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ANNUAL REPORT
August 31, 1996
Neuberger&Berman
EQUITY TRUST -Registered Trademark-
Neuberger&Berman
FOCUS TRUST
Neuberger&Berman
GENESIS TRUST
Neuberger&Berman
GUARDIAN TRUST
Neuberger&Berman
MANHATTAN TRUST
Neuberger&Berman
PARTNERS TRUST
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
THE FUNDS
CHAIRMAN'S LETTER 4
PORTFOLIO MANAGERS'
COMMENTARY
Focus Trust 6
Genesis Trust 9
Guardian Trust 12
Manhattan Trust 15
Partners Trust 18
GROWTH OF A DOLLAR
CHARTS
COMPARISON OF A
$10,000 INVESTMENT
Focus Trust 21
Genesis Trust 22
Guardian Trust 23
Manhattan Trust 24
Partners Trust 25
FINANCIAL STATEMENTS 26
FINANCIAL HIGHLIGHTS
PER SHARE DATA
Focus Trust 36
Genesis Trust 37
Guardian Trust 38
Manhattan Trust 39
Partners Trust 40
REPORT OF
INDEPENDENT
ACCOUNTANTS/AUDITORS 43
THE PORTFOLIOS
SCHEDULE OF
INVESTMENTS
TOP TEN EQUITY
HOLDINGS
Focus Portfolio 46
Genesis Portfolio 48
Guardian Portfolio 51
Manhattan Portfolio 55
Partners Portfolio 57
FINANCIAL STATEMENTS 62
FINANCIAL HIGHLIGHTS 73
REPORT OF
INDEPENDENT
ACCOUNTANTS/AUDITORS 76
OTHER INFORMATION
Directory/Officers and
Trustees 78
</TABLE>
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CHAIRMAN'S LETTER August 31, 1996
Dear Fellow Shareholder,
When we reported to you last year, the stock market was enjoying broad
gains -- across big companies and small, from one industry to another.
Late in 1995, however, the general bullishness started to wane. Cautious
investors feared a slowing economy and took flight to safety -- favoring
blue-chip stocks selling at high multiples.
Early in 1996, the fears of recession were eclipsed by fears of an overheating
economy. In February, the government reported much higher-than-expected growth
in employment. This created uncertainty in the markets, renewing speculation of
future interest rate hikes. In this volatile context, Wall Street sentiment
shifted toward fast-growing smaller companies.
Not for long, though. In July, when a number of high-tech companies reported
lower-than-expected quarterly earnings, the market got battered badly. Scores of
issues hit lows for the year, and the terrific gains earned just months earlier
were erased.
Fortunately, calm was restored in August. Economic reports indicated that
earlier anxieties about inflation were unwarranted, and as we are writing to you
today, the market appears to be reaching new highs once again.
In the following letters, our portfolio managers will explain why they have
outperformed or underperformed the market indices. In broad strokes, here is the
key explanation:
/ / In the last quarter of 1995, Wall Street favored high-multiple blue
chips -- stocks that few of our primarily value-oriented equity fund
managers hold. This underweighting adversely affected some of our funds'
performance.
Despite these temporary setbacks, we remain committed to our primarily
value-oriented investment approach. It's a strategy that has produced consistent
long-term results for almost half a century (though, of course, past performance
is no guarantee of future results).
In fact, it's heartening to us that even with the current volatility, investor
interest in our funds has continued to grow. On August 31,
4
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1995, our equity and income shareholders had entrusted us with $10.7 billion.
Only a year later, that amount has grown to $13.2 billion -- a 23.4% jump and
one of the biggest increases in our history.
We remain confident in the long-term performance of our mutual funds and thank
you for your continued support.
Sincerely,
/s/ Stanley Egener
Stanley Egener
Chairman of the Board
Neuberger&Berman Equity Trust
5
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PORTFOLIO MANAGERS' COMMENTARY
Neuberger&Berman
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Focus Trust
OBJECTIVE AND STRATEGY
Seeks long-term capital appreciation by investing principally in common
stocks selected from 13 leading sectors of the economy believed to offer
the greatest potential for capital growth.
Dear Fellow Shareholder,
For the fiscal year ended August 31, 1996, Focus' net asset value increased
3.62%. After the sharp gains of last year, the increases in both the overall
stock market and the Trust have moderated somewhat this year. This is not
unusual.
Focus' performance in fiscal 1996 did not match that of the benchmark we
measure ourselves against, the Standard & Poor's "500".* (See page 21 for a
comparison of a $10,000 investment and average annual returns as of August 31,
1996). This was due to two basic factors. In the first place, over the last 9 to
12 months, investors have grown increasingly nervous about exposing themselves
to an uncertain economy. Earnings disappointments in individual companies have
been met with instant and significant price declines, and with the economy
perceived to be in a decelerating trend, investors have sought protection
against this by buying those stocks thought to be immune to any economic
slowdown. Therefore, the stocks of companies in such industries as
pharmaceuticals, soft drinks, food and household products have done relatively
better than the market overall. Because of their valuations, these names are
unattractive to value investors such as ourselves. These stocks have accounted
for a disproportionate amount of the increase in the S&P, and not owning them
has been detrimental to our relative performance.
The other factor was the underperformance of two of our larger sectors:
technology and health care. In each case the primary culprit has been earnings
disappointments; but in both industries we think the reaction has been both
overdone in terms of stock price declines and
6
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Focus Trust (Cont'd)
overdramatized in terms of its implications. We believe technology will be an
ever-increasing part of the economy in the years to come and its future is
extremely bright. As value managers, we do not often get a chance to buy stocks
in high-growth industries at attractive P/E ratios, and when we do, we take
advantage of the opportunity. Similarly, our holdings in health care, which are
all HMO stocks, have been held back by some earnings shortfalls which we believe
are temporary. Two facts are central to our HMO investment thesis: one, the
percentage of the population enrolled in HMOs continues to increase steadily and
dramatically, and two, the managements of virtually all the companies in the
industry are addressing the problem of insufficient rates, which was the cause
of recent earnings disappointments.
We focus on these two areas of under performance for two reasons. First, we
believe in being candid with our shareholders, and second, it is indicative of
how we run the Portfolio. Our adherence to the value discipline is total, and to
get above-average companies at below-average valuations means we must often buy
companies when their fortunes are perceived to be diminished and their stocks
are out of favor. This approach has served us well over time as evidenced by
Focus' average annual return since August 31, 1991 of 16.54%, comfortably ahead
of the S&P's return of 13.59% over the same five-year period.**
Of the six sectors we are focused on at the present time, financial services
remains our largest. We continue to find both individual stocks, such as
CITICORP and Fannie Mae, and whole industries, such as the credit card business,
that we think offer earnings prospects much superior to the market while selling
at significant valuation discounts. As the three of us look at our holdings, we
like what we see. Our overall valuation level is lower than that of virtually
all other mutual funds, yet the earnings growth rates of our stocks are well
above average. This combination has been a winning strategy in the past; we are
sticking with it. Of course, past performance is no guarantee of future results.
7
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Focus Trust (Cont'd)
We appreciate your continued confidence in Neuberger&Berman Focus Trust, and
we look forward to keeping you informed about your fund.
Sincerely,
/s/ Kent Simons /s/ Lawrence Marx III /s/ Kevn Risen
Kent Simons Lawrence Marx III Kevin Risen
Portfolio Co-Managers
The composition, industries and holdings of the Trust are subject to change.
Focus Trust's portfolio is invested in a wide array of stocks and no single
holding makes up more than a small fraction of the portfolio's total assets.
While the value-oriented approach is intended to limit risks, the portfolio -
with its concentration in sectors - may be more greatly affected by any single
economic, political or regulatory development than a more diversified mutual
fund.
Before November 1, 1991, the investment policies of Neuberger&Berman Focus
Trust's Sister Fund required that a substantial percentage of its assets be
invested in the energy field; accordingly, performance results prior to that
time do not necessarily reflect the level of performance that may be expected
under the fund's current policies.
* The S&P "500" Index is an unmanaged index generally considered to be
representative of stock market activity. Please note that indices do not take
into account any fees and expenses of investing in the individual securities
that they track, and that individuals cannot invest directly in any index. Data
about the performance of this index are prepared or obtained by Neuberger&Berman
Management Inc. and include reinvestment of all dividends and capital gain
distributions. The Portfolio invests in many securities not included in the
above-described index.
** Performance before August 1993 is for Neuberger&Berman Focus Fund.
8
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PORTFOLIO MANAGER'S COMMENTARY
Neuberger&Berman
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Genesis Trust
OBJECTIVE AND STRATEGY
Seeks capital appreciation by investing primarily in common stocks of
companies with small-market capitalizations ("small-cap").
Dear Fellow Shareholder,
For the fiscal year ended August 31, 1996, Genesis Trust had a return of
21.44% -- comparing favorably with both the general market's unmanaged Standard
& Poor's "500" Stock Index (up 18.70%) and the small-cap market's unmanaged
Russell 2000 Index (up 10.82%) (see page 22 for a comparison of a $10,000
investment and average annual total returns as of August 31, 1996).*
Over the fiscal year, the Trust registered gains across a wide variety of
industry sectors. Energy stocks performed notably well as a group, following
higher gas and oil prices which encouraged increased drilling activity. Oil
service companies including Smith International and Oceaneering International
showed strong revenue and earnings growth. Interest-rate-sensitive stocks, such
as those of banks and insurance companies, were weaker as rates began to rise
during 1996.
This year's strong results demonstrate that attractive investments can still
be found among less glamorous, little-known small-cap issues that do not command
premium prices. Too many investors, we believe, focus only on the high-tech
companies among small-cap issues and ignore opportunities that can be found in
more mundane industries. Such businesses are a safer investment because the
greater the growth expectations, the greater the risk of disappointment.
Following are a few examples of stocks that demonstrate Genesis Trust's
"boring is beautiful" philosophy:
/ / BMC Industries.
BMC, the portfolio's largest holding, manufactures low-cost aperture masks
that are used for color televisions and computer monitors, as well as eyewear
lenses. Since 1991, reported earnings have grown at an annually compounded rate
of 24%, and earnings from existing operations have grown even more, over 30%
annually.
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Genesis Trust (Cont'd)
We are pleased that a shift in demand to larger aperture masks and to
polycarbonate lenses -- both of which have superior profit margins -- is
spurring rapid earnings growth. Expanded capacity for aperture masks is also
benefiting cash flow.
Thanks to enlarged capacity and a more profitable product mix, we believe
earnings for BMC Industries show promise over the next two years. Investors have
increasingly recognized the company's growth potential, and BMC's stock price
has appreciated in value.
/ / Texas Industries.
One of the lowest-cost producers of cement and steel, as well as a major
manufacturer of aggregates and related building materials, Texas Industries
(TXI) is benefiting from strong demand and tight supply conditions in its main
business lines.
TXI is using its healthy cash flow to reduce its debt, buy back its stock, and
consider making possible acquisitions. TXI's balance sheet has improved
substantially from several years ago and currently shows a modest 31%
debt-to-capitalization ratio. Return on equity has risen above 18%, and it is
our belief that it will continue to go up.
/ / DH Technology.
DH Technology designs and manufactures transaction printers, bar-code
printers, and other equipment. It has successfully introduced new products since
1995, and the new sales have helped quarterly revenues and earnings to grow over
20%. We believe these gains should continue, with improving margins.
We are pleased with the company's excellent balance sheet showing that DH
Technology has no debt. The company expects to have approximately $35 million in
cash at the end of this quarter. Currently, the company is considering its
excess cash flow to make possible acquisitions.
10
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Genesis Trust (Cont'd)
These are just a few examples of the little-known companies that have
performed strongly over the past fiscal year. We will continue in our search for
further "undiscovered gems" in the future, and we look forward to keeping you
informed about the fund.
Sincerely,
/s/ Judith Vale
Judith Vale
Portfolio Manager
The risk involved in seeking capital appreciation from investments principally
in companies with small market capitalization are set forth in the prospectus.
The composition, industries and holdings of the Trust are subject to change.
Genesis Trust's portfolio is invested in a wide array of stocks and no single
holding makes up more than a small fraction of the portfolio's total assets.
* The S&P "500" Index is an unmanaged index generally considered to be
representative of stock market activity; the Russell 2000 Index is an unmanaged
index generally considered to be representative of small-cap stock market
activity. Please note that indices do not take into account any fees and
expenses of investing in the individual securities that they track, and that
individuals cannot invest directly in any index. Data about the performance of
these indices are prepared or obtained by Neuberger&Berman Management Inc. and
include reinvestment of all dividends and capital gain distributions. The
Portfolio invests in many securities not included in the above-described
indices.
11
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PORTFOLIO MANAGERS' COMMENTARY
Neuberger&Berman
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Guardian Trust
OBJECTIVE AND STRATEGY
Seeks long-term capital appreciation and, secondarily, current income. It
invests primarily in long-established, high-quality companies, considering
factors such as low price-to-earnings ratios, strong balance sheets, and
consistent earnings.
Dear Fellow Shareholder,
After the unusually high returns of 1995, some diminution in 1996 in both the
overall stock market and in the Trust is not out of the ordinary. On the other
hand, it has been frustrating to us to have the Trust's performance lag that of
our traditional benchmark, the Standard & Poor's "500" (S&P).* Guardian's return
for the fiscal year was 5.19% versus 18.70% for the S&P "500". (See page 23 for
a comparison of a $10,000 investment and average annual total returns as of
August 31, 1996).
There were two primary reasons for this. Firstly, we did not own the large
capitalization consumer non-durable stocks that accounted for a significant part
of the S&P "500's" advance. These stocks, such as Coca-Cola, Gillette and
Johnson & Johnson, have been aggressively sought by investors seeking to isolate
themselves from any earnings disappointments that a slowdown in the economy
might bring. In the process, these issues have been bid up to levels that we
find unattractive, and therefore -- while we have owned many of these stocks in
the past -- we own virtually none now.
Secondly, two of our larger areas of emphasis -- technology and managed care
(HMOs) -- were out of favor for much of the fiscal year. Both sectors were hurt
by earnings disappointments in several companies which investors extrapolated to
all companies in the business and, moreover, assumed to be long lasting. As a
result, the price declines in these sectors hampered our overall performance,
but at the same time caused the stocks to reach valuation measures which we
found compelling. Therefore we have gradually increased our holdings in these
areas throughout the year. We think that technology will be an increasing force
in the economy for many years to come and will experience
12
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Guardian Trust (Cont'd)
above-average growth as a result. As value managers, we do not often get the
chance to buy companies in high-growth industries at below-average P/E ratios,
but when we do, we take advantage of the opportunity. Similarly, in the HMO
industry, overly aggressive pricing by some companies last year caused earnings
disappointments this year, which some investors assumed to be more lasting than
we do. The percentage of the population enrolled in HMOs has been increasing
rapidly for many years and shows no sign of abating, and we believe that this
remains a high-growth industry. Therefore, as in the case of technology, when
presented with the opportunity to buy above-average earnings prospects at
below-average P/E ratios, we took advantage of it.
Since its inception, Guardian has been managed using the value investing
approach. In order to buy companies with above-average earnings prospects at
below-average P/E ratios, we are often seeking either companies or industries
that are out of favor with most investors. This is the case in the examples
cited above. While this can be a wearing experience for your fund managers, over
the life of the Trust's Sister Fund (Neuberger&Berman Guardian Fund), it has
been a rewarding experience for its shareholders. Since its inception (June 1,
1950), the Fund's average annual return of 12.92% has exceeded that of the S&P's
12.31%. Given that our approach has worked for over forty years, we are inclined
to stick with it. Of course, past peformance is no guarantee of future results.
As of this writing, our valuation level (as measured by the overall
price-earnings ratio) is lower than that of over 95% of all equity mutual funds
in the U.S. At the same time, the return on equity and earnings growth rate of
the holdings are above average. This combination of low valuations and high
returns is what has produced our superior long-term results. As the three of us
look at our holdings today, we like what we see, and we believe the strategy
will be successful.
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Guardian Trust (Cont'd)
We appreciate your continued confidence in Neuberger&Berman Guardian Trust,
and we look forward to keeping you informed about your fund.
Sincerely,
/s/ Kent Simons /s/ Lawrence Marx III /s/ Kevn Risen
Kent Simons Lawrence Marx III Kevin Risen
Portfolio Co-Managers
The composition, industries and holdings of the Trust are subject to change.
Guardian Trust's portfolio is invested in a wide array of stocks and no single
holding makes up more than a small fraction of the portfolio's total assets.
