<PAGE>
BALANCED PORTFOLIO
NEUBERGER&BERMAN
ADVISERS MANAGEMENT TRUST
ANNUAL REPORT
DECEMBER 31, 1997
NBAMT0211297
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PORTFOLIO MANAGERS' COMMENTARY
Neuberger&Berman Advisers Management Trust December 31, 1997
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AMT Balanced Portfolio
THE AMT BALANCED PORTFOLIO SEEKS LONG-TERM CAPITAL GROWTH AND REASONABLE
CURRENT INCOME WITHOUT UNDUE RISK TO PRINCIPAL. THE EQUITY PORTION OF THE
PORTFOLIO CAN BE AS HIGH AS 70% AND AS LOW AS 50% OF TOTAL ASSETS, WITH THE
LONG-TERM AVERAGE EXPECTED TO BE AROUND 60%. THE BALANCE WILL BE INVESTED
PRIMARILY IN INVESTMENT GRADE FIXED INCOME SECURITIES. THE PORTFOLIO'S
PERFORMANCE GOAL IS TO PROVIDE RETURNS APPROXIMATING 85% OF THE S&P 500 INDEX*
WITH ABOUT 65% OF THE S&P "500" 'S VOLATILITY, (GENERALLY CONSIDERED THE PRIMARY
RISK FACTOR IN EQUITIES INVESTING).
JENNIFER K. SILVER AND BROOKE A. COBB CO-MANAGE THE EQUITY PORTION OF THE
PORTFOLIO WITH A FOCUS ON MID-CAP STOCKS BELIEVED TO HAVE ABOVE-MARKET AVERAGE
EARNINGS GROWTH POTENTIAL AND A RECORD OF CONSISTENTLY EXCEEDING CONSENSUS
EARNINGS EXPECTATIONS. THEODORE GIULIANO, MANAGER OF THE NEUBERGER&BERMAN, LLC,
FIXED INCOME GROUP, AND THOMAS WOLFE, CO-MANAGE THE FIXED INCOME PORTION OF THE
PORTFOLIO.
EQUITY PORTION
As reflected in the S&P "500" Index's 33.32% gain (including reinvestment of
dividends), 1997 was another great year for large-cap stocks. It was a good year
for mid-cap growth stocks, with the Russell Midcap-TM- Growth Index* returning
22.54%.
Since we took over management of the equity portion of the Portfolio in
mid-July, this is our first opportunity to directly address the shareholders.
Consequently, we thought it important to describe our investment discipline in
some detail. Let us begin by saying we are growth stock investors in the purest
sense of the term. We want to own the stocks of companies that are growing
earnings faster than the average American business and ideally, faster than the
competitors in their respective industries. We are particularly biased towards
companies that consistently beat consensus earnings estimates. Our research has
revealed that stocks whose earnings consistently exceed expectations offered
greater potential for long-term capital appreciation.
We focus our research efforts on mid-cap stocks in new and/or rapidly
evolving industries. The mid-cap growth sector is less widely followed by Wall
Street analysts and therefore, less efficient than the large-cap stock market.
By operating in the mid-cap arena we believe we are likely to identify more of
our brand of growth stock opportunities. Considering the currently high
valuations of large-cap growth stocks relative to mid-cap stocks with comparable
or in many cases, better earnings growth potential, we believe the Portfolio is
particularly well positioned in today's market.
Let us once again emphasize we are growth stock investors. But, there is a
value component to our discipline as well. Although the Portfolio may purchase
securities at higher multiples to measures of economic value than other
portfolios of the Advisers Management Trust, the kind of fast-growth companies
we favor generally trade at what we believe to be very reasonable multiples
relative to projected annual earnings growth rates. Given the choice between two
good companies with comparable earnings growth rates, we will select the one
trading at the lower multiple to earnings growth.
We are dispassionate sellers. If a stock does not live up to our earnings
expectations or its valuation becomes excessive, we will sell and direct the
assets to another more attractive opportunity. We will maintain a broadly
diversified portfolio rather than heavily concentrating our holdings in just a
few of the fastest growing industry groups.
Now that we have detailed our discipline, some comments on the market are
appropriate. Although mid-cap stocks have a superior long-term performance
record, they have lagged large-cap stocks in recent years. Will this continue?
We don't know. However, on a fundamental basis, mid-cap stocks appear quite
inexpensive relative to their large-cap counterparts. Currently, the S&P "500"
is trading at approximately two times its projected five-year
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earnings growth rate. The equity portion of the Portfolio presently trades at
only one time its projected five-year earnings growth rate. One could argue that
large-cap stocks deserve this price/earnings growth rate premium because they
have been growing earnings faster than mid-cap stocks. In recent years, there is
some validity to this argument. Going forward, we believe it will be called into
question. To wit: based on consensus earnings estimates from First Call (an
independent research firm that compiles and distributes Wall Street earnings
estimates), S&P "500" earnings are expected to grow 7% in calendar 1998 and 10%
annually over the next five years. Also based on First Call, the equity portion
of the Portfolio is projected to grow earnings by 25% in calendar 1998 and 21%
annually over the next five years.
Of course, consensus earnings estimates do not always translate into earnings
realities. With justifiable uncertainty over the impact of Asian economic woes
on the earnings prospects for many American companies, consensus estimates may
prove particularly unreliable in the year ahead. Since taking over management of
the equity portion of the Portfolio in mid-July, we have eliminated what we saw
as richly priced large-cap stocks in the banking and drug industries -- strong
performers in first half 1997 -- and replaced them with fundamentally less
expensive mid-cap growth companies. We also purged commodity-oriented technology
companies that we believed vulnerable on the earnings front. We are emphasizing
companies with proprietary products, cost advantages, profit margins that can be
maintained without price increases, and geographical diversification. We are
particularly disposed to companies with productivity enhancing products, where
we expect demand to continue to be strong in today's tight labor market. We
believe these are the kinds of companies most likely to meet or exceed earnings
projections in this somewhat unsettled economic environment.
Perhaps the best way to demonstrate our investment discipline in action is to
discuss several of the portfolio holdings at year-end 1997. Be aware we may
change our opinion on these and other portfolio holdings and may sell them at
any time.
Dura Pharmaceuticals is a mid-sized drug company with a diversified line of
profitable drug products. The company also has approximately $400 million in
cash (roughly $10 per share) which it can use to fund acquisitions of other
pharmaceutical products. Finally, Dura has developed a new drug delivery system,
Spiros-TM-, for the treatment of asthma, which could be a real blockbuster
product and eventually represent 50% of the company's sales. The stock currently
trades at 32 times our 1998 earnings estimate -- a nice discount to our 40%
annual earnings growth rate projections. If the company can add to its product
line through acquisition and Spiros lives up to its potential, earnings could
grow materially faster than consensus estimates. In comparison, Pfizer,
admittedly a great company, trades at 37 times consensus earnings estimates and
over two times its projected 16% annual earnings growth rate. On a relative
fundamental basis, we believe Dura Pharmaceuticals is a real growth-oriented
bargain.
CIENA Corporation makes systems that allow an optical fiber to carry 16 times
the current capacity of data, graphic and voice information without requiring
significant equipment upgrades. These are products that should be in great
demand as telephone companies compete with cable television operators to
increase digital transmission capacity. The company is the technology and market
share leader in this business, which is expected to grow from $0 in 1996 to over
$4 billion by 2001. CIENA reported third quarter 1997 earnings that tripled
consensus estimates. Although earnings estimates were revised upward following
this very pleasant third quarter surprise, we still think they are low,
particularly if CIENA can close on contracts it has been working on with AT&T
and several of the Regional Bell Operating Companies -- in the opinion of our
research department and others on Wall Street, a reasonable proposition. At 38
times 1998 earnings estimates, the stock doesn't look cheap. But, that's less
than one time our 60% annual five-year earnings growth rate projections -- in
our eyes, a very compelling fundamental value.
