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SEMI-ANNUAL REPORT
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February 28, 1998
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
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THE FUNDS
CHAIRMAN'S LETTER A-4
PORTFOLIO COMMENTARY
Focus Fund A-5
Genesis Fund A-8
Guardian Fund A-11
International Fund A-14
Manhattan Fund A-17
Partners Fund A-20
Socially Responsive Fund A-23
PERFORMANCE HIGHLIGHTS B-1
FINANCIAL STATEMENTS B-2
FINANCIAL HIGHLIGHTS
PER SHARE DATA
Focus Fund B-13
Genesis Fund B-14
Guardian Fund B-15
International Fund B-16
Manhattan Fund B-17
Partners Fund B-18
Socially Responsive Fund B-19
THE PORTFOLIOS
SCHEDULE OF INVESTMENTS
TOP TEN EQUITY HOLDINGS
Focus Portfolio B-23
Genesis Portfolio B-25
Guardian Portfolio B-30
International Portfolio B-33
Manhattan Portfolio B-39
Partners Portfolio B-41
Socially Responsive Portfolio B-44
FINANCIAL STATEMENTS B-48
FINANCIAL HIGHLIGHTS
Focus Portfolio B-64
Genesis Portfolio B-65
Guardian Portfolio B-66
International Portfolio B-67
Manhattan Portfolio B-68
Partners Portfolio B-69
Socially Responsive Portfolio B-70
DIRECTORY C-1
OFFICERS AND TRUSTEES C-2
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A-3
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CHAIRMAN'S LETTER April 17th, 1998
Dear Fellow Shareholder,
At the end of this semi-annual reporting period (February 28, 1998), the major
market indices stood at record levels. However, the preceding six months have
not been easy. The Asian currency crisis that surfaced in mid-summer caused
considerable damage to a number of sectors of the domestic equities market in
late 1997. In what we viewed as a classic Wall Street "shoot first and ask
questions later" response, technology stocks were among the casualties.
Neuberger&Berman portfolio managers were faced with a classic investment
dilemma -- think short term and retreat, or hold their ground in sectors and
individual stocks they believed to have outstanding long-term performance
potential. I'm proud to say, they chose the latter option, and so far in early
1998, were rewarded for their persistence.
In today's volatile equity markets, investors' patience and discipline is
tested on a daily basis. Experienced investors realize that the prospect for
superior long-term returns is diminished by overreaction to short-term events.
At Neuberger&Berman, we pride ourselves on being farsighted. We are not
influenced by emotion or market fads and fashion. We strive to be coldly
analytical and focus on where we think a stock will be in three years, not three
months. We believe if we can successfully ignore the market's constant static
and focus on the long-term fundamental message, we will achieve our goal of
providing shareholders solid long-term returns.
Sincerely,
/s/ Stanley Egener
Stanley Egener
Chairman of the Board
Neuberger&Berman Equity Funds
A-4
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PORTFOLIO COMMENTARY
Neuberger&Berman
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Focus Fund
THE MANAGEMENT TEAM OF KENT SIMONS AND KEVIN RISEN EMPLOY A
SECTOR-SPECIFIC APPROACH TO SHAPING THE PORTFOLIO. FIRST, THEY IDENTIFY
SIX ECONOMIC SECTORS (OUT OF A POSSIBLE 13) THEY BELIEVE TO BE MOST
UNDERVALUED. THEY THEN FOCUS ON WELL-MANAGED, FINANCIALLY SOUND INDUSTRY
LEADERS IN EACH CHOSEN ECONOMIC SECTOR. THE PORTFOLIO MANAGEMENT TEAM
FAVORS COMPANIES WITH ABOVE MARKET AVERAGE EARNINGS GROWTH POTENTIAL
TRADING AT BELOW MARKET AVERAGE PRICE/ EARNINGS MULTIPLES.
For the six months ending February 28, 1998, the fund returned 9.07% versus
the Standard & Poor's 500 Index's 17.64% gain (see
page B1 for average annual total returns through March 31, 1998).*
Over this six-month reporting period, our financial holdings, particularly
mortgage lenders and insurance stocks, performed quite well. The portfolio's
retail and auto stocks also contributed to returns. Our technology and
healthcare stocks (primarily HMOs) restrained performance.
Quoting from our 1997 Annual Report letter, "One of the premises of value
investing is that over the long term, the stock market is a rational animal and
that stock prices will ultimately reflect the underlying economic value of
companies. Over the short term, the market and individual stock prices are
influenced by investor emotion, fad, fashion and momentum." In our opinion,
emotion carried the day in calendar fourth quarter 1997. When Asian currencies
began toppling like dominoes last fall, investors bailed out of stocks of
American companies with exposure to Far Eastern markets. Technology stocks were
particularly hard hit.
We can't say we anticipated the Asian currency crisis. However, when Asian
currency problems began surfacing in late summer/early fall, we took a hard look
at our technology holdings, trying to gauge the impact Asian economic problems
would have on earnings. We concluded that barring a real doomsday scenario in
which Korea crashed taking Japan and China down with it, in most cases, any
earnings problems would be short-lived. We then had a choice. We could think
A-5
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Focus Fund (Cont'd)
short term and sell stocks we viewed as exceptional long-term fundamental
bargains or we could stand pat and weather the storm. We chose the latter option
and while the portfolio took on some water in late 1997, the ship righted itself
in early 1998, and progressed at a steady pace propelled in part by a technology
stock recovery. We believe our decision will be further justified in the year
ahead.
In a related issue, today's extreme market volatility is a cross investors may
have to bear for the foreseeable future. Business values rarely change as
rapidly as stock prices, even in more stable markets. This can be a
blessing -- value investors like us depend on inefficient pricing for
opportunities. It can also be a curse when a portfolio holding declines 10%, 15%
and even 25% in a day following a very modest earnings shortfall. We have and
probably will continue to periodically suffer from such silliness. This will not
turn us into day traders. To paraphrase Warren Buffett, short term (and it seems
to be getting shorter by the day), the market is a voting machine, but longer
term, it is a weighing machine. We will continue to weigh the long-term
fundamental merits of companies such as the following.
Chase Manhattan stock declined along with the other money center banks as
investors responded to Asian currency turmoil. It then came roaring back as
investors appeared to collectively realize that the impact of Asian economic
problems would likely be minimal. With the merger with Chemical Bank in 1996,
Chase Manhattan is now the largest bank holding company in the U.S. The
integration of the merged companies is well along and Chase is now prepared to
concentrate on growing revenues and earnings. Chase has a nice balance between
global wholesale banking (investment banking, financial advisory, trading and
investment services) and domestic consumer banking. It is also now the third
largest credit card issuer in the U.S. Management has some ambitious, but in our
opinion, achievable goals for the company, including 15% operating earnings
growth and a return on equity of 18% or higher in 1998. Wall Street appears
under-whelmed by Chase as is evidenced by its well below market average P/E.
However, companies like Citicorp
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Focus Fund (Cont'd)
and Merrill Lynch view Chase as a very strong competitor. We agree. We reserve
the right to change our opinion on Chase without notice if fundamentals warrant
it. However, at present, we view it as a real value.
The preceding six months has tested our patience and discipline. We have
persevered and are encouraged by the portfolio's rapid comeback after a very
tough start. Our value-oriented approach is validated in our long-term
performance record. We believe it will continue to serve our shareholders well.
Sincerely,
/s/ Kent Simons /s/ Kevin Risen
Kent Simons and Kevin Risen
PORTFOLIO CO-MANAGERS
*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.
The composition, industries and holdings of the portfolio are subject to
change. No single holding of the portfolio makes up more than a small fraction
of the portfolio's total assets. Prior to November 1, 1991, the investment
policies of the portfolio required that it invest a substantial portion of its
assets in the energy field. 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.
Past performance is no guarantee of future results.
A-7
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PORTFOLIO COMMENTARY
Neuberger&Berman
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Genesis Fund
PORTFOLIO CO-MANAGERS JUDITH VALE AND ROBERT D'ALELIO FOCUS ON
"EASY-TO-UNDERSTAND" COMPANIES IN THE LESS GLAMOROUS SECTORS OF THE
SMALL-CAPITALIZATION STOCK UNIVERSE. BY AVOIDING THE CUTTING EDGE
TECHNOLOGY COMPANIES THAT ATTRACT SO MUCH SPECULATIVE ATTENTION IN THE
SMALL-CAP MARKET, THEY ARE BETTER ABLE TO IDENTIFY FUNDAMENTALLY
UNDERVALUED STOCKS WITH EXCEPTIONAL GROWTH POTENTIAL. THIS VALUE-ORIENTED
APPROACH TO SMALL-CAP INVESTING TRANSLATES INTO A PORTFOLIO WITH FAVORABLE
RISK/REWARD CHARACTERISTICS.
For the six-month period concluding February 28, 1998, the fund returned 5.65%
compared to the Russell 2000's 9.64% gain over the same time period (see page B1
for average annual total returns through March 31, 1998).*
During this six-month reporting period, good performance from regional banks,
commercial aerospace component manufacturers, REITs and utilities stocks was
offset by the poor performance of oil services and drilling companies. The
regional banks benefited from declining interest rates, steady earnings gains,
merger activity in the industry, and in some cases, a favorable outlook for the
positive resolution of "goodwill" lawsuits against the federal government. We
took profits in some of our bank holdings, which in our opinion, had become
fully priced. However, we believe selected regional banks still present an
excellent opportunity going forward. We also took some profits in commercial
aerospace manufacturers, but remain committed to the group. New airplane demand
may slacken somewhat with Asian economic weakness, but backlogs remain high and
earnings could continue to advance at an attractive rate.
We think Wall Street has overreacted to the decline in oil prices resulting
from what we believe to be short-term phenomena. More importantly, in our
opinion, the Street is ignoring secular factors strongly benefiting oil service
and drilling companies. El Nino's warm winter weather pattern and inventory
liquidation in Asia has reduced energy demand. Increased production from OPEC
has increased supply. However, depletion rates (the naturally occurring decline
in annual production capacity from existing reserves) have not come down
significantly. With only about 5% "shut in" production (readily available
A-8
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Genesis Fund (Cont'd)
in-ground reserves) versus 30% five years ago, we believe energy companies will
be forced to maintain drilling activity at or near current levels even with
lower oil prices. Over the short term, we may see some exploration projects
curtailed. But, this is not likely to have a materially negative impact on the
oil service and drilling industries that, due to a long period of under
investment, remain capacity constrained.
Looking ahead, El Nino years have historically been followed by cold winters,
OPEC has shown no taste for extended price wars, and Asia will probably have to
rebuild energy inventories. These are pluses for oil pricing. Also, oil services
and drilling company stocks have been hit so hard, they now appear attractive
relative to underlying asset values. The recent Halliburton/Dresser Industries
merger and EVI's acquisition of Weatherford Entera, may foreshadow extensive
consolidation in the oil patch.
Over the last six months, we have made a significant commitment to utilities.
Utilities have been under the cloud of ongoing deregulation. This cloud has
started to dissipate. Selective electric utilities are being allowed to divest
power-generating assets and become pure power distributors. This is not only
helping to reduce some of the risks that have plagued the industry (most notably
nuclear generating facilities), but is also providing a lot of cash to reduce
debt, repurchase shares and go shopping for other utilities companies.
Regulatory roadblocks for natural gas utilities are also coming down.
We believe the utilities industry is ripe for consolidation. Similar to the
banking industry five years ago, there are just too many utilities.
Consolidation could create economies of scale and enhance profits. We may also
see local and regional electricity companies combining with natural gas
utilities to provide one stop shopping in their operating areas. The portfolio
owns a diversified group of utilities companies -- approximately half electric,
half gas -- in different geographic areas in the U.S. We believe these positions
will energize the portfolio in the year ahead.
As is our custom, we will discuss a portfolio holding that demonstrates our
value-oriented investment discipline. This should not be construed as a
recommendation and we reserve the right to sell any security without notice
should fundamental developments warrant doing so.
A-9
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Genesis Fund (Cont'd)
Texas Industries, a cement and specialty steel producer, has done well as
constrained capacity in the cement industry has improved pricing and profits.
Recent years' strong free cash flow has allowed the company to reduce debt,
repurchase shares, buy all of Chapparal Steel and develop a new cement
production process, which it is starting to sell to other cement companies not
competing in its markets. In view of the strong construction market, which we
expect to continue to benefit the company's cement and specialty steel
operations, and the prospects for fee income from selling the new cement
processing technology, we expect earnings growth to continue to be impressive.
Despite a nice run, Texas Industries stock still sells at just about 14 times
earnings. In the interest of full disclosure, we have taken some profits in the
stock to reduce what had become a very large position in the portfolio. However,
we still view Texas Industries as an attractive fundamental situation that
demonstrates our research discipline and value focus.
In closing, we are disappointed with the fund's lackluster performance during
this reporting period following its exceptionally good returns in fiscal 1996
and 1997. We believe the portfolio is well positioned to regain performance
momentum in the year ahead.
Sincerely,
/s/ Judith Vale /s/ Robert D'Alelio
Judith Vale and Robert D'Alelio
PORTFOLIO CO-MANAGERS
*The Russell 2000-Registered Trademark- Index is an unmanaged index generally
considered to be representative of small 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.
The risks involved in seeking capital appreciation from investments principally
in companies with small market capitalization are set forth in the prospectus.
The composition, industries and holdings of the portfolio are subject to
change. Genesis 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.
Past performance is no guarantee of future results.
A-10
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PORTFOLIO COMMENTARY
Neuberger&Berman
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Guardian Fund
PORTFOLIO CO-MANAGERS KENT SIMONS AND KEVIN RISEN FOCUS ON "FIRST RATE"
COMPANIES IN INDUSTRIES THAT ARE CURRENTLY OUT OF FAVOR. RECOGNIZING THAT
"CHEAP" STOCKS ARE NOT NECESSARILY UNDERVALUED, THEY SEEK WELL MANAGED,
FINANCIALLY SOUND COMPANIES TRADING AT FUNDAMENTALLY ATTRACTIVE PRICES
RELATIVE TO THEIR LONG-TERM EARNINGS GROWTH POTENTIAL. BY CONCENTRATING
THE PORTFOLIO IN HIGH QUALITY WALL STREET "ORPHANS", THE PORTFOLIO
MANAGEMENT TEAM ATTEMPTS TO CONSISTENTLY TAKE ADVANTAGE OF OPPORTUNITIES
CREATED BY INVESTORS' OVER-REACTION TO REAL OR PERCEIVED PROBLEMS.
For the six-month period concluding February 28, 1998, the fund returned 5.66%
versus the Standard & Poor's 500 Index's 17.64% gain
(see page B1 for average annual total returns through March 31, 1998).*
Over the last six months, our financial holdings (banks, insurance and
consumer finance) performed quite well. Our auto and airline holdings also
contributed to returns. Our technology holdings, particularly in the computer,
semiconductor and semiconductor equipment sectors, were hit hard. The
portfolio's healthcare holdings, primarily HMOs, also restrained returns.
Over the last six months, equity investors were confronted by two powerful and
conflicting forces -- the potentially negative impact of the Asian currency
crisis on U.S. corporate earnings and a bond rally that drove interest rates to
levels supporting higher valuations for stocks. These crosscurrents resulted in
extreme volatility for the market and our portfolio. Bank stocks were dragged
under briefly, but made it to higher ground by the end of the reporting period.
Technology stocks were really swamped in late 1997 and although they came back
in early 1998, remain underwater.
What were we doing as the waters swirled around us? What we always do -- our
homework. When Asian currency problems began surfacing in late summer, we began
taking a hard look at all our technology stock holdings to assess the impact
Asian economic problems would have on earnings. In general, we concluded that
any earnings problems resulting from Asian economic weakness would likely be
short-lived. So, Wall Street be damned, we decided to stick
A-11
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Guardian Fund (Cont'd)
with what we viewed as outstanding long-term bargains. We paid the price in late
1997. Going forward, we believe our discipline and patience in what we see as a
very undervalued technology group will be rewarded.
With our portfolio under the gun in fourth quarter 1997, we received some
criticism for owning technology stocks in a value portfolio. This prompted us to
review our investment discipline for our critics. We are trying to buy good
companies when they are cheap. This demands intensive research and independent
thinking. We are not influenced by the common perception that certain groups
like technology are for growth stock investors only. We feel perfectly justified
buying outstanding technology companies with well above market average long-term
earnings prospects when they are trading at below market average multiples. In
our opinion, that is the very definition of value. Ironically, we received
similar criticism for our large positions in drug stocks in 1993. The
pharmaceuticals were thought to be another growth group that had no place in
value portfolios. Well, at the time we were buying them, they were fundamentally
cheap and became one of the very best performing groups in our portfolio in the
mid 90's.
Our ongoing commitment to bank stocks has also been questioned. The most
commonly voiced concern has been that after recent years' strong performance,
bank stocks are now trading well above historic valuations and therefore, are no
longer value plays. In our opinion, selected bank stocks are trading above
historic valuations for very good reasons. Declining interest rates,
productivity gains, favorable demographics, a less cyclical economy and
consolidation were helping banking companies grow earnings at a much higher rate
than in the past and in many cases, at above market average rates. Yet, despite
recent years' excellent performance, selected bank stocks are still trading at
P/Es well below the market's. Once again, in our eyes, clearly defined value.
Applied Materials (AMAT) was one of our technology holdings that got beaten up
in late 1997. AMAT is the technological and market leader in equipment that
layers electrically conductive materials on to
A-12
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Guardian Fund (Cont'd)
semiconductor chips. The economic malaise in the Far East may impact revenues
and earnings in the next several quarters. However, looking past any short-term
Asia-induced weakness, we believe AMAT could lead a major semiconductor industry
technology upgrade. If so, we think AMAT's revenues and earnings will grow well
in excess of the market averages over the longer term. Yet, as of February 28,
1998, based on our 1998 earnings projections, AMAT stock was still trading at a
price/earnings ratio discount to the S&P "500." We think this represents
excellent value. Be reminded that when we discuss individual securities in our
reports to shareholders it is done solely to demonstrate our investment
discipline, not as a recommendation. We offer no guarantee the portfolio will
continue to own this security or any others we may mention if our fundamental
outlook changes.
Our brand of value investing demands hard work, discipline and patience. There
will be periods (like calendar fourth quarter 1997) when the portfolio will
materially underperform the S&P "500." However, the portfolio's long-term
performance record justifies our belief that owning fundamentally undervalued
stocks will generate superior results over time.
Sincerely,
/s/ Kent Simons /s/ Kevin Risen
Kent Simons and Kevin Risen
PORTFOLIO CO-MANAGERS
*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.
The composition, industries and holdings of the portfolio are subject to
change. Guardian 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.
Past performance is no guarantee of future results.
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PORTFOLIO COMMENTARY
Neuberger&Berman
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International Fund
PORTFOLIO MANAGER VALERIE CHANG TAKES A VALUE APPROACH TO INTERNATIONAL
EQUITIES MARKETS. AFTER ANALYZING THE POLITICAL, SOCIAL, ECONOMIC, AND
STOCK MARKET ENVIRONMENTS OF COUNTRIES AROUND THE GLOBE, SHE SELECTS THOSE
INTERNATIONAL INVESTMENT ARENAS BELIEVED TO OFFER THE BEST FUNDAMENTAL
VALUE. THE STOCK SELECTION PROCESS IS RESEARCH INTENSIVE, FEATURING
FREQUENT MEETINGS WITH CORPORATE MANAGEMENT AND THEIR COMPETITORS IN
ADDITION TO THE ANALYSIS OF INCOME STATEMENTS AND BALANCE SHEETS. THE GOAL
IS TO LOOK BEYOND "THE NUMBERS" TO FIND THOSE INTERNATIONAL COMPANIES WITH
THE BEST LONG-TERM INVESTMENT PROSPECTS.
For the six-month period concluding February 28, 1998, the International Fund
returned 9.16% versus EAFE's 8.46% gain (see page B1 for average annual total
returns as of March 31, 1998).*
The last six months have been particularly challenging for international
equity investors, with currency devaluation and financial turmoil in Asia
negatively impacting stock markets globally. During this period, European
investments on the whole appeared to be the stable, defensive plays in the
international markets. The portfolio benefited from strong returns in
Scandinavia and southern Europe, with our holdings in Finland performing
particularly well. We continue to overweight the Finnish market for its
attractive investment opportunities and as another avenue to participate in the
economic growth of the CIS (Commonwealth of Independent States) and the Baltic
States. Stock picks in Italy and Spain also fared well due to strong domestic
economies and declining interest rates required for inclusion in the European
Monetary Union.
In addition, our holdings in South Africa have enhanced the portfolio's
return. Our selections appreciated approximately 40% during this reporting
period despite lackluster performance of the All-Share Index. In South Africa,
we have focused on computer-related and finance-oriented companies. We
particularly like Specialised Outsourcing, a
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International Fund (Cont'd)
firm that handles treasury, foreign exchange and currency risk management for a
variety of medium- and large-sized companies in South Africa. Of course, we
reserve the right to change our opinion on this or any other security in our
portfolio should fundamentals warrant it.