* The S&P "500" Index is an unmanaged index generally considered to be
representative of stock market activity. Please note that indices do not take
into account any fees and expenses of investing in the individual securities
that they track, and that individuals cannot invest directly in any index. Data
about the performance of this index are prepared or obtained by Neuberger&Berman
Management Inc. and include reinvestment of all dividends and capital gain
distributions. The Portfolio invests in many securities not included in the
above-described index.
14
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PORTFOLIO MANAGER'S COMMENTARY
Neuberger&Berman
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Manhattan Trust
OBJECTIVE AND STRATEGY
This broadly diversified growth fund seeks long-term capital appreciation.
Manhattan Trust follows a "growth at a reasonable price" philosophy and
searches for financially sound, growing companies with a special
competitive advantage that are attractively valued.
Dear Fellow Shareholder,
Manhattan Trust ended fiscal 1995 up 25.90%, -- one of its highest returns
since Neuberger&Berman Management Inc. started managing it 17 years ago.*
Unfortunately, many of the factors which aided the Trust's performance in the
previous year were not present in fiscal 1996. As a growth fund, Manhattan Trust
has historically performed best when inflation fears are steady, bond yields
fall, economic growth slows down, and corporate earnings grow. These conditions
were not met in fiscal 1996. The Trust ended its year down 2.98% (see page 24
for a comparison of a $10,000 investment and average annual total returns as of
August 31, 1996).
In contrast to 1995, 1996 was a year of apprehension in the markets as
investors worried about both the sensitivity of the overall market to
inflationary pressures and the heightened sensitivity of individual stocks to
earnings disappointments. As such, many of the large capitalization blue-chip
stocks, such as food and drug names, which are viewed as resistant to these
concerns, did very well. Manhattan Trust, which has sought to buy stocks trading
at a discount to their earnings growth as opposed to these stocks which
typically trade at a premium, did not own many of these "in favor" names.
Also contributing to the decline was weakness in technology stocks in the
fourth quarter of 1995, after considerable strengths in earlier quarters.
Oversupplies of semiconductor memories from the Far East caused most high-tech
stocks to tumble. Not every company in the sector, however, showed
weakness -- Intel, a leading computer peripherals company, and SAP, a software
company, had year-long strength.
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Manhattan Trust (Cont'd)
On a more positive note, Manhattan Trust benefited from strong returns in our
financial services and insurance holdings (25% of assets). Morgan Stanley
(investment banking) and Travelers Group (investment banking, commercial credit,
retail brokerage, and insurance) registered strong gains. So, too, did our
credit card holdings, First USA Inc., MBNA Corporation and Capital One Financial
Corporation. Each of these has been growing credit card balances 30% per year
while the traditional banks have been scaling back in the business. Outside of
the financial services sector, Manhattan Trust was helped by its restaurant-
chain investments and selected consumer and retail stocks, including the office
products companies, Viking and Staples.
We are in no way discouraged by the reversal for the fiscal year. As long-term
investors, we expect occasional setbacks caused by changes in market conditions.
They are a small price to pay for the benefits of a mutual fund specializing in
common stocks with strong growth records and, in our judgment, strong prospects.
Moreover, in a year of significant volatility, Manhattan Trust took advantage
of market declines, on a selective basis, to increase positions in some existing
holdings and to establish new ones. We believe that we are well-positioned as we
enter fiscal 1997.
Among the new holdings in the Fund are two UK cable stocks, International
CableTel and Comcast UK. While the market has been neglecting the UK cable
business, we believe it offers considerable potential at this time. Comcast UK
is halfway through building the cable system in the UK. It is also offering
telephone service competitive with British Telecom, the principal UK telephone
service supplier. In addition, the company is beginning to offer on-line
services. With a business offering three state-of-the-art services -- and
operating far ahead of competition -- we think Comcast UK is positioned to
generate positive cash flow later this year. We believe International CableTel
is similarly well-positioned.
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Manhattan Trust (Cont'd)
While the fiscal year has been frustrating, we believe a long-term outlook can
reward the patient investor. We appreciate your continued confidence in
Manhattan Trust and look forward to keeping you informed about the fund.
Sincerely,
/s/ Mark Goldstein
Mark Goldstein
Portfolio Manager
The composition, industries and holdings of the Trust are subject to change.
Manhattan Trust's portfolio is invested in a wide array of stocks and no single
holding makes up more than a small fraction of the portfolio's total assets.
*Performance before August 1993 is for Neuberger&Berman Manhattan Fund.
17
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PORTFOLIO MANAGERS' COMMENTARY
Neuberger&Berman
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Partners Trust
OBJECTIVE AND STRATEGY
Seeks capital growth through investing principally in common stocks of
medium-to-large capitalization companies.
Dear Fellow Shareholder,
Despite a more volatile market, Partners Trust advanced 13.76% in the fiscal
year ended August 31, 1996 (see page 25 for a comparison of a $10,000 investment
and average annual total returns as of August 31, 1996). Though less than the
striking upward move of the prior fiscal year, when the fund gained 21.52%, it
was a respectable result in the sometimes difficult conditions encountered as
the year progressed.
Results were helped, once again, by the financial services sector. Wells
Fargo, one of our largest portfolio holdings, performed strongly due to solid
earnings. Consumer non-durables (particularly food and drug stocks) also posted
solid gains, although their price-to-earnings ratios were too high for us to
consider making additional purchases. For the market at large, however, they
were attractive to cautious investors who feared market declines and inflation.
On the negative side, the Portfolio's technology and health-services related
issues suffered declines in response to over-production and price pressures,
respectively. We sold out our investment in Humana, a health care provider that
got caught up in the general negativism and increased cost pressure affecting
the industry.
We continue to value companies as a business executive would, comparing a
company's quoted trading price to a hypothetical off-market offer to buy the
entire company. In the second quarter, this practice was positively put to the
test in literal terms as several portfolio holdings were the subject of purchase
offers, including Stop & Shop, Loral, and Revco (a merger later disallowed by
the Justice Department).
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Partners Trust (Cont'd)
Following are a few examples of the companies whose stocks we bought or sold
over the past fiscal year:
/ / Anheuser Busch
We bought Anheuser Busch, America's largest brewer, because the company
continues to gain market share and has enjoyed a more favorable pricing
environment. This market leader is using its positive cash flow to further
reduce costs and to buy back stock.
/ / Tyson Foods
We sold our shares in this consumer foods company because it was faced with
continuing run-ups in the prices of corn and soy meal, its two main raw material
costs. Importing difficulties involving foreign governments, a politically
sensitive area, were also a concern.
/ / Harley-Davidson
We bought Harley-Davidson when the company had problems with its recreational
vehicles unit. While this affected Harley-Davidson's stock price significantly,
its dominant business, motorcycles, continued to be very profitable. In an
owner-oriented move, the company initiated a stock buy-back. With the
recreational vehicle business sold in 1996 (and the main business holding a full
order book and waiting list), Harley-Davidson's stock price appreciated
strongly. We no longer believed the stock to be undervalued and therefore sold
our position.
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Partners Trust (Cont'd)
We appreciate your continued confidence in Neuberger&Berman Partners Trust,
and we look forward to keeping you informed about your fund.
Sincerely,
/s/ Michael Kassen /s/ Robert Gendelman
Michael Kassen Robert Gendelman
Portfolio Co-Managers
The composition, industries and holdings of the Trust are subject to change.
Partners Trust's portfolio is invested in a wide array of stocks and no single
holding makes up more than a small fraction of the portfolio's total assets.
20
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COMPARISON OF A $10,000 INVESTMENT
Neuberger&Berman August 31, 1996
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Focus Trust
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C>
Average Annual Total Return*
Focus S&P "500"
1 Year +3.62% +18.70%
5 Year +16.54% +13.59%
10 Year +13.71% +13.35%
Focus Trust S&P "500"
1986 $10,000 $10,000
1987 $13,206 $13,464
1988 $11,213 $11,043
1989 $15,065 $15,373
1990 $14,504 $14,585
1991 $16,818 $18,522
1992 $18,804 $19,992
1993 $24,107 $23,029
1994 $27,380 $24,298
1995 $34,892 $29,503
1996 $36,156 $35,019
</TABLE>
The performance information for Neuberger&Berman Focus Trust is as of August
31, 1996. Neuberger&Berman Focus Trust started operating on August 30, 1993. It
has identical investment objectives and policies, and invests in the same
Portfolio as Neuberger&Berman Focus Fund ("Sister Fund"), which is also managed
by Neuberger&Berman Management Inc. The performance information shown in the
above chart for the period before August 30, 1993, is for the Sister Fund.
Neuberger&Berman Management Inc. voluntarily bears certain operating expenses of
the Trust so that its expense ratio per annum will not exceed the expense ratio
per annum of its Sister Fund by more than 0.10% of the Trust's average daily net
assets per annum, until December 31, 1996, and thereafter subject to at least 60
days' prior written notice. Absent such arrangement, the average annual total
returns of the Trust would have been less. The total returns for periods prior
to the Trust's commencement of operations would have been lower had they
reflected the higher expense ratios of the Trust as compared to those of
Neuberger&Berman Focus Fund.
The Trust's name prior to January 1, 1995 was Neuberger&Berman Selected
Sectors Trust. Prior to November 1, 1991, the investment policies of the Sister
Fund required that a substantial percentage of its assets be invested in the
energy field; accordingly, performance results prior to that time do not
necessarily reflect the level of performance that may be expected under the
Trust's current investment policies. While the Trust's value-oriented approach
is intended to limit risks, the Portfolio, with its concentration in sectors,
may be more greatly affected by any single economic, political or regulatory
development than a more diversified mutual fund.
*"Total Return" includes reinvestment of all income dividends and capital gain
distributions. Results represent past performance and do not indicate future
results. The value of an investment in the Trust and the return on the
investment both will fluctuate, and redemption proceeds may be higher or lower
than an investor's original cost.
The S&P "500" Index is an unmanaged index generally considered to be
representative of stock market activity. Please note that indices do not take
into account any fees and expenses of investing in the individual securities
that they track, and that individuals cannot invest directly in any index. Data
about the performance of this index are prepared or obtained by Neuberger&Berman
Management Inc. and include reinvestment of all dividends and capital gain
distributions. The Portfolio invests in many securities not included in the
above-described index.
21
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COMPARISON OF A $10,000 INVESTMENT
Neuberger&Berman August 31, 1996
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Genesis Trust
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C>
Average Annual Total Return*
Genesis Russell 2000
1 Year +21.44% +10.82%
5 Year +14.83% +15.05%
Life of Fund +13.69% +12.64%
Genesis Trust Russell 2000
9/27/88 $10,000 $10,000
1989 $13,045 $12,113
1990 $10,236 $9,714
1991 $13,856 $12,749
1992 $14,562 $13,680
1993 $18,072 $18,130
1994 $19,061 $19,193
1995 $22,780 $23,191
1996 $27,664 $25,701
</TABLE>
The performance information for Neuberger&Berman Genesis Trust is as of
August 31, 1996. Neuberger&Berman Genesis Trust started operating on August 26,
1993. It has identical investment objectives and policies, and invests in the
same Portfolio as Neuberger&Berman Genesis Fund ("Sister Fund"), which is also
managed by Neuberger&Berman Management Inc. The performance information shown in
the above chart for the period before August 26, 1993, is for the Sister Fund
which commenced operations on September 27, 1988. Neuberger&Berman Management
Inc. voluntarily bears certain operating expenses of the Trust so that its
expense ratio per annum will not exceed the expense ratio per annum of its
Sister Fund by more than 0.10% of the Trust's average daily net assets per
annum, until December 31, 1996, and thereafter subject to at least 60 days'
prior written notice. Effective May 1, 1995, Neuberger&Berman Management Inc.
has voluntarily agreed to waive a portion of the management fee borne directly
by Neuberger&Berman Genesis Portfolio and indirectly by Neuberger&Berman Genesis
Trust to reduce that fee by 0.10% of the Portfolio's average daily net assets
per annum. Absent such arrangements, the average annual total returns would have
been less. The total returns for periods prior to the Trust's commencement of
operations would have been lower had they reflected the higher expense ratios of
the Trust as compared to those of Neuberger&Berman Genesis Fund.
*"Total Return" includes reinvestment of all income dividends and capital gain
distributions. Results represent past performance and do not indicate future
results. The value of an investment in the Trust and the return on the
investment both will fluctuate, and redemption proceeds may be higher or lower
than an investor's original cost.
The Russell 2000 Index is an unmanaged index generally considered to be
representative of the 2,000 issuers having the smallest capitalization in the
Russell 3000 Index, representing approximately 7% of the Russell 3000 total
market capitalization. The smallest company's market capitalization is roughly
$13 million. The risks involved in seeking capital appreciation from investments
principally in companies with small market capitalization are set forth in the
prospectus. Please note that indices do not take into account any fees and
expenses of investing in the individual securities that they track, and that
individuals cannot invest directly in any index. Data about the performance of
this index are prepared or obtained by Neuberger&Berman Management Inc. and
include reinvestment of all dividends and capital gain distributions. The
Portfolio invests in many securities not included in the above-described index.
22
<PAGE>
COMPARISON OF A $10,000 INVESTMENT
Neuberger&Berman August 31, 1996
- ----------------------------------------------------------------------
Guardian Trust
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C>
Average Annual Total Return*
Guardian S&P "500"
1 Year +5.19% +18.70%
5 Year +15.07% +13.59%
10 Year +13.31% +13.35%
Guardian Trust S&P "500"
1986 $10,000 $10,000
1987 $12,667 $13,464
1988 $11,313 $11,043
1989 $15,148 $15,373
1990 $13,255 $14,585
1991 $17,296 $18,522
1992 $19,698 $19,992
1993 $24,197 $23,029
1994 $26,755 $24,298
1995 $33,180 $29,503
1996 $34,902 $35,019
</TABLE>
The performance information for Neuberger&Berman Guardian Trust is as of
August 31, 1996. Neuberger&Berman Guardian Trust started operating on August 3,
1993. It has identical investment objectives and policies, and invests in the
same Portfolio as Neuberger&Berman Guardian Fund ("Sister Fund"), which is also
managed by Neuberger&Berman Management Inc. The performance information shown in
the above chart for the period before August 3, 1993, is for the Sister Fund.
Neuberger&Berman Management Inc. voluntarily bears certain operating expenses of
the Trust so that its expense ratio per annum will not exceed the expense ratio
per annum of its Sister Fund by more than 0.10% of the Trust's average daily net
assets per annum, until December 31, 1996, and thereafter subject to at least 60
days' prior written notice. Absent such arrangement, the average annual total
returns of the Trust would have been less. The total returns for periods prior
to the Trust's commencement of operations would have been lower had they
reflected the higher expense ratios of the Trust as compared to those of
Neuberger&Berman Guardian Fund.
*"Total Return" includes reinvestment of all income dividends and capital gain
distributions. Results represent past performance and do not indicate future
results. The value of an investment in the Trust and the return on the
investment both will fluctuate, and redemption proceeds may be higher or lower
than an investor's original cost.
The S&P "500" Index is an unmanaged index generally considered to be
representative of stock market activity. Please note that indices do not take
into account any fees and expenses of investing in the individual securities
that they track, and that individuals cannot invest directly in any index. Data
about the performance of this index are prepared or obtained by Neuberger&
Berman Management Inc. and include reinvestment of all dividends and capital
gain distributions. The Portfolio invests in many securities not included in the
above-described index.
23
<PAGE>
COMPARISON OF A $10,000 INVESTMENT
Neuberger&Berman August 31, 1996
- ----------------------------------------------------------------------
Manhattan Trust
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C>
Average Annual Total Return*
Manhattan S&P "500"
1 Year -2.98% +18.70%
5 Year +11.12% +13.59%
10 Year +11.12% +13.35%
Manhattan Trust S&P "500"
1986 $10,000 $10,000
1987 $13,435 $13,464
1988 $10,776 $11,043
1989 $15,347 $15,373
1990 $13,434 $14,585
1991 $16,949 $18,522
1992 $17,753 $19,992
1993 $22,668 $23,029
1994 $23,506 $24,298
1995 $29,595 $29,503
1996 $28,713 $35,019
</TABLE>
The performance information for Neuberger&Berman Manhattan Trust is as of
August 31, 1996. Neuberger&Berman Manhattan Trust started operating on August
30, 1993. It has identical investment objectives and policies, and invests in
the same Portfolio as Neuberger& Berman Manhattan Fund ("Sister Fund"), which is
also managed by Neuberger&Berman Management Inc. The performance information
shown in the above chart for the period before August 30, 1993, is for the
Sister Fund. Neuberger&Berman Management Inc. voluntarily bears certain
operating expenses of the Trust so that its expense ratio per annum will not
exceed the expense ratio per annum of its Sister Fund by more than 0.10% of the
Trust's average daily net assets per annum, until December 31, 1996, and
thereafter subject to at least 60 days' prior written notice. Absent such
arrangement, the average annual total returns of the Trust would have been less.