In closing, 1997 was a transition year in the management of the equity
portfolio of the AMT Balanced Portfolio. We believe the timing of the change in
management will prove advantageous. We enjoyed very strong performance
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from large-cap growth companies in the first half of 1997. We have replaced them
with in our opinion, more reasonably valued mid-cap companies with better future
earnings growth prospects. We believe the equity portion of the Portfolio is
well positioned to take advantage of what we think will be a more favorable
outlook for mid-cap growth stocks in the year ahead.
Sincerely,
[SIG] [SIG]
Jennifer K. Silver and Brooke A. Cobb
PORTFOLIO CO-MANAGERS
Equity Portion
FIXED INCOME PORTION
In 1997, bonds benefited from low inflation and reduced inflationary
expectations, benign monetary and fiscal policies, and favorable supply/demand
factors in the fixed income marketplace. Let's begin with inflation. The notion
that a strong economy leads to a pick-up in inflation was called into question.
With this historically unprecedented economic expansion, many economists and
market observers predicted that a rise in inflation in 1997 was inevitable. It
didn't happen. Inflation remained at 3% or lower and the Federal Reserve, which
would have normally tightened credit at this stage of the business cycle,
remained justifiably quiescent. As we write, investors now seem to believe the
Fed's next adjustment of short-term rates will be down -- a 180 degree shift
from consensus expectations earlier in 1997.
In 1997, we also saw increasing evidence that the federal budget deficit was
shrinking substantially. In fact, some economists are now forecasting a budget
surplus within the next several years. This would be the first budget surplus in
over three decades. The decline in the budget deficit, accompanied by reduced
issuance of government bonds, seemed to convince a growing number of investors
here and overseas that the United States' fiscal house is in order.
The Treasury Department's funding policy, highlighted by its desire to sell
more floating rate debt (the new Treasury Inflation Protection Securities or
"TIPS") and fewer fixed-rate securities, helped create a "scarcity" value for
traditional fixed-rate securities. In fourth quarter 1997, extreme volatility in
the U.S. equity market sent investors scurrying to the relative safety of bonds,
and economic upheaval in Asia helped attract even more foreign investors to the
U.S. bond market. Strong demand and limited supply, particularly in the U.S.
Treasuries market, helped fuel the strong bond rally at the close of the year.
Our sector allocation did not change dramatically throughout the year. We
favored the corporate sector, which offered a material yield advantage to
Treasuries. Our high-yield investments (approximately 10% of the fixed income
portion of the Portfolio) performed well. So well, in fact, that we took some
profits in high-yield bonds that had become fully valued, and replaced them with
more opportunistically priced high-yield securities.
One of our most successful strategies in 1997 was something we didn't
do -- namely invest in Southeast Asia. While the Portfolio is permitted to buy
U.S. dollar-denominated bonds of foreign issuers, we are very careful in our
credit analysis. In recent years, countries such as Thailand, Korea, Malaysia
and Indonesia have been major issuers of dollar-denominated debt in the U.S.
bond market. All of these countries had strong investment-grade ratings from the
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major rating agencies and powerful sponsorship from the key Wall Street
underwriters. We took a hard look at these offerings and our analysis showed
these bonds to have below investment-grade risk characteristics with huge
downside risk if the supply of external capital dried up. Our concerns were
confirmed when currency turmoil, which began in July and accelerated through
year end 1997, overwhelmed these countries and sent bonds plummeting.
In the corporate sector, we modestly increased our exposure to utility
company bonds, which until quite recently, have been out of favor with the
credit rating agencies and investors due to concerns about the deregulation of
the industry. The dust is now settling and we are seeing evidence that the
financially strong and well managed utilities companies can survive and prosper
in this new environment. In addition, regulators thus far appear disposed to
protecting bond holders during this transition period.
In closing, we are gratified by the performance of the fixed income portion
of the Portfolio in 1997. Can we expect an equally gratifying year in 1998? The
fundamental outlook for bonds remains appealing. Inflation remains low and
disinflationary forces resulting from Asian economic turmoil should help keep
the lid on inflation for the foreseeable future. We believe fiscal and monetary
policy should continue to be benign. However, much if not all of this good news
may already be baked into bond prices. So, we doubt 1998 bond returns will be as
robust as they were in 1997. This does not mean bonds aren't still an important
ingredient in a diversified investment portfolio. Yield and relative safety of
principal are always attractive in their own right. They may be even more
attractive if we continue to see extreme volatility in equities markets here and
overseas.
Sincerely,
[SIG] [SIG]
Theodore Giuliano and Thomas Wolfe
PORTFOLIO CO-MANAGERS
Fixed Income Portion
*The S&P "500" Index is an unmanaged index generally considered to be
representative of stock market activity. The Russell Midcap Growth Index
measures the performance of those Russell Midcap-TM- Index companies with
higher price-to-book ratios and higher forecasted growth values. The Russell
Midcap Index measures the performance of the 800 smallest companies in the
Russell 1000-Registered Trademark- Index, which represents approximately 35% of
the total market capitalization of the Russell 1000 Index (which in turn,
consists of the 1,000 largest U.S. companies, based on market capitalization).
Please note that indices do not take into account any fees and expenses of
investing in the individual securities that they track, and that individuals
cannot invest directly in any index. Data about the performance of these
indices are prepared or obtained by Neuberger&Berman Management
Inc.-Registered Trademark- and include reinvestment of all dividend 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. The Portfolio is invested in a wide array of securities and no single
holding makes up more than a small fraction of its total assets.
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COMPARISON OF A $10,000 INVESTMENT
Neuberger&Berman Advisers Management Trust December 31, 1997
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Balanced Portfolio
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN(1)
MERRILL LYNCH 1-3
BALANCED PORTFOLIO YEAR TREASURY INDEX(2) S&P "500"(2)
<S> <C> <C> <C>
1 Year +19.45% +6.66% +33.32%
5 Year +10.21% +5.67% +20.22%
Life of Fund +11.20% +7.45% +18.03%
Merrill Lynch 1-3 Year Treasury
Balanced Portfolio Index S&P "500"
02/28/89 $10,000 $10,000 $10,000
12/31/89 $11,640 $11,012 $12,697
1990 $11,867 $12,083 $12,302
1991 $14,558 $13,494 $16,034
1992 $15,731 $14,344 $17,253
1993 $16,746 $15,121 $18,985
1994 $16,184 $15,207 $19,242
1995 $20,029 $16,879 $26,448
1996 $21,408 $17,720 $32,504
1997 $25,573 $18,899 $43,333
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN(1)
RUSSELL MIDCAP-TM- GROWTH INDEX(2)
<S> <C>
1 Year +22.54%
5 Year +15.98%
Life of Fund +16.91%
Russell Midcap- Growth Index
02/28/89 $10,000
12/31/89 $12,519
1990 $11,877
1991 $17,463
1992 $18,984
1993 $21,109
1994 $20,652
1995 $27,669
1996 $32,504
1997 $39,832
</TABLE>
The inception date of Neuberger&Berman Advisers Management Trust Balanced
Portfolio-SM- (the "Fund") is 2/28/89.
1. "Total Return" includes reinvestment of all income dividends and capital gain
distributions. Results represent past performance and do not guarantee future
results. The value of an investment in the Fund and the return on the investment
both will fluctuate, and redemption proceeds may be higher or lower than an
investor's original cost.
2. Before July 1997, the equity portion of AMT Balanced Investments-SM- (the
"Series") was managed using a "growth at a reasonable price" investment
approach. Under this blended value and growth approach, the Portfolio Manager
purchased securities of small-, medium-, and large-capitalization companies that
he believed offered greater potential for long-term capital appreciation, in
most cases at prices reflecting relatively higher multiples to measures of
economic value (such as earnings or cash flow) compared to securities purchased
by other Neuberger&Berman Funds.
In July 1997, growth-style Managers Jennifer Silver and Brooke Cobb joined
Neuberger&Berman Management Inc. and assumed responsibility for the equity
portion of the Series. Ms. Silver now heads Neuberger&Berman, LLC's new Growth
Equity Group in Boston. The equity portion of the Series is now managed using a
growth-oriented investment approach. True to this new approach, the Managers
seek securities of companies that are growing earnings faster than the average
American business and, ideally, faster than competitors in their respective
industries. In return for this perceived higher earnings growth potential, the
Managers are willing to pay a higher absolute multiple for these securities.
