International Class A 42,629
1,889,700 Varity Corp. 94,957 (2)
------------
206,336
------------
AUTOMOTIVE (4.3%)
4,800,000 Chrysler Corp. 139,800
2,570,000 General Motors 127,858
------------
267,658
------------
BANKING (5.7%)
1,340,000 Bank of Boston 70,685
1,820,000 CITICORP 151,515
504,000 First Tennessee National 17,199
900,000 Signet Banking 21,713
389,600 Wells Fargo 96,913
------------
358,025
------------
CHEMICALS (1.6%)
2,325,000 IMC Global 99,975
------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
CONSUMER GOODS & SERVICES (0.8%)
185,000 Kellwood Co. $ 2,983
3,236,900 Owens-Illinois 49,767 (2)
------------
52,750
------------
DRUGS (0.6%)
480,000 Zeneca Group ADR 34,620
------------
FINANCIAL SERVICES (12.6%)
857,000 ADVANTA Corp. Class B 38,136
216,485 Alleghany Corp. 43,730 (2)
2,424,000 Capital One Financial 73,023
4,800,000 Countrywide Credit Industries 115,800
1,020,000 Dean Witter, Discover 51,000
775,000 Federal Home Loan Mortgage 68,491
4,080,000 Federal National Mortgage
Association 126,480
1,920,000 First USA 101,760
270,000 Household International 21,398
1,167,650 MBNA Corp. 35,467
1,250,000 Merrill Lynch 76,562
492,300 MGIC Investment 31,200
------------
783,047
------------
FOOD PRODUCTS (1.0%)
2,625,000 IBP, Inc. 61,359
------------
FOREST PRODUCTS & PAPER (5.1%)
1,400,000 Champion International 60,200
1,200,000 Fort Howard 28,350 (2)
600,000 Mead Corp. 34,350
676,300 Rayonier Inc. 26,798
1,995,000 Stone Container 27,681
765,000 Temple-Inland 37,772
</TABLE>
60
<PAGE>
August 31, 1996
- --------------------------------------------------------------------------------
Guardian Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
900,000 Union Camp $ 43,650
907,000 Willamette Industries 56,007
------------
314,808
------------
HEALTH CARE (5.5%)
1,652,900 FHP International 59,918 (2)
3,020,000 Foundation Health 90,600 (2,5)
4,190,000 Healthsource Inc. 62,850 (2,5)
4,190,400 Humana Inc. 78,570 (2)
1,380,800 Mid Atlantic Medical Services 18,641 (2)
1,066,396 Wellpoint Health Networks 33,058 (2)
------------
343,637
------------
HEAVY INDUSTRY (1.7%)
4,778,900 Coltec Industries 71,684 (2,5)
600,000 Rockwell International 31,200
------------
102,884
------------
INDUSTRIAL GOODS & SERVICES (3.8%)
1,050,000 Aluminum Co. of America 65,231
2,223,500 American Standard 75,877 (2)
663,800 Phelps Dodge 40,160
2,002,500 USG Corp. 57,071 (2)
------------
238,339
------------
INSURANCE (5.6%)
1,952,220 Aetna Inc. 129,091
520,000 American International Group 49,400
508,600 Chubb Corp. 22,569
561,800 ITT Hartford Group 29,635
264,300 National Re 13,909
263,500 Transatlantic Holdings 18,280
2,045,000 Travelers Group 88,702
------------
351,586
------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
MEDIA & ENTERTAINMENT (6.3%)
870,000 A.H. Belo $ 34,909
1,100,000 Comcast Corp. Class A 17,462
3,200,000 Comcast Corp. Class A Special 51,600
1,450,000 Harcourt General 69,419
730,900 Jones Intercable Inc. Class A 9,319 (2)
49,500 Knight-Ridder 1,671
389,600 Omnicom Group 17,678
401,700 R.R. Donnelley 13,105
1,700,000 Time Warner 56,737
1,352,000 United International Holdings 18,590 (2)
1,500,000 Viacom Inc. Class B 47,250 (2)
1,530,000 Vodafone Group ADR 57,949
------------
395,689
------------
OIL & GAS (6.0%)
267,833 British Petroleum ADR 31,537
832,150 Kerr-McGee 47,745
800,000 Murphy Oil 35,000
928,800 Norsk Hydro ADR 42,376
1,104,500 Parker & Parsley Petroleum 27,336
621,900 Union Pacific Resources Group 16,947
1,980,000 Unocal Corp. 67,815
1,542,500 Vastar Resources 53,795
398,600 Western Atlas 24,215 (2)
1,702,000 Zeigler Coal Holding 25,530 (5)
------------
372,296
------------
REAL ESTATE INVESTMENT TRUSTS (1.6%)
1,159,500 CWM Mortgage Holdings 21,306
1,442,600 Hospitality Properties Trust 38,589 (5)
</TABLE>
61
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Guardian Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
510,000 Security Capital Industrial
Trust $ 9,180
1,040,000 Spieker Properties 31,070
------------
100,145
------------
RETAIL (2.5%)
260,500 Barnes & Noble 8,564 (2)
3,241,700 Fingerhut Cos. 43,358 (5)
510,000 May Department Stores 23,205
84,800 Payless ShoeSource 2,978 (2)
2,860,000 Wal-Mart Stores 75,790
------------
153,895
------------
STEEL (1.7%)
553,100 AK Steel Holding 20,603
763,100 Allegheny Teledyne 15,453
3,278,200 J & L Specialty Steel 44,665 (5)
2,175,500 LTV Corp. 25,562
------------
106,283
------------
TECHNOLOGY (13.9%)
1,165,000 Altera Corp. 51,260 (2)
1,500,000 Applied Materials 36,375 (2)
1,475,000 Arrow Electronics 67,297 (2)
1,367,500 Avnet, Inc. 63,931
600,000 Cabletron Systems 36,600 (2)
2,250,000 Compaq Computer 127,406 (2)
1,660,000 Digital Equipment 64,118 (2)
575,000 Intel Corp. 45,892
2,400,000 KLA Instruments 47,400 (2)
1,752,000 Komag, Inc. 37,230 (2)
1,600,000 Linear Technology 54,400
1,123,300 LSI Logic 24,572 (2)
1,100,000 Micron Technology 25,025
1,035,200 National Semiconductor 19,022 (2)
1,285,000 Seagate Technology 61,680 (2)
1,560,000 Texas Instruments 72,930
853,200 Xilinx Inc. 29,862 (2)
------------
865,000
------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
TELECOMMUNICATIONS (4.9%)
2,143,000 360 Communications $ 51,164 (2)
2,375,000 Airtouch Communications 65,312 (2)
1,000,000 Frontier Corp. 29,500
2,140,000 Tele-Communications
International 35,578 (2)
4,000,000 Tele-Communications, Inc.
Class A 59,500 (2)
3,683,400 U.S. West Media Group 66,762 (2)
------------
307,816
------------
TELEPHONE UTILITIES (1.2%)
1,400,000 AT&T Corp. 73,500
------------
TRANSPORTATION (4.2%)
360,759 AMR Corp. 29,582 (2)
700,000 Canadian Pacific 15,750
1,009,000 CSX Corp. 51,081
500,000 Delta Air Lines 35,437
2,000,000 Ryder System 56,750
650,000 Union Pacific 47,369
1,257,000 USFreightways Corp. 26,083 (5)
------------
262,052
------------
TOTAL COMMON STOCKS (COST
$4,834,551) 5,851,700
------------
PREFERRED STOCKS (0.8%)
250,000 FHP International, 5.00% 7,531
52,430 Aetna Inc., Ser. C, Cv., 6.25% 3,644
605,700 Airtouch Communications, Ser.
B, Cv., 6.00% 17,414
</TABLE>
62
<PAGE>
August 31, 1996
- --------------------------------------------------------------------------------
Guardian Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
388,994 Airtouch Communications, Ser.