The total returns for periods prior to the Trust's commencement of operations
would have been lower had they reflected the higher expense ratios of the Trust
as compared to those of Neuberger&Berman Manhattan Fund.
*"Total Return" includes reinvestment of all income dividends and capital gain
distributions. Results represent past performance and do not indicate future
results. The value of an investment in the Trust and the return on the
investment both will fluctuate, and redemption proceeds may be higher or lower
than an investor's original cost.
The S&P "500" Index is an unmanaged index generally considered to be
representative of stock market activity. Please note that indices do not take
into account any fees and expenses of investing in the individual securities
that they track, and that individuals cannot invest directly in any index. Data
about the performance of this index are prepared or obtained by Neuberger&
Berman Management Inc. and include reinvestment of all dividends and capital
gain distributions. The Portfolio invests in many securities not included in the
above-described index.
24
<PAGE>
COMPARISON OF A $10,000 INVESTMENT
Neuberger&Berman August 31, 1996
- ----------------------------------------------------------------------
Partners Trust
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C>
Average Annual Total Return*
Partners S&P "500"
1 Year +13.76% +18.70%
5 Year +15.21% +13.59%
10 Year +12.59% +13.35%
Partners Trust S&P "500"
1986 $10,000 $10,000
1987 $12,618 $13,464
1988 $11,130 $11,043
1989 $14,656 $15,373
1990 $13,657 $14,585
1991 $16,119 $18,522
1992 $17,489 $19,992
1993 $22,413 $23,029
1994 $23,670 $24,298
1995 $28,763 $29,503
1996 $32,721 $35,019
</TABLE>
The performance information for Neuberger&Berman Partners Trust is as of
August 31, 1996. Neuberger&Berman Partners Trust started operating on August 30,
1993. It has identical investment objectives and policies, and invests in the
same Portfolio as Neuberger&Berman Partners Fund ("Sister Fund"), which is also
managed by Neuberger&Berman Management Inc. The performance information shown in
the above chart for the period before August 30, 1993, is for the Sister Fund.
Neuberger&Berman Management Inc. voluntarily bears certain operating expenses of
the Trust so that its expense ratio per annum will not exceed the expense ratio
per annum of its Sister Fund by more than 0.10% of the Trust's average daily net
assets per annum, until December 31, 1996, and thereafter subject to at least 60
days' prior written notice. Absent such arrangement, the average annual total
returns of the Trust would have been less. The total returns for periods prior
to the Trust's commencement of operations would have been lower had they
reflected the higher expense ratios of the Trust as compared to those of
Neuberger&Berman Partners Fund.
*"Total Return" includes reinvestment of all income dividends and capital gain
distributions. Results represent past performance and do not indicate future
results. The value of an investment in the Trust and the return on the
investment both will fluctuate, and redemption proceeds may be higher or lower
than an investor's original cost.
The S&P "500" Index is an unmanaged index generally considered to be
representative of stock market activity. Please note that indices do not take
into account any fees and expenses of investing in the individual securities
that they track, and that individuals cannot invest directly in any index. Data
about the performance of this index are prepared or obtained by Neuberger&
Berman Management Inc. and include reinvestment of all dividends and capital
gain distributions. The Portfolio invests in many securities not included in the
above-described index.
25
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
Neuberger&Berman
- ----------------------------------------------------------------------
Equity Trust
<TABLE>
<CAPTION>
FOCUS GENESIS
(000'S OMITTED EXCEPT PER SHARE AMOUNTS) TRUST TRUST
----------------------------
<S> <C> <C>
ASSETS
Investment in corresponding Portfolio, at
value (Note A) $ 54,165 $ 65,186
Deferred organization costs (Note A) 19 19
Receivable for Trust shares sold 1,519 96
----------------------------
55,703 65,301
----------------------------
LIABILITIES
Payable for Trust shares redeemed 48 8
Payable to administrator -- net (Note B) 9 25
Accrued expenses 33 32
----------------------------
90 65
----------------------------
NET ASSETS at value $ 55,613 $ 65,236
----------------------------
NET ASSETS consist of:
Par value $ 4 $ 4
Paid-in capital in excess of par value 53,518 52,922
Accumulated undistributed net investment
income 203 --
Accumulated net realized gains (losses) on
investment (213) 764
Net unrealized appreciation in value of
investment 2,101 11,546
----------------------------
NET ASSETS at value $ 55,613 $ 65,236
----------------------------
SHARES OUTSTANDING
($.001 par value; unlimited shares
authorized) 3,750 4,353
----------------------------
NET ASSET VALUE, offering and redemption price per
share $14.83 $14.99
----------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
26
<PAGE>
August 31, 1996
- ----------------------------------------------------------------------
Equity Trust
<TABLE>
<CAPTION>
GUARDIAN MANHATTAN PARTNERS
TRUST TRUST TRUST
-------------------------------------------
<S> <C> <C> <C>
ASSETS
Investment in corresponding Portfolio, at
value (Note A) $ 1,334,613 $ 50,212 $ 128,513
Deferred organization costs (Note A) 19 19 19
Receivable for Trust shares sold 6,653 35 173
-------------------------------------------
1,341,285 50,266 128,705
-------------------------------------------
LIABILITIES
Payable for Trust shares redeemed 544 2,023 194
Payable to administrator -- net (Note B) 515 9 29
Accrued expenses 138 36 31
-------------------------------------------
1,197 2,068 254
-------------------------------------------
NET ASSETS at value $ 1,340,088 $ 48,198 $ 128,451
-------------------------------------------
NET ASSETS consist of:
Par value $ 94 $ 4 $ 10
Paid-in capital in excess of par value 1,215,760 44,009 113,830
Accumulated undistributed net investment
income 3,980 -- 603
Accumulated net realized gains (losses) on
investment 21,966 1,635 6,282
Net unrealized appreciation in value of
investment 98,288 2,550 7,726
-------------------------------------------
NET ASSETS at value $ 1,340,088 $ 48,198 $ 128,451
-------------------------------------------
SHARES OUTSTANDING
($.001 par value; unlimited shares
authorized) 94,130 3,956 9,592
-------------------------------------------
NET ASSET VALUE, offering and redemption price per
share $14.24 $12.18 $13.39
-------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
27
<PAGE>
STATEMENTS OF OPERATIONS
Neuberger&Berman
- ----------------------------------------------------------------------
Equity Trust
<TABLE>
<CAPTION>
FOCUS GENESIS
(000'S OMITTED) TRUST TRUST
---------------------------
<S> <C> <C>
INVESTMENT INCOME
Investment income from corresponding Portfolio
(Note A) $ 588 $ 434
---------------------------
Expenses:
Administration fee (Note B) 145 156
Amortization of deferred organization and
initial offering expenses (Note A) 10 10
Auditing fees 5 5
Custodian fees 10 10
Legal fees 12 13
Registration and filing fees 35 33
Shareholder reports 28 26
Shareholder servicing agent fees 20 18
Trustees' fees and expenses 1 1
Miscellaneous 1 1
Expenses from corresponding Portfolio (Notes
A & B) 196 331
---------------------------
Total expenses 463 604
Deduct -- expenses reimbursed by
administrator (Note B) (105) (66)
---------------------------
Total net expenses 358 538
---------------------------
Net investment income (loss) 230 (104)
---------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
FROM CORRESPONDING PORTFOLIO (NOTE A)
Net realized gain (loss) on investment
securities (306) 1,183
Net realized loss on option contracts written (7) --
Change in net unrealized appreciation of
investment securities and option contracts
written 488 6,518
---------------------------
Net gain (loss) on investments from
corresponding Portfolio (Note A) 175 7,701
---------------------------
Net increase (decrease) in net assets
resulting from operations $ 405 $ 7,597
---------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
28
<PAGE>
For the Year Ended August 31, 1996
- ----------------------------------------------------------------------
Equity Trust
<TABLE>
<CAPTION>
GUARDIAN MANHATTAN PARTNERS
TRUST TRUST TRUST
-----------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Investment income from corresponding Portfolio
(Note A) $ 22,818 $ 315 $ 1,530
-----------------------------------------------
Expenses:
Administration fee (Note B) 4,185 181 344
Amortization of deferred organization and
initial offering expenses (Note A) 9 10 10
Auditing fees 5 11 5
Custodian fees 10 10 10
Legal fees 23 12 12
Registration and filing fees 364 33 43
Shareholder reports 155 26 30
Shareholder servicing agent fees 34 19 21
Trustees' fees and expenses 13 1 1
Miscellaneous 4 1 1
Expenses from corresponding Portfolio (Notes
A & B) 4,852 262 436
-----------------------------------------------
Total expenses 9,654 566 913
Deduct -- expenses reimbursed by
administrator (Note B) (69) (79) (109)
-----------------------------------------------
Total net expenses 9,585 487 804
-----------------------------------------------
Net investment income (loss) 13,233 (172) 726
-----------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
FROM CORRESPONDING PORTFOLIO (NOTE A)
Net realized gain (loss) on investment
securities 25,018 1,705 7,827
Net realized loss on option contracts written (986) -- --
Change in net unrealized appreciation of
investment securities and option contracts
written 8,398 (3,356) 212
-----------------------------------------------
Net gain (loss) on investments from
corresponding Portfolio (Note A) 32,430 (1,651) 8,039
-----------------------------------------------
Net increase (decrease) in net assets
resulting from operations $ 45,663 $ (1,823) $ 8,765
-----------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
29
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
Neuberger&Berman
- ----------------------------------------------------------------------
Equity Trust
<TABLE>
<CAPTION>
FOCUS TRUST GENESIS TRUST
Year Year
Ended Ended
August 31, August 31,
(000'S OMITTED) 1996 1995 1996 1995
------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 230 $ 32 $ (104) $ (52)
Net realized gain (loss) on
investments from corresponding
Portfolio (Note A) (313) 111 1,183 482
Change in net unrealized
appreciation of investments from
corresponding Portfolio (Note A) 488 1,542 6,518 4,936
------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 405 1,685 7,597 5,366
------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (33) (11) -- --
Net realized gain on investments (133) -- (822) (11)
------------------------------------------------------
Total distributions to shareholders (166) (11) (822) (11)
------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 59,911 13,612 30,213 23,213
Proceeds from reinvestment of
dividends and distributions 161 11 822 11
Payments for shares redeemed (19,169) (2,413) (3,211) (1,029)
------------------------------------------------------
Net increase from Trust share
transactions 40,903 11,210 27,824 22,195
------------------------------------------------------
NET INCREASE IN NET ASSETS 41,142 12,884 34,599 27,550
NET ASSETS:
Beginning of year 14,471 1,587 30,637 3,087
------------------------------------------------------
End of year $ 55,613 $ 14,471 $ 65,236 $ 30,637
------------------------------------------------------
Accumulated undistributed net
investment income
at end of year $ 203 $ 25 $ -- $ --
------------------------------------------------------
NUMBER OF TRUST SHARES:
Sold 4,038 1,054 2,095 2,223
Issued on reinvestment of dividends
and distributions 11 1 64 1
Redeemed (1,303) (191) (227) (94)
------------------------------------------------------
Net increase in shares outstanding 2,746 864 1,932 2,130
------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
30
<PAGE>
- ----------------------------------------------------------------------
Equity Trust
<TABLE>
<CAPTION>
GUARDIAN TRUST MANHATTAN TRUST PARTNERS TRUST
Year Year Year
Ended Ended Ended
August 31, August 31, August 31,
1996 1995 1996 1995 1996 1995
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 13,233 $ 3,810 $ (172) $ (6) $ 726 $ 265
Net realized gain (loss) on
investments from corresponding
Portfolio (Note A) 24,032 5,025 1,705 977 7,827 3,113
Change in net unrealized
appreciation of investments from
corresponding Portfolio (Note A) 8,398 88,893 (3,356) 5,693 212 7,316
----------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 45,663 97,728 (1,823) 6,664 8,765 10,694
----------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (9,999) (2,568) -- (17) (364) (32)
Net realized gain on investments (10,557) -- (1,370) (69) (4,629) (130)
----------------------------------------------------------------------------------
Total distributions to shareholders (20,556) (2,568) (1,370) (86) (4,993) (162)
----------------------------------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 854,807 628,123 24,466 24,099 75,478 52,448
Proceeds from reinvestment of
dividends and distributions 20,520 2,565 1,370 86 4,893 153
Payments for shares redeemed (243,412) (118,547) (10,026) (7,260) (17,026) (6,512)
----------------------------------------------------------------------------------
Net increase from Trust share
transactions 631,915 512,141 15,810 16,925 63,345 46,089
----------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 657,022 607,301 12,617 23,503 67,117 56,621
NET ASSETS:
Beginning of year 683,066 75,765 35,581 12,078 61,334 4,713
----------------------------------------------------------------------------------
End of year $ 1,340,088 $ 683,066 $ 48,198 $ 35,581 $ 128,451 $ 61,334
----------------------------------------------------------------------------------
Accumulated undistributed net
investment income
at end of year $ 3,980 $ 1,392 $ -- $ -- $ 603 $ 241
----------------------------------------------------------------------------------
NUMBER OF TRUST SHARES:
Sold 60,492 52,405 1,900 2,196 5,647 4,960
Issued on reinvestment of dividends
and distributions 1,469 213 110 9 394 15
Redeemed (17,232) (9,940) (792) (632) (1,287) (584)
----------------------------------------------------------------------------------
Net increase in shares outstanding 44,729 42,678 1,218 1,573 4,754 4,391
----------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
31
<PAGE>
(This page has been left blank intentionally.)
32
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Neuberger&Berman August 31, 1996
- ----------------------------------------------------------------------
Equity Trust
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1) GENERAL: Neuberger&Berman Focus Trust ("Focus," formerly Neuberger&
Berman Selected Sectors Trust), Neuberger&Berman Genesis Trust ("Genesis"),
Neuberger&Berman Guardian Trust ("Guardian"), Neuberger&Berman Manhattan
Trust ("Manhattan"), and Neuberger&Berman Partners Trust ("Partners")
(collectively, the "Funds") are separate operating series of Neuberger&Berman
Equity Trust (the "Trust"), a Delaware business trust organized pursuant to a
Trust Instrument dated May 6, 1993. The Trust is registered as a diversified,
open-end management investment company under the Investment Company Act of
1940, as amended, and its shares are registered under the Securities Act of
1933, as amended. The trustees of the Trust changed the name of
Neuberger&Berman Selected Sectors Trust to Neuberger&Berman Focus Trust,
effective January 1, 1995. The trustees of the Trust may establish additional
series or classes of shares without the approval of shareholders.
The assets of each series belong only to that series, and the liabilities
of each series are borne solely by that series and no other.
Each Fund seeks to achieve its investment objective by investing all of
its net investable assets in its corresponding Portfolio of Equity Managers
Trust (the "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 (4.83%, 25.08%, 21.41%, 8.85%, and 6.43%, for Focus, Genesis,
Guardian, Manhattan, and Partners, respectively, at August 31, 1996). The
performance of each Fund is directly affected by the performance of its
corresponding Portfolio. The financial statements of each Portfolio,
including the Schedule of Investments, are included elsewhere in this report
and should be read in conjunction with the corresponding Fund's financial
statements.
2) PORTFOLIO VALUATION: Each Fund records its investment in its corresponding
Portfolio at value. Investment securities held by each Portfolio of Equity
Managers Trust are valued by Equity Managers Trust as indicated in the notes
following the Portfolios' Schedule of Investments.
3) FEDERAL INCOME TAXES: Each series of the Trust is treated as a separate
entity for Federal income tax purposes. It is the policy of each Fund to
continue to qualify as a regulated investment company by complying with the
provisions available to 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
33
<PAGE>
tax purposes as capital loss carryforwards) sufficient to relieve it from
all, or substantially all, Federal income taxes. Accordingly, each Fund paid
no Federal income taxes and no provision for Federal income taxes was
required.
4) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Each Fund earns income, net
of Portfolio expenses, daily on its investment in its corresponding
Portfolio. Dividends and distributions from net realized capital gains, if
any, are normally distributed in December. Guardian generally distributes
substantially all of its net investment income at the end of each calendar
quarter. Income dividends and capital gain distributions to shareholders are
recorded on the ex-dividend date. To the extent each Fund's net realized
capital gains, if any, can be offset by capital loss carryforwards ($169,636
expiring in 2004, for Focus, determined as of August 31, 1996), it is the
policy of each Fund not to distribute such gains.
Each Fund distinguishes between dividends on a tax basis and a financial
reporting basis and only distributions in excess of tax basis earnings and
profits are reported in the financial statements as a return of capital.
Differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes are classified as
distributions in excess of net investment income or accumulated net realized
gains.
5) ORGANIZATION EXPENSES: Expenses incurred by each Fund in connection with
its organization are being amortized by each Fund on a straight-line basis
over a five-year period. At August 31, 1996, the unamortized balance of such
expenses amounted to $19,454, $19,346, $18,708, $19,453, and $19,455, for
Focus, Genesis, Guardian, Manhattan, and Partners, respectively.
6) EXPENSE ALLOCATION: Each Fund bears all costs of its operations. Expenses
incurred by the Trust with respect to any two or more Funds are allocated in
proportion to the net assets of such Funds, except where a more appropriate
allocation of expenses to each Fund can otherwise be made fairly. Expenses
directly attributable to a Fund are charged to that Fund.
7) OTHER: All net investment income and realized and unrealized capital gains
and losses of each Portfolio are allocated pro rata among its respective
Funds and any other investors in the Portfolio.
NOTE B -- ADMINISTRATION FEES, DISTRIBUTION ARRANGEMENTS, AND OTHER
TRANSACTIONS WITH AFFILIATES:
Each Fund retains Neuberger&Berman Management Incorporated ("Management") as
its administrator under an Administration Agreement ("Agreement") dated as of
August 3, 1993. Pursuant to this Agreement each Fund pays Management an
administration fee at the annual rate of .40% of that Fund's average daily net
assets and indirectly pays for investment management services through its
investment in its corresponding Portfolio (see Note B of Notes to Financial
Statements of the Portfolios). The Agreement provides that, if with respect to
any fiscal year of each Fund, its total operating expenses plus its pro rata
portion of its corresponding Portfolio's operating expenses (including the fees
payable to Management but excluding interest, taxes, brokerage commissions, and
extraordinary expenses) ("Operating Expenses")
34
<PAGE>
exceed the most restrictive of the expense limitations imposed by securities
laws of the states in which such Fund's shares are qualified for sale, the
administration fees for that fiscal year will be reduced by the amount of such
excess, provided that Management has no obligation to reimburse the Fund for any
such expenses that exceed the administration fee. The most restrictive expense
limitation to which each Fund is currently subject is 2 1/2% of the first $30
million of average daily net assets, 2% of the next $70 million of average daily
net assets, and 1 1/2% of any additional average daily net assets. No reduction
in the administration fee as a result of the state expense limitation was
required for the year ended August 31, 1996.
In addition, Management has voluntarily undertaken until December 31, 1996
(and thereafter subject to termination upon 60 days' prior written notice), to
reimburse each Fund for its Operating Expenses which, in the aggregate, exceed
by more than .10% the expense ratio per annum of a certain other mutual fund
("Sister Fund") which also invests in the same Portfolio. Prior to January 1,
1995, Management voluntarily reimbursed each Fund for its Operating Expenses
which exceeded the expense ratio of that Sister Fund. For the year ended August
31, 1996, expenses (net of reimbursement) incurred by each Fund amounted to
.99%, 1.38%, .92%, 1.08%, and .94%, of average daily net assets on an annualized
basis for Focus, Genesis, Guardian, Manhattan, and Partners, respectively.
All of the capital stock of Management is owned by individuals who are also
general partners of Neuberger&Berman, L.P. ("Neuberger"), a member firm of The
New York Stock Exchange and sub-adviser to each Portfolio. Several individuals
who are officers and/or trustees of the Trust are also partners of Neuberger
and/or officers and/or directors of Management.
Each Fund also has a distribution agreement with Management, which receives
no compensation therefor and no commissions for sales or redemptions of shares
of beneficial interest of each Fund.
Each Portfolio has an expense offset arrangement in connection with its
custodian contract. The impact of this arrangement, reflected in the Statement
of Operations, under the caption Expenses from corresponding Portfolio, is less
than .01% of each Fund's average daily net assets.
NOTE C -- INVESTMENT TRANSACTIONS:
During the year ended August 31, 1996, additions and reductions in each
Fund's investment in its corresponding Portfolio were as follows:
<TABLE>
<CAPTION>
ADDITIONS REDUCTIONS
- ----------------------------------------------------------------
<S> <C> <C>
FOCUS $ 49,100,489 $ 9,928,621
GENESIS 28,680,109 1,923,079
GUARDIAN 638,027,577 33,379,976
MANHATTAN 20,426,563 4,109,572
PARTNERS 62,935,965 4,801,711
</TABLE>
35
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Focus Trust(1)
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. The per share amounts and ratios which are shown reflect income and
expenses, including the Fund's proportionate share of its corresponding
Portfolio's income and expenses. It should be read in conjunction with its
corresponding Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
August 30,
1993(2) to
Year Ended August 31, August 31,
1996 1995 1994 1993
----------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 14.41 $ 11.36 $ 10.03 $ 10.00
----------------------------------------------------
Income From Investment Operations
Net Investment Income .06 .05 .05 --
Net Gains or Losses on Securities (both
realized and unrealized) .46 3.05 1.31 .03
----------------------------------------------------
Total From Investment Operations .52 3.10 1.36 .03
----------------------------------------------------
Less Distributions
Dividends (from net investment income) (.02) (.05) (.02) --
Distributions (from capital gains) (.08) -- (.01) --
----------------------------------------------------
Total Distributions (.10) (.05) (.03) --
----------------------------------------------------
Net Asset Value, End of Year $ 14.83 $ 14.41 $ 11.36 $ 10.03
----------------------------------------------------
Total Return+ +3.62% +27.44% +13.58% +0.30%(3)
----------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $ 55.6 $ 14.5 $ 1.6 $ --
----------------------------------------------------
Ratio of Expenses to Average Net Assets(4) .99% .96% .85% .92%(5)
----------------------------------------------------
Ratio of Net Investment Income to Average Net
Assets(4) .63% .67% .92% .05%(5)
----------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
36
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Genesis Trust
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. The per share amounts and ratios which are shown reflect income and
expenses, including the Fund's proportionate share of its corresponding
Portfolio's income and expenses. It should be read in conjunction with its
corresponding Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
August 26,
1993(2)
Year Ended August 31, to August 31,
1996 1995 1994 1993
------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 12.65 $ 10.59 $ 10.05 $ 10.00
------------------------------------------------------
Income From Investment Operations
Net Investment Income (Loss) (.02) (.01) (.01) --
Net Gains or Losses on Securities (both
realized and unrealized) 2.68 2.08 .56 .05
------------------------------------------------------
Total From Investment Operations 2.66 2.07 .55 .05
------------------------------------------------------
Less Distributions
Distributions (from capital gains) (.32) (.01) (.01) --
------------------------------------------------------
Net Asset Value, End of Year $ 14.99 $ 12.65 $ 10.59 $ 10.05
------------------------------------------------------
Total Return+ +21.44% +19.51% +5.47% +0.50%(3)
------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $ 65.2 $ 30.6 $ 3.1 $ --
------------------------------------------------------
Ratio of Expenses to Average Net Assets(4) 1.38% 1.42% 1.36% 1.51%(5)
------------------------------------------------------
Ratio of Net Investment Income (Loss) to
Average Net Assets(4) (.27%) (.24%) (.21%) (.44%)(5)
------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
37
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Guardian Trust
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. The per share amounts and ratios which are shown reflect income and
expenses, including the Fund's proportionate share of its corresponding
Portfolio's income and expenses. It should be read in conjunction with its
corresponding Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
August 3,
1993(2)
Year Ended August 31, to August 31,
1996 1995 1994 1993
--------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 13.83 $ 11.27 $ 10.27 $ 10.00
--------------------------------------------------
Income From Investment Operations
Net Investment Income .16 .13 .09 --
Net Gains or Losses on Securities (both
realized and unrealized) .55 2.55 .99 .27
--------------------------------------------------
Total From Investment Operations .71 2.68 1.08 .27
--------------------------------------------------
Less Distributions
Dividends (from net investment income) (.14) (.12) (.07) --
Distributions (from capital gains) (.16) -- (.01) --
--------------------------------------------------
Total Distributions (.30) (.12) (.08) --
--------------------------------------------------
Net Asset Value, End of Year $ 14.24 $ 13.83 $ 11.27 $ 10.27
--------------------------------------------------
Total Return+ +5.19% +24.01% +10.57% +2.70%(3)
--------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $1,340.1 $ 683.1 $ 75.8 $ --
--------------------------------------------------
Ratio of Expenses to Average Net Assets(4) .92% .90% .80% .81%(5)
--------------------------------------------------
Ratio of Net Investment Income to Average Net
Assets(4) 1.26% 1.35% 1.50% 1.00%(5)
--------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
38
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Manhattan Trust
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. The per share amounts and ratios which are shown reflect income and
expenses, including the Fund's proportionate share of its corresponding
Portfolio's income and expenses. It should be read in conjunction with its
corresponding Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
August 30,
1993(2)
Year Ended August 31, to August 31,
1996 1995 1994 1993
--------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 12.99 $ 10.37 $ 10.01 $ 10.00
--------------------------------------------------
Income From Investment Operations
Net Investment Income (Loss) (.04) -- .01 --
Net Gains or Losses on Securities (both
realized and unrealized) (.34) 2.67 .36 .01
--------------------------------------------------
Total From Investment Operations (.38) 2.67 .37 .01
--------------------------------------------------
Less Distributions
Dividends (from net investment income) -- (.01) (.01) --
Distributions (from capital gains) (.43) (.04) -- --
--------------------------------------------------
Total Distributions (.43) (.05) (.01) --
--------------------------------------------------
Net Asset Value, End of Year $ 12.18 $ 12.99 $ 10.37 $ 10.01
--------------------------------------------------
Total Return+ -2.98% +25.90% +3.70% +0.10%(3)
--------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $ 48.2 $ 35.6 $ 12.1 $ --
--------------------------------------------------
Ratio of Expenses to Average Net Assets(4) 1.08% 1.06% .96% 1.04%(5)
--------------------------------------------------
Ratio of Net Investment Income (Loss) to
Average Net Assets(4) (.38%) (.03%) .16% 5.48%(5)
--------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
39
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Partners Trust
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. The per share amounts and ratios which are shown reflect income and
expenses, including the Fund's proportionate share of its corresponding
Portfolio's income and expenses. It should be read in conjunction with its
corresponding Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
August 30,
1993(2)
Year Ended August 31, to August 31,
1996 1995 1994 1993
--------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 12.68 $ 10.54 $ 10.01 $ 10.00
--------------------------------------------------
Income From Investment Operations
Net Investment Income .08 .05 .03 --
Net Gains or Losses on Securities (both
realized and unrealized) 1.59 2.19 .53 .01
--------------------------------------------------
Total From Investment Operations 1.67 2.24 .56 .01
--------------------------------------------------
Less Distributions
Dividends (from net investment income) (.07) (.02) (.01) --
Distributions (from capital gains) (.89) (.08) (.02) --
--------------------------------------------------
Total Distributions (.96) (.10) (.03) --
--------------------------------------------------
Net Asset Value, End of Year $ 13.39 $ 12.68 $ 10.54 $ 10.01
--------------------------------------------------
Total Return+ +13.76% +21.52% +5.61% +0.10%(3)
--------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $ 128.5 $ 61.3 $ 4.7 $ --
--------------------------------------------------
Ratio of Expenses to Average Net Assets(4) .94% .92% .81% .84%(5)
--------------------------------------------------
Ratio of Net Investment Income to Average Net
Assets(4) .84% .81% .47% 2.65%(5)
--------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
40
<PAGE>
NOTES TO FINANCIAL HIGHLIGHTS
Neuberger&Berman August 31, 1996
- ----------------------------------------------------------------------
Equity Trust
1)Prior to January 1, 1995, its name was Neuberger&Berman Selected Sectors
Trust.
2)The date investment operations commenced.
3)Not annualized.
4)After reimbursement of expenses by the administrator as described in Note B of
Notes to Financial Statements. Had the administrator not undertaken such
action the annualized ratios to average daily net assets would have been:
<TABLE>
<CAPTION>
PERIOD FROM
AUGUST 30,
1993
YEAR ENDED AUGUST 31, TO AUGUST
FOCUS 1996 1995 1994 31, 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Expenses 1.27% 2.50% 2.50% 2.50%
------------------------------------------
Net Investment Income (Loss) .35% (.87%) (.73%) (1.53%)
------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PERIOD FROM
AUGUST 3,
1993
YEAR ENDED AUGUST 31, TO AUGUST
GUARDIAN 1996 1995 1994 31, 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Expenses .92% .96% 1.52% 2.50%
------------------------------------------
Net Investment Income (Loss) 1.26% 1.29% .78% (.69%)
------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PERIOD FROM
AUGUST 30,
1993
YEAR ENDED AUGUST 31, TO AUGUST
MANHATTAN 1996 1995 1994 31, 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Expenses 1.25% 1.46% 2.50% 2.50%
------------------------------------------
Net Investment Income (Loss) (.55%) (.43%) (1.38%) 4.02%
------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PERIOD FROM
AUGUST 30,
1993
YEAR ENDED AUGUST 31, TO AUGUST
PARTNERS 1996 1995 1994 31, 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Expenses 1.06% 1.24% 2.50% 2.50%
------------------------------------------
Net Investment Income (Loss) .72% .49% (1.22%) .99%
------------------------------------------
</TABLE>
41
<PAGE>
After reimbursement of expenses by Management as described in Note B of Notes
to Financial Statements and the waiver of a portion of the management fee as
described in Note B of Notes to Financial Statements of Neuberger&Berman Genesis
Portfolio. Had Management not undertaken such action the annualized ratios to
average daily net assets would have been:
<TABLE>
<CAPTION>
PERIOD FROM
AUGUST 26,
1993
YEAR ENDED AUGUST 31, TO AUGUST
GENESIS 1996 1995 1994 31, 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Expenses 1.65% 1.78% 2.50% 2.50%
------------------------------------------
Net Investment Loss (.54%) (.60%) (1.35%) (1.43%)
------------------------------------------
</TABLE>
5)Annualized.
+ Total return based on per share net asset value reflects the effects of
changes in net asset value on the performance of each Fund during each year
and assumes dividends and capital gain distributions, if any, were reinvested.
Results represent past performance and do not guarantee future results.
Investment returns and principal may fluctuate and shares when redeemed may be
worth more or less than original cost. Total return would be lower if
Management had not reimbursed certain expenses. For Genesis Trust, total
return would have been lower if Management had not waived a portion of the
management fee.
42
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of Neuberger&Berman Equity Trust and
Shareholders of Neuberger&Berman Manhattan Trust
We have audited the accompanying statement of assets and liabilities of
Neuberger&Berman Manhattan Trust (the "Trust"), as of August 31, 1996, 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. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Neuberger&Berman Manhattan Trust as of August 31, 1996, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the periods indicated therein, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
October 4, 1996
43
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Trustees
Neuberger&Berman Equity Trust and
Shareholders of:
Neuberger&Berman Focus Trust
Neuberger&Berman Genesis Trust
Neuberger&Berman Guardian Trust and
Neuberger&Berman Partners Trust
We have audited the accompanying statements of assets and liabilities of the
Neuberger&Berman Focus Trust, Neuberger&Berman Genesis Trust, Neuberger&Berman
Guardian Trust, and Neuberger&Berman Partners Trust, four of the series
comprising Neuberger&Berman Equity Trust (the "Trust"), as of August 31, 1996,
the related statements of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the periods indicated therein. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the above mentioned series of Neuberger&Berman Equity Trust at August 31,
1996, the results of their operations for the year then ended, the changes in
their net assets for each of the two years in the period then ended, and the
financial highlights for each of the periods indicated therein, in conformity
with generally accepted accounting principles.
/s/ Ernst & Young L.L.P.
Boston, Massachusetts
October 3, 1996
44
<PAGE>
(This page has been left blank intentionally.)