They do so because they believe these stocks offer greater potential for
long-term capital appreciation. Moreover, while the Series can still invest in
securities of small-, medium-, and large-cap companies, the Managers with
respect to the equity portion of the Series, currently intend to focus on the
securities of medium-cap companies.
The Merrill Lynch 1-3 Year Treasury Index is an unmanaged total return market
value index consisting of all coupon-bearing U.S. Treasury publicly placed debt
securities with maturities between 1 and 3 years. The S&P "500" Index is an
unmanaged index generally considered to be representative of overall stock
market activity. The Russell Midcap-TM- Index measures the performance of the
800 smallest companies in the
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COMPARISON OF A $10,000 INVESTMENT (Cont'd)
Neuberger&Berman Advisers Management Trust December 31, 1997
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Balanced Portfolio
Russell 1000-Registered Trademark- Index, which represents approximately 35% of
the total market capitalization of the Russell 1000 Index (which, in turn,
consists of the 1,000 largest U.S. companies, based on market capitalization).
The Russell Midcap Growth Index measures the performance of those Russell Midcap
Index companies with higher price-to-book ratios and higher forecasted growth
values.
Therefore, the equity portion of the Series prior to July 1997 was appropriately
compared to the S&P "500" Index as a benchmark. However, with its focus on
medium-cap growth stocks, that portion of the Series is more appropriately
compared to the Russell Midcap Growth Index as a benchmark.
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 Series invests
in many securities not included in the above-described indices.
Performance data are historical and include changes in share price and
reinvestment of dividends and capital gain distributions. Performance numbers
are net of all Fund operating expenses, but do not include any insurance charges
or other expenses imposed by your insurance company's variable annuity or
variable life insurance policy. Qualified Plans that are direct shareholders of
the Fund are not affected by insurance charges and related expenses. If this
performance information included the effect of the insurance charges and other
expenses, performance numbers would be lower.
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STATEMENT OF ASSETS AND LIABILITIES
Neuberger&Berman Advisers Management Trust
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Balanced Portfolio
<TABLE>
<CAPTION>
December 31,
1997
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<S> <C>
ASSETS
Investment in Series, at value (Note A) $162,025,490
Receivable for Trust shares sold 73,185
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162,098,675
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LIABILITIES
Accrued expenses 73,750
Payable for Trust shares redeemed 71,942
Payable to administrator (Note B) 44,352
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190,044
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NET ASSETS at value $161,908,631
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NET ASSETS consist of:
Par value $ 9,098
Paid-in capital in excess of par value 116,814,160
Accumulated undistributed net investment income 3,752,903
Accumulated net realized gains on investment 26,509,852
Net unrealized appreciation in value of investment 14,822,618
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NET ASSETS at value $161,908,631
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SHARES OUTSTANDING
($.001 par value; unlimited shares authorized) 9,097,878
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NET ASSET VALUE, offering and redemption price per share $17.80
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</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-3
<PAGE>
STATEMENT OF OPERATIONS
Neuberger&Berman Advisers Management Trust
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Balanced Portfolio
<TABLE>
<CAPTION>
For the
Year Ended
December 31,
1997
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<S> <C>
INVESTMENT INCOME
Investment income from Series (Note A) $ 5,686,337
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Expenses:
Administration fee (Note B) 548,326
Shareholder reports 94,608
Registration and filing fees 22,582
Shareholder servicing agent fees (Note B) 13,263
Legal fees 10,667
Custodian fees 10,000
Trustees' fees and expenses 8,182
Auditing fees 1,801
Miscellaneous 1,854
Expenses from Series (Notes A & B) 1,183,699
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Total expenses 1,894,982
Expenses reduced by custodian fee and shareholder servicing
expense offset arrangements (Note B) (1,212)
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Total net expenses 1,893,770
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Net investment income 3,792,567
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REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS FROM SERIES (NOTE
A)
Net realized gain on investment securities 27,186,711
Net realized loss on financial futures contracts (533,454)
Net realized gain on foreign currency transactions 4,273
Change in net unrealized appreciation of investment securities and
financial futures contracts 897,508
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Net gain on investments from Series (Note A) 27,555,038
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Net increase in net assets resulting from operations $31,347,605
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</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-4
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
Neuberger&Berman Advisers Management Trust
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Balanced Portfolio
<TABLE>
<CAPTION>
Year Ended
December 31,
1997 1996
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<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 3,792,567 $ 3,081,884
Net realized gain on investments from Series (Note A) 26,657,530 8,184,216
Change in net unrealized appreciation of investments from Series
(Note A) 897,508 (201,548)
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Net increase in net assets resulting from operations 31,347,605 11,064,552
---------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (3,158,780) (3,827,457)
Net realized gain on investments (8,107,536) (21,284,395)
---------------------------
Total distributions to shareholders (11,266,316) (25,111,852)
---------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 16,051,516 40,422,008
Proceeds from reinvestment of dividends and distributions 11,266,316 25,111,853
Payments for shares redeemed (58,657,890) (22,740,252)
---------------------------
Net increase (decrease) from Trust share transactions (31,340,058) 42,793,609
---------------------------
NET INCREASE (DECREASE) IN NET ASSETS (11,258,769) 28,746,309
NET ASSETS:
Beginning of year 173,167,400 144,421,091
---------------------------
End of year $161,908,631 $173,167,400
---------------------------
Accumulated undistributed net investment income at end of year $ 3,752,903 $ 3,073,763
---------------------------
NUMBER OF TRUST SHARES:
Sold 956,764 2,435,851
Issued on reinvestment of dividends and distributions 719,892 1,645,600
Redeemed (3,454,180) (1,450,441)
---------------------------
Net increase (decrease) in shares outstanding (1,777,524) 2,631,010
---------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Neuberger&Berman Advisers Management Trust December 31, 1997
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Balanced Portfolio
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1) GENERAL: Balanced Portfolio (the "Fund") is a separate operating series of
Neuberger&Berman Advisers Management Trust (the "Trust"), a Delaware business
trust organized pursuant to a Trust Instrument dated May 23, 1994. The Trust
is currently comprised of eight separate operating series (the "Funds"). The
Trust is registered as a diversified, open-end management investment company
under the Investment Company Act of 1940, as amended, and its shares are
registered under the Securities Act of 1933, as amended. The trustees of the
Trust may establish additional series or classes of shares without the
approval of shareholders.
The assets of each fund belong only to that fund, and the liabilities of
each fund are borne solely by that fund and no other.
The Fund seeks to achieve its investment objective by investing all of its
net investable assets in AMT Balanced Investments, a series of Advisers
Managers Trust (the "Series") having the same investment objective and
policies as the Fund. The value of the Fund's investment in the Series
reflects the Fund's proportionate interest in the net assets of the Series
(100% at December 31, 1997). The performance of the Fund is directly affected
by the performance of the Series. The financial statements of the Series,
including the Schedule of Investments, are included elsewhere in this report
and should be read in conjunction with the Fund's financial statements.
2) PORTFOLIO VALUATION: The Fund records its investment in the Series at value.
Investment securities held by the Series are valued by Advisers Managers
Trust as indicated in the notes following the Series' Schedule of
Investments.
3) FEDERAL INCOME TAXES: The Fund and the other series of the Trust are treated
as separate entities for Federal income tax purposes. It is the policy of the
Fund to continue to qualify as a regulated investment company by complying
with the provisions available to certain investment companies, as defined in
applicable sections of the Internal Revenue Code, and to make distributions
of investment company taxable income and net capital gains (after reduction
for any amounts available for Federal income tax purposes as capital loss
carryforwards) sufficient to relieve it from all, or substantially all,
Federal income taxes. Accordingly, the Fund paid no Federal income taxes and
no provision for Federal income taxes was required.
4) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: The Fund earns income, net of
Series expenses, daily on its investment in the Series. Income dividends and
distributions from net realized capital gains, if any, are normally
distributed in February. Income dividends and capital gain distributions to
shareholders are recorded on the ex-dividend date. To the extent the Fund's
net realized capital gains, if any, can be offset by capital loss
carryforwards, it is the policy of the Fund not to distribute such gains.