C, Cv., 4.25% $ 18,526
------------
TOTAL PREFERRED STOCKS (COST
$41,123) 47,115
------------
RIGHTS (0.0%)
510,000 Security Capital Industrial
Trust, Expire 9/24/96 (COST
$0) 48 (2)
------------
<CAPTION>
Principal
Amount
- -----------
<C> <S> <C>
CONVERTIBLE BONDS (0.2%)
$15,000,000 International CableTel Inc.,
Cv. Sub. Notes, 7.25%, due
4/15/05 (COST $14,997) 15,843(6)
------------
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- ----------- ------------
<C> <S> <C>
U.S. TREASURY SECURITIES (5.8%)
$347,780,000 U.S. Treasury Bills, 4.965% -
5.26%, due 9/5/96 - 12/12/96 $ 347,034
15,000,000 U.S. Treasury Notes, 8.00%,
due 5/15/01 15,759
------------
TOTAL U.S. TREASURY SECURITIES
(COST $361,808) 362,793
------------
TOTAL INVESTMENTS (100.7%)
(COST $5,252,479) 6,277,499(4)
Liabilities, less cash,
receivables and other assets
[(0.7%)] (44,957)
------------
TOTAL NET ASSETS (100.0%) $6,232,542
------------
</TABLE>
63
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
International Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------------------------------------------------
HOLDING COUNTRY INDUSTRY PERCENTAGE
<C> <S> <C> <C> <C>
1. Dassault Systemes ADR France Technology 1.6%
Industrial Goods &
2. SGL Carbon Germany Services 1.3%
3. TT Tieto "B" Finland Technology 1.2%
4. Compania Peruana de Telefonos "B" Peru Telecommunications 1.2%
5. Adidas AG Germany Retailing 1.2%
6. Bure Investment Sweden Banking & Financial 1.1%
7. Ares-Serono Group "B" Switzerland Pharmaceutical 1.1%
8. Barclays PLC United Kingdom Banking & Financial 1.0%
9. Altana AG Germany Pharmaceutical 0.9%
10. Powerscreen International PLC Ireland Machinery & Equipment 0.9%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
COMMON STOCKS (87.6%)
ARGENTINA (1.1%)
4,000 Central Costanera ADR $ 124 (6)
6,500 IRSA Inversiones y
Representaciones GDR 179
10,000 Telefonica de Argentina ADR 239
5,000 YPF SA ADR 106
-------------
648
-------------
AUSTRALIA (0.6%)
10,274 Broken Hill Proprietary 140
30,000 QBE Insurance Group 180
-------------
320
-------------
AUSTRIA (0.8%)
2,300 OMV AG 230
918 Wolford AG 219
-------------
449
-------------
BELGIUM (1.2%)
2,000 Barco Industries 343
8,060 Telinfo SA 331 (2)
-------------
674
-------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
BRAZIL (0.9%)
7,000 Telecomunicacoes Brasileiras
ADR $ 521
-------------
CHILE (1.0%)
19,000 Banco Santander Chile ADR 240
2,000 Cia de Telecomunicaciones de
Chile ADR 195
5,000 Santa Isabel ADR 127
-------------
562
-------------
CZECH REPUBLIC (0.4%)
8,000 Czech Republic Fund 118
3,650 Komercni Banka GDR 114
-------------
232
-------------
DENMARK (1.3%)
12,000 Bang & Olufsen Holding 451
1,250 Falck AS 306
-------------
757
-------------
FINLAND (3.0%)
10,300 Aamulehti Group II 262 (6)
15,000 Amer Group 366
25,000 Hansabank AS 196 (2)
</TABLE>
64
<PAGE>
August 31, 1996
- --------------------------------------------------------------------------------
International Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
12,900 TT Tieto "B" $ 710
6,000 Valmet Corp. ADR 202
-------------
1,736
-------------
FRANCE (7.0%)
2,220 Cardif SA 288
3,990 Chargeurs International 144
2,800 Compagnie Bancaire 277
2,600 Credit Local de France 214
22,900 Dassault Systemes ADR 887 (2)
1,350 Elf Gabon 284
3,800 Grand Optical Photoservice 465
2,400 Group Axime 281 (6)
8,000 Lagardere Groupe 191
990 Pathe SA 262 (2)
5,500 SGS Thomson Microelectronics 220 (2)
5,300 SGS Thomson Microelectronics -
New York 217 (2)
2,500 Unilog SA 255
-------------
3,985
-------------
GERMANY (5.1%)
7,800 Adidas AG 671 (6)
700 Altana AG 530
8,000 Hoechst AG 281
527 Mannesmann AG 190
6,000 SGL Carbon 732 (2)
25,000 Tarkett AG 508 (2,6)
-------------
2,912
-------------
HONG KONG (4.0%)
27,000 Cheung Kong Holdings 189
1,070,000 Climax International 169
150,000 First Pacific 244
22,000 HSBC Holdings PLC 380
34,000 Hutchison Whampoa 206
920,000 Joyce Boutique Holdings 244
374,000 Manhattan Card 168
29,500 Swire Pacific "A" 262
100,000 Varitronix International 189
112,000 VTech Holdings 206
-------------
2,257
-------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
HUNGARY (1.1%)
5,050 BorsodChem Rt. GDR $ 96 (6)
3,260 EGIS Rt. EDR 212 (2)
12,250 OTP Bank GDR 218
1,950 Richter Gedeon GDR 109 (6)
-------------
635
-------------
INDIA (0.4%)
6,000 Bajaj Auto GDR 220 (2,6)
-------------
INDONESIA (1.6%)
20,000 Hanjaya Mandala Sampoerna -
Foreign 193
6,000 Indosat ADR 187
82,500 Matahari Putra Prima - Foreign 108
357,000 Steady Safe - Foreign 290
4,000 Telekomunikasi Indonesia ADR 111
-------------
889
-------------
IRELAND (1.9%)
15,000 Adare Printing Group PLC 109
30,000 CRH PLC 297
30,272 Greencore Group PLC 152
64,000 Powerscreen International PLC 523
-------------
1,081
-------------
ISRAEL (2.1%)
20,000 NICE-Systems ADR 495
15,000 Orbotec, Ltd. 184 (2)
25,000 Tecnomatix Technologies 497 (2)
-------------
1,176
-------------
ITALY (2.6%)
50,000 Ente Nazionale Idrocarburi 219
7,500 Esaote Biomedica ADR 279 (2,6)
4,000 Fila Holding ADR 388
3,000 Luxottica Group ADR 229
28,000 SAES Getters ADR 392 (2)
-------------
1,507
-------------
</TABLE>
65
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
International Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
JAPAN (6.3%)
10,000 77 Bank $ 97
5,600 Acom Co. 225
12,000 Arcland Sakamoto 174
1,000 Autobacs Seven 84
18,000 Banyu Pharmaceutical 235
10,000 Calsonic Corp. 74
5,000 Fanuc 183
2,000 Ito Yokado 105
9,000 JACCS Co. 71
4,000 Kyocera Corp. 272
6,000 Matsushita Electric Industrial 101
5,000 Mitsubishi Trust & Banking 75
18,000 NEC Corp. 192
10,000 Nikon Corp. 109
9,000 Sankyo Co. 224
2,000 Sega Enterprises 86
350 Shin-Etsu Chemical 6
375 Shinkawa 7
2,000 SMC Corp. 140
8,100 Sony Corp. 508
10,000 Tachi-S 97
10,000 Taisho Pharmaceutical 201
13,000 Takeda Chemical Industries 225
4,000 Tokyo Ohka Kogyo 102
-------------
3,593
-------------
KOREA (0.6%)
10 Korea 1990 Trust IDR 45 (2)
2,200 Korea Electric Power 67 (2)
1,299 Samsung Electronics 101 (2)
391 Samsung Electronics - New 29 (2)
144 Shinsegae - New 9 (2)
1,329 Shinsegae Department Store 83 (2)
-------------
334
-------------
MALAYSIA (2.2%)
24,000 Ekran 102
16,000 Genting 118
21,000 Malayan Banking 200
34,000 Malaysian Assurance Alliance 187
48,000 New Straits Times Press 269
34,000 Sime Darby 115
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
12,000 Telekom Malaysia $ 106
30,000 YTL Corp. 148(6)
-------------
1,245
-------------
MEXICO (2.6%)
76,859 ALFA, SA "A" 337
65,000 Cementos de Mexico "B" 269 (2)
16,000 Coca-Cola FEMSA ADR 420
83,000 Fomento Economico Mexicano "B" 248
5,000 Panamerican Beverages "A" 211
-------------
1,485
-------------
NETHERLANDS (3.7%)
4,500 Aegon N.V. 220
6,400 ASM Lithography Holding 246
12,520 Elsevier N.V. 199
20,148 Getronics N.V. 491
6,000 Hunter Douglas 420
8,210 Royal PTT Nederland 288
14,000 VNU Verenigd Bezit 243
-------------
2,107
-------------
NEW ZEALAND (0.3%)
2,000 Telecom of New Zealand ADR 153
-------------
NORWAY (2.8%)
9,000 Hafslund ASA "B" 57
20,000 Merkantildata AS 293
7,800 Nera AS 287
10,000 Petroleum Geo-Services ADR 273 (2)
21,800 Schibsted Group 316
9,000 Tomra Systems 98
50,000 VISMA AS 281
-------------
1,605
-------------
PERU (1.2%)
297,000 Compania Peruana de Telefonos
"B" 694 (2)
-------------
PHILIPPINES (1.7%)
980,000 Bankard, Inc. 288 (2)
16,500 Benpres Holdings GDR 116 (2,6)
114,000 Fil-Estate Land 118
</TABLE>
66
<PAGE>
August 31, 1996
- --------------------------------------------------------------------------------
International Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
446,000 International Container
Terminal Services $ 272
550,000 JG Summit Holdings "A" 197
-------------
991
-------------
RUSSIA (0.8%)
5,500 GUM ADR 220 (2)
4,000 Lukoil Holding ADR 156
3,500 Mosenergo ADR 102 (2,6)
-------------
478
-------------
SINGAPORE (2.2%)
300,000 Datacraft Asia 324
14,000 Singapore Press Holdings 243
39,000 United Overseas Bank-Foreign 374
200,000 Venture Manufacturing 320
-------------
1,261
-------------
SPAIN (1.0%)
1,300 Empresa Nacional de
Electricidad ADR 76
8,500 Telefonica de Espana ADR 471
-------------
547
-------------
SWEDEN (8.2%)
75,000 Bure Investment 651 (6)
30,800 Caran "B" 363
7,000 Celsius Industries "B" 88
30,000 Dahl International 453 (2,6)
3,000 Elekta Instrument "B" 117
7,000 Enator AB 152 (2)
31,200 Frontec "B" 346
17,000 Getinge Industrier 307
12,200 Kinnevik 342
22,600 L.M. Ericsson Telephone ADR 521
12,200 NetCom Systems "B" 135 (2)
23,000 Nobel Biocare 438
8,400 Skandia Forsakrings 197
24,000 Skandinaviska Enskilda Banken
"A" 199
6,000 WM-Data "B" 361
-------------
4,670
-------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
SWITZERLAND (2.3%)
595 Ares-Serono Group "B" $ 625
125 Lindt & Spruengli 217
240 Sandoz AG 285
1,100 Schweizerischer Bankverein "B" 214
-------------
1,341
-------------
TAIWAN (0.3%)
2,672 Asia Cement GDS 56 (2)
4,000 China Steel GDR 90
-------------
146
-------------
THAILAND (1.1%)
6,200 Bangkok Bank-Foreign 78
25,900 K.R. Precision - Foreign 127
2,800 Siam Cement-Foreign 108
32,000 Thai Farmers Bank-Foreign 339
-------------
652
-------------
UNITED KINGDOM (14.2%)
29,000 Azlan Group PLC 322
38,800 Barclays PLC 551
26,600 British Airport Authority PLC 199
3,000 British Petroleum ADR 353
48,500 Cadbury Schweppes PLC 389
50,625 Carlton Communications PLC 379
35,900 Dorling Kindersley Holdings
PLC 293
30,000 EMAP PLC 333
8,660 EMI Group PLC 195
19,800 Ethical Holdings ADR 156
16,500 GKN PLC 271
50,000 Inchcape PLC 231
26,000 J.D. Wetherspoon PLC 386
60,000 JBA Holdings PLC 454
30,000 Misys PLC 395
155,000 Orange PLC 465 (2)
48,000 Rentokil Group PLC 306
40,000 Sage Group PLC 272
20,000 SEMA Group PLC 231
</TABLE>
67
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman August 31, 1996
- --------------------------------------------------------------------------------
International Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
16,000 Tele-Communications
International $ 266(2)
8,660 Thorn PLC 53(2)
81,186 Tomkins PLC 332
40,900 United Utilities PLC 386
12,000 Videotron Holdings ADR 201(2)
100,000 WPP Group PLC 358
4,000 Zeneca Group ADR 289
-------------
8,066
-------------
TOTAL COMMON STOCKS (COST
$43,563) 49,929
-------------
PREFERRED STOCKS (3.5%)
300 Bayerische Motoren Werke,
Germany 124
2,100 Fresenius AG, Germany 411
6,000 Moebel Walther, Germany 332
11,000 Nokia Corp. ADR, Finland 465
2,500 SAP AG, Germany 410
80,000 Village Roadshow "A",
Australia 253 (2)
-------------
TOTAL PREFERRED STOCKS (COST
$1,531) 1,995
-------------
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- --------- -------------
<C> <S> <C>
CONVERTIBLE BONDS (0.6%)
$ 291,000 United Micro Electronics, Cv.