Export-oriented stocks declined substantially in the wake of lower growth and
demand prospects. Specifically, the technology sector was attacked by negative
sentiment when Korea became the next victim of the financial crisis. Concern
regarding earnings potential and capital expenditure programs not only seriously
impacted D-RAM manufacturers and semiconductor equipment manufacturers
worldwide, but also extended to indirectly related areas such as software
engineering and networking services. Portfolio holdings ASM Lithography and
Tecnomatix, which had hit price highs in the third quarter, fell approximately
35-50% within the following three months. The portfolio's overweight position in
technology had worked to our advantage in the previous 12-18 months but
negatively affected returns in the last three months of 1997. We have been
carefully monitoring our technology holdings in the short-term, but we maintain
our overweight position in this sector due to what we believe to be strong
long-term prospects.
Sincerely,
/s/ Valerie Chang
Valerie Chang
PORTFOLIO MANAGER
A-15
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International Fund (Cont'd)
Please note that in the Annual Report dated August 31, 1997 there is an error
on page A-17. The correct version should read: "We were able to buy Advantest
stock at around 22 times earnings. That does not appear inexpensive relative to
U.S. stock valuations, but it was half of the Nikkei 225's average
price/earnings multiple of 55."
*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.
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 portfolio are subject to change. International
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.
Past performance is no guarantee of future results.
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PORTFOLIO COMMENTARY
Neuberger&Berman
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Manhattan Fund
PORTFOLIO CO-MANAGERS JENNIFER SILVER AND BROOKE COBB LOVE
SURPRISES -- POSITIVE EARNINGS SURPRISES THAT IS. THEIR RESEARCH REVEALS
THAT THE STOCKS OF COMPANIES CONSISTENTLY EXCEEDING CONSENSUS EARNINGS
ESTIMATES HAVE TENDED TO BE TERRIFIC PERFORMERS. THEY COMPUTER SCREEN THE
MID-CAP GROWTH STOCK UNIVERSE TO ISOLATE STOCKS WHOSE MOST RECENT EARNINGS
HAVE BEATEN THE STREET'S EXPECTATIONS. THEY THEN ROLL UP THEIR SLEEVES,
AND THROUGH DILIGENT FUNDAMENTAL RESEARCH, STRIVE TO IDENTIFY THOSE
COMPANIES MOST LIKELY TO RECORD A STRING OF POSITIVE EARNINGS SURPRISES.
THEIR GOAL IS TO INVEST TODAY IN THE FAST-GROWING MID-SIZED COMPANIES THAT
WILL COMPRISE TOMORROW'S FORTUNE 500.
For the six-month period ending February 28, 1998, the fund returned 10.43%
compared to the Russell Midcap-TM- Growth Index's 9.77% and the Standard &
Poor's 500 Index's 17.64% gain (see page B1 for average annual total returns
through March 31, 1998).*
Over this six-month reporting period, our retail and retail services holdings
performed quite well. Our selections in the media, restaurant, banking and
insurance industries also contributed to returns. Interestingly, in total, our
computer holdings posted decent gains during a period that saw many
technology-oriented securities severely punished due to the potential for
Asian-induced earnings problems. Our healthcare investments were mixed. However,
the portfolio was hurt by the poor performance of HMO's, which in keeping with
our sell discipline, have been liquidated. Although we were under-weighted in
the energy sector, our positions were negatively impacted by declining oil
prices.
The strong economy, high employment, low inflation and low interest rates,
have consumers feeling quite confident. This has created a
tailwind for the retail group in general. Our focus on retailers delivering
quality merchandise at good value to their customers was particularly
beneficial, with off-price retailers like Costco, Staples and TJX & Company all
gaining 35% or more over the last six months. The portfolio's lone airline
stock, Southwest Airlines, the leading low price operator in its industry, also
took off, gaining more than 50%. We
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Manhattan Fund (Cont'd)
believe consumer confidence will remain strong and that high quality,
value-oriented retailers will continue to grow earnings at attractive rates.
As the television networks have lost viewers in recent years, national and
large regional advertisers have gravitated to other media including radio and
billboards. Consolidation in these industries is creating larger companies with
bigger market footprints. This enhances advertising revenue and economies of
scale realized through consolidation are improving profit margins and
accelerating earnings for portfolio companies like Chancellor Media (radio) and
Outdoor Systems, Inc. (billboards), which were up strongly over the last six
months. We believe earnings will continue to trend higher for these companies.
Be reminded, our opinions on these and any other portfolio holdings mentioned in
this report are subject to change.
Our relative success in the technology group over the last six months can be
traced to our mid-summer decision to move out of hardware and commodity-oriented
tech stocks (personal computer, disc drive, semiconductor and semiconductor
equipment manufacturers), and into proprietary product companies (software and
specialty systems producers), whose earnings we believe to be less sensitive to
the capital spending cycle. In our carefully considered opinion, these types of
technology companies offer more reliable earnings growth potential, albeit at a
slightly higher valuation level. This decision proved to be particularly timely
as commodity-oriented technology stocks got hit hard in late 1997 when Asian
economic turmoil dampened earnings expectations.
Although mid-cap stocks have a superior long-term performance record, they
have lagged large-cap stocks in recent years. Will this continue? We don't know.
However, on a valuation basis, mid-cap growth companies currently look
attractive relative to large-cap growth companies. To wit: based on consensus
earnings estimates from First Call (an independent research firm that compiles
and distributes Wall Street earnings estimates), S&P "500" earnings are expected
to grow approximately 4% in first quarter 1998, and 10% annually over the next
five years. Also based on First Call data, our portfolio holdings are projected
to grow earnings by 40% in first quarter 1998 and 25%
A-18
<PAGE>
- ----------------------------------------------------------------------
Manhattan Fund (Cont'd)
annually over the next five years. Yet, the Manhattan portfolio trades at just
one time its estimated five year annual earnings growth rate compared to the S&P
"500's" substantial premium to its five year annual earnings growth projections.
Also, as you know, we believe companies that consistently beat earnings
estimates will ultimately deliver superior investment performance. In fourth
quarter 1997, 90% of the Manhattan portfolio's holdings met or exceeded First
Call earnings estimates, reporting year-to-year earnings gains approximating
45%. Only 62% of the S&P "500" companies met or exceeded First Call estimates,
reporting only about 8% year-to-year earnings advances.
In closing, a highly volatile stock market has and will likely continue to
challenge investors of all stripes. The Manhattan portfolio is positioned in
companies with a recent history of rapid growth, trading at what we view as very
reasonable multiples relative to projected earnings growth rates. We believe
this disciplined investment strategy will reward our shareholders.
Sincerely,
/s/ Jennifer Silver /s/ Brooke Cobb
Jennifer Silver and Brooke Cobb
PORTFOLIO CO-MANAGERS
*The S&P "500" Index is an unmanaged index generally considered to be
representative of stock market activity. The Russell Midcap-TM- Growth Index is
an unmanaged index which measures the performance of those Russell Midcap Index
companies with higher price-to-book ratios and higher forecasted growth values.
The Russell Midcap Index measures the performance of the 800 smallest companies
in the Russell 1000-Registered Trademark- index, which represents approximately
35% of the total market capitalization of the Russell 1000 Index (which in
turn, consists of the 1,000 largest U.S. companies, based on market
capitalization). 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.
The composition, industries and holdings of the portfolio are subject to
change. Manhattan 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.
Past performance is no guarantee of future results.
A-19
<PAGE>
PORTFOLIO COMMENTARY
Neuberger&Berman
- ----------------------------------------------------------------------
Partners Fund
PORTFOLIO CO-MANAGERS MICHAEL KASSEN AND ROBERT GENDELMAN FOCUS ON
OUT-OF-FAVOR LARGE-CAP STOCKS AND MID-SIZED COMPANIES LESS WIDELY FOLLOWED
BY WALL STREET ANALYSTS. THEY ARE PARTICULARLY PARTIAL TO "FALLEN
ANGELS" -- GROWTH STOCKS THAT HAVE EXPERIENCED TEMPORARY SETBACKS, BUT
WHOSE LONGER-TERM FUNDAMENTAL OUTLOOK REMAINS STRONG. THE PORTFOLIO
MANAGEMENT TEAM VIEWS STOCKS AS PIECES OF BUSINESSES THEY WOULD LIKE TO
OWN RATHER THAN PIECES OF PAPER TO TRADE BASED ON SHORT-TERM PRICE
FLUCTUATIONS. THE GOAL IS TO FIND QUALITY COMPANIES TRADING AT A DISCOUNT
TO THEIR INTRINSIC ECONOMIC VALUE.
For the six-month period concluding February 28, 1998, the fund returned 9.87%
versus the Standard & Poor's 500 Index's 17.64% gain (see page B1 for average
annual total returns through March 31, 1998).*
Over the last six months, portfolio holdings in the retail, cable television,
airline, and financial (banks, consumer finance and insurance) groups
contributed to returns. In the healthcare sector, we were hurt both by what we
owned (HMOs still struggling to get pricing and costs in line) and what we
didn't own (drug stocks, whose high multiples got even higher in the last six
months). Our energy investments, particularly exploration and production
companies where profits are tied directly to oil prices, disappointed. Our
technology investments hindered performance as Asian economic problems spooked
investors. We believe Asian economic weakness will muddy the short-term earnings
outlook for some of our technology holdings, but that the longer-term earnings
picture remains bright.
The strong performance of cable television stocks was particularly gratifying
in that we were more than satisfactorily rewarded for our patience and
discipline -- absolute requirements for value investors. We bought cable
television companies like Comcast and Time Warner (the big entertainment
conglomerate and one of the largest cable operators in the U.S.) back when no
one wanted to own them. We thought the business fundamentals were reasonably
good and likely to get better,
A-20
<PAGE>
- ----------------------------------------------------------------------
Partners Fund (Cont'd)
and that the threat of competition from satellite broadcasters was overblown.
These stocks did nothing for us until 1997, when investors suddenly realized
that cable television was still a good growth business and sent CATV stocks
soaring. Our patience being rewarded, we have recently taken some profits in
both stocks.
The airline stocks also took off during this reporting period. This was an
industry we had avoided because the group never really grew earnings over a full
cycle. Good times prompted all the airlines to add capacity (buy a lot of
expensive new airplanes) which they then couldn't fill without profit eroding
fare wars. To make matters worse, new airlines kept popping up overnight and
despite hemorrhaging money, were kept on life support systems by the government
and unrealistically optimistic investors.
Proving old dogs are not necessarily resistant to new tricks; we took another
look at the airline industry in late 1996. We recognized three major changes we
believed were improving the industry's outlook. First, the hub system
(individual airlines controlling the majority of gates at airports in selected
cities and effectively creating mini-monopolies) was raising the barrier of
entry in the business, allowing established airlines to dominate certain
markets, and limiting the fare wars that restrained profitability. Secondly,
airline company managements were becoming much more financially savvy,
particularly in controlling capital expenditures. Finally, the strong economy
and lower fuel costs were improving profit margins.
When we put our stock picking hats on -- always the most important element in
our investment wardrobe -- we selected Continental, Delta and Southwest
Airlines. Let's use Continental to demonstrate what was so appealing about the
airlines. Continental's hubs in Newark, Houston and Cleveland provide strong
market footholds in the Northeast, Southwest and Midwest. In recent years,
Continental has added more capacity than the other four top carriers and has had
little problem filling the seats. The company has standardized its
fuel-efficient fleet, in the process saving on training and maintenance costs.
Continental now has an alliance with Northwest Airlines, which expands its
geographic reach and we estimate can add $2.50 to $3.75 to earnings by the year
A-21
<PAGE>
- ----------------------------------------------------------------------
Partners Fund (Cont'd)
2000. We believe Continental can grow total pre-tax earnings at a 12-15% annual
rate for the next several years. Yet, even after its strong run, the stock
trades at just 10 times our 1998 earnings estimates. We believe when investors
recognize the beneficial changes for the airlines in general and Continental's
progress in particular, it will get a better appraisal. Bear in mind, as
positively as we feel about the group and Continental, we may change our opinion
without notice, should the stock fly out of our value range or the company fails
to meet our fundamental expectations. We have taken some profit in Delta and
Southwest but we've kept all our seats on Continental.
In closing, after three years of exceptional equity performance, the pickings
are getting slimmer for true value-oriented investors. However, even with the
market indices near record levels, we are still finding fundamental bargains in
industries and companies not swept up in Wall Street's euphoria. We believe that
by maintaining our discipline and providing a home for under-loved stocks, our
shareholders can enjoy the sunshine while it lasts and have a roof over their
heads should the market weather become inclement.
Sincerely,
/s/ Robert Gendelman /s/ Michael Kassen
Robert Gendelman and Michael Kassen
PORTFOLIO CO-MANAGERS
*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.
The composition, industries and holdings of the portfolio are subject to
change. Partners 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.
Past performance is no guarantee of future results.
A-22
<PAGE>
PORTFOLIO COMMENTARY
Neuberger&Berman
- ----------------------------------------------------------------------
Socially Responsive Fund
PORTFOLIO MANAGER JANET PRINDLE BELIEVES DOING GOOD IS GOOD BUSINESS AND
HAS THE POTENTIAL TO PRODUCE POSITIVE INVESTMENT RESULTS. SHE FOCUSES ON
COMPANIES THAT ARE AGENTS OF FAVORABLE CHANGE IN WORKPLACE POLICIES
(PARTICULARLY FOR WOMEN AND MINORITIES); ARE GOOD CORPORATE CITIZENS; AND
ARE RESPONSIVE TO ENVIRONMENTAL ISSUES. SHE DOES NOT INVEST IN TOBACCO,
ALCOHOL, GAMBLING, NUCLEAR POWER, OR WEAPONS COMPANIES. BUT, SOCIAL
RESPONSIBILITY ALONE DOES NOT QUALIFY A COMPANY AS A GOOD INVESTMENT. TRUE
TO NEUBERGER& BERMAN'S PRINCIPLES, PORTFOLIO CANDIDATES MUST FIRST BE
FOUND TO BE FUNDAMENTALLY ATTRACTIVE. THEN, AND ONLY THEN, ARE SOCIAL
SCREENS APPLIED. THE OBJECTIVE IS SIMPLE AND STRAIGHTFORWARD -- TO SERVE
BOTH SOCIETY AND SHAREHOLDERS.
For the six-month period concluding February 28, 1998, the fund returned
13.56% compared to the Standard & Poor's 500 Index's 17.64% gain (see page B1
for average annual total returns through March 31, 1998).*
In this six-month reporting period, the portfolio's telecommunications
holdings performed well, highlighted by Southwestern Bell's pending acquisition
of Southern New England Telephone and Wall Street's favorable appraisal of
WorldCom's proposed acquisition of MCI. We think the MCI deal makes great
strategic sense, as well as being potentially additive to earnings and cash
flow. We believe the combined entity would be well positioned to achieve strong
growth from voice and data services, as well as realize large cost efficiencies.
Portfolio positions in pharmaceutical companies also contributed to performance,
with strong earnings and some high profile mergers focusing attention on the
group. Our insurance holdings also continued to perform well.
Our technology company holdings restrained performance. Currency turmoil and
the prospect for Asian economic deceleration sent investors scurrying from
technology stocks in calendar fourth quarter 1997. Tech stocks rebounded in
early 1998, but remain well below their 52-week highs. We believe the sell-off
in technology stocks has been
A-23
<PAGE>
- ----------------------------------------------------------------------
Socially Responsive Fund (Cont'd)
somewhat indiscriminate and that the longer-term earnings prospects even for
those portfolio companies legitimately impacted by Asian economic weakness
remain quite good.
Oil service and energy exploration and production companies had some of the
greatest negative impact on the portfolio. As is evidenced by the price of oil
at a five year low, there is currently too much oil in the marketplace. However,
we believe this is the result of short-term factors -- El Nino's warm winter,
increased OPEC production, and the reduction of energy inventory in the Far
East. Looking ahead, we don't think we will be blessed by another extremely
temperate winter. It certainly isn't in OPEC's best interest to see oil prices
stay at currently depressed levels. Finally, at some point, Asian inventories
will have to be rebuilt. So, we expect oil prices to firm in the year ahead.
Most importantly, in a world with only 2-3% of excess production capacity, we
doubt the industry will stop drilling and risk letting the well run dry. Our
opinion is that lower oil prices or not, energy companies are going to have to
continue poking holes in the ground. Also, consolidation has begun in the oil
services group, with one of our holdings, Dresser Industries, just recently
agreeing to merge with Halliburton, and climbing 16.4% upon announcement of the
merger.
In this report, we've chosen to highlight Fannie Mae as the stock that
demonstrates our value-oriented investment discipline and fulfills our mandate
to own socially responsible companies. Fannie Mae stock has done quite well by
us, appreciating more than 40% over the last six months. At its current price,
it is no longer a steal. However, we still view it as fundamentally attractive.
We think Fannie Mae management has done an exceptional job managing interest
rate and political risk, while having delivered consistent double-digit earnings
gains.
As a provider of home mortgages for low- to moderate-income households, Fannie
Mae's main product assists the economically disadvantaged. The company also has
a strong record in the area of diversity, with representation of women and
minorities throughout its business. Supporting its employees, the company offers
extensive family-friendly
A-24
<PAGE>
- ----------------------------------------------------------------------
Socially Responsive Fund (Cont'd)
benefits. Finally, Fannie Mae has been recognized for its innovative giving
programs focused on affordable housing and community economic development. We
view Fannie Mae as an ideal portfolio holding -- a strong business that can
reward shareholders and one that serves the community and its employees well.
Remember, this and the other securities mentioned in this report are not
recommendations, and our opinion on all stocks in the portfolio may change
without notice.
In closing, we think weakness in our technology, oil services and energy
exploration and production holdings will turn into portfolio strengths in the
year ahead. We believe our value focus and sensitivity to social issues will
continue to reward shareholders and the community.
Sincerely,
/s/ Janet Prindle
Janet Prindle
PORTFOLIO MANAGER
*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.
The composition, industries and holdings of the portfolio are subject to
change. Socially Responsive 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.
Past performance is no guarantee of future results.
A-25
<PAGE>
(This page has been left blank intentionally.)
A-26
<PAGE>
PERFORMANCE HIGHLIGHTS
<TABLE>
<CAPTION>
FOR PERIODS
ENDED 3/31/98
------------------------------------
SIX MONTH
PERIOD AVERAGE ANNUAL TOTAL
NEUBERGER&BERMAN INCEPTION ENDED RETURNS(1)
EQUITY FUNDS DATE 2/28/98(1) 1 YR 5 YR 10 YR
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
FOCUS FUND(2) 10/19/55 +9.07% +42.84% +20.69% +17.96%
GUARDIAN FUND 6/1/50 +5.66% +33.44% +18.09% +17.35%
PARTNERS FUND 1/20/75(3) +9.87% +41.54% +21.81% +17.75%
SOCIALLY RESPONSIVE FUND(4) 3/16/94 +13.56% +43.45% +22.03% (5) N/A
S&P "500"(6) N/A +17.64% +47.88% +22.35% +18.88%
MANHATTAN FUND 3/1/79(3) +10.43% +39.92% +16.78% +15.76%
RUSSELL MIDCAP-TRADEMARK- GROWTH INDEX(6) N/A +9.77% +42.36% +18.41% +17.02%
GENESIS FUND(4) 9/27/88 +5.65% +43.67% +19.84% +16.68% (5)
RUSSELL 2000-REGISTERED TRADEMARK- INDEX(6) N/A +9.64% +42.01% +17.67% N/A
INTERNATIONAL FUND(4) 6/15/94 +9.16% +25.21% +15.66% (5) N/A
EAFE-REGISTERED TRADEMARK- INDEX(6) N/A +8.46% +18.93% N/A N/A
</TABLE>
1) Results are shown on a "total return" basis and include reinvestment of all
dividends and capital gain distributions. Performance data quoted represents
past performance, which is no guarantee of future results. The investment
return and principal value of an investment will fluctuate so that the
shares, when redeemed, may be worth more or less than their original cost.
2) Prior to November 1, 1991, the investment policies of Neuberger&Berman Focus
Fund-Registered Trademark- required that it invest a substantial portion of
its assets in the energy field.
3) These dates reflect when Neuberger&Berman Management Inc.-Registered
Trademark- first became investment adviser to these Funds.
4) Neuberger&Berman Management Inc. currently absorbs certain operating expenses
that exceed, in the aggregate, 1.70% of average daily net assets per annum
for Neuberger&Berman International Fund-Registered Trademark- until December
31, 1998 and previously absorbed certain operating expenses of
Neuberger&Berman Socially Responsive Fund-Registered Trademark-.
Neuberger&Berman Management Inc. previously waived a portion of the
management fee borne directly by Neuberger&Berman Genesis Portfolio and
indirectly by Neuberger&Berman Genesis Fund-Registered Trademark-. Absent
such arrangements, which are subject to change, the average annual total
returns for the periods stated would have been less.
5) From inception.