45
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Focus Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
--------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Neiman-Marcus Group 4.2%
2. CITICORP 3.7%
3. Compaq Computer 3.0%
4. Chrysler Corp. 3.0%
5. General Motors 2.9%
6. UCAR International 2.8%
7. Federal National Mortgage Association 2.7%
8. Federal Home Loan Mortgage 2.5%
9. Aetna Inc. 2.4%
10. Travelers Group 2.4%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ------------
<C> <S> <C>
COMMON STOCKS (96.1%)
AUTOMOTIVE (6.9%)
445,900 Cabot Corp. $ 12,262
1,146,000 Chrysler Corp. 33,377
645,000 General Motors 32,089
------------
77,728
------------
FINANCIAL SERVICES (31.8%)
330,000 ADVANTA Corp. Class B 14,685
231,700 Allmerica Property & Casualty 6,545
185,000 American International Group 17,575
300,000 Bank of Boston 15,825
690,000 Capital One Financial 20,786
495,000 CITICORP 41,209
1,100,000 Countrywide Credit Industries 26,537
200,000 Dean Witter, Discover 10,000
315,000 Federal Home Loan Mortgage 27,838
992,000 Federal National Mortgage
Association 30,752
410,000 First USA $ 21,730
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ------------
<C> <S> <C>
102,500 Horace Mann Educators 3,523
232,200 ITT Hartford Group 12,249
157,500 MBNA Corp. 4,784
250,000 Merrill Lynch 15,312
495,000 PartnerRe Ltd. 13,984
450,000 PennCorp Financial Group 13,725
226,800 Signet Banking 5,472
272,500 Sphere Drake Holdings 2,555
615,000 Travelers Group 26,676
100,000 Wells Fargo 24,875
------------
356,637
------------
HEALTH CARE (9.3%)
410,000 Aetna Inc. 27,111
705,000 FHP International 25,556 (2)
730,000 Foundation Health 21,900 (2)
220,000 Healthsource Inc. 3,300 (2)
860,000 Humana Inc. 16,125 (2)
815,000 Mid Atlantic Medical Services 11,003 (2)
------------
104,995
------------
HEAVY INDUSTRY (14.4%)
935,800 AGCO Corp. 22,108
150,000 Aluminum Co. of America 9,319
275,600 American Standard 9,405 (2)
80,000 Champion International 3,440
205,000 Cleveland-Cliffs 7,995
881,500 LTV Corp. 10,358
165,000 Mead Corp. 9,446
1,100,000 Rollins Truck Leasing 13,063
100,000 Temple-Inland 4,938
804,600 UCAR International 31,379 (2)
150,000 Union Camp 7,275
170,000 USFreightways Corp. 3,527
379,000 Varity Corp. 19,045 (2)
175,000 Willamette Industries 10,806
------------
162,104
------------
</TABLE>
46
<PAGE>
August 31, 1996
- --------------------------------------------------------------------------------
Focus Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ------------
<C> <S> <C>
MEDIA & ENTERTAINMENT (10.9%)
178,000 A.H. Belo $ 7,142
445,000 Bell Cablemedia ADR 6,550 (2)
25,000 Comcast Corp. Class A 397
915,000 Comcast Corp. Class A Special 14,754
530,000 Comcast UK Cable Partners
Limited 5,698 (2)
325,000 Harcourt General 15,559
436,000 International CableTel 10,573 (2)
450,000 Jones Intercable Inc. Class A 5,738 (2)
310,000 Scandinavian Broadcasting
System 6,471 (2)
500,000 Tele-Communications, Inc.
Class A 7,438 (2)
150,000 Time Warner 5,006
550,000 U.S. West Media Group 9,969 (2)
500,000 United International Holdings 6,875 (2)
300,000 Viacom Inc. Class B 9,450 (2)
276,600 Vodafone Group ADR 10,476
------------
122,096
------------
RETAIL (4.2%)
1,577,800 Neiman-Marcus Group 46,742 (2)
------------
TECHNOLOGY (18.4%)
425,000 Airtouch Communications 11,688 (2)
250,000 Altera Corp. 11,000 (2)
200,000 Applied Materials 4,850 (2)
330,000 Arrow Electronics 15,056 (2)
250,000 Avnet, Inc. 11,687
600,000 Compaq Computer 33,975 (2)
350,000 Digital Equipment 13,519 (2)
550,000 KLA Instruments 10,862 (2)
250,000 Komag, Inc. 5,312 (2)
375,000 MEMC Electronic Materials 13,219 (2)
400,000 Microchip Technology 14,700 (2)
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ------------
<C> <S> <C>
230,000 Micron Technology $ 5,232
200,000 Palmer Wireless 3,900(2)
197,500 PriCellular Corp. 2,642(2)
300,000 Seagate Technology 14,400(2)
670,000 Tele-Communications
International 11,139(2)
286,000 Texas Instruments 13,371
225,000 Varian Associates 10,266
------------
206,818
------------
UTILITIES (0.2%)
35,000 AT&T Corp. 1,837
------------
TOTAL COMMON STOCKS (COST
$792,860) 1,078,957
------------
<CAPTION>
Principal
Amount
- ----------
<C> <S> <C>
CONVERTIBLE BONDS (0.1%)
$1,000,000 Scandinavian Broadcasting
System SA, Cv. Sub. Deb.,
7.25%, due 8/1/05 (COST
$1,000) 985
------------
U.S. TREASURY SECURITIES (1.4%)
15,345,000 U.S. Treasury Bills, 4.965% &
5.24%, due 9/5/96 & 12/19/96
(COST $15,242) 15,250
------------
SHORT-TERM CORPORATE NOTES (2.6%)
29,400,000 General Electric Capital
Corp., 5.10%, due 9/3/96
(COST $29,400) 29,400 (3)
------------
TOTAL INVESTMENTS (100.2%)
(COST $838,502) 1,124,592 (4)
Liabilities, less cash,
receivables and other assets
[(0.2%)] (2,221 )
------------
TOTAL NET ASSETS (100.0%) $ 1,122,371
------------
</TABLE>
47
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Genesis Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
--------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. BMC Industries 4.0%
2. Texas Industries 2.8%
3. DH Technology 2.5%
4. Wolverine Tube 2.4%
5. Dallas Semiconductor 2.1%
6. Reynolds & Reynolds 2.1%
7. SCI Systems 2.0%
8. Apogee Enterprises 1.9%
9. Prime Hospitality 1.9%
10. Alumax Inc. 1.8%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
COMMON STOCKS (96.4%)
AEROSPACE (2.9%)
180,300 AAR Corp. $ 3,899
80,100 Thiokol Corp. 3,594
-------------
7,493
-------------
AGRICULTURE (0.9%)
79,149 Delta & Pine Land 2,246
-------------
AUTOMOTIVE (2.5%)
108,400 Donaldson Co. 2,791
67,800 Monaco Coach 898 (2)
115,900 Tower Automotive 2,782 (2)
-------------
6,471
-------------
BANKING & FINANCIAL (7.2%)
107,100 Bank United 2,584 (2)
63,000 Charter One Financial 2,398
70,000 First Commerce 2,502
45,250 Mark Twain Bancshares 1,753
42,777 ONBANCorp, Inc. 1,380
155,000 Reliance Bancorp 2,654
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
70,500 Texas Regional Bancshares $ 2,027
105,200 Webster Financial 3,393
-------------
18,691
-------------
BUILDING, CONSTRUCTION & FURNISHINGS (6.5%)
142,500 Apogee Enterprises 4,881
73,000 Lincoln Electric Class A 1,989
125,000 Oakwood Homes 2,937
110,000 Texas Industries 7,164
-------------
16,971
-------------
CHEMICALS (2.5%)
112,000 Lawter International 1,330
232,000 Lilly Industries 3,683
85,400 McWhorter Technologies 1,527 (2)
-------------
6,540
-------------
COMMUNICATIONS (1.3%)
124,700 Black Box 3,289 (2)
-------------
CONSUMER PRODUCTS & SERVICES (7.1%)
92,000 Alltrista Corp. 2,070 (2)
51,500 Block Drug 2,292
60,800 Bush Boake Allen 1,368 (2)
108,200 Coachmen Industries 2,015
40,000 First Brands 910
24,000 Marcus Corp. 570
253,600 Prime Hospitality 4,818 (2)
89,000 Richfood Holdings 3,382
75,000 The First Years 1,003
-------------
18,428
-------------
DIAGNOSTIC EQUIPMENT (0.9%)
105,700 ADAC Laboratories 2,431
-------------
DIVERSIFIED (0.4%)
40,200 Raven Industries 915
-------------
ELECTRONICS (12.4%)
350,200 BMC Industries 10,506
</TABLE>
48
<PAGE>
August 31, 1996
- --------------------------------------------------------------------------------
Genesis Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
224,800 Continental Circuits $ 2,810(2)
291,900 Dallas Semiconductor 5,546
76,000 Fusion Systems 1,463(2)
136,900 Kent Electronics 3,029(2)
70,000 Nu Horizons 578(2)
232,500 Pioneer Standard Electronics 3,081
119,000 SCI Systems 5,310(2)
-------------
32,323
-------------
ENERGY (6.6%)
127,300 Aquila Gas Pipeline 1,559
623,000 Coho Energy 3,894 (2)
81,200 Cross Timbers Oil 1,847
108,100 Dreco Energy Services 2,784 (2)
247,000 Offshore Logistics 3,087 (2)
112,400 Smith International 3,906 (2)
-------------
17,077
-------------
ENTERTAINMENT (0.9%)
126,375 Casino Data Systems 2,322 (2)
-------------
INDUSTRIAL & COMMERCIAL
PRODUCTS & SERVICES (14.9%)
105,000 Alamo Group 1,549
80,500 AMTROL, Inc. 2,196
103,300 CLARCOR Inc. 2,221
88,200 Dionex Corp. 3,153 (2)
142,850 Holophane Corp. 2,179 (2)
54,000 Kaydon Corp. 2,423
79,300 Libbey Inc. 2,220
117,400 Material Sciences 1,878 (2)
191,700 NN Ball & Roller 2,876
107,000 Pentair, Inc. 2,916
40,000 Roper Industries 1,660
22,800 U.S. Can 345 (2)
149,800 W.H. Brady 3,408
50,000 Wallace Computer Services 1,356
153,000 Wolverine Tube 6,273 (2)
155,750 Woodhead Industries 2,005
-------------
38,658
-------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
INSURANCE (1.8%)
63,300 American Heritage Life $ 1,227
68,300 FBL Financial Group 1,383 (2)
40,000 Orion Capital 2,010
-------------
4,620
-------------
MACHINERY & EQUIPMENT (1.2%)
59,000 Allied Products 1,527
90,450 Graco Inc. 1,696
-------------
3,223
-------------
METALS (3.9%)
145,000 Alumax Inc. 4,785 (2)
92,800 Commonwealth Aluminum 1,485
118,500 Kentucky Electric Steel 844 (2)
105,000 Steel of West Virginia 682 (2)
104,170 Varlen Corp. 2,240
-------------
10,036
-------------
OFFICE EQUIPMENT (2.5%)
261,600 DH Technology 6,409 (2)
-------------
OIL & GAS (8.8%)
115,000 Apache Corp. 3,378
178,500 Cairn Energy USA 1,830 (2)
54,200 Flores & Rucks 1,782 (2)
288,100 Nabors Industries 4,285 (2)
267,300 Oceaneering International 4,577 (2)
310,800 Pride Petroleum Services 4,468 (2)
55,000 Production Operators 1,925
53,500 Tuboscope VETCO 669 (2)
-------------
22,914
-------------
PACKING & CONTAINERS (0.4%)
32,100 AptarGroup Inc. 1,124
-------------
PUBLISHING & BROADCASTING (3.1%)
86,000 Central Newspapers 3,139
25,000 Houghton Mifflin 1,187
</TABLE>
49
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman August 31, 1996
- --------------------------------------------------------------------------------
Genesis Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
65,000 McClatchy Newspapers $ 1,812
34,250 Pulitzer Publishing 1,858
-------------
7,996
-------------
RETAILING (0.8%)
37,800 99 Cents Only Stores 557 (2)
119,000 Schultz Sav-O Stores 1,577
-------------
2,134
-------------
TECHNOLOGY (4.1%)
21,900 Analysts International 805
161,400 Auspex Systems 2,542 (2)
12,000 Computer Horizons 285
85,800 Methode Electronics Class A 1,630
109,000 Reynolds & Reynolds 5,464
-------------
10,726
-------------
TEXTILES & APPAREL (1.0%)
66,000 St. John Knits 2,632
-------------
TRANSPORTATION, SHIPPING & FREIGHT (1.8%)
52,250 Air Express International 1,457
120,000 Harmon Industries 2,040
213,600 Maritrans Inc. 1,308
-------------
4,805
-------------
TOTAL COMMON STOCKS (COST
$189,255) 250,474
-------------
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- --------- -------------
<C> <S> <C>
U.S. TREASURY SECURITIES (3.0%)
$7,800,000 U.S. Treasury Bills, 4.94% -
5.105%, due 10/10/96 -
11/14/96 (COST $7,742) $ 7,744
-------------
SHORT-TERM CORPORATE NOTES (0.8%)
2,200,000 General Electric Capital
Corp., 5.10%, due 9/3/96
(COST $2,200) 2,200 (3)
-------------
TOTAL INVESTMENTS (100.2%)
(COST $199,197) 260,418 (4)
Liabilities, less cash,
receivables and other assets
[(0.2%)] (554 )
-------------
TOTAL NET ASSETS (100.0%) $ 259,864
-------------
</TABLE>
50
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman August 31, 1996
- --------------------------------------------------------------------------------
Guardian Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
--------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. CITICORP 2.4%
2. Chrysler Corp. 2.2%
3. Aetna Inc. 2.1%
4. General Motors 2.1%
5. Compaq Computer 2.0%
6. Federal National Mortgage Association 2.0%
7. Countrywide Credit Industries 1.9%
8. First USA 1.6%
9. IMC Global 1.6%
10. Wells Fargo 1.6%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
COMMON STOCKS (93.9%)
AUTO RELATED (3.3%)
2,500,000 Cabot Corp. $ 68,750
883,500 Magna International Class A 42,629
1,889,700 Varity Corp. 94,957 (2)
------------
206,336
------------
AUTOMOTIVE (4.3%)
4,800,000 Chrysler Corp. 139,800
2,570,000 General Motors 127,858
------------
267,658
------------
BANKING (5.7%)
1,340,000 Bank of Boston 70,685
1,820,000 CITICORP 151,515
504,000 First Tennessee National 17,199
900,000 Signet Banking 21,713
389,600 Wells Fargo 96,913
------------
358,025
------------
CHEMICALS (1.6%)
2,325,000 IMC Global 99,975
------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
CONSUMER GOODS & SERVICES (0.8%)
185,000 Kellwood Co. $ 2,983
3,236,900 Owens-Illinois 49,767 (2)
------------
52,750
------------
DRUGS (0.6%)
480,000 Zeneca Group ADR 34,620
------------
FINANCIAL SERVICES (12.6%)
857,000 ADVANTA Corp. Class B 38,136
216,485 Alleghany Corp. 43,730 (2)
2,424,000 Capital One Financial 73,023
4,800,000 Countrywide Credit Industries 115,800
1,020,000 Dean Witter, Discover 51,000
775,000 Federal Home Loan Mortgage 68,491
4,080,000 Federal National Mortgage
Association 126,480
1,920,000 First USA 101,760
270,000 Household International 21,398
1,167,650 MBNA Corp. 35,467
1,250,000 Merrill Lynch 76,562
492,300 MGIC Investment 31,200
------------
783,047
------------
FOOD PRODUCTS (1.0%)
2,625,000 IBP, Inc. 61,359
------------
FOREST PRODUCTS & PAPER (5.1%)
1,400,000 Champion International 60,200
1,200,000 Fort Howard 28,350 (2)
600,000 Mead Corp. 34,350
676,300 Rayonier Inc. 26,798
1,995,000 Stone Container 27,681
765,000 Temple-Inland 37,772
</TABLE>
51
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Guardian Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
900,000 Union Camp $ 43,650
907,000 Willamette Industries 56,007
------------
314,808
------------
HEALTH CARE (5.5%)
1,652,900 FHP International 59,918 (2)
3,020,000 Foundation Health 90,600 (2,5)
4,190,000 Healthsource Inc. 62,850 (2,5)
4,190,400 Humana Inc. 78,570 (2)
1,380,800 Mid Atlantic Medical Services 18,641 (2)
1,066,396 Wellpoint Health Networks 33,058 (2)
------------
343,637
------------
HEAVY INDUSTRY (1.7%)
4,778,900 Coltec Industries 71,684 (2,5)
600,000 Rockwell International 31,200
------------
102,884
------------
INDUSTRIAL GOODS & SERVICES (3.8%)
1,050,000 Aluminum Co. of America 65,231
2,223,500 American Standard 75,877 (2)
663,800 Phelps Dodge 40,160
2,002,500 USG Corp. 57,071 (2)
------------
238,339
------------
INSURANCE (5.6%)
1,952,220 Aetna Inc. 129,091
520,000 American International Group 49,400
508,600 Chubb Corp. 22,569
561,800 ITT Hartford Group 29,635
264,300 National Re 13,909
263,500 Transatlantic Holdings 18,280
2,045,000 Travelers Group 88,702
------------
351,586
------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
MEDIA & ENTERTAINMENT (6.3%)
870,000 A.H. Belo $ 34,909
1,100,000 Comcast Corp. Class A 17,462
3,200,000 Comcast Corp. Class A Special 51,600
1,450,000 Harcourt General 69,419
730,900 Jones Intercable Inc. Class A 9,319 (2)
49,500 Knight-Ridder 1,671
389,600 Omnicom Group 17,678
401,700 R.R. Donnelley 13,105
1,700,000 Time Warner 56,737
1,352,000 United International Holdings 18,590 (2)
1,500,000 Viacom Inc. Class B 47,250 (2)
1,530,000 Vodafone Group ADR 57,949
------------
395,689
------------
OIL & GAS (6.0%)
267,833 British Petroleum ADR 31,537
832,150 Kerr-McGee 47,745
800,000 Murphy Oil 35,000
928,800 Norsk Hydro ADR 42,376
1,104,500 Parker & Parsley Petroleum 27,336
621,900 Union Pacific Resources Group 16,947
1,980,000 Unocal Corp. 67,815
1,542,500 Vastar Resources 53,795
398,600 Western Atlas 24,215 (2)
1,702,000 Zeigler Coal Holding 25,530 (5)
------------
372,296
------------
REAL ESTATE INVESTMENT TRUSTS (1.6%)
1,159,500 CWM Mortgage Holdings 21,306
1,442,600 Hospitality Properties Trust 38,589 (5)
</TABLE>
52
<PAGE>
August 31, 1996
- --------------------------------------------------------------------------------
Guardian Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
510,000 Security Capital Industrial
Trust $ 9,180
1,040,000 Spieker Properties 31,070
------------
100,145
------------
RETAIL (2.5%)
260,500 Barnes & Noble 8,564 (2)
3,241,700 Fingerhut Cos. 43,358 (5)
510,000 May Department Stores 23,205
84,800 Payless ShoeSource 2,978 (2)
2,860,000 Wal-Mart Stores 75,790
------------
153,895
------------
STEEL (1.7%)
553,100 AK Steel Holding 20,603
763,100 Allegheny Teledyne 15,453
3,278,200 J & L Specialty Steel 44,665 (5)
2,175,500 LTV Corp. 25,562
------------
106,283
------------
TECHNOLOGY (13.9%)
1,165,000 Altera Corp. 51,260 (2)
1,500,000 Applied Materials 36,375 (2)
1,475,000 Arrow Electronics 67,297 (2)
1,367,500 Avnet, Inc. 63,931
600,000 Cabletron Systems 36,600 (2)
2,250,000 Compaq Computer 127,406 (2)
1,660,000 Digital Equipment 64,118 (2)
575,000 Intel Corp. 45,892
2,400,000 KLA Instruments 47,400 (2)
1,752,000 Komag, Inc. 37,230 (2)
1,600,000 Linear Technology 54,400
1,123,300 LSI Logic 24,572 (2)
1,100,000 Micron Technology 25,025
1,035,200 National Semiconductor 19,022 (2)
1,285,000 Seagate Technology 61,680 (2)
1,560,000 Texas Instruments 72,930
853,200 Xilinx Inc. 29,862 (2)
------------
865,000
------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
TELECOMMUNICATIONS (4.9%)
2,143,000 360 Communications $ 51,164 (2)
2,375,000 Airtouch Communications 65,312 (2)
1,000,000 Frontier Corp. 29,500
2,140,000 Tele-Communications
International 35,578 (2)
4,000,000 Tele-Communications, Inc.