Unsub. Notes, 1.25%, due
6/8/04 (COST $357) $ 349(6)
-------------
U.S. TREASURY SECURITIES (9.7%)
5,520,000 U.S. Treasury Bills, 4.90% -
5.04%, due 9/5/96 - 10/24/96
(COST $5,492) 5,492 (3)
-------------
TOTAL INVESTMENTS (101.4%)
(COST $50,943) 57,765 (4)
Liabilities, less cash,
receivables and other assets
[(1.4%)] (782 )
-------------
TOTAL NET ASSETS (100.0%) $ 56,983
-------------
</TABLE>
68
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman August 31, 1996
- --------------------------------------------------------------------------------
Manhattan Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
--------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. CITICORP 2.9%
2. First USA 2.8%
3. General Nutrition 2.7%
4. Harrah's Entertainment 2.5%
5. Healthsource Inc. 2.5%
6. Intel Corp. 2.5%
7. GTECH Holdings 2.4%
8. Capital One Financial 2.3%
9. Wells Fargo 2.2%
10. United Healthcare 2.2%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- -------------
<C> <S> <C>
COMMON STOCKS (100.3%)
CHEMICALS (1.2%)
100,000 Hercules Inc. $ 4,975
40,000 SGL Carbon ADR 1,610 (2)
-------------
6,585
-------------
COMMUNICATIONS (12.1%)
385,000 Airtouch Communications 10,587 (2)
585,000 Comcast Corp. Class A Special 9,433
680,000 Comcast UK Cable Partners
Limited 7,310 (2)
280,000 ECI Telecommunications 5,775
380,000 International CableTel 9,215 (2)
480,000 Tele-Communications,
Inc. Class A 7,140 (2)
Tele-Communications,
87,500 Inc. Class A Liberty
Media Group 2,308 (2)
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- -------------
<C> <S> <C>
280,000 Vanguard Cellular Systems $ 5,355(2)
305,000 Vodafone Group ADR 11,552
-------------
68,675
-------------
CONSUMER GOODS & SERVICES (9.3%)
510,000 Authentic Fitness 6,758
345,000 CUC International 11,859 (2)
85,000 Industrie Natuzzi ADR 4,292
90,000 Luxottica Group ADR 6,874
125,000 Nine West 6,438 (2)
480,000 Nu-Kote Holding 5,820 (2)
50,000 Philip Morris 4,487
245,000 Regis Corp. 6,125
-------------
52,653
-------------
DRUGS & HEALTH CARE (12.9%)
510,000 Coventry Corp. 6,726 (2)
941,000 Healthsource Inc. 14,115 (2)
155,000 Nellcor Puritan Bennett 3,991 (2)
130,000 PacifiCare Health Systems
Class B 10,465 (2)
110,000 R.P. Scherer 5,294 (2)
211,000 Teva Pharmaceutical ADR 7,688
320,000 United Healthcare 12,360
100,000 Warner-Lambert 5,950
225,000 Watson Pharmaceuticals 6,525 (2)
-------------
73,114
-------------
ENTERTAINMENT (8.9%)
490,000 GTECH Holdings 13,598 (2)
760,000 Harrah's Entertainment 14,440 (2)
750,000 Players International 4,875 (2)
225,000 Promus Hotel 6,778 (2)
545,000 Showboat, Inc. 10,832
-------------
50,523
-------------
</TABLE>
69
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman August 31, 1996
- --------------------------------------------------------------------------------
Manhattan Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- -------------
<C> <S> <C>
FINANCIAL SERVICES (16.4%)
220,000 Bear Stearns $ 5,143
430,000 Capital One Financial 12,954
200,000 CITICORP 16,650
185,000 Finova Group 10,175
295,000 First USA 15,635
320,000 MBNA Corp. 9,720
215,000 Morgan Stanley Group 10,266
51,000 Wells Fargo 12,686
-------------
93,229
-------------
INSURANCE (8.2%)
200,000 ACE Ltd. 9,325
365,000 Highlands Insurance 6,935 (2)
85,000 Loews Corp. 6,354
324,000 PennCorp Financial Group 9,882
143,000 Sphere Drake Holdings 1,341
48,500 Transatlantic Holdings 3,365
220,000 Travelers Group 9,542
-------------
46,744
-------------
REAL ESTATE (0.1%)
25,000 JDN Realty 584
-------------
RESTAURANTS (8.4%)
55,000 Buffets Inc. 756 (2)
410,000 Cheesecake Factory 9,635 (2)
425,000 CKE Restaurants 11,794
470,000 HomeTown Buffet 7,285 (2)
416,000 IHOP Corp. 10,296 (2)
335,000 Sonic Corp. 7,872 (2)
-------------
47,638
-------------
SPECIALTY RETAIL (7.0%)
1,020,000 General Nutrition 15,045 (2)
450,000 Office Depot 7,144 (2)
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- -------------
<C> <S> <C>
500,000 Staples Inc. $ 9,875(2)
300,000 Viking Office Products 7,762(2)
-------------
39,826
-------------
TECHNOLOGY (14.8%)
130,000 Informix Corp. 2,925 (2)
175,000 Intel Corp. 13,967
550,000 KLA Instruments 10,863 (2)
295,000 Micron Technology 6,711
155,000 Motorola, Inc. 8,273
245,000 Nokia Corp. ADR 10,351
55,000 SAP AG (Ordinary Shares) 9,163
205,000 Seagate Technology 9,840 (2)
230,000 Texas Instruments 10,753
100,000 Xeikon N.V. ADR 1,125 (2)
-------------
83,971
-------------
TRANSPORTATION (1.0%)
250,000 RailTex Inc. 5,500 (2)
-------------
TOTAL COMMON STOCKS (COST
$486,409) 569,042
-------------
<CAPTION>
Principal
Amount
- ----------
<C> <S> <C>
U.S. TREASURY SECURITIES (1.9%)
$11,010,000 U.S. Treasury Bills, 4.97% &
4.94%, due 9/19/96 & 10/10/96
(COST $10,980) 10,983
-------------
TOTAL INVESTMENTS (102.2%)
(COST $497,389) 580,025(4)
Liabilities, less cash,
receivables and other assets
[(2.2%)] (12,599)
-------------
TOTAL NET ASSETS (100.0%) $ 567,426
-------------
</TABLE>
70
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman August 31, 1996
- --------------------------------------------------------------------------------
Partners Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
--------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Wells Fargo 2.4%
2. Price/Costco 2.3%
3. Columbia/HCA Healthcare 2.3%
4. Travelers Group 2.1%
5. W.R. Grace 2.1%
6. Knight-Ridder 2.1%
7. Progressive Corp. 2.1%
8. Revco D.S. 2.0%
9. Warner-Lambert 2.0%
10. Comcast Corp. Class A Special 2.0%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
COMMON STOCKS (89.8%)
AEROSPACE (2.7%)
559,400 Litton Industries $ 26,082
322,400 Lockheed Martin 27,122
------------
53,204
------------
BANKING & FINANCIAL SERVICES (9.0%)
630,300 American Express 27,576
782,100 Capital One Financial 23,561
459,100 CITICORP 38,220
1,403,400 Countrywide Credit Industries 33,857
410,100 H & R Block 10,252
190,566 Wells Fargo 47,403
------------
180,869
------------
BUILDING, CONSTRUCTION & REFURNISHING (1.9%)
1,300,000 USG Corp. 37,050 (2)
------------
BUSINESS SERVICES (0.9%)
300,000 Dun & Bradstreet 17,288
------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
CHEMICALS (3.4%)
300,000 duPont $ 24,637
11,000 Eastman Chemical 615
648,500 W.R. Grace 42,558
------------
67,810
------------
COMMUNICATIONS (0.9%)
500,000 Vodafone Group ADR 18,938
------------
CONSUMER GOODS & SERVICES (1.3%)
610,000 Tupperware Corp. 26,687
------------
DIVERSIFIED (1.9%)
210,000 Anheuser Busch 15,907
60,000 Mannesmann AG ADR 21,681
------------
37,588
------------
ELECTRONICS (2.1%)
900,000 KLA Instruments 17,775 (2)
500,000 Loral Space & Communications 7,000
450,300 Sundstrand Corp. 16,830
------------
41,605
------------
ENTERTAINMENT (4.0%)
1,000,000 Mirage Resorts 23,250 (2)
760,300 Royal Caribbean Cruises 20,053
1,071,700 Time Warner 35,768
------------
79,071
------------
FOOD & DRUG STORES (2.1%)
1,590,500 Revco D.S. 40,955 (2)
------------
FOOD & TOBACCO (2.5%)
1,200,000 IBP, Inc. 28,050
800,000 RJR Nabisco Holdings 21,100
------------
49,150
------------
</TABLE>
71
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Partners Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
HEALTH CARE (4.0%)
550,000 Ciba-Geigy ADR $ 34,513
799,900 Columbia/HCA Healthcare 45,094
------------
79,607
------------
INDUSTRIAL GOODS & SERVICES (6.4%)
702,500 AK Steel Holding 26,168
600,000 Crown Cork & Seal 28,050
357,400 Goodyear Tire & Rubber 16,306
1,455,000 Owens-Illinois 22,371 (2)
326,300 Varity Corp. 16,396 (2)
450,000 XTRA Corp. 19,519
------------
128,810
------------
INSURANCE (12.1%)
722,400 Allstate Corp. 32,237
1,142,500 Equitable Cos. 28,134
1,164,200 EXEL Ltd. 39,001
325,000 MBIA, Inc. 26,487
641,775 Orion Capital 32,249
770,000 Progressive Corp. 41,869
988,200 Travelers Group 42,863
------------
242,840
------------
MEDIA (4.9%)
8,671,205 Australis Media (Ordinary
Shares) 1,235 (2)
2,500,000 Comcast Corp. Class A Special 40,312
1,245,000 Knight-Ridder 42,019
450,000 Viacom Inc. Class B 14,175 (2)
------------
97,741
------------
MINING (1.4%)
798,200 Freeport-McMoRan 27,438
------------
OIL & GAS (4.2%)
2,400,000 Gulf Canada Resources 14,400
467,600 Noble Affiliates 18,763
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
269,800 Schlumberger, Ltd. $ 22,764
800,950 Tejas Gas 27,833(2)
------------
83,760
------------
PAPER & FOREST PRODUCTS (1.7%)
1,475,000 Fort Howard 34,847 (2)
------------
PHARMACEUTICAL (2.0%)
680,000 Warner-Lambert 40,460
------------
PUBLISHING & BROADCASTING (0.5%)
961,000 Hollinger International 10,451
------------
RAILROADS (1.6%)
427,100 Union Pacific 31,125
------------
REAL ESTATE (6.0%)
400,000 Beacon Properties 10,900
350,700 CBL & Associates Properties 8,066
575,000 Del Webb 10,350
742,300 Hospitality Properties Trust 19,857
2,555,100 Host Marriott 35,133 (2)
316,700 Irvine Apartment Communities 7,126
377,000 Macerich Co. 8,105
367,300 Starwood Lodging Trust 13,957
155,000 Vornado Realty Trust 6,452
------------
119,946
------------
RETAILING (1.8%)
475,000 Harcourt General 22,741
300,000 Melville Corp. 12,675
------------
35,416
------------
RETAILING & APPAREL (3.4%)
555,200 Nordstrom, Inc. 21,653
2,350,000 Price/Costco 46,706 (2)
------------
68,359
------------
SPECIALTY CHEMICAL (0.3%)
180,000 Millipore Corp. 6,885
------------
</TABLE>
72
<PAGE>
August 31, 1996
- --------------------------------------------------------------------------------
Partners Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
TECHNOLOGY (6.8%)
400,000 Applied Materials $ 9,700 (2)
474,700 Autodesk, Inc. 10,918
1,200,000 Komag, Inc. 25,500 (2)
500,000 Seagate Technology 24,000 (2)
600,000 Texas Instruments 28,050
702,500 Xerox Corp. 38,550
------------
136,718
------------
TOTAL COMMON STOCKS (COST
$1,563,649) 1,794,618
------------
PREFERRED STOCKS (0.6%)
2,277,000 RJR Nabisco, Ser. C, Dep.