The 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) EXPENSE ALLOCATION: Expenses directly attributable to a fund are charged to
that fund. Expenses not directly attributed to a fund are allocated, on the
basis of relative net assets, to each of the funds of the Trust.
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NOTES TO FINANCIAL STATEMENTS (Cont'd)
Neuberger&Berman Advisers Management Trust December 31, 1997
- --------------------------------------------------------------------------------
Balanced Portfolio
6) OTHER: All net investment income and realized and unrealized capital gains
and losses of the Series are allocated pro rata among the Fund and any other
investors in the Series.
NOTE B -- ADMINISTRATION FEES, DISTRIBUTION ARRANGEMENTS, AND OTHER TRANSACTIONS
WITH AFFILIATES:
Fund shares are issued and redeemed in connection with investments in and
payments under certain variable annuity contracts and variable life insurance
policies issued through separate accounts of life insurance companies and are
also offered directly to qualified pension and retirement plans.
The Fund retains Neuberger&Berman Management Incorporated ("N&B Management")
as its administrator under an Administration Agreement ("Agreement") dated as of
May 1, 1995. Pursuant to this Agreement the Fund pays N&B Management an
administration fee at the annual rate of .30% of the Fund's average daily net
assets. The Fund indirectly pays for investment management services through its
investment in the Series (see Note B of Notes to Financial Statements of the
Series).
Effective May 1, 1995, the trustees of the Trust adopted a non-fee
distribution plan for each series of the Trust.
N&B Management has voluntarily undertaken to limit the Fund's expenses by
reimbursing the Fund for its operating expenses and its pro rata share of its
Series' operating expenses (excluding the fees payable to N&B Management,
interest, taxes, brokerage commissions, extraordinary expenses, and transaction
costs) which exceed, in the aggregate, 1% per annum of the Fund's average daily
net assets. This undertaking is subject to termination by N&B Management upon at
least 60 days' prior written notice to the Fund. For the year ended December 31,
1997, no reimbursement to the Fund was required.
All of the capital stock of N&B Management is owned by individuals who are
also principals of Neuberger& Berman, LLC ("Neuberger"), a member firm of The
New York Stock Exchange and sub-adviser to the Series. Several individuals who
are officers and/or trustees of the Trust are also principals of Neuberger
and/or officers and/ or directors of N&B Management.
The Series has an expense offset arrangement in connection with its custodian
contract. The impact of this arrangement, reflected in the Statement of
Operations under the caption Expenses from Series, was a reduction of $1,094.
The Series has an expense offset arrangement in connection with its
shareholder servicing agent contract. The impact of this arrangement, reflected
in the Statement of Operations under the caption Shareholder servicing agent
fees, was a reduction of $118.
NOTE C -- INVESTMENT TRANSACTIONS:
During the year ended December 31, 1997, additions and reductions in the
Fund's investment in its Series amounted to $4,639,298 and $48,168,855,
respectively.
B-7
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman Advisers Management Trust
- --------------------------------------------------------------------------------
Balanced Portfolio
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. It should be read in conjunction with its Series' Financial
Statements and notes thereto.(1)
<TABLE>
<CAPTION>
Period from
February 28,
1989(2) to
Year Ended December 31, December 31,
1997(3) 1996(3) 1995(3) 1994 1993 1992 1991 1990 1989
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $15.92 $17.52 $14.51 $15.62 $14.90 $14.16 $11.72 $11.64 $10.00
-----------------------------------------------------------------------------------------
Income From Investment Operations
Net Investment Income .36 .34 .32 .30 .34 .40 .47 .49 .30
Net Gains or Losses on Securities
(both realized and unrealized) 2.59 .75 3.06 (.80) .61 .72 2.16 (.27)(4) 1.34
-----------------------------------------------------------------------------------------
Total From Investment Operations 2.95 1.09 3.38 (.50) .95 1.12 2.63 .22 1.64
-----------------------------------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.30) (.41) (.28) (.23) (.20) (.19) (.19) (.07) --
Distributions (from net capital
gains) (.77) (2.28) (.09) (.38) (.03) (.19) -- (.07) --
-----------------------------------------------------------------------------------------
Total Distributions (1.07) (2.69) (.37) (.61) (.23) (.38) (.19) (.14) --
-----------------------------------------------------------------------------------------
Net Asset Value, End of Year $17.80 $15.92 $17.52 $14.51 $15.62 $14.90 $14.16 $11.72 $11.64
-----------------------------------------------------------------------------------------
Total Return(5) +19.45% +6.89% +23.76% -3.36% +6.45% +8.06% +22.68% +1.95% +16.40%(6)
-----------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in
millions) $161.9 $173.2 $144.4 $179.3 $161.1 $ 87.1 $ 28.3 $ 6.9 $ 0.6
-----------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(7) 1.04% 1.09% .99% -- -- -- -- -- --
-----------------------------------------------------------------------------------------
Ratio of Net Expenses to Average
Net Assets(8) 1.04% 1.09% .99% .91% .90% .95% 1.10% 1.35% 1.70%(9)
-----------------------------------------------------------------------------------------
Ratio of Net Investment Income to
Average Net Assets(8) 2.07% 1.84% 1.99% 1.91% 1.96% 2.33% 3.00% 4.00% 3.28%(9)
-----------------------------------------------------------------------------------------
Portfolio Turnover Rate(10) -- -- 21% 55% 114% 82% 69% 77% 58%
-----------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-8
<PAGE>
NOTES TO FINANCIAL HIGHLIGHTS
Neuberger&Berman Advisers Management Trust December 31, 1997
- --------------------------------------------------------------------------------
Balanced Portfolio
1) The per share amounts which are shown have been computed based on the
average number of shares outstanding during each fiscal period.
2) February 28, 1989 is the date shares of the Balanced Portfolio were first
sold to the separate accounts pursuant to the public offering of Trust
shares.
3) The per share amounts and ratios which are shown reflect income and
expenses, including the Fund's proportionate share of the Series' income and
expenses.
4) The amounts shown at this caption for a share outstanding throughout the
year may not accord with the change in aggregate gains and losses in
securities for the year because of the timing of sales and repurchases of
Fund shares in relation to fluctuating market values for the Fund.
5) Total return based on per share net asset value reflects the effects of
changes in net asset value on the performance of the 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. The total return
information shown does not reflect charges and other expenses that apply to
the separate account or the related insurance policies, and the inclusion of
these charges and other expenses would reduce the total return figures for
all fiscal periods shown. Qualified Plans that are direct shareholders of
the Fund are not affected by insurance charges and related expenses.
6) Not annualized.
7) 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.
8) Since the commencement of operations, N&B Management voluntarily assumed
certain operating expenses of the Fund as described in Note B of Notes to
Financial Statements. Had N&B Management not undertaken such action the
annualized ratios of expenses and net investment income to average daily net
assets would have been 2.78% and 2.20%, respectively, for the period from
February 28, 1989, to December 31, 1989. There was no reduction of expenses
for the years ended December 31, 1990, through and including 1997.
9) Annualized.
10) The Fund transferred all of its investment securities into its Series on
April 28, 1995. After that date the Fund invested only in its Series, and
that Series, rather than the Fund, engaged in securities transactions.
Therefore, after that date the Fund had no portfolio turnover rate.
Portfolio turnover rates for periods ending after April 28, 1995, are
included in the Financial Highlights of AMT Balanced Investments, which
appear elsewhere in this report.
