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NEUBERGER BERMAN
Neuberger Berman
Equity Funds
SEMI-ANNUAL REPORT
FEBRUARY 28, 1999
Focus Fund
Genesis Fund
Guardian Fund
International Fund
Manhattan Fund
Millennium Fund
Partners Fund
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
Millennium Fund A-20
Partners Fund A-23
Socially Responsive Fund A-26
PERFORMANCE HIGHLIGHTS B-1
FINANCIAL STATEMENTS B-4
FINANCIAL HIGHLIGHTS
PER SHARE DATA
Focus Fund B-16
Genesis Fund B-17
Guardian Fund B-18
International Fund B-19
Manhattan Fund B-20
Millennium Fund B-21
Partners Fund B-22
Socially Responsive Fund B-23
THE PORTFOLIOS
SCHEDULE OF INVESTMENTS
TOP TEN EQUITY HOLDINGS
Focus Portfolio C-1
Genesis Portfolio C-3
Guardian Portfolio C-7
International Portfolio C-10
Manhattan Portfolio C-15
Millennium Portfolio C-18
Partners Portfolio C-20
Socially Responsive Portfolio C-23
FINANCIAL STATEMENTS C-28
FINANCIAL HIGHLIGHTS
Focus Portfolio C-46
Genesis Portfolio C-47
Guardian Portfolio C-48
International Portfolio C-49
Manhattan Portfolio C-50
Millennium Portfolio C-51
Partners Portfolio C-52
Socially Responsive Portfolio C-53
DIRECTORY D-1
OFFICERS AND TRUSTEES D-2
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A-3
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CHAIRMAN'S LETTER April 16, 1999
Dear Fellow Shareholder,
The first half of fiscal 1999 was the best of times and worst of times for
equities investors. In September 1998, the first month of this reporting period,
global economic and financial market turmoil sent stocks plummeting. Then, with
three waves of interest rate cuts, Federal Reserve Chairman Alan Greenspan
seemed to make the market's problems disappear and stocks surged back to record
highs. However, not all stocks participated equally in the market recovery.
Growth stocks performed significantly better than value stocks across the market
capitalization spectrum, and large-cap stocks, in general, outperformed mid- and
small-cap stocks. These short-term performance trends are reflected in the
varying returns achieved by our different funds this time period.
No one knows what the market has in store for us in the future or which
investment style or capitalization sector will be most productive. That's why
we've introduced our new small-cap growth fund, Neuberger Berman Millennium
Fund, a move that will help round out Neuberger Berman's product line to offer a
complete menu of quality products in virtually all equity style and
capitalization categories. We believe prudent investors should diversify, rather
than put all or most of their eggs in whatever style/capitalization portfolio
has produced the most generous recent returns. That means making and maintaining
positions in current laggards as well as current leaders.
In closing, I urge shareholders to consider an investment in Neuberger
Berman's new Millennium Fund. Many industry professionals were surprised we
chose to introduce a small-cap growth fund after years of lagging performance in
this sector. However, at Neuberger Berman, we are dedicated to offering quality
funds managed by talented and experienced investors, not rushing to market with
the latest "hot" product. To that end, we are very excited about Millennium and
are pleased to welcome the fund into our family of investment products.
Sincerely,
/s/ STANLEY EGENER
Stanley Egener
Chairman of the Board
Neuberger Berman Equity Funds
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PORTFOLIO COMMENTARY
Neuberger Berman
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Focus Fund
PORTFOLIO MANAGER KENT SIMONS EMPLOYS A BOTTOM-UP STOCK SELECTION PROCESS
SEEKING HIGH-QUALITY COMPANIES TRADING AT DISCOUNTED VALUATIONS. IDEALLY,
PORTFOLIO HOLDINGS HAVE ABOVE MARKET AVERAGE EARNINGS GROWTH AND TRADE AT
BELOW MARKET AVERAGE PRICE/EARNINGS MULTIPLES. AS THE NAME IMPLIES, THE
FOCUS PORTFOLIO IS MORE CONCENTRATED THAN OUR OTHER EQUITY FUNDS,
GENERALLY HOLDING 60 STOCKS OR LESS, WITH THE TEN LARGEST POSITIONS
REPRESENTING A SIGNIFICANT PORTION OF PORTFOLIO ASSETS.
For the six-month period ended February 28, 1999, Focus Fund-Registered
Trademark- gained 36.30% versus the Standard & Poor's 500 Index's 30.32% return
(see page B-1 for average annual total returns through March 31, 1999).*
The same industry groups and many of the same stocks that restrained
performance in the early part of last year rebounded during the six-month
reporting period and posted strong gains -- rewarding our patience and, once
again, validating our thesis that owning high-quality companies at discounted
valuations is a productive long-term investment strategy. Our two largest
industry group commitments, financial services and technology, which represent a
total of approximately 36% of the portfolio assets, performed well during the
past six months. In fact, all five of the portfolio's largest holdings are
within these two groups, and, on average, they appreciated more than 40%.
Within financial services, the portfolio's holdings rebounded after
experiencing severe pressure following the Russian default in August, an event
that Wall Street quickly characterized as a crisis. Aided considerably by three
interest rate cuts by the Federal Reserve last fall, this "crisis" did not, in
fact, materialize, and the stocks returned to their prior, and in our opinion,
more normal valuations. It is worth noting that during the turmoil in the
financial markets last summer, the actual businesses of our financial holdings
held up quite well. One of our basic assumptions when we established our core
positions in Citigroup, Chase Manhattan and Morgan Stanley Dean Witter was that
over time, we believed these firms would increase their market share because of
their product breadth, financial strength and superior management. This, in
fact, proved to be the case during last summer's turmoil.
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Focus Fund (Cont'd)
Moreover, the long-term case for our positions in financial services remains
very much intact. Demographics in the United States point to increased savings
and investment as baby boomers prepare for retirement. In addition, we expect to
see accelerated investment banking activity overseas as the rest of the world
follows the U.S. model and more corporate assets come under public ownership. To
make the most of an opportunity, we believe a firm needs to have an
institutional and retail presence, a global reach, and a strong balance sheet.
Our core holdings -- Citigroup, Chase and Morgan Stanley -- meet these criteria.
Our technology holdings posted good gains during this reporting period -- in
aggregate, up more than 70%. These attractive returns did not come from high
multiple market favorites like Intel, Microsoft, Dell Computer or Lucent
Technologies -- all great companies, but well out of the value range. Our gains
came from high-quality, but previously out-of-favor companies like Applied
Materials and KLA-Tencor, both of which are semi-conductor equipment
manufacturers, as well as Texas Instruments, a leading maker of digital service
providers (DSP), and software companies Oracle and Rational Software.
Of course, we did have some disappointments during this reporting period, both
on a negative return and opportunity-lost basis. The stock price of Sierra
Health Services, one of our health care positions, declined during this period.
In hindsight, it appears our sale of Merrill Lynch during this period was
premature. In our opinion, Morgan Stanley Dean Witter emerged from the third
quarter 1998 global financial debacle looking healthier than Merrill, which had
suffered substantial trading losses. While Merrill was laying off workers,
Morgan Stanley Dean Witter was using its excess capital to repurchase shares.
Since our earnings projections for both companies were virtually identical and
Merrill was trading up to 20% higher than Morgan Stanley Dean Witter, we decided
to sell Merrill and add to our Morgan Stanley Dean Witter position.
In closing, I want to stress a few things about our approach and focused
portfolios in general. First, we take substantial positions in
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Focus Fund (Cont'd)
industry groups, not because we are making top-down macro-economic judgments,
but rather because that is where we find the most compelling investment values.
Secondly, although over the short term, our more concentrated portfolio will
most likely be more volatile than a more widely diversified fund, this does not
necessarily reflect volatile operating results for our portfolio companies. In
the recently released Morgan Stanley Dean Witter 1998 Annual Report, the
Chairman expresses his puzzlement over the wide swings in the company's stock
price during a period in which revenues and profits held steady. Unfortunately,
short-term stock price volatility is something we may all have to endure. Longer
term, we believe quality companies that can consistently grow revenues and
earnings will provide good returns. Finally, contrary to today's conventional
wisdom, you don't always have to pay up for great companies. The fact that our
portfolio has a price/earnings ratio lower than the S&P 500 with above market
average projected earnings growth (by Institutional Brokers Estimate System),
demonstrates that you can buy some very good companies at reasonable valuations.
Sincerely,
/s/ KENT SIMONS
Kent Simons
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. ("NBMI") 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 Focus Portfolio makes up more than a small
fraction of the Portfolio's total assets.
While the value-oriented approach is intended to limit risks, the
Portfolio -- with its concentration in sectors -- may be more greatly affected
by any single economic, political or regulatory development than a more
diversified mutual fund.
Please remember that past performance is not indicative 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 ended February 28, 1999, Genesis Fund gained 7.35%
versus the Russell 2000-Registered Trademark- Index's 16.79% return (see page
B-1 for average annual total returns through March 31, 1999).*
The Genesis portfolio's lagging performance, relative to its benchmark, is
largely explained by the small-cap market's strong bias to growth during this
reporting period. To further illustrate this point, we'd like to point out that
the Russell 2000-Registered Trademark-Growth Index gained 29.28% over the last
six months, compared to the Russell 2000-Registered Trademark- Value Index's
considerably more modest 4.93% return.*
Three Federal Reserve interest rate cuts last fall seemed to inspire small-cap
investors to throw caution to the wind and bid up the most attractive stocks in
the small-cap growth arena, most notably the already richly-valued Internet
group. The more mundane, but in our view, much more attractively priced
small-cap stocks, languished. In general, our holdings posted relatively good
earnings gains -- meeting or exceeding our expectations. However, investors just
didn't seem to notice or care. Only time will tell whether paying sky-high
multiples to earnings -- in those instances where earnings even exist -- will
continue to be productive. Our feeling is that many of the most sensational
small-cap performers during this reporting period will have a very hard time
meeting investors' increasingly grandiose expectations. If earnings realities
fail to live up to current fantasies, small-cap speculators will likely get
burned.
On an absolute and relative basis, our best returns during this reporting
period came from the consumer staples sector, highlighted by strong gains for
Brinker International, Church & Dwight, and First Brands, which was acquired by
Clorox. The First Brands/Clorox deal illustrates a trend in the market that we
believe will ultimately breathe more life into undervalued small-cap stocks.
These two companies are
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Genesis Fund (Cont'd)
in similar businesses and have comparable earnings growth rates. Clorox, which
at the time of the acquisition was trading at around 33 times earnings, was able
to use its richly-valued stock to pay a 100% premium for First Brands, which
prior to the announcement of the deal, was trading at just 13 times earnings. If
you combine the earnings of both companies, the deal was particularly attractive
for Clorox, even before factoring in very large potential cost savings. We've
since sold our position in Clorox and taken profits; however, we believe going
forward, more and more richly-valued, large-cap companies will use their stock
as currency to buy smaller undervalued companies within their own industries.
This should eventually lead to increased investor recognition for small-cap
stocks.
As a group, our consumer cyclical investments also performed well, with stocks
like 99 Cents Only Stores, Black Box Corp, and St. John Knits all posting strong
gains. In addition, our financial holdings, in particular, small regional banks,
consumer credit companies, and insurers, contributed positive returns for the
portfolio.
On the negative side, our energy investments continued to disappoint during
the six-month period. However, we are still overweighted in energy, primarily in
small oil services companies, because we believe we see light at the end of what
has been a dark tunnel for these stocks. In our view, oil prices are creeping
higher and non-OPEC supply is being depleted. In addition, we believe global
demand should pick up as Asian economies recover. When combined, these factors
seem to us to point to renewed drilling activity and a potential profit recovery
for small oil services companies. As a result, we see a lot of upside potential
for these severely depressed stocks.
While our over-weighting in small utilities companies helped us during the
sharp market decline in September, since then, our utilities holdings have been
ho-hum performers. That's because small-cap investors have tended to focus on
faster-growth industries. We continue to believe the utilities sector presents a
great store of value, and are optimistic that the opportunities in this area
will surface via accelerating cost driven consolidation in this newly
deregulated industry. Our "low voltage" technology investments have also
languished. In general, these portfolio companies have legitimate high teens/low
twenties earnings
A-9
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Genesis Fund (Cont'd)
growth rates. But, that hasn't been exciting enough for tech investors, who have
been willing to pay up for companies with faster earnings growth potential.
Like most small-cap investors, we are somewhat dismayed that much more
richly-valued, large-cap stocks continue to outperform what we view as much
better fundamental bargains in the small-cap sector. It is not unusual for
small-cap stocks to underperform large-caps for extended periods of time. These
periods have been followed by briefer periods in which small caps
outperformed -- often by a wide margin. While it is impossible to predict
precisely when this performance tide will turn, we believe it tends to happen
when everyone least expects it to. Who would have known at the end of 1990 -- a
terrible year for small-cap stocks -- that they would come roaring back and
outperform large caps by nearly 50% over the next three years? We will remain
patient and dedicated to uncovering quality small-cap companies that are trading
at reasonable valuations. When small-cap stocks reassert themselves, we believe
the Genesis portfolio is well positioned to benefit.
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 consisting
of securities of the 2,000 issuers having the smallest capitalization in the
Russell 3000-Registered Trademark- Index, representing approximately 11% of the
Russell 3000 total market capitalization. The smallest company's market
capitalization is roughly $222 million. The Russell 2000-Registered Trademark-
Growth Index measures the performance of those Russell 2000-Registered
Trademark- Index companies with higher price-to-book ratios and higher
forecasted growth values. The Russell 2000-Registered Trademark- Value Index
measures the performance of those Russell 2000-Registered Trademark- Index
companies with lower price-to-book ratios and lower forecasted growth values.
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. ("NBMI")
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. 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.
THE RISKS INVOLVED IN SEEKING CAPITAL APPRECIATION FROM INVESTMENTS PRIMARILY
IN COMPANIES WITH SMALL MARKET CAPITALIZATIONS ARE SET FORTH IN THE PROSPECTUS.
Please remember that past performance is not indicative of future results.
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PORTFOLIO COMMENTARY
Neuberger Berman
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Guardian Fund
PORTFOLIO CO-MANAGERS KEVIN RISEN AND RICK WHITE 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' OVERREACTION TO REAL OR PERCEIVED PROBLEMS.
For the six-month period ended February 28, 1999, Guardian Fund gained 24.59%
versus the Russell 1000-Registered Trademark- Value Index's 22.53% advance and
the Standard & Poor's 500 Index's 30.32% return (see page B-1 for average annual
total returns through March 31, 1999).*
We are pleased to report that the Guardian portfolio materially outperformed
the Russell 1000 Value Index in first half fiscal 1999. We achieved such
competitive results versus the S&P 500 during a period in which growth continued
to outperform value. In fact, for the five-month period beginning at the end of
September (a particularly difficult month for value stocks and our portfolio),
we actually outperformed the S&P 500.
A lot of the good things, and some of the not so good things, that happened to
the portfolio in first half fiscal 1999 can be traced back to the events of late
summer/early fall 1998. Ongoing economic turmoil in Southeast Asia, the Russian
debt default, and the well-publicized problems of highly leveraged hedge funds
culminated in a swift and merciless market decline in September. The basic
materials, capital goods, energy, financial services, and technology sectors all
fell sharply in response to global economic and financial market turmoil. During
this chaos, we were in the process of restructuring the portfolio -- both in
terms of choosing the stocks we wanted to keep and those we wanted to discard,
as well as taking steps to further diversify the portfolio. We didn't escape the
September market massacre unscathed, but, in our opinion, the decisions we made
during those trying times have generally worked in our favor.
In the technology sector, we elected to own shares in out-of-favor
semi-conductor equipment manufacturers like Applied Materials,
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Guardian Fund (Cont'd)
KLA-Tencor, and Teradyne, all of which posted 100% plus gains during this
six-month reporting period. We also stayed with Micron Technology, Sun
Microsystems and Texas Instruments, companies that rewarded our patience with
large gains. In addition, we've gradually reduced positions in some of the big
winners in the portfolio and have recently been moving into larger, more
diversified technology companies like IBM and Xerox. These companies are less
cyclical because they serve many different industries, and in our opinion, they
have better valuation support at current prices.
In the financial services sector, our best returns in this reporting period
came from two money center banks, Citigroup and Chase Manhattan, as well as
Morgan Stanley Dean Witter, a blue chip broker/ asset manager. While the bulk of
Citigroup's positive performance surfaced after the merger with Travelers Group,
in our view, all of these companies were substantially undervalued after sharp
declines in late summer/early fall 1998. Because these stocks are no longer
quite as inexpensive, we have been reducing our positions there. Instead, we
have been gravitating to domestic financial services franchises that we find
more fundamentally appealing, primarily because their fortunes are not directly
linked to the relative health of the global capital and credit markets. Such
examples include banks, like Banc One and Wells Fargo, whose operations are
concentrated in the U.S., and consumer finance companies such as Associates
First Capital Corp., which we expect to benefit from ongoing strength in
consumer spending in the U.S.
Although the portfolio has been underweighted in communications services and
energy, both groups contributed to six-month positive returns. In addition to
reaping positive returns from our holdings in MCI Worldcom, the portfolio got a
big lift when AirTouch agreed to be acquired by Vodaphone. Recently, we have
established a small position in AT&T. We would like to own more
telecommunications stocks, but we won't stretch our value parameters to do so.
Our decision back in September to trade out of oil services companies and into
larger, more financially robust international oils helped us generate attractive
returns in a sector that posted only modest gains.
On the other hand, several stocks we chose to hold have not recovered much of
the ground lost in September. For example, our basic materials and capital goods
investments have languished. With global
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Guardian Fund (Cont'd)
economic weakness continuing to restrain commodities prices and capital goods
spending, we are taking another hard look at stocks in these sectors. We think
these stocks have valuation support at current prices, but we would like to see
more evidence of a potential turnaround in the form of firming commodities
prices and increased capital goods spending. In addition, we were disappointed
in our airline holdings and believe we may have already seen peak earnings for
this cycle. However, we think the industry is now somewhat less cyclical than it
was in the past and with current airline valuations very depressed, we are
inclined to remain patient with our current positions.
In closing, we are pleased with the portfolio's impressive performance
compared to the Russell 1000 Value Index and competitive performance relative to
the S&P 500. We believe most of the decisions we made in September 1998,
following a very difficult period for the portfolio, have worked in
shareholders' favor. Looking ahead, we believe Guardian has the potential to
generate more consistent returns with less risk and lower volatility.
Sincerely,
/s/ KEVIN RISEN /s/ ALLAN R. WHITE III
Kevin Risen and Rick White
PORTFOLIO CO-MANAGERS
*The S&P 500 Index is an unmanaged index generally considered to be
representative of stock market activity. The Russell 1000-Registered Trademark-
Index measures the performance of the 1,000 largest companies in the Russell
3000-Registered Trademark- Index (which measures the performance of the 3,000
largest U.S. companies based on total market capitalization). The Russell 1000
Index represents approximately 89% of the total market capitalization of the
Russell 3000 Index. The Russell 1000-Registered Trademark- Value Index measures
the performance of those Russell 1000 companies with lower price-to-book ratios
and lower forecasted growth values. 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. ("NBMI") 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. 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.
Please remember that past performance is not indicative of future results.
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PORTFOLIO COMMENTARY
Neuberger Berman
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International Fund
PORTFOLIO MANAGER VALERIE CHANG USES BOTH GROWTH AND VALUE INVESTMENT
STYLES IN HER APPROACH TO INTERNATIONAL EQUITIES MARKETS. THE BOTTOM-UP
STOCK SELECTION PROCESS IS RESEARCH INTENSIVE, FEATURING FREQUENT MEETINGS
WITH CORPORATE MANAGEMENTS 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. SHE ALSO LOOKS AT THE WORLD FROM A
TOP-DOWN PERSPECTIVE, WHICH INVOLVES ANALYZING THE POLITICAL, SOCIAL,
ECONOMIC, AND STOCK MARKET ENVIRONMENTS OF COUNTRIES AROUND THE GLOBE
BEFORE SELECTING THOSE INTERNATIONAL INVESTMENT ARENAS BELIEVED TO OFFER
THE BEST FUNDAMENTAL VALUE.
For the fiscal six-month period ended February 28, 1999, International Fund
advanced 7.94%, versus EAFE-Registered Trademark- Index's 14.00% gain over the
same period (see page B-1 for average annual total returns as of March 31,
1999).*
The international investment arena continues to present new challenges. At the
time we issued our last report, back in September, we were in the midst of a
second wave of market upset in the emerging regions, ignited by the Russian
financial crisis that began in mid-August. This wave of turmoil continued into
the early part of October, when we began to see signs of stability. Shortly
thereafter, during the fourth quarter of 1998, the Fund posted very strong
absolute performance, evidenced by a 16.43% return. Year-to-date 1999, the fund
gained 0.95% vs. a 2.63% decline for the MSCI EAFE.
The Fund was nearly fully invested as of the end of February with
approximately 4% of assets held in cash. The most notable allocation change from
the period ending August 31, 1998 was our increased exposure to the Pacific
Basin region. We now have approximately 20% of the portfolio allocated to this
region with investments primarily in the markets of Japan, Hong Kong, and
Singapore, up from a negligible position six months ago. This strategy has
proved profitable: Japan and Singapore in particular have been among our top
performing markets over the period.
Our European exposure has remained stable with some minor adjustments to the
component countries, as has our exposure to emerging markets. Our commitment to
Latin America remains very low, and in fact, is down nearly 1.0% from a 3.2%
weighting at the end of August. It is our intention to take a cautious stance
toward Latin America as we
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International Fund (Cont'd)
monitor the developments with Brazil's economic reform, the success or failure
of which will continue to be a barometer for the region. Finally, we initiated a
small position in Bermuda with the purchase of Global Crossing, a
telecommunications company that provides global undersea fiber optic
communication networks. On an absolute return basis, Global Crossing was one of
our best-performing securities for the period.
Our top five performing stocks for the period were Overseas Union Bank
(Singapore), Specialised Outsourcing (South Africa), Sonere Group (Finland),
Nokia (Finland) and Computer Configuration Holdings (South Africa). Overseas
Union Bank and Specialised Outsourcing are both names in the banking and
financial services sector, which was the second largest sector weighting for the
fund at the end of February. Sonere Group and Nokia are both telecommunications
companies while Computer Configuration Holdings is a technology company. There
were no significant changes made to our sector diversification weightings over
the period. The portfolio continues to favor the Banking & Finance,
Telecommunications, Technology, and Pharmaceuticals sectors.