Shares (COST $15,318) 12,239
------------
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- ----------- ------------
<C> <S> <C>
U.S. TREASURY SECURITIES (8.4%)
$169,230,000 U.S. Treasury Bills, 4.925% -
5.26%, due 9/19/96 - 12/12/96
(COST $167,943) $ 168,009
------------
SHORT-TERM CORPORATE NOTES (1.5%)
30,000,000 General Electric Capital
Corp., 5.233%, due 9/9/96
(COST $30,000) 30,000 (3)
------------
TOTAL INVESTMENTS (100.3%)
(COST $1,776,910) 2,004,866 (4)
Liabilities, less cash,
receivables and other assets
[(0.3%)] (5,263 )
------------
TOTAL NET ASSETS (100.0%) $ 1,999,603
------------
</TABLE>
73
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Socially Responsive Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
--------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Louisiana Land & Exploration 2.9%
2. Illinois Central 2.5%
3. Dun & Bradstreet 2.2%
4. ENSERCH Corp. 2.2%
5. National City 2.1%
6. Hewlett-Packard 2.1%
7. Intel Corp. 2.1%
8. Brooklyn Union Gas 2.1%
9. Warner-Lambert 2.1%
10. Cabot Corp. 2.0%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
COMMON STOCKS (94.6%)
AGRICULTURE (0.8%)
83,500 Mycogen Corp. $ 1,331 (2)
-------------
BANKING (8.7%)
32,000 CITICORP 2,664
67,007 CoreStates Financial 2,772
150,000 Dime Bancorp 1,969 (2)
60,000 Mercantile Bancorporation 2,933
90,000 National City 3,386
-------------
13,724
-------------
BUSINESS SERVICES (5.1%)
82,500 Banta Corp. 1,934
60,000 Dun & Bradstreet 3,457
110,000 John H. Harland 2,764
-------------
8,155
-------------
CHEMICALS (9.7%)
40,000 Air Products & Chemicals 2,190
115,000 Cabot Corp. 3,163
100,000 Dexter Corp. 2,912
55,000 Minerals Technologies 2,097
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
65,000 Morton International $ 2,413
50,000 Perkin-Elmer 2,594
-------------
15,369
-------------
COMMUNICATIONS (3.4%)
170,000 Comcast Corp. Class A Special 2,741
166,700 Matav-Cable Systems Media ADR 2,584 (2)
-------------
5,325
-------------
CONSUMER GOODS & SERVICES (4.8%)
30,000 Kimberly-Clark 2,351
29,400 Procter & Gamble 2,613
85,000 Viacom Inc. Class B 2,678 (2)
-------------
7,642
-------------
DIVERSIFIED (2.6%)
77,000 CasTech Aluminum Group 1,559 (2)
60,000 Tyco International 2,535
-------------
4,094
-------------
ENERGY (1.9%)
75,000 Noble Affiliates 3,009
-------------
FINANCIAL SERVICES (3.1%)
75,000 Federal National Mortgage
Association 2,325
60,000 Travelers Group 2,603
-------------
4,928
-------------
FOOD & BEVERAGE (1.7%)
122,000 Whitman Corp. 2,730
-------------
FURNISHINGS (1.8%)
100,000 Leggett & Platt 2,850
-------------
HEALTH CARE (3.6%)
50,000 Johnson & Johnson 2,463
55,000 Warner-Lambert 3,272
-------------
5,735
-------------
</TABLE>
74
<PAGE>
August 31, 1996
- --------------------------------------------------------------------------------
Socially Responsive Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
INDUSTRIAL & COMMERCIAL PRODUCTS (3.1%)
156,600 Polymer Group $ 2,192 (2)
40,000 Raychem Corp. 2,745
-------------
4,937
-------------
INSURANCE (4.9%)
79,800 Allmerica Property & Casualty 2,254
101,600 Equitable Cos. 2,502
70,000 ReliaStar Financial 3,089
-------------
7,845
-------------
OIL & GAS (6.2%)
170,000 ENSERCH Corp. 3,421
200,000 Enserch Exploration 1,825 (2)
80,000 Louisiana Land & Exploration 4,550
-------------
9,796
-------------
PACKAGING & CONTAINERS (1.2%)
63,000 Sonoco Products 1,866
-------------
PAPER & FOREST PRODUCTS (1.8%)
50,000 Mead Corp. 2,863
-------------
RAILROADS (2.5%)
129,600 Illinois Central 3,920
-------------
RECYCLING (1.5%)
150,000 IMCO Recycling 2,381
-------------
RETAIL STORES (5.6%)
60,000 May Department Stores 2,730
62,000 Nordstrom, Inc. 2,418
95,000 Price/Costco 1,888 (2)
60,000 Rite Aid 1,913
-------------
8,949
-------------
TECHNOLOGY (5.7%)
60,000 Digital Equipment 2,318 (2)
76,000 Hewlett-Packard 3,325
41,500 Intel Corp. 3,312
-------------
8,955
-------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
TELECOMMUNICATIONS (11.6%)
86,000 Airtouch Communications $ 2,365 (2)
60,000 AT&T Corp. 3,150
35,000 Cabletron Systems 2,135 (2)
167,500 Jones Intercable Inc. Class A 2,136 (2)
230,000 Metromedia International Group 2,587 (2)
52,000 Southern New England
Telecommunications 1,983
50,000 Telephone & Data Systems 2,131
90,000 WorldCom Inc. 1,890 (2)
-------------
18,377
-------------
TRANSPORTATION (1.2%)
103,700 Stolt-Nielsen ADR 1,828
-------------
UTILITIES (2.1%)
121,300 Brooklyn Union Gas 3,290
-------------
TOTAL COMMON STOCKS (COST
$126,656) 149,899
-------------
<CAPTION>
Principal
Amount
- ---------
<C> <S> <C>
U.S. TREASURY SECURITIES (5.3%)
$8,520,000 U.S. Treasury Bills, 4.85% -
5.05%, due 9/5/96 - 10/24/96
(COST $8,497) 8,497(3)
-------------
TOTAL INVESTMENTS (99.9%)
(COST $135,153) 158,396(4)
Cash, receivables and other
assets, less liabilities
(0.1%) 89
-------------
TOTAL NET ASSETS (100.0%) $ 158,485
-------------
</TABLE>
75
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS
August 31, 1996
- ----------------------------------------------------------------------
Equity Managers Trust and Global Managers Trust
1)Investment securities of each Portfolio are valued at the latest sales price;
securities for which no sales were reported, unless otherwise noted, are
valued at the mean between the closing bid and asked prices, with the
exception of securities held by Neuberger&Berman International Portfolio which
are valued at the last available bid price. The Portfolios value all other
securities by a method that the trustees of Equity Managers Trust and Global
Managers Trust believe accurately reflects fair value. Foreign security prices
are furnished by independent quotation services expressed in local currency
values. Foreign securities are translated from the local currency into U.S.
dollars using current exchange rates. Short-term debt securities with less
than 60 days until maturity at the time of purchase may be valued at cost
which, when combined with interest earned, approximates market value.
2)Non-income producing security.
3)At cost, which approximates market value.
4)At August 31, 1996, selected Portfolio information on a Federal income tax
basis was as follows:
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED NET UNREALIZED
NEUBERGER&BERMAN COST APPRECIATION DEPRECIATION APPRECIATION
--------------- --------------- ------------ ---------------
<S> <C> <C> <C> <C>
FOCUS PORTFOLIO $ 838,896,000 $ 306,179,000 $20,483,000 $ 285,696,000
GENESIS PORTFOLIO 199,260,000 65,714,000 4,556,000 61,158,000
GUARDIAN PORTFOLIO 5,253,794,000 1,160,256,000 136,551,000 1,023,705,000
MANHATTAN PORTFOLIO 497,446,000 113,133,000 30,554,000 82,579,000
PARTNERS PORTFOLIO 1,781,852,000 268,475,000 45,461,000 223,014,000
SOCIALLY RESPONSIVE
PORTFOLIO 135,180,000 26,389,000 3,173,000 23,216,000
</TABLE>
5)Affiliated Issuer (see Note E of Notes to Financial Statements).
6)Security exempt from registration under the Securities Act of 1933. These
securities may be resold in transactions exempt from registration, normally to
qualified institutional buyers under Rule 144A. At August 31, 1996, these
securities amounted to $15,843,000 or .2% of net assets for Neuberger&Berman
Guardian Portfolio and $4,369,000 or 7.7% of net assets for Neuberger&Berman
International Portfolio.
SEE NOTES TO FINANCIAL STATEMENTS
76
<PAGE>
(This page has been left blank intentionally.)