B-9
<PAGE>
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS
To the Board of Trustees of
Neuberger&Berman Advisers Management Trust and
Shareholders of Balanced Portfolio
We have audited the accompanying statement of assets and liabilities of
Balanced Portfolio, one of the series comprising Neuberger&Berman Advisers
Management Trust (the "Trust"), as of December 31, 1997, and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended, and the financial
highlights for each of the periods indicated therein. These financial statements
and financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Balanced Portfolio of Neuberger&Berman Advisers Management Trust at December 31,
1997, the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended, and the financial
highlights for each of the periods indicated therein, in conformity with
generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
January 26, 1998
B-10
<PAGE>
SCHEDULE OF INVESTMENTS
Advisers Managers Trust December 31, 1997
- --------------------------------------------------------------------------------
AMT Balanced Investments
<TABLE>
<CAPTION>
Number Market
of Shares Value(1)
- --------- ------------
<C> <S> <C>
COMMON STOCKS (58.0%)
BASIC MATERIALS (1.2%)
24,300 Cytec Industries $ 1,140,581(2)
49,200 NS Group 842,550(2)
------------
1,983,131
------------
CAPITAL GOODS (2.8%)
79,800 Corporate Express 1,027,425(2)
77,800 Philip Services 1,118,375(2)
26,600 U.S. Filter 796,337(2)
42,400 USA Waste Services 1,664,200(2)
------------
4,606,337
------------
COMMUNICATIONS (1.4%)
24,300 CIENA Corp. 1,485,337(2)
36,000 RSL Communications 792,000(2)
------------
2,277,337
------------
CONSUMER CYCLICALS (11.8%)
20,300 American Skiing 301,963(2)
62,500 Authentic Fitness 1,152,344
32,500 Cendant Corp. 1,117,187(2)
36,600 Costco Cos. 1,633,275(2)
14,000 Dollar Thrifty 287,000(2)
14,800 GTECH Holdings 472,675(2)
48,100 Hayes Lemmerz International 1,346,800(2)
20,700 HON INDUSTRIES 1,221,300
27,700 Outdoor Systems 1,062,987(2)
46,802 Promus Hotel 1,965,705(2)
37,200 Robert Half International 1,488,000(2)
83,100 Staples Inc. 2,306,025(2)
23,300 Sylvan Learning Systems 908,700(2)
26,700 Tiffany & Co. 962,869
58,200 TJX Cos. 2,000,625
39,600 Viking Office Products 863,775(2)
------------
19,091,230
------------
<CAPTION>
Number Market
of Shares Value(1)
- --------- ------------
<C> <S> <C>
CONSUMER STAPLES (8.3%)
23,200 Cardinal Health $ 1,742,900
28,000 Chancellor Media 2,089,500(2)
26,500 Cheesecake Factory 808,250(2)
56,200 CKE Restaurants 2,367,425
50,400 Comcast Corp. Class A Special 1,590,750
24,100 Estee Lauder 1,239,644
74,500 General Nutrition 2,533,000(2)
33,600 Rexall Sundown 1,014,300(2)
------------
13,385,769
------------
ENERGY (4.7%)
18,260 BJ Services 1,313,578(2)
45,700 Enron Oil & Gas 968,269
49,200 Noble Drilling 1,506,750(2)
37,400 Oryx Energy 953,700(2)
44,800 Seagull Energy 924,000(2)
34,400 The Williams Cos. 976,100
16,600 Tidewater Inc. 915,075
------------
7,557,472
------------
FINANCIAL SERVICES (8.9%)
17,300 ACE Ltd. 1,669,450
26,600 Bear Stearns 1,263,500
24,500 Equitable Cos. 1,218,875
24,900 EXEL Ltd. 1,578,038
35,600 Finova Group 1,768,875
29,700 FIRSTPLUS Financial Group 1,139,737(2)
17,900 GreenPoint Financial 1,298,869
25,500 Northern Trust 1,778,625
22,300 State Street Corp. 1,297,581
31,900 SunAmerica, Inc. 1,363,725
------------
14,377,275
------------
</TABLE>
B-11
<PAGE>
SCHEDULE OF INVESTMENTS (Cont'd)
Advisers Managers Trust December 31, 1997
- --------------------------------------------------------------------------------
AMT Balanced Investments
<TABLE>
<CAPTION>
Number Market
of Shares Value(1)
- --------- ------------
<C> <S> <C>
HEALTH CARE (6.6%)
24,600 Alternative Living Services $ 727,238(2)
55,400 Dura Pharmaceuticals 2,541,475(2)
23,100 Elan Corp. ADR 1,182,431(2)
25,400 HBO & Co. 1,219,200
50,200 Omnicare, Inc. 1,556,200
38,600 Quintiles Transnational 1,476,450(2)
47,500 Watson Pharmaceuticals 1,540,781(2)
23,900 Zonagen, Inc. 434,681(2)
------------
10,678,456
------------
TECHNOLOGY (10.2%)
15,500 Applied Micro Circuits 191,812(2)
23,300 BMC Software 1,529,062(2)
20,600 Cadence Design Systems 504,700(2)
17,500 CBT Group ADR 1,437,187(2)
40,100 CHS Electronics 686,713(2)
19,200 Citrix Systems 1,459,200(2)
45,700 Equifax, Inc. 1,619,494
<CAPTION>
Number Market
of Shares Value(1)
- --------- ------------
<C> <S> <C>
36,900 J.D. Edwards & Co. $ 1,088,550(2)
27,800 KLA-Tencor 1,073,775(2)
5,000 Metromedia Fiber Network 83,125(2)
38,400 Network Appliance 1,363,200(2)
29,100 Network Associates 1,538,663(2)
43,900 NEXTLINK Communications 935,619(2)
19,000 Spectrian Corp. 365,750(2)
38,100 Sterling Commerce 1,464,469(2)
35,900 Teradyne, Inc. 1,148,800(2)
------------
16,490,119
------------
TRANSPORTATION (0.8%)
55,300 Southwest Airlines 1,361,763
------------
UTILITIES (1.3%)
46,300 AES Corp. 2,158,738(2)
------------
TOTAL COMMON STOCKS (COST
$79,487,190) 93,967,627
------------
</TABLE>
B-12
<PAGE>
SCHEDULE OF INVESTMENTS (Cont'd)
Advisers Managers Trust December 31, 1997
- --------------------------------------------------------------------------------
AMT Balanced Investments
<TABLE>
<CAPTION>
Principal Rating(3) Market
Amount Moody's S&P Value(1)
- --------- ---------- --------- ------------
<C> <S> <C> <C> <C>
U.S. TREASURY SECURITIES (0.4%)
$ 662,929 U.S. Treasury Inflation-Indexed Notes, 3.375%, due 1/15/07
(COST $662,623) TSY TSY $ 645,527
------------
U.S. GOVERNMENT AGENCY SECURITIES (1.3%)
1,420,000 Freddie Mac, Discount Notes, 4.75%, due 1/2/98 AGY AGY 1,420,000
735,000 Federal Home Loan Bank, Discount Notes, 5.80%, due 1/7/98 AGY AGY 734,427
------------
TOTAL U.S. GOVERNMENT AGENCY SECURITIES (COST $2,154,102) 2,154,427
------------
MORTGAGE-BACKED SECURITIES (2.8%)
FANNIE MAE
13,152 Balloon Pass-Through Certificates, 8.50%, due 11/1/98 AGY AGY 13,580
1,673,534 Pass-Through Certificates, 7.00%, due 6/1/11 AGY AGY 1,710,034
1,105,192 Pass-Through Certificates, 7.50%, due 9/1/11 AGY AGY 1,133,473
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
1,703,984 Pass-Through Certificates, 7.00%, due 1/15/27 AGY AGY 1,717,803
------------
TOTAL MORTGAGE-BACKED SECURITIES (COST $4,452,593) 4,574,890
------------
ASSET-BACKED SECURITIES (6.2%)
67,563 USAA Auto Loan Grantor Trust, Automobile Loan Pass-Through
Certificates, Ser. 1994-1, 5.00%, due 11/15/99 Aaa AAA 67,427
1,450,000 PNC Student Loan Trust I, Ser. 1997-2, Class A-2, 6.138%,
due 1/25/00 Aaa AAA 1,455,235
970,000 Chase Manhattan Auto Owner Trust, Ser. 1996-C, Class A-3,
5.95%, due 11/15/00 Aaa AAA 970,339
682,584 Banc One Auto Grantor Trust, Ser. 1996-B, Class A, 6.55%,
due 2/15/03 Aaa AAA 685,820
1,350,000 Ford Credit Auto Loan Master Trust, Auto Loan Certificates,
Ser. 1996-1, 5.50%, due 2/15/03 Aaa AAA 1,333,705
1,420,000 Chase Credit Card Master Trust, Ser. 1997-2, Class A, 6.30%,
due 4/15/03 Aaa AAA 1,433,817
650,000 Navistar Financial Owner Trust, Ser. 1996-B, Class A-3,
6.33%, due 4/21/03 Aaa AAA 655,109
1,350,000 World Omni Automobile Lease Securitization Trust, Ser.