The Fund's largest positions at the end of the period, as measured by
percentage of total net assets, were France Telecom (France), Nokia (Finland),
Aegon (Netherlands), Tieto Corp. (Finland), and Takeda Chemicals (Japan). France
Telecom and Nokia are telecommunications companies. France Telecom is primarily
a fixed-line provider while Nokia, a consistent performer and long-term holding,
specializes in cellular communications manufacturing equipment and provides
access lines. Aegon is a Netherlands-based international insurance group, Tieto
Corp. manufactures and sells computer software, and Takeda Chemicals is a global
chemical and pharmaceuticals company.
On the other hand, the Fund did experience some missed opportunities during
the reporting period due to the fact that we had lowered our exposures to the
emerging market regions of Eastern Europe, South Africa and Latin America during
the third quarter. These areas rebounded strongly during our reporting period
and the Fund would have benefited handsomely had we had more significant
commitments. In addition, while our performance lagged its benchmark, it's
important for investors to remember that the portfolio seeks to identify
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International Fund (Cont'd)
opportunities across all capitalization ranges and geographic regions, including
emerging markets, while the EAFE-Registered Trademark-Index focuses primarily on
large-cap companies in developed markets.
In closing, while we have a more optimistic outlook now than six months ago,
we remain cautious about unfulfilled economic reforms needed in Brazil and
Russia and the subsequent impact these markets can have on their respective
regions. Within the Pacific Basin, significant reforms are taking place
throughout the component countries. We plan to continue monitoring the
individual developments of those Pacific Basin countries in an effort to capture
investment opportunities created by these steps toward reform. As always, we
remain flexible in our regional allocation as market conditions warrant and will
continue to invest selectively on a security-by-security basis.
Sincerely,
/s/ VALERIE CHANG
Valerie Chang
PORTFOLIO MANAGER
*The EAFE-Registered Trademark- Index, also known as the Morgan Stanley Capital
International Europe, Australasia, Far East Index, is an unmanaged index of
over 1,000 foreign stock prices. The index is 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. ("NBMI") and
include reinvestment of all dividends and capital gain distributions. The
Portfolio may invest in many securities not included in the above-described
index.
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.
INVESTING IN FOREIGN SECURITIES INVOLVES GREATER RISKS THAN INVESTING IN
SECURITIES OF U.S. ISSUERS, INCLUDING CURRENCY FLUCTUATIONS, INTEREST RATES AND
POLITICAL CONDITIONS. IN AN ATTEMPT TO REDUCE OVERALL VOLATILITY, NBMI
DIVERSIFIES THE PORTFOLIO HOLDINGS OVER A WIDE ARRAY OF COUNTRIES AND
INDIVIDUAL STOCKS.
Please remember that past performance is not indicative of future results.
A-16
<PAGE>
PORTFOLIO COMMENTARY
Neuberger Berman
- ----------------------------------------------------------------------
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 USE A COMPUTER TO
SCREEN THE MID-CAP GROWTH STOCK UNIVERSE TO ISOLATE STOCKS WHOSE MOST
RECENT EARNINGS HAVE BEAT 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, 1999, Manhattan Fund-Registered
Trademark- gained 27.50% versus the Russell Midcap-TM- Growth Index's 33.27%
return (see page B-1 for average annual total returns through March 31, 1999).*
We are pleased with the portfolio's progress in what has been an uneven and
volatile mid-cap stock market. During this six-month reporting period, our
consumer cyclical investments performed quite well, with specialty retailers
Abercrombie & Fitch and Linens 'n Things posting strong gains. Value retailers
also reported strong gains, with companies like Costco, Staples, and TJX leading
the pack. However, the real star of this industry group category was Amazon.com,
which continued to surpass analysts' projections for revenue and earnings
growth.
Our healthcare investments also buoyed returns. Biogen was the biggest winner
as Avonex, its new drug for the treatment of multiple sclerosis, quickly reached
blockbuster status. As a group, our financial holdings performed well with
broker/dealer Donaldson Lufkin & Jenrette, asset manager Northern Trust, and
State Street, one of the leading custodian/transfer agents for the mutual fund
industry, each gaining more than 40%.
On the other hand, while returns from our technology holdings were generous on
an absolute basis (in aggregate up 26.8%), they were less impressive than more
aggressive funds that really cashed in on the Internet stock frenzy. Our
approach to the Internet group has been conservative -- we focused on companies
we believed had legitimate earnings growth prospects and staying power. As a
result, we have been
A-17
<PAGE>
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Manhattan Fund (Cont'd)
modestly over-weighted in the group and our selections have been great
performers, with Infoseek, Yahoo!, and lesser known companies like VERITAS
SOFTWARE and Network Appliance, all gaining more than 100% in this six-month
reporting period. We did miss out on some spectacular short-term gains in some
other ".com" companies which, in our opinion, had more sizzle than substance.
However, we can envision these gains evaporating quickly if reality fails to
live up to the hype surrounding these companies. And, true to our sell
discipline, technology holdings like CBT Group, J.D. Edwards and SmarTalk were
sold during the period because they failed to meet our earnings expectations.
In addition, some of our investments in capital goods companies were
disappointing. Although our capital goods holdings, as a group, posted modest
gains, earnings continued to be restrained by weak global demand and a lack of
pricing flexibility.
In terms of indices, the Russell Midcap Growth Index outperformed the S&P 500
Index during the six-month reporting period. However, most of the mid-cap
sector's outperformance occurred during a spirited, but relatively short-lived
rally in November/December 1998. During the first two months of 1999, the S&P
outperformed once again, leaving mid-cap investors wondering just what it takes
to keep up with the large-cap competition.
We recently conducted a survey of earnings growth and valuations in these two
capitalization sectors. In 1998, S&P 500 earnings advanced 2%. By comparison,
Russell Midcap Index and Russell Midcap Growth Index earnings grew by 8% and
25%, respectively. If you look at earnings growth for these three indices on an
unweighted basis (earnings from all component stocks given equal weighting in
calculating the indices' earnings growth rate), the discrepancy was even
greater. Within that context, S&P 500 earnings were flat, and Russell Midcap and
Russell Midcap Growth earnings grew by 13% and 36%, respectively.
The results of this survey may seem confusing. In view of these earnings
dynamics, it would appear that the two mid-cap indices should have outperformed
the large-cap benchmark in 1998. In fact, just the opposite occurred -- they
materially lagged the S&P 500. The reason may be that large-cap valuations have
been growing much faster than earnings, which has resulted in even better
relative value in the mid-cap
A-18
<PAGE>
- ----------------------------------------------------------------------
Manhattan Fund (Cont'd)
sector. Presently, on a price/sales, price/earnings, and P/E relative to
earnings growth rate basis, mid-cap stocks are at or near historical lows versus
large-cap stocks. The question then becomes if, and when, this will change.
One indication of value in the mid-cap sector is increasing merger and
acquisition activities. Over the last six months, four of our portfolio
holdings, Ascend Communications, Sofamor Danek Group, SunAmerica, Inc., and HBO
& Company, have been acquired. A fifth, Level One Communications, is in the
midst of negotiating an acquisition by Intel. It seems that while the investment
public has yet to fully acknowledge value in the mid-cap sector, business buyers
are steadily taking advantage of bargains.
In closing, the Manhattan portfolio continued to reward shareholders in the
first few months of 1999. We can't predict what will happen over the next six
months, but the portfolio has the critical fundamental
characteristics -- superior earnings growth potential and reasonable valuations
relative to projected earnings growth rates -- that we believe has the potential
to translate into excellent long-term performance.
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-TM- 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 US 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.
("NBMI") 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.
Please remember that past performance is not indicative of future results.
A-19
<PAGE>
PORTFOLIO COMMENTARY
Neuberger Berman
- ----------------------------------------------------------------------
Millennium Fund
PORTFOLIO CO-MANAGERS MICHAEL MALOUF AND JENNIFER SILVER BELIEVE BIG
INVESTMENT RETURNS OFTEN COME IN SMALL PACKAGES. IN THEIR SEARCH FOR
SMALL-CAP COMPANIES, THE TEAM USES A THREE-STEP STOCK SELECTION PROCESS.
FIRST, THEY IDENTIFY SMALL-CAP STOCKS GROWING EARNINGS BY AT LEAST 15%
ANNUALLY AND THAT, IN THEIR JUDGEMENT, EXHIBIT THE CAPABILITY TO
CONSISTENTLY SURPASS CONSENSUS EARNINGS ESTIMATES. THEN, THEY EVALUATE
FINANCIAL STRENGTH AND MANAGEMENT DEPTH AND TALENT. FINALLY, THEY FAVOR
STOCKS TRADING AT REASONABLE VALUATIONS RELATIVE TO THEIR INDUSTRY PEER
GROUP AND THE MARKET.
Since its inception on October 20, 1998 through February 28, 1999, Millennium
Fund gained 48.80%, versus gains of 21.27% and 11.73% for the Russell
2000-Registered Trademark- Growth Index and Russell 2000-Registered Trademark-
Indexes, respectively.*
Technology, one of the portfolio's largest industry group concentrations, was
responsible for much of this strong advance. Big winners included Internet
portal Infoseek and Micromuse, a company that specializes in monitoring traffic
on corporate data networks. Infoseek's new GO Network helped propel the stock to
a more than 150% gain during this reporting period while Micromuse's stock
nearly doubled during the same time period. As can be expected in a group in
which earnings disappointments are quickly and often severely punished, we had
some technology stock losers as well. Software company BEA Systems "missed its
numbers," and true to our dispassionate sell discipline, the stock was quickly
eliminated from the portfolio.
In addition, our holdings in Quanta Services and SFX Entertainment posted
strong gains. Quanta is a telecommunications company that outsources maintenance
and construction projects for utilities and SFX Entertainment, a consumer
cyclical holding, is the most dominant company in the outdoor concert arena
business.
On the other hand, several of our healthcare services investments were
disappointments. One example is Province Healthcare, an owner and operator of
rural hospitals. While Province's earnings met our expectations, like most
hospital companies, the stock was hurt by concern that increased federal
regulatory scrutiny may have a negative impact on future earnings.
Since this is our first opportunity to address our shareholders, we want to
provide some detail on our investment methodology. In selecting stocks for the
portfolio, we employ a three-part process, which begins with an effort to
identify small companies with favorable growth
A-20
<PAGE>
- ----------------------------------------------------------------------
Millennium Fund (Cont'd)
characteristics and the realistic potential to consistently surpass consensus
growth expectations. We are looking at growth over three time horizons: the
near-term, defined as the next three months; intermediate-term, defined as the
next three calendar quarters; and the long-term, defined as the next three
years. In the near-term, since we like target companies to hit the portfolio
running, we favor companies whose earnings we believe with a high degree of
certainty will at least meet next quarter's expectations. In the
intermediate-term, we look out over the next three quarters and evaluate the
potential for positive earnings surprises. Finally, in the long-term, we adjust
our research telescopes to look three years into the future to try to determine
whether investment candidates can sustain above average growth. Here is where
taking a hard look at a target company's markets and longer-term business
strategies is particularly critical. We don't want to own shooting
stars -- companies whose earnings flame out after spectacular, but short-lived,
advances.
The next step is to evaluate management and balance sheets. We like to see
management depth rather than just one person wearing all the critical management
hats. We are looking for proactive management that we believe can anticipate and
respond quickly to changes in the marketplace. We like to see managers' own
substantial stakes in their own firms so that their interests are consistent
with shareholders' -- namely to grow the value of their investment. We also like
to find an independent board of directors, which has the experience to help
management, and if and when necessary, challenge management decisions. We want
to see strong balance sheets because rapidly growing companies often need a lot
of money to grow. We prefer seeing this money come from internally generated
cash flow rather than excessive debt or secondary equities offerings that can
dilute the holdings of existing shareholders.
The third step in this process is that we don't want to overpay for good
growth companies. To accomplish that, we realize that we need more than one
standard of relative value. For more mature small companies in more developed
industries, we look at price/earnings ratios relative to their peers and the
market. In some instances, the price/cash flow ratio is a better barometer of
relative value. In the case of companies in new, explosive growth businesses,
like the Internet, we may
A-21
<PAGE>
- ----------------------------------------------------------------------
Millennium Fund (Cont'd)
focus on price/sales ratios. Whatever fundamental yardstick we use to measure
value, the continual goal is to buy small, quality growth companies at
reasonable valuations.
Finally, we attempt to limit risk in the portfolio through broad
diversification. The portfolio will generally own 60-80 individual securities in
at least 12 different industry groups. No single position will exceed 5% of
total portfolio assets.
In closing, we are delighted that Millennium has gotten off to such a fast
start. Our confidence in this asset class and our disciplined approach is
demonstrated by the fact that we have put a significant percentage of our
personal net worths into the portfolio. We believe introducing this kind of a
product at this time underscores Neuberger Berman's commitment to quality
investment products rather than marketing whatever may be "hot" at the time.
Sincerely,
/s/ MICHAEL MALOUF /s/ JENNIFER SILVER
Michael Malouf and Jennifer Silver
PORTFOLIO CO-MANAGERS
*These are cumulative returns and are not annualized. The cumulative returns for
Neuberger Berman Millennium Fund-SM- and the Russell 2000-Registered Trademark-
Growth Index are from October 20, 1998, which is the inception of the Fund,
through February 28, 1999. Because this is a new fund, short-term results may
not be duplicated. Average net assets of the Portfolio for its first four
months were approximately $16.2 million. It may be easier to achieve higher
returns in a small fund than in a larger fund. Neuberger Berman Management Inc.
("NBMI") currently absorbs certain expenses of the Fund. This arrangement is
subject to change, and without this arrangement, the Fund's returns would have
been less. Total return includes reinvestment of dividends and distributions.
Past performance does not guarantee future results and shares when redeemed may
be worth more or less than original cost.
*The Russell 2000-Registered Trademark- Index is an unmanaged index consisting
of the securities of the 2,000 issuers having the smallest capitalization the
Russell 3000-Registered Trademark- Index, representing approximately 11% of the
Russell 3000 total market capitalization. The smallest company's market
capitalization is roughly $222 million. The Russell 2000 Growth Index measures
the performance of those Russell 2000 Index companies with higher price-to-book
ratios and higher forecasted growth values. 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
NBMI 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.
Millennium Portfolio is invested in a wide array of stocks and no single holding
makes up more than a small fraction of the Portfolio's total assets.
THE RISKS INVOLVED IN SEEKING CAPITAL APPRECIATION FROM INVESTMENTS PRIMARILY IN
COMPANIES WITH SMALL MARKET CAPITALIZATION ARE SET FORTH IN THE PROSPECTUS.
A-22
<PAGE>
PORTFOLIO COMMENTARY
Neuberger Berman
- ----------------------------------------------------------------------
Partners Fund
PORTFOLIO CO-MANAGERS MICHAEL KASSEN, ROBERT GENDELMAN AND S. BASU MULLICK
FOCUS ON OUT-OF-FAVOR LARGE-CAP STOCKS AND MID-SIZED COMPANIES LESS WIDELY
FOLLOWED BY WALL STREET ANALYSTS. THEY ARE PARTICULARLY PARTIAL TO 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 ended February 28, 1999, Partners Fund returned
20.25% versus the Russell 1000-Registered Trademark- Value Index's 22.53%
advance and the S&P 500 Index's 30.32% gain (see page B-1 for average annual
total returns through March 31, 1999).*
During the first half of fiscal 1999, our technology investments performed
particularly well -- in aggregate, up more than 60%. We achieved these strong
returns without owning high price/earnings multiple market darlings like Intel,
Microsoft, Dell Computer, Lucent, or any of the sizzling Internet stocks. Our
focus on high-quality companies like Texas Instruments, Hewlett-Packard and
Northern Telecom, whose multiples are below the market average, validated our
belief that buying quality technology companies at opportunistic prices can
generate attractive risk-adjusted returns.
Our healthcare positions also performed quite well. Once again, we did not own
the glamour stocks like Merck and Pfizer. Instead, we held smaller, and in our
opinion, much more reasonably valued drug companies like ALZA, Biogen, and
Baxter International. Each of these companies has new drug introductions we
believe will have a very favorable impact on future results.
In the consumer staples sector, we did well with our holdings in
Anheuser-Busch (beer), McDonald's (fast foods), Tricon Global Restaurants
(pizza, fried chicken and tacos), and Nabisco Holdings (cookies). Kimberly Clark
(diapers) and MediaOne Group (cellular telephone and cable television) also
rewarded us.
A-23
<PAGE>
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Partners Fund (Cont'd)
Our financial holdings were mixed. In the banking group, Bank One, Chase
Manhattan and Citigroup performed well, while our holdings in BankBoston
disappointed. And even as our holdings in Morgan Stanley Dean Witter, a
broker/asset manager, soared, we had flat returns in Countrywide Credit, a
mortgage finance company. In general, our larger-capitalization financial
holdings performed materially better than our mid-cap positions.
In aggregate, the portfolio's capital goods, transportation, and energy
holdings declined over this reporting period. Capital goods companies continue
to suffer the aftereffects of the Asian economic flu -- slack demand and no
pricing flexibility. We believe our current capital goods investments represent
high quality and great value. However, over the short-to-intermediate term, we
believe our patience will likely continue to be tested. The same can be said for
our energy holdings, which have suffered as oil prices have remained depressed.
We are not anticipating a sharp rise in oil prices in the immediate future.
However, we are sufficiently contrarian to challenge the current consensus that
oil prices will stay at current levels indefinitely.
Our airline holdings, primarily Continental Airlines, declined during this
six-month reporting period. Wall Street seems to believe we have seen peak
earnings in this cycle and consequently, price/earnings multiples have
contracted. We believe airline earnings will level off, but not plunge the way
they have during previous down cycles.
Within utilities, The Williams Companies, the only big winner among our
otherwise disappointing holdings there, is really two companies -- a large gas
pipeline and a telecommunications network. Several years ago, Williams used its
steady cash flow from the pipeline business to build a telecommunications
network (WilTel), which it eventually sold at a handsome profit to Worldcom (now
MCI Worldcom). It is doing it all over again, laying an advanced fiber optic
network along its 32,000 miles of gas pipeline. Recently, SBC Communications,
(formerly Southwestern Bell), has contracted for the use of this new fiber optic
network and taken a 10% stake in the business. We believe the combined value of
the gas pipeline and telecommunications network is a bit higher than $40 per
share -- above Williams' $37 per share price at the end of this reporting
period. Williams has announced
A-24
<PAGE>
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Partners Fund (Cont'd)
it will be spinning off a portion of this new communications network business to
the public. We believe this should help surface value and perhaps foreshadow a
more complete restructuring. We reserve the right to change our opinion on
Williams Companies should circumstances warrant it. But, right now, we think it
has excellent upside potential.
In the first two months of 1999, growth stocks continued to outperform value
stocks and large-cap stocks continued to outperform smaller companies. However,
our stock picking discipline produced generous absolute returns in this uneven
market. We believe our portfolio represents quality and value -- the
cornerstones of a prudent and productive investment program.
Sincerely,
/s/ ROBERT GENDELMAN /s/ MICHAEL KASSEN /s/ S. BASU MULLICK
Robert Gendelman, Michael Kassen, and S. Basu Mullick,
PORTFOLIO CO-MANAGERS
*The S&P 500 Index is an unmanaged index generally considered to be
representative of stock market activity. The Russell 1000-Registered Trademark-
Index measures the performance of the 1,000 largest companies in the Russell
3000-Registered Trademark- Index (which measures the performance of the 3,000
largest U.S. companies based on total market capitalization). The Russell 1000
Index represents approximately 89% of the total market capitalization of the
Russell 3000 Index. The Russell 1000-Registered Trademark- Value Index measures
the performance of those Russell 1000 companies with lower price-to-book ratios
and lower forecasted growth values. 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. ("NBMI") 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. 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.
Please remember that past performance is not indicative of future results.
A-25
<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 APPEAR
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 ended February 28, 1999, Socially Responsive Fund
gained 24.75% versus the Standard & Poor's 500 Index's 30.32% return (see page
B-1 for average annual total returns through March 31, 1999).*
In a period in which growth investing once again materially outperformed value
investing, we credit our stock selection for the portfolio's competitive returns
versus the growth stock dominated S&P 500. Our technology, healthcare, and
consumer staples holdings excelled -- in aggregate, returning approximately 56%,
40% and 39%, respectively. Big winners in the technology sector included Analog
Devices, Perkin Elmer, and Unisys -- high-quality companies we were able to
accumulate at discounted valuations. Good performers in the consumer staples
category included Kimberly Clark and Valassis Communications -- once again,
top-tier companies bought at bargain prices. In the healthcare arena, previously
out-of-favor stocks Biogen, C.R. Bard and Wellpoint Health Networks posted
strong gains.
However, our capital goods and utilities investments disappointed on both an
absolute and relative performance basis. Plagued by slack global demand and the
absence of pricing power, multinationals like Minnesota Mining and Manufacturing
and Raychem Corp. struggled. We may have to wait for the global economy to
stabilize before these and other high-quality capital goods holdings can
advance. In addition, our utilities holdings have been restrained by uncertainty
regarding how the ongoing deregulation of the utilities industry would impact
earnings and most recently, by rising interest rates. We didn't buy utilities
for
A-26
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Socially Responsive Fund (Cont'd)
earnings or yield, but rather because we expect ongoing industry-wide
consolidations to reduce operating expenses for many of these companies, which,
in turn, should reveal their intrinsic value.
In this report we would like to highlight three companies that we believe
represent socially responsive companies which are also excellent investment
opportunities. We have chosen to highlight drug maker Biogen, computer hardware
and services company Unisys, and retailer Dayton Hudson. Be reminded we reserve
the right to alter our opinion on these and all the stocks in the portfolio if
changing circumstances dictate.