77
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY MANAGERS TRUST
-------------------------------------------
FOCUS GENESIS GUARDIAN
(000'S OMITTED) PORTFOLIO PORTFOLIO PORTFOLIO
-------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in securities, at market value*
(Notes A & E) -- see Schedule of
Investments:
Unaffiliated issuers $ 1,124,592 $ 260,418 $ 5,874,140
Non-controlled affiliated issuers -- -- 403,359
-------------------------------------------
1,124,592 260,418 6,277,499
Cash 95 50 69
Deferred organization costs (Note A) 17 4 49
Dividends and interest receivable 982 112 6,667
Prepaid expenses and other assets 35 9 180
Receivable for securities sold 1,077 792 4,294
-------------------------------------------
1,126,798 261,385 6,288,758
-------------------------------------------
LIABILITIES
Net payable for forward foreign currency
exchange contracts purchased (Note C) -- -- --
Payable for collateral on securities loaned
(Note A) -- -- 35,520
Payable for securities purchased 3,863 1,319 18,006
Payable for variation margin (Note A) -- -- --
Payable to investment manager (Note B) 479 156 2,326
Accrued expenses 85 46 364
-------------------------------------------
4,427 1,521 56,216
-------------------------------------------
NET ASSETS Applicable to Investors' Beneficial
Interests $ 1,122,371 $ 259,864 $ 6,232,542
-------------------------------------------
NET ASSETS consist of:
Paid-in capital $ 836,281 $ 198,643 $ 5,207,522
Net unrealized appreciation in value of
investment securities, financial futures
contracts, translation of assets and
liabilities in foreign currencies, and
foreign currency contracts 286,090 61,221 1,025,020
-------------------------------------------
NET ASSETS $ 1,122,371 $ 259,864 $ 6,232,542
-------------------------------------------
*Cost of investments:
Unaffiliated issuers $ 838,502 $ 199,197 $ 4,820,642
Non-controlled affiliated issuers -- -- 431,837
-------------------------------------------
Total cost of investments $ 838,502 $ 199,197 $ 5,252,479
-------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
78
<PAGE>
August 31, 1996
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL
MANAGERS EQUITY MANAGERS TRUST
TRUST -------------------------------------------
------------- SOCIALLY
INTERNATIONAL MANHATTAN PARTNERS RESPONSIVE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments in securities, at market value*
(Notes A & E) -- see Schedule of
Investments:
Unaffiliated issuers $ 57,765 $ 580,025 $ 2,004,866 $ 158,396
Non-controlled affiliated issuers -- -- -- --
----------------------------------------------------------
57,765 580,025 2,004,866 158,396
Cash 19 -- 49 8
Deferred organization costs (Note A) 32 19 34 17
Dividends and interest receivable 79 133 1,710 168
Prepaid expenses and other assets 1 22 73 3
Receivable for securities sold -- -- 3,761 --
----------------------------------------------------------
57,896 580,199 2,010,493 158,592
----------------------------------------------------------
LIABILITIES
Net payable for forward foreign currency
exchange contracts purchased (Note C) 35 -- -- --
Payable for collateral on securities loaned
(Note A) -- 10,790 -- --
Payable for securities purchased 712 1,618 9,975 --
Payable for variation margin (Note A) 49 -- -- --
Payable to investment manager (Note B) 39 259 802 73
Accrued expenses 78 106 113 34
----------------------------------------------------------
913 12,773 10,890 107
----------------------------------------------------------
NET ASSETS Applicable to Investors' Beneficial
Interests $ 56,983 $ 567,426 $ 1,999,603 $ 158,485
----------------------------------------------------------
NET ASSETS consist of:
Paid-in capital $ 50,339 $ 484,790 $ 1,771,647 $ 135,242
Net unrealized appreciation in value of
investment securities, financial futures
contracts, translation of assets and
liabilities in foreign currencies, and
foreign currency contracts 6,644 82,636 227,956 23,243
----------------------------------------------------------
NET ASSETS $ 56,983 $ 567,426 $ 1,999,603 $ 158,485
----------------------------------------------------------
*Cost of investments:
Unaffiliated issuers $ 50,943 $ 497,389 $ 1,776,910 $ 135,153
Non-controlled affiliated issuers -- -- -- --
----------------------------------------------------------
Total cost of investments $ 50,943 $ 497,389 $ 1,776,910 $ 135,153
----------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
79
<PAGE>
STATEMENTS OF OPERATIONS
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY MANAGERS TRUST
------------------------------------------
FOCUS GENESIS GUARDIAN
(000'S OMITTED) PORTFOLIO PORTFOLIO PORTFOLIO
------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Income:
Dividend income -- unaffiliated issuers $ 15,806 $ 1,711 $ 82,054
Dividend income -- non-controlled affiliated
issuers -- -- 2,834
Interest income 1,599 263 40,556
Foreign taxes withheld (Note A) (101) -- (1,170)
------------------------------------------
Total income 17,304 1,974 124,274
------------------------------------------
Expenses:
Investment advisory/management fee (Note B) 5,565 1,506 25,172
Accounting fees 10 10 10
Administration fee (Note B) -- -- --
Amortization of deferred organization and
initial offering expenses (Note A) 8 2 26
Auditing fees 41 22 50
Custodian fees (Note B) 229 94 872
Insurance expense 24 4 113
Legal fees 15 15 14
Trustees' fees and expenses 20 7 75
Miscellaneous 2 20 8
------------------------------------------
Total expenses 5,914 1,680 26,340
Deduct -- expenses reimbursed by investment
adviser (Note B) -- -- --
Fee waived by the investment manager (Note
B) -- (177) --
------------------------------------------
Total net expenses 5,914 1,503 26,340
------------------------------------------
Net investment income 11,390 471 97,934
------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investment securities
sold in unaffiliated issuers 51,999 5,660 322,951
Net realized loss on investment securities
sold in non-controlled affiliated issuers -- -- (8,835)
Net realized loss on option contracts written
(Note A) (298) -- (6,706)
Net realized gain on financial futures
contracts (Note A) -- -- --
Net realized gain on foreign currency
transactions (Note A) -- -- --
Change in net unrealized appreciation of
investment securities, option contracts
written, translation of assets and
liabilities in foreign currencies, and
foreign currency contracts (21,728) 27,635 (111,192)
Change in net unrealized appreciation
(depreciation) of financial futures
contracts (Note A) -- -- --
------------------------------------------
Net gain (loss) on investments 29,973 33,295 196,218
------------------------------------------
Net increase (decrease) in net assets
resulting from operations $ 41,363 $ 33,766 $ 294,152
------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
80
<PAGE>
For the Year Ended August 31, 1996
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL
MANAGERS EQUITY MANAGERS TRUST
TRUST ------------------------------------------------
------------ SOCIALLY
INTERNATIONAL MANHATTAN PARTNERS RESPONSIVE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Income:
Dividend income -- unaffiliated issuers $ 698 $ 4,391 $ 29,261 $ 1,814
Dividend income -- non-controlled affiliated
issuers -- -- -- --
Interest income 183 246 3,659 325
Foreign taxes withheld (Note A) (93) (103) (150) --
---------------------------------------------------------------
Total income 788 4,534 32,770 2,139
---------------------------------------------------------------
Expenses:
Investment advisory/management fee (Note B) 327 3,402 8,868 704
Accounting fees 10 10 10 10
Administration fee (Note B) 17 -- -- --
Amortization of deferred organization and
initial offering expenses (Note A) 12 9 18 7
Auditing fees 30 40 43 19
Custodian fees (Note B) 123 197 349 69
Insurance expense 1 17 43 2
Legal fees 42 15 14 14
Trustees' fees and expenses 39 13 28 7
Miscellaneous 2 2 3 --
---------------------------------------------------------------
Total expenses 603 3,705 9,376 832
Deduct -- expenses reimbursed by investment
adviser (Note B) (48) -- -- --
Fee waived by the investment manager (Note
B) -- -- -- --
---------------------------------------------------------------
Total net expenses 555 3,705 9,376 832
---------------------------------------------------------------
Net investment income 233 829 23,394 1,307
---------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investment securities
sold in unaffiliated issuers 260 63,165 240,765 11,385
Net realized loss on investment securities
sold in non-controlled affiliated issuers -- (3,656) -- --
Net realized loss on option contracts written
(Note A) -- -- -- --
Net realized gain on financial futures
contracts (Note A) 283 -- -- --
Net realized gain on foreign currency
transactions (Note A) 66 -- -- --
Change in net unrealized appreciation of
investment securities, option contracts
written, translation of assets and
liabilities in foreign currencies, and
foreign currency contracts 4,239 (74,167) (30,217) 9,035
Change in net unrealized appreciation
(depreciation) of financial futures
contracts (Note A) (275) -- -- --
---------------------------------------------------------------
Net gain (loss) on investments 4,573 (14,658) 210,548 20,420
---------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $ 4,806 $ (13,829) $ 233,942 $ 21,727
---------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
81
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY MANAGERS
TRUST
FOCUS GENESIS
PORTFOLIO PORTFOLIO
Year Year
Ended Ended
August 31, August 31,
(000'S OMITTED) 1996 1995 1996 1995
------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 11,390 $ 7,496 $ 471 $ 335
Net realized gain (loss) on
investments sold 51,701 50,732 5,660 6,666
Change in net unrealized
appreciation of investments (21,728) 139,750 27,635 17,448
------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 41,363 197,978 33,766 24,449
------------------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 231,514 157,842 110,968 34,636
Reductions (119,679) (31,658) (27,030) (55,494)
------------------------------------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests 111,835 126,184 83,938 (20,858)
------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 153,198 324,162 117,704 3,591
NET ASSETS:
Beginning of year 969,173 645,011 142,160 138,569
------------------------------------------------------
End of year $ 1,122,371 $ 969,173 $ 259,864 $ 142,160
------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
82
<PAGE>
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY MANAGERS GLOBAL MANAGERS EQUITY MANAGERS
TRUST TRUST TRUST
GUARDIAN INTERNATIONAL MANHATTAN
PORTFOLIO PORTFOLIO PORTFOLIO
Year Year Year
Ended Ended Ended
August 31, August 31, August 31,
1996 1995 1996 1995 1996 1995
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 97,934 $ 53,790 $ 233 $ 328 $ 829 $ 2,206
Net realized gain (loss) on
investments sold 307,410 124,394 609 (1,230) 59,509 44,742
Change in net unrealized
appreciation of investments (111,192) 627,968 3,964 2,468 (74,167) 85,917
----------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 294,152 806,152 4,806 1,566 (13,829) 132,865
----------------------------------------------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 1,540,028 1,413,464 30,618 21,185 70,833 75,821
Reductions (214,834) (86,756) (4,847) (2,397) (134,984) (85,015)
----------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests 1,325,194 1,326,708 25,771 18,788 (64,151) (9,194)
----------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 1,619,346 2,132,860 30,577 20,354 (77,980) 123,671
NET ASSETS:
Beginning of year 4,613,196 2,480,336 26,406 6,052 645,406 521,735
----------------------------------------------------------------------------------
End of year $ 6,232,542 $ 4,613,196 $ 56,983 $ 26,406 $ 567,426 $ 645,406
----------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
83
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS(Cont'd)
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY MANAGERS
TRUST
SOCIALLY
PARTNERS RESPONSIVE
PORTFOLIO PORTFOLIO
Year Year
Ended Ended
August 31, August 31,
(000'S OMITTED) 1996 1995 1996 1995
------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 23,394 $ 15,524 $ 1,307 $ 925
Net realized gain (loss) on
investments sold 240,765 165,254 11,385 1,842
Change in net unrealized
appreciation of investments (30,217) 109,257 9,035 12,075
------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 233,942 290,035 21,727 14,842
------------------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 309,196 100,895 45,974 21,008
Reductions (167,061) (107,688) (5,963) (9,789)
------------------------------------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests 142,135 (6,793) 40,011 11,219
------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 376,077 283,242 61,738 26,061
NET ASSETS:
Beginning of year 1,623,526 1,340,284 96,747 70,686
------------------------------------------------------
End of year $ 1,999,603 $ 1,623,526 $ 158,485 $ 96,747
------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
84
<PAGE>
NOTES TO FINANCIAL STATEMENTS
August 31, 1996
- ----------------------------------------------------------------------
Equity Managers Trust and Global Managers Trust
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1) GENERAL: Neuberger&Berman Focus Portfolio ("Focus," formerly Neuberger&
Berman Selected Sectors Portfolio), Neuberger&Berman Genesis Portfolio
("Genesis"), Neuberger&Berman Guardian Portfolio ("Guardian"), Neuberger&
Berman Manhattan Portfolio ("Manhattan"), Neuberger&Berman Partners Portfolio
("Partners"), and Neuberger&Berman Socially Responsive Portfolio ("Socially
Responsive") are separate operating series of Equity Managers Trust
("Managers Trust"), a New York common law trust organized as of December 1,
1992. Neuberger&Berman International Portfolio ("International," formerly
International Portfolio) is a separate operating series of Global Managers
Trust ("Global"), a New York common law trust organized as of March 18, 1994,
with its principal office in the Cayman Islands. These seven aforementioned
series are collectively referred to as the "Portfolios." Managers Trust and
Global (collectively the "Trusts") are registered as diversified, open-end
management investment companies under the Investment Company Act of 1940, as
amended (the "1940 Act"). The trustees of Managers Trust changed the name of
Neuberger& Berman Selected Sectors Portfolio to Neuberger&Berman Focus
Portfolio, effective January 1, 1995. The trustees of Global changed the name
of International Portfolio to Neuberger&Berman International Portfolio,
effective November 1, 1995. Other regulated investment companies sponsored by
Neuberger&Berman Management Incorporated ("Management"), whose financial
statements are not presented herein, also invest in Managers Trust. Global
currently has only one Portfolio.