1997-A, Class A-3, 6.85%, due 6/25/03 Aaa AAA 1,377,405
910,040 Chevy Chase Auto Receivables Trust, Ser. 1996-2, Class A,
5.90%, due 7/15/03 Aaa AAA 905,307
1,223,492 IMC Excess Cashflow Trust, Ser. 1997-A, 7.41%, due 11/26/28 BBB(4) 1,222,269(5)
------------
TOTAL ASSET-BACKED SECURITIES (COST $10,068,983) 10,106,433
------------
BANKS & FINANCIAL INSTITUTIONS (7.9%)
1,300,000 CIT Group Holdings, Inc., Medium-Term Notes, 6.25%, due
10/25/99 Aa3 A+ 1,303,783
970,000 First National Bank of Commerce, Senior Bank Notes, 6.50%,
due 1/14/00 A2 A- 976,325
1,020,000 HomeSide Lending, Inc., Notes, 6.875%, due 5/15/00 Baa2 BBB 1,032,556
</TABLE>
B-13
<PAGE>
SCHEDULE OF INVESTMENTS (Cont'd)
Advisers Managers Trust December 31, 1997
- --------------------------------------------------------------------------------
AMT Balanced Investments
<TABLE>
<CAPTION>
Principal Rating(3) Market
Amount Moody's S&P Value(1)
- --------- ---------- --------- ------------
<C> <S> <C> <C> <C>
$1,280,000 Salomon Smith Barney Holdings Inc., Notes, 7.00%, due
5/15/00 A2 A $ 1,305,088
1,360,000 Comdisco, Inc., Notes, 6.50%, due 6/15/00 Baa1 BBB+ 1,368,731
1,860,000 Associates Pass-Through Asset Trust, Ser. 1997-1, 6.45%, due
9/15/00 Aa3 AA- 1,872,964(5)
820,000 Lehman Brothers Holdings Inc., Medium-Term Notes, Ser. E,
6.89%, due 10/10/00 Baa1 A 831,767
680,000 Lehman Brothers Holdings Inc., Medium-Term Notes, Ser. E,
6.65%, due 11/8/00 Baa1 A 685,141
1,420,000 Capital One Bank, Bank Notes, 5.95%, due 2/15/01 Baa3 BBB- 1,395,093
135,000 ABN AMRO Bank N.V., Global Subordinated Notes, 6.625%, due
10/31/01 Aa3 A 136,316
930,000 Riggs National Corp., Subordinated Notes, 8.50%, due 2/1/06 Ba1(6) BB-(6) 982,313
925,000 Goldman Sachs Group, L.P., Global Notes, 6.75%, due 2/15/06 A1 A+ 936,997(5)
------------
TOTAL BANKS & FINANCIAL INSTITUTIONS (COST $12,748,430) 12,827,074
------------
CORPORATE DEBT SECURITIES (19.7%)
1,500,000 Occidental Petroleum Corp., Medium-Term Notes, 5.85%, due
11/9/98 Baa2 BBB 1,492,455
1,200,000 NWCG Holdings Corp., Notes, Zero-Coupon, Yielding 7.05%, due
6/15/99 Ba2 BB+ 1,080,000
1,200,000 Williams Holdings of Delaware, Inc., Medium-Term Notes, Ser.
A, 6.40%, due 6/17/99 Baa2 BBB- 1,204,044
1,100,000 Chrysler Financial Corp., Medium-Term Notes, Ser. Q, 6.37%,
due 6/21/99 A3 A 1,105,863
660,000 Arkla, Inc., Notes, 8.875%, due 7/15/99 Baa3 BBB 684,809
1,240,000 Time Warner Pass-Through Asset Trust, Ser. 1997-2, 4.90%,
due 7/29/99 Ba1 BBB- 1,213,886(5)
1,220,000 Norfolk Southern Corp., Notes, 6.70%, due 5/1/00 Baa1 BBB+ 1,233,627
900,000 Cleveland Electric Illuminating Co., Secured Notes, Ser. B,
7.19%, due 7/1/00 Ba1 BB+ 909,315
1,440,000 Sears Roebuck Acceptance Corp., Medium-Term Notes, Ser. IV,
6.23%, due 7/12/00 A2 A- 1,443,614
1,160,000 Arvin Industries, Inc., Notes, 10.00%, due 8/1/00 Ba1 BBB- 1,255,491
1,000,000 Ford Motor Credit Co., Medium-Term Notes, 6.84%, due 8/16/00 A1 A 1,017,520
1,670,000 MedPartners, Inc., Senior Subordinated Notes, 6.875%, due
9/1/00 Ba2 BBB- 1,647,906
520,000 Chesapeake Corp., Notes, 10.375%, due 10/1/00 Baa3 BBB 571,860
415,000 BHP Finance (USA) Limited, Guaranteed Notes, 5.625%, due
11/1/00 A2 A 409,389
1,450,000 IKON Capital, Inc., Medium-Term Notes, Ser. C, 6.33%, due
12/8/00 A3 A- 1,450,667
130,000 Congoleum Corp., Senior Notes, 9.00%, due 2/1/01 B1 BB- 131,300
870,000 Revlon Worldwide Corp., Senior Secured Notes, Ser. B,
Zero-Coupon, Yielding 10.75% & 10.959%, due 3/15/01 B3 B- 599,213
520,000 Colonial Realty Limited Partnership, Senior Notes, 7.50%,
due 7/15/01 Baa3 BBB- 537,118
1,000,000 Tyco International Ltd., Notes, 6.50%, due 11/1/01 Baa2 A- 1,006,580
</TABLE>
B-14
<PAGE>
SCHEDULE OF INVESTMENTS (Cont'd)
Advisers Managers Trust December 31, 1997
- --------------------------------------------------------------------------------
AMT Balanced Investments
<TABLE>
<CAPTION>
Principal Rating(3) Market
Amount Moody's S&P Value(1)
- --------- ---------- --------- ------------
<C> <S> <C> <C> <C>
$ 755,000 ICI Wilmington Inc., Guaranteed Notes, 7.50%, due 1/15/02 Baa1 A- $ 789,496
600,000 Fort James Corp., Senior Notes, 6.50%, due 9/15/02 Baa3 BBB- 600,342
400,000 Core-Mark International Inc., Senior Subordinated Notes,
11.375%, due 9/15/03 B3 B 423,000
1,040,000 Stewart Enterprises, Inc., Notes, 6.70%, due 12/1/03 Baa3 BBB 1,048,382
160,000 Loomis Fargo & Co., Senior Subordinated Notes, 10.00%, due
1/15/04 B3 B- 160,800
45,000 Playtex Products, Inc., Senior Notes, Ser. B, 8.875%, due
7/15/04 B1 B+ 45,675
170,000 Iridium LLC, Senior Notes, Ser. C, 11.25%, due 7/15/05 B3 B- 167,875(5)
110,000 ICN Pharmaceuticals, Inc., Senior Notes, Ser. B, 9.25%, due
8/15/05 B1 BB 116,600
1,170,000 Bell Cablemedia plc, Senior Step Up Notes, Yielding 8.98%,
due 9/15/05 Baa3 BBB+ 1,025,212
450,000 Heritage Media Corp., Senior Subordinated Notes, 8.75%, due
2/15/06 B1 BB+ 481,500
1,160,000 Mark IV Industries, Inc., Senior Subordinated Notes, 7.75%,
due 4/1/06 Ba2(7) BB+(7) 1,174,500
205,000 Printpack, Inc., Senior Subordinated Notes, Ser. B, 10.625%,
due 8/15/06 B3 B+ 217,813
500,000 Time Warner Inc., Notes, 8.11%, due 8/15/06 Ba1 BBB- 542,895
165,000 Commonwealth Aluminum Corp., Senior Subordinated Notes,
10.75%, due 10/1/06 B2 B- 176,756
320,000 MedPartners, Inc., Senior Notes, 7.375%, due 10/1/06 Baa3 BBB 316,835
235,000 Motors and Gears, Inc., Senior Notes, Ser. B, 10.75%, due
11/15/06 B3 B 249,688
45,000 Newport News Shipbuilding Inc., Senior Subordinated Notes,
9.25%, due 12/1/06 B1 B+ 47,700
100,000 Safelite Glass Corp., Senior Subordinated Notes, 9.875%, due
12/15/06 B3 B 109,500(5)
220,000 AMTROL Inc., Senior Subordinated Notes, 10.625%, due
12/31/06 B3 B- 226,600
410,000 Pen-Tab Industries, Inc., Senior Subordinated Notes, Ser. B,
10.875%,
due 2/1/07 B3 B- 393,600
235,000 Fonda Group, Inc., Senior Subordinated Notes, Ser. B, 9.50%,
due 3/1/07 B3 B- 222,662
325,000 GFSI Inc., Senior Subordinated Notes, 9.625%, due 3/1/07 B3 B- 333,938
30,000 Tekni-Plex, Inc., Senior Subordinated Notes, Ser. B, 11.25%,
due 4/1/07 B3 B- 32,325
75,000 French Fragrances, Inc., Senior Notes, Ser. B, 10.375%, due
5/15/07 B2 B+ 78,937
610,000 Owens-Illinois, Inc., Senior Debentures, 8.10%, due 5/15/07 Ba1(8) BB+(8) 653,042
110,000 AmeriServe Food Distribution, Inc., Senior Subordinated
Notes, 10.125%, due 7/15/07 B3 B- 115,225
50,000 Safety Components International, Inc., Senior Subordinated
Notes, 10.125%, due 7/15/07 B3 B- 51,563
70,000 United Auto Group, Inc., Senior Subordinated Notes, 11.00%,
due 7/15/07 B3 B- 68,425(5)
225,000 HydroChem Industrial Services, Inc., Senior Subordinated
Notes, Ser. B,
10.375%, due 8/1/07 B3 B- 231,750
</TABLE>
B-15
<PAGE>
SCHEDULE OF INVESTMENTS (Cont'd)
Advisers Managers Trust December 31, 1997
- --------------------------------------------------------------------------------
AMT Balanced Investments
<TABLE>
<CAPTION>
Principal Rating(3) Market
Amount Moody's S&P Value(1)
- --------- ---------- --------- ------------
<C> <S> <C> <C> <C>
$1,310,000 Interpool, Inc., Notes, 7.20%, due 8/1/07 Ba1 BBB $ 1,312,004(5)
50,000 Insilco Corp., Senior Subordinated Notes, 10.25%, due
8/15/07 B3 BB 52,313