First, Biogen is a company whose stock has more than doubled in the last six
months. Its success in part is driven by the overwhelming reception for Avonex,
its new drug for the treatment of multiple sclerosis. As the only drug that has
proven effective in treating MS during all its stages, we believe Avonex has
true blockbuster potential. Research reveals that since Avonex's introduction,
early stage diagnosis of MS has increased, indicating the market for this
product may be even larger than generally recognized. While Biogen's stock is no
longer cheap, we believe if Avonex reaches its full potential and the company
can bring other promising drugs in its pipeline to market, it may still be a
long-term bargain at current prices. We applaud Biogen's success with Avonex and
its ongoing commitment to finding treatments for other diseases.
Second, Unisys, a computer hardware and services company, has exhibited strong
performance over the last six months. Its management is now focusing on the
higher margin computer network and systems integration business. This strategy,
along with a much-improved balance sheet, is attracting investor attention.
Unisys also deserves credit for re-engineering its facilities to dramatically
reduce manufacturing emissions. This move has not only helped the company by
producing future cost savings estimated at $6 million dollars annually, but it
also benefited the communities located near its manufacturing facilities. A
clearer business strategy, a healthier balance sheet, and cleaner air for its
neighbors has earned our investment and socially responsive stamps of approval.
A-27
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Socially Responsive Fund (Cont'd)
And third, retailer Dayton Hudson, another of the portfolio's excellent
performers during the past six months, owes much of its progress to its Target
Store discount chain. Target's profits are accelerating and now account for
approximately 70% of parent Dayton Hudson's earnings. The Target formula -- low
prices combined with more attractive merchandising and a higher level of service
than that provided by many other discount retailers -- has turned out to be a
winning strategy and one we believe can continue to propel Dayton Hudson's
stock. Dayton Hudson also deserves high corporate citizenship marks for donating
5% of its pre-tax profits to charities and for its diverse board of directors
that includes three women and two ethnic minority members.
In closing, most value-oriented investors have struggled to keep pace with the
S&P 500 over the last six months. Consequently, we are particularly pleased with
the portfolio's performance during first half fiscal 1999. As always, we are
pleased to have been able to reward shareholders whose quest for financial
security is coupled with a well-developed social conscience.
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. ("NBMI") 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.
Please remember that past performance is not indicative of future results.
A-28
<PAGE>
PERFORMANCE HIGHLIGHTS
<TABLE>
<CAPTION>
FOR PERIODS
ENDED 3/31/99
-----------------------------
SIX MONTH
PERIOD AVERAGE ANNUAL TOTAL
NEUBERGER BERMAN INCEPTION ENDED RETURNS(1)
EQUITY FUNDS DATE 2/28/99(1) 1 YR 5 YR 10 YR
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
FOCUS FUND(2) 10/19/55 +36.30% +1.46% +19.21% +16.53%
GUARDIAN FUND 6/1/50 +24.59% -6.78% +15.02% +14.46%
PARTNERS FUND 1/20/75(3) +20.25% -2.61% +19.75% +15.86%
SOCIALLY RESPONSIVE FUND(4) 3/16/94 +24.75% +0.82% +19.15% +17.49%(5)
S&P 500 INDEX(6) N/A +30.32% +18.43% +26.19% +18.92%
RUSSELL 1000-REGISTERED TRADEMARK- VALUE
INDEX(6) N/A +22.53% +5.04% +22.07% +16.71%
MANHATTAN FUND 3/1/79(3) +27.50% +1.29% +15.81% +14.13%
RUSSELL MIDCAP-TRADEMARK- GROWTH INDEX(6) N/A +33.27% +8.89% +18.87% +16.97%
GENESIS FUND(4) 9/27/88 +7.35% -19.53% +13.90% +12.10%
RUSSELL 2000-REGISTERED TRADEMARK- INDEX(6) N/A +16.79% -16.26% +11.22% +11.46%
MILLENNIUM FUND 10/20/98 +48.80%* +61.90%* N/A N/A
RUSSELL 2000-REGISTERED TRADEMARK- GROWTH
INDEX(6) N/A +21.27%* +25.59%* N/A N/A
INTERNATIONAL FUND(4) 6/15/94 +7.94% -12.60% +9.10%(5) N/A
EAFE-REGISTERED TRADEMARK- INDEX(6) N/A +14.00% +6.37% N/A N/A
</TABLE>
* THESE ARE CUMULATIVE RETURNS AND ARE NOT ANNUALIZED. THE CUMULATIVE RETURNS
FOR NEUBERGER BERMAN MILLENNIUM FUND-SM- AND THE RUSSELL 2000 GROWTH INDEX
ARE FROM OCTOBER 20, 1998, WHICH IS THE COMMENCEMENT OF OPERATIONS OF THE
FUND, THROUGH FEBRUARY 28, 1999 AND MARCH 31, 1999, RESPECTIVELY. BECAUSE
THIS IS A NEW FUND, SHORT-TERM RESULTS MAY NOT BE DUPLICATED. AVERAGE NET
ASSETS OF THE PORTFOLIO THROUGH MARCH 31, 1999 WERE APPROXIMATELY $18.5
MILLION. IT MAY BE EASIER TO ACHIEVE HIGHER RETURNS IN A SMALL FUND THAN IN A
LARGER FUND. NEUBERGER BERMAN MANAGEMENT INC.-REGISTERED TRADEMARK- CURRENTLY
ABSORBS CERTAIN OPERATING EXPENSES THAT EXCEED, IN THE AGGREGATE, 1.75% OF
AVERAGE DAILY NET ASSETS PER ANNUM FOR NEUBERGER BERMAN MILLENNIUM FUND,
UNTIL DECEMBER 31, 1999. ABSENT THIS ARRANGEMENT, WHICH IS SUBJECT TO CHANGE,
THE FUND'S RETURNS WOULD HAVE BEEN LESS. THE RISKS INVOLVED IN SEEKING
CAPITAL APPRECIATION FROM INVESTMENTS PRIMARILY IN COMPANIES WITH SMALL
MARKET CAPITALIZATION ARE SET FORTH IN THE PROSPECTUS.
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. first became
investment adviser to these Funds.
4) Neuberger Berman Management Inc. previously absorbed certain operating
expenses of Neuberger Berman International Fund-Registered Trademark- and
Neuberger Berman Socially Responsive Fund-Registered Trademark-. Neuberger
Berman Management Inc. previously agreed to waive a portion of the management
fee borne directly by Neuberger Berman Genesis Portfolio-SM- and indirectly
by Neuberger Berman Genesis Fund-Registered Trademark-. Absent such
arrangements, 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 1000-Registered
Trademark- Index measures the performance of the 1,000 largest companies in
the Russell 3000-Registered Trademark- Index (which measures the performance
of the 3,000 largest U.S. companies based on total market capitalization).
The Russell 1000 Index represents approximately 89% of the total market
capitalization of the Russell 3000 Index. The Russell 1000 Value Index
measures the performance of
B-1
<PAGE>
those Russell 1000 companies with lower price-to-book ratios and lower
forecasted growth values. The Russell Midcap 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 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 Index is an unmanaged index that measures the performance of the 2,000
issuers having the smallest capitalization in the Russell 3000 Index,
representing approximately 11% of the Russell 3000 total market
capitalization. The smallest company's market capitalization is roughly $222
million. The Russell 2000 Growth Index measures the performance of those
Russell 2000 Index companies with higher price-to-book ratios and higher
forecasted growth values. The EAFE Index, also known as the Morgan Stanley
Capital International Europe, Australasia, Far East Index, is an unmanaged
index of over 1,000 foreign stock prices. The index is 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 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.
THE RISKS INVOLVED IN SEEKING CAPITAL APPRECIATION FROM INVESTMENTS PRIMARILY
IN COMPANIES WITH SMALL MARKET CAPITALIZATION OR THAT ARE BASED OUTSIDE THE
U.S. ARE SET FORTH IN THE PROSPECTUS.
B-2
<PAGE>
(This page has been left blank intentionally.)
B-3
<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) $ 1,400,558 $ 939,173 $ 3,993,952
Deferred organization costs (Note A) -- -- --
Receivable for Trust shares sold 1,477 2,219 2,878
Receivable from administrator -- net (Note
B) -- -- --
----------------------------------------
1,402,035 941,392 3,996,830
----------------------------------------
LIABILITIES
Payable for Trust shares redeemed 649 2,388 11,458
Payable to administrator (Note B) 288 198 826
Accrued expenses 317 496 1,252
----------------------------------------
1,254 3,082 13,536
----------------------------------------
NET ASSETS at value $ 1,400,781 $ 938,310 $ 3,983,294
----------------------------------------
NET ASSETS consist of:
Par value $ 39 $ 72 $ 177
Paid-in capital in excess of par value 781,994 983,471 2,858,296
Accumulated undistributed net investment
income (loss) 252 4,883 6,113
Accumulated net realized gains (losses) on
investment 59,055 (46,784) 405,410
Net unrealized appreciation (depreciation)
in value of investment 559,441 (3,332) 713,298
----------------------------------------
NET ASSETS at value $ 1,400,781 $ 938,310 $ 3,983,294
----------------------------------------
SHARES OUTSTANDING
($.001 par value; unlimited shares
authorized) 39,153 72,404 176,811
----------------------------------------
NET ASSET VALUE, offering and redemption price per
share $35.78 $12.96 $22.53
----------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-4
<PAGE>
February 28, 1999 (Unaudited)
- ----------------------------------------------------------------------
Equity Funds
<TABLE>
<CAPTION>
SOCIALLY
INTERNATIONAL MANHATTAN MILLENNIUM PARTNERS RESPONSIVE
FUND FUND FUND FUND FUND
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investment in corresponding Portfolio, at
value (Note A) $ 120,372 $ 573,098 $ 25,686 $ 3,034,784 $ 105,885
Deferred organization costs (Note A) 6 -- -- -- 1
Receivable for Trust shares sold 61 92 36 1,704 167
Receivable from administrator -- net (Note
B) -- -- 6 -- --
---------------------------------------------------------------
120,439 573,190 25,728 3,036,488 106,053
---------------------------------------------------------------
LIABILITIES
Payable for Trust shares redeemed 548 417 518 4,798 57
Payable to administrator (Note B) 25 118 -- 620 21
Accrued expenses 82 265 48 772 75
---------------------------------------------------------------
655 800 566 6,190 153
---------------------------------------------------------------
NET ASSETS at value $ 119,784 $ 572,390 $ 25,162 $ 3,030,298 $ 105,900
---------------------------------------------------------------
NET ASSETS consist of:
Par value $ 8 $ 51 $ 2 $ 120 $ 5
Paid-in capital in excess of par value 97,744 454,562 21,543 2,563,868 86,311
Accumulated undistributed net investment
income (loss) (595) (1,386) (68) 19,772 96
Accumulated net realized gains (losses) on
investment (19,054) 15,218 2,155 145,525 531
Net unrealized appreciation (depreciation)
in value of investment 41,681 103,945 1,530 301,013 18,957
---------------------------------------------------------------
NET ASSETS at value $ 119,784 $ 572,390 $ 25,162 $ 3,030,298 $ 105,900
---------------------------------------------------------------
SHARES OUTSTANDING
($.001 par value; unlimited shares
authorized) 8,015 51,114 1,691 120,229 5,455
---------------------------------------------------------------
NET ASSET VALUE, offering and redemption price per
share $14.94 $11.20 $14.88 $25.20 $19.41
---------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-5
<PAGE>
STATEMENTS OF OPERATIONS
Neuberger Berman
- ----------------------------------------------------------------------
Equity Funds
<TABLE>
<CAPTION>
FOCUS GENESIS GUARDIAN
FUND FUND FUND
For the For the For the
Six Months Six Months Six Months
Ended Ended Ended
February 28, February 28, February 28,
1999 1999 1999
(000'S OMITTED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Investment income from corresponding Portfolio
(Note A) $ 6,063 $ 11,541 $ 32,592
------------------------------------------
Expenses:
Administration fee (Note B) 1,688 1,458 5,524
Amortization of deferred organization and
initial offering expenses (Note A) -- -- --
Auditing fees 4 4 4
Custodian fees 5 5 5
Legal fees 3 8 9
Registration and filing fees 14 171 38
Reimbursement of expenses previously assumed
by administrator (Note B) -- -- --
Shareholder reports 106 176 349
Shareholder servicing agent fees 347 650 1,700
Trustees' fees and expenses 11 9 28
Miscellaneous 7 6 27
Expenses from corresponding Portfolio (Notes
A & B) 3,338 4,154 9,789
------------------------------------------
Total expenses 5,523 6,641 17,473
Expenses reimbursed by administrator and/or
reduced by custodian fee expense offset
arrangement (Note B) (2) (2) (1)
------------------------------------------
Total net expenses 5,521 6,639 17,472
------------------------------------------
Net investment income (loss) 542 4,902 15,120
------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
FROM CORRESPONDING PORTFOLIO (NOTE A)
Net realized gain (loss) on investment
securities 61,231 (45,661) 358,160
Net realized gain on option contracts 44 -- 2,228
Net realized gain (loss) on financial futures
contracts -- -- 58,652
Net realized loss on foreign currency
transactions -- -- --
Net realized loss on equity swap contracts -- -- --
Change in net unrealized appreciation
(depreciation) of investment securities,
financial futures contracts, option
contracts, equity swap contracts,
translation of assets and liabilities in
foreign currencies, and foreign currency
contracts 328,743 129,330 516,932
------------------------------------------
Net gain on investments from corresponding
Portfolio (Note A) 390,018 83,669 935,972
------------------------------------------
Net increase in net assets resulting from
operations $ 390,560 $ 88,571 $ 951,092
------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-6
<PAGE>
- ----------------------------------------------------------------------
Equity Funds
<TABLE>
<CAPTION>
MILLENNIUM
FUND
For the
Period from SOCIALLY
INTERNATIONAL MANHATTAN October 20, PARTNERS RESPONSIVE
FUND FUND 1998 FUND FUND
(Commencement
For the For the of For the For the
Six Months Six Months Operations) Six Months Six Months
Ended Ended to Ended Ended
February 28, February 28, February 28, February 28, February 28,
1999 1999 1999 1999 1999
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Investment income from corresponding Portfolio
(Note A) $ 522 $ 1,418 $ 31 $ 32,485 $ 697
------------------------------------------------------------------------
Expenses:
Administration fee (Note B) 156 713 15 3,995 126
Amortization of deferred organization and
initial offering expenses (Note A) 10 -- -- -- 7
Auditing fees 4 5 1 4 4
Custodian fees 5 5 4 5 5
Legal fees 12 8 26 7 7
Registration and filing fees 14 49 37 168 34
Reimbursement of expenses previously assumed
by administrator (Note B) 20 -- -- -- --
Shareholder reports 33 96 37 314 34
Shareholder servicing agent fees 72 320 3 969 62
Trustees' fees and expenses 3 6 2 22 2
Miscellaneous 1 4 -- 16 1
Expenses from corresponding Portfolio (Notes
A & B) 671 1,601 86 7,215 290
------------------------------------------------------------------------
Total expenses 1,001 2,807 211 12,715 572
Expenses reimbursed by administrator and/or
reduced by custodian fee expense offset
arrangement (Note B) (2) (3) (112) (2) --
------------------------------------------------------------------------
Total net expenses 999 2,804 99 12,713 572
------------------------------------------------------------------------
Net investment income (loss) (477) (1,386) (68) 19,772 125
------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
FROM CORRESPONDING PORTFOLIO (NOTE A)
Net realized gain (loss) on investment
securities (5,751) 15,515 2,155 149,998 565
Net realized gain on option contracts -- -- -- -- --
Net realized gain (loss) on financial futures
contracts (1,193) -- -- -- --
Net realized loss on foreign currency
transactions (1,980) -- -- -- --
Net realized loss on equity swap contracts (273) -- -- -- --
Change in net unrealized appreciation
(depreciation) of investment securities,
financial futures contracts, option
contracts, equity swap contracts,
translation of assets and liabilities in
foreign currencies, and foreign currency
contracts 19,075 115,611 1,530 391,052 19,674
------------------------------------------------------------------------
Net gain on investments from corresponding
Portfolio (Note A) 9,878 131,126 3,685 541,050 20,239
------------------------------------------------------------------------
Net increase in net assets resulting from
operations $ 9,401 $ 129,740 $ 3,617 $ 560,822 $ 20,364
------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-7
<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
1999 August 31, 1999 August 31,
(000'S OMITTED) (UNAUDITED) 1998 (UNAUDITED) 1998
-------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 542 $ 3,949 $ 4,902 $ 9,699
Net realized gain (loss) on
investments from corresponding
Portfolio (Note A) 61,275 80,090 (45,661) 27,717
Change in net unrealized
appreciation (depreciation) of
investments from corresponding
Portfolio (Note A) 328,743 (318,701) 129,330 (330,423)
-------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 390,560 (234,662) 88,571 (293,007)
-------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (3,445) (2,176) (9,718) --
Net realized gain on investments (75,412) (178,818) (27,534) (14,284)
-------------------------------------------------------------
Total distributions to shareholders (78,857) (180,994) (37,252) (14,284)
-------------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 72,918 193,247 135,435 1,453,709
Proceeds from reinvestment of
dividends and distributions 69,001 160,844 33,073 13,158
Payments for shares redeemed (172,762) (230,424) (360,593) (798,608)
-------------------------------------------------------------
Net increase (decrease) from Trust
share transactions (30,843) 123,667 (192,085) 668,259
-------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 280,860 (291,989) (140,766) 360,968
NET ASSETS:
Beginning of period 1,119,921 1,411,910 1,079,076 718,108
-------------------------------------------------------------
End of period $ 1,400,781 $ 1,119,921 $ 938,310 $ 1,079,076
-------------------------------------------------------------
Accumulated undistributed net
investment income (loss) at end of
period $ 252 $ 3,155 $ 4,883 $ 9,699
-------------------------------------------------------------
NUMBER OF TRUST SHARES:
Sold 2,175 5,176 9,852 89,859
Issued on reinvestment of dividends
and distributions 1,950 5,052 2,369 850
Redeemed (5,265) (6,242) (26,351) (50,355)
-------------------------------------------------------------
Net increase (decrease) in shares
outstanding (1,140) 3,986 (14,130) 40,354
-------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-8
<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
1999 August 31, 1999 August 31, 1999 August 31,
(UNAUDITED) 1998 (UNAUDITED) 1998 (UNAUDITED) 1998
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 15,120 $ 36,229 $ (477) $ (321) $ (1,386) $ (2,526)
Net realized gain (loss) on
investments from corresponding
Portfolio (Note A) 419,040 737,046 (9,197) (10,595) 15,515 42,660
Change in net unrealized
appreciation (depreciation) of
investments from corresponding
Portfolio (Note A) 516,932 (1,869,600) 19,075 (254) 115,611 (97,621)
---------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 951,092 (1,096,325) 9,401 (11,170) 129,740 (57,487)
---------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (14,261) (37,408) -- -- -- --
Net realized gain on investments (663,907) (809,963) (86) (1,069) (40,870) (148,169)
---------------------------------------------------------------------------------------
Total distributions to shareholders (678,168) (847,371) (86) (1,069) (40,870) (148,169)
---------------------------------------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 186,212 672,782 82,897 138,963 35,501 82,374
Proceeds from reinvestment of
dividends and distributions 625,765 785,350 79 999 37,852 137,125
Payments for shares redeemed (1,312,367) (1,778,812) (98,013) (117,593) (66,481) (107,644)
---------------------------------------------------------------------------------------
Net increase (decrease) from Trust
share transactions (500,390) (320,680) (15,037) 22,369 6,872 111,855
---------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (227,466) (2,264,376) (5,722) 10,130 95,742 (93,801)
NET ASSETS:
Beginning of period 4,210,760 6,475,136 125,506 115,376 476,648 570,449
---------------------------------------------------------------------------------------
End of period $ 3,983,294 $ 4,210,760 $ 119,784 $ 125,506 $ 572,390 $ 476,648
---------------------------------------------------------------------------------------
Accumulated undistributed net
investment income (loss) at end of
period $ 6,113 $ 5,254 $ (595) $ (118) $ (1,386) $ --
---------------------------------------------------------------------------------------
NUMBER OF TRUST SHARES:
Sold 8,055 23,020 5,889 8,477 3,233 6,569
Issued on reinvestment of dividends
and distributions 28,123 31,246 5 70 3,300 13,235
Redeemed (56,894) (62,892) (6,938) (7,268) (6,045) (8,493)
---------------------------------------------------------------------------------------
Net increase (decrease) in shares
outstanding (20,716) (8,626) (1,044) 1,279 488 11,311
---------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-9
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS(Cont'd)
Neuberger Berman
- ----------------------------------------------------------------------
Equity Funds
<TABLE>
<CAPTION>
MILLENNIUM
FUND
Period from
October 20,
1998
(Commencement
of
Operations)
to
February 28,
1999
(000'S OMITTED) (UNAUDITED)
------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ (68)
Net realized gain (loss) on
investments from corresponding
Portfolio (Note A) 2,155
Change in net unrealized
appreciation (depreciation) of
investments from corresponding
Portfolio (Note A) 1,530
------------
Net increase (decrease) in net
assets resulting from operations 3,617
------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income --
Net realized gain on investments --
------------
Total distributions to shareholders --
------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 24,129
Proceeds from reinvestment of
dividends and distributions --
Payments for shares redeemed (2,584)
------------
Net increase (decrease) from Trust
share transactions 21,545
------------
NET INCREASE (DECREASE) IN NET ASSETS 25,162
NET ASSETS:
Beginning of period --
------------
End of period $ 25,162
------------
Accumulated undistributed net
investment income (loss) at end of
period $ (68)
------------
NUMBER OF TRUST SHARES:
Sold 1,866
Issued on reinvestment of dividends
and distributions --
Redeemed (175)
------------
Net increase (decrease) in shares
outstanding 1,691
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-10
<PAGE>
- ----------------------------------------------------------------------
Equity Funds
<TABLE>
<CAPTION>
SOCIALLY
PARTNERS FUND RESPONSIVE FUND
Six Months Six Months
Ended Year Ended Year
February 28, Ended February 28, Ended
1999 August 31, 1999 August 31,
(UNAUDITED) 1998 (UNAUDITED) 1998
---------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 19,772 $ 26,638 $ 125 $ 356
Net realized gain (loss) on
investments from corresponding
Portfolio (Note A) 149,998 379,905 565 4,904
Change in net unrealized
appreciation (depreciation) of
investments from corresponding
Portfolio (Note A) 391,052 (727,668) 19,674 (13,949)
---------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 560,822 (321,125) 20,364 (8,689)
---------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- (18,986) (355) (83)
Net realized gain on investments (282,180) (583,567) (4,467) (1,563)
---------------------------------------------------------
Total distributions to shareholders (282,180) (602,553) (4,822) (1,646)
---------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 213,247 759,283 20,257 44,463
Proceeds from reinvestment of
dividends and distributions 267,996 573,055 4,361 1,494
Payments for shares redeemed (542,264) (699,711) (16,758) (12,864)
---------------------------------------------------------
Net increase (decrease) from Trust
share transactions (61,021) 632,627 7,860 33,093
---------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 217,621 (291,051) 23,402 22,758
NET ASSETS:
Beginning of period 2,812,677 3,103,728 82,498 59,740
---------------------------------------------------------
End of period $ 3,030,298 $ 2,812,677 $ 105,900 $ 82,498
---------------------------------------------------------
Accumulated undistributed net
investment income (loss) at end of
period $ 19,772 $ -- $ 96 $ 326
---------------------------------------------------------
NUMBER OF TRUST SHARES:
Sold 8,345 26,171 1,070 2,283
Issued on reinvestment of dividends
and distributions 10,690 22,596 224 85
Redeemed (21,271) (24,506) (894) (671)
---------------------------------------------------------
Net increase (decrease) in shares
outstanding (2,236) 24,261 400 1,697
---------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-11
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Neuberger Berman February 28, 1999 (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 Millennium Fund
("Millennium"), 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 (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 (the "1940 Act"), and its
shares are registered under the Securities Act of 1933, as amended (the "1933
Act"). Millennium had no operations until October 20, 1998, other than
matters relating to its organization and registration as a diversified,
open-end management investment company under the 1940 Act, and registration
of its shares under the 1933 Act. The trustees of the Trust may establish
additional series or classes of shares without the approval of shareholders.