The assets of each series belong only to that series, and the liabilities
of each series are borne solely by that series and no other.
2) PORTFOLIO VALUATION: Investment securities are valued as indicated in the
notes following the Portfolios' Schedule of Investments.
3) FOREIGN CURRENCY TRANSLATION: The accounting records of the Portfolios are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars at the current rate of exchange of such currency against the U.S.
dollar to determine the value of investments, other assets and liabilities.
Purchase and sale prices of securities, and income and expenses are
translated into U.S. dollars at the prevailing rate of exchange on the
respective dates of such transactions.
4) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Dividend income is recorded on the
ex-dividend date or, for certain foreign dividends, as soon as the Portfolio
becomes aware of
85
<PAGE>
the dividends. Interest income, including original issue discount, where
applicable, and accretion of discount on short-term investments, is recorded
on the accrual basis. Realized gains and losses from securities transactions
and foreign currency transactions are recorded on the basis of identified
cost.
5) FORWARD FOREIGN CURRENCY CONTRACTS: The Portfolios may enter into forward
foreign currency contracts ("contracts") in connection with planned purchases
or sales of securities, or to hedge the U.S. dollar value of portfolio
securities denominated in a foreign currency. International may also enter
into such contracts to increase or decrease its exposure to a currency other
than U.S. dollars. The gain or loss arising from the difference between the
original contract price and the closing price of such contract is included in
net realized gains or losses on foreign currency transactions. Fluctuations
in the value of forward foreign currency contracts are recorded for financial
reporting purposes as unrealized gains or losses by each Portfolio. The
Portfolios, with the exception of International which has no specific
limitation, have restrictions limiting the portion of their net assets which
may be committed to these types of contracts to 5% of their net assets. The
Portfolios could be exposed to risks if a counterparty to a contract were
unable to meet the terms of its contract or if the value of the foreign
currency changes unfavorably. The U.S. dollar value of foreign currency
underlying all contractual commitments held by each Portfolio is determined
using forward foreign currency rates supplied by an independent pricing
service.
6) TAXES: Managers Trust intends to comply with the requirements of the Internal
Revenue Code of 1986, as amended. Each Portfolio of Managers Trust and Global
also intend to conduct its operations so that each of its investors (in the
case of Global, its U.S. investors) will be able to qualify as a regulated
investment company. Each Portfolio will be treated as a partnership for U.S.
Federal income tax purposes and is therefore not subject to U.S. Federal
income tax. There is, at present, no direct taxation in the Cayman Islands,
and therefore interest, dividends and capital gains derived by Global are not
subject to taxes in that jurisdiction.
7) FOREIGN TAXES: Foreign taxes withheld represent amounts withheld by foreign
tax authorities, net of refunds recoverable.
8) ORGANIZATION EXPENSES: Expenses incurred by each Portfolio in connection
with its organization are being amortized by each Portfolio on a
straight-line basis over a five-year period. At August 31, 1996, the
unamortized balance of such expenses amounted to $16,728, $3,687, $49,070,
$32,418, $18,675, $34,014, and $17,095, for Focus, Genesis, Guardian,
International, Manhattan, Partners, and Socially Responsive, respectively.
9) EXPENSE ALLOCATION: Each Portfolio bears all costs of its operations.
Expenses incurred by each of the Trusts with respect to any two or more
Portfolios are
86
<PAGE>
allocated in proportion to the net assets of such Portfolios, except where a
more appropriate allocation of expenses to each Portfolio can otherwise be
made fairly. Expenses directly attributable to a Portfolio are charged to
that Portfolio.
10)CALL OPTIONS: Premiums received by each Portfolio upon writing a covered call
option are recorded in the liability section of each Portfolio's Statement of
Assets and Liabilities and are subsequently adjusted to the current market
value. When an option expires, is exercised or is closed, the Portfolio
realizes a gain or loss and the liability is eliminated. A Portfolio bears
the risk of a decline in the price of the security during the period,
although any potential loss during the period would be reduced by the amount
of the option premium received. In general, written call options may serve as
a partial hedge against decreases in value in the underlying securities to
the extent of the premium received. All securities covering outstanding
options are held in escrow by the custodian bank.
Summary of Option Transactions for the Year Ended August 31, 1996:
<TABLE>
<CAPTION>
VALUE
WHEN
FOCUS NUMBER WRITTEN
- ------------------------------------------------------------
<S> <C> <C>
CONTRACTS OUTSTANDING 8/31/95 850 $ 737,316
CONTRACTS WRITTEN 3,800 1,705,364
CONTRACTS EXPIRED (2,300 ) (281,841)
CONTRACTS EXERCISED (500 ) (154,745)
CONTRACTS CLOSED (1,850 ) (2,006,094)
-----------------------
CONTRACTS OUTSTANDING 8/31/96 0 $ 0
-----------------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
GUARDIAN NUMBER WHEN WRITTEN
- ------------------------------------------------------------------
<S> <C> <C>
CONTRACTS OUTSTANDING 8/31/95 8,650 $ 7,625,995
CONTRACTS WRITTEN 16,150 9,878,556
CONTRACTS EXPIRED 0 0
CONTRACTS EXERCISED (7,650) (2,570,511)
CONTRACTS CLOSED (17,150) (14,934,040)
-----------------------------
CONTRACTS OUTSTANDING 8/31/96 0 $ 0
-----------------------------
</TABLE>
11)FINANCIAL FUTURES CONTRACTS: International may buy and sell financial futures
contracts for hedging and non-hedging purposes; Socially Responsive may buy
and sell financial futures contracts for hedging purposes only. At the time a
Portfolio enters into a financial futures contract, it is required to deposit
with its custodian a specified amount of cash or U.S. Government securities,
known as "initial margin," ranging upward from 1.1% of the value of the
financial futures contract being traded. Each day, the futures contract is
valued at the official settlement price of the board of trade or U.S.
commodity exchange on which
87
<PAGE>
such futures contract is traded. Subsequent payments, known as "variation
margin," to and from the broker are made on a daily basis as the market price
of the financial futures contract fluctuates. Daily variation margin
adjustments, arising from this "mark to market," are recorded by the
Portfolio as unrealized gains or losses.
Although some financial futures contracts by their terms call for actual
delivery or acceptance of financial instruments, in most cases the contracts
are closed out prior to delivery by offsetting purchases or sales of matching
financial futures contracts. When the contracts are closed, a Portfolio
recognizes a gain or loss. Risks of entering into futures contracts include
the possibility that there may be an illiquid market and/or that a change in
the value of the contract may not correlate with changes in the value of the
underlying securities.
For Federal income tax purposes, the futures transactions undertaken by a
Portfolio may cause that Portfolio to recognize gains or losses from marking
to market even though its positions have not been sold or terminated, may
affect the character of the gains or losses recognized as long-term or
short-term and may affect the timing of some capital gains and losses
realized by the Portfolio. Also, a Portfolio's losses on transactions
involving futures contracts may be deferred rather than being taken into
account currently in calculating such Portfolio's taxable income.
At August 31, 1996, open positions in financial futures contracts for
International were as follows:
<TABLE>
<CAPTION>
OPEN UNREALIZED
EXPIRATION CONTRACTS POSITION DEPRECIATION
- -------------------------------------------------
<S> <C> <C> <C>
December 30 Nikkei
1996 Futures Long $ 143,250
</TABLE>
At August 31, 1996, the Portfolio had deposited $155,000 U.S. Treasury
Bills due 10/17/96 in a segregated account to cover margin requirements on
open financial future contracts.
12)SECURITY LENDING: Portfolio securities loans involve certain risks in the
event a borrower should fail financially, including delays or inability to
recover the lent securities or foreclose against the collateral. The
investment manager, under the supervision of the Trusts' Board of Trustees,
monitors the creditworthiness of the parties to whom the Portfolios make
security loans. The Portfolios will not lend securities on which covered call
options have been written, or lend securities on terms which would prevent
each of their investors from qualifying as a regulated investment company.
Portfolio securities loans to Neuberger&Berman, L.P. ("Neuberger"), the
Portfolios' principal broker, are made in accordance with an exemptive order
issued by the Securities and Exchange Commission under the 1940 Act. The
Portfolios receive cash as collateral against the lent securities, which must
be maintained at not less than 100% of the market value of the lent
88
<PAGE>
securities during the period of the loan. The Portfolios receive income
earned on the lent securities and a portion of the income earned on the cash
collateral. During the year ended August 31, 1996, Focus, Guardian,
Manhattan, and Partners lent securities to Neuberger. At August 31, 1996,
cash collateral received by Guardian and Manhattan was equal to or in excess
of 100% of the market value of the loaned securities.