Class A 59,500 (2)
3,683,400 U.S. West Media Group 66,762 (2)
------------
307,816
------------
TELEPHONE UTILITIES (1.2%)
1,400,000 AT&T Corp. 73,500
------------
TRANSPORTATION (4.2%)
360,759 AMR Corp. 29,582 (2)
700,000 Canadian Pacific 15,750
1,009,000 CSX Corp. 51,081
500,000 Delta Air Lines 35,437
2,000,000 Ryder System 56,750
650,000 Union Pacific 47,369
1,257,000 USFreightways Corp. 26,083 (5)
------------
262,052
------------
TOTAL COMMON STOCKS (COST
$4,834,551) 5,851,700
------------
PREFERRED STOCKS (0.8%)
250,000 FHP International, 5.00% 7,531
52,430 Aetna Inc., Ser. C, Cv., 6.25% 3,644
605,700 Airtouch Communications, Ser.
B, Cv., 6.00% 17,414
</TABLE>
53
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman August 31, 1996
- --------------------------------------------------------------------------------
Guardian Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
388,994 Airtouch Communications, Ser.
C, Cv., 4.25% $ 18,526
------------
TOTAL PREFERRED STOCKS (COST
$41,123) 47,115
------------
RIGHTS (0.0%)
510,000 Security Capital Industrial
Trust, Expire 9/24/96 (COST
$0) 48 (2)
------------
<CAPTION>
Principal
Amount
- -----------
<C> <S> <C>
CONVERTIBLE BONDS (0.2%)
$15,000,000 International CableTel Inc.,
Cv. Sub. Notes, 7.25%, due
4/15/05 (COST $14,997) 15,843(6)
------------
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- ----------- ------------
<C> <S> <C>
U.S. TREASURY SECURITIES (5.8%)
$347,780,000 U.S. Treasury Bills, 4.965% -
5.26%, due 9/5/96 - 12/12/96 $ 347,034
15,000,000 U.S. Treasury Notes, 8.00%,
due 5/15/01 15,759
------------
TOTAL U.S. TREASURY SECURITIES
(COST $361,808) 362,793
------------
TOTAL INVESTMENTS (100.7%)
(COST $5,252,479) 6,277,499(4)
Liabilities, less cash,
receivables and other assets
[(0.7%)] (44,957)
------------
TOTAL NET ASSETS (100.0%) $6,232,542
------------
</TABLE>
54
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman August 31, 1996
- --------------------------------------------------------------------------------
Manhattan Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
--------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. CITICORP 2.9%
2. First USA 2.8%
3. General Nutrition 2.7%
4. Harrah's Entertainment 2.5%
5. Healthsource Inc. 2.5%
6. Intel Corp. 2.5%
7. GTECH Holdings 2.4%
8. Capital One Financial 2.3%
9. Wells Fargo 2.2%
10. United Healthcare 2.2%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- -------------
<C> <S> <C>
COMMON STOCKS (100.3%)
CHEMICALS (1.2%)
100,000 Hercules Inc. $ 4,975
40,000 SGL Carbon ADR 1,610 (2)
-------------
6,585
-------------
COMMUNICATIONS (12.1%)
385,000 Airtouch Communications 10,587 (2)
585,000 Comcast Corp. Class A Special 9,433
680,000 Comcast UK Cable Partners
Limited 7,310 (2)
280,000 ECI Telecommunications 5,775
380,000 International CableTel 9,215 (2)
480,000 Tele-Communications,
Inc. Class A 7,140 (2)
87,500 Tele-Communications,
Inc. Class A Liberty
Media Group 2,308 (2)
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- -------------
<C> <S> <C>
280,000 Vanguard Cellular Systems $ 5,355(2)
305,000 Vodafone Group ADR 11,552
-------------
68,675
-------------
CONSUMER GOODS & SERVICES (9.3%)
510,000 Authentic Fitness 6,758
345,000 CUC International 11,859 (2)
85,000 Industrie Natuzzi ADR 4,292
90,000 Luxottica Group ADR 6,874
125,000 Nine West 6,438 (2)
480,000 Nu-Kote Holding 5,820 (2)
50,000 Philip Morris 4,487
245,000 Regis Corp. 6,125
-------------
52,653
-------------
DRUGS & HEALTH CARE (12.9%)
510,000 Coventry Corp. 6,726 (2)
941,000 Healthsource Inc. 14,115 (2)
155,000 Nellcor Puritan Bennett 3,991 (2)
130,000 PacifiCare Health Systems
Class B 10,465 (2)
110,000 R.P. Scherer 5,294 (2)
211,000 Teva Pharmaceutical ADR 7,688
320,000 United Healthcare 12,360
100,000 Warner-Lambert 5,950
225,000 Watson Pharmaceuticals 6,525 (2)
-------------
73,114
-------------
ENTERTAINMENT (8.9%)
490,000 GTECH Holdings 13,598 (2)
760,000 Harrah's Entertainment 14,440 (2)
750,000 Players International 4,875 (2)
225,000 Promus Hotel 6,778 (2)
545,000 Showboat, Inc. 10,832
-------------
50,523
-------------
</TABLE>
55
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman August 31, 1996
- --------------------------------------------------------------------------------
Manhattan Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- -------------
<C> <S> <C>
FINANCIAL SERVICES (16.4%)
220,000 Bear Stearns $ 5,143
430,000 Capital One Financial 12,954
200,000 CITICORP 16,650
185,000 Finova Group 10,175
295,000 First USA 15,635
320,000 MBNA Corp. 9,720
215,000 Morgan Stanley Group 10,266
51,000 Wells Fargo 12,686
-------------
93,229
-------------
INSURANCE (8.2%)
200,000 ACE Ltd. 9,325
365,000 Highlands Insurance 6,935 (2)
85,000 Loews Corp. 6,354
324,000 PennCorp Financial Group 9,882
143,000 Sphere Drake Holdings 1,341
48,500 Transatlantic Holdings 3,365
220,000 Travelers Group 9,542
-------------
46,744
-------------
REAL ESTATE (0.1%)
25,000 JDN Realty 584
-------------
RESTAURANTS (8.4%)
55,000 Buffets Inc. 756 (2)
410,000 Cheesecake Factory 9,635 (2)
425,000 CKE Restaurants 11,794
470,000 HomeTown Buffet 7,285 (2)
416,000 IHOP Corp. 10,296 (2)
335,000 Sonic Corp. 7,872 (2)
-------------
47,638
-------------
SPECIALTY RETAIL (7.0%)
1,020,000 General Nutrition 15,045 (2)
450,000 Office Depot 7,144 (2)
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- -------------
<C> <S> <C>
500,000 Staples Inc. $ 9,875(2)
300,000 Viking Office Products 7,762(2)
-------------
39,826
-------------
TECHNOLOGY (14.8%)
130,000 Informix Corp. 2,925 (2)
175,000 Intel Corp. 13,967
550,000 KLA Instruments 10,863 (2)
295,000 Micron Technology 6,711
155,000 Motorola, Inc. 8,273
245,000 Nokia Corp. ADR 10,351
55,000 SAP AG (Ordinary Shares) 9,163
205,000 Seagate Technology 9,840 (2)
230,000 Texas Instruments 10,753
100,000 Xeikon N.V. ADR 1,125 (2)
-------------
83,971
-------------
TRANSPORTATION (1.0%)
250,000 RailTex Inc. 5,500 (2)
-------------
TOTAL COMMON STOCKS (COST
$486,409) 569,042
-------------
<CAPTION>
Principal
Amount
- ----------
<C> <S> <C>
U.S. TREASURY SECURITIES (1.9%)
$11,010,000 U.S. Treasury Bills, 4.97% &
4.94%, due 9/19/96 & 10/10/96
(COST $10,980) 10,983
-------------
TOTAL INVESTMENTS (102.2%)
(COST $497,389) 580,025(4)
Liabilities, less cash,
receivables and other assets
[(2.2%)] (12,599)
-------------
TOTAL NET ASSETS (100.0%) $ 567,426
-------------
</TABLE>
56
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman August 31, 1996
- --------------------------------------------------------------------------------
Partners Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
--------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Wells Fargo 2.4%
2. Price/Costco 2.3%
3. Columbia/HCA Healthcare 2.3%
4. Travelers Group 2.1%
5. W.R. Grace 2.1%
6. Knight-Ridder 2.1%
7. Progressive Corp. 2.1%
8. Revco D.S. 2.0%
9. Warner-Lambert 2.0%
10. Comcast Corp. Class A Special 2.0%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
COMMON STOCKS (89.8%)
AEROSPACE (2.7%)
559,400 Litton Industries $ 26,082
322,400 Lockheed Martin 27,122
------------
53,204
------------
BANKING & FINANCIAL SERVICES (9.0%)
630,300 American Express 27,576
782,100 Capital One Financial 23,561
459,100 CITICORP 38,220
1,403,400 Countrywide Credit Industries 33,857
410,100 H & R Block 10,252
190,566 Wells Fargo 47,403
------------
180,869
------------
BUILDING, CONSTRUCTION & REFURNISHING (1.9%)
1,300,000 USG Corp. 37,050 (2)
------------
BUSINESS SERVICES (0.9%)
300,000 Dun & Bradstreet 17,288
------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
CHEMICALS (3.4%)
300,000 duPont $ 24,637
11,000 Eastman Chemical 615
648,500 W.R. Grace 42,558
------------
67,810
------------
COMMUNICATIONS (0.9%)
500,000 Vodafone Group ADR 18,938
------------
CONSUMER GOODS & SERVICES (1.3%)
610,000 Tupperware Corp. 26,687
------------
DIVERSIFIED (1.9%)
210,000 Anheuser Busch 15,907
60,000 Mannesmann AG ADR 21,681
------------
37,588
------------
ELECTRONICS (2.1%)
900,000 KLA Instruments 17,775 (2)
500,000 Loral Space & Communications 7,000
450,300 Sundstrand Corp. 16,830
------------
41,605
------------
ENTERTAINMENT (4.0%)
1,000,000 Mirage Resorts 23,250 (2)
760,300 Royal Caribbean Cruises 20,053
1,071,700 Time Warner 35,768
------------
79,071
------------
FOOD & DRUG STORES (2.1%)
1,590,500 Revco D.S. 40,955 (2)
------------
FOOD & TOBACCO (2.5%)
1,200,000 IBP, Inc. 28,050
800,000 RJR Nabisco Holdings 21,100
------------
49,150
------------
</TABLE>
57
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Partners Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
HEALTH CARE (4.0%)
550,000 Ciba-Geigy ADR $ 34,513
799,900 Columbia/HCA Healthcare 45,094
------------
79,607
------------
INDUSTRIAL GOODS & SERVICES (6.4%)
702,500 AK Steel Holding 26,168
600,000 Crown Cork & Seal 28,050
357,400 Goodyear Tire & Rubber 16,306
1,455,000 Owens-Illinois 22,371 (2)
326,300 Varity Corp. 16,396 (2)
450,000 XTRA Corp. 19,519
------------
128,810
------------
INSURANCE (12.1%)
722,400 Allstate Corp. 32,237
1,142,500 Equitable Cos. 28,134
1,164,200 EXEL Ltd. 39,001
325,000 MBIA, Inc. 26,487
641,775 Orion Capital 32,249
770,000 Progressive Corp. 41,869
988,200 Travelers Group 42,863
------------
242,840
------------
MEDIA (4.9%)
8,671,205 Australis Media (Ordinary
Shares) 1,235 (2)
2,500,000 Comcast Corp. Class A Special 40,312
1,245,000 Knight-Ridder 42,019
450,000 Viacom Inc. Class B 14,175 (2)
------------
97,741
------------
MINING (1.4%)
798,200 Freeport-McMoRan 27,438
------------
OIL & GAS (4.2%)
2,400,000 Gulf Canada Resources 14,400
467,600 Noble Affiliates 18,763
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
269,800 Schlumberger, Ltd. $ 22,764
800,950 Tejas Gas 27,833(2)
------------
83,760
------------
PAPER & FOREST PRODUCTS (1.7%)
1,475,000 Fort Howard 34,847 (2)
------------
PHARMACEUTICAL (2.0%)
680,000 Warner-Lambert 40,460
------------
PUBLISHING & BROADCASTING (0.5%)
961,000 Hollinger International 10,451
------------
RAILROADS (1.6%)
427,100 Union Pacific 31,125
------------
REAL ESTATE (6.0%)
400,000 Beacon Properties 10,900
350,700 CBL & Associates Properties 8,066
575,000 Del Webb 10,350
742,300 Hospitality Properties Trust 19,857
2,555,100 Host Marriott 35,133 (2)
316,700 Irvine Apartment Communities 7,126
377,000 Macerich Co. 8,105
367,300 Starwood Lodging Trust 13,957
155,000 Vornado Realty Trust 6,452
------------
119,946
------------
RETAILING (1.8%)
475,000 Harcourt General 22,741
300,000 Melville Corp. 12,675
------------
35,416
------------
RETAILING & APPAREL (3.4%)
555,200 Nordstrom, Inc. 21,653
2,350,000 Price/Costco 46,706 (2)
------------
68,359
------------
SPECIALTY CHEMICAL (0.3%)
180,000 Millipore Corp. 6,885
------------
</TABLE>
58
<PAGE>
August 31, 1996
- --------------------------------------------------------------------------------
Partners Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
TECHNOLOGY (6.8%)
400,000 Applied Materials $ 9,700 (2)
474,700 Autodesk, Inc. 10,918
1,200,000 Komag, Inc. 25,500 (2)
500,000 Seagate Technology 24,000 (2)
600,000 Texas Instruments 28,050
702,500 Xerox Corp. 38,550
------------
136,718
------------
TOTAL COMMON STOCKS (COST
$1,563,649) 1,794,618
------------
PREFERRED STOCKS (0.6%)
2,277,000 RJR Nabisco, Ser. C, Dep.