The assets of each Fund belong only to that Fund, and the liabilities of
each Fund are borne solely by that Fund 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
(85.48%, 55.83%, 72.65%, 98.32%, 91.40%, 95.25%, 76.64%, and 29.80%, for
Focus, Genesis, Guardian, International, Manhattan, Millennium, Partners, and
Socially Responsive, respectively, at February 28, 1999). 64.87% 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 Inc. ("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.
B-12
<PAGE>
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) TAXES: The Funds are treated as separate entities for U.S. Federal income tax
purposes. It is the policy of Focus, Genesis, Guardian, International,
Manhattan, Partners, and Socially Responsive to continue to and the intention
of Millennium to qualify as regulated investment companies by complying with
the provisions available to certain investment companies, as defined in
applicable sections of the Internal Revenue Code, and to make distributions
of investment company taxable income and net capital gains (after reduction
for any amounts available for U.S. Federal income tax purposes as capital
loss carryforwards) sufficient to relieve it from all, or substantially all,
U.S. Federal income taxes. Accordingly, each Fund paid no U.S. Federal income
taxes and no provision for U.S. 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, 1999, the
unamortized balance of such expenses amounted to $5,828 and $680, 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.
B-13
<PAGE>
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 Management as its administrator under an Administration
Agreement ("Agreement"). Pursuant to this Agreement each Fund pays Management an
administration fee at the annual rate of 0.26% of that Fund's average 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).
Management has voluntarily undertaken to reimburse International and
Millennium for their operating expenses plus their pro rata portion of their
corresponding Portfolios' operating expenses (including the fees payable to
Management but excluding interest, taxes, brokerage commissions, and
extraordinary expenses) ("Operating Expenses") which exceed, in the aggregate,
1.70% and 1.75%, respectively, per annum of their average daily net assets (each
an "Expense Limitation"). Each undertaking is subject to termination by
Management upon at least 60 days' prior written notice to the appropriate Fund.
For the period ending February 28, 1999, such excess expenses amounted to
$111,009 for Millennium. International had agreed to repay Management through
December 31, 1998, for its excess Operating Expenses previously reimbursed by
Management, so long as its annual Operating Expenses during that period did not
exceed its Expense Limitation. For the period from September 1, 1998 to December
31, 1998, International reimbursed Management $20,095 under this agreement. At
February 28, 1999, International has no remaining contingent liability to
Management under the agreement for any amount not repaid December 31, 1998.
Millennium has agreed to repay Management through December 31, 2000, for its
excess Operating Expenses that Management reimburses through December 31, 1999,
so long as Millennium's Operating Expenses during that period do not exceed its
Expense Limitation. For the period ended February 28, 1999, Millennium has not
reimbursed Management.
All of the capital stock of 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 Management.
Each Fund also has a distribution agreement with Management. 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. In addition, in connection with the Securities Lending
Agreement between
B-14
<PAGE>
each Portfolio and Morgan Stanley & Co. Incorporated ("Morgan"), Morgan has
agreed to reimburse each Portfolio for transaction costs incurred on security
lending transactions charged by the custodian. The impact of these arrangements,
respectively, reflected in the Statements of Operations under the caption
Expenses from corresponding Portfolio, was a reduction of $139 and $1,395, $95
and $2,030, $229 and $1,179, $114 and $1,764, $106 and $2,688, $291 and $503,
$130 and $1,438, and $30 and $132, for Focus, Genesis, Guardian, International,
Manhattan, Millennium, Partners, and Socially Responsive, respectively.
NOTE C -- INVESTMENT TRANSACTIONS:
During the six months ended February 28, 1999, additions and reductions in
each Fund's investment in its corresponding Portfolio were as follows:
<TABLE>
<CAPTION>
ADDITIONS REDUCTIONS
- ---------------------------------------------------------------------------------
<S> <C> <C>
FOCUS $ 4,464,161 $ 120,032,533
GENESIS 13,885,178 247,838,084
GUARDIAN 9,541,595 1,202,670,589
INTERNATIONAL 48,764,401 64,183,802
MANHATTAN 7,108,915 41,893,922
MILLENNIUM 22,068,119 12,660
PARTNERS 11,157,895 362,952,601
SOCIALLY RESPONSIVE 10,406,807 8,025,728
</TABLE>
At February 28, 1999, Neuberger Berman International Portfolio's cost of
investments for U.S. Federal income tax purposes was $92,607,503. Gross
unrealized appreciation of investments was $43,788,417 and gross unrealized
depreciation of investments was $2,080,187, resulting in net unrealized
appreciation of $41,708,230, 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-15
<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
February 28,
1999 Year Ended August 31,
(UNAUDITED) 1998 1997 1996 1995 1994
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 27.79 $ 38.89 $ 28.46 $ 28.88 $ 24.42 $ 24.00
------------------------------------------------------------------------------
Income From Investment Operations
Net Investment Income .02 .10 .08 .19 .17 .21
Net Gains or Losses on Securities
(both realized and unrealized) 10.03 (6.21) 12.00 .85 5.97 2.16
------------------------------------------------------------------------------
Total From Investment Operations 10.05 (6.11) 12.08 1.04 6.14 2.37
------------------------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.09) (.06) (.22) (.11) (.20) (.25)
Distributions (from net capital
gains) (1.97) (4.93) (1.43) (1.35) (1.48) (1.70)
------------------------------------------------------------------------------
Total Distributions (2.06) (4.99) (1.65) (1.46) (1.68) (1.95)
------------------------------------------------------------------------------
Net Asset Value, End of Period $ 35.78 $ 27.79 $ 38.89 $ 28.46 $ 28.88 $ 24.42
------------------------------------------------------------------------------
Total Return(3) +36.30%(4) -17.37% +43.92% +3.70% +27.47% +10.35%
------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $1,400.8 $ 1,119.9 $ 1,411.9 $ 1,071.4 $ 956.0 $ 643.9
------------------------------------------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(5) .85%(6) .84% .86% .89% -- --
------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net
Assets .85%(6) .84% .86% .89% .87% .85%
------------------------------------------------------------------------------
Ratio of Net Investment Income to
Average Net Assets .08%(6) .27% .21% .69% .75% .89%
------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-16
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Genesis 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,
1999 Year Ended August 31,
(UNAUDITED) 1998 1997 1996 1995 1994
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $12.47 $ 15.55 $ 10.91 $ 9.52 $ 8.27 $ 8.62
--------------------------------------------------------------------------
Income From Investment Operations
Net Investment Income (Loss) .08 .11 (.01) (.01) -- (.01)
Net Gains or Losses on Securities
(both realized and unrealized) .87 (3.00) 4.80 1.95 1.56 .42
--------------------------------------------------------------------------
Total From Investment Operations .95 (2.89) 4.79 1.94 1.56 .41
--------------------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.12) -- -- -- -- (.01)
Distributions (from net capital
gains) (.34) (.19) (.15) (.55) (.31) (.75)
--------------------------------------------------------------------------
Total Distributions (.46) (.19) (.15) (.55) (.31) (.76)
--------------------------------------------------------------------------
Net Asset Value, End of Period $12.96 $ 12.47 $ 15.55 $ 10.91 $ 9.52 $ 8.27
--------------------------------------------------------------------------
Total Return(3) +7.35%(4) -18.82% +44.32% +21.32% +19.69% +4.77%
--------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $938.3 $ 1,079.1 $ 718.1 $ 195.4 $ 111.5 $ 135.6
--------------------------------------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(5) 1.18%(6) 1.11% 1.17% 1.28% -- --
--------------------------------------------------------------------------
Ratio of Net Expenses to Average Net
Assets 1.18%(6) 1.10%(7) 1.16%(7) 1.28%(7) 1.35%(7) 1.36%
--------------------------------------------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets .87%(6) .72% (.08%) (.18%) (.16%) (.20%)
--------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-17
<PAGE>
FINANCIAL HIGHLIGHTS
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,
1999 Year Ended August 31,
(UNAUDITED) 1998 1997 1996 1995 1994
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 21.32 $ 31.41 $ 23.78 $ 23.61 $ 19.52 $ 18.57
----------------------------------------------------------------------------------
Income From Investment Operations
Net Investment Income .09 .18 .15 .31 .27 .24
Net Gains or Losses on Securities
(both realized and unrealized) 5.11 (6.09) 8.96 .90 4.30 1.41
----------------------------------------------------------------------------------
Total From Investment Operations 5.20 (5.91) 9.11 1.21 4.57 1.65
----------------------------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.08) (.18) (.24) (.28) (.25) (.30)
Distributions (from net capital
gains) (3.91) (4.00) (1.24) (.76) (.23) (.40)
----------------------------------------------------------------------------------
Total Distributions (3.99) (4.18) (1.48) (1.04) (.48) (.70)
----------------------------------------------------------------------------------
Net Asset Value, End of Period $ 22.53 $ 21.32 $ 31.41 $ 23.78 $ 23.61 $ 19.52
----------------------------------------------------------------------------------
Total Return(3) +24.59%(4) -20.80% +39.69% +5.27% +24.06% +9.12%
----------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $3,983.3 $ 4,210.8 $ 6,475.1 $ 4,905.2 $ 3,947.5 $ 2,416.5
----------------------------------------------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(5) .82%(6) .79% .80% .82% -- --
----------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net
Assets .82%(6) .79% .80% .82% .80% .80%
----------------------------------------------------------------------------------
Ratio of Net Investment Income to
Average Net Assets .71%(6) .59% .55% 1.37% 1.40% 1.36%
----------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-18
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
International 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>
Period
from
June
15,
Six Months 1994(8)
Ended to
February 28, August
1999 Year Ended August 31, 31,
(UNAUDITED) 1998 1997 1996 1995 1994
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $13.85 $ 14.83 $ 11.91 $ 10.70 $ 10.46 $10.00
------------------------------------------------------------------------
Income From Investment Operations
Net Investment Income (Loss) (.06) (.03) -- .01 .06 .01
Net Gains or Losses on Securities
(both realized and unrealized) 1.16 (.81) 2.94 1.24 .21 .45
------------------------------------------------------------------------
Total From Investment Operations 1.10 (.84) 2.94 1.25 .27 .46
------------------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) -- -- (.02) (.04) (.03) --
Distributions (from net capital
gains) (.01) (.14) -- -- -- --
------------------------------------------------------------------------
Total Distributions (.01) (.14) (.02) (.04) (.03) --
------------------------------------------------------------------------
Net Asset Value, End of Period $14.94 $ 13.85 $ 14.83 $ 11.91 $ 10.70 $10.46
------------------------------------------------------------------------
Total Return(3) +7.94%(4) -5.69% +24.71% +11.73% +2.60% +4.60%(4)
------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $119.8 $ 125.5 $ 115.4 $ 57.0 $ 26.4 $ 6.2
------------------------------------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(5) 1.66%(6) 1.71% 1.70% 1.70% -- --
------------------------------------------------------------------------
Ratio of Net Expenses to Average Net
Assets(7) 1.66%(6) 1.70% 1.70% 1.70% 1.70% 1.70%(6)
------------------------------------------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets (.79%)(6) (.24%) (.02%) .24% .73% .57%(6)
------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-19
<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,
1999 Year Ended August 31,
(UNAUDITED) 1998 1997 1996 1995 1994
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 9.42 $ 14.51 $ 11.94 $ 13.27 $ 11.28 $ 12.94
-------------------------------------------------------------------------
Income From Investment Operations
Net Investment Income (Loss) (.03) (.05) (.03) (.04) -- .02
Net Gains or Losses on Securities
(both realized and unrealized) 2.64 (1.20) 4.26 (.33) 2.70 .40
-------------------------------------------------------------------------
Total From Investment Operations 2.61 (1.25) 4.23 (.37) 2.70 .42
-------------------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) -- -- -- -- (.01) (.02)
Distributions (from net capital
gains) (.83) (3.84) (1.66) (.96) (.70) (2.06)
-------------------------------------------------------------------------
Total Distributions (.83) (3.84) (1.66) (.96) (.71) (2.08)
-------------------------------------------------------------------------
Net Asset Value, End of Period $ 11.20 $ 9.42 $ 14.51 $ 11.94 $ 13.27 $ 11.28
-------------------------------------------------------------------------
Total Return(3) +27.50%(4) -11.02% +38.75% -2.91% +26.00% +3.49%
-------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $ 572.4 $ 476.6 $ 570.4 $ 516.2 $ 612.0 $ 510.3
-------------------------------------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(5) 1.02%(6) .95% .99% .98% -- --
-------------------------------------------------------------------------
Ratio of Net Expenses to Average Net
Assets 1.02%(6) .94% .98% .98% .98% .96%
-------------------------------------------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets (.51%)(6) (.42%) (.20%) (.27%) .03% .16%
-------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-20
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Millennium Fund(2)
The following table includes selected data for a share outstanding throughout
the 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>
Period from
October 20, 1998(8) to
February 28,
1999
(UNAUDITED)
----------------------
<S> <C>
Net Asset Value, Beginning of Period $10.00
------
Income From Investment Operations
Net Investment Loss (.04)
Net Gains or Losses on Securities
(both realized and unrealized) 4.92
------
Total From Investment Operations 4.88
------
Net Asset Value, End of Period $14.88
------
Total Return(3)(4) +48.80%
------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $ 25.2
------
Ratio of Gross Expenses to Average
Net Assets(5)(6) 1.76%
------
Ratio of Net Expenses to Average Net
Assets(6)(7) 1.75%
------
Ratio of Net Investment Loss to
Average Net Assets(6) (1.20%)
------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-21
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Partners 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,
1999 Year Ended August 31,
(UNAUDITED) 1998 1997 1996 1995 1994
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 22.97 $ 31.60 $ 23.88 $ 23.72 $ 21.32 $ 22.46
----------------------------------------------------------------------------------
Income From Investment Operations
Net Investment Income .16 .23 .19 .22 .17 .10
Net Gains or Losses on Securities
(both realized and unrealized) 4.48 (2.83) 10.36 2.84 3.94 1.07
----------------------------------------------------------------------------------
Total From Investment Operations 4.64 (2.60) 10.55 3.06 4.11 1.17
----------------------------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) -- (.19) (.22) (.20) (.11) (.11)
Distributions (from net capital
gains) (2.41) (5.84) (2.61) (2.70) (1.60) (2.20)
----------------------------------------------------------------------------------
Total Distributions (2.41) (6.03) (2.83) (2.90) (1.71) (2.31)
----------------------------------------------------------------------------------
Net Asset Value, End of Period $ 25.20 $ 22.97 $ 31.60 $ 23.88 $ 23.72 $ 21.32
----------------------------------------------------------------------------------
Total Return(3) +20.25%(4) -10.03% +47.11% +13.86% +21.53% +5.56%
----------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $3,030.3 $ 2,812.7 $ 3,103.7 $ 1,871.9 $ 1,564.0 $ 1,335.9
----------------------------------------------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(5) .83%(6) .80% .81% .84% -- --
----------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net
Assets .83%(6) .80% .81% .84% .83% .81%
----------------------------------------------------------------------------------
Ratio of Net Investment Income to
Average Net Assets 1.29%(6) .78% .72% .93% .83% .48%
----------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-22
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Socially Responsive 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 Period from
Ended March 16,
February 28, 1994(8) to
1999 Year Ended August 31, August 31,
(UNAUDITED) 1998 1997 1996 1995 1994
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 16.32 $ 17.79 $ 13.88 $ 11.84 $ 10.07 $10.00
------------------------------------------------------------------------------
Income From Investment Operations
Net Investment Income .02 .07 .03 .02 .03 .01
Net Gains or Losses on Securities
(both realized and unrealized) 4.02 (1.11) 4.33 2.35 1.76 .06
------------------------------------------------------------------------------
Total From Investment Operations 4.04 (1.04) 4.36 2.37 1.79 .07
------------------------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.07) (.03) (.03) (.02) (.02) --
Distributions (from net capital
gains) (.88) (.40) (.42) (.31) -- --
------------------------------------------------------------------------------
Total Distributions (.95) (.43) (.45) (.33) (.02) --
------------------------------------------------------------------------------
Net Asset Value, End of Period $ 19.41 $ 16.32 $ 17.79 $ 13.88 $ 11.84 $10.07
------------------------------------------------------------------------------
Total Return(3) +24.75%(4) -6.02% +31.96% +20.19% +17.82% +0.70%(4)
------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $ 105.9 $ 82.5 $ 59.7 $ 32.9 $ 8.2 $ 2.3
------------------------------------------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(5) 1.18%(6) 1.10% 1.49% 1.50% -- --
------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net
Assets 1.18%(6) 1.10% 1.48%(7) 1.50%(7) 1.51%(7) 1.50%(6)(7)
------------------------------------------------------------------------------
Ratio of Net Investment Income to
Average Net Assets .26%(6) .43% .23% .19% .36% .50%(6)
------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-23
<PAGE>
NOTES TO FINANCIAL HIGHLIGHTS
Neuberger Berman February 28, 1999 (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,
Millennium, and Socially Responsive, total return would have been lower if
Management had not reimbursed certain expenses. For Genesis, total return
would have been lower if the investment manager 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.
6) Annualized.
7) Had the investment manager not waived a portion of the management fee borne
directly by Neuberger Berman Genesis Portfolio as described in Note B of
Notes to Financial Statements of the Portfolios the annualized ratios of net
expenses to average daily net assets would have been:
<TABLE>
<CAPTION>
Year Ended August 31,
1998 1997 1996 1995
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Expenses 1.12% 1.26% 1.38% 1.38%
---------------------------------------
</TABLE>
After reimbursement of expenses by Management as described in Note B of Notes
to Financial Statements. Had Management not undertaken such action the
annualized ratios of net expenses 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%
------------------------------------
</TABLE>
B-24
<PAGE>
<TABLE>
<CAPTION>
Period from
October 20, 1998
to February 28,
MILLENNIUM 1999
- -----------------------------------------------------------------
<S> <C>
Net Expenses 3.72%
------
</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%
------------------------------------
</TABLE>
Had International not reimbursed Management, as described in Note B of
Notes to Financial Statements, the annualized ratios of net expenses to
average daily net assets would have been:
<TABLE>
<CAPTION>
Six
Months
Ended
February Year Ended
28, August 31,
1999 1998 1997
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Net Expenses 1.63% 1.61% 1.69%
----------------------------
</TABLE>
Had Socially Responsive not reimbursed Management, the annualized ratios
of net expenses to average daily net assets would have been:
<TABLE>
<CAPTION>
Year
Ended
August
31,
1997
- -------------------------------------------------------
<S> <C>
Net Expenses 1.20%
------
</TABLE>
8) The date investment operations commenced.
B-25
<PAGE>
(This page has been left blank intentionally.)