13)REPURCHASE AGREEMENTS: Each Portfolio may enter into repurchase agreements
with institutions that each Portfolio's investment manager has determined are
creditworthy. Each repurchase agreement is recorded at cost. A Portfolio
requires that the securities purchased in a repurchase transaction be
transferred to the custodian in a manner sufficient to enable a Portfolio to
obtain those securities in the event of a default under the repurchase
agreement. A Portfolio monitors, on a daily basis, the value of the
securities transferred to ensure that their value, including accrued
interest, is greater than amounts owed to a Portfolio under each such
repurchase agreement.
NOTE B -- ADMINISTRATION AND ADVISORY/MANAGEMENT FEES AND OTHER TRANSACTIONS
WITH AFFILIATES:
Each Portfolio retains Management as its investment manager under a
Management Agreement. For such investment management services, each Portfolio
(except Genesis and International) pays Management a fee at the annual rate of
0.55% of the first $250 million of that Portfolio's average daily net assets,
0.525% of the next $250 million, 0.50% of the next $250 million, 0.475% of the
next $250 million, 0.45% of the next $500 million, and 0.425% of average daily
net assets in excess of $1.5 billion. Genesis has contracted to pay Management a
fee for investment management services at the annual rate of 0.85% of the first
$250 million of that Portfolio's average daily net assets, 0.80% of the next
$250 million, 0.75% of the next $250 million, 0.70% of the next $250 million,
and 0.65% of average daily net assets in excess of $1 billion. Management has
voluntarily agreed to waive a portion of the management fee borne directly by
Genesis and indirectly by Neuberger&Berman Genesis Fund to reduce the annual fee
by 0.10% per annum of average daily net assets of Genesis, effective May 1,
1995. International pays Management a fee for investment management services at
the annual rate of 0.85% of the first $250 million of that Portfolio's average
daily net assets, 0.825% of the next $250 million, 0.80% of the next $250
million, 0.775% of the next $250 million, 0.75% of the next $500 million, and
0.725% of average daily net assets in excess of $1.5 billion.
Prior to November 1, 1995, International had retained BNP-N&B Global Asset
Management L.P. ("BNP-N&B Global"), a partnership jointly owned by Banque
Nationale de Paris ("BNP") and Neuberger, as its investment adviser. For such
investment advisory services, International paid BNP-N&B Global a fee at the
annual rate of 0.50% of the first $250 million of that Portfolio's average daily
net assets, 0.475% of the next $250 million, 0.45% of the next $250 million, and
0.425% of
89
<PAGE>
average daily net assets in excess of $750 million. For the period from
September 1, 1995 to October 31, 1995, International paid $24,032 for such
services. Additionally, under a separate Administration Agreement ("Portfolio
Administration Agreement"), which was in effect through October 31, 1995,
International had retained Management to provide certain administrative
services. Pursuant to the Portfolio Administration Agreement, International paid
Management a fee at the annual rate of 0.10% of the first $250 million of that
Portfolio's average daily net assets, 0.08% of the next $250 million, 0.06% of
the next $250 million, and 0.04% of average daily net assets in excess of $750
million. The minimum administration fee was $100,000 per annum. For the period
from September 1, 1995, to October 31, 1995, the Portfolio paid $16,666 for such
services.
Prior to November 1, 1995, BNP-N&B Global had voluntarily undertaken to
reimburse International for its operating expenses (excluding interest, taxes,
brokerage commissions, and extraordinary expenses) ("Operating Expenses") that
exceeded 0.70% per annum of that Portfolio's average daily net assets. For the
period from September 1, 1995, to October 31, 1995, BNP-N&B Global reimbursed
International $48,443. Effective November 1, 1995 the above expense limitation
was terminated.
All of the capital stock of Management is owned by individuals who are also
general partners of Neuberger, a member firm of The New York Stock Exchange and
sub-adviser to each Portfolio. Neuberger is retained by Management to furnish it
with investment recommendations and research information without cost to each
Portfolio. Several individuals who are officers and/or trustees of the Trusts
are also partners of Neuberger and/or officers and/or directors of Management.
Each Portfolio has an expense offset arrangement in connection with its
custodian contract. The impact of this arrangement, reflected in the Statement
of Operations, is less than .01% of each Portfolio's average daily net assets.
NOTE C -- SECURITIES TRANSACTIONS:
During the year ended August 31, 1996, there were purchase and sale
transactions (excluding short-term securities, forward foreign currency
contracts, financial futures contracts, and option contracts written) as
follows:
<TABLE>
<CAPTION>
PURCHASES SALES
- ---------------------------------------------------------------------
<S> <C> <C>
FOCUS $ 527,099,223 $ 416,382,149
GENESIS 111,738,992 35,561,645
GUARDIAN 3,665,028,039 1,883,081,464
INTERNATIONAL 39,462,298 16,976,012
MANHATTAN 336,006,035 397,529,041
PARTNERS 1,715,861,680 1,705,874,758
SOCIALLY RESPONSIVE 101,143,798 65,018,616
</TABLE>
90
<PAGE>
At August 31, 1996, International had entered into various contracts to
deliver currencies at specified future dates. Open contracts were as follows:
<TABLE>
<CAPTION>
NET
UNREALIZED
CONTRACTS TO IN EXCHANGE SETTLEMENT APPRECIATION
SALES DELIVER FOR DATE VALUE (DEPRECIATION)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
German Mark 1,426,300 $ 943,320 10/1/96 $ 965,598 $ (22,278)
French Franc 4,919,700 975,899 11/13/96 974,603 1,296
German Mark 1,451,500 982,735 11/15/96 985,630 (2,895)
Swiss Franc 1,163,900 973,975 11/15/96 976,272 (2,297)
British Pound 663,526 1,027,138 11/22/96 1,035,664 (8,526)
$ 4,903,067 $ 4,937,767 $ (34,700)
------------ ---------------------------
</TABLE>
During the year ended August 31, 1996, there were brokerage commissions on
securities paid to Neuberger and other brokers (none of which was paid to BNP)
as follows:
<TABLE>
<CAPTION>
NEUBERGER OTHER BROKERS TOTAL
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
FOCUS $ 583,212 $ 582,639 $ 1,165,851
GENESIS 95,999 110,151 206,150
GUARDIAN 3,542,127 3,344,463 6,886,590
INTERNATIONAL 5,485 177,850 183,335
MANHATTAN 543,020 397,304 940,324
PARTNERS 2,741,666 1,956,188 4,697,854
SOCIALLY RESPONSIVE 124,879 83,955 208,834
</TABLE>
In addition, Neuberger's share of the total interest income earned for the
year ended August 31, 1996, from the collateralization of securities loaned to
or through Neuberger was $330,001, $2,129,341, $186,163, and $118,041, for
Focus, Guardian, Manhattan, and Partners, respectively.
NOTE D -- LINE OF CREDIT:
Genesis had an unsecured $10,000,000 bank line of credit with Morgan Guaranty
Trust Company of New York ("Morgan"), which expired on August 31, 1996, to be
used only as a temporary measure for extraordinary or emergency purposes.
Borrowings under this agreement would have borne interest at a rate based on the
Morgan Bid Rate Program. For this line of credit, Genesis was assessed an annual
facility fee of .2% of the available line of credit. No compensating balances
were required. There were no loans outstanding pursuant to this line of credit
at August 31, 1996, nor did Genesis utilize the line of credit at anytime.
Beginning August 31, 1996, Genesis established a $20,000,000 unsecured line of
credit with State Street Bank and Trust Company for the same purpose. Any
borrowings under this agreement will bear interest at the overnight Federal
Funds Rate plus .75% per annum. For this line of credit, Genesis is assessed a
facility fee of .1% per annum.
91
<PAGE>
NOTE E -- INVESTMENTS IN NON-CONTROLLED AFFILIATES*:
<TABLE>
<CAPTION>
GUARDIAN
BALANCE OF GROSS BALANCE OF
SHARES HELD PURCHASES GROSS SALES SHARES HELD
AUGUST 31, AND AND AUGUST 31, VALUE AUGUST
NAME OF ISSUER: 1995 ADDITIONS REDUCTIONS 1996 31, 1996
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Coltec Industries 2,765,000 2,013,900 0 4,778,900 $71,683,500
Fingerhut Cos. 1,465,000 1,776,700 0 3,241,700 43,357,737
Foundation Health 2,230,000 790,000 0 3,020,000 90,600,000
Healthsource Inc. 0 4,190,000 0 4,190,000 62,850,000
Hospitality
Properties Trust 0 1,458,900 16,300 1,442,600 38,589,550
J & L Specialty
Steel 0 3,278,200 0 3,278,200 44,665,475
USFreightways Corp. 0 1,257,000 0 1,257,000 26,082,750
Zeigler Coal Holding 565,500 1,136,500 0 1,702,000 25,530,000
<CAPTION>
MANHATTAN
BALANCE OF GROSS BALANCE OF
SHARES HELD PURCHASES GROSS SALES SHARES HELD
AUGUST 31, AND AND AUGUST 31, VALUE AUGUST
NAME OF ISSUER: 1995 ADDITIONS REDUCTIONS 1996 31, 1996
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Spaghetti Warehouse 404,000 0 404,000 0 $0
</TABLE>
*AFFILIATED ISSUERS, AS DEFINED IN THE 1940 ACT, INCLUDE ISSUERS IN WHICH THE
PORTFOLIO HELD 5% OR MORE OF THE OUTSTANDING VOTING SECURITIES.
92
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY MANAGERS TRUST
FOCUS GENESIS
PORTFOLIO PORTFOLIO
Period from Period from
August 2, August 2,
1993 1993
(Commencement (Commencement
of of
Operations) Operations)
to to
Year Ended August 31, August 31, Year Ended August 31, August 31,
1996 1995 1994 1993 1996 1995 1994 1993
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET
ASSETS:
Expenses .54% .57% .58% .58%(1) .85%(2) .94%(2) .98% 1.07%(1)
-----------------------------------------------------------------------------------------------------
Net Investment Income 1.04% 1.05% 1.16% 1.46%(1) .27%(2) .25%(2) .18% .37%(1)
-----------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 39% 36% 52% 4% 21% 37% 63% 3%
-----------------------------------------------------------------------------------------------------
Average Commission Rate
Paid $0.0578 -- -- -- $0.0576 -- -- --
-----------------------------------------------------------------------------------------------------
Net Assets, End of Year
(in millions) $1,122.4 $969.2 $645.0 $574.0 $259.9 $142.2 $138.6 $118.6
-----------------------------------------------------------------------------------------------------
</TABLE>
1) Annualized.