130,000 NBTY, Inc., Senior Subordinated Notes, 8.625%, due 9/15/07 B1 B+ 130,000(5)
60,000 Physician Sales & Service, Inc., Senior Subordinated Notes,
8.50%, due 10/1/07 B1 B 61,650(5)
60,000 United Defense, L.P., Senior Subordinated Notes, 8.75%, due
11/15/07 B3 B- 60,150(5)
610,000 UPM-Kymmene Corp., Notes, 6.875%, due 11/26/07 Baa1 BBB+ 609,061(5)
415,000 Central Maine Power & Co., General and Refunding Mortgage
Bonds, Ser. Q, 7.05%, due 3/1/08 Baa3 BB+ 407,779
95,000 KinderCare Learning Centers, Inc., Senior Subordinated
Notes, Ser. B, 9.50%, due 2/15/09 B3 B- 94,525
------------
TOTAL CORPORATE DEBT SECURITIES (COST $31,586,137) 31,824,775
------------
SHORT-TERM CORPORATE NOTES (2.9%)
4,600,000 General Electric Capital Corp., 5.95%, due 1/2/98 (COST
$4,600,000) P-1 A-1+ 4,600,000(9)
------------
TOTAL INVESTMENTS (99.2%) (COST $145,760,058) 160,700,753(10)
Cash, receivables and other assets, less liabilities (0.8%) 1,324,738
------------
TOTAL NET ASSETS (100.0%) $162,025,491
------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
B-16
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS
Advisers Managers Trust December 31, 1997
- --------------------------------------------------------------------------------
AMT Balanced Investments
1) Investments in equity securities of the Series 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.
Investments in limited maturity debt securities of the Series are valued
daily by obtaining bid price quotations from independent pricing services on
selected securities available in each service's data base. For all other
securities requiring daily quotations, bid prices are obtained from
principal market makers in those securities or, if quotations are not
available, by a method that the trustees of Advisers 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) Non-income producing security.
3) Credit ratings are unaudited.
4) Not rated by Moody's; the rating shown is from Fitch Investors Services,
Inc.
5) Security exempt from registration under the Securities Act of 1933. These
securities may be resold in transactions exempt from registration, normally
to qualified institutional buyers under Rule 144A. At December 31, 1997,
these securities amounted to $7,764,781 or 4.8% of net assets.
6) Rated BBB- by Thomson Bank Watch, Inc.
7) Rated BBB- by Fitch Investors Services, Inc.
8) Rated BBB- by Duff & Phelps Credit Rating Co.
9) At cost, which approximates market value.
10) At December 31, 1997, the cost of investments for Federal income tax
purposes was $146,163,010. Gross unrealized appreciation of investments was
$19,252,526 and gross unrealized depreciation of investments was $4,714,783,
resulting in net unrealized appreciation of $14,537,743, based on cost for
Federal income tax purposes.
SEE NOTES TO FINANCIAL STATEMENTS
B-17
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
Advisers Managers Trust
- --------------------------------------------------------------------------------
AMT Balanced Investments
<TABLE>
<CAPTION>
December 31,
1997
-------------
<S> <C>
ASSETS
Investments in securities, at market value* (Note A) -- see
Schedule of Investments $160,700,753
Cash 3,706
Receivable for securities sold 1,858,104
Dividends and interest receivable 1,003,989
Deferred organization costs (Note A) 24,179
Prepaid expenses and other assets 3,586
-------------
163,594,317
-------------
LIABILITIES
Payable for securities purchased 1,425,669
Payable to investment manager (Note B) 81,837
Accrued expenses 39,336
Payable for variation margin (Note A) 21,984
-------------
1,568,826
-------------
NET ASSETS Applicable to Investors' Beneficial Interests $162,025,491
-------------
NET ASSETS consist of:
Paid-in capital $147,202,873
Net unrealized appreciation in value of investment securities
and financial futures contracts 14,822,618
-------------
NET ASSETS $162,025,491
-------------
*Cost of investments $145,760,058
-------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-18
<PAGE>
STATEMENT OF OPERATIONS
Advisers Managers Trust
- --------------------------------------------------------------------------------
AMT Balanced Investments
<TABLE>
<CAPTION>
For the
Year Ended
December 31,
1997
------------
<S> <C>
INVESTMENT INCOME
Income:
Interest income $ 5,062,127
Dividend income 635,234
Foreign taxes withheld (Note A) (11,024)
------------
Total income 5,686,337
------------
Expenses:
Investment management fee (Note B) 1,006,276
Custodian fees (Note B) 131,101
Amortization of deferred organization and initial offering
expenses (Note A) 10,369
Accounting fees 10,000
Legal fees 8,099
Trustees' fees and expenses 7,971
Auditing fees 6,518
Insurance expense 3,316
Miscellaneous 49
------------
Total expenses 1,183,699
Expenses reduced by custodian fee expense offset arrangement
(Note B) (1,094)
------------
Total net expenses 1,182,605
------------
Net investment income 4,503,732
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investment securities sold 27,186,711
Net realized loss on financial futures contracts (Note A) (533,454)
Net realized gain on foreign currency transactions (Note A) 4,273
Change in net unrealized appreciation of investment securities and
financial futures contracts (Note A) 897,508
------------
Net gain on investments 27,555,038
------------
Net increase in net assets resulting from operations $32,058,770
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-19
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
Advisers Managers Trust
- --------------------------------------------------------------------------------
AMT Balanced Investments
<TABLE>
<CAPTION>
Year Ended
December 31,
1997 1996
---------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 4,503,732 $ 3,818,166
Net realized gain on investments 26,657,530 8,184,216
Change in net unrealized appreciation of investments 897,508 (201,548)
---------------------------
Net increase in net assets resulting from operations 32,058,770 11,800,834
---------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS:
Additions 4,639,298 27,061,978
Reductions (48,168,855) (68,687,411)
---------------------------
Net decrease in net assets resulting from transactions in
investors' beneficial interests (43,529,557) (41,625,433)
---------------------------
NET DECREASE IN NET ASSETS (11,470,787) (29,824,599)
NET ASSETS:
Beginning of year 173,496,278 203,320,877
---------------------------
End of year $162,025,491 $173,496,278
---------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-20
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Advisers Managers Trust December 31, 1997
- --------------------------------------------------------------------------------
AMT Balanced Investments
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1) GENERAL: AMT Balanced Investments (the "Series") is a separate operating
series of Advisers Managers Trust ("Managers Trust"), a New York common law
trust organized as of May 24, 1994. Managers Trust is currently comprised of
eight separate operating series. Managers Trust is registered as a
diversified, open-end management investment company under the Investment
Company Act of 1940, as amended.