6) The S&P "500" Index is an unmanaged index generally considered to be
representative of stock market activity. The Russell Midcap-Trademark- Growth
Index measures the performance of those Russell Midcap-Trademark- Index
companies with higher price-to-book ratios and higher forecasted growth
values. The Russell Midcap Index measures the performance of the 800 smallest
companies in the Russell 1000-Registered Trademark- Index, which represents
approximately 35% of the total market capitalization of the Russell 1000
Index (which, in turn, consists of the 1,000 largest U.S. companies, based on
market capitalization). The Russell 2000-Registered Trademark- Index is an
unmanaged index consisting of the securities of the 2,000 issuers having the
smallest capitalization in the Russell 3000-Registered Trademark- Index,
representing approximately 10% of the Russell 3000 total market
capitalization. The smallest company's market capitalization is roughly $172
million. The risks involved in seeking capital appreciation from investments
primarily in companies with small market capitalization are set forth in the
prospectus. 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 primarily 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 these indices are prepared or obtained by Neuberger&Berman
Management Inc. and include reinvestment of all dividends and capital gain
distributions. The Portfolios invest in many securities not included in any
of the above-described indices.
B-1
<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) $1,513,744 $1,546,114 $6,267,758
Deferred organization costs (Note A) -- -- --
Receivable for Trust shares sold 1,247 19,587 7,375
-----------------------------------
1,514,991 1,565,701 6,275,133
-----------------------------------
LIABILITIES
Payable for Trust shares redeemed 774 4,473 10,167
Payable to administrator (Note B) 294 294 1,226
Accrued expenses 213 203 1,026
-----------------------------------
1,281 4,970 12,419
-----------------------------------
NET ASSETS at value $1,513,710 $1,560,731 $6,262,714
-----------------------------------
NET ASSETS consist of:
Par value $ 41 $ 96 $ 220
Paid-in capital in excess of par value 847,505 1,316,833 3,979,268
Accumulated undistributed net investment income (loss) 1,233 2,995 5,972
Accumulated net realized gains (losses) on investment 28,527 16,540 87,968
Net unrealized appreciation in value of investment 636,404 224,267 2,189,286
-----------------------------------
NET ASSETS at value $1,513,710 $1,560,731 $6,262,714
-----------------------------------
SHARES OUTSTANDING
($.001 par value; unlimited shares authorized) 41,281 96,135 219,670
-----------------------------------
NET ASSET VALUE, offering and redemption price per share $36.67 $16.23 $28.51
-----------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-2
<PAGE>
February 28, 1998 (Unaudited)
- ----------------------------------------------------------------------
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) $ 131,542 $ 605,637 $3,528,754 $ 82,080
Deferred organization costs (Note A) 26 -- -- 16
Receivable for Trust shares sold 1,392 914 11,350 1,012
---------------------------------------------------
132,960 606,551 3,540,104 83,108
---------------------------------------------------
LIABILITIES
Payable for Trust shares redeemed 823 624 1,750 36
Payable to administrator (Note B) 43 117 680 15
Accrued expenses 46 152 464 50
---------------------------------------------------
912 893 2,894 101
---------------------------------------------------
NET ASSETS at value $ 132,048 $ 605,658 $3,537,210 $ 83,007
---------------------------------------------------
NET ASSETS consist of:
Par value $ 8 $ 52 $ 126 $ 4
Paid-in capital in excess of par value 97,988 464,041 2,716,482 60,807
Accumulated undistributed net investment income (loss) (595) (1,080) 4,079 67
Accumulated net realized gains (losses) on investment (3,376) 18,562 167,504 2,768
Net unrealized appreciation in value of investment 38,023 124,083 649,019 19,361
---------------------------------------------------
NET ASSETS at value $ 132,048 $ 605,658 $3,537,210 $ 83,007
---------------------------------------------------
SHARES OUTSTANDING
($.001 par value; unlimited shares authorized) 8,237 51,794 126,117 4,210
---------------------------------------------------
NET ASSET VALUE, offering and redemption price per share $16.03 $11.69 $28.05 $19.72
---------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-3
<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) $ 7,607 $ 9,148 $ 46,297
----------------------------------------
Expenses:
Administration fee (Note B) 1,838 1,498 8,090
Amortization of deferred organization and initial offering
expenses (Note A) -- -- --
Auditing fees 4 4 4
Custodian fees 5 5 5
Legal fees 5 6 5
Registration and filing fees 22 157 39
Reimbursement of expenses previously assumed by
administrator (Note B) -- -- --
Shareholder reports 88 81 243
Shareholder servicing agent fees (Note B) 306 453 2,020
Trustees' fees and expenses 8 7 24
Miscellaneous 8 2 28
Expenses from corresponding Portfolio (Notes A & B) 3,629 3,988 14,154
----------------------------------------
Total expenses 5,913 6,201 24,612
Expenses reduced by custodian fee and shareholder servicing
expense offset arrangements (Note B) (49) (48) (232)
----------------------------------------
Total net expenses 5,864 6,153 24,380
----------------------------------------
Net investment income (loss) 1,743 2,995 21,917
----------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS FROM
CORRESPONDING PORTFOLIO (NOTE A)
Net realized gain (loss) on investment securities 38,701 17,299 183,072
Net realized loss on option contracts (3,356) -- (8,780)
Net realized loss on financial futures contracts -- -- --
Net realized gain on foreign currency transactions -- -- --
Change in net unrealized appreciation of investment
securities, financial futures contracts, option contracts,
translation of assets and liabilities in foreign
currencies, and foreign currency contracts 87,005 26,506 123,320
----------------------------------------
Net gain on investments from corresponding Portfolio
(Note A) 122,350 43,805 297,612
----------------------------------------
Net increase in net assets resulting from operations $ 124,093 $ 46,800 $ 319,529
----------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-4
<PAGE>
For the Six Months Ended February 28, 1998 (Unaudited)
- ----------------------------------------------------------------------
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) $ 549 $ 1,633 $ 23,944 $ 524
---------------------------------------------------------------
Expenses:
Administration fee (Note B) 152 744 4,191 89
Amortization of deferred organization and initial offering
expenses (Note A) 10 -- -- 8
Auditing fees 4 4 4 1
Custodian fees 5 5 5 5
Legal fees 5 13 5 5
Registration and filing fees 23 17 167 30
Reimbursement of expenses previously assumed by
administrator (Note B) 58 -- -- --
Shareholder reports 18 63 101 14
Shareholder servicing agent fees (Note B) 43 226 794 36
Trustees' fees and expenses 3 4 14 1
Miscellaneous 1 6 12 1
Expenses from corresponding Portfolio (Notes A & B) 673 1,652 7,595 208
---------------------------------------------------------------
Total expenses 995 2,734 12,888 398
Expenses reduced by custodian fee and shareholder servicing
expense offset arrangements (Note B) (4) (21) (120) (3)
---------------------------------------------------------------
Total net expenses 991 2,713 12,768 395
---------------------------------------------------------------
Net investment income (loss) (442) (1,080) 11,176 129
---------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS FROM
CORRESPONDING PORTFOLIO (NOTE A)
Net realized gain (loss) on investment securities (3,282) 20,649 288,024 2,892
Net realized loss on option contracts (29) -- -- --
Net realized loss on financial futures contracts (1,016) -- -- --
Net realized gain on foreign currency transactions 204 -- -- --
Change in net unrealized appreciation of investment
securities, financial futures contracts, option contracts,
translation of assets and liabilities in foreign
currencies, and foreign currency contracts 15,165 38,128 11,390 6,129
---------------------------------------------------------------
Net gain on investments from corresponding Portfolio
(Note A) 11,042 58,777 299,414 9,021
---------------------------------------------------------------
Net increase in net assets resulting from operations $ 10,600 $ 57,697 $ 310,590 $ 9,150
---------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-5
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
Neuberger&Berman
- ----------------------------------------------------------------------
Equity Funds
<TABLE>
<CAPTION>
FOCUS FUND GENESIS FUND
Six Months Six Months
Ended Year Ended Year
February 28, Ended February 28, Ended
1998 August 31, 1998 August 31,
(000'S OMITTED) (UNAUDITED) 1997 (UNAUDITED) 1997
-------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 1,743 $ 2,521 $ 2,995 $ (320)
Net realized gain (loss) on investments from corresponding
Portfolio (Note A) 35,345 172,820 17,299 14,252
Change in net unrealized appreciation of investments from
corresponding Portfolio (Note A) 87,005 265,410 26,506 148,087
-------------------------------------------------------------
Net increase in net assets resulting from operations 124,093 440,751 46,800 162,019
-------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (2,176) (8,010) -- --
Net realized gain on investments (178,818) (52,068) (14,284) (3,645)
-------------------------------------------------------------
Total distributions to shareholders (180,994) (60,078) (14,284) (3,645)
-------------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 109,727 214,044 1,116,313 482,993
Proceeds from reinvestment of dividends and distributions 160,836 53,255 13,158 3,444
Payments for shares redeemed (111,862) (307,442) (319,364) (122,082)
-------------------------------------------------------------
Net increase (decrease) from Trust share transactions 158,701 (40,143) 810,107 364,355
-------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 101,800 340,530 842,623 522,729
NET ASSETS:
Beginning of period 1,411,910 1,071,380 718,108 195,379
-------------------------------------------------------------
End of period $ 1,513,710 $ 1,411,910 $ 1,560,731 $ 718,108
-------------------------------------------------------------
Accumulated undistributed net investment income (loss) at end
of period $ 1,233 $ 1,666 $ 2,995 $ --
-------------------------------------------------------------
NUMBER OF TRUST SHARES:
Sold 2,957 6,453 68,965 37,602
Issued on reinvestment of dividends and distributions 5,051 1,718 850 288
Redeemed (3,034) (9,505) (19,860) (9,618)
-------------------------------------------------------------
Net increase (decrease) in shares outstanding 4,974 (1,334) 49,955 28,272
-------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-6
<PAGE>
- ----------------------------------------------------------------------
Equity Funds
<TABLE>
<CAPTION>
GUARDIAN FUND INTERNATIONAL FUND MANHATTAN FUND
Six Months Six Months Six Months
Ended Year Ended Year Ended Year
February 28, Ended February 28, Ended February 28, Ended
1998 August 31, 1998 August 31, 1998 August 31,
(UNAUDITED) 1997 (UNAUDITED) 1997 (UNAUDITED) 1997
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS:
FROM OPERATIONS:
Net investment income
(loss) $ 21,917 $ 31,611 $ (442) $ (21) $ (1,080) $ (1,052)
Net realized gain (loss)
on investments from
corresponding Portfolio
(Note A) 174,292 728,099 (4,123) 2,368 20,649 170,508
Change in net unrealized
appreciation of
investments from
corresponding Portfolio
(Note A) 123,320 1,139,234 15,165 16,214 38,128 5,870
---------------------------------------------------------------------------------------------
Net increase in net assets
resulting from
operations 319,529 1,898,944 10,600 18,561 57,697 175,326
---------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM:
Net investment income (22,388) (49,597) -- (111) -- --
Net realized gain on
investments (809,963) (252,628) (1,069) -- (148,170) (67,073)
---------------------------------------------------------------------------------------------
Total distributions to
shareholders (832,351) (302,225) (1,069) (111) (148,170) (67,073)
---------------------------------------------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 374,869 999,314 50,455 90,517 39,059 92,313
Proceeds from reinvestment
of dividends and
distributions 771,471 279,571 988 96 137,080 61,291
Payments for shares
redeemed (845,940) (1,305,637) (44,302) (50,675) (50,457) (207,647)
---------------------------------------------------------------------------------------------
Net increase (decrease)
from Trust share
transactions 300,400 (26,752) 7,141 39,938 125,682 (54,043)
---------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS (212,422) 1,569,967 16,672 58,388 35,209 54,210
NET ASSETS:
Beginning of period 6,475,136 4,905,169 115,376 56,988 570,449 516,239
---------------------------------------------------------------------------------------------
End of period $ 6,262,714 $ 6,475,136 $ 132,048 $ 115,376 $ 605,658 $ 570,449
---------------------------------------------------------------------------------------------
Accumulated undistributed
net investment income
(loss) at end of period $ 5,972 $ 6,443 $ (595) $ (153) $ (1,080) $ --
---------------------------------------------------------------------------------------------
NUMBER OF TRUST SHARES:
Sold 12,663 36,707 3,348 6,581 3,007 7,177
Issued on reinvestment of
dividends and
distributions 30,770 10,821 70 7 13,232 5,234
Redeemed (29,916) (47,659) (2,961) (3,592) (3,760) (16,326)
---------------------------------------------------------------------------------------------
Net increase (decrease) in
shares outstanding 13,517 (131) 457 2,996 12,479 (3,915)
---------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-7
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS(Cont'd)
Neuberger&Berman
- ----------------------------------------------------------------------
Equity Funds
<TABLE>
<CAPTION>
SOCIALLY
PARTNERS FUND RESPONSIVE FUND
Six Months Six Months
Ended Year Ended Year
February 28, Ended February 28, Ended
1998 August 31, 1998 August 31,
(000'S OMITTED) (UNAUDITED) 1997 (UNAUDITED) 1997
-------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 11,176 $ 17,506 $ 129 $ 107
Net realized gain (loss) on
investments from corresponding
Portfolio (Note A) 288,024 490,163 2,892 1,586
Change in net unrealized
appreciation of investments from
corresponding Portfolio (Note A) 11,390 417,398 6,129 11,253
-------------------------------------------------------------
Net increase in net assets resulting
from operations 310,590 925,067 9,150 12,946
-------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (18,986) (17,551) (115) (82)
Net realized gain on investments (583,567) (208,212) (1,532) (1,152)
-------------------------------------------------------------
Total distributions to shareholders (602,553) (225,763) (1,647) (1,234)
-------------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 446,707 798,352 19,541 30,166
Proceeds from reinvestment of
dividends and distributions 573,044 214,033 1,494 1,124
Payments for shares redeemed (294,306) (479,905) (5,271) (16,186)
-------------------------------------------------------------
Net increase (decrease) from Trust
share transactions 725,445 532,480 15,764 15,104
-------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 433,482 1,231,784 23,267 26,816
NET ASSETS:
Beginning of period 3,103,728 1,871,944 59,740 32,924
-------------------------------------------------------------
End of period $ 3,537,210 $ 3,103,728 $ 83,007 $ 59,740
-------------------------------------------------------------
Accumulated undistributed net
investment income (loss) at end of
period $ 4,079 $ 11,889 $ 67 $ 53
-------------------------------------------------------------
NUMBER OF TRUST SHARES:
Sold 15,198 29,056 1,051 1,925
Issued on reinvestment of dividends
and distributions 22,596 8,450 85 74
Redeemed (9,881) (17,682) (284) (1,013)
-------------------------------------------------------------
Net increase (decrease) in shares
outstanding 27,913 19,824 852 986
-------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-8
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Neuberger&Berman February 28, 1998 (Unaudited)
- ----------------------------------------------------------------------
Equity Funds
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1) GENERAL: Neuberger&Berman Focus Fund ("Focus"), Neuberger&Berman Genesis Fund
("Genesis"), Neuberger&Berman Guardian Fund-SM-("Guardian"), Neuberger&Berman
International Fund ("International"), Neuberger& Berman Manhattan
Fund-Registered Trademark- ("Manhattan"), Neuberger& Berman Partners
Fund-Registered Trademark- ("Partners"), and Neuberger& Berman Socially
Responsive Fund ("Socially Responsive") (collectively, the "Funds") are
separate operating series of Neuberger&Berman Equity Funds-Registered
Trademark- (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 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
(85.82%, 66.35%, 71.44%, 100.00%, 91.36%, 81.52%, and 25.93%, for Focus,
Genesis, Guardian, International, Manhattan, Partners, and Socially
Responsive, respectively, at February 28, 1998). 70.49% of Neuberger&Berman
Socially Responsive Portfolio is held by another regulated investment
company, which has only a single shareholder and is sponsored by
Neuberger&Berman Management Incorporated ("N&B Management"). 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.
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
B-9
<PAGE>
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.
Income 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, if any, 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, 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 February 28, 1998, the
unamortized balance of such expenses amounted to $25,866 and $16,291, 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.
NOTE B -- ADMINISTRATION FEES, DISTRIBUTION ARRANGEMENTS, AND OTHER TRANSACTIONS
WITH AFFILIATES:
Each Fund retains N&B Management as its administrator under an Administration
Agreement ("Agreement"). Pursuant to this Agreement each Fund pays N&B
Management an administration fee at the annual rate of .26% of that Fund's
average
B-10
<PAGE>
daily net assets. Each Fund indirectly pays for investment management services
through its investment in its corresponding Portfolio (see Note B of Notes to
Financial Statements of the Portfolios).
N&B Management has voluntarily undertaken to reimburse International for its
operating expenses plus its pro rata portion of its corresponding Portfolio's
operating expenses (including the fees payable to N&B Management but excluding
interest, taxes, brokerage commissions, and extraordinary expenses) ("Operating
Expenses") which exceed, in the aggregate, 1.70% per annum of its average daily
net assets (the "Expense Limitation"). This undertaking is subject to
termination by N&B Management upon at least 60 days' prior written notice to the
Fund. International has agreed to repay N&B Management through December 31,
1998, for its excess Operating Expenses previously reimbursed by N&B Management,
so long as its annual Operating Expenses during that period do not exceed the
Expense Limitation. For the six months ended February 28, 1998, International
reimbursed N&B Management $58,243 under this agreement. At February 28, 1998,
International has a remaining contingent liability to N&B Management of $288,302
under the agreement. This contingent liability expires on December 31, 1998, for
any amount not repaid by that date. For the fiscal year ended August 31, 1997,
Socially Responsive had a similar reimbursement and repayment arrangement.
All of the capital stock of N&B Management is owned by individuals who are
also principals of Neuberger&Berman, LLC ("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 principals of Neuberger
and/or officers and/or directors of N&B Management.
Each Fund also has a distribution agreement with N&B Management. N&B
Management 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 Statements
of Operations under the caption Expenses from corresponding Portfolio, was a
reduction of $421, $1,315, $270, $160, $241, $219, and $28, for Focus, Genesis,
Guardian, International, Manhattan, Partners, and Socially Responsive,
respectively.
Each Fund has an expense offset arrangement in connection with its
shareholder servicing agent contract. The impact of this arrangement, reflected
in the Statements of Operations under the caption Shareholder servicing agent
fees, was a reduction of $48,802, $46,692, $231,532, $4,368, $21,313, $120,092,
and $2,500, for Focus, Genesis, Guardian, International, Manhattan, Partners,
and Socially Responsive, respectively.
B-11
<PAGE>
NOTE C -- INVESTMENT TRANSACTIONS:
During the six months ended February 28, 1998, additions and reductions in
each Fund's investment in its corresponding Portfolio were as follows:
<TABLE>
<CAPTION>
ADDITIONS REDUCTIONS
- --------------------------------------------------------------------------------
<S> <C> <C>
FOCUS $ 35,972,538 $ 59,267,178
GENESIS 813,507,464 21,363,961
GUARDIAN 27,192,851 564,760,922
INTERNATIONAL 31,123,871 25,764,402
MANHATTAN 15,191,841 38,906,465
PARTNERS 211,088,887 97,716,788
SOCIALLY RESPONSIVE 14,617,911 1,630,307
</TABLE>
At February 28, 1998, Neuberger&Berman International Portfolio's cost of
investments for U.S. Federal income tax purposes was $95,179,000. Gross
unrealized appreciation of investments was $39,794,000 and gross unrealized
depreciation of investments was $1,968,000, resulting in net unrealized
appreciation of $37,826,000, based on cost for U.S. Federal income tax purposes.
NOTE D -- UNAUDITED FINANCIAL INFORMATION:
The financial information included in this interim report is taken from the
records of each Fund without audit by independent accountants/auditors. Annual
reports contain audited financial statements.