2) Had Management not waived a portion of the management fee, the annualized
ratios to average daily net assets would have been:
<TABLE>
<CAPTION>
Year Ended August 31,
GENESIS 1996 1995
<S> <C> <C>
- ------------------------------------------------------------
Expenses .95% .97%
Net Investment Income .17% .22%
</TABLE>
93
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY MANAGERS TRUST GLOBAL MANAGERS TRUST
GUARDIAN INTERNATIONAL
PORTFOLIO PORTFOLIO
Period from
August 2,
1993 Period from
(Commencement June 15, 1994
of (Commencement
Operations) of Operations)
to Year Ended August 31, to
Year Ended August 31, August 31, August 31,
1996 1995 1994 1993 1996 1995 1994
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET
ASSETS:
Expenses .46% .48% .50% .51%(1) 1.37%(2) .70%(2) .70%(1,2)
-------------------------------------------------------------------------------------------
Net Investment Income 1.72% 1.72% 1.66% 2.45%(1) .58%(2) 1.74%(2) 1.63%(1,2)
-------------------------------------------------------------------------------------------
Portfolio Turnover Rate 37% 26% 24% 3% 45% 41% 5%
-------------------------------------------------------------------------------------------
Average Commission Rate
Paid $0.0580 -- -- -- $0.0150 -- --
-------------------------------------------------------------------------------------------
Net Assets, End of Year
(in millions) $6,232.5 $4,613.2 $2,480.3 $1,777.6 $57.0 $26.4 $6.1
-------------------------------------------------------------------------------------------
</TABLE>
1) Annualized.
2) After reimbursement of expenses by the investment adviser as described in
Note B of Notes to Financial Statements. Had the investment adviser not
undertaken such action the annualized ratios of expenses and net investment
income (loss) to average daily net assets would have been 1.49% and .46%,
respectively, for the year ended August 31, 1996, 2.24% and .20%,
respectively, in 1995, and 2.50% and (.17%), respectively, in 1994.
94
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY MANAGERS TRUST
MANHATTAN PARTNERS
PORTFOLIO PORTFOLIO
Period from Period from
August 2, August 2,
1993 1993
(Commencement (Commencement
of of
Operations) Operations)
to to
Year Ended August 31, August 31, Year Ended August 31, August 31,
1996 1995 1994 1993 1996 1995 1994 1993
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET
ASSETS:
Expenses .58% .59% .59% .59%(1) .51% .53% .54% .54%(1)
---------------------------------------------------------------------------------------------------
Net Investment Income .13% .42% .53% .55%(1) 1.26% 1.13% .75% 1.19%(1)
---------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 53% 44% 50% 3% 96% 98% 75% 8%
---------------------------------------------------------------------------------------------------
Average Commission Rate
Paid $0.0373 -- -- -- $0.0494 -- -- --
---------------------------------------------------------------------------------------------------
Net Assets, End of Year
(in millions) $567.4 $645.4 $521.7 $536.8 $1,999.6 $1,623.5 $1,340.3 $1,182.1
---------------------------------------------------------------------------------------------------
</TABLE>
1) Annualized.
95
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY MANAGERS TRUST
SOCIALLY RESPONSIVE
PORTFOLIO
Period from
March 14,
1994
(Commencement
of
Operations)
to
Year Ended August 31, August 31,
1996 1995 1994
------------------------------------
<S> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Expenses .65% .68% .69%(1)
------------------------------------
Net Investment Income 1.02% 1.18% 1.33%(1)
------------------------------------
Portfolio Turnover Rate 53% 58% 14%
------------------------------------
Average Commission Rate Paid $0.0587 -- --
------------------------------------
Net Assets, End of Year (in millions) $158.5 $96.7 $70.7
------------------------------------
</TABLE>
1) Annualized.
96
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of Equity Managers Trust and
Owners of Beneficial Interest of
Neuberger&Berman Manhattan Portfolio and
Neuberger&Berman Socially Responsive Portfolio
We have audited the accompanying statements of assets and liabilities of
Neuberger&Berman Manhattan Portfolio and Neuberger&Berman Socially Responsive
Portfolio (collectively the "Portfolios"), including the schedules of
investments, as of August 31, 1996, and the related statements of operations for
the year then ended, and the statements of changes in net assets for each of the
two years in the period then ended and the financial highlights for each of the
periods indicated therein. These financial statements and financial highlights
are the responsibility of the Portfolios' management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
August 31, 1996 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Neuberger&Berman Manhattan Portfolio and Neuberger&Berman Socially Responsive
Portfolio as of August 31, 1996, the results of their operations for the year
then ended, and the changes in their net assets for each of the two years in the
period then ended and the financial highlights for each of the periods indicated
therein, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
October 4, 1996
97
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Trustees
Equity Managers Trust and
Owners of Beneficial Interest of
Neuberger&Berman Focus Portfolio
Neuberger&Berman Genesis Portfolio
Neuberger&Berman Guardian Portfolio and
Neuberger&Berman Partners Portfolio
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of the Neuberger&Berman Focus Portfolio,
Neuberger&Berman Genesis Portfolio, Neuberger&Berman Guardian Portfolio, and
Neuberger&Berman Partners Portfolio, four of the series comprising Equity
Managers Trust (the "Trust"), as of August 31, 1996, and the related statements
of operations for the year then ended, the statements of changes in net assets
for each of the two years in the period then ended, and the financial highlights
for each of the periods indicated therein. These financial statements and
financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of August 31, 1996, by correspondence with the custodian and
brokers or other appropriate auditing procedures where replies from brokers were
not received. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the above mentioned series of Equity Managers Trust at August 31, 1996, the
results of their operations for the year then ended, the changes in their net
assets for each of the two years in the period then ended, and the financial
highlights for each of the periods indicated therein, in conformity with
generally accepted accounting principles.
Boston, Massachusetts /s/ Ernst & Young LLP
October 3, 1996
98
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Trustees
Global Managers Trust and Owners of Beneficial Interest of
Neuberger&Berman International Portfolio
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of the Neuberger&Berman International
Portfolio, a series of Global Managers Trust (the "Trust"), as of August 31,
1996, and the related statement of operations for the year then ended, and the
statement of changes in net assets for each of the two years in the period then
ended, and financial highlights for each of the periods indicated therein. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of August 31, 1996, by correspondence with the custodian and brokers or
other appropriate auditing procedures where replies from brokers were not
received. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Neuberger&Berman International Portfolio at August 31, 1996, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and its financial highlights for each of
the periods indicated therein, in conformity with accounting principles
generally accepted in the United States.
/s/ Ernst & Young
Grand Cayman,
Cayman Islands
October 3, 1996
99
<PAGE>
DIRECTORY
INVESTMENT MANAGER, ADMINISTRATOR
AND DISTRIBUTOR
Neuberger&Berman Management Incorporated
605 Third Avenue 2nd Floor
New York, NY 10158-0180
800-877-9700
Institutional Services 800-366-6264
SUB-ADVISER
Neuberger&Berman, L.P.
605 Third Avenue
New York, NY 10158-3698
CUSTODIAN AND SHAREHOLDER
SERVICING AGENT
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
ADDRESS CORRESPONDENCE TO:
Neuberger&Berman Funds
Boston Service Center
P.O. Box 8403
Boston, MA 02266-8403
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, NW
2nd Floor
Washington, DC 20036-1800
INDEPENDENT ACCOUNTANTS/AUDITORS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
Ernst & Young LLP
200 Clarendon Street
Boston, MA 02116
Ernst & Young
One Capital Place
Shedden Road
George Town
Grand Cayman, Cayman Islands
Neuberger&Berman Management Inc., Neuberger&Berman Focus Fund, Neuberger&Berman
Genesis Fund, Neuberger&Berman Guardian Fund, Neuberger&Berman International
Fund, Neuberger&Berman Manhattan Fund, Neuberger&Berman Partners Fund, and
Neuberger&Berman Socially Responsive Fund are registered service marks of
Neuberger&Berman Management Inc.
- -C- 1996 Neuberger&Berman Management Inc.
100
<PAGE>
OFFICERS AND TRUSTEES
EQUITY MANAGERS TRUST/ GLOBAL MANAGERS
NEUBERGER&BERMAN TRUST
EQUITY FUNDS Stanley Egener
Stanley Egener CHAIRMAN OF THE BOARD AND TRUSTEE
CHAIRMAN OF THE BOARD AND TRUSTEE Lawrence Zicklin
Lawrence Zicklin PRESIDENT
PRESIDENT AND TRUSTEE Howard A. Mileaf
Faith Colish TRUSTEE
TRUSTEE John T. Patterson, Jr.
Donald M. Cox TRUSTEE
TRUSTEE John P. Rosenthal
Alan R. Gruber TRUSTEE
TRUSTEE Daniel J. Sullivan
Howard A. Mileaf VICE PRESIDENT
TRUSTEE Michael J. Weiner
Edward I. O'Brien VICE PRESIDENT
TRUSTEE Richard Russell
John T. Patterson, Jr. TREASURER
TRUSTEE Claudia A. Brandon
John P. Rosenthal SECRETARY
TRUSTEE Barbara DiGiorgio
Cornelius T. Ryan ASSISTANT TREASURER
TRUSTEE Jacqueline Henning
Gustave H. Shubert ASSISTANT TREASURER
TRUSTEE Celeste Wischerth
Daniel J. Sullivan ASSISTANT TREASURER
VICE PRESIDENT Stacy Cooper-Shugrue
Michael J. Weiner ASSISTANT SECRETARY
VICE PRESIDENT Lenore Joan McCabe
Richard Russell ASSISTANT SECRETARY
TREASURER C. Carl Randolph
Claudia A. Brandon ASSISTANT SECRETARY
SECRETARY
Barbara DiGiorgio
ASSISTANT TREASURER
Celeste Wischerth
ASSISTANT TREASURER
Stacy Cooper-Shugrue
ASSISTANT SECRETARY
C. Carl Randolph
ASSISTANT SECRETARY
101
<PAGE>
Notice to Shareholders (Unaudited)
For Neuberger&Berman Guardian Fund 62% of the dividends distributed during
the fiscal year ended August 31, 1996 qualifies for the dividend received
deduction for corporate shareholders. The Fund will notify shareholders in
January 1997 of the applicable percentage of qualifying dividends for corporate
shareholders for use in preparing 1996 income tax returns.
Neuberger&Berman International Fund has elected to pass through to its
shareholders the credit for taxes paid to foreign countries. For the fiscal year
ended August 31, 1996 the Fund had $95,461 of such credits. In January 1997,
each shareholder will receive a 1996 Form 1099 which will provide specific
information for preparing tax returns.
102
<PAGE>
Neuberger&Berman Management Inc.
605 THIRD AVENUE 2ND FLOOR
NEW YORK, NY 10158-0180
SHAREHOLDER SERVICES
800.877.9700
INSTITUTIONAL SERVICES
800.366.6264
Statistics and projections in this report are derived from sources
deemed to be reliable but cannot be regarded as a representation of
future results of the Funds. This report is prepared for the general infor-
mation of shareholders and is not an offer of shares of the Funds.
Shares are sold only through the currently effective prospectus, which
must precede or accompany this report.
PRINTED ON RECYCLED PAPER
(recycle logo) NBEFAR10896
WITH SOY BASED INKS
<PAGE>