B-26
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Focus Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Citigroup Inc. 8.7%
2. Chase Manhattan 7.3%
3. Capital One Financial 7.2%
4. Morgan Stanley Dean Witter 7.0%
5. Compaq Computer 5.4%
6. Wellpoint Health Networks 5.4%
7. Countrywide Credit Industries 4.7%
8. General Motors 3.1%
9. BankBoston Corp. 3.1%
10. MCI WorldCom 3.0%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ------------
<C> <S> <C>
COMMON STOCKS (98.3%)
AUTOMOTIVE (3.8%)
467,900 Cabot Corp. $ 11,785
620,000 General Motors 51,189
------------
62,974
------------
FINANCIAL SERVICES (50.6%)
798,500 ADVANTA Corp. Class A 9,332 (2)
802,500 ADVANTA Corp. Class B 7,273 (2)
670,000 Bank One 36,012
1,236,000 BankBoston Corp. 49,981
922,500 Capital One Financial 117,734
1,505,000 Chase Manhattan 119,836
2,421,250 Citigroup Inc. 142,248
2,015,000 Countrywide Credit Industries 76,318
601,000 Hartford Financial Services
Group 32,492
1,265,000 Morgan Stanley Dean Witter 114,482
655,000 Nationwide Financial Services 29,762
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ------------
<C> <S> <C>
522,000 PartnerRe Ltd. $ 22,577
1,198,000 Travelers Property Casualty 45,449
659,000 Washington Mutual 26,360
------------
829,856
------------
HEALTH CARE (6.4%)
1,977,900 Foundation Health Systems 15,823
1,122,000 Wellpoint Health Networks 88,498
------------
104,321
------------
RETAIL (6.8%)
555,000 Barnes & Noble 16,407
1,982,800 Furniture Brands International 42,382
225,000 Jones Apparel Group 6,286
520,000 Payless ShoeSource 28,535
520,000 Promus Hotel 18,298
------------
111,908
------------
TECHNOLOGY (30.7%)
931,000 3Com Corp. 29,268
245,000 Applied Materials 13,628
1,090,000 Atmel Corp. 18,734
375,000 Autodesk Inc. 15,047
2,512,500 Compaq Computer 88,566
295,000 Compuware Corp. 16,502
265,000 Etec Systems 11,743
560,000 KLA-Tencor 29,015
1,640,000 Maxtor Corp. 13,530
591,500 MCI WorldCom 48,799
530,000 Microchip Technology 14,442
140,000 Micron Technology 8,067
331,000 Novellus Systems 19,550
330,000 Oracle Corp. 18,439
145,000 PeopleSoft, Inc. 2,737
1,010,000 Photronics, Inc. 20,768
1,820,000 PLATINUM Technology 24,115
1,495,000 Rational Software 44,383
</TABLE>
C-1
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Focus Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ------------
<C> <S> <C>
1,060,000 Saville Systems ADR $ 21,134
492,000 Texas Instruments 43,880
------------
502,347
------------
TOTAL COMMON STOCKS (COST
$991,719) 1,611,406
------------
<CAPTION>
Principal
Amount
- ----------
<C> <S> <C>
SHORT-TERM INVESTMENTS (4.0%)
$17,170,000 General Electric Capital
Corp., 4.72%, due 3/1/99 17,170
48,892,335 N&B Securities Lending Quality
Fund, LLC 48,892
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $66,062) 66,062(3)
------------
TOTAL INVESTMENTS (102.3%)
(COST $1,057,781) 1,677,468(4)
Liabilities, less cash,
receivables and other assets
[(2.3%)] (38,930)
------------
TOTAL NET ASSETS (100.0%) $1,638,538
------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-2
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Genesis Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Alliant Techsystems 3.4%
2. AptarGroup Inc. 2.6%
3. Dallas Semiconductor 2.4%
4. Webster Financial 2.3%
5. Trigon Healthcare 2.2%
6. Newport News Shipbuilding 2.2%
7. Bank United 2.0%
8. Montana Power 1.9%
9. Universal Health Services Class B 1.9%
10. Cordant Technologies 1.7%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ------------
<C> <S> <C>
COMMON STOCKS (93.4%)
AEROSPACE (6.5%)
1,781,350 AAR Corp. $ 26,943 (2)
1,244,500 Aviall Inc. 17,190 (2)
755,800 Cordant Technologies 29,429
468,300 DONCASTERS PLC ADR 8,283 (2)
299,850 Ducommun Inc. 3,748
121,600 Howmet International 1,961
425,000 Ladish Co. 3,001
343,000 Moog, Inc. Class A 10,933
257,300 Orbital Sciences 7,108
------------
108,596
------------
AUTOMOTIVE (0.6%)
597,200 Donaldson Co. 10,787
------------
BANKING & FINANCIAL (9.1%)
866,400 Bank United 34,223
604,300 Community First Bankshares 11,784
333,800 Cullen/Frost Bankers 15,793
552,500 FirstFed Financial 9,358
285,400 Ocean Financial 4,245
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ------------
<C> <S> <C>
678,300 Peoples Heritage Financial
Group $ 11,531
116,212 Queens County Bancorp 3,377
227,600 Reliance Bancorp 6,970
726,675 Sterling Bancshares 8,720
357,850 Texas Regional Bancshares 9,125
1,243,400 Webster Financial 38,002
------------
153,128
------------
BASIC MATERIALS (1.0%)
299,200 Lone Star Industries 9,874
165,160 Southdown, Inc. 7,793
------------
17,667
------------
BUILDING, CONSTRUCTION & FURNISHINGS (0.7%)
157,200 Lincoln Electric Holdings 3,222
220,100 Simpson Manufacturing 7,800
------------
11,022
------------
BUSINESS SERVICES (1.1%)
300,000 Metzler Group 12,750
109,000 Valassis Communications 5,232
------------
17,982
------------
CHEMICALS (0.4%)
399,900 Lawter International 2,849
201,000 Lilly Industries 3,430
------------
6,279
------------
CONSUMER CYCLICALS (0.6%)
466,600 Coachmen Industries 9,449
------------
CONSUMER PRODUCTS & SERVICES (6.5%)
658,800 Alberto-Culver Class A 14,329
530,638 Block Drug 20,695
141,800 Bush Boake Allen 4,529
521,300 Church & Dwight 21,764
131,200 Matthews International 3,756
</TABLE>
C-3
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Genesis Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ------------
<C> <S> <C>
372,400 Omega Protein $ 2,281
888,900 Richfood Holdings 21,111
800,700 Ruddick Corp. 14,763
457,000 The First Years 6,969
------------
110,197
------------
DEFENSE (6.4%)
715,400 Alliant Techsystems 56,651 (2)
1,272,900 Newport News Shipbuilding 36,834
337,000 Primex Technologies 14,007 (2)
------------
107,492
------------
DIAGNOSTIC EQUIPMENT (1.1%)
1,043,300 ADAC Laboratories 18,649 (2)
------------
ELECTRONICS (2.9%)
1,158,600 Dallas Semiconductor 40,985
237,700 SCI Systems 7,354
------------
48,339
------------
ENERGY (0.7%)
425,000 Cabot Oil & Gas 4,648
661,990 Swift Energy 3,972
855,800 Unit Corp. 3,530
------------
12,150
------------
HEALTH CARE (10.1%)
977,800 Acuson Corp. 14,667
214,600 Arrow International 5,271
445,400 CONMED Corp. 13,752
709,000 DENTSPLY International 18,079
1,176,000 Haemonetics Corp. 19,625
542,000 Mentor Corp. 8,333
429,950 Patterson Dental 17,413
503,700 STAAR Surgical 4,754
1,055,200 Trigon Healthcare 36,998
767,900 Universal Health Services
Class B 31,196
------------
170,088
------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ------------
<C> <S> <C>
INDUSTRIAL & COMMERCIAL PRODUCTS & SERVICES (6.8%)
789,700 BMC Industries $ 3,850
449,900 Brady Corp. 10,741
282,000 Dionex Corp. 10,399
1,496,800 Hussmann International 21,142
284,700 IDEX Corp. 6,761
676,300 Kaydon Corp. 20,627
235,000 NN Ball & Roller 1,322
187,000 Pentair, Inc. 7,083
183,100 Roper Industries 4,051
814,400 SOS Staffing Services 7,228 (2)
809,800 Wallace Computer Services 18,322
203,750 Woodhead Industries 2,318
------------
113,844
------------
INSURANCE (3.8%)
836,200 Annuity and Life Re 18,553
600,800 FBL Financial Group 12,054
392,300 Orion Capital 12,970
229,000 Penn-America Group 2,548
61,700 Trenwick Group 1,789
570,500 W. R. Berkley 16,331
------------
64,245
------------
LODGING (0.5%)
846,000 Prime Hospitality 8,671
------------
MACHINERY & EQUIPMENT (0.2%)
178,800 Allied Products 883
226,500 Gardner Denver Machinery 2,888
------------
3,771
------------
OFFICE EQUIPMENT (1.2%)
1,091,900 United Stationers 19,995
------------
OIL SERVICES (4.0%)
350,700 Cal Dive International 5,041
468,500 Friede Goldman International 5,007
</TABLE>
C-4
<PAGE>
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Genesis Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ------------
<C> <S> <C>
700,800 Global Industries $ 3,548
520,000 IRI International 1,625
569,500 Nabors Industries 6,549
1,446,712 National-Oilwell 12,840
588,400 Oceaneering International 5,884
781,600 Offshore Logistics 6,815
777,300 Pride International 3,886
463,400 Smith International 11,266
267,500 Tuboscope Inc. 1,438
398,200 UTI Energy 2,315
247,400 Willbros Group 1,206
------------
67,420
------------
PACKING & CONTAINERS (2.6%)
1,612,900 AptarGroup Inc. 44,153
------------
PUBLISHING & BROADCASTING (0.6%)
133,866 Pulitzer Publishing 10,692
------------
REAL ESTATE/REITS (2.5%)
277,700 Crescent Real Estate Equities 5,797
495,000 Health Care Property Investors 14,540
415,000 Nationwide Health Properties 7,470
778,100 Prime Retail 6,225
421,800 SL Green Realty 8,146
------------
42,178
------------
RESTAURANTS (1.4%)
830,650 Brinker International 24,037
------------
RETAILING (2.3%)
472,968 99 Cents Only Stores 22,378
529,500 Claire's Stores 11,682
222,000 Schultz Sav-O Stores 3,857
------------
37,917
------------
TECHNOLOGY (5.2%)
679,700 Analysts International 9,686
194,900 Black Box 6,286
527,600 CACI International 8,705
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ------------
<C> <S> <C>
2,500 Dialogic Corp. $ 69
2,606,300 Inprise Corp. 13,032(2)
1,350,400 Methode Electronics Class A 14,179
800,900 Reynolds & Reynolds 15,117
795,600 Zebra Technologies 20,536
------------
87,610
------------
TEXTILES & APPAREL (0.2%)
100,000 St. John Knits 2,669
------------
TRANSPORTATION, SHIPPING & FREIGHT (0.2%)
112,000 Air Express International 1,967
213,600 Maritrans Inc. 1,242
------------
3,209
------------
UTILITIES, ELECTRIC & GAS (14.2%)
1,257,500 AGL Resources 23,971
183,200 Aquila Gas Pipeline 1,603
344,800 Atmos Energy 8,275
63,800 Avista Corp. 1,045
282,500 Central Hudson Gas & Electric 10,241
430,100 Connecticut Energy 11,209
129,300 Eastern Enterprises 4,970
149,000 Interstate Energy 4,107
535,100 Montana Power 32,574
341,200 National Fuel Gas 13,755
384,700 Nevada Power 9,209
298,800 NICOR Inc. 11,410
290,000 Northwest Natural Gas 7,096
450,900 NUI Corp. 10,342
374,300 ONEOK, Inc. 10,083
115,100 Orange & Rockland Utilities 6,460
266,500 Otter Tail Power 9,877
360,500 Public Service Co. of New
Mexico 5,543
490,100 Rochester Gas & Electric 12,804
401,100 Sierra Pacific Resources 13,763
</TABLE>
C-5
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Genesis Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ------------
<C> <S> <C>
271,500 UtiliCorp United $ 9,333
457,400 Washington Gas Light 10,949
319,600 WICOR, Inc. 6,751
120,000 WPS Resources 3,570
------------
238,940
------------
TOTAL COMMON STOCKS (COST
$1,625,933) 1,571,176
------------
WARRANTS (0.1%)
355,000 Golden State Bancorp (COST
$2,161) 1,797
------------
<CAPTION>
Principal
Amount
- ----------
<C> <S> <C>
REPURCHASE AGREEMENTS (3.0%)
$50,440,000 State Street Bank and Trust
Co. Repurchase Agreement,
4.70%, due 3/1/99, dated
2/26/99, Maturity Value
$50,459,756, Collateralized
by $44,340,000 U.S. Treasury
Bonds, 7.25%, due 5/15/16
(Collateral Value
$51,961,071) (COST $50,440) 50,440 (3)
------------
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- ---------- ------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (5.0%)
$3,000,000 General Electric Capital
Corp., 4.79%, due 3/2/99 $ 29,996
2,000,000 Ford Motor Credit Co., 4.83%,
due 3/3/99 19,995
34,356,306 N&B Securities Lending Quality
Fund, LLC 34,356
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $84,347) 84,347(3)
------------
TOTAL INVESTMENTS (101.5%)
(COST $1,762,881) 1,707,760(4)
Liabilities, less cash,
receivables and other assets
[(1.5%)] (25,498)
------------
TOTAL NET ASSETS (100.0%) $1,682,262
------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-6
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Guardian Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Capital One Financial 4.8%
2. Wellpoint Health Networks 4.7%
3. General Motors 4.3%
4. Countrywide Credit Industries 3.5%
5. Conseco, Inc. 3.4%
6. Aetna Inc. 3.4%
7. MCI WorldCom 3.3%
8. Philip Morris 2.8%
9. Chase Manhattan 2.7%
10. PacifiCare Health Systems Class B 2.6%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
COMMON STOCKS (89.0%)
BANKING & FINANCIAL (9.1%)
608,000 Allstate Corp. $ 22,800
2,184,600 Bank One 117,422
1,121,000 BankAmerica Corp. 73,215
2,313,000 BankBoston Corp. 93,532 (5)
1,853,800 Chase Manhattan 147,609
1,126,000 SLM Holding 48,277
------------
502,855
------------
BASIC MATERIALS (3.0%)
3,841,000 Cabot Corp. 96,745 (2)
2,472,000 Millennium Chemicals 44,650
455,560 Potash Corp. of Saskatchewan 25,825
------------
167,220
------------
CAPITAL GOODS (4.5%)
5,337,000 Republic Services 93,064 (2)
792,900 SCI Systems 24,530
863,800 Solectron Corp. 38,601
1,800,000 Waste Management 87,975
------------
244,170
------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
COMMUNICATION SERVICES (5.8%)
978,000 AT&T Corp. $ 80,318
1,019,700 Bell Atlantic 58,569
2,178,900 MCI WorldCom 179,759
------------
318,646
------------
CONSUMER CYCLICALS (7.6%)
5,800,100 Cendant Corp. 96,064
2,840,000 General Motors 234,478
1,651,600 Lear Corp. 58,322
519,100 Tandy Corp. 28,875
------------
417,739
------------
CONSUMER STAPLES (7.3%)
1,133,800 Keebler Foods 44,218
1,795,000 Kimberly-Clark 84,814
900,000 McDonald's Corp. 76,500
3,900,000 Philip Morris 152,588
1,545,100 Sara Lee 42,007
------------
400,127
------------
ENERGY (4.1%)
640,100 Amerada Hess 29,045
356,400 Chevron Corp. 27,398
1,443,000 Conoco Inc. 29,311
906,800 Halliburton Co. 25,617
799,500 Mobil Corp. 66,508
985,000 Texaco, Inc. 45,864
------------
223,743
------------
FINANCIAL SERVICES (21.6%)
2,038,000 Associates First Capital 82,794
2,086,000 Capital One Financial 266,226
1,563,200 Citigroup Inc. 91,838
6,168,000 Conseco, Inc. 184,655
5,010,800 Countrywide Credit Industries 189,784
2,350,000 Hartford Financial Services
Group 127,047
3,067,100 IndyMac Mortgage Holdings 32,588
320,000 Loews Corp. 25,020
</TABLE>
C-7
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Guardian Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
1,104,500 Morgan Stanley Dean Witter $ 99,957
2,448,700 Wells Fargo 89,990
------------
1,189,899
------------
HEALTH CARE (12.3%)
2,487,100 Aetna Inc. 184,201
1,469,900 American Home Products 87,459
1,995,564 PacifiCare Health Systems
Class B 144,179 (2)
3,295,996 Wellpoint Health Networks 259,972
------------
675,811
------------
TECHNOLOGY (12.0%)
1,389,900 3Com Corp. 43,695
1,917,800 Compaq Computer 67,602
1,168,900 Hewlett-Packard 77,659
569,650 IBM 96,841
500,000 KLA-Tencor 25,906 (5)
378,800 Micron Technology 21,828
824,300 Motorola, Inc. 57,907
2,045,000 Rational Software 60,711
530,400 Sun Microsystems 51,615
469,500 Teradyne, Inc. 22,360
602,700 Texas Instruments 53,753 (5)
1,428,600 Xerox Corp. 78,841
------------
658,718
------------
TRANSPORTATION (1.7%)
502,900 AMR Corp. 27,880
1,005,000 Continental Airlines Class B 34,798
1,301,400 Northwest Airlines 32,535
------------
95,213
------------
TOTAL COMMON STOCKS (COST
$3,977,212) 4,894,141
------------
PREFERRED STOCKS (1.1%)
2,258,200 News Corp. ADR (COST $56,624) 59,278
------------
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- ----------- ------------
<C> <S> <C>
U.S. TREASURY SECURITIES (2.4%)
$132,840,000 U.S. Treasury Bills, 4.345% &
4.425%, due 4/1/99 & 4/22/99
(COST $132,260) $ 132,238
------------
REPURCHASE AGREEMENTS (2.4%)
131,215,000 State Street Bank and Trust
Co. Repurchase Agreement,
4.70%, due 3/1/99, dated
2/26/99, Maturity Value
$131,266,393, Collateralized
by $115,340,000 U.S. Treasury
Bonds, 7.25%, due 5/15/16
(Collateral Value
$135,164,409) (COST $131,215) 131,215 (3)
------------
SHORT-TERM INVESTMENTS (6.0%)
50,000,000 Koch Industries, Inc., 4.76%,
due 3/1/99 50,000
50,000,000 Pitney Bowes Inc., 4.85%, due
3/1/99 50,000
25,000,000 Vulcan Materials Co., 4.81%,
due 3/1/99 25,000
40,550,000 National Australia Funding,
4.80%, due 3/2/99 40,544
50,000,000 Export Development Corp.,
4.80%, due 3/3/99 49,987
50,000,000 Ford Motor Credit Co., 4.84%,
due 3/4/99 49,980
</TABLE>
C-8
<PAGE>
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Guardian Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- ----------- ------------
<C> <S> <C>
$30,000,000 Enterprise Funding Corp.,
4.87%, due 3/5/99 $ 29,984
26,202,000 USAA Capital Corp., 4.81%, due
3/5/99 26,188
7,002,158 N&B Securities Lending Quality
Fund, LLC 7,002
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $328,685) 328,685(3)
------------
TOTAL INVESTMENTS (100.9%)
(COST $4,625,996) 5,545,557(4)
Liabilities, less cash,
receivables and other assets
[(0.9%)] (48,020)
------------
TOTAL NET ASSETS (100.0%) $5,497,537
------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-9
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
International Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
----------------------------------------------------------------------------------------------
HOLDING COUNTRY INDUSTRY PERCENTAGE
<C> <S> <C> <C> <C>
1. France Telecom ADR France Telecommunications 3.7%
2. Nokia Corp. ADR Finland Telecommunications 3.3%
3. Aegon NV-New York Netherlands Insurance 2.2%
4. Tieto Corp. Finland Technology 2.2%
5. Takeda Chemical Industries Japan Pharmaceutical 2.1%
6. Computer Configurations Holdings South Africa Technology 1.8%
7. Orange PLC United Kingdom Telecommunications 1.8%
8. Dassault Systemes ADR France Technology 1.7%
9. Mannesmann AG Germany Machinery & Equipment 1.6%
10. Autogrill SpA Italy Restaurants 1.5%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
COMMON STOCKS (94.8%)
ARGENTINA (0.4%)
14,570 YPF SA ADR $ 423
-------------
BELGIUM (3.3%)
15,151 Mobistar SA 1,199
8,060 Telinfo SA 1,280
3,200 Tractebel 564
20,000 UCB SA 1,040
-------------
4,083
-------------
BERMUDA (0.8%)
17,000 Global Crossing 1,003
-------------
CANADA (0.5%)
24,000 BioChem Pharma 589
-------------
CZECH REPUBLIC (0.8%)
33,300 Ceske Radiokomunikace GDR 1,032 (6)
-------------
DENMARK (0.8%)
13,500 Unidanmark AS, A Shares 962
-------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
FINLAND (7.7%)
22,000 Helsingin Puhelin $ 1,371
30,000 Nokia Corp. ADR 4,069
19,800 Pohjola Insurance Group, B
Shares 1,088
15,000 Sonera Group 258
66,000 Tieto Corp. 2,649
-------------
9,435
-------------
FRANCE (10.3%)
52,500 Dassault Systemes ADR 2,093
49,080 France Telecom ADR 4,482
16,720 Lagardere SCA 643
18,000 Scor SA ADR 927
6,000 Suez Lyonnaise des Eaux 1,201
6,000 Synthelabo 1,392
7,000 Vivendi 1,828
-------------
12,566
-------------
GERMANY (4.0%)
26,200 Continental AG 654
7,300 Henkel KGaA 548
15,000 Mannesmann AG 2,017
</TABLE>
C-10
<PAGE>
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
International Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
12,000 Metro AG $ 849
13,000 Volkswagen AG 842
-------------
4,910
-------------
HONG KONG (2.0%)
31,100 Asia Satellite
Telecommunications Holdings
ADR 517
100,000 Cheung Kong 681
65,000 Hang Seng Bank 529
25,200 HSBC Holdings 709
-------------
2,436
-------------
HUNGARY (1.0%)
20,400 Matav RT ADR 556
15,850 OTP Bank GDR 624
-------------
1,180
-------------
INDONESIA (0.8%)
37,400 PT Indosat ADR 486
80,700 PT Telekomunikasi Indonesia
ADR 515
-------------
1,001
-------------
IRELAND (2.1%)
9,900 Allied Irish Banks ADR 1,022
44,200 CRH PLC 819
10,100 Elan Corp. ADR 775
-------------
2,616
-------------
ITALY (2.8%)
189,380 Autogrill SpA 1,893
50,000 ENI SpA 289
45,975 IFI 654
93,023 Telecom Italia 629
-------------
3,465
-------------
JAPAN (11.3%)
12,300 Acom Co. 727
120,000 Bank of Tokyo-Mitsubishi 1,447
101,000 Chugai Pharmaceutical 967
28,000 Kao Corp. 559
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
8,700 Kita Kyushu Coca-Cola Bottling $ 330
15,000 Mikuni Coca-Cola Bottling 324
89,000 Mitsubishi Trust & Banking 756
5,500 Nintendo Corp. 464
65 NTT Corp. 536
20 NTT Mobile Communication
Network 813
26,000 Sankyo Co. 559
17,400 Sanyo Coca-Cola Bottling 334
12,800 Sony Corp. 969
75,000 Takeda Chemical Industries 2,580
60,000 Terumo Corp. 1,224
24,000 Yamanouchi Pharmaceutical 732
18,000 York-Benimaru Co. 524
-------------
13,845
-------------
MEXICO (1.9%)
300,000 Cemex SA, B Shares 926
240,000 Corporacion Interamericana de
Entretenimiento, B Shares 628
30,000 Fomento Economico Mexicano ADR 789
-------------
2,343
-------------
NETHERLANDS (5.9%)
26,000 Aegon NV-New York 2,720
20,148 Getronics NV 881
11,900 ING Groep 667
25,000 Laurus NV 715
8,200 Unilever NV 592
14,000 VNU NV 576
5,700 Wolters Kluwer 1,100
-------------
7,251
-------------
</TABLE>
C-11
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
International Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
NORWAY (2.2%)
145,000 Merkantildata ASA $ 1,503
33,400 Tomra Systems 1,161
-------------
2,664
-------------
PORTUGAL (1.0%)
25,000 Portugal Telecom ADR 1,225
-------------
RUSSIA (0.8%)
16,800 Global TeleSystems Group 932
-------------
SINGAPORE (4.8%)
848,000 Datacraft Asia 1,696
65,000 Elec & Eltek International 354
200,000 Overseas Union Bank 731
49,500 Singapore Press Holdings 563
150,000 United Overseas Bank 880
285,000 Venture Manufacturing 1,200
900,000 Vickers Ballas Holdings 452
-------------
5,876
-------------
SOUTH AFRICA (3.2%)
400,134 Computer Configurations
Holdings 2,261
200,000 Specialised Outsourcing 1,615
-------------
3,876
-------------
SPAIN (4.8%)
43,850 Banco Bilbao Vizcaya ADR 647
32,990 Banco Santander ADR 650
50,000 Endesa ADR 1,319
11,683 Telefonica SA ADR 1,606
200,000 TelePizza, SA 1,638
-------------
5,860
-------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
SWEDEN (3.8%)
12,500 Assa Abloy $ 585
30,000 NetCom Systems, B Shares 1,147
82,000 Skandia Forsakrings 1,507
52,800 Skandinaviska Enskilda Banken,
A Shares 590
20,000 WM-Data 867
-------------
4,696
-------------
SWITZERLAND (2.4%)