The assets of each series belong only to that series, and the liabilities
of each series are borne solely by that series and no other.
2) PORTFOLIO VALUATION: Investment securities are valued as indicated in the
notes following the Series' Schedule of Investments.
3) FOREIGN CURRENCY TRANSLATION: The accounting records of the Series 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) FORWARD FOREIGN CURRENCY CONTRACTS: The Series 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. 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 the Series. The Series has no specific limitation on the
percentage of assets which may be committed to these types of contracts. The
Series 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 the Series is determined using forward
foreign currency exchange rates supplied by an independent pricing service.
5) FINANCIAL FUTURES CONTRACTS: The Series may buy and sell financial futures
contracts to hedge against changes in securities prices resulting from
changes in prevailing interest rates. At the time the Series enters into a
financial futures contract, it is required to deposit with its custodian a
specified amount of cash or liquid securities, known as "initial margin,"
ranging upward from 1.1% of the value of the financial futures contract
being traded. Each day, the futures contract is valued at the official
settlement price of the board of trade or U.S. commodity exchange on which
such futures contract is traded. Subsequent payments, known as "variation
margin," to and from the broker are made on a daily basis as the market
price of the financial futures contract fluctuates. Daily variation margin
adjustments, arising from this "mark to market," are recorded by the Series
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, the
Series 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.
B-21
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Cont'd)
Advisers Managers Trust December 31, 1997
- --------------------------------------------------------------------------------
AMT Balanced Investments
For Federal income tax purposes, the futures transactions undertaken by
the Series may cause the Series 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 Series. Also, the Series' losses on transactions involving
futures contracts may be deferred rather than being taken into account
currently in calculating the Series' taxable income.
At December 31, 1997, open positions in financial futures contracts were
as follows:
<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION
EXPIRATION OPEN CONTRACTS POSITION (DEPRECIATION)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
March 1998 126 U.S. Treasury Notes, 2 Year Long $ 18,875
March 1998 51 U.S. Treasury Notes, 5 Year Short (46,584)
March 1998 114 U.S. Treasury Notes, 10 Year Short (90,368)
</TABLE>
At December 31, 1997, the Series had deposited $554,000 principal of Ford
Credit Auto Loan Master Trust, Auto Loan Certificates, Ser. 1996-1, 5.50%,
due 2/15/03 in a segregated account to cover margin requirements on open
financial futures contracts.
6) 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 Series
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 original issue discount, where
applicable, and accretion of discount on short-term investments, is recorded
on the accrual basis. Realized gains and losses from securities transactions
and foreign currency transactions are recorded on the basis of identified
cost.
7) FEDERAL INCOME TAXES: Managers Trust intends to comply with the requirements
of the Internal Revenue Code. Each series of Managers Trust also intends to
conduct its operations so that each of its investors will be able to qualify
as a regulated investment company. Each series will be treated as a
partnership for Federal income tax purposes and is therefore not subject to
Federal income tax.
8) FOREIGN TAXES: Foreign taxes withheld represent amounts withheld by foreign
tax authorities, net of refunds recoverable.
9) ORGANIZATION EXPENSES: Expenses incurred by the Series in connection with
its organization are being amortized by the Series on a straight-line basis
over a five-year period. At December 31, 1997, the unamortized balance of
such expenses amounted to $24,179.
10) EXPENSE ALLOCATION: Expenses directly attributable to a series are charged
to that series. Expenses not directly attributed to a series are allocated,
on the basis of relative net assets, to each of the series of Managers
Trust.
B-22
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Cont'd)
Advisers Managers Trust December 31, 1997
- --------------------------------------------------------------------------------
AMT Balanced Investments
NOTE B -- MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES:
The Series retains Neuberger&Berman Management Incorporated ("N&B
Management") as its investment manager under a Management Agreement. For such
investment management services, the Series pays N&B Management a fee at the
annual rate of .55% of the first $250 million of the Series' average daily net
assets, .525% of the next $250 million, .50% of the next $250 million, .475% of
the next $250 million, .45% of the next $500 million, and .425% of average daily
net assets in excess of $1.5 billion.
All of the capital stock of N&B Management is owned by individuals who are
also principals of Neuberger& Berman, LLC ("Neuberger"), a member firm of The
New York Stock Exchange and sub-adviser to the Series. Neuberger is retained by
N&B Management to furnish it with investment recommendations and research
information without added cost to the Series. Several individuals who are
officers and/or trustees of Managers Trust are also principals of Neuberger
and/or officers and/or directors of N&B Management.
The Series has an expense offset arrangement in connection with its custodian
contract. The impact of this arrangement, reflected in the Statement of
Operations under the caption Custodian fees, was a reduction of $1,094.
NOTE C -- SECURITIES TRANSACTIONS:
During the year ended December 31, 1997, there were purchase and sale
transactions (excluding short-term securities, financial futures contracts, and
forward foreign currency contracts) of $179,739,472 and $222,023,805,
respectively.
During the year ended December 31, 1997, the Series entered into various
contracts to deliver currencies at specified future dates. There were no open
positions in these contracts at December 31, 1997.
During the year ended December 31, 1997, brokerage commissions on securities
transactions amounted to $229,076, of which Neuberger received $94,867, and
other brokers received $134,209.
B-23
<PAGE>
FINANCIAL HIGHLIGHTS
Advisers Managers Trust
- --------------------------------------------------------------------------------
AMT Balanced Investments
<TABLE>
<CAPTION>
Period from
Year Ended May 1, 1995(1)
December 31, to December 31,
1997 1996 1995
---------------------------------------
<S> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(2) .65% .65% .64%(3)
---------------------------------------
Net Expenses .65% .65% .64%(3)
---------------------------------------
Net Investment Income 2.46% 2.28% 2.36%(3)
---------------------------------------
Portfolio Turnover Rate 103% 87% 55%
---------------------------------------
Average Commission Rate Paid $0.0388 $0.0572 $0.0451
---------------------------------------
Net Assets, End of Year (in millions) $162.0 $173.5 $203.3
---------------------------------------
</TABLE>
1) The date investment operations commenced.
2) The Series is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset arrangements.
3) Annualized.
B-24
<PAGE>
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS
To the Board of Trustees of
Advisers Managers Trust and
Owners of Beneficial Interest of AMT Balanced Investments
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of AMT Balanced Investments, one of the
series comprising Advisers Managers Trust ("Managers Trust"), as of December 31,
1997, and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods indicated therein.
These financial statements and financial highlights are the responsibility of
Managers Trust's management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of December 31, 1997, by correspondence with the custodian
and brokers or other appropriate auditing procedures where replies from brokers
were not received. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AMT
Balanced Investments of Advisers Managers Trust at December 31, 1997, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and the financial highlights
for each of the periods indicated therein, in conformity with generally accepted
accounting principles.
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
January 26, 1998
B-25