Shares (COST $15,318) 12,239
------------
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- ----------- ------------
<C> <S> <C>
U.S. TREASURY SECURITIES (8.4%)
$169,230,000 U.S. Treasury Bills, 4.925% -
5.26%, due 9/19/96 - 12/12/96
(COST $167,943) $ 168,009
------------
SHORT-TERM CORPORATE NOTES (1.5%)
30,000,000 General Electric Capital
Corp., 5.233%, due 9/9/96
(COST $30,000) 30,000 (3)
------------
TOTAL INVESTMENTS (100.3%)
(COST $1,776,910) 2,004,866 (4)
Liabilities, less cash,
receivables and other assets
[(0.3%)] (5,263 )
------------
TOTAL NET ASSETS (100.0%) $ 1,999,603
------------
</TABLE>
59
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS
August 31, 1996
- ----------------------------------------------------------------------
Equity 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. The Portfolios
value all other securities by a method that the trustees of Equity Managers
Trust believe accurately reflects fair value. Foreign security prices are
furnished by independent quotation services expressed in local currency
values. Foreign securities are translated from the local currency into U.S.
dollars using current exchange rates. Short-term debt securities with less
than 60 days until maturity at the time of purchase may be valued at cost
which, when combined with interest earned, approximates market value.
2)Non-income producing security.
3)At cost, which approximates market value.
4)At August 31, 1996, selected Portfolio information on a Federal income tax
basis was as follows:
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED NET UNREALIZED
NEUBERGER&BERMAN COST APPRECIATION DEPRECIATION APPRECIATION
--------------- --------------- ------------ ---------------
<S> <C> <C> <C> <C>
FOCUS PORTFOLIO $ 838,896,000 $ 306,179,000 $20,483,000 $ 285,696,000
GENESIS PORTFOLIO 199,260,000 65,714,000 4,556,000 61,158,000
GUARDIAN PORTFOLIO 5,253,794,000 1,160,256,000 136,551,000 1,023,705,000
MANHATTAN PORTFOLIO 497,446,000 113,133,000 30,554,000 82,579,000
PARTNERS PORTFOLIO 1,781,852,000 268,475,000 45,461,000 223,014,000
</TABLE>
5)Affiliated Issuer (see Note E of Notes to Financial Statements).
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 August 31, 1996, this
security amounted to $15,843,000 or .2% of net assets for Neuberger&Berman
Guardian Portfolio.
SEE NOTES TO FINANCIAL STATEMENTS
60
<PAGE>
(This page has been left blank intentionally.)
61
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
- ----------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
FOCUS GENESIS
(000'S OMITTED) PORTFOLIO PORTFOLIO
-------------------------------
<S> <C> <C>
ASSETS
Investments in securities, at market value*
(Notes A & E) -- see Schedule of
Investments:
Unaffiliated issuers $ 1,124,592 $ 260,418
Non-controlled affiliated issuers -- --
-------------------------------
1,124,592 260,418
Cash 95 50
Deferred organization costs (Note A) 17 4
Dividends and interest receivable 982 112
Prepaid expenses and other assets 35 9
Receivable for securities sold 1,077 792
-------------------------------
1,126,798 261,385
-------------------------------
LIABILITIES
Payable for collateral on securities loaned
(Note A) -- --
Payable for securities purchased 3,863 1,319
Payable to investment manager (Note B) 479 156
Accrued expenses 85 46
-------------------------------
4,427 1,521
-------------------------------
NET ASSETS Applicable to Investors' Beneficial
Interests $ 1,122,371 $ 259,864
-------------------------------
NET ASSETS consist of:
Paid-in capital $ 836,281 $ 198,643
Net unrealized appreciation in value of
investment securities 286,090 61,221
-------------------------------
NET ASSETS $ 1,122,371 $ 259,864
-------------------------------
*Cost of investments:
Unaffiliated issuers $ 838,502 $ 199,197
Non-controlled affiliated issuers -- --
-------------------------------
Total cost of investments $ 838,502 $ 199,197
-------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
62
<PAGE>
August 31, 1996
- ----------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
GUARDIAN MANHATTAN PARTNERS
PORTFOLIO PORTFOLIO PORTFOLIO
------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in securities, at market value*
(Notes A & E) -- see Schedule of
Investments:
Unaffiliated issuers $ 5,874,140 $ 580,025 $ 2,004,866
Non-controlled affiliated issuers 403,359 -- --
------------------------------------------------
6,277,499 580,025 2,004,866
Cash 69 -- 49
Deferred organization costs (Note A) 49 19 34
Dividends and interest receivable 6,667 133 1,710
Prepaid expenses and other assets 180 22 73
Receivable for securities sold 4,294 -- 3,761
------------------------------------------------
6,288,758 580,199 2,010,493
------------------------------------------------
LIABILITIES
Payable for collateral on securities loaned
(Note A) 35,520 10,790 --
Payable for securities purchased 18,006 1,618 9,975
Payable to investment manager (Note B) 2,326 259 802
Accrued expenses 364 106 113
------------------------------------------------
56,216 12,773 10,890
------------------------------------------------
NET ASSETS Applicable to Investors' Beneficial
Interests $ 6,232,542 $ 567,426 $ 1,999,603
------------------------------------------------
NET ASSETS consist of:
Paid-in capital $ 5,207,522 $ 484,790 $ 1,771,647
Net unrealized appreciation in value of
investment securities 1,025,020 82,636 227,956
------------------------------------------------
NET ASSETS $ 6,232,542 $ 567,426 $ 1,999,603
------------------------------------------------
*Cost of investments:
Unaffiliated issuers $ 4,820,642 $ 497,389 $ 1,776,910
Non-controlled affiliated issuers 431,837 -- --
------------------------------------------------
Total cost of investments $ 5,252,479 $ 497,389 $ 1,776,910
------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
63
<PAGE>
STATEMENTS OF OPERATIONS
- ----------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
FOCUS GENESIS
(000'S OMITTED) PORTFOLIO PORTFOLIO
---------------------------
<S> <C> <C>
INVESTMENT INCOME
Income:
Dividend income -- unaffiliated issuers $ 15,806 $ 1,711
Dividend income -- non-controlled affiliated
issuers -- --
Interest income 1,599 263
Foreign taxes withheld (Note A) (101) --
---------------------------
Total income 17,304 1,974
---------------------------
Expenses:
Investment management fee (Note B) 5,565 1,506
Accounting fees 10 10
Amortization of deferred organization and
initial offering expenses (Note A) 8 2
Auditing fees 41 22
Custodian fees (Note B) 229 94
Insurance expense 24 4
Legal fees 15 15
Trustees' fees and expenses 20 7
Miscellaneous 2 20
---------------------------
Total expenses 5,914 1,680
Fee waived by the investment manager (Note
B) -- (177)
---------------------------
Total net expenses 5,914 1,503
---------------------------
Net investment income 11,390 471
---------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investment securities
sold in
unaffiliated issuers 51,999 5,660
Net realized loss on investment securities
sold in
non-controlled affiliated issuers -- --
Net realized loss on option contracts written
(Note A) (298) --
Change in net unrealized appreciation of
investment securities and option contracts
written (21,728) 27,635
---------------------------
Net gain (loss) on investments 29,973 33,295
---------------------------
Net increase (decrease) in net assets
resulting from operations $ 41,363 $ 33,766
---------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
64
<PAGE>
For the Year Ended August 31, 1996
- ----------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
GUARDIAN MANHATTAN PARTNERS
PORTFOLIO PORTFOLIO PORTFOLIO
-----------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Income:
Dividend income -- unaffiliated issuers $ 82,054 $ 4,391 $ 29,261
Dividend income -- non-controlled affiliated
issuers 2,834 -- --
Interest income 40,556 246 3,659
Foreign taxes withheld (Note A) (1,170) (103) (150)
-----------------------------------------------
Total income 124,274 4,534 32,770
-----------------------------------------------
Expenses:
Investment management fee (Note B) 25,172 3,402 8,868
Accounting fees 10 10 10
Amortization of deferred organization and
initial offering expenses (Note A) 26 9 18
Auditing fees 50 40 43
Custodian fees (Note B) 872 197 349
Insurance expense 113 17 43
Legal fees 14 15 14
Trustees' fees and expenses 75 13 28
Miscellaneous 8 2 3
-----------------------------------------------
Total expenses 26,340 3,705 9,376
Fee waived by the investment manager (Note
B) -- -- --
-----------------------------------------------
Total net expenses 26,340 3,705 9,376
-----------------------------------------------
Net investment income 97,934 829 23,394
-----------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investment securities
sold in
unaffiliated issuers 322,951 63,165 240,765
Net realized loss on investment securities
sold in
non-controlled affiliated issuers (8,835) (3,656) --
Net realized loss on option contracts written
(Note A) (6,706) -- --
Change in net unrealized appreciation of
investment securities and option contracts
written (111,192) (74,167) (30,217)
-----------------------------------------------
Net gain (loss) on investments 196,218 (14,658) 210,548
-----------------------------------------------
Net increase (decrease) in net assets
resulting from operations $ 294,152 $ (13,829) $ 233,942
-----------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
65
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
FOCUS GENESIS
PORTFOLIO PORTFOLIO
Year Year
Ended Ended
August 31, August 31,
(000'S OMITTED) 1996 1995 1996 1995
-------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 11,390 $ 7,496 $ 471 $ 335
Net realized gain on investments
sold 51,701 50,732 5,660 6,666
Change in net unrealized
appreciation of investments (21,728) 139,750 27,635 17,448
-------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 41,363 197,978 33,766 24,449
-------------------------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 231,514 157,842 110,968 34,636
Reductions (119,679) (31,658) (27,030) (55,494)
-------------------------------------------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests 111,835 126,184 83,938 (20,858)
-------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 153,198 324,162 117,704 3,591
NET ASSETS:
Beginning of year 969,173 645,011 142,160 138,569
-------------------------------------------------------------
End of year $ 1,122,371 $ 969,173 $ 259,864 $ 142,160
-------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
66
<PAGE>
- ----------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
GUARDIAN MANHATTAN PARTNERS
PORTFOLIO PORTFOLIO PORTFOLIO
Year Year Year
Ended Ended Ended
August 31, August 31, August 31,
1996 1995 1996 1995 1996 1995
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 97,934 $ 53,790 $ 829 $ 2,206 $ 23,394 $ 15,524
Net realized gain on investments
sold 307,410 124,394 59,509 44,742 240,765 165,254
Change in net unrealized
appreciation of investments (111,192) 627,968 (74,167) 85,917 (30,217) 109,257
---------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 294,152 806,152 (13,829) 132,865 233,942 290,035
---------------------------------------------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 1,540,028 1,413,464 70,833 75,821 309,196 100,895
Reductions (214,834) (86,756) (134,984) (85,015) (167,061) (107,688)
---------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests 1,325,194 1,326,708 (64,151) (9,194) 142,135 (6,793)
---------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 1,619,346 2,132,860 (77,980) 123,671 376,077 283,242
NET ASSETS:
Beginning of year 4,613,196 2,480,336 645,406 521,735 1,623,526 1,340,284
---------------------------------------------------------------------------------
End of year $ 6,232,542 $ 4,613,196 $ 567,426 $ 645,406 $ 1,999,603 $ 1,623,526
---------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
67
<PAGE>
NOTES TO FINANCIAL STATEMENTS
August 31, 1996
- ----------------------------------------------------------------------
Equity Managers Trust
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1) GENERAL: Neuberger&Berman Focus Portfolio ("Focus," formerly Neuberger&
Berman Selected Sectors Portfolio), Neuberger&Berman Genesis Portfolio
("Genesis"), Neuberger&Berman Guardian Portfolio ("Guardian"), Neuberger&
Berman Manhattan Portfolio ("Manhattan"), and Neuberger&Berman Partners
Portfolio ("Partners"), (collectively, the "Portfolios") are separate
operating series of Equity Managers Trust ("Managers Trust"), a New York
common law trust organized as of December 1, 1992. Managers Trust is
registered as a diversified, open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"). The trustees of
Managers Trust changed the name of Neuberger&Berman Selected Sectors
Portfolio to Neuberger& Berman Focus Portfolio, effective January 1, 1995.
Other regulated investment companies sponsored by Neuberger&Berman Management
Incorporated ("Management"), whose financial statements are not presented
herein, also invest in Managers Trust.
The assets of each series belong only to that series, and the liabilities
of each series are borne solely by that series and no other.
2) PORTFOLIO VALUATION: Investment securities are valued as indicated in the
notes following the Portfolios' Schedule of Investments.
3) FOREIGN CURRENCY TRANSLATION: The accounting records of the Portfolios are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars at the current rate of exchange of such currency against the U.S.
dollar to determine the value of investments, other assets and liabilities.
Purchase and sale prices of securities, and income and expenses are
translated into U.S. dollars at the prevailing rate of exchange on the
respective dates of such transactions.
4) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Dividend income is recorded on the
ex-dividend date or, for certain foreign dividends, as soon as the Portfolio
becomes aware of the dividends. 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 are recorded on the basis of identified cost.
5) FEDERAL INCOME TAXES: Managers Trust intends to comply with the
requirements of the Internal Revenue Code of 1986, as amended. Each Portfolio of
Managers Trust also intends to conduct its operations so that each of its
investors
68
<PAGE>
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.
6) FOREIGN TAXES: Foreign taxes withheld represent amounts withheld by foreign
tax authorities, net of refunds recoverable.
7) ORGANIZATION EXPENSES: Expenses incurred by each Portfolio in connection
with its organization are being amortized by each Portfolio on a
straight-line basis over a five-year period. At August 31, 1996, the
unamortized balance of such expenses amounted to $16,728, $3,687, $49,070,
$18,675, and $34,014, for Focus, Genesis, Guardian, Manhattan, and Partners,
respectively.
8) EXPENSE ALLOCATION: Each Portfolio bears all costs of its operations.
Expenses incurred by Managers Trust 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.
9) CALL OPTIONS: Premiums received by each Portfolio upon writing a covered call
option are recorded in the liability section of each Portfolio's Statement of
Assets and Liabilities and are subsequently adjusted to the current market
value. When an option expires, is exercised or is closed, the Portfolio
realizes a gain or loss and the liability is eliminated. A Portfolio bears
the risk of a decline in the price of the security during the period,
although any potential loss during the period would be reduced by the amount
of the option premium received. In general, written call options may serve as
a partial hedge against decreases in value in the underlying securities to
the extent of the premium received. All securities covering outstanding
options are held in escrow by the custodian bank.