400 Kudelski SA 1,295
364 Novartis AG 639
30 Roche Holding 380
1,680 Swisscom AG 664
-------------
2,978
-------------
TAIWAN (1.0%)
28,800 ASE Test 1,170
-------------
UNITED KINGDOM (14.4%)
55,000 Alliance & Leicester 742
48,800 Barclays PLC 1,304
32,300 Bodycote International 427
84,000 COLT Telecom Group 1,554
60,000 Diageo PLC 658
36,000 EMAP PLC 773
67,200 Energis PLC 1,610
40,500 Glaxo Wellcome 1,293
95,000 Hays PLC 909
150,000 Orange PLC 2,171
120,000 Rentokil Initial 887
40,000 Sage Group 1,294
60,000 SEMA Group 673
25,000 Serco Group 563
266,125 Stagecoach Holdings 1,017
51,000 United Utilities 647
140,000 WPP Group 1,109
-------------
17,631
-------------
TOTAL COMMON STOCKS (COST
$74,935) 116,048
-------------
</TABLE>
C-12
<PAGE>
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
International Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
PREFERRED STOCKS (1.5%)
2,000 BMW AG, Germany $ 814
300 BMW AG-New, Germany 125
2,500 SAP AG-Vorzug, Germany 945
-------------
TOTAL PREFERRED STOCKS (COST
$1,289) 1,884
-------------
<CAPTION>
Principal
Amount
- ---------
<C> <S> <C>
U.S. TREASURY SECURITIES (2.4%)
$3,000,000 U.S. Treasury Bills, 4.48% &
4.54%, due 4/22/99 (COST
$2,981) 2,981(3)
-------------
REPURCHASE AGREEMENTS (0.2%)
240,000 State Street Bank and Trust
Co. Repurchase Agreement,
4.70%, due 3/1/99, dated
2/26/99, Maturity Value
$240,094, Collateralized by
$215,000 U.S. Treasury Bonds,
7.25%, due 5/15/16
(Collateral Value $251,954)
(COST $240) 240 (3)
-------------
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- --------- -------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (10.8%)
$4,800,000 General Electric Capital
Corp., 4.72%, due 3/1/99 $ 4,800
8,363,438 N&B Securities Lending Quality
Fund, LLC 8,363
-------------
TOTAL SHORT-TERM INVESTMENTS
(COST $13,163) 13,163(3)
-------------
TOTAL INVESTMENTS (109.7%)
(COST $92,608) 134,316
Liabilities, less cash,
receivables and other assets
[(9.7%)] (11,884)
-------------
TOTAL NET ASSETS (100.0%) $ 122,432
-------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-13
<PAGE>
SUMMARY SCHEDULE OF INVESTMENTS
BY INDUSTRY
Neuberger Berman
- --------------------------------------------------------------------------------
International Portfolio
<TABLE>
<CAPTION>
Market
Value(1)
(000's Percentage of
Industry omitted) Net Assets
------------------------------ ------------- -------------
<S> <C> <C>
Telecommunications $ 30,152 24.6%
Banking & Financial 15,053 12.3%
Technology 13,485 11.0%
Pharmaceutical 10,946 8.9%
Electronics 6,432 5.3%
Insurance 6,243 5.1%
Diversified 5,663 4.6%
U.S. Treasury Securities &
Other Assets-Net 4,500 3.7%
Restaurants 3,531 2.9%
Publishing & Broadcasting 3,013 2.5%
Machinery & Equipment 2,601 2.1%
Food & Beverage 2,435 2.0%
Manufacturing 2,363 1.9%
Retailing 2,088 1.7%
Utilities 1,966 1.6%
Automotive 1,781 1.5%
Building Materials 1,744 1.4%
Industrial Goods & Services 1,450 1.2%
Hospital Supplies 1,224 1.0%
Consumer Goods & Services 1,152 0.9%
Advertising 1,109 0.9%
Media & Entertainment 1,092 0.9%
Transportation 1,017 0.8%
Oil & Gas 711 0.6%
Holding Companies 681 0.6%
------------- -------------
TOTAL NET ASSETS $ 122,432 100.0%
------------- -------------
</TABLE>
C-14
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Manhattan Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Donaldson, Lufkin & Jenrette 2.2%
2. Citrix Systems 2.1%
3. Staples, Inc. 2.0%
4. Elan Corp. ADR 2.0%
5. Kansas City Southern Industries 1.9%
6. TJX Cos. 1.8%
7. Capital One Financial 1.8%
8. Dollar Tree Stores 1.8%
9. Intuit Inc. 1.7%
10. Republic Services 1.7%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- -------------
<C> <S> <C>
COMMON STOCKS (96.3%)
BUSINESS SERVICES (6.6%)
364,900 Avis Rent A Car $ 8,370
282,600 Cambridge Technology Partners 7,100
106,500 International Network Services 5,445
97,800 NCR Corp. 4,004
397,500 Saville Systems ADR 7,925
179,800 Valassis Communications 8,630
-------------
41,474
-------------
CAPITAL GOODS (1.7%)
621,700 Republic Services 10,841
-------------
COMMUNICATIONS (5.8%)
223,300 American Tower 5,987
278,900 ICG Communications 5,247
225,100 Intermedia Communications 4,080
94,100 Jones Intercable Class A 3,811
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- -------------
<C> <S> <C>
102,100 NTL Inc. $ 7,932
336,300 RSL Communications 9,606
-------------
36,663
-------------
CONSUMER CYCLICALS (19.9%)
132,600 Abercrombie & Fitch 10,078
65,300 Amazon.com 8,367
83,300 Costco Cos. 6,690
277,900 Dollar Tree Stores 11,116
346,500 Furniture Brands International 7,406
180,500 Hayes Lemmerz International 4,693
267,800 Lennar Corp. 6,210
273,900 Linens 'n Things 9,860
229,100 Office Depot 8,176
329,775 Outdoor Systems 9,213
434,400 Staples, Inc. 12,774
320,600 Sylvan Learning Systems 10,660
395,200 TJX Cos. 11,288
320,500 Tower Automotive 5,969
140,400 Travel Services International 2,141
-------------
124,641
-------------
CONSUMER STAPLES (10.3%)
81,500 American Italian Pasta 2,078
178,500 Brinker International 5,165
335,500 Capstar Broadcasting 6,773
112,150 Cardinal Health 8,096
245,000 Chancellor Media 10,719
350,900 CKE Restaurants 9,321
80,600 Estee Lauder 6,997
70,900 Jones Apparel Group 1,981
86,600 SFX Entertainment 5,293
217,300 Suiza Foods 8,040
-------------
64,463
-------------
</TABLE>
C-15
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Manhattan Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- -------------
<C> <S> <C>
ELECTRICAL EQUIPMENT (5.5%)
149,100 Altera Corp. $ 7,250
122,800 KLA-Tencor 6,363
170,100 Level One Communications 5,698
75,800 Micron Technology 4,368
98,700 PMC-Sierra 6,995
45,700 RF Micro Devices 3,519
-------------
34,193
-------------
FINANCIAL SERVICES (9.8%)
87,700 Capital One Financial 11,193
241,100 Donaldson, Lufkin & Jenrette 13,743
187,100 FINOVA Group 9,507
152,000 Nationwide Financial Services 6,906
231,300 North Fork Bancorp. 5,088
82,700 Providian Financial 8,446
87,500 State Street 6,710
-------------
61,593
-------------
HARDWARE (7.0%)
343,000 Adaptec, Inc. 6,838
136,200 Ascend Communications 10,479
194,300 Network Appliance 8,161
201,700 Sanmina Corp. 10,539
90,700 Uniphase Corp. 7,993
-------------
44,010
-------------
HEALTH CARE (15.3%)
345,000 Alternative Living Services 7,072
100,900 ALZA Corp. 5,291
110,600 Biogen, Inc. 10,631
167,500 C. R. Bard 9,443
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- -------------
<C> <S> <C>
159,600 Elan Corp. ADR $ 12,239
53,500 Immunex Corp. 7,570
226,400 Mylan Laboratories 6,184
349,100 Omnicare, Inc. 8,357
385,600 Safeskin Corp. 8,965
7,900 Sepracor Inc. 986
263,500 STERIS Corp. 8,663
69,900 Sunrise Assisted Living 2,700
158,600 Watson Pharmaceuticals 7,662
-------------
95,763
-------------
INTERNET (4.4%)
123,100 Infoseek Corp. 8,809
109,600 Intuit Inc. 10,844
78,400 Safeguard Scientifics 2,930
33,600 Yahoo! Inc. 5,158
-------------
27,741
-------------
SOFTWARE (8.1%)
182,300 BMC Software 7,451
173,750 Citrix Systems 13,400
144,800 Compuware Corp. 8,100
178,800 Network Associates 8,404
227,500 Novell, Inc. 4,408
122,900 VERITAS Software 8,726
-------------
50,489
-------------
TRANSPORTATION (1.9%)
254,400 Kansas City Southern
Industries 11,893
-------------
TOTAL COMMON STOCKS (COST
$489,643) 603,764
-------------
</TABLE>
C-16
<PAGE>
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Manhattan Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- ----------- -------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (21.3%)
$21,800,000 General Electric Capital
Corp., 4.72%, due 3/1/99 $ 21,800
111,711,022 N&B Securities Lending Quality
Fund, LLC 111,711
-------------
TOTAL SHORT-TERM INVESTMENTS
(COST $133,511) 133,511(3)
-------------
TOTAL INVESTMENTS (117.6%)
(COST $623,154) 737,275(4)
Liabilities, less cash,
receivables and other
assets[(17.6%)] (110,263)
-------------
TOTAL NET ASSETS (100.0%) $ 627,012
-------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-17
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Millennium Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. CSK Auto 3.8%
2. Profit Recovery Group International 3.2%
3. Corporate Executive Board 3.2%
4. Flextronics International 2.8%
5. SFX Entertainment 2.7%
6. Osteotech, Inc. 2.6%
7. Corinthian Colleges 2.5%
8. White Cap Industries 2.5%
9. Micromuse Inc. 2.4%
10. Infoseek Corp. 2.4%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
COMMON STOCKS (97.2%)
BUSINESS SERVICES (19.2%)
4,000 Consolidated Graphics $ 243
30,000 Corinthian Colleges 671
35,000 Corporate Executive Board 857
8,000 F.Y.I. Inc. 241
36,000 First Consulting Group 508
5,000 Lason, Inc. 271
8,000 Metzler Group 340
35,000 Packaged Ice 298
26,000 Profit Recovery Group
International 859
16,000 Provant, Inc. 310
9,000 Sylvan Learning Systems 299
50,000 UniCapital Corp. 291
-------------
5,188
-------------
CONSUMER CYCLICALS (8.1%)
23,000 Blue Rhino 392
35,000 Comfort Systems USA 473
12,000 School Specialty 265
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
12,000 SFX Entertainment $ 733
9,000 Speedway Motorsports 321
-------------
2,184
-------------
ELECTRICAL EQUIPMENT (3.9%)
9,000 Lattice Semiconductor 359
10,000 Level One Communications 335
7,000 PRI Automation 210
3,000 Vitesse Semiconductor 138
-------------
1,042
-------------
ENERGY (2.0%)
24,000 Hanover Compressor 525
-------------
FINANCIAL SERVICES (1.9%)
15,000 Affiliated Managers Group 390
5,000 HealthCare Financial Partners 131
-------------
521
-------------
HARDWARE (7.6%)
27,000 ACT Networks 314
50,000 Ancor Communications 312
20,000 Flextronics International 754
2,500 RF Micro Devices 193
12,000 Visual Networks 471
-------------
2,044
-------------
HEALTH CARE (14.6%)
12,000 Alternative Living Services 246
27,000 Anesta Corp. 535
40,000 Karrington Health 495
14,000 Kendle International 338
25,000 MEDE AMERICA 428
25,000 Ocular Sciences 613
13,000 Osteotech, Inc. 704
</TABLE>
C-18
<PAGE>
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Millennium Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
10,000 Priority Healthcare $ 389
12,000 Province Healthcare 182
-------------
3,930
-------------
INTERNET (6.6%)
3,000 Exodus Communications 220
9,000 Infoseek Corp. 644
5,000 Safeguard Scientifics 187
6,000 theglobe.com 278
7,000 USWeb Corp. 236
5,000 VerticalNet, Inc. 206
-------------
1,771
-------------
RETAIL (12.5%)
30,000 CSK Auto 1,029
20,000 Dave & Buster's 394
15,000 Group 1 Automotive 378
12,000 Insight Enterprises 279
18,000 Sonic Automotive 290
9,000 Tweeter Home Entertainment
Group 341
45,000 White Cap Industries 664
-------------
3,375
-------------
SOFTWARE (15.7%)
30,000 Best Software 488
22,000 Catalyst International 341
70,000 Descartes Systems Group 481
13,000 Engineering Animation 588
30,000 Exchange Applications 495
20,000 Micromuse Inc. 645
5,000 VERITAS Software 355
12,000 Visio Corp. 345
60,000 VISTA Information Solutions 502
-------------
4,240
-------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
TELECOMMUNICATIONS (3.6%)
15,000 Quanta Services $ 405
20,000 RSL Communications 571
-------------
976
-------------
TRANSPORTATION (1.5%)
25,000 United Road Services 412
-------------
TOTAL COMMON STOCKS (COST
$24,647) 26,208
-------------
<CAPTION>
Principal
Amount
- ---------
<C> <S> <C>
U.S. TREASURY SECURITIES (1.2%)
$ 335,000 U.S. Treasury Bills, 4.13%,
due 3/18/99 (COST $334) 334(3)
-------------
SHORT-TERM INVESTMENTS (26.4%)
440,000 General Electric Capital
Corp., 4.72%, due 3/1/99 440
6,665,000 N&B Securities Lending Quality
Fund, LLC 6,665
-------------
TOTAL SHORT-TERM INVESTMENTS
(COST $7,105) 7,105 (3)
-------------
TOTAL INVESTMENTS (124.8%)
(COST $32,086) 33,647 (4)
Liabilities, less cash,
receivables and other assets
[(24.8%)] (6,680)
-------------
TOTAL NET ASSETS (100.0%) $ 26,967
-------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-19
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Partners Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Bank One 3.1%
2. CIGNA Corp. 3.1%
3. Northern Telecom 3.0%
4. MCI WorldCom 2.9%
5. MediaOne Group 2.8%
6. SLM Holding 2.5%
7. American Home Products 2.5%
8. Xerox Corp. 2.5%
9. Chase Manhattan 2.4%
10. Baxter International 2.4%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ------------
<C> <S> <C>
COMMON STOCKS (97.4%)
AIRLINES (1.3%)
1,532,100 Continental Airlines Class B $ 53,049
------------
AUTOMOBILE MANUFACTURING (1.5%)
710,000 General Motors 58,619
------------
AUTO/TRUCK REPLACEMENT PARTS (2.5%)
1,215,000 AutoZone, Inc. 42,525
1,070,000 Delphi Automotive Systems 19,728
1,036,000 Lear Corp. 36,584
------------
98,837
------------
BANKING & FINANCIAL (10.4%)
2,297,000 Bank One 123,464
988,000 BankAmerica Corp. 64,529
1,185,000 Chase Manhattan 94,356
2,063,300 Countrywide Credit Industries 78,147
1,309,400 Household International 53,194
------------
413,690
------------
CHEMICALS (0.5%)
415,000 duPont 21,295
------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ------------
<C> <S> <C>
COMMUNICATIONS (4.9%)
319,500 AT&T Corp. $ 26,239
945,400 Bell Atlantic 54,301
1,391,600 MCI WorldCom 114,807
------------
195,347
------------
ELECTRICAL & ELECTRONICS (3.6%)
1,720,000 General Motors Class H 81,162
1,165,000 Raytheon Co. Class A 61,599
------------
142,761
------------
ELECTRONICS (1.7%)
2,191,200 Loral Space & Communications 39,442
615,000 Teradyne, Inc. 29,289
------------
68,731
------------
ENERGY (3.0%)
1,899,200 McDermott International 37,865
1,917,500 Texas Utilities 81,374
------------
119,239
------------
ENTERTAINMENT (1.1%)
2,240,000 Mirage Resorts 43,680
------------
FINANCIAL SERVICES (3.4%)
390,000 Morgan Stanley Dean Witter 35,295
2,338,800 SLM Holding 100,276
------------
135,571
------------
FOOD & TOBACCO (6.7%)
940,000 Anheuser-Busch 72,086
2,293,900 ConAgra, Inc. 69,104
2,112,000 Nabisco Holdings 93,720
745,000 Philip Morris 29,148
------------
264,058
------------
FOOD PRODUCTS (1.5%)
115,200 Diageo PLC ADR 5,213
1,940,000 Sara Lee 52,744
------------
57,957
------------
</TABLE>
C-20
<PAGE>
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Partners Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ------------
<C> <S> <C>
GAS (1.6%)
1,751,600 Praxair, Inc. $ 61,197
------------
HEALTH CARE (15.9%)
1,670,000 ALZA Corp. 87,571
1,665,000 American Home Products 99,067
1,340,000 Baxter International 94,302
1,490,000 Becton, Dickinson & Co. 49,915
1,361,900 Boston Scientific 36,090
1,082,000 Centocor, Inc. 44,971
1,550,000 CIGNA Corp. 121,675
630,000 McKesson HBOC 42,840
2,711,000 Tenet Healthcare 53,373
------------
629,804
------------
INDUSTRIAL GOODS & SERVICES (1.0%)
1,585,700 Owens-Illinois 37,958
------------
INSURANCE (4.1%)
1,835,000 Ace, Ltd. 50,004
650,000 Aetna Inc. 48,141
501,000 Allstate Corp. 18,787
230,000 NAC Re 12,434
560,600 XL Capital 34,337
------------
163,703
------------
OIL & GAS (4.4%)
490,000 Chevron Corp. 37,669
410,000 Schlumberger Ltd. 19,910
1,575,000 Texaco Inc. 73,336
2,100,000 Tosco Corp. 43,444
------------
174,359
------------
REAL ESTATE (0.8%)
2,825,300 Host Marriott 30,549
------------
RETAILING (3.8%)
1,208,000 Consolidated Stores 30,426
1,180,000 Harcourt General 54,059
1,205,000 Tandy Corp. 67,028
------------
151,513
------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ------------
<C> <S> <C>
STEEL (0.8%)
1,435,000 AK Steel Holding $ 31,301
------------
TECHNOLOGY (11.3%)
1,857,100 Computer Associates 77,998
1,073,000 Hewlett-Packard 71,287
470,000 IBM 79,900
2,475,000 Parametric Technology 38,053
1,728,300 Quantum Corp. 28,409
575,000 Texas Instruments 51,283
1,790,000 Xerox Corp. 98,786
------------
445,716
------------
TELECOMMUNICATIONS (7.5%)
1,050,800 GTE Corp. 68,171
2,045,000 MediaOne Group 111,452
2,036,600 Northern Telecom 118,250
------------
297,873
------------
UTILITIES (4.1%)
657,000 PG&E Corp. 20,696
2,120,000 The Williams Cos. 78,440
1,760,000 Unicom Corp. 62,590
------------
161,726
------------
TOTAL COMMON STOCKS (COST
$3,492,631) 3,858,533
------------
PREFERRED STOCKS (1.1%)
1,660,000 News Corp. ADR (COST $43,439) 43,575
------------
</TABLE>
C-21
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Partners Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- ---------- ------------
<C> <S> <C>
REPURCHASE AGREEMENTS (1.3%)
$51,050,000 State Street Bank and Trust
Co. Repurchase Agreement,
4.70%, due 3/1/99, dated
2/26/99, Maturity Value
$51,066,995, Collateralized
by $44,875,000 U.S. Treasury
Bonds, 7.25%, due 5/15/16
(Collateral Value
$52,588,025) (COST $51,050) $ 51,050(3)
------------
SHORT-TERM INVESTMENTS (3.1%)
6,000,000 USAA Capital Corp., 4.80%, due
3/2/99 5,999
25,000,000 Vulcan Materials Co., 4.85%,
due 3/2/99 24,997
92,088,729 N&B Securities Lending Quality
Fund, LLC 92,089
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $123,085) 123,085 (3)
------------
TOTAL INVESTMENTS (102.9%)
(COST $3,710,205) 4,076,243 (4)
Liabilities, less cash,
receivables and other assets
[(2.9%)] (116,483)
------------
TOTAL NET ASSETS (100.0%) $ 3,959,760
------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-22
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Socially Responsive Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Citigroup Inc. 3.6%
2. MCI WorldCom 3.5%
3. C. R. Bard 3.2%
4. Intel Corp. 2.7%
5. Wal-Mart Stores 2.7%
6. ALZA Corp. 2.7%
7. Wellpoint Health Networks 2.6%
8. Unisys Corp. 2.5%
9. Tyco International 2.5%
10. Fannie Mae 2.5%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- -------------
<C> <S> <C>
COMMON STOCKS (95.8%)
ADVERTISING (2.2%)
330,000 True North Communications $ 7,693
-------------
AUTOMOTIVE (1.7%)
137,200 Borg-Warner Automotive 5,977
-------------
BANKING & FINANCIAL (2.4%)
160,000 Bank One 8,600
-------------
CHEMICALS (1.2%)
100,000 Minerals Technologies 4,294
-------------
CONSUMER GOODS & SERVICES (2.0%)
150,000 Kimberly-Clark 7,088
-------------
DIVERSIFIED (2.5%)
120,000 Tyco International 8,933
-------------
ENERGY (1.7%)
80,000 Chevron Corp. 6,150
-------------
ENTERTAINMENT (2.2%)
300,000 Fox Entertainment Group 7,800
-------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- -------------
<C> <S> <C>
FINANCIAL SERVICES (10.5%)
150,000 Ambac Financial Group $ 8,400
217,500 Citigroup Inc. 12,778
200,000 Dun & Bradstreet 6,850
125,000 Fannie Mae 8,750
53,500 Indigo Aviation ADR 401
-------------
37,179
-------------
FOOD & BEVERAGE (1.9%)
80,000 McDonald's Corp. 6,800
-------------
FURNISHINGS (2.1%)
350,000 Leggett & Platt 7,328
-------------
HEALTH CARE (13.7%)
180,000 ALZA Corp. 9,439
85,000 Biogen, Inc. 8,171
250,000 Invacare Corp. 5,937
90,000 Johnson & Johnson 7,684
120,000 Warner-Lambert 8,287
118,000 Wellpoint Health Networks 9,307
-------------
48,825
-------------
HOSPITAL SUPPLIES (5.2%)
150,000 Beckman Coulter 7,247
200,000 C. R. Bard 11,275
-------------
18,522
-------------
INDUSTRIAL & COMMERCIAL PRODUCTS (2.2%)
350,000 Raychem Corp. 7,984
-------------
INSURANCE (3.9%)
380,000 ESG Re 6,436
160,000 ReliaStar Financial 7,260
-------------
13,696
-------------
OIL & GAS (1.3%)
200,000 Cooper Cameron 4,625
-------------
PAPER & FOREST PRODUCTS (1.6%)
190,000 Mead Corp. 5,783
-------------
</TABLE>
C-23
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Socially Responsive Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- -------------
<C> <S> <C>
PUBLISHING & BROADCASTING (4.1%)
240,000 CMP Media $ 7,200
150,000 Valassis Communications 7,200
-------------
14,400
-------------
RECYCLING (0.7%)
187,500 IMCO Recycling 2,355
-------------
RETAIL GROCERY (1.9%)
120,000 Albertson's Inc. 6,840
-------------
RETAIL STORES (4.6%)
160,000 Circuit City Stores 8,680
120,000 Dayton Hudson 7,508
-------------
16,188
-------------
RETAILING (2.7%)
110,000 Wal-Mart Stores 9,501
-------------
TECHNOLOGY (12.8%)
230,000 Analog Devices 5,764
160,000 Compaq Computer 5,640
120,000 Hewlett-Packard 7,973
80,000 Intel Corp. 9,595
300,000 Unisys Corp. 8,944
140,000 Xerox Corp. 7,726
-------------
45,642
-------------
TELECOMMUNICATIONS (4.0%)
150,000 MCI WorldCom 12,375
303,200 Metromedia International Group 1,762
-------------
14,137
-------------
TRANSPORTATION (1.9%)
120,000 AMR Corp. 6,653
-------------
UTILITIES, ELECTRIC & GAS (4.8%)
180,000 Cinergy Corp. 5,254
300,000 DPL Inc. 5,343
250,000 KeySpan Energy 6,625
-------------
17,222
-------------
TOTAL COMMON STOCKS (COST
$260,523) 340,215
-------------
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- ---------- -------------
<C> <S> <C>
U.S. TREASURY SECURITIES (1.2%)
$ 4,370,000 U.S. Treasury Bills, 4.30% &
4.485%, due 3/25/99 & 4/22/99
(COST $4,347) $ 4,347(3)
---------------
REPURCHASE AGREEMENTS (3.2%)
11,340,000 State Street Bank and Trust
Co. Repurchase Agreement,
4.70%, due 3/1/99, dated
2/26/99, Maturity Value
$11,344,442, Collateralized
by $9,970,000 U.S. Treasury
Bonds, 7.25%, due 5/15/16
(Collateral Value
$11,683,624) (COST $11,340) 11,340(3)
---------------
SHORT-TERM INVESTMENTS (1.8%)
100,000 Self Help Credit Union, 4.66%,
due 5/24/99 100
6,293,657 N&B Securities Lending Quality
Fund, LLC 6,294
---------------
TOTAL SHORT-TERM INVESTMENTS
(COST $6,394) 6,394(3)
---------------
TOTAL INVESTMENTS (102.0%)
(COST $282,604) 362,296(4)
Liabilities, less cash,
receivables and other assets
[(2.0%)] (6,964)
---------------
TOTAL NET ASSETS (100.0%) $355,332
---------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-24
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS
February 28, 1999 (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 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) At cost, which approximates market value.