B-12
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Focus Fund(1)(2)
The following table includes selected data for a share outstanding throughout
each period 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>
Six Months Ended Period from
February 28, October 1, 1992
1998 Year Ended August 31, to August 31,
(UNAUDITED) 1997 1996 1995 1994 1993
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 38.89 $ 28.46 $ 28.88 $24.42 $24.00 $19.31
----------------------------------------------------------------------
Income From Investment Operations
Net Investment Income .04 .08 .19 .17 .21 .23
Net Gains or Losses on Securities (both realized
and unrealized) 2.73 12.00 .85 5.97 2.16 4.65
----------------------------------------------------------------------
Total From Investment Operations 2.77 12.08 1.04 6.14 2.37 4.88
----------------------------------------------------------------------
Less Distributions
Dividends (from net investment income) (.06) (.22) (.11) (.20) (.25) (.04)
Distributions (from net capital gains) (4.93) (1.43) (1.35) (1.48) (1.70) (.15)
----------------------------------------------------------------------
Total Distributions (4.99) (1.65) (1.46) (1.68) (1.95) (.19)
----------------------------------------------------------------------
Net Asset Value, End of Period $ 36.67 $ 38.89 $ 28.46 $28.88 $24.42 $24.00
----------------------------------------------------------------------
Total Return(3) +9.07%(4) +43.92% +3.70% +27.47% +10.35% +25.39%(4)
----------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in millions) $1,513.7 $1,411.9 $1,071.4 $956.0 $643.9 $573.9
----------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets(5) .84%(6) .86% .89% -- -- --
----------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets .83%(6) .86% .89% .87% .85% .92%(6)
----------------------------------------------------------------------
Ratio of Net Investment Income to Average Net
Assets .25%(6) .21% .69% .75% .89% 1.18%(6)
----------------------------------------------------------------------
Portfolio Turnover Rate(7) -- -- -- -- -- 52%
----------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-13
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Genesis Fund
The following table includes selected data for a share outstanding throughout
each period 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>
Six Months Ended Period from
February 28, August 1, 1993 Year Ended
1998 Year Ended August 31, to August 31, July 31,
(UNAUDITED)(2) 1997(2) 1996(2) 1995(2) 1994(2) 1993(2) 1993
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $ 15.55 $10.91 $ 9.52 $ 8.27 $ 8.62 $ 8.30 $ 7.10
----------------------------------------------------------------------------------------------------
Income From Investment
Operations
Net Investment Income
(Loss) .03 (.01) (.01) -- (.01) -- .01
Net Gains or Losses on
Securities (both realized
and unrealized) .84 4.80 1.95 1.56 .42 .32 1.19
----------------------------------------------------------------------------------------------------
Total From Investment
Operations .87 4.79 1.94 1.56 .41 .32 1.20
----------------------------------------------------------------------------------------------------
Less Distributions
Dividends (from net
investment income) -- -- -- -- (.01) -- --
Distributions (from net
capital gains) (.19) (.15) (.55) (.31) (.75) -- --
----------------------------------------------------------------------------------------------------
Total Distributions (.19) (.15) (.55) (.31) (.76) -- --
----------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 16.23 $15.55 $10.91 $ 9.52 $ 8.27 $ 8.62 $ 8.30
----------------------------------------------------------------------------------------------------
Total Return(3) +5.65%(4) +44.32% +21.32% +19.69% +4.77% +3.86%(4) +16.90%
----------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period
(in millions) $1,560.7 $718.1 $195.4 $111.5 $135.6 $118.5 $113.5
----------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to
Average Net Assets(5) 1.08%(6) 1.17% 1.28% -- -- -- --
----------------------------------------------------------------------------------------------------
Ratio of Net Expenses to
Average Net Assets 1.07%(6)(8) 1.16%(8) 1.28%(8) 1.35%(8) 1.36% 1.51%(6) 1.65%
----------------------------------------------------------------------------------------------------
Ratio of Net Investment
Income (Loss) to Average
Net Assets .52%(6)(8) (.08%)(8) (.18%)(8) (.16%)(8) (.20%) (.08%)(6) .15%
----------------------------------------------------------------------------------------------------
Portfolio Turnover Rate(7) -- -- -- -- -- -- 54%
----------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-14
<PAGE>
FINANCIAL HIGHLIGHTS(9)
Neuberger&Berman
- --------------------------------------------------------------------------------
Guardian Fund(2)
The following table includes selected data for a share outstanding throughout
each period 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>
Six Months Ended
February 28,
1998 Year Ended August 31,
(UNAUDITED) 1997 1996 1995 1994 1993
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 31.41 $ 23.78 $ 23.61 $ 19.52 $ 18.57 $ 15.73
-------------------------------------------------------------------
Income From Investment Operations
Net Investment Income .11 .15 .31 .27 .24 .30
Net Gains or Losses on Securities (both
realized and unrealized) 1.10 8.96 .90 4.30 1.41 3.45
-------------------------------------------------------------------
Total From Investment Operations 1.21 9.11 1.21 4.57 1.65 3.75
-------------------------------------------------------------------
Less Distributions
Dividends (from net investment income) (.11) (.24) (.28) (.25) (.30) (.25)
Distributions (from net capital gains) (4.00) (1.24) (.76) (.23) (.40) (.66)
-------------------------------------------------------------------
Total Distributions (4.11) (1.48) (1.04) (.48) (.70) (.91)
-------------------------------------------------------------------
Net Asset Value, End of Period $ 28.51 $ 31.41 $ 23.78 $ 23.61 $ 19.52 $ 18.57
-------------------------------------------------------------------
Total Return(3) +5.66%(4) +39.69% +5.27% +24.06% +9.12% +24.43%
-------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in millions) $6,262.7 $6,475.1 $4,905.2 $3,947.5 $2,416.5 $1,787.0
-------------------------------------------------------------------
Ratio of Gross Expenses to Average Net
Assets(5) .79%(6) .80% .82% -- -- --
-------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets .78%(6) .80% .82% .80% .80% .81%
-------------------------------------------------------------------
Ratio of Net Investment Income to Average Net
Assets .70%(6) .55% 1.37% 1.40% 1.36% 2.01%
-------------------------------------------------------------------
Portfolio Turnover Rate(7) -- -- -- -- -- 27%
-------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-15
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
International Fund
The following table includes selected data for a share outstanding throughout
each period 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
Six Months Ended June 15,
February 28, 1994(10)
1998 Year Ended August 31, to August 31,
(UNAUDITED) 1997 1996 1995 1994
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $14.83 $11.91 $10.70 $10.46 $10.00
-----------------------------------------------------------
Income From Investment Operations
Net Investment Income (Loss) (.05) -- .01 .06 .01
Net Gains or Losses on Securities (both realized and
unrealized) 1.39 2.94 1.24 .21 .45
-----------------------------------------------------------
Total From Investment Operations 1.34 2.94 1.25 .27 .46
-----------------------------------------------------------
Less Distributions
Dividends (from net investment income) -- (.02) (.04) (.03) --
Distributions (from net capital gains) (.14) -- -- -- --
-----------------------------------------------------------
Total Distributions (.14) (.02) (.04) (.03) --
-----------------------------------------------------------
Net Asset Value, End of Period $16.03 $14.83 $11.91 $10.70 $10.46
-----------------------------------------------------------
Total Return(3) +9.16%(4) +24.71% +11.73% +2.60% +4.60%(4)
-----------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in millions) $132.0 $115.4 $ 57.0 $ 26.4 $ 6.2
-----------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets(5) 1.71%(6) 1.70% 1.70% -- --
-----------------------------------------------------------
Ratio of Net Expenses to Average Net Assets(8) 1.70%(6) 1.70% 1.70% 1.70% 1.70%(6)
-----------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net
Assets(8) (.76%)(6) (.02%) .24% .73% .57%(6)
-----------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-16
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Manhattan Fund(2)
The following table includes selected data for a share outstanding throughout
each period 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>
Six Months Ended
February 28,
1998 Year Ended August 31,
(UNAUDITED) 1997 1996 1995 1994 1993
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $14.51 $11.94 $13.27 $11.28 $12.94 $ 11.59
----------------------------------------------------------------
Income From Investment Operations
Net Investment Income (Loss) (.02) (.03) (.04) -- .02 .02
Net Gains or Losses on Securities (both realized and
unrealized) 1.04 4.26 (.33) 2.70 .40 3.06
----------------------------------------------------------------
Total From Investment Operations 1.02 4.23 (.37) 2.70 .42 3.08
----------------------------------------------------------------
Less Distributions
Dividends (from net investment income) -- -- -- (.01) (.02) (.05)
Distributions (from net capital gains) (3.84) (1.66) (.96) (.70) (2.06) (1.68)
----------------------------------------------------------------
Total Distributions (3.84) (1.66) (.96) (.71) (2.08) (1.73)
----------------------------------------------------------------
Net Asset Value, End of Period $11.69 $14.51 $11.94 $13.27 $11.28 $ 12.94
----------------------------------------------------------------
Total Return(3) +10.43%(4) +38.75% -2.91% +26.00% +3.49% +27.76%
----------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in millions) $605.7 $570.4 $516.2 $612.0 $510.3 $ 537.6
----------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets(5) .96%(6) .99% .98% -- -- --
----------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets .95%(6) .98% .98% .98% .96% 1.04%
----------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net
Assets (.38%)(6) (.20%) (.27%) .03% .16% .20%
----------------------------------------------------------------
Portfolio Turnover Rate(7) -- -- -- -- -- 76%(6)
----------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-17
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Partners Fund
The following table includes selected data for a share outstanding throughout
each period 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>
Six Months Ended Period from
February 28, July 1, 1993 Year Ended
1998 Year Ended August 31, to August 31, June 30,
(UNAUDITED)(2) 1997(2) 1996(2) 1995(2) 1994(2) 1993(2) 1993
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $ 31.60 $ 23.88 $ 23.72 $ 21.32 $ 22.46 $ 20.98 $ 18.96
-----------------------------------------------------------------------------------------------
Income From Investment Operations
Net Investment Income .10 .19 .22 .17 .10 .02 .16
Net Gains or Losses on
Securities (both realized and
unrealized) 2.38 10.36 2.84 3.94 1.07 1.46 3.84
-----------------------------------------------------------------------------------------------
Total From Investment
Operations 2.48 10.55 3.06 4.11 1.17 1.48 4.00
-----------------------------------------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.19) (.22) (.20) (.11) (.11) -- (.19)
Distributions (from net capital
gains) (5.84) (2.61) (2.70) (1.60) (2.20) -- (1.79)
-----------------------------------------------------------------------------------------------
Total Distributions (6.03) (2.83) (2.90) (1.71) (2.31) -- (1.98)
-----------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 28.05 $ 31.60 $ 23.88 $ 23.72 $ 21.32 $ 22.46 $ 20.98
-----------------------------------------------------------------------------------------------
Total Return(3) +9.87%(4) +47.11% +13.86% +21.53% +5.56% +7.05%(4) +21.78%
-----------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $3,537.2 $3,103.7 $1,871.9 $1,564.0 $1,335.9 $1,185.1 $1,085.6
-----------------------------------------------------------------------------------------------
Ratio of Gross Expenses to
Average Net Assets(5) .80%(6) .81% .84% -- -- -- --
-----------------------------------------------------------------------------------------------
Ratio of Net Expenses to
Average Net Assets .79%(6) .81% .84% .83% .81% .84%(6) .86%
-----------------------------------------------------------------------------------------------
Ratio of Net Investment Income
to Average Net Assets .69%(6) .72% .93% .83% .48% .59%(6) .83%
-----------------------------------------------------------------------------------------------
Portfolio Turnover Rate(7) -- -- -- -- -- 6% 82%
-----------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-18
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Socially Responsive Fund
The following table includes selected data for a share outstanding throughout
each period 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
Six Months Ended March 16,
February 28, 1994(10)
1998 Year Ended August 31, to August 31,
(UNAUDITED) 1997 1996 1995 1994
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $17.79 $13.88 $11.84 $10.07 $10.00
------------------------------------------------------------
Income From Investment Operations
Net Investment Income .03 .03 .02 .03 .01
Net Gains or Losses on Securities (both realized and
unrealized) 2.33 4.33 2.35 1.76 .06
------------------------------------------------------------
Total From Investment Operations 2.36 4.36 2.37 1.79 .07
------------------------------------------------------------
Less Distributions
Dividends (from net investment income) (.03) (.03) (.02) (.02) --
Distributions (from net capital gains) (.40) (.42) (.31) -- --
------------------------------------------------------------
Total Distributions (.43) (.45) (.33) (.02) --
------------------------------------------------------------
Net Asset Value, End of Period $19.72 $17.79 $13.88 $11.84 $10.07
------------------------------------------------------------
Total Return(3) +13.56%(4) +31.96% +20.19% +17.82% +0.70%(4)
------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in millions) $ 83.0 $ 59.7 $ 32.9 $ 8.2 $ 2.3
------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets(5) 1.17%(6) 1.49% 1.50% -- --
------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets(8) 1.16%(6) 1.48% 1.50% 1.51% 1.50%(6)
------------------------------------------------------------
Ratio of Net Investment Income to Average Net Assets(8) .38%(6) .23% .19% .36% .50%(6)
------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-19
<PAGE>
NOTES TO FINANCIAL HIGHLIGHTS
Neuberger&Berman February 28, 1998 (Unaudited)
- ----------------------------------------------------------------------
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) 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 fiscal
period and assumes dividends and other 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 the investment
manager had not reimbursed certain expenses. For Genesis, total return would
have been lower if N&B Management had not waived a portion of the management
fee.
4) Not annualized.
5) For fiscal periods ending after September 1, 1995, the Fund is required to
calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements. For International and
Socially Responsive, these ratios include expense reimbursement or repayment
arrangements, and for Genesis, a management fee waiver.
6) Annualized.
7) 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 in the
Financial Highlights for each Portfolio, which appear elsewhere in this
report.
B-20
<PAGE>
8) Had N&B 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 of net expenses and net
investment income (loss) to average daily net assets would have been:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
February 28, August 31,
GENESIS 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Expenses 1.12% 1.26% 1.38% 1.38%
----------------------------------------
Net Investment Income (Loss) .47% (.18%) (.28%) (.19%)
----------------------------------------
</TABLE>
After reimbursement of expenses by N&B Management as described in Note B
of Notes to Financial Statements. Had N&B Management not undertaken such
action the annualized ratios of net expenses and net investment income (loss)
to average daily net assets would have been:
<TABLE>
<CAPTION>
Period from
Year Ended June 15, 1994
August 31, to August 31,
INTERNATIONAL 1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Expenses 2.28% 2.31% 2.50%
----------------------------
Net Investment Income (Loss) (.34%) .12% (.23%)
----------------------------
</TABLE>
<TABLE>
<CAPTION>
Period from
Year Ended March 16, 1994
August 31, to August 31,
SOCIALLY RESPONSIVE 1996 1995 1994
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Expenses 1.69% 2.50% 2.50%
-----------------------------
Net Investment Income (Loss) .00% (.63%) (.50%)
-----------------------------
</TABLE>
Had International not reimbursed N&B Management, as described in Note B of
Notes to Financial Statements, the annualized ratios of net expenses and net
investment loss to average daily net assets would have been:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
February 28, August 31,
1998 1997
- ---------------------------------------------------------------------------------
<S> <C> <C>
Net Expenses 1.60% 1.69%
-----------------------------
Net Investment Loss (.66%) (.01%)
-----------------------------
</TABLE>
B-21
<PAGE>
Had Socially Responsive not reimbursed N&B Management, as described in
Note B of Notes to Financial Statements, the annualized ratios of net
expenses and net investment income to average daily net assets would have
been:
<TABLE>
<CAPTION>
Year Ended
August 31,
1997
- --------------------------------------------------------------
<S> <C>
Net Expenses 1.20%
-----
Net Investment Income .51%
-----
</TABLE>
9) Adjusted for a 200% stock dividend effective January 20, 1993.
10) The date investment operations commenced.
B-22
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Focus Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Compaq Computer 4.9%
2. Chase Manhattan 4.8%
3. Travelers Group 4.5%
4. Countrywide Credit Industries 4.3%
5. CITICORP 4.2%
6. Capital One Financial 3.6%
7. General Motors 3.5%
8. Fannie Mae 3.4%
9. 3Com Corp. 3.4%
10. Furniture Brands International 3.1%
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ----------- ---------------
<C> <S> <C>
COMMON STOCKS (92.9%)
AUTOMOTIVE (4.9%)
183,100 Cabot Corp. $ 6,454
883,500 General Motors 60,907
503,400 Hertz Corp. 19,947
---------------
87,308
---------------
FINANCIAL SERVICES (45.8%)
209,000 ACE Ltd. 20,665
964,155 ADVANTA Corp. Class A 22,718(2)
643,500 Banc One 36,358
383,000 BankBoston Corp. 38,180
940,000 Capital One Financial 63,156
680,000 Chase Manhattan 84,363
555,000 CITICORP 73,538
1,715,000 Countrywide Credit Industries 76,210
940,000 Fannie Mae 59,984
700,000 Freddie Mac 33,075
247,000 Hartford Financial Services Group 24,268
672,500 Merrill Lynch 48,126
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ----------- ---------------
<C> <S> <C>