Summary of Option Transactions for the Year Ended August 31, 1996:
<TABLE>
<CAPTION>
VALUE
WHEN
FOCUS NUMBER WRITTEN
- ---------------------------------------------------------------
<S> <C> <C>
CONTRACTS OUTSTANDING 8/31/95 850 $ 737,316
CONTRACTS WRITTEN 3,800 1,705,364
CONTRACTS EXPIRED (2,300) (281,841)
CONTRACTS EXERCISED (500) (154,745)
CONTRACTS CLOSED (1,850) (2,006,094)
--------------------------
CONTRACTS OUTSTANDING 8/31/96 0 $ 0
--------------------------
</TABLE>
69
<PAGE>
<TABLE>
<CAPTION>
VALUE
GUARDIAN NUMBER WHEN WRITTEN
- ------------------------------------------------------------------
<S> <C> <C>
CONTRACTS OUTSTANDING 8/31/95 8,650 $ 7,625,995
CONTRACTS WRITTEN 16,150 9,878,556
CONTRACTS EXPIRED 0 0
CONTRACTS EXERCISED (7,650) (2,570,511)
CONTRACTS CLOSED (17,150) (14,934,040)
-----------------------------
CONTRACTS OUTSTANDING 8/31/96 0 $ 0
-----------------------------
</TABLE>
10)SECURITY LENDING: Portfolio securities loans involve certain risks in the
event a borrower should fail financially, including delays or inability to
recover the lent securities or foreclose against the collateral. The
investment manager, under the supervision of Manager Trust's Board of
Trustees, monitors the creditworthiness of the parties to whom the Portfolios
make security loans. The Portfolios will not lend securities on which covered
call options have been written, or lend securities on terms which would
prevent each of their investors from qualifying as a regulated investment
company. Portfolio securities loans to Neuberger& Berman, L.P. ("Neuberger"),
the Portfolios' principal broker, are made in accordance with an exemptive
order issued by the Securities and Exchange Commission under the 1940 Act.
The Portfolios receive cash as collateral against the lent securities, which
must be maintained at not less than 100% of the market value of the lent
securities during the period of the loan. The Portfolios receive income
earned on the lent securities and a portion of the income earned on the cash
collateral. During the year ended August 31, 1996, Focus, Guardian,
Manhattan, and Partners lent securities to Neuberger. At August 31, 1996,
cash collateral received by Guardian and Manhattan was equal to or in excess
of 100% of the market value of the loaned securities.
11)REPURCHASE AGREEMENTS: Each Portfolio may enter into repurchase agreements
with institutions that each Portfolio's investment manager has determined are
creditworthy. Each repurchase agreement is recorded at cost. A Portfolio
requires that the securities purchased in a repurchase transaction be
transferred to the custodian in a manner sufficient to enable a Portfolio to
obtain those securities in the event of a default under the repurchase
agreement. A Portfolio monitors, on a daily basis, the value of the
securities transferred to ensure that their value, including accrued
interest, is greater than amounts owed to a Portfolio under each such
repurchase agreement.
NOTE B -- MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES:
Each Portfolio retains Management as its investment manager under a
Management Agreement. For such investment management services, each Portfolio
(except Genesis) 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
70
<PAGE>
next $250 million, 0.475% of the next $250 million, 0.45% of the next $500
million, and 0.425% of average daily net assets in excess of $1.5 billion.
Genesis has contracted to pay Management a fee for investment management
services at the annual rate of 0.85% of the first $250 million of that
Portfolio's average daily net assets, 0.80% of the next $250 million, 0.75% of
the next $250 million, 0.70% of the next $250 million, and 0.65% of average
daily net assets in excess of $1 billion. Management has voluntarily agreed to
waive a portion of the management fee borne directly by Genesis and indirectly
by Neuberger&Berman Genesis Trust to reduce the annual fee by 0.10% per annum of
average daily net assets of Genesis, effective May 1, 1995.
All of the capital stock of Management is owned by individuals who are also
general partners of Neuberger, a member firm of The New York Stock Exchange and
sub-adviser to each Portfolio. Neuberger is retained by Management to furnish it
with investment recommendations and research information without cost to each
Portfolio. Several individuals who are officers and/or trustees of Managers
Trust are also partners of Neuberger and/or officers and/or directors of
Management.
Each Portfolio has an expense offset arrangement in connection with its
custodian contract. The impact of this arrangement, reflected in the Statement
of Operations, is less than .01% of each Portfolio's average daily net assets.
NOTE C -- SECURITIES TRANSACTIONS:
During the year ended August 31, 1996, there were purchase and sale
transactions (excluding short-term securities and option contracts written) as
follows:
<TABLE>
<CAPTION>
PURCHASES SALES
- ---------------------------------------------------------------------
<S> <C> <C>
FOCUS $ 527,099,223 $ 416,382,149
GENESIS 111,738,992 35,561,645
GUARDIAN 3,665,028,039 1,883,081,464
MANHATTAN 336,006,035 397,529,041
PARTNERS 1,715,861,680 1,705,874,758
</TABLE>
During the year ended August 31, 1996, there were brokerage commissions on
securities paid to Neuberger and other brokers as follows:
<TABLE>
<CAPTION>
NEUBERGER OTHER BROKERS TOTAL
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
FOCUS $ 583,212 $ 582,639 $ 1,165,851
GENESIS 95,999 110,151 206,150
GUARDIAN 3,542,127 3,344,463 6,886,590
MANHATTAN 543,020 397,304 940,324
PARTNERS 2,741,666 1,956,188 4,697,854
</TABLE>
71
<PAGE>
In addition, Neuberger's share of the total interest income earned for the
year ended August 31, 1996, from the collateralization of securities loaned to
or through Neuberger was $330,001, $2,129,341, $186,163, and $118,041, for
Focus, Guardian, Manhattan, and Partners, respectively.
NOTE D -- LINE OF CREDIT:
Genesis had an unsecured $10,000,000 bank line of credit with Morgan Guaranty
Trust Company of New York ("Morgan"), which expired on August 31, 1996, to be
used only as a temporary measure for extraordinary or emergency purposes.
Borrowings under this agreement would have borne interest at a rate based on the
Morgan Bid Rate Program. For this line of credit, Genesis was assessed an annual
facility fee of .2% of the available line of credit. No compensating balances
were required. There were no loans outstanding pursuant to this line of credit
at August 31, 1996, nor did Genesis utilize the line of credit at anytime.
Beginning August 31, 1996, Genesis established a $20,000,000 unsecured line of
credit with State Street Bank and Trust Company for the same purpose. Any
borrowings under this agreement will bear interest at the overnight Federal
Funds Rate plus .75% per annum. For this line of credit, Genesis is assessed a
facility fee of .1% per annum.
NOTE E -- INVESTMENTS IN NON-CONTROLLED AFFILIATES*:
<TABLE>
<CAPTION>
GUARDIAN
BALANCE OF GROSS BALANCE OF
SHARES HELD PURCHASES GROSS SALES SHARES HELD
AUGUST 31, AND AND AUGUST 31, VALUE AUGUST
NAME OF ISSUER: 1995 ADDITIONS REDUCTIONS 1996 31, 1996
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Coltec Industries 2,765,000 2,013,900 0 4,778,900 $71,683,500
Fingerhut Cos. 1,465,000 1,776,700 0 3,241,700 43,357,737
Foundation Health 2,230,000 790,000 0 3,020,000 90,600,000
Healthsource Inc. 0 4,190,000 0 4,190,000 62,850,000
Hospitality
Properties Trust 0 1,458,900 16,300 1,442,600 38,589,550
J & L Specialty
Steel 0 3,278,200 0 3,278,200 44,665,475
USFreightways Corp. 0 1,257,000 0 1,257,000 26,082,750
Zeigler Coal Holding 565,500 1,136,500 0 1,702,000 25,530,000
<CAPTION>
MANHATTAN
BALANCE OF GROSS BALANCE OF
SHARES HELD PURCHASES GROSS SALES SHARES HELD
AUGUST 31, AND AND AUGUST 31, VALUE AUGUST
NAME OF ISSUER: 1995 ADDITIONS REDUCTIONS 1996 31, 1996
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Spaghetti Warehouse 404,000 0 404,000 0 $0
</TABLE>
*AFFILIATED ISSUERS, AS DEFINED IN THE 1940 ACT, INCLUDE ISSUERS IN WHICH THE
PORTFOLIO HELD 5% OR MORE OF THE OUTSTANDING VOTING SECURITIES.
72
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
FOCUS GENESIS
PORTFOLIO PORTFOLIO
Period from Period from
August 2, 1993 August 2, 1993
(Commencement (Commencement
of Operations) of Operations)
to to
Year Ended August 31, August 31, Year Ended August 31, August 31,
1996 1995 1994 1993 1996 1995 1994 1993
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET
ASSETS:
Expenses .54% .57% .58% .58%(1) .85%(2) .94%(2) .98% 1.07%(1)
---------------------------------------------------------------------------------------------------
Net Investment Income 1.04% 1.05% 1.16% 1.46%(1) .27%(2) .25%(2) .18% .37%(1)
---------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 39% 36% 52% 4% 21% 37% 63% 3%
---------------------------------------------------------------------------------------------------
Average Commission Rate
Paid $0.0578 -- -- -- $0.0576 -- -- --
---------------------------------------------------------------------------------------------------
Net Assets, End of Year
(in millions) $1,122.4 $969.2 $645.0 $574.0 $259.9 $142.2 $138.6 $118.6
---------------------------------------------------------------------------------------------------
</TABLE>
1) Annualized.
2) Had Management not waived a portion of the management fee, the annualized
ratios to average daily net assets would have been:
<TABLE>
<CAPTION>
Year Ended August 31,
GENESIS 1996 1995
- ------------------------------------------------------
<S> <C> <C>
Expenses .95% .97%
Net Investment
Income .17% .22%
</TABLE>
73
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
GUARDIAN MANHATTAN
PORTFOLIO PORTFOLIO
Period from Period from
August 2, August 2,
1993 1993
(Commencement (Commencement
of of
Operations) Operations)
to to
Year Ended August 31, August 31, Year Ended August 31, August 31,
1996 1995 1994 1993 1996 1995 1994 1993
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET
ASSETS:
Expenses .46% .48% .50% .51%(1) .58% .59% .59% .59%(1)
----------------------------------------------------------------------------------------------
Net Investment Income 1.72% 1.72% 1.66% 2.45%(1) .13% .42% .53% .55%(1)
----------------------------------------------------------------------------------------------
Portfolio Turnover Rate 37% 26% 24% 3% 53% 44% 50% 3%
----------------------------------------------------------------------------------------------
Average Commission Rate
Paid $0.0580 -- -- -- $0.0373 -- -- --
----------------------------------------------------------------------------------------------
Net Assets, End of Year
(in millions) $6,232.5 $4,613.2 $2,480.3 $1,777.6 $567.4 $645.4 $521.7 $536.8
----------------------------------------------------------------------------------------------
</TABLE>
1) Annualized.
74
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
PARTNERS
PORTFOLIO
Period from
August 2, 1993
(Commencement
of Operations) to
Year Ended August 31, August 31,
1996 1995 1994 1993
-----------------------------------------------------
<S> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Expenses .51% .53% .54% .54%(1)
-----------------------------------------------------
Net Investment Income 1.26% 1.13% .75% 1.19%(1)
-----------------------------------------------------
Portfolio Turnover Rate 96% 98% 75% 8%
-----------------------------------------------------
Average Commission Rate Paid $0.0494 -- -- --
-----------------------------------------------------
Net Assets, End of Year (in
millions) $1,999.6 $1,623.5 $1,340.3 $1,182.1
-----------------------------------------------------
</TABLE>
1) Annualized.
75
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of Equity Managers Trust and
Owners of Beneficial Interest of
Neuberger&Berman Manhattan Portfolio
We have audited the accompanying statement of assets and liabilities of
Neuberger&Berman Manhattan Portfolio (the "Portfolio"), including the schedule
of investments, as of August 31, 1996, 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 Portfolio'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. Our procedures included confirmation of securities owned as of
August 31, 1996 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Neuberger&Berman Manhattan Portfolio as of August 31, 1996, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the periods indicated therein, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
October 4, 1996
76
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Trustees
Equity Managers Trust and
Owners of Beneficial Interest of
Neuberger&Berman Focus Portfolio
Neuberger&Berman Genesis Portfolio
Neuberger&Berman Guardian Portfolio and
Neuberger&Berman Partners Portfolio
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of the Neuberger&Berman Focus Portfolio,
Neuberger&Berman Genesis Portfolio, Neuberger&Berman Guardian Portfolio, and
Neuberger&Berman Partners Portfolio, four of the series comprising Equity
Managers Trust (the "Trust"), as of August 31, 1996, the related statements of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the periods indicated therein. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of August 31, 1996, by correspondence with the custodian and
brokers or other appropriate auditing procedures where replies from brokers were
not received. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the above mentioned series of Equity Managers Trust at August 31, 1996, the
results of their operations for the year then ended, the changes in their net
assets for each of the two years in the period then ended, and the financial
highlights for each of the periods indicated therein, in conformity with
generally accepted accounting principles.
Boston, Massachusetts /s/ ERNST & YOUNG LLP
October 3, 1996
77
<PAGE>
OTHER INFORMATION
DIRECTORY OFFICERS AND TRUSTEES
INVESTMENT MANAGER, ADMINISTRATOR Stanley Egener
AND DISTRIBUTOR CHAIRMAN OF THE BOARD AND TRUSTEE
Neuberger&Berman Management Lawrence Zicklin
Incorporated PRESIDENT AND TRUSTEE
605 Third Avenue 2nd Floor Faith Colish
New York, NY 10158-0180 TRUSTEE
800-877-9700 Donald M. Cox
Institutional Services 800-366-6264 TRUSTEE
SUB-ADVISER Alan R. Gruber
Neuberger&Berman, L.P. TRUSTEE
605 Third Avenue Howard A. Mileaf
New York, NY 10158-3698 TRUSTEE
CUSTODIAN AND SHAREHOLDER Edward I. O'Brien
SERVICING AGENT TRUSTEE
State Street Bank and Trust Company John T. Patterson, Jr.
225 Franklin Street TRUSTEE
Boston, MA 02110 John P. Rosenthal
ADDRESS CORRESPONDENCE TO: TRUSTEE
Neuberger&Berman Funds Cornelius T. Ryan
Institutional Services TRUSTEE
605 Third Avenue 2nd Floor Gustave H. Shubert
New York, NY 10158-0180 TRUSTEE
LEGAL COUNSEL Daniel J. Sullivan
Kirkpatrick & Lockhart LLP VICE PRESIDENT
1800 Massachusetts Avenue, NW Michael J. Weiner
2nd Floor VICE PRESIDENT
Washington, DC 20036-1800 Richard Russell
INDEPENDENT ACCOUNTANTS/AUDITORS TREASURER
Coopers & Lybrand L.L.P. Claudia A. Brandon
One Post Office Square SECRETARY
Boston, MA 02109Ernst & Young LLP Barbara DiGiorgio
200 Clarendon Street ASSISTANT TREASURER
Boston, MA 02116 Celeste Wischerth
ASSISTANT TREASURER
Stacy Cooper-Shugrue
ASSISTANT SECRETARY
C. Carl Randolph
ASSISTANT SECRETARY
Notice to Shareholders (Unaudited)
For Neuberger&Berman Guardian Trust 63% of the dividends distributed during
the fiscal year ended August 31, 1996 qualifies for the dividend received
deduction for corporate shareholders. The Fund will notify shareholders in
January 1997 of the applicable percentage of qualifying dividends for corporate
shareholders for use in preparing 1996 income tax returns.
Neuberger&Berman Management Inc., Neuberger&Berman Focus Trust, Neuberger&Berman
Genesis Trust, Neuberger&Berman Guardian Trust, Neuberger&Berman Manhattan
Trust, and Neuberger&Berman Partners Trust are registered service marks of
Neuberger&Berman Management Inc.
- -C- 1996 Neuberger&Berman Management Inc.
78
<PAGE>
NEUBERGER&BERMAN MANAGEMENT INC.
605 THIRD AVENUE 2ND FLOOR
NEW YORK, NY 10158-0180
SHAREHOLDER SERVICES
800.877.9700
INSTITUTIONAL SERVICES
800.366.6264
Statistics and projections in this report are derived from sources
deemed to be reliable but cannot be regarded as a representation of
future results of the Funds. This report is prepared for the general infor-
mation of shareholders and is not an offer of shares of the Funds.
Shares are sold only through the currently effective prospectus, which
must precede or accompany this report.
PRINTED ON RECYCLED PAPER
(recycle logo) NBETAR020896
WITH SOY BASED INKS
<PAGE>