4) At February 28, 1999, selected Portfolio information on a U.S. Federal income
tax basis was as follows:
<TABLE>
<CAPTION>
NET
GROSS GROSS UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
NEUBERGER BERMAN COST APPRECIATION DEPRECIATION (DEPRECIATION)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FOCUS PORTFOLIO $ 1,059,364,728 $ 679,640,706 $ 61,537,630 $618,103,076
GENESIS PORTFOLIO 1,762,881,325 182,036,789 237,157,652 (55,120,863)
GUARDIAN PORTFOLIO 4,631,212,166 1,236,374,590 322,029,482 914,345,108
MANHATTAN PORTFOLIO 623,154,006 151,141,461 37,020,222 114,121,239
MILLENNIUM PORTFOLIO 32,086,645 3,086,232 1,525,656 1,560,576
PARTNERS PORTFOLIO 3,713,681,052 512,732,171 150,170,224 362,561,947
SOCIALLY RESPONSIVE PORTFOLIO 282,603,942 93,521,367 13,829,456 79,691,911
</TABLE>
5) The following securities were held in escrow at February 28, 1999, to cover
outstanding call options written:
<TABLE>
<CAPTION>
MARKET VALUE PREMIUM MARKET
SECURITIES AND OF ON VALUE
NEUBERGER BERMAN SHARES OPTIONS SECURITIES OPTIONS OF OPTIONS
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
GUARDIAN PORTFOLIO 200,000 BankBoston Corp. $ 8,087,500 $ 543,982 $ 700,000
May 1999 @ 40
500,000 KLA-Tencor 25,906,250 1,947,435 2,187,500
March 1999 @ 50
100,000 Texas Instruments 8,918,750 671,978 125,000
March 1999 @ 100
</TABLE>
C-25
<PAGE>
6) Security exempt from registration under the Securities Act of 1933. This
security may be resold in transactions exempt from registration, normally to
qualified institutional buyers under Rule 144A. At February 28, 1999, this
security amounted to $1,032,300 or 0.8% of net assets for Neuberger Berman
International Portfolio.
SEE NOTES TO FINANCIAL STATEMENTS
C-26
<PAGE>
(This page has been left blank intentionally.)
C-27
<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 $ 1,660,863 $ 1,545,777 $ 5,211,569
Non-controlled affiliated issuers 16,605 161,983 333,988
------------------------------------------------
1,677,468 1,707,760 5,545,557
Cash 6 4 10
Deferred organization costs (Note A) -- -- --
Dividends and interest receivable 1,404 3,276 8,768
Prepaid expenses and other assets 23 47 115
Receivable for securities sold 42,727 20,410 106,079
------------------------------------------------
1,721,628 1,731,497 5,660,529
------------------------------------------------
LIABILITIES
Option contracts written, at market value
(Note A) -- -- 3,012
Payable for collateral on securities loaned
(Note A) 48,892 34,356 7,002
Payable for securities purchased 32,914 12,641 146,184
Payable for variation margin (Note A) -- -- 2,261
Payable to investment manager (Note B) 627 988 1,928
Accrued expenses and other payables 657 1,250 2,605
------------------------------------------------
83,090 49,235 162,992
------------------------------------------------
NET ASSETS Applicable to Investors' Beneficial
Interests $ 1,638,538 $ 1,682,262 $ 5,497,537
------------------------------------------------
NET ASSETS consist of:
Paid-in capital $ 1,018,851 $ 1,737,383 $ 4,555,306
Net unrealized appreciation (depreciation)
in value of investment securities,
financial futures contracts, option
contracts, translation of assets and
liabilities in foreign currencies, and
foreign currency contracts 619,687 (55,121) 942,231
------------------------------------------------
NET ASSETS $ 1,638,538 $ 1,682,262 $ 5,497,537
------------------------------------------------
*Cost of investments:
Unaffiliated issuers $ 1,024,810 $ 1,584,548 $ 4,264,323
Non-controlled affiliated issuers 32,971 178,333 361,673
------------------------------------------------
Total cost of investments $ 1,057,781 $ 1,762,881 $ 4,625,996
------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-28
<PAGE>
February 28,1999 (Unaudited)
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL
MANAGERS EQUITY MANAGERS TRUST
TRUST ---------------------------------------------------------
------------ SOCIALLY
INTERNATIONAL MANHATTAN MILLENNIUM PARTNERS RESPONSIVE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments in securities, at market value*
(Notes A & E) -- see Schedule of
Investments:
Unaffiliated issuers $ 134,316 $ 737,275 $ 33,647 $ 4,076,243 $ 362,296
Non-controlled affiliated issuers -- -- -- -- --
------------------------------------------------------------------------
134,316 737,275 33,647 4,076,243 362,296
Cash 11 4 4 8 9
Deferred organization costs (Note A) 3 -- -- -- --
Dividends and interest receivable 436 2,253 28 7,237 722
Prepaid expenses and other assets 11 59 -- 70 7
Receivable for securities sold 613 5,468 34 1,438 6,009
------------------------------------------------------------------------
135,390 745,059 33,713 4,084,996 369,043
------------------------------------------------------------------------
LIABILITIES
Option contracts written, at market value
(Note A) -- -- -- -- --
Payable for collateral on securities loaned
(Note A) 8,364 111,711 6,665 92,089 6,293
Payable for securities purchased 4,185 3,851 15 28,145 6,907
Payable for variation margin (Note A) -- -- -- -- --
Payable to investment manager (Note B) 82 263 17 1,396 149
Accrued expenses and other payables 327 2,222 49 3,606 362
------------------------------------------------------------------------
12,958 118,047 6,746 125,236 13,711
------------------------------------------------------------------------
NET ASSETS Applicable to Investors' Beneficial
Interests $ 122,432 $ 627,012 $ 26,967 $ 3,959,760 $ 355,332
------------------------------------------------------------------------
NET ASSETS consist of:
Paid-in capital $ 80,726 $ 512,891 $ 25,406 $ 3,593,722 $ 275,640
Net unrealized appreciation (depreciation)
in value of investment securities,
financial futures contracts, option
contracts, translation of assets and
liabilities in foreign currencies, and
foreign currency contracts 41,706 114,121 1,561 366,038 79,692
------------------------------------------------------------------------
NET ASSETS $ 122,432 $ 627,012 $ 26,967 $ 3,959,760 $ 355,332
------------------------------------------------------------------------
*Cost of investments:
Unaffiliated issuers $ 92,608 $ 623,154 $ 32,086 $ 3,710,205 $ 282,604
Non-controlled affiliated issuers -- -- -- -- --
------------------------------------------------------------------------
Total cost of investments $ 92,608 $ 623,154 $ 32,086 $ 3,710,205 $ 282,604
------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-29
<PAGE>
STATEMENTS OF OPERATIONS
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY MANAGERS TRUST
------------------------------------------
FOCUS GENESIS GUARDIAN
PORTFOLIO PORTFOLIO PORTFOLIO
For the For the For the
Six Months Six Months Six Months
Ended Ended Ended
February 28, February 28, February 28,
1999 1999 1999
(000'S OMITTED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Income:
Dividend income -- unaffiliated issuers $ 6,393 $ 16,601 $ 28,153
Dividend income -- non-controlled affiliated
issuers 243 391 845
Interest income 497 3,155 16,496
Foreign taxes withheld (Note A) (37) -- (554)
------------------------------------------
Total income 7,096 20,147 44,940
------------------------------------------
Expenses:
Investment management fee (Note B) 3,723 6,961 12,941
Accounting fees 5 5 5
Amortization of deferred organization and
initial offering expenses (Note A) -- -- --
Auditing fees 21 23 24
Custodian fees (Note B) 122 181 426
Insurance expense 10 13 44
Legal fees 13 16 14
Trustees' fees and expenses 11 15 36
Miscellaneous -- 22 --
------------------------------------------
Total expenses 3,905 7,236 13,490
Expenses reduced by custodian fee expense
offset arrangement (Note B) (2) (4) (2)
------------------------------------------
Total net expenses 3,903 7,232 13,488
------------------------------------------
Net investment income (loss) 3,193 12,915 31,452
------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investment
securities sold in unaffiliated issuers 67,598 (81,908) 443,851
Net realized loss on investment securities
sold in non-controlled affiliated issuers (5,311) (1,491) --
Net realized gain on option contracts (Note A) 54 -- 3,042
Net realized gain (loss) on financial futures
contracts (Note A) -- -- 81,082
Net realized loss on foreign currency
transactions (Note A) -- -- --
Net realized loss on equity swap contracts
(Note A) -- -- --
Change in net unrealized appreciation
(depreciation) of investment securities,
financial futures contracts, option
contracts, equity swap contracts,
translation of assets and liabilities in
foreign currencies, and foreign currency
contracts (Note A) 395,546 217,640 767,858
------------------------------------------
Net gain on investments 457,887 134,241 1,295,833
------------------------------------------
Net increase in net assets resulting from
operations $ 461,080 $ 147,156 $ 1,327,285
------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-30
<PAGE>
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL
MANAGERS
TRUST EQUITY MANAGERS TRUST
------------ ---------------------------------------------------------
MILLENNIUM
PORTFOLIO
For the
Period from SOCIALLY
INTERNATIONAL MANHATTAN October 20, PARTNERS RESPONSIVE
PORTFOLIO PORTFOLIO 1998 PORTFOLIO PORTFOLIO
(Commencement
For the For the of For the For the
Six Months Six Months Operations) Six Months Six Months
Ended Ended to Ended Ended
February 28, February 28, February 28, February 28, February 28,
1999 1999 1999 1999 1999
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Income:
Dividend income -- unaffiliated issuers $ 224 $ 578 $ -- $ 38,731 $ 2,013
Dividend income -- non-controlled affiliated
issuers -- -- -- -- --
Interest income 339 976 32 3,279 353
Foreign taxes withheld (Note A) (33) -- -- (107) --
------------------------------------------------------------------------
Total income 530 1,554 32 41,903 2,366
------------------------------------------------------------------------
Expenses:
Investment management fee (Note B) 518 1,595 50 8,923 896
Accounting fees 5 5 4 5 5
Amortization of deferred organization and
initial offering expenses (Note A) 6 -- -- -- 3
Auditing fees 16 31 6 23 15
Custodian fees (Note B) 105 92 18 303 53
Insurance expense 1 4 -- 24 2
Legal fees 18 13 9 9 8
Trustees' fees and expenses 10 6 2 25 5
Miscellaneous 3 7 -- -- --
------------------------------------------------------------------------
Total expenses 682 1,753 89 9,312 987
Expenses reduced by custodian fee expense
offset arrangement (Note B) (2) (3) (1) (2) (1)
------------------------------------------------------------------------
Total net expenses 680 1,750 88 9,310 986
------------------------------------------------------------------------
Net investment income (loss) (150) (196) (56) 32,593 1,380
------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investment
securities sold in unaffiliated issuers (5,875) 16,611 2,226 157,610 6,144
Net realized loss on investment securities
sold in non-controlled affiliated issuers -- -- -- -- --
Net realized gain on option contracts (Note A) -- -- -- -- --
Net realized gain (loss) on financial futures
contracts (Note A) (1,217) -- -- -- --
Net realized loss on foreign currency
transactions (Note A) (2,018) -- -- -- --
Net realized loss on equity swap contracts
(Note A) (274) -- -- -- --
Change in net unrealized appreciation
(depreciation) of investment securities,
financial futures contracts, option
contracts, equity swap contracts,
translation of assets and liabilities in
foreign currencies, and foreign currency
contracts (Note A) 19,444 126,995 1,561 537,283 63,179
------------------------------------------------------------------------
Net gain on investments 10,060 143,606 3,787 694,893 69,323
------------------------------------------------------------------------
Net increase in net assets resulting from
operations $ 9,910 $ 143,410 $ 3,731 $ 727,486 $ 70,703
------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-31
<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
1999 August 31, 1999 August 31,
(000'S OMITTED) (UNAUDITED) 1998 (UNAUDITED) 1998
-------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 3,193 $ 10,123 $ 12,915 $ 23,438
Net realized gain (loss) on
investments 62,341 74,686 (83,399) 35,406
Change in net unrealized
appreciation (depreciation) of
investments 395,546 (360,086) 217,640 (545,041)
-------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 461,080 (275,277) 147,156 (486,197)
-------------------------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 25,197 178,065 115,426 1,557,053
Reductions (165,217) (158,751) (392,675) (342,152)
-------------------------------------------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests (140,020) 19,314 (277,249) 1,214,901
-------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 321,060 (255,963) (130,093) 728,704
NET ASSETS:
Beginning of period 1,317,478 1,573,441 1,812,355 1,083,651
-------------------------------------------------------------
End of period $ 1,638,538 $ 1,317,478 $ 1,682,262 $ 1,812,355
-------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-32
<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
1999 August 31, 1999 August 31, 1999 August 31,
(UNAUDITED) 1998 (UNAUDITED) 1998 (UNAUDITED) 1998
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 31,452 $ 78,026 $ (150) $ 391 $ (196) $ (343)
Net realized gain (loss) on
investments 527,975 893,833 (9,384) (10,675) 16,611 45,585
Change in net unrealized
appreciation (depreciation) of
investments 767,858 (2,420,985) 19,444 (596) 126,995 (106,156)
---------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 1,327,285 (1,449,126) 9,910 (10,880) 143,410 (60,914)
---------------------------------------------------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 46,875 391,142 49,074 91,654 18,985 53,069
Reductions (1,664,428) (1,912,418) (64,374) (68,216) (58,742) (90,539)
---------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests (1,617,553) (1,521,276) (15,300) 23,438 (39,757) (37,470)
---------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (290,268) (2,970,402) (5,390) 12,558 103,653 (98,384)
NET ASSETS:
Beginning of period 5,787,805 8,758,207 127,822 115,264 523,359 621,743
---------------------------------------------------------------------------------------
End of period $ 5,497,537 $ 5,787,805 $ 122,432 $ 127,822 $ 627,012 $ 523,359
---------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-33
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS(Cont'd)
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY
MANAGERS
TRUST
MILLENNIUM
PORTFOLIO
Period from
October 20,
1998
(Commencement
of
Operations)
to
February 28,
1999
(000'S OMITTED) (UNAUDITED)
-------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ (56)
Net realized gain (loss) on
investments 2,226
Change in net unrealized
appreciation (depreciation) of
investments 1,561
-------------
Net increase (decrease) in net
assets resulting from operations 3,731
-------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 23,454
Reductions (218)
-------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests 23,236
-------------
NET INCREASE (DECREASE) IN NET ASSETS 26,967
NET ASSETS:
Beginning of period --
-------------
End of period $ 26,967
-------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-34
<PAGE>
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY MANAGERS
TRUST
SOCIALLY
PARTNERS RESPONSIVE
PORTFOLIO PORTFOLIO
Six Months Six Months
Ended Year Ended Year
February 28, Ended February 28, Ended
1999 August 31, 1999 August 31,
(UNAUDITED) 1998 (UNAUDITED) 1998
-------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 32,593 $ 46,344 $ 1,380 $ 2,863
Net realized gain (loss) on
investments 157,610 408,784 6,144 26,331
Change in net unrealized
appreciation (depreciation) of
investments 537,283 (872,798) 63,179 (50,773)
-------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 727,486 (417,670) 70,703 (21,579)
-------------------------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 135,861 743,583 25,042 71,633
Reductions (484,924) (320,149) (23,263) (23,485)
-------------------------------------------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests (349,063) 423,434 1,779 48,148
-------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 378,423 5,764 72,482 26,569
NET ASSETS:
Beginning of period 3,581,337 3,575,573 282,850 256,281
-------------------------------------------------------------
End of period $ 3,959,760 $ 3,581,337 $ 355,332 $ 282,850
-------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-35
<PAGE>
NOTES TO FINANCIAL STATEMENTS
February 28, 1999 (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
Millennium Portfolio ("Millennium"), 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 eight 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"). Millennium had no operations until October 20, 1998, other than
matters relating to its organization and registration as a series of Managers
Trust. Other regulated investment companies sponsored by Neuberger Berman
Management Inc. ("Management"), whose financial statements are not presented
herein, also invest in the Trusts. Global currently has only one Portfolio.
The assets of each Portfolio belong only to that Portfolio, and the
liabilities of each Portfolio are borne solely by that Portfolio 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
C-36
<PAGE>
discount on short-term investments, is recorded on the accrual basis.
Realized gains and losses from securities transactions and foreign currency
transactions are recorded on the basis of identified cost.
5) FORWARD FOREIGN CURRENCY CONTRACTS: The Portfolios may enter into forward
foreign currency contracts ("contracts") in connection with planned purchases
or sales of securities 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 the Trusts 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 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, 1999, the
unamortized balance of such expenses amounted to $3,375 and $233, for
International 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.
