<PAGE>
ANNUAL REPORT
- ----------------------------------------------------
August 31, 1997
NEUBERGER&BERMAN
EQUITY TRUST -Registered Trademark-
Neuberger&Berman
NYCDC SOCIALLY RESPONSIVE TRUST
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
THE FUND
CHAIRMAN'S LETTER A-4
PORTFOLIO MANAGER'S COMMENTARY A-6
GROWTH OF A DOLLAR CHART B-1
COMPARISON OF A $10,000 INVESTMENT
FINANCIAL STATEMENTS B-2
FINANCIAL HIGHLIGHTS B-8
PER SHARE DATA
REPORT OF INDEPENDENT ACCOUNTANTS B-10
THE PORTFOLIO
SCHEDULE OF INVESTMENTS B-11
TOP TEN EQUITY HOLDINGS
FINANCIAL STATEMENTS B-14
FINANCIAL HIGHLIGHTS B-20
REPORT OF INDEPENDENT ACCOUNTANTS B-21
DIRECTORY C-1
OFFICERS AND TRUSTEES C-2
</TABLE>
A-3
<PAGE>
CHAIRMAN'S LETTER October 17, 1997
Dear Fellow Shareholder,
Despite sharp corrections in March, early April, and again in late
July-August, the stock market continued its historic advance with the Standard &
Poor's "500" Index returning 14.78% and 40.73%, respectively, for the six and
twelve month periods concluding August 31, 1997. In August, the blue chip growth
stocks, which outpaced virtually every other sector for the last two and a half
years, surrendered market leadership to large-cap value stocks, and small- and
mid-cap stocks in general.
Driven by the exceptional performance of a relative handful of the Index's
largest stocks, the S&P "500" has materially out-performed broader market
indices and most active equities managers in recent years. This changed rather
suddenly in August, with the S&P (and the Dow Jones Industrial
Average -- another rather narrow large-cap stock index) bearing the brunt of the
market correction. Is this dramatic change in market leadership a temporary
phenomena or a major shift in investor focus? We believe the answer lies in
valuations.
In an article titled "Cautionary Tale of Index Fund Dangers" published in the
July 23, 1997 edition of THE WALL STREET JOURNAL, our own Kent Simons,
co-manager of the Neuberger&Berman Guardian and Focus Portfolios, addressed the
valuation issue. Kent highlighted eight high-quality companies in the Guardian
Portfolio that could theoretically be purchased in their entirety for less than
the then $169.35 billion market capitalization of Coca-Cola. These eight
companies are projected to have combined 1997 earnings of $12.4 billion compared
to the $4.1 billion consensus earnings estimate for Coke. Although Coca-Cola was
growing earnings at a higher rate than the average of Kent's eight companies, at
its annual growth rate of 18%, it would take Coke nearly seven years to equal
these companies' current projected 1997 earnings. The moral of the story is that
while Coca-Cola is a terrific company, its valuation may have become excessive
relative to many other equally fine companies. We believe the same can be said
for a number of the other growth stock giants that have had such a
disproportionate influence on the performance of the capitalization-weighted
A-4
<PAGE>
S&P "500". Going forward, if investors are once again focusing on fundamentals,
active, value-oriented managers will be competing on a much more level playing
field with the indexers.
We are proud of Neuberger&Berman's value heritage. But, we have also made a
major commitment to growth stock investing. The recent addition of Jennifer
Silver and Brooke Cobb, who are leading Neuberger&Berman LLC's new growth stock
group and serving as co-managers of the Manhattan Portfolio, is an important
step in enhancing our growth stock research and management capabilities.
Jennifer comes to us from Putnam Investments, Inc., where she co-managed the
$3.5 billion Putnam Vista Fund. Brooke is also a Putnam veteran and the former
Chief Investment Officer of Bainco International Investors.
In closing, we thank you for your confidence in our investment skills. We
remain dedicated to helping you achieve your long-term financial objectives
through our diversified value and growth stock portfolios.