700,000 Morgan Stanley, Dean Witter, Discover $ 48,781
640,800 Nationwide Financial Services 28,195
525,600 PartnerRe Ltd. 25,623
177,100 St. Paul Cos. 15,695
107,000 Transamerica Corp. 12,459
1,427,000 Travelers Group 79,555
395,000 Travelers Property Casualty 16,195
---------------
807,144
---------------
HEALTH CARE (8.0%)
1,857,900 Foundation Health Systems 51,441
940,000 Sierra Health Services 34,427(2)
934,900 Wellpoint Health Networks 54,633
---------------
140,501
---------------
HEAVY INDUSTRY (5.2%)
1,330,000 AGCO Corp. 37,406
1,000,000 AK Steel Holding 18,688
1,030,000 DT Industries 36,307(2)
---------------
92,401
---------------
RETAIL (9.4%)
1,200,000 Barnes & Noble 42,150
2,014,300 Furniture Brands International 55,142
1,074,000 Neiman-Marcus Group 39,939
420,000 Payless ShoeSource 28,245
---------------
165,476
---------------
TECHNOLOGY (17.8%)
1,665,000 3Com Corp. 59,524
700,000 Applied Materials 25,769(3)
525,000 Atmel Corp. 8,531
</TABLE>
B-23
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Focus Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ----------- ---------------
<C> <S> <C>
2,700,000 Compaq Computer $ 86,569
120,000 Credence Systems 4,005
580,000 KLA-Tencor 26,771
964,500 National Semiconductor 23,027
90,000 Rational Software 1,215
1,300,000 Silicon Valley Group 35,425
533,000 Teradyne, Inc. 25,151
320,000 Texas Instruments 18,520
---------------
314,507
---------------
TRANSPORTATION (1.8%)
644,000 Continental Airlines Class B 32,361
---------------
TOTAL COMMON STOCKS (COST $952,034) 1,639,698
---------------
<CAPTION>
Market
Principal Value(1)
Amount (000's omitted)
- ----------- ---------------
<C> <S> <C>
U.S. TREASURY SECURITIES (2.7%)
$47,880,000 U.S. Treasury Bills, 4.97% - 5.045%, due
3/5/98 & 4/9/98 (COST $47,749) $ 47,756
---------------
SHORT-TERM CORPORATE NOTES (3.9%)
68,140,000 General Electric Capital Corp., 5.50%,
due 3/2/98 (COST $68,140) 68,140(4)
---------------
TOTAL INVESTMENTS (99.5%) (COST
$1,067,923) 1,755,594(5)
Cash, receivables and other assets, less
liabilities (0.5%) 8,292
---------------
TOTAL NET ASSETS (100.0%) $1,763,886
---------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
B-24
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Genesis Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Thiokol Corp. 1.9%
2. Bank United 1.8%
3. Webster Financial 1.6%
4. AAR Corp. 1.6%
5. Pride International 1.4%
6. Trigon Healthcare 1.4%
7. National-Oilwell 1.3%
8. Richfood Holdings 1.2%
9. AptarGroup Inc. 1.2%
10. Crescent Real Estate Equities 1.1%
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ------------ ---------------
<C> <S> <C>
COMMON STOCKS (86.5%)
AEROSPACE (6.5%)
1,209,750 AAR Corp. $ 36,746
1,194,100 Aviall Inc. 17,165(2)
259,100 BE Aerospace 7,627
468,300 DONCASTERS PLC ADR 11,708
199,900 Ducommun Inc. 6,434
210,200 Hexcel Corp. 5,531
344,200 Moog, Inc. Class A 12,133
257,300 Orbital Sciences 9,810
463,500 Thiokol Corp. 44,322
---------------
151,476
---------------
AUTOMOTIVE (0.4%)
384,000 Donaldson Co. 9,144
---------------
BANKING & FINANCIAL (12.8%)
237,775 Associated Banc-Corp 12,453
874,900 Bank United 41,230
253,612 Charter One Financial 15,367
196,900 Colonial BancGroup 6,695
121,485 Commerce Bancorp 5,786
321,100 Commercial Federal 11,359
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ------------ ---------------
<C> <S> <C>
302,800 Community First Bankshares $ 16,048
328,100 Cullen/Frost Bankers 18,681
211,600 Dime Community Bancorp 5,316
186,700 First Commerce 14,749
281,300 FirstFed Financial 11,358
232,200 Imperial Bancorp 7,663
248,500 Long Island Bancorp 14,957
78,300 North Fork Bancorp 2,677
142,700 Ocean Financial 5,030
82,877 ONBANCorp, Inc. 6,019
511,300 Peoples Heritage Financial Group 23,807
169,175 Queens County Bancorp 6,725
227,600 Reliance Bancorp 8,080
237,700 Sovereign Bancorp 4,605
687,675 Sterling Bancshares 10,315
307,750 Texas Regional Bancshares 10,656
592,600 Webster Financial 38,075
---------------
297,651
---------------
BASIC MATERIALS (1.9%)
101,300 Lone Star Industries 6,103
198,800 Lone Star Technologies 6,163
244,500 Medusa Corp. 11,568
361,600 Texas Industries 20,430
---------------
44,264
---------------
BUILDING, CONSTRUCTION & REFURNISHING (0.8%)
825,600 Apogee Enterprises 10,681
73,000 Lincoln Electric Class A 2,774
95,000 Simpson Manufacturing 3,907
---------------
17,362
---------------
</TABLE>
B-25
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Genesis Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ------------ ---------------
<C> <S> <C>
CHEMICALS (0.7%)
382,500 Lawter International $ 4,471
201,000 Lilly Industries 4,045
297,000 Lyondell Petrochemical 8,093
---------------
16,609
---------------
CONSUMER CYCLICALS (0.7%)
466,600 Coachmen Industries 13,327
67,800 Monaco Coach 2,678
---------------
16,005
---------------
CONSUMER PRODUCTS & SERVICES (3.9%)
243,791 Block Drug 10,270
138,800 Bush Boake Allen 4,476
477,400 First Brands 12,293
134,100 Libbey Inc. 4,945
579,500 Prime Hospitality 11,011
1,020,800 Richfood Holdings 29,029
273,800 Stewart Enterprises 12,903
166,900 The First Years 4,485
---------------
89,412
---------------
DEFENSE (1.7%)
271,700 Alliant Techsystems 17,066
660,000 Newport News Shipbuilding 17,985
100,000 Primex Technologies 4,325
---------------
39,376
---------------
DIAGNOSTIC EQUIPMENT (0.9%)
793,100 ADAC Laboratories 21,116
---------------
ELECTRONICS (2.0%)
224,800 Continental Circuits 5,311
534,100 Dallas Semiconductor 25,370
25,000 Kent Electronics 558
340,900 SCI Systems 15,340
---------------
46,579
---------------
ENERGY (2.4%)
509,500 Apache Corp. 17,323
410,000 Cabot Oil & Gas 8,610
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ------------ ---------------
<C> <S> <C>
701,900 Coho Energy $ 5,571
182,700 Cross Timbers Oil 2,923
54,200 Ocean Energy 2,534
636,990 Swift Energy 11,426
17,994 Titan Exploration 130
765,800 Unit Corp. 6,079
---------------
54,596
---------------
HEALTH CARE (8.0%)
511,000 Acuson Corp. 9,390
92,500 Arrow International 3,619
634,000 Ballard Medical Products 15,929
252,900 CompDent Corp. 3,509
492,200 CONMED Corp. 10,798
445,400 DePuy, Inc. 11,998
871,500 Haemonetics Corp. 14,543
195,877 Henry Schein 7,982
315,000 John Alden Financial 7,068
443,550 Patterson Dental 13,417
370,000 Physio-Control International 6,984
149,100 R.P. Scherer 9,067
154,100 Sofamor Danek Group 11,596
192,500 STAAR Surgical 3,128
1,039,800 Trigon Healthcare 32,234
475,600 Universal Health Services Class B 24,850
---------------
186,112
---------------
INDUSTRIAL & COMMERCIAL PRODUCTS & SERVICES (5.4%)
115,000 Alamo Group 2,084
1,003,800 BMC Industries 19,511
118,700 Dionex Corp. 6,929
1,380,900 Hussmann International 20,972
612,200 Kaydon Corp. 22,766
332,000 NN Ball & Roller 3,528
281,800 Pameco Corp. 4,650(2)
162,000 Pentair, Inc. 6,672
96,600 Roper Industries 2,808
547,200 SOS Staffing Services 11,218
233,600 W.H. Brady 7,709
</TABLE>
B-26
<PAGE>
February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Genesis Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ------------ ---------------
<C> <S> <C>
389,100 Wallace Computer Services $ 14,154
180,750 Woodhead Industries 3,434
---------------
126,435
---------------
INSURANCE (1.9%)
535,150 Allied Group 16,857
290,200 FBL Financial Group 13,494
81,000 Orion Capital 3,954
229,000 Penn-America Group 5,238
150,700 Trenwick Group 5,501
---------------
45,044
---------------
MACHINERY & EQUIPMENT (0.9%)
178,800 Allied Products 4,101
27,900 Gardner Denver Machinery 748
683,300 Stewart & Stevenson Services 16,698
---------------
21,547
---------------
OFFICE EQUIPMENT (1.1%)
415,000 United Stationers 24,848
---------------
OIL SERVICES (8.2%)
50,600 Bayard Drilling Technologies 651
208,200 Cal Dive International 5,621
193,800 Cliffs Drilling 7,510
313,800 Dawson Production Services 3,785
373,500 Friede Goldman International 11,345
630,400 Global Industries 10,874
226,200 Hvide Marine 4,298
405,000 IRI International 4,784
544,500 Nabors Industries 12,455
1,103,091 National-Oilwell 30,887
480,700 Oceaneering International 7,962
742,500 Offshore Logistics 13,087
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ------------ ---------------
<C> <S> <C>
1,463,400 Pride International $ 33,384
367,000 R&B Falcon 9,726
287,400 Smith International 15,304
224,400 Trico Marine Services 4,180
192,600 Tuboscope Inc. 3,768
393,200 UTI Energy 5,357
344,800 Willbros Group 5,538
---------------
190,516
---------------
PACKING & CONTAINERS (1.2%)
491,200 AptarGroup Inc. 28,336
---------------
PUBLISHING & BROADCASTING (0.3%)
85,666 Pulitzer Publishing 7,196
---------------
REAL ESTATE/REITS (5.7%)
570,900 CCA Prison Realty Trust 25,119
26,800 Crescent Operating 533
749,500 Crescent Real Estate Equities 25,530
335,000 ElderTrust 6,072(2)
495,000 Health Care Property Investors 18,377
297,000 Imperial Credit Commercial Mortgage
Investment 4,566
140,900 National Health Investors 5,777
339,700 Nationwide Health Properties 8,981
162,800 OMEGA Healthcare Investors 6,319
798,100 Prime Retail 11,622
415,300 SL Green Realty 11,031
540,000 Sunstone Hotel Investors 8,640
---------------
132,567
---------------
RESTAURANTS (0.6%)
706,800 Brinker International 14,754
---------------
</TABLE>
B-27
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Genesis Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ------------ ---------------
<C> <S> <C>
RETAILING (1.0%)
354,875 99 Cents Only Stores $ 13,663
517,900 Micro Warehouse 7,121
178,500 Schultz Sav-O Stores 2,789
---------------
23,573
---------------
TECHNOLOGY (5.3%)
242,800 Analysts International 8,589
1,072,600 Auspex Systems 10,257
202,600 Black Box 7,243
2,036,300 Borland International 18,963(2)
517,600 CACI International 11,064
1,124,100 Data General 23,185
162,500 Eltron International 3,494
264,900 Emulex Corp. 3,146
483,200 Methode Electronics Class A 6,825
1,027,400 Reynolds & Reynolds 21,832
328,400 Zebra Technologies 9,482
---------------
124,080
---------------
TEXTILES & APPAREL (0.2%)
124,300 St. John Knits 5,252
---------------
TRANSPORTATION, SHIPPING & FREIGHT (0.2%)
78,375 Air Express International 2,195
213,600 Maritrans Inc. 2,136
---------------
4,331
---------------
UTILITIES, ELECTRIC & GAS (11.8%)
582,200 AGL Resources 11,826
183,200 Aquila Gas Pipeline 2,210
248,600 Atmos Energy 7,132
246,500 Central Hudson Gas & Electric 10,014
227,600 Connecticut Energy 6,714
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ------------ ---------------
<C> <S> <C>
124,300 Eastern Enterprises $ 5,508
509,800 Eastern Utilities Associates 12,203
400,500 Enova Corp. 10,213
695,600 Illinova Corp. 19,303
628,800 Montana Power 20,122
336,200 National Fuel Gas 15,675
618,200 Nevada Power 15,339
193,300 NICOR Inc. 7,949
48,500 Northwest Natural Gas 1,367
289,800 NUI Corp. 7,662
383,600 ONEOK, Inc. 13,426
200,000 Orange & Rockland Utilities 8,787
66,100 Otter Tail Power 2,504
529,900 Public Service Co. of New Mexico 12,353
475,100 Rochester Gas & Electric 14,817
376,100 Sierra Pacific Resources 13,493
390,000 UtiliCorp United 14,040
457,400 Washington Gas Light 12,321
483,600 Washington Water Power 11,062
152,300 WICOR, Inc. 7,282
249,000 WPL Holdings 7,937
140,000 WPS Resources 4,550
---------------
275,809
---------------
TOTAL COMMON STOCKS (COST $1,700,109) 2,013,990
---------------
PREFERRED STOCKS (0.1%)
60,000 Hvide Capital Trust, Cv., 6.50% (COST
$3,000) 2,948(6)
---------------
</TABLE>
B-28
<PAGE>
February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Genesis Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Principal Value(1)
Amount (000's omitted)
- ------------ ---------------
<C> <S> <C>
U.S. TREASURY SECURITIES (12.3%)
$287,240,000 U.S. Treasury Bills,
4.90% - 5.045%,
due 3/5/98 -
4/9/98 (COST $286,585) $ 286,628
---------------
SHORT-TERM CORPORATE NOTES (2.2%)
51,040,000 General Electric Capital Corp., 5.50%,
due 3/2/98 (COST $51,040) 51,040(4)
---------------
TOTAL INVESTMENTS (101.1%) (COST
$2,040,734) 2,354,606(5)
Liabilities, less cash, receivables and
other assets [(1.1%)] (24,479)
---------------
TOTAL NET ASSETS (100.0%) $2,330,127
---------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
B-29
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Guardian Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. General Motors 4.0%
2. Compaq Computer 3.9%
3. Chase Manhattan 3.5%
4. Travelers Group 3.5%
5. Capital One Financial 3.4%
6. CITICORP 3.2%
7. Foundation Health Systems 3.1%
8. Morgan Stanley, Dean Witter, Discover 3.1%
9. Countrywide Credit Industries 3.0%
10. 3Com Corp. 2.9%
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ------------ ---------------
<C> <S> <C>
COMMON STOCKS (93.0%)
AGRICULTURE (4.0%)
5,360,200 AGCO Corp. $ 150,756(2)
3,107,200 IMC Global 118,656
904,600 Potash Corp. of Saskatchewan 80,848
---------------
350,260
---------------
AUTOMOTIVE (11.1%)
3,040,700 Cabot Corp. 107,185
2,793,250 Chrysler Corp. 108,762
4,893,900 Coltec Industries 127,547(2)
5,048,000 General Motors 347,997
649,000 Lear Corp. 34,316
2,298,786 LucasVarity PLC ADR 86,492
1,784,800 Magna International Class A 107,980
2,452,081 Mark IV Industries 57,011
---------------
977,290
---------------
BANKING (12.3%)
4,026,069 Banc One 227,473
2,300,000 BankBoston Corp. 229,281
2,495,000 Chase Manhattan $ 309,536
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ------------ ---------------
<C> <S> <C>
2,095,000 CITICORP 277,588
1,008,000 First Tennessee National 32,130
---------------
1,076,008
---------------
CONSUMER GOODS & SERVICES (0.4%)
874,728 Cendant Corp. 32,802
---------------
ENERGY (1.2%)
150,000 Cooper Cameron 8,044
1,275,000 Praxair, Inc. 60,961
1,125,000 Santa Fe International 39,867
---------------
108,872
---------------
FINANCIAL SERVICES (17.5%)
2,254,350 ADVANTA Corp. Class B 49,596
220,814 Alleghany Corp. 75,298
4,380,000 Capital One Financial 294,281(2)
5,830,000 Countrywide Credit Industries 259,071(2)
3,000,000 Fannie Mae 191,437(3)
3,020,000 Freddie Mac 142,695
3,300,000 Merrill Lynch 236,156
3,897,700 Morgan Stanley, Dean Witter, Discover 271,621
510,000 Security Capital Industrial Trust 12,367
---------------
1,532,522
---------------
HEALTH CARE (10.8%)
2,855,000 Aetna Inc. 249,456
9,974,900 Foundation Health Systems 276,180(2)
4,788,800 Humana Inc. 121,815
1,260,000 Mid Atlantic Medical Services 14,805
1,465,790 PacifiCare Health Systems Class B 91,612(2)
326,600 Tenet Healthcare 12,186
</TABLE>
B-30
<PAGE>
February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Guardian Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ------------ ---------------
<C> <S> <C>
800,000 United Healthcare $ 48,550
2,326,396 Wellpoint Health Networks 135,949
---------------
950,553
---------------
HEAVY INDUSTRY (1.9%)
339,000 Harnischfeger Industries 11,992
537,100 Rockwell International 32,495
3,654,400 UCAR International 125,848(2)
---------------
170,335
---------------
INDUSTRIAL GOODS & SERVICES (3.7%)
2,275,200 American Standard 101,246
1,150,000 U.S. Filter 39,028
2,251,500 USA Waste Services 93,719
1,700,700 USG Corp. 92,901
---------------
326,894
---------------
INSURANCE (6.1%)
1,640,000 Hartford Financial Services Group 161,130
95,000 St. Paul Cos. 8,419
163,100 Transamerica Corp. 18,991
451,050 Transatlantic Holdings 34,111
5,530,000 Travelers Group 308,298
---------------
530,949
---------------
MEDIA & ENTERTAINMENT (0.4%)
611,900 Harcourt General 33,043
---------------
REAL ESTATE INVESTMENT TRUSTS (1.5%)
2,767,100 INMC Mortgage Holdings 72,809
1,542,000 Spieker Properties 61,198
---------------
134,007
---------------
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ------------ ---------------
<C> <S> <C>
RETAIL (1.7%)
2,739,600 Barnes & Noble $ 96,228
200,500 Sears, Roebuck 10,639
1,800,000 Woolworth Corp. 42,750
---------------
149,617
---------------
TECHNOLOGY (17.3%)
7,175,000 3Com Corp. 256,506
3,795,000 Applied Materials 139,703(3)
2,950,000 Arrow Electronics 98,272
2,846,000 Atmel Corp. 46,247
1,280,000 Avnet, Inc. 81,600
1,046,600 Cabletron Systems 16,222
10,602,500 Compaq Computer 339,943(3)
1,830,000 KLA-Tencor 84,466
3,265,000 National Semiconductor 77,952
3,150,000 Teradyne, Inc. 148,641
3,906,000 Texas Instruments 226,060
---------------
1,515,612
---------------
TRANSPORTATION (3.1%)
1,510,600 Continental Airlines Class B 75,908
930,270 Delta Air Lines 105,179
550,000 Union Pacific 28,050
926,000 US Airways Group 58,627
---------------
267,764
---------------
TOTAL COMMON STOCKS (COST $5,357,418) 8,156,528
---------------
PREFERRED STOCKS (0.1%)
52,430 Aetna Inc., Ser. C, Cv., 6.25% 4,371
125,000 PacifiCare Health Systems, Ser. C, Cv.,
$1.00 3,031
---------------
TOTAL PREFERRED STOCKS (COST $7,557) 7,402
---------------
</TABLE>
B-31
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Guardian Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Principal Value(1)
Amount (000's omitted)
- ------------ ---------------
<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) $ 18,112(6)
---------------
U.S. TREASURY SECURITIES (5.3%)
243,025,000 U.S. Treasury Bills,
4.96% - 5.06%,
due 3/5/98 -
4/9/98 242,724
15,000,000 U.S. Treasury Notes, 8.00%, due 5/15/01 16,045
100,000,000 U.S. Treasury Bonds, 6.25%, due 8/15/23 103,344
100,000,000 U.S. Treasury Bonds, 6.00%, due 2/15/26 100,156
---------------
TOTAL U.S. TREASURY SECURITIES (COST
$449,843) 462,269
---------------
<CAPTION>
Market
Principal Value(1)
Amount (000's omitted)
- ------------ ---------------
<C> <S> <C>
SHORT-TERM CORPORATE NOTES (0.4%)
$ 38,310,000 General Electric Capital Corp., 5.50%,
due 3/2/98 (COST $38,310) $ 38,310(4)
---------------
TOTAL INVESTMENTS (99.0%) (COST
$5,868,125) 8,682,621(5)
Cash, receivables and other assets, less
liabilities (1.0%) 91,203
---------------
TOTAL NET ASSETS (100.0%) $8,773,824
---------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
B-32
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
International Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
----------------------------------------------------------------------------------------------
HOLDING COUNTRY INDUSTRY PERCENTAGE
<C> <S> <C> <C> <C>
1. Portugal Telecom ADR Portugal Telecommunications 2.5%
2. Misys PLC United Kingdom Technology 2.2%
3. France Telecom ADR France Telecommunications 1.8%
4. Novartis AG Switzerland Pharmaceutical 1.6%
5. ASM Lithography Netherlands Electronics 1.4%
Holding-New York
6. TT Tieto, B Shares Finland Technology 1.3%
7. Dassault Systemes ADR France Technology 1.2%
8. Aegon NV-New York Netherlands Insurance 1.1%
9. ASE Test Taiwan Electronics 1.1%
10. Barclays PLC United Kingdom Banking & Financial 1.1%
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ----------- ---------------
<C> <S> <C>
COMMON STOCKS (84.5%)
ARGENTINA (1.1%)
10,000 Banco Rio de La Plata ADR $ 130
14,616 IRSA Inversiones y Representaciones GDR 510
10,000 Telefonica de Argentina ADR 360
14,570 YPF SA ADR 461
---------------
1,461
---------------
AUSTRALIA (0.6%)
27,000 Commonwealth Bank of Australia 335
44,385 QBE Insurance Group 183
100,000 Telstra Corp. 265
---------------
783
---------------
AUSTRIA (0.2%)
2,300 OMV AG 280
---------------
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ----------- ---------------
<C> <S> <C>
BELGIUM (1.3%)
3,000 Barco Industries $ 640
8,060 Telinfo SA 652
100 UCB SA 402
---------------
1,694
---------------
BRAZIL (0.7%)
7,000 Telebras ADR 857
---------------
CHILE (0.2%)
17,000 Distribucion y Servicio ADR 259
---------------
COLOMBIA (0.5%)
34,600 Bell Canada International 623
---------------
CZECH REPUBLIC (0.0%)
3,650 Komercni Banka GDR 42(6)
---------------
DENMARK (2.1%)