C-37
<PAGE>
10) CALL OPTIONS: Premiums received by each Portfolio upon writing a covered
call option are recorded in the liability section of each Portfolio's
Statement of Assets and Liabilities and are subsequently adjusted to the
current market value. When an option 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, 1999:
<TABLE>
<CAPTION>
VALUE
WHEN
FOCUS NUMBER WRITTEN
- -------------------------------------------------------------------------
<S> <C> <C>
CONTRACTS OUTSTANDING 8/31/98 0 $ 0
CONTRACTS WRITTEN 10,180 3,425,092
CONTRACTS EXPIRED (1,880) (920,082)
CONTRACTS EXERCISED (3,525) (870,436)
CONTRACTS CLOSED (4,775) (1,634,574)
------------------------
CONTRACTS OUTSTANDING 2/28/99 0 $ 0
------------------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
WHEN
GUARDIAN NUMBER WRITTEN
- --------------------------------------------------------------------------
<S> <C> <C>
CONTRACTS OUTSTANDING 8/31/98 7,018 $ 3,498,330
CONTRACTS WRITTEN 42,000 17,810,913
CONTRACTS EXPIRED (12,518) (5,081,776)
CONTRACTS EXERCISED (15,000) (8,098,489)
CONTRACTS CLOSED (13,500) (4,965,583)
-------------------------
CONTRACTS OUTSTANDING 2/28/99 8,000 $ 3,163,395
-------------------------
</TABLE>
11) FINANCIAL FUTURES CONTRACTS: Focus, Guardian, International, Millennium, and
Socially Responsive may each buy and sell financial futures contracts to
hedge against a possible decline in the value of their portfolio securities.
Also, Focus and Guardian may each buy and sell stock index futures contracts
for purposes of managing cash flow. 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
C-38
<PAGE>
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 Portfolios as unrealized gains or losses.
Although some financial futures contracts by their terms call for actual
delivery or acceptance of financial instruments, in most cases the contracts
are closed out prior to delivery by offsetting purchases or sales of
matching financial futures contracts. When the contracts are closed, a
Portfolio recognizes a gain or loss. Risks of entering into futures
contracts include the possibility 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 Portfolios. 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 period ended February 28, 1999, Focus, Millennium, and
Socially Responsive did not enter into any financial futures contracts.
During the six months ended February 28, 1999, International had entered
into various financial futures contracts. At February 28, 1999, there were
no open positions.
At February 28, 1999, open positions in financial futures contracts for
Guardian were as follows:
<TABLE>
<CAPTION>
UNREALIZED
EXPIRATION OPEN CONTRACTS POSITION APPRECIATION
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
March 1999 1,507 S&P 500 Futures Long $22,519,480
</TABLE>
At February 28, 1999, Guardian had the following securities deposited in a
segregated account to cover margin requirements on open financial futures
contracts:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT SECURITY
-----------------------------------------------------------
<S> <C>
$ 10,205,000 U.S. Treasury Bills, 4.345%, due 4/1/1999
21,500,000 U.S. Treasury Bills, 4.425%, due 4/22/1999
</TABLE>
12) SECURITY LENDING: 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
C-39
<PAGE>
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. Effective June 1, 1998, the
Portfolios entered into a Securities Lending Agreement with Morgan Stanley &
Co. Incorporated ("Morgan"). The Portfolios receive cash collateral equal to
at least 100% of the current market value of the loaned securities. The
Portfolios invest the cash collateral in the N&B Securities Lending Quality
Fund, LLC ("investment vehicle"), which is managed by State Street Bank and
Trust Company pursuant to guidelines approved by the Trusts' investment
manager. Income earned on the investment vehicle is paid to Morgan monthly.
The Portfolios receive a fee, payable monthly, negotiated by the Portfolios
and Morgan, based on the number and duration of the lending transactions. At
February 28, 1999, 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>
FOCUS $ 47,933,652 $ 48,892,335
GENESIS 33,682,579 34,356,306
GUARDIAN 6,864,855 7,002,158
INTERNATIONAL 8,199,450 8,363,438
MANHATTAN 109,520,578 111,711,022
MILLENNIUM 6,577,912 6,665,000
PARTNERS 90,283,072 92,088,729
SOCIALLY RESPONSIVE 6,170,250 6,293,657
</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.
14) SWAPS: International has entered into equity swap contracts to gain exposure
to specific foreign equities. A swap is an agreement that obligates two
parties to exchange a series of cash flows at specified intervals based upon
or calculated by reference to changes in specified security prices or
interest rates. The payment flows are usually netted against each other,
with the difference being paid by one party to the other.
C-40
<PAGE>
Risks may arise as a result of the failure of another party to the swap
contract to comply with the terms of the swap contract. The loss incurred by
the failure of a counterparty is generally limited to the net payment to be
received by the Portfolio and/or the termination value at the end of the
contract. Therefore, International considers the creditworthiness of each
counterparty to a swap contract in evaluating potential credit risk.
Additionally, risks may arise from unanticipated movements in interest rates
or in the value of the underlying equities.
International records a net receivable or payable for the amount expected
to be received or paid under the contract. The fluctuation in the market
value of the underlying security is recorded as unrealized appreciation
(depreciation) of investments. Premium payments made to enter into a swap
contract are capitalized and amortized over the life of the swap contract.
Management periodically reviews the value of the unamortized balance of the
premium payment and may accelerate the amortization. At February 28, 1999,
International had no outstanding equity swap contracts.
NOTE B -- MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES:
Each Portfolio retains Management as its investment manager under a
Management Agreement. For such investment management services, each Portfolio
(except Genesis, International, and Millennium) pays Management a fee at the
annual rate of 0.55% of the first $250 million of that Portfolio's average daily
net assets, 0.525% of the next $250 million, 0.50% of the next $250 million,
0.475% of the next $250 million, 0.45% of the next $500 million, and 0.425% of
average daily net assets in excess of $1.5 billion. Genesis and Millennium pay
Management a fee for investment management services at the annual rate of 0.85%
of the first $250 million of that Portfolio's average daily net assets, 0.80% of
the next $250 million, 0.75% of the next $250 million, 0.70% of the next $250
million, and 0.65% of average daily net assets in excess of $1 billion. Prior to
December 15, 1997, Management had voluntarily agreed to waive a portion of the
management fee borne directly by Genesis and indirectly by any entity that
invested in Genesis 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 Management a fee for investment management
services at the annual rate of 0.85% of the first $250 million of that
Portfolio's average daily net assets, 0.825% of the next $250 million, 0.80% of
the next $250 million, 0.775% of the next $250 million, 0.75% of the next $500
million, and 0.725% of average daily net assets in excess of $1.5 billion.
All of the capital stock of 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. Neuberger is retained by
C-41
<PAGE>
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 Management.
Each Portfolio has an expense offset arrangement in connection with its
custodian contract. In addition, in connection with the Securities Lending
Agreement between each Portfolio and Morgan, Morgan has agreed to reimburse each
Portfolio for transaction costs incurred on security lending transactions
charged by the custodian. The impact of these arrangements, respectively,
reflected in the Statements of Operations under the caption Custodian fees, was
a reduction of $162 and $1,632, $166 and $3,536, $315 and $1,624, $116 and
$1,792, $116 and $2,944, $301 and $520, $168 and $1,856, and $100 and $448, for
Focus, Genesis, Guardian, International, Manhattan, Millennium, Partners, and
Socially Responsive, respectively.
NOTE C -- SECURITIES TRANSACTIONS:
During the six months ended February 28, 1999, there were purchase and sale
transactions (excluding short-term securities, financial futures contracts,
forward foreign currency contracts, option contracts, and equity swap contracts)
as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
- ------------------------------------------------------------------------------------
<S> <C> <C>
FOCUS $ 397,301,619 $ 525,042,028
GENESIS 232,202,486 474,841,102
GUARDIAN 2,144,893,710 4,020,900,683
INTERNATIONAL 41,094,507 53,577,696
MANHATTAN 283,532,028 321,578,824
MILLENNIUM 33,864,943 11,426,582
PARTNERS 3,272,942,139 3,435,597,084
SOCIALLY RESPONSIVE 95,860,433 90,481,097
</TABLE>
During the six months ended February 28, 1999, International had entered into
various contracts to deliver currencies at specified future dates. At February
28, 1999, there were no open contracts.
C-42
<PAGE>
During the six months ended February 28, 1999, there were brokerage
commissions on securities paid to Neuberger and other brokers as follows:
<TABLE>
<CAPTION>
OTHER
NEUBERGER BROKERS TOTAL
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FOCUS $ 518,826 $ 561,853 $ 1,080,679
GENESIS 528,353 536,852 1,065,205
GUARDIAN 2,043,446 4,106,527 6,149,973
INTERNATIONAL 4,692 277,294 281,986
MANHATTAN 195,212 288,686 483,898
MILLENNIUM 11,550 9,437 20,987
PARTNERS 4,586,919 3,987,457 8,574,376
SOCIALLY RESPONSIVE 165,385 76,638 242,023
</TABLE>
NOTE D -- COMBINED LINE OF CREDIT:
At February 28, 1999, Genesis, Manhattan, and Millennium were three of the
holders of a committed, unsecured $100,000,000 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 0.75% per annum. A facility fee of 0.07% per
annum of the available line of credit is charged, of which Genesis, Manhattan,
and Millennium 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. No
compensating balance is required. Other investment companies managed by
Management also participate 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 $100,000,000 at any
particular time. Genesis, Manhattan, and Millennium had no loans outstanding
pursuant to this line of credit at February 28, 1999. During the six months
ended February 28, 1999, Genesis, Manhattan, and Millennium did not utilize this
line of credit.
At February 28, 1999, 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
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 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, 1999, nor had it utilized this line of credit at any time
prior to that date.
C-43
<PAGE>
NOTE E -- INVESTMENTS IN NON-CONTROLLED AFFILIATES*:
<TABLE>
<CAPTION>
BALANCE OF GROSS GROSS BALANCE OF
SHARES HELD PURCHASES SALES SHARES HELD VALUE
FOCUS AUGUST 31, AND AND FEBRUARY 28, FEBRUARY 28,
NAME OF ISSUER: 1998 ADDITIONS REDUCTIONS 1999 1999
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ADVANTA Corp. Class A 948,694 0 150,194 798,500 $ 9,332,469
ADVANTA Corp. Class B 910,000 0 107,500 802,500 7,272,656
Sierra Health Services** 1,360,000 0 1,360,000 0 0
</TABLE>
<TABLE>
<CAPTION>
BALANCE OF GROSS GROSS BALANCE OF
SHARES HELD PURCHASES SALES SHARES HELD VALUE
GENESIS AUGUST 31, AND AND FEBRUARY 28, FEBRUARY 28,
NAME OF ISSUER: 1998 ADDITIONS REDUCTIONS 1999 1999
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AAR Corp. 1,748,650 60,900 28,200 1,781,350 $ 26,942,919
ADAC Laboratories 1,003,100 42,200 2,000 1,043,300 18,648,988
Alliant Techsystems 648,500 90,600 23,700 715,400 56,650,738
Aviall Inc. 1,194,100 50,400 0 1,244,500 17,189,656
DONCASTERS PLC ADR 468,300 0 0 468,300 8,283,056
Eltron International** 420,000 0 420,000 0 0
Inprise Corp. 2,606,300 0 0 2,606,300 13,031,500
Pameco Corp.** 281,800 0 281,800 0 0
Primex Technologies 235,000 102,000 0 337,000 14,006,563
SOS Staffing Services 641,900 172,500 0 814,400 7,227,800
</TABLE>
C-44
<PAGE>
<TABLE>
<CAPTION>
BALANCE OF GROSS GROSS BALANCE OF
SHARES HELD PURCHASES SALES SHARES HELD VALUE
GUARDIAN AUGUST 31, AND AND FEBRUARY 28, FEBRUARY 28,
NAME OF ISSUER: 1998 ADDITIONS REDUCTIONS 1999 1999
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cabot Corp. 3,841,000 0 0 3,841,000 $ 96,745,188
Capital One Financial** 3,087,900 0 1,001,900 2,086,000 266,225,750
Coltec Industries** 4,863,900 0 4,863,900 0 0
Countrywide Credit Industries** 6,590,000 0 1,579,200 5,010,800 189,784,050
Foundation Health Systems** 9,939,900 0 9,939,900 0 0
Mark IV Industries** 2,942,081 0 2,942,081 0 0
PacifiCare Health Systems Class B 1,988,564 7,000 0 1,995,564 144,179,499
Republic Services 3,835,000 1,502,000 0 5,337,000 93,063,938
UCAR International** 2,176,200 0 2,176,200 0 0
Wellpoint Health Networks** 3,674,996 25,000 404,000 3,295,996 259,971,685
</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, 1999, THE ISSUERS OF THESE SECURITIES WERE NO LONGER
AFFILIATED WITH THE PORTFOLIO.
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.
C-45
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Focus Portfolio
<TABLE>
<CAPTION>
Six Months
Ended
February 28,
1999 Year Ended August 31,
(UNAUDITED) 1998 1997 1996 1995 1994
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(1) .51%(2) .51% .53% .54% -- --
--------------------------------------------------------------------------------
Net Expenses .51%(2) .51% .53% .54% .57% .58%
--------------------------------------------------------------------------------
Net Investment Income .42%(2) .59% .54% 1.04% 1.05% 1.16%
--------------------------------------------------------------------------------
Portfolio Turnover Rate 26% 64% 63% 39% 36% 52%
--------------------------------------------------------------------------------
Net Assets, End of Period (in millions) $1,638.5 $1,317.5 $1,573.4 $1,122.4 $969.2 $645.0
--------------------------------------------------------------------------------
</TABLE>
1) 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.
2) Annualized.
C-46
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Genesis Portfolio
<TABLE>
<CAPTION>
Six Months
Ended
February 28,
1999 Year Ended August 31,
(UNAUDITED) 1998 1997 1996 1995 1994
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(1) .74%(2) .72% .77% .85% -- --
------------------------------------------------------------------------------
Net Expenses .74%(2) .72%(3) .77%(3) .85%(3) .94%(3) .98%
------------------------------------------------------------------------------
Net Investment Income 1.32%(2) 1.13% .32% .27% .25% .18%
------------------------------------------------------------------------------
Portfolio Turnover Rate 13% 18% 18% 21% 37% 63%
------------------------------------------------------------------------------
Net Assets, End of Period (in millions) $1,682.3 $1,812.4 $1,083.7 $259.9 $142.2 $138.6
------------------------------------------------------------------------------
</TABLE>
1) 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.
2) Annualized.
3) Had the investment manager not waived a portion of the management fee, the
annualized ratios of net expenses to average daily net assets would have
been:
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
1998 1997 1996 1995
- --------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Expenses .74% .87% .95% .97%
------------------------------------------
</TABLE>
C-47
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Guardian Portfolio
<TABLE>
<CAPTION>
Six
Months
Ended
February
28,
1999 Year Ended August 31,
(UNAUDITED) 1998 1997 1996 1995 1994
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RATIOS TO
AVERAGE NET
ASSETS:
Gross
Expenses(1) .46%(2) .46% .46% .46% -- --
-------------------------------------------------------------------------------
Net
Expenses .46%(2) .46% .46% .46% .48% .50%
-------------------------------------------------------------------------------
Net
Investment
Income 1.07%(2) .92% .89% 1.72% 1.72% 1.66%
-------------------------------------------------------------------------------
Portfolio
Turnover Rate 41% 60% 50% 37% 26% 24%
-------------------------------------------------------------------------------
Net Assets,
End of Period
(in millions) $5,497.5 $5,787.8 $8,758.2 $6,232.5 $4,613.2 $2,480.3
-------------------------------------------------------------------------------
</TABLE>
1) 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.
2) Annualized.
C-48
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
International Portfolio
<TABLE>
<CAPTION>
Period from
Six Months June 15,
Ended 1994(1)
February 28, to August
1999 Year Ended August 31, 31,
(UNAUDITED) 1998 1997 1996 1995 1994
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(2) 1.12%(3) 1.18% 1.21% 1.37% -- --
-------------------------------------------------------------------------------
Net Expenses 1.12%(3) 1.18% 1.21% 1.37%(4) .70%(4) .70%(3)(4)
-------------------------------------------------------------------------------
Net Investment Income (Loss) (.25%)(3) .29% .47% .58% 1.74% 1.63%(3)
-------------------------------------------------------------------------------
Portfolio Turnover Rate 36% 46% 37% 45% 41% 5%
-------------------------------------------------------------------------------
Net Assets, End of Period (in millions) $122.4 $127.8 $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 to
average daily net assets would have been:
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED JUNE 15, 1994
AUGUST 31, TO AUGUST 31,
1996 1995 1994
- --------------------------------------------------------------
<S> <C> <C> <C>
Net Expenses 1.49% 2.24% 2.50%
</TABLE>
C-49
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Manhattan Portfolio
<TABLE>
<CAPTION>
Six Months
Ended
February 28,
1999 Year Ended August 31,
(UNAUDITED) 1998 1997 1996 1995 1994
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(1) .58%(2) .57% .59% .58% -- --
--------------------------------------------------------------------------
Net Expenses .58%(2) .57% .59% .58% .59% .59%
--------------------------------------------------------------------------
Net Investment Income (Loss) (.07%)(2) (.05%) .20% .13% .42% .53%
--------------------------------------------------------------------------
Portfolio Turnover Rate 49% 90% 89% 53% 44% 50%
--------------------------------------------------------------------------
Net Assets, End of Period (in millions) $627.0 $523.4 $621.7 $567.4 $645.4 $521.7
--------------------------------------------------------------------------
</TABLE>
1) 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.
2) Annualized.
C-50
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Millennium Portfolio
<TABLE>
<CAPTION>
Period from
October 20, 1998(1)
to February 28,
1999
(UNAUDITED)
-------------------
<S> <C>
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(2)(3) 1.52%
-------------------
Net Expenses(3) 1.50%
-------------------
Net Investment Loss(3) (.95%)
-------------------
Portfolio Turnover Rate 82%
-------------------
Net Assets, End of Period (in millions) $27.0
-------------------
</TABLE>
1) The date investment operations commenced.
2) The Portfolio is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset arrangements.
3) Annualized.
C-51
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Partners Portfolio
<TABLE>
<CAPTION>
Six Months
Ended
February 28,
1999 Year Ended August 31,
(UNAUDITED) 1998 1997 1996 1995 1994
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(1) .47%(2) .47% .48% .51% -- --
------------------------------------------------------------------------------------
Net Expenses .47%(2) .47% .48% .51% .53% .54%
------------------------------------------------------------------------------------
Net Investment Income 1.64%(2) 1.11% 1.05% 1.26% 1.13% .75%
------------------------------------------------------------------------------------
Portfolio Turnover Rate 85% 109% 77% 96% 98% 75%
------------------------------------------------------------------------------------
Net Assets, End of Period (in millions) $3,959.8 $3,581.3 $3,575.6 $1,999.6 $1,623.5 $1,340.3
------------------------------------------------------------------------------------
</TABLE>
1) 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.
2) Annualized.
C-52
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Socially Responsive Portfolio
<TABLE>
<CAPTION>
Period from
Six Months March 14,
Ended 1994 (1)
February 28, to August
1999 Year Ended August 31, 31,
(UNAUDITED) 1998 1997 1996 1995 1994
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(2) .60%(3) .60% .63% .65% -- --
------------------------------------------------------------------------------
Net Expenses .60%(3) .60% .63% .65% .68% .69%(3)
------------------------------------------------------------------------------
Net Investment Income .84%(3) .92% 1.08% 1.02% 1.18% 1.33%(3)
------------------------------------------------------------------------------
Portfolio Turnover Rate 29% 47% 51% 53% 58% 14%
------------------------------------------------------------------------------
Net Assets, End of Period (in millions) $355.3 $282.9 $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.
C-53
<PAGE>
(This page has been left blank intentionally.)
C-54
<PAGE>
DIRECTORY
INVESTMENT MANAGER, ADMINISTRATOR
AND DISTRIBUTOR
Neuberger Berman Management Inc.
605 Third Avenue 2nd Floor
New York, NY 10158-0180
800.877.9700 or 212.476.8800
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
- -C- 1999 Neuberger Berman Management Inc.
D-1
<PAGE>
OFFICERS AND TRUSTEES
EQUITY MANAGERS TRUST/
NEUBERGER BERMAN EQUITY FUNDS
Stanley Egener
CHAIRMAN OF THE BOARD AND TRUSTEE
Lawrence Zicklin
PRESIDENT AND TRUSTEE
Faith Colish
TRUSTEE
Howard A. Mileaf
TRUSTEE
Edward I. O'Brien
TRUSTEE
John T. Patterson, Jr.
TRUSTEE
John P. Rosenthal
TRUSTEE
Cornelius T. Ryan
TRUSTEE
Gustave H. Shubert
TRUSTEE
Daniel J. Sullivan
VICE PRESIDENT
Michael J. Weiner
VICE PRESIDENT
Richard Russell
TREASURER
Claudia A. Brandon
SECRETARY
Barbara DiGiorgio
ASSISTANT TREASURER
Celeste Wischerth
ASSISTANT TREASURER
Stacy Cooper-Shugrue
ASSISTANT SECRETARY
C. Carl Randolph
ASSISTANT SECRETARY
GLOBAL MANAGERS TRUST
Stanley Egener
CHAIRMAN OF THE BOARD AND TRUSTEE
Lawrence Zicklin
PRESIDENT
Howard A. Mileaf
TRUSTEE
John T. Patterson, Jr.
TRUSTEE
John P. Rosenthal
TRUSTEE
Daniel J. Sullivan
VICE PRESIDENT
Michael J. Weiner
VICE PRESIDENT
Richard Russell
TREASURER
Claudia A. Brandon
SECRETARY
Barbara DiGiorgio
ASSISTANT TREASURER
Jacqueline Henning
ASSISTANT TREASURER
Celeste Wischerth
ASSISTANT TREASURER
Stacy Cooper-Shugrue
ASSISTANT SECRETARY
Lenore Joan McCabe
ASSISTANT SECRETARY
C. Carl Randolph
ASSISTANT SECRETARY
D-2
<PAGE>
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.
NEUBERGER BERMAN
NEUBERGER BERMAN MANAGEMENT INC.
605 Third Avenue 2nd Floor
New York, NY 10158-0180
SHAREHOLDER SERVICES
800.877.9700
INSTITUTIONAL SERVICES
800.366.6264
www.nbfunds.com
[LOGO] NMATR5590499