Sincerely,
/s/ Stanley Egener
Stanley Egener
Chairman of the Board
Neuberger&Berman Equity Trust
A-5
<PAGE>
PORTFOLIO MANAGER'S COMMENTARY
Neuberger&Berman
- ----------------------------------------------------------------------
NYCDC Socially Responsive Trust
PORTFOLIO MANAGER JANET PRINDLE BELIEVES DOING GOOD, IS GOOD BUSINESS AND
HAS THE POTENTIAL TO PRODUCE POSITIVE INVESTMENT RESULTS. SHE FOCUSES ON
COMPANIES THAT ARE AGENTS OF FAVORABLE CHANGE IN WORKPLACE POLICIES
(PARTICULARLY FOR WOMEN AND MINORITIES); ARE GOOD CORPORATE CITIZENS; AND
ARE RESPONSIVE TO ENVIRONMENTAL ISSUES. SHE DOES NOT INVEST IN TOBACCO,
ALCOHOL, GAMBLING, NUCLEAR POWER, OR WEAPONS COMPANIES. BUT, SOCIAL
RESPONSIBILITY ALONE DOES NOT QUALIFY A COMPANY AS A GOOD INVESTMENT. TRUE
TO NEUBERGER&BERMAN'S PRINCIPLES, PORTFOLIO CANDIDATES MUST FIRST BE FOUND
TO BE FUNDAMENTALLY ATTRACTIVE. THEN, AND ONLY THEN, ARE SOCIAL SCREENS
APPLIED. THE OBJECTIVE IS SIMPLE AND STRAIGHTFORWARD -- TO SERVE BOTH
SOCIETY AND SHAREHOLDERS.
For the six- and twelve-month periods ended August 31, 1997, NYCDC Socially
Responsive Trust returned 14.86% and 33.20%, respectively, compared to the
Standard & Poor's "500" Index's 14.78% and 40.73% gains over the same periods
(see page B-1 for comparison of a $10,000 investment and average annual total
returns as of August 31, 1997).*
In fiscal 1997, our retail, insurance, banking, and technology investments
were, on average, stellar performers. Our telecommunications, food and beverage,
and energy investments disappointed.
Value investing requires patience. If you do your homework and find good
companies in out-of-favor industries, patience is generally rewarded. Retail
stocks were in Wall Street's doghouse in 1995-96. We had the opportunity to buy
two of the best, Costco and Nordstrom, at very reasonable prices. Our little
shopping spree didn't do much for the Portfolio last year, but it produced
strong positive returns in fiscal year 1997.
We are being similarly patient with our energy investments, which as a group
lagged this year. The economics in the industry have improved as worldwide
demand has continued to outpace new production. Exploration and production
activity recently has been vigorous -- a very good sign for oil service
companies. Political instability in oil-producing nations, weather patterns, and
short term supply/demand imbalances will cause oil and gas prices to fluctuate.
However, we believe the long term prospects for energy pricing and energy stock
earnings are favorable.
We continue to have significant exposure to the banking sector. Our portfolio
holdings in the group performed quite well in fiscal 1997. On
A-6
<PAGE>
a fundamental basis, we believe the stocks are still very reasonably priced. The
regional bank stocks seem particularly appealing. Earnings have been progressing
quite nicely despite a back-up in interest rates. If rates trend down from
here -- the spread between interest rates and inflation is historically
high -- regional banks could attract more investor attention. Finally, we
believe consolidation in the industry could continue. The stocks should do well
on fundamentals alone and we may even get a windfall in the form of a takeover
of one or more of our regional bank holdings.
In our shareholder letter, we like to go into detail on at least one current
portfolio holding that illustrates our investment approach. Be advised, we can
change our minds on any stock in our portfolio if deteriorating fundamentals or
price appreciation warrants it. Technology giant Intel was one of our better
performing stocks in fiscal 1997. We think it will continue to do well. As the
leading designer and manufacturer of microprocessors, Intel holds the dominant
market share in a rapidly growing industry. Enormous research and development
spending, in addition to high capital expenditures, has allowed the company to
maintain and enhance its competitive position.
Intel is also one of America's better corporate citizens. The company has a
good environmental record. It has a diverse workforce, with women and minorities
well represented. It is employee friendly, with numerous family-oriented
programs in the workplace. Finally, the company is one of the largest charitable
givers in the American corporate community.