15,000 Bang & Olufsen Holding, B Shares 968
8,840 Carli Gry International 525
7,000 NeuroSearch AS 577
</TABLE>
B-33
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
International Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ----------- ---------------
<C> <S> <C>
12,000 Olicom AS $ 326
5,000 Unidanmark AS, A Shares 363
---------------
2,759
---------------
FINLAND (4.5%)
16,400 Aamulehti Group II 694
77,600 Hansabank Ltd. 600
7,750 Hartwall AB 732
19,800 Pohjola Insurance Group, B Shares 935
7,500 Raisio Group 1,251
11,000 TT Tieto, B Shares 1,668
---------------
5,880
---------------
FRANCE (6.0%)
8,990 Chargeurs International 532
2,800 Compagnie Generale des Eaux 441
42,000 Dassault Systemes ADR 1,622
49,080 France Telecom ADR 2,377
23,000 Genset ADR 667
16,000 GrandVision 589
16,720 Lagardere SCA 608
6,000 Louis Dreyfus Citrus 207
7,000 Scor SA ADR 364
2,500 Unilog SA 516
---------------
7,923
---------------
GERMANY (1.9%)
800 Mannesmann AG 481
8,400 SGL Carbon 996
8,000 Siemens AG 492
900 Volkswagen AG 592
---------------
2,561
---------------
HONG KONG (3.3%)
500,000 ASM Pacific Technology 394
1,000,000 China Overseas Land & Investment 300
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ----------- ---------------
<C> <S> <C>
33,000 China Telecom ADR $ 1,184
1,140,000 Founder Hong Kong 876
2,410,000 Vanda Systems & Communication Holdings 872
200,000 VTech Holdings 697
---------------
4,323
---------------
HUNGARY (1.4%)
20,400 Matav RT ADR 528
15,850 OTP Bank GDR 725
1,950 Richter Gedeon GDR 215(6)
3,500 Richter Gedeon GDR 386
---------------
1,854
---------------
IRELAND (0.5%)
30,000 Adare Printing Group 311
20,000 Irish Permanent 279
---------------
590
---------------
ISRAEL (3.5%)
19,500 Formula Systems 594
20,000 NICE-Systems ADR 881
28,200 Orbotech, Ltd. 1,123
56,500 Orckit Communications 946
29,000 Tecnomatix Technologies 1,019
---------------
4,563
---------------
ITALY (2.3%)
189,380 Autogrill SpA 1,053
50,000 ENI SpA 292
175,000 Gruppo Ceramiche Ricchetti 324
45,975 IFI Istituto Finanziario 892
93,023 Telecom Italia 452
---------------
3,013
---------------
</TABLE>
B-34
<PAGE>
February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
International Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ----------- ---------------
<C> <S> <C>
JAPAN (6.7%)
5,600 Acom Co. $ 314
11,700 Advantest Corp. 829
15,000 Ariake Japan 445
10,200 Circle K Japan 503
19,000 Fuji Photo Film 746
10,010 Fujimi, Inc. 468
20,000 Konami Co. 431
7,700 Micronics Japan 214
26,000 Mitsumi Electric 388
5,500 Nintendo Corp. 506
19,000 Noritsu Koki 625
13,000 Sankyo Co. 349
8,700 SMC Corp. 759
12,800 Sony Corp. 1,157
10,000 Taisho Pharmaceutical 235
22,000 Takeda Chemical Industries 611
15,000 Terumo Corp. 212
---------------
8,792
---------------
KOREA (0.7%)
55,000 Kookmin Bank 350
3,400 S1 Corp. 523
---------------
873
---------------
MALAYSIA (0.3%)
450,000 IOI Corp. 380
---------------
MEXICO (2.7%)
1,198,000 Biper SA, B Shares 497
65,000 Cemex SA, B Shares 311
48,000 Coca-Cola Femsa ADR 918
14,645 Desc SA ADR 427
83,000 Fomento Economico Mexicano, B Shares 618
23,000 Panamerican Beverages, A Shares 838
---------------
3,609
---------------
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ----------- ---------------
<C> <S> <C>
NETHERLANDS (4.8%)
13,000 Aegon NV-New York $ 1,462
20,000 ASM Lithography Holding-New York 1,868
20,148 Getronics NV 801
12,000 Hunter Douglas 519
9,500 ING Groep 503
14,000 Koninklijke Nedlloyd Groep 327
6,500 Vendex International 410
14,000 VNU Verenigd Bezit 441
---------------
6,331
---------------
NORWAY (2.6%)
17,200 ContextVision AB 261
29,000 Merkantildata ASA 1,349
10,000 Petroleum Geo-Services ADR 567
18,000 Smedvig ASA ADR 378
33,400 Tomra Systems 829
---------------
3,384
---------------
PERU (0.4%)
300,000 Telefonica del Peru, B Shares 559
---------------
PHILIPPINES (0.1%)
1,003,500 International Container Terminal
Services 149
---------------
PORTUGAL (3.1%)
9,000 Banco Espirito Santo e Comercial de
Lisboa 365
10,000 Brisa-Auto Estradas de Portugal 471
62,000 Portugal Telecom ADR 3,263
---------------
4,099
---------------
</TABLE>
B-35
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
International Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ----------- ---------------
<C> <S> <C>
RUSSIA (2.8%)
30,000 Gazprom ADR $ 622(6)
16,800 Global TeleSystems Group 615
12,500 Lukoil Holding ADR 877
7,000 Tatneft ADR 795(6)
18,700 Vimpel-Communications ADR 743
---------------
3,652
---------------
SINGAPORE (1.7%)
424,000 Datacraft Asia 1,175
285,000 Venture Manufacturing 1,090
---------------
2,265
---------------
SOUTH AFRICA (2.4%)
45,000 DataTec Ltd. 539
120,276 Dimension Data Holdings 716
11,000 Investec Group 545
82,000 Persetel Q Data Holdings 662
150,000 Specialised Outsourcing 637
---------------
3,099
---------------
SPAIN (3.4%)
21,900 Banco Bilbao Vizcaya ADR 1,016
19,200 Banco Santander ADR 895
17,200 Endesa ADR 383
10,000 Tele Pizza 1,135
10,500 Telefonica de Espana ADR 1,087
---------------
4,516
---------------
SWEDEN (6.0%)
53,500 Atle AB 1,104
85,000 Bure Investment 1,249
30,000 Dahl International 484
18,400 Enator AB 379
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ----------- ---------------
<C> <S> <C>
7,000 Incentive AB, A Shares $ 672
22,600 L.M. Ericsson Telephone ADR 1,024
20,000 Ortivus AB, B Shares 735
16,400 Skandia Forsakrings 927
24,000 Skandinaviska Enskilda Banken, A Shares 343
15,000 Tornet Fastighets 217
35,000 WM-Data, B Shares 818
---------------
7,952
---------------
SWITZERLAND (2.6%)
595 Ares-Serono Group, B Shares 893
1,170 Novartis AG 2,136
1,100 Schweizerischer Bankverein 368
---------------
3,397
---------------
TAIWAN (1.1%)
28,800 ASE Test 1,462
---------------
TURKEY (0.2%)
16,000 Efes Sinai Yatirim Holding 264
---------------
UNITED KINGDOM (12.8%)
55,000 Alliance & Leicester 874
48,800 Barclays PLC 1,454
32,300 Bodycote International 545
3,200 British Airways ADR 304
9,209 British Petroleum ADR 761
68,125 Carlton Communications 479
49,600 Cobham PLC 715
30,000 EMAP PLC 545
67,200 Energis PLC 550
190,000 J.D. Wetherspoon 876
90,000 JBA Holdings 1,031
</TABLE>
B-36
<PAGE>
February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
International Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ----------- ---------------
<C> <S> <C>
65,314 Misys PLC $ 2,905
40,000 Sage Group 890
15,000 SEMA Group 483
25,000 Serco Group 476
490,000 SkyePharma PLC 525
50,000 Stagecoach Holdings 671
40,900 United Utilities 550
570,000 VideoLogic Group 498
58,600 Virgin Express Holdings ADR 1,231
100,000 WPP Group 532
---------------
16,895
---------------
TOTAL COMMON STOCKS (COST $74,977) 111,143
---------------
PREFERRED STOCKS (2.3%)
1,000 BMW AG, Germany 684
2,333 Fresenius AG, Germany 469
9,000 Nokia Corp. ADR, Finland 907
2,500 SAP AG, Germany 1,031
---------------
TOTAL PREFERRED STOCKS (COST $1,421) 3,091
---------------
<CAPTION>
Number Market
Of Value(1)
Contracts (000's omitted)
- ----------- ---------------
<C> <S> <C>
PUT OPTION CONTRACTS PURCHASED (0.0%)
20 ASM Lithography Holding, @ 75, expiring
4/18/98 (COST $11) $ 1
---------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount
- -----------
<C> <S> <C>
U.S. TREASURY SECURITIES (14.3%)
$18,860,000 U.S. Treasury Bills,
4.92% - 5.26%,
due 3/5/98 -
4/23/98 (COST $18,770) 18,770(4)
---------------
TOTAL INVESTMENTS (101.1%) (COST
$95,179) 133,005
Liabilities, less cash, receivables and
other assets [(1.1%)] (1,463)
---------------
TOTAL NET ASSETS (100.0%) $131,542
---------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
B-37
<PAGE>
SUMMARY SCHEDULE OF INVESTMENTS
BY INDUSTRY
Neuberger&Berman
- --------------------------------------------------------------------------------
International Portfolio
<TABLE>
<CAPTION>
Market
Value(1) Percentage
Industry (000's omitted) of Net Assets
- -------------------------------------------------- --------------- -------------
<S> <C> <C>
Technology $ 19,112 14.5%
Telecommunications 18,665 14.2%
U.S. Treasury Securities & Other Assets-Net 17,308 13.2%
Banking & Financial 12,490 9.5%
Electronics 12,282 9.3%
Pharmaceutical 7,465 5.7%
Food & Beverage 5,272 4.0%
Diversified 5,097 3.9%
Oil & Gas 5,034 3.8%
Insurance 3,871 2.9%
Restaurants 3,064 2.3%
Retailing 2,873 2.2%
Industrial Goods & Services 1,994 1.5%
Publishing & Broadcasting 1,992 1.5%
Manufacturing 1,544 1.2%
Airlines 1,535 1.2%
Transportation 1,469 1.1%
Media & Entertainment 1,417 1.1%
Building Materials 1,314 1.0%
Automotive 1,276 1.0%
Machinery & Equipment 1,240 0.9%
Textiles 1,057 0.8%
Real Estate 1,027 0.8%
Hospital Supplies 947 0.7%
Utilities 933 0.7%
Consumer Goods & Services 583 0.5%
Advertising 532 0.4%
Packing & Containers 149 0.1%
--------------- -----
TOTAL NET ASSETS $131,542 100.0%
--------------- -----
</TABLE>
B-38
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Manhattan Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. General Nutrition 2.7%
2. CKE Restaurants 2.6%
3. Staples, Inc. 2.3%
4. Chancellor Media 2.3%
5. TJX Cos. 2.1%
6. Promus Hotel 2.0%
7. Network Associates 1.9%
8. Finova Group 1.9%
9. AES Corp. 1.8%
10. Omnicare, Inc. 1.8%
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ----------- ---------------
<C> <S> <C>
COMMON STOCKS (95.7%)
BASIC MATERIALS (1.9%)
169,300 Cytec Industries $ 8,274
318,100 NS Group 4,533
---------------
12,807
---------------
CAPITAL GOODS (7.1%)
562,900 Corporate Express 5,699
131,000 HON INDUSTRIES 8,613
809,400 Philip Services 7,740
107,200 Sanmina Corp. 8,543
167,100 U.S. Filter 5,671
266,900 USA Waste Services 11,110
---------------
47,376
---------------
COMMUNICATIONS (4.3%)
131,600 Advanced Fibre Communications 3,940
97,700 CIENA Corp. 4,097
229,500 NEXTLINK Communications 6,914
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ----------- ---------------
<C> <S> <C>
286,300 RSL Communications $ 7,480
128,200 Saville Systems Ireland ADR 6,009
---------------
28,440
---------------
CONSUMER CYCLICALS (20.2%)
130,800 American Skiing 1,962
335,000 Authentic Fitness 7,035
230,900 Costco Cos. 11,285
88,300 Dollar Thrifty 1,766
447,200 General Nutrition 17,776
302,600 Hayes Lemmerz International 9,816
233,350 Outdoor Systems 6,957
278,742 Promus Hotel 13,449
240,500 Robert Half International 10,883
734,700 Staples, Inc. 15,520
210,400 Sylvan Learning Systems 9,639
166,700 Tiffany & Co. 7,835
366,600 TJX Cos. 14,160
251,100 Viking Office Products 5,524
---------------
133,607
---------------
CONSUMER STAPLES (11.6%)
134,400 Cardinal Health 11,004
341,300 Chancellor Media 15,273
166,600 Cheesecake Factory 5,373
398,420 CKE Restaurants 16,908
322,300 Comcast Corp. Class A Special 11,281
135,500 Estee Lauder 7,927
139,900 Suiza Foods 9,067
---------------
76,833
---------------
ENERGY (5.5%)
241,200 BJ Services 8,291
152,800 Cooper Cameron 8,194
313,900 Noble Drilling 8,907
</TABLE>
B-39
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Manhattan Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ----------- ---------------
<C> <S> <C>
233,800 Oryx Energy $ 5,947
296,200 Seagull Energy 4,999
---------------
36,338
---------------
FINANCIAL SERVICES (14.1%)
100,900 ACE Ltd. 9,976
173,100 Bear Stearns 8,071
153,500 Equitable Cos. 8,030
160,000 EXEL Ltd. 10,590
225,500 Finova Group 12,402
187,600 FIRSTPLUS Financial Group 6,191
111,900 GreenPoint Financial 8,309
133,800 Northern Trust 10,177
147,300 State Street 9,105
237,200 SunAmerica, Inc. 10,748
---------------
93,599
---------------
HEALTH CARE (9.3%)
148,100 Alternative Living Services 5,072
96,300 Biogen, Inc. 4,249
168,100 Elan Corp. ADR 10,433
314,500 Omnicare, Inc. 11,637
215,000 Quintiles Transnational 10,508
126,100 Rexall Sundown 4,666
71,300 Sofamor Danek Group 5,365
265,500 Watson Pharmaceuticals 9,525
---------------
61,455
---------------
TECHNOLOGY (18.4%)
201,900 Analog Devices 6,511
81,500 Applied Micro Circuits 1,528
127,400 BMC Software 9,746
220,400 Cadence Design Systems 7,700
109,400 CBT Group ADR 10,010
220,900 CHS Electronics 4,556
225,850 Citrix Systems 9,500
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ----------- ---------------
<C> <S> <C>
113,400 Equifax, Inc. $ 4,076
159,000 HBO & Co. 8,606
285,000 J.D. Edwards & Co. 9,405
136,300 KLA-Tencor 6,291
323,900 Network Appliance 9,555
198,000 Network Associates 12,796
229,000 Sterling Commerce 10,448
233,200 Teradyne, Inc. 11,004
---------------
121,732
---------------
TRANSPORTATION (1.5%)
346,500 Southwest Airlines 9,940
---------------
UTILITIES (1.8%)
277,800 AES Corp. 12,223
---------------
TOTAL COMMON STOCKS (COST $498,478) 634,350
---------------
<CAPTION>
Principal
Amount
- -----------
<C> <S> <C>
U.S. TREASURY SECURITIES (2.6%)
$17,440,000 U.S. Treasury Bills, 4.95%, due 3/26/98
(COST $17,380) 17,385
---------------
SHORT-TERM CORPORATE NOTES (3.8%)
24,880,000 General Electric Capital Corp., 5.50%,
due 3/2/98 (COST $24,880) 24,880(4)
---------------
TOTAL INVESTMENTS (102.1%) (COST
$540,738) 676,615(5)
Liabilities, less cash, receivables and
other assets [(2.1%)] (13,684)
---------------
TOTAL NET ASSETS (100.0%) $662,931
---------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
B-40
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Partners Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Sears, Roebuck 2.2%
2. Allstate Corp. 2.0%
3. CITICORP 2.0%
4. Unicom Corp. 1.9%
5. EXEL Ltd. 1.9%
6. Enron Corp. 1.9%
7. Chase Manhattan 1.8%
8. McDonald's Corp. 1.8%
9. duPont 1.8%
10. Crown Cork & Seal 1.8%
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ------------ ---------------
<C> <S> <C>
COMMON STOCKS (95.9%)
AEROSPACE (1.4%)
1,100,000 Boeing Co. $ 59,675
---------------
AIRLINES (2.5%)
1,103,300 Continental Airlines Class B 55,441
100,000 Delta Air Lines 11,306
1,400,000 Southwest Airlines 40,163
---------------
106,910
---------------
AUTO/TRUCK REPLACEMENT PARTS (3.1%)
1,012,500 AutoZone, Inc. 30,628
682,500 Cummins Engine 39,499
954,600 Goodyear Tire & Rubber 65,987
---------------
136,114
---------------
AUTOMOBILE MANUFACTURING (1.4%)
1,600,000 Chrysler Corp. 62,300
---------------
BANKING & FINANCIAL SERVICES (6.7%)
1,070,960 Banc One 60,509
628,000 Chase Manhattan 77,911
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ------------ ---------------
<C> <S> <C>
648,000 CITICORP $ 85,860
1,466,000 Countrywide Credit Industries 65,146
---------------
289,426
---------------
BUILDING, CONSTRUCTION & REFURNISHING (1.4%)
1,115,900 USG Corp. 60,956
---------------
CHEMICALS (3.0%)
1,250,000 duPont 76,641
1,357,600 Morton International 44,886
153,079 Rhone-Poulenc ADR 7,070
---------------
128,597
---------------
COMMUNICATIONS (2.3%)
844,400 BCE, Inc. 30,029
1,855,000 WorldCom Inc. 70,838
---------------
100,867
---------------
DIVERSIFIED (1.9%)
370,000 Minnesota Mining & Manufacturing 31,566
1,271,600 Tenneco Inc. 52,294
---------------
83,860
---------------
ELECTRONICS (2.7%)
1,172,900 KLA-Tencor 54,137
1,412,500 Raychem Corp. 61,355
17,500 Rockwell International 1,059
---------------
116,551
---------------
ENERGY (2.0%)
637,300 CalEnergy Co. 17,087
1,757,200 McDermott International 69,190
---------------
86,277
---------------
ENTERTAINMENT (2.2%)
1,982,900 Mirage Resorts 45,359
750,000 Time Warner 50,625
---------------
95,984
---------------
</TABLE>
B-41
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Partners Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ------------ ---------------
<C> <S> <C>
FINANCIAL SERVICES (1.1%)
1,174,400 SLM Holding $ 48,517
---------------
FOOD & TOBACCO (4.7%)
1,524,100 Anheuser-Busch 71,442
200,000 Nabisco Holdings 9,438
1,100,000 Philip Morris 47,781
2,083,500 UST, Inc. 73,834
---------------
202,495
---------------
GAS (1.7%)
1,554,800 Praxair, Inc. 74,339
---------------
HEALTH CARE (6.4%)
994,500 Amgen, Inc. 52,833
1,373,400 Biogen, Inc. 60,601
269,000 CIGNA Corp. 51,379
1,780,950 Columbia/HCA Healthcare 48,308
713,042 Novartis AG ADR 65,065
---------------
278,186
---------------
INDUSTRIAL GOODS & SERVICES (3.5%)
700,000 Corning Inc. 28,438
1,406,800 Crown Cork & Seal 75,967
1,205,000 Owens-Illinois 46,242
---------------
150,647
---------------
INSURANCE (11.2%)
634,000 Aetna Inc. 55,396
934,000 Allstate Corp. 87,095
284,200 Aon Corp. 16,999
1,245,800 EXEL Ltd. 82,456
1,373,550 Orion Capital 67,046
329,000 Progressive Corp. 38,123
713,800 St. Paul Cos. 63,261
1,361,000 Travelers Group 75,876
---------------
486,252
---------------
MEDIA (1.4%)
1,724,181 Comcast Corp. Class A Special 60,346
---------------
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ------------ ---------------
<C> <S> <C>
OIL & GAS (7.6%)
1,485,200 Cabot Corp. $ 52,353
76,000 Chevron Corp. 6,166
1,746,000 Enron Corp. 82,062
4,555,900 Gulf Canada Resources 26,766
1,343,000 Noble Affiliates 52,377
104,600 Schlumberger Ltd. 7,884
1,918,155 Union Pacific Resources Group 42,919
1,792,000 YPF SA ADR 56,672
---------------
327,199
---------------
PAPER & FOREST PRODUCTS (2.5%)
1,420,000 Mead Corp. 48,546
1,190,800 Weyerhaeuser Co. 59,466
---------------
108,012
---------------
PUBLISHING & BROADCASTING (1.3%)
968,500 Knight Ridder 54,478
---------------
RAILROADS (1.7%)
720,000 Burlington Northern Santa Fe 71,730
---------------
REAL ESTATE (2.1%)
3,426,100 Host Marriott 67,880
1,607,700 Security Capital U.S. Realty 22,347(6)
---------------
90,227
---------------
RESTAURANTS (1.8%)
1,418,500 McDonald's Corp. 77,663
---------------
RETAILING (1.2%)
984,200 Harcourt General 53,147
---------------
RETAILING & APPAREL (3.0%)
700,000 Costco Cos. 34,212
1,784,400 Sears, Roebuck 94,685
---------------
128,897
---------------
SPECIALTY CHEMICAL (0.9%)
979,300 Millipore Corp. 37,030
---------------
</TABLE>
B-42
<PAGE>
February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Partners Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ------------ ---------------
<C> <S> <C>
STEEL (1.7%)
2,176,000 AK Steel Holding $ 40,664
661,000 Nucor Corp. 34,041
---------------
74,705
---------------
TECHNOLOGY (5.0%)
705,000 First Data 23,970
1,400,000 Komag, Inc. 20,125
2,020,000 National Semiconductor 48,228
550,000 Quantum Corp. 13,819
1,125,500 Texas Instruments 65,138
774,800 Varian Associates 44,938
---------------
216,218
---------------
TRANSPORTATION (1.6%)
1,123,200 FDX Corp. 71,534
---------------
UTILITIES (4.9%)
2,426,000 Edison International 67,018
2,057,000 PG&E Corp. 62,096
2,600,000 Unicom Corp. 83,362
---------------
212,476
---------------
TOTAL COMMON STOCKS (COST $3,409,726) 4,151,615
---------------
PREFERRED STOCKS (0.0%)
566,700 Fresenius National Medical Care, Class D
(COST $108) 31
---------------
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ------------ ---------------
<C> <S> <C>
WARRANTS (0.0%)
44,356 Security Capital Group, Class B, Expire
9/18/98 (COST $0) $ 163
---------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount
- ------------
<C> <S> <C>
U.S. TREASURY SECURITIES (2.8%)
$120,000,000 U.S. Treasury Bills, 5.00% - 5.08%, due
4/2/98 & 4/9/98 (COST $119,432) 119,449
---------------
SHORT-TERM CORPORATE NOTES (1.3%)
57,420,000 General Electric Capital Corp., 5.50%,
due 3/2/98 (COST $57,420) 57,420(4)
---------------
TOTAL INVESTMENTS (100.0%) (COST
$3,586,686) 4,328,678(5)
Liabilities, less cash, receivables and
other assets [(0.0%)] (13)
---------------
TOTAL NET ASSETS (100.0%) $4,328,665
---------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
B-43
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Socially Responsive Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. A.G. Edwards 2.8%
2. Warner-Lambert 2.5%
3. ReliaStar Financial 2.4%
4. Hasbro, Inc. 2.3%
Southern New England
Telecommunications 2.3%
5.
6. Wal-Mart Stores 2.2%
7. WorldCom Inc. 2.2%
8. Intel Corp. 2.2%
9. Ambac Financial Group 2.2%
10. Cincinnati Milacron 2.1%
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ----------- ---------------
<C> <S> <C>
COMMON STOCKS (94.2%)
ADVERTISING (2.0%)
240,000 True North Communications $ 6,195
---------------
AUTOMOTIVE (1.8%)
100,000 Borg-Warner Automotive 5,863
---------------
BANKING (9.6%)
45,000 CITICORP 5,962
200,000 Dime Bancorp 6,100
105,000 Mercantile Bancorporation 5,841
90,000 National City 5,873
165,000 Southtrust Corp. 6,744
---------------
30,520
---------------
CHEMICALS (4.6%)
140,300 Dexter Corp. 5,700
60,000 Minerals Technologies 2,865
80,000 Perkin-Elmer 5,855
---------------
14,420
---------------
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ----------- ---------------
<C> <S> <C>
CONSUMER GOODS & SERVICES
(5.5%)
200,000 Hasbro, Inc. $ 7,262
120,000 Kimberly-Clark 6,682
40,000 Procter & Gamble 3,398
---------------
17,342
---------------
DIVERSIFIED (3.4%)
53,000 Minnesota Mining & Manufacturing 4,522
120,000 Tyco International 6,090
---------------
10,612
---------------
ENERGY (1.5%)
120,000 Noble Affiliates 4,680
---------------
FINANCIAL SERVICES (9.6%)
210,000 A.G. Edwards 8,833
68,400 ADVANTA Corp. Class A 1,612
36,480 ADVANTA Corp. Class B 802
128,000 Ambac Financial Group 6,816
100,000 Fannie Mae 6,381
105,000 Travelers Group 5,854
---------------
30,298
---------------
FOOD & BEVERAGE (1.7%)
100,000 McDonald's Corp. 5,475
---------------
FURNISHINGS (1.7%)
110,000 Leggett & Platt 5,521
---------------
HEALTH CARE (9.8%)
140,000 Biogen, Inc. 6,177
200,000 Invacare Corp. 4,588
80,000 Johnson & Johnson 6,040
100,000 SmithKline Beecham ADR 6,187
55,000 Warner-Lambert 8,044
---------------
31,036
---------------
</TABLE>
B-44
<PAGE>
February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Socially Responsive Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ----------- ---------------
<C> <S> <C>
INDUSTRIAL & COMMERCIAL PRODUCTS
(3.3%)
110,000 Corning Inc. $ 4,469
140,000 Raychem Corp. 6,081
---------------
10,550
---------------
INSURANCE (6.0%)
200,000 ESG Re 5,300
160,000 ReliaStar Financial 7,610
70,000 St. Paul Cos. 6,204
---------------
19,114
---------------
MACHINERY & EQUIPMENT (2.1%)
220,000 Cincinnati Milacron 6,792
---------------
OIL & GAS (1.2%)
220,000 Seagull Energy 3,713
---------------
OIL SERVICES (3.0%)
120,000 Dresser Industries 5,362
90,000 Tidewater Inc. 4,005
---------------
9,367
---------------
PUBLISHING & BROADCASTING (3.2%)
188,200 CMP Media 4,446
150,000 Valassis Communications 5,719
---------------
10,165
---------------
RECYCLING (1.0%)
187,500 IMCO Recycling 3,246
---------------
RETAIL STORES (2.1%)
125,000 Sears, Roebuck 6,633
---------------
RETAILING (3.7%)
100,000 Costco Cos. 4,887
150,000 Wal-Mart Stores 6,947
---------------
11,834
---------------
TECHNOLOGY (7.5%)
110,000 AMP, Inc. 4,861
91,000 Hewlett-Packard 6,097
76,000 Intel Corp. 6,816
330,000 Unisys Corp. 5,899
---------------
23,673
---------------
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ----------- ---------------
<C> <S> <C>
TELECOMMUNICATIONS (6.1%)
450,000 Metromedia International Group $ 5,119
114,000 Southern New England Telecommunications 7,196
180,000 WorldCom Inc. 6,874
---------------
19,189
---------------
UTILITIES, ELECTRIC & GAS (3.8%)
110,000 Cinergy Corp. 3,829
225,000 DPL Inc. 4,092
115,000 KeySpan Energy 4,090
---------------
12,011
---------------
TOTAL COMMON STOCKS (COST $209,454) 298,249
---------------
<CAPTION>
Principal
Amount
- -----------
<C> <S> <C>
U.S. TREASURY SECURITIES (4.7%)
$14,885,000 U.S. Treasury Bills, 4.97% & 5.245%, due
3/5/98 & 4/23/98 (COST $14,828) 14,828(4)
---------------
CERTIFICATES OF DEPOSIT (0.0%)
100,000 Self Help Credit Union, 5.20%, due
5/26/98 (COST $100) 100(4)
---------------
TOTAL INVESTMENTS (98.9%) (COST
$224,382) 313,177(5)
Cash, receivables and other assets, less
liabilities (1.1%) 3,386
---------------
TOTAL NET ASSETS (100.0%) $316,563
---------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
B-45
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS
February 28, 1998 (Unaudited)
- ----------------------------------------------------------------------
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 security prices 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 may be valued at cost which,
when combined with interest earned, approximates market value.
2) Affiliated issuer (see Note E of Notes to Financial Statements).
3) The following securities were held in escrow at February 28, 1998, to cover
outstanding call options written:
<TABLE>
<CAPTION>
MARKET VALUE PREMIUM
SECURITIES AND OF ON MARKET VALUE
NEUBERGER&BERMAN SHARES OPTIONS SECURITIES OPTIONS OF OPTIONS
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FOCUS PORTFOLIO 100,000 Applied Materials $ 3,681,250 $96,997 $ 50,000
March 1998 @ 40
GUARDIAN PORTFOLIO 300,000 Applied Materials $11,043,750 $347,238 $ 150,000
March 1998 @ 40
100,000 Compaq Computer $ 3,206,250 $234,492 $ 112,500
April 1998 @ 35
200,000 Compaq Computer $ 6,412,500 $818,853 $1,050,000
April 1998 @ 55
200,000 Fannie Mae $12,762,500 $693,977 $ 800,000
March 1998 @ 60
100,000 Fannie Mae $ 6,381,250 $546,981 $ 525,000
April 1998 @ 60
</TABLE>
4) At cost, which approximates market value.
B-46
<PAGE>
5) At February 28, 1998, 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 $1,069,699,000 $ 704,548,000 $ 18,653,000 $ 685,895,000
GENESIS PORTFOLIO 2,040,734,000 369,078,000 55,206,000 313,872,000
GUARDIAN PORTFOLIO 5,868,350,000 2,981,275,000 167,004,000 2,814,271,000
MANHATTAN PORTFOLIO 540,738,000 153,708,000 17,831,000 135,877,000
PARTNERS PORTFOLIO 3,587,977,000 789,866,000 49,165,000 740,701,000
SOCIALLY RESPONSIVE PORTFOLIO 224,409,000 91,974,000 3,206,000 88,768,000
</TABLE>
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 February 28, 1998,
these securities amounted to $2,948,000 or .1% of net assets for
Neuberger&Berman Genesis Portfolio, $18,112,000 or .2% of net assets for
Neuberger&Berman Guardian Portfolio, $1,674,000 or 1.3% of net assets for
Neuberger&Berman International Portfolio, and $22,347,000 or .5% of net
assets for Neuberger&Berman Partners Portfolio.
SEE NOTES TO FINANCIAL STATEMENTS
B-47
<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 $ 1,662,141 $ 2,307,756 $ 7,357,326
Non-controlled affiliated issuers 93,453 46,850 1,325,295
------------------------------------------------
1,755,594 2,354,606 8,682,621
Cash 10 4 8
Deferred organization costs (Note A) 4 1 11
Dividends and interest receivable 969 1,413 7,281
Prepaid expenses and other assets 24 13 138
Receivable for securities sold 29,134 448 161,519
Receivable for variation margin (Note A) -- -- --
------------------------------------------------
1,785,735 2,356,485 8,851,578
------------------------------------------------
LIABILITIES
Option contracts written, at market value
(Note A) 50 -- 2,638
Payable for collateral on securities loaned
(Note A) -- 3,300 35,000
Payable for forward foreign currency
exchange contracts purchased (Note C) -- -- --
Payable for securities purchased 21,098 21,758 36,888
Payable to investment manager (Note B) 623 1,193 2,885
Accrued expenses 78 107 343
------------------------------------------------
21,849 26,358 77,754
------------------------------------------------
NET ASSETS Applicable to Investors' Beneficial
Interests $ 1,763,886 $ 2,330,127 $ 8,773,824
------------------------------------------------
NET ASSETS consist of:
Paid-in capital $ 1,076,169 $ 2,016,255 $ 5,959,324
Net unrealized appreciation in value of
investment securities, option contracts,
financial futures contracts, translation
of assets and liabilities in foreign
currencies, and foreign currency contracts 687,717 313,872 2,814,500
------------------------------------------------
NET ASSETS $ 1,763,886 $ 2,330,127 $ 8,773,824
------------------------------------------------
*Cost of investments:
Unaffiliated issuers $ 990,099 $ 1,997,751 $ 4,901,488
Non-controlled affiliated issuers 77,824 42,983 966,637
------------------------------------------------
Total cost of investments $ 1,067,923 $ 2,040,734 $ 5,868,125
------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-48
<PAGE>
February 28, 1998 (Unaudited)
- ----------------------------------------------------------------------
<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 $ 133,005 $ 676,615 $ 4,328,678 $ 313,177
Non-controlled affiliated issuers -- -- -- --
-----------------------------------------------------------------
133,005 676,615 4,328,678 313,177
Cash 9 14 9 2
Deferred organization costs (Note A) 15 4 7 7
Dividends and interest receivable 102 187 4,944 379
Prepaid expenses and other assets 2 10 54 4
Receivable for securities sold 953 10,559 80,070 3,165
Receivable for variation margin (Note A) 55 -- -- --
-----------------------------------------------------------------
134,141 687,389 4,413,762 316,734
-----------------------------------------------------------------
LIABILITIES
Option contracts written, at market value
(Note A) -- -- -- --
Payable for collateral on securities loaned
(Note A) -- 17,094 784 --
Payable for forward foreign currency
exchange contracts purchased (Note C) 85 -- -- --
Payable for securities purchased 2,352 6,987 82,745 --
Payable to investment manager (Note B) 79 260 1,430 136
Accrued expenses 83 117 138 35
-----------------------------------------------------------------
2,599 24,458 85,097 171
-----------------------------------------------------------------
NET ASSETS Applicable to Investors' Beneficial
Interests $ 131,542 $ 662,931 $ 4,328,665 $ 316,563
-----------------------------------------------------------------
NET ASSETS consist of:
Paid-in capital $ 93,519 $ 527,054 $ 3,586,673 $ 227,768
Net unrealized appreciation in value of
investment securities, option contracts,
financial futures contracts, translation
of assets and liabilities in foreign
currencies, and foreign currency contracts 38,023 135,877 741,992 88,795
-----------------------------------------------------------------
NET ASSETS $ 131,542 $ 662,931 $ 4,328,665 $ 316,563
-----------------------------------------------------------------
*Cost of investments:
Unaffiliated issuers $ 95,179 $ 540,738 $ 3,586,686 $ 224,382
Non-controlled affiliated issuers -- -- -- --
-----------------------------------------------------------------
Total cost of investments $ 95,179 $ 540,738 $ 3,586,686 $ 224,382
-----------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-49
<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 $ 7,523 $ 9,369 $ 45,631
Dividend income -- non-controlled affiliated
issuers 288 -- 1,961
Interest income 747 4,530 16,550
Foreign taxes withheld (Note A) -- -- (341)
------------------------------------------
Total income 8,558 13,899 63,801
------------------------------------------
Expenses:
Investment management fee (Note B) 3,875 5,790 18,716
Accounting fees 5 5 5
Amortization of deferred organization and
initial offering expenses (Note A) 4 1 12
Auditing fees 22 12 26
Custodian fees (Note B) 146 179 639
Insurance expense 11 7 62
Legal fees 11 46 12
Trustees' fees and expenses 10 11 42
Miscellaneous -- 19 --
------------------------------------------
Total expenses 4,084 6,070 19,514
Fee waived by investment manager and/or
expenses reduced by custodian fee expense
offset arrangement (Note B) (1) (2) --
------------------------------------------
Total net expenses 4,083 6,068 19,514
------------------------------------------
Net investment income (loss) 4,475 7,831 44,287
------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investment
securities sold in unaffiliated issuers 32,299 24,505 216,558
Net realized gain (loss) on investment
securities sold in non-controlled affiliated
issuers 6,405 -- (1,853)
Net realized loss on option contracts (Note A) (3,764) -- (11,852)
Net realized loss on financial futures
contracts (Note A) -- -- --
Net realized gain on foreign currency
transactions (Note A) -- -- --
Change in net unrealized appreciation of
investment securities, financial futures
contracts, option contracts, translation of
assets and liabilities in foreign
currencies, and foreign currency contracts
(Note A) 103,490 41,592 219,142
------------------------------------------
Net gain on investments 138,430 66,097 421,995
------------------------------------------
Net increase in net assets resulting from
operations $ 142,905 $ 73,928 $ 466,282
------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-50
<PAGE>
For the Six Months Ended February 28, 1998 (Unaudited)
- ----------------------------------------------------------------------
<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 $ 314 $ 909 $ 23,952 $ 1,805
Dividend income -- non-controlled affiliated
issuers -- -- -- --
Interest income 272 877 4,422 332
Foreign taxes withheld (Note A) (37) (3) -- (5)
----------------------------------------------------------------
Total income 549 1,783 28,374 2,132
----------------------------------------------------------------
Expenses:
Investment management fee (Note B) 495 1,655 8,593 763
Accounting fees 5 5 5 5
Amortization of deferred organization and
initial offering expenses (Note A) 6 5 9 3
Auditing fees 16 25 23 12
Custodian fees (Note B) 102 85 304 51
Insurance expense 1 4 24 2
Legal fees 36 13 12 12
Trustees' fees and expenses 11 6 20 4
Miscellaneous 1 6 -- --
----------------------------------------------------------------
Total expenses 673 1,804 8,990 852
Fee waived by investment manager and/or
expenses reduced by custodian fee expense
offset arrangement (Note B) -- -- -- --
----------------------------------------------------------------
Total net expenses 673 1,804 8,990 852
----------------------------------------------------------------
Net investment income (loss) (124) (21) 19,384 1,280
----------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investment
securities sold in unaffiliated issuers (3,282) 21,812 319,848 14,653
Net realized gain (loss) on investment
securities sold in non-controlled affiliated
issuers -- -- -- --
Net realized loss on option contracts (Note A) (29) -- -- --
Net realized loss on financial futures
contracts (Note A) (1,016) -- -- --
Net realized gain on foreign currency
transactions (Note A) 204 -- -- --
Change in net unrealized appreciation of
investment securities, financial futures
contracts, option contracts, translation of
assets and liabilities in foreign
currencies, and foreign currency contracts
(Note A) 15,165 42,595 40,439 21,509
----------------------------------------------------------------
Net gain on investments 11,042 64,407 360,287 36,162
----------------------------------------------------------------
Net increase in net assets resulting from
operations $ 10,918 $ 64,386 $ 379,671 $ 37,442
----------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-51
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY MANAGERS
TRUST
FOCUS GENESIS
PORTFOLIO PORTFOLIO
Six Months Six Months
Ended Year Ended Year
February 28, Ended February 28, Ended
1998 August 31, 1998 August 31,
(000'S OMITTED) (UNAUDITED) 1997 (UNAUDITED) 1997
-------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 4,475 $ 7,119 $ 7,831 $ 1,728
Net realized gain (loss) on
investments 34,940 176,471 24,505 18,411
Change in net unrealized
appreciation of investments 103,490 298,137 41,592 211,059
-------------------------------------------------------------
Net increase in net assets resulting
from operations 142,905 481,727 73,928 231,198
-------------------------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 136,750 156,839 1,238,836 609,195
Reductions (89,210) (187,496) (66,288) (16,606)
-------------------------------------------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests 47,540 (30,657) 1,172,548 592,589
-------------------------------------------------------------
NET INCREASE IN NET ASSETS 190,445 451,070 1,246,476 823,787
NET ASSETS:
Beginning of period 1,573,441 1,122,371 1,083,651 259,864
-------------------------------------------------------------
End of period $ 1,763,886 $ 1,573,441 $ 2,330,127 $ 1,083,651
-------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-52
<PAGE>
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY MANAGERS GLOBAL MANAGERS EQUITY MANAGERS
TRUST TRUST TRUST
GUARDIAN INTERNATIONAL MANHATTAN
PORTFOLIO PORTFOLIO PORTFOLIO
Six Months Six Months Six Months
Ended Year Ended Year Ended Year
February 28, Ended February 28, Ended February 28, Ended
1998 August 31, 1998 August 31, 1998 August 31,
(UNAUDITED) 1997 (UNAUDITED) 1997 (UNAUDITED) 1997
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 44,287 $ 66,858 $ (124) $ 425 $ (21) $ 1,154
Net realized gain (loss) on
investments 202,853 871,150 (4,123) 2,368 21,812 180,525
Change in net unrealized
appreciation of investments 219,142 1,570,338 15,165 16,214 42,595 10,646
---------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 466,282 2,508,346 10,918 19,007 64,386 192,325
---------------------------------------------------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 285,502 592,646 31,124 61,548 24,255 41,417
Reductions (736,167) (575,327) (25,764) (22,274) (47,453) (179,425)
---------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests (450,665) 17,319 5,360 39,274 (23,198) (138,008)
---------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 15,617 2,525,665 16,278 58,281 41,188 54,317
NET ASSETS:
Beginning of period 8,758,207 6,232,542 115,264 56,983 621,743 567,426
---------------------------------------------------------------------------------------
End of period $ 8,773,824 $ 8,758,207 $ 131,542 $ 115,264 $ 662,931 $ 621,743
---------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-53
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS(Cont'd)
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY MANAGERS
TRUST
SOCIALLY
PARTNERS RESPONSIVE
PORTFOLIO PORTFOLIO
Six Months Six Months
Ended Year Ended Year
February 28, Ended February 28, Ended
1998 August 31, 1998 August 31,
(000'S OMITTED) (UNAUDITED) 1997 (UNAUDITED) 1997
-------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 19,384 $ 28,316 $ 1,280 $ 2,214
Net realized gain (loss) on
investments 319,848 531,668 14,653 11,478
Change in net unrealized
appreciation of investments 40,439 473,597 21,509 44,043
-------------------------------------------------------------
Net increase in net assets resulting
from operations 379,671 1,033,581 37,442 57,735
-------------------------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 477,524 715,909 32,087 57,455
Reductions (104,103) (173,520) (9,247) (17,394)
-------------------------------------------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests 373,421 542,389 22,840 40,061
-------------------------------------------------------------
NET INCREASE IN NET ASSETS 753,092 1,575,970 60,282 97,796
NET ASSETS:
Beginning of period 3,575,573 1,999,603 256,281 158,485
-------------------------------------------------------------
End of period $ 4,328,665 $ 3,575,573 $ 316,563 $ 256,281
-------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-54
<PAGE>
NOTES TO FINANCIAL STATEMENTS
February 28, 1998 (Unaudited)
- ----------------------------------------------------------------------
Equity Managers Trust and Global Managers Trust
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1) GENERAL: Neuberger&Berman Focus Portfolio ("Focus"), 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") 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"). Other regulated investment companies sponsored by
Neuberger&Berman Management Incorporated ("N&B 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 the dividends. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, including accretion of 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.
B-55
<PAGE>
5) FORWARD FOREIGN CURRENCY CONTRACTS: The Portfolios may enter into forward
foreign currency contracts ("contracts") in connection with planned
purchases or sales of securities 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 have no specific limitation on the percentage of
assets which may be committed to these types of contracts. 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 exchange rates supplied by an independent pricing
service.
6) TAXES: Managers Trust intends to comply with the requirements of the
Internal Revenue Code. Each Portfolio of Managers Trust and Global also
intends 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 February 28, 1998, the
unamortized balance of such expenses amounted to $3,668, $809, $10,741,
$15,012, $4,091, $7,440, and $6,989, 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 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
B-56
<PAGE>
an option is exercised, closed, or expired, 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 covered 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 six months ended February 28, 1998:
<TABLE>
<CAPTION>
VALUE WHEN
FOCUS NUMBER WRITTEN
- ------------------------------------------------------------
<S> <C> <C>
CONTRACTS OUTSTANDING 8/31/97 1,250 $ 1,985,185
CONTRACTS WRITTEN 2,500 654,978
CONTRACTS EXPIRED 0 0
CONTRACTS EXERCISED (1,000 ) (371,987)
CONTRACTS CLOSED (1,750 ) (2,171,179)
-----------------------
CONTRACTS OUTSTANDING 2/28/98 1,000 $ 96,997
-----------------------
</TABLE>
<TABLE>
<CAPTION>
VALUE WHEN
GUARDIAN NUMBER WRITTEN
- ------------------------------------------------------------------
<S> <C> <C>
CONTRACTS OUTSTANDING 8/31/97 7,997 $ 5,491,034
CONTRACTS WRITTEN 13,000 3,460,513
CONTRACTS EXPIRED 0 0
CONTRACTS EXERCISED (8,030) (5,376,565)
CONTRACTS CLOSED (3,967) (933,441)
-----------------------------
CONTRACTS OUTSTANDING 2/28/98 9,000 $ 2,641,541
-----------------------------
</TABLE>
11) FINANCIAL FUTURES CONTRACTS: International and Socially Responsive may buy
and sell financial futures contracts to hedge against a possible decline in
the value of its portfolio securities. International may also buy and sell
financial futures contracts for non-hedging purposes. 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 liquid 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 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.
B-57
<PAGE>
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 there may be an illiquid market and/or a
change in the value of the contract may not correlate with changes in the
value of the underlying securities.
For U.S. 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.
During the six months ended February 28, 1998, Socially Responsive did
not enter into any financial futures contracts.
At February 28, 1998, open positions in financial futures contracts for
International were as follows:
<TABLE>
<CAPTION>
UNREALIZED
EXPIRATION OPEN CONTRACTS POSITION APPRECIATION
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
March
1998 30 Hang Seng Futures Long $ 116,241
March
1998 5 Milan Futures Long 72,209
March
1998 6 Nikkei Futures Long 17,100
June
1998 7 Milan Futures Long 78,134
</TABLE>
At February 28, 1998, International had deposited $570,000 U.S. Treasury
Bills, 4.99% & 5.04%, due 4/9/98, in a segregated account to cover margin
requirements on open financial futures 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 general supervision of the Trusts' Boards 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, LLC
("Neuberger"), the Portfolios' principal broker and sub-adviser, 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
B-58
<PAGE>
the market value of the lent 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 six months ended February
28, 1998, Focus, Genesis, Guardian, Manhattan, Partners, and Socially
Responsive lent securities to Neuberger. At February 28, 1998, the value of
the securities loaned and the value of the collateral were as follows:
<TABLE>
<CAPTION>
VALUE OF
SECURITIES VALUE OF
LOANED COLLATERAL
- ---------------------------------------------------------------------
<S> <C> <C>
GENESIS $ 3,187,500 $ 3,300,000
GUARDIAN 33,937,500 35,000,000
MANHATTAN 16,613,094 17,094,400
PARTNERS 755,000 784,000
</TABLE>
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 -- MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES:
Each Portfolio retains N&B Management as its investment manager under a
Management Agreement. For such investment management services, each Portfolio
(except Genesis and International) pays N&B 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 N&B
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. Prior to
December 15, 1997, N&B Management had 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 December 15, 1997, the above waiver was terminated.
International pays N&B Management a fee for investment management services at
the annual rate of 0.85% of the first $250 million of that Portfolio's average
B-59
<PAGE>
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.
All of the capital stock of N&B Management is owned by individuals who are
also principals of Neuberger, a member firm of The New York Stock Exchange and
sub-adviser to each Portfolio. Neuberger is retained by N&B Management to
furnish it with investment recommendations and research information without
added cost to each Portfolio. Several individuals who are officers and/or
trustees of the Trusts are also principals of Neuberger and/or officers and/or
directors of N&B Management.
Each Portfolio has an expense offset arrangement in connection with its
custodian contract. The impact of this arrangement, reflected in the Statements
of Operations under the caption Custodian fees, was a reduction of $474, $2,002,
$378, $160, $241, $269, and $108, for Focus, Genesis, Guardian, International,
Manhattan, Partners, and Socially Responsive, respectively.
NOTE C -- SECURITIES TRANSACTIONS:
During the six months ended February 28, 1998, there were purchase and sale
transactions (excluding short-term securities, forward foreign currency
contracts, financial futures contracts, and option contracts) as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
- ---------------------------------------------------------------------
<S> <C> <C>
FOCUS $ 447,275,784 $ 489,078,798
GENESIS 1,056,190,516 124,203,828
GUARDIAN 1,776,344,276 1,849,371,286
INTERNATIONAL 23,647,151 25,889,630
MANHATTAN 267,343,782 273,721,632
PARTNERS 2,192,592,514 1,791,409,499
SOCIALLY RESPONSIVE 89,435,007 71,045,986
</TABLE>
At February 28, 1998, International had entered into various contracts to
deliver currencies at specified future dates. Open contracts were as follows:
<TABLE>
<CAPTION>
NET
CONTRACTS TO IN EXCHANGE SETTLEMENT UNREALIZED
SALES DELIVER FOR DATE VALUE DEPRECIATION
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Japanese Yen 130,260,000 $ 1,000,000 3/9/98 $ 1,034,600 $ 34,600
German Mark 1,810,200 1,000,000 5/26/98 1,003,254 3,254
Japanese Yen 128,330,000 1,000,000 7/15/98 1,038,083 38,083
Italian Lira 1,799,250,000 1,000,000 10/23/98 1,009,056 9,056
--------------- --------------- -------
$ 4,000,000 $ 4,084,993 $ 84,993
--------------- --------------- -------
</TABLE>
B-60
<PAGE>
During the six months ended February 28, 1998, there were brokerage
commissions on securities paid to Neuberger and other brokers as follows:
<TABLE>
<CAPTION>
NEUBERGER OTHER BROKERS TOTAL
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
FOCUS $ 467,982 $ 467,990 $ 935,972
GENESIS 803,599 869,152 1,672,751
GUARDIAN 2,136,335 1,745,085 3,881,420
INTERNATIONAL 2,462 119,308 121,770
MANHATTAN 264,094 266,094 530,188
PARTNERS 2,544,056 1,693,940 4,237,996
SOCIALLY RESPONSIVE 165,745 44,308 210,053
</TABLE>
In addition, Neuberger's share of the total interest income earned for the
six months ended February 28, 1998, from the collateralization of securities
loaned to or through Neuberger was $2,092, $93,415, $296,469, $95,451, $32,622,
and $10,833, for Focus, Genesis, Guardian, Manhattan, Partners, and Socially
Responsive, respectively.
NOTE D -- COMBINED LINE OF CREDIT:
At February 28, 1998, Genesis and Manhattan were two of the holders of an
unsecured $60,000,000 combined line of credit with State Street Bank and Trust
Company, to be used only for temporary or emergency purposes. Interest is
charged on borrowings under this agreement at the overnight Federal Funds Rate
plus .75% per annum. A facility fee of .1% per annum of the available line of
credit is charged, of which Genesis and Manhattan each has agreed to pay its pro
rata share, based on the ratio of its individual net assets to the net assets of
all the participants at the time the fee is due and payable. The fee is paid
quarterly in arrears, commencing June 30, 1997. No compensating balance is
required. Another investment company managed by N&B Management also participates
in the line of credit on the same terms. Because several investment companies
participate, there is no assurance that an individual Portfolio will have access
to the entire $60,000,000 at any particular time. Genesis and Manhattan had no
loans outstanding pursuant to this line of credit at February 28, 1998. During
the six months ended February 28, 1998, neither Genesis nor Manhattan utilized
this line of credit.
At February 28, 1998, International was one of two holders of a $20,000,000
combined uncommitted, secured line of credit with State Street Bank and Trust
Company to be used for temporary or emergency purposes or for leverage. Interest
is charged at LIBOR, or the overnight Federal Funds Rate, plus a spread to be
determined at the time of borrowing. Another investment company managed by N&B
Management also participates in the line of credit on the same terms. Because
another investment company participates, there is no assurance that an
individual Portfolio
B-61
<PAGE>
will have access to the entire $20,000,000 at any particular time. International
had no loans outstanding pursuant to this line of credit at February 28, 1998,
nor had it utilized this line of credit at any time prior to that date.
NOTE E -- INVESTMENTS IN NON-CONTROLLED AFFILIATES*:
FOCUS
<TABLE>
<CAPTION>
BALANCE OF GROSS BALANCE OF
SHARES HELD PURCHASES GROSS SALES SHARES HELD VALUE
AUGUST 31, AND AND FEBRUARY 28, FEBRUARY 28,
NAME OF ISSUER: 1997 ADDITIONS REDUCTIONS 1998 1998
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ADVANTA Corp. Class A 1,691,500 0 727,345 964,155 $22,717,902
DT Industries 1,045,000 0 15,000 1,030,000 36,307,500
Sierra Health Services 934,500 5,500 0 940,000 34,427,500
</TABLE>
GENESIS
<TABLE>
<CAPTION>
BALANCE OF GROSS BALANCE OF
SHARES HELD PURCHASES GROSS SALES SHARES HELD VALUE
AUGUST 31, AND AND FEBRUARY 28, FEBRUARY 28,
NAME OF ISSUER: 1997 ADDITIONS REDUCTIONS 1998 1998
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aviall Inc. 947,000 247,100 0 1,194,100 $17,165,188
Borland International 1,378,700 657,600 0 2,036,300 18,963,044
ElderTrust 0 335,000 0 335,000 6,071,875
Pameco Corp. 119,900 161,900 0 281,800 4,649,700
</TABLE>
GUARDIAN
<TABLE>
<CAPTION>
BALANCE OF GROSS BALANCE OF
SHARES HELD PURCHASES GROSS SALES SHARES HELD VALUE
AUGUST 31, AND AND FEBRUARY 28, FEBRUARY 28,
NAME OF ISSUER: 1997 ADDITIONS REDUCTIONS 1998 1998
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AGCO Corp. 4,737,400 622,800 0 5,360,200 1$50,755,625
Capital One Financial 4,445,000 0 65,000 4,380,000 294,281,250
Coltec Industries 4,893,900 0 0 4,893,900 127,547,269
Countrywide Credit
Industries 5,445,000 385,000 0 5,830,000 259,070,625
Foundation Health
Systems 9,065,800 909,100 0 9,974,900 276,180,044
PacifiCare Health
Systems Class B 1,327,790 138,000 0 1,465,790 91,611,875
UCAR International 3,404,400 575,000 325,000 3,654,400 125,848,400
Zeigler Coal Holding** 1,702,000 0 1,702,000 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.
**AT FEBRUARY 28, 1998, THE ISSUERS OF THESE SECURITIES WERE NO LONGER
AFFILIATED WITH THE PORTFOLIO.
B-62
<PAGE>
NOTE F -- UNAUDITED FINANCIAL INFORMATION:
The financial information included in this interim report is taken from the
records of each Portfolio without audit by independent accountants/auditors.
Annual reports contain audited financial statements.
B-63
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Focus Portfolio
<TABLE>
<CAPTION>
Six Months Period from
Ended August 2,
February 28, 1993(1)
1998 Year Ended August 31, to August 31,
(UNAUDITED) 1997 1996 1995 1994 1993
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(2) .51%(3) .53% .54% -- -- --
---------------------------------------------------------------------------
Net Expenses .51%(3) .53% .54% .57% .58% .58%(3)
---------------------------------------------------------------------------
Net Investment Income .56%(3) .54% 1.04% 1.05% 1.16% 1.46%(3)
---------------------------------------------------------------------------
Portfolio Turnover Rate 29% 63% 39% 36% 52% 4%
---------------------------------------------------------------------------
Average Commission Rate Paid $0.0536 $0.0555 $0.0578 -- -- --
---------------------------------------------------------------------------
Net Assets, End of Period (in millions) $1,763.9 $1,573.4 $1,122.4 $969.2 $645.0 $574.0
---------------------------------------------------------------------------
</TABLE>
1) The date investment operation commenced.
2) For fiscal periods ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements.
3) Annualized.
B-64
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Genesis Portfolio
<TABLE>
<CAPTION>
Period from
Six Months August 2,
Ended 1993(1)
February 28, to August
1998 Year Ended August 31, 31,
(UNAUDITED) 1997 1996 1995 1994 1993
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(2) .70%(3) .77% .85% -- -- --
-----------------------------------------------------------------------------
Net Expenses .70%(3)(4) .77%(4) .85%(4) .94%(4) .98% 1.07%(3)
-----------------------------------------------------------------------------
Net Investment Income .91%(3)(4) .32%(4) .27%(4) .25%(4) .18% .37%(3)
-----------------------------------------------------------------------------
Portfolio Turnover Rate 8% 18% 21% 37% 63% 3%
-----------------------------------------------------------------------------
Average Commission Rate Paid $0.0550 $0.0565 $0.0576 -- -- --
-----------------------------------------------------------------------------
Net Assets, End of Period (in millions) $2,330.1 $1,083.7 $259.9 $142.2 $138.6 $118.6
-----------------------------------------------------------------------------
</TABLE>
1) The date investment operations commenced.
2) For fiscal periods ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements. These ratios include the
management fee waiver.
3) Annualized.
4) Had N&B Management not waived a portion of the management fee, the annualized
ratios of net expenses and net investment income to average daily net assets
would have been:
<TABLE>
<CAPTION>
Six Months
Ended
February 28, Year Ended
1998 August 31,
(UNAUDITED) 1997 1996 1995
<S> <C> <C> <C> <C>
- ------------------------------------------
Net Expenses .75% .87% .95% .97%
Net Investment Income .86% .22% .17% .22%
</TABLE>
B-65
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Guardian Portfolio
<TABLE>
<CAPTION>
Six Months Period from
Ended August 2,
February 28, 1993(1)
1998 Year Ended August 31, to August 31,
(UNAUDITED) 1997 1996 1995 1994 1993
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(2) .46%(3) .46% .46% -- -- --
-------------------------------------------------------------------------
Net Expenses .46%(3) .46% .46% .48% .50% .51%(3)
-------------------------------------------------------------------------
Net Investment Income 1.03%(3) .89% 1.72% 1.72% 1.66% 2.45%(3)
-------------------------------------------------------------------------
Portfolio Turnover Rate 22% 50% 37% 26% 24% 3%
-------------------------------------------------------------------------
Average Commission Rate Paid $0.0541 $0.0538 $0.0580 -- -- --
-------------------------------------------------------------------------
Net Assets, End of Period (in millions) $8,773.8 $8,758.2 $6,232.5 $4,613.2 $2,480.3 $1,777.6
-------------------------------------------------------------------------
</TABLE>
1) The date investment operations commenced.
2) For fiscal periods ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements.
3) Annualized.
B-66
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
International Portfolio
<TABLE>
<CAPTION>
Six Months Period from
Ended June 15,
February 28, 1994(1)
1998 Year Ended August 31, to August 31,
(UNAUDITED) 1997 1996 1995 1994
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(2) 1.16%(3) 1.21% 1.37% -- --
----------------------------------------------------------------
Net Expenses 1.16%(3) 1.21% 1.37%(4) .70%(4) .70%(3)(4)
----------------------------------------------------------------
Net Investment Income (Loss) (.21%)(3) .47% .58%(4) 1.74%(4) 1.63%(3)(4)
----------------------------------------------------------------
Portfolio Turnover Rate 22% 37% 45% 41% 5%
----------------------------------------------------------------
Average Commission Rate Paid $0.0123 $0.0161 $0.0150 -- --
----------------------------------------------------------------
Net Assets, End of Period (in millions) $131.5 $115.3 $57.0 $26.4 $6.1
----------------------------------------------------------------
</TABLE>
1) The date investment operations commenced.
2) For fiscal periods ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements.
3) Annualized.
4) After reimbursement of expenses by the investment adviser. Had the investment
adviser not undertaken such action, the annualized ratios of net expenses and
net investment income (loss) to average daily net assets would have been:
<TABLE>
<CAPTION>
Period from
June 15,
1994
Year Ended to August
August 31, 31,
1996 1995 1994
<S> <C> <C> <C>
- ----------------------------------------------
Net Expenses 1.49% 2.24% 2.50%
Net Investment Income (Loss) .46% .20% (.17%)
</TABLE>
B-67
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Manhattan Portfolio
<TABLE>
<CAPTION>
Six Months Period from
Ended August 2,
February 28, 1993(1)
1998 Year Ended August 31, to August 31,
(UNAUDITED) 1997 1996 1995 1994 1993
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(2) .58%(3) .59% .58% -- -- --
-----------------------------------------------------------------------
Net Expenses .58%(3) .59% .58% .59% .59% .59%(3)
-----------------------------------------------------------------------
Net Investment Income (Loss) (.01%)(3) .20% .13% .42% .53% .55%(3)
-----------------------------------------------------------------------
Portfolio Turnover Rate 45% 89% 53% 44% 50% 3%
-----------------------------------------------------------------------
Average Commission Rate Paid $0.0580 $0.0573 $0.0373 -- -- --
-----------------------------------------------------------------------
Net Assets, End of Period (in millions) $662.9 $621.7 $567.4 $645.4 $521.7 $536.8
-----------------------------------------------------------------------
</TABLE>
1) The date investment operations commenced.
2) For fiscal periods ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements.
3) Annualized.
B-68
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Partners Portfolio
<TABLE>
<CAPTION>
Six Months Period from
Ended August 2,
February 28, 1993(1)
1998 Year Ended August 31, to August 31,
(UNAUDITED) 1997 1996 1995 1994 1993
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(2) .47%(3) .48% .51% -- -- --
-------------------------------------------------------------------------
Net Expenses .47%(3) .48% .51% .53% .54% .54%(3)
-------------------------------------------------------------------------
Net Investment Income 1.02%(3) 1.05% 1.26% 1.13% .75% 1.19%(3)
-------------------------------------------------------------------------
Portfolio Turnover Rate 49% 77% 96% 98% 75% 8%
-------------------------------------------------------------------------
Average Commission Rate Paid $0.0548 $0.0522 $0.0494 -- -- --
-------------------------------------------------------------------------
Net Assets, End of Period (in millions) $4,328.7 $3,575.6 $1,999.6 $1,623.5 $1,340.3 $1,182.1
-------------------------------------------------------------------------
</TABLE>
1) The date investment operations commenced.
2) For fiscal periods ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements.
3) Annualized.
B-69
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Socially Responsive Portfolio
<TABLE>
<CAPTION>
Six Months
Ended Period from
February March 14,
28, 1994(1)
1998 Year Ended August 31, to August 31,
(UNAUDITED) 1997 1996 1995 1994
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(2) .61%(3) .63% .65% -- --
-----------------------------------------------------------
Net Expenses .61%(3) .63% .65% .68% .69%(3)
-----------------------------------------------------------
Net Investment Income .92%(3) 1.08% 1.02% 1.18% 1.33%(3)
-----------------------------------------------------------
Portfolio Turnover Rate 26% 51% 53% 58% 14%
-----------------------------------------------------------
Average Commission Rate Paid $0.0550 $0.0568 $0.0587 -- --
-----------------------------------------------------------
Net Assets, End of Period (in millions) $316.6 $256.3 $158.5 $96.7 $70.7
-----------------------------------------------------------
</TABLE>
1) The date investment operations commenced.
2) For fiscal periods ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements.
3) Annualized.
B-70
<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, LLC
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
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- 1998 Neuberger&Berman Management Inc.
C-1
<PAGE>
OFFICERS AND TRUSTEES
EQUITY MANAGERS TRUST/
NEUBERGER&BERMAN EQUITY FUNDS
Stanley Egener GLOBAL MANAGERS TRUST
CHAIRMAN OF THE BOARD AND TRUSTEE Stanley Egener
Lawrence Zicklin CHAIRMAN OF THE BOARD AND TRUSTEE
PRESIDENT AND TRUSTEE Lawrence Zicklin
Faith Colish PRESIDENT
TRUSTEE Howard A. Mileaf
Howard A. Mileaf TRUSTEE
TRUSTEE John T. Patterson, Jr.
Edward I. O'Brien TRUSTEE
TRUSTEE John P. Rosenthal
John T. Patterson, Jr. TRUSTEE
TRUSTEE Daniel J. Sullivan
John P. Rosenthal VICE PRESIDENT
TRUSTEE Michael J. Weiner
Cornelius T. Ryan VICE PRESIDENT
TRUSTEE Richard Russell
Gustave H. Shubert TREASURER
TRUSTEE Claudia A. Brandon
Daniel J. Sullivan SECRETARY
VICE PRESIDENT Barbara DiGiorgio
Michael J. Weiner ASSISTANT TREASURER
VICE PRESIDENT Jacqueline Henning
Richard Russell ASSISTANT TREASURER
TREASURER Celeste Wischerth
Claudia A. Brandon ASSISTANT TREASURER
SECRETARY Stacy Cooper-Shugrue
Barbara DiGiorgio ASSISTANT SECRETARY
ASSISTANT TREASURER Lenore Joan McCabe
Celeste Wischerth ASSISTANT SECRETARY
ASSISTANT TREASURER C. Carl Randolph
Stacy Cooper-Shugrue ASSISTANT SECRETARY
ASSISTANT SECRETARY
C. Carl Randolph
ASSISTANT SECRETARY
C-2
<PAGE>
Neuberger&Berman Management Inc.-Registered Trademark-
605 THIRD AVENUE 2ND FLOOR
NEW YORK, NY 10158-0180
SHAREHOLDER SERVICES
800-877-9700
INSTITUTIONAL SERVICES
800-366-6264
WWW.NBFUNDS.COM
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 information 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.
[LOGO] PRINTED ON RECYCLED PAPER NBESAR020298
KIRKPATRICK & LOCKHART LLP
1800 MASSACHUSETTS AVENUE, N.W.
2ND FLOOR
WASHINGTON, D.C. 10036-1800
TELEPHONE (202) 778-9000
FACSIMILE (202) 778-9100
May 4, 1998
VIA EDGAR
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Neuberger & Berman Equity Funds:
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
1933 Act File No. 2-11357
1940 Act File No. 811-582
-------------------------
Dear Sir or Madam:
Transmitted herewith for filing is the Semi-Annual Report to
Shareholders of the above-referenced series of Neuberger & Berman Equity Funds
for the period ended February 28, 1998. This filing is being made pursuant to
Section 30(b)(2) of the Investment Company Act of 1940, as amended, and Rule
30b2-1 thereunder.
If you should have any questions regarding this filing, please contact
the undersigned.
Sincerely,
/s/ Lori L. Schneider
--------------------------
Lori L. Schneider
Enclosures