In closing, our mandate does present special challenges. We must find not only
good companies, but companies that are good to their employees and society in
general. If we can do so successfully, we receive a double reward -- the
gratification all portfolio managers get from taking good care of their
shareholders, and the special feeling of accomplishment from doing so in a
socially responsive manner.
Sincerely,
/s/ Janet Prindle
Janet Prindle
Portfolio Manager
*The S&P "500" Index is an unmanaged index generally considered to be
representative of stock market activity. Please note that indices do not take
into account any fees and expenses of investing in the individual securities
that they track, and that individuals cannot invest directly in any index. Data
about the performance of this index are prepared or obtained by
Neuberger&Berman Management Inc. and include reinvestment of all dividends and
capital gain distributions. The Portfolio invests in many securities not
included in the above-described index.
The composition, industries and holdings of the Portfolio are subject to
change. NYCDC Socially Responsive 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.
A-7
<PAGE>
COMPARISON OF A $10,000 INVESTMENT
Neuberger&Berman August 31, 1997
- ----------------------------------------------------------------------
NYCDC Socially Responsive Trust
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN*
NYCDC SOCIALLY
RESPONSIVE TRUST S&P "500"
<S> <C> <C>
1 Year +33.20% +40.73%
Life of Fund +21.44% +23.78%
NYCDC Socially
Responsive Trust S&P "500"
3/14/94 $10,000 $10,000
8/31/94 $10,225 $10,345
1995 $12,163 $12,561
1996 $14,750 $14,909
1997 $19,647 $20,981
</TABLE>
The inception date of Neuberger&Berman NYCDC Socially Responsive Trust-SM- is
3/14/94.
Neuberger&Berman Management Inc.-Registered Trademark- has voluntarily
undertaken to reimburse NYCDC Socially Responsive Trust for its operating
expenses and its pro rata share of its Portfolio's operating expenses which, in
the aggregate, exceed 0.60% per annum of NYCDC Socially Responsive Trust's
average daily net assets. This arrangement can be terminated upon 60 days'
notice. Absent such arrangement, the average annual total returns of the Trust
would have been less.
*"Total Return" includes reinvestment of all income dividends and capital gain
distributions. Results represent past performance and do not indicate future
results. The value of an investment in the 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.
B-1
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
Neuberger&Berman
- ----------------------------------------------------------------------
NYCDC Socially Responsive Trust
<TABLE>
<CAPTION>
August 31,
(000'S OMITTED EXCEPT PER SHARE AMOUNT) 1997
----------
<S> <C>
ASSETS
Investment in Portfolio, at value (Note A) $188,817
Receivable for Trust shares sold 119
Deferred organization costs (Note A) 15
Receivable from administrator -- net (Note B) 6
----------
188,957
----------
LIABILITIES
Payable for Trust shares redeemed 72
Accrued expenses 22
----------
94
----------
NET ASSETS at value $188,863
----------
NET ASSETS consist of:
Par value $ 11
Paid-in capital in excess of par value 126,102
Accumulated undistributed net investment income 1,171
Accumulated net realized gains on investment 7,988
Net unrealized appreciation in value of investment 53,591
----------
NET ASSETS at value $188,863
----------
SHARES OUTSTANDING
($.001 par value; unlimited shares authorized) 10,717
----------
NET ASSET VALUE, offering and redemption price per share $17.62
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-2
<PAGE>
STATEMENT OF OPERATIONS
Neuberger&Berman
- ----------------------------------------------------------------------
NYCDC Socially Responsive Trust
<TABLE>
<CAPTION>
For the
Year Ended
August 31,
(000'S OMITTED) 1997
----------
<S> <C>
INVESTMENT INCOME
Investment income from Portfolio (Note A) $ 2,657
----------
Expenses:
Administration fee (Note B) 78
Shareholder reports 21
Shareholder servicing agent fees 17
Legal fees 12
Custodian fees 11
Amortization of deferred organization and initial
offering expenses (Note A) 9
Auditing fees 6
Trustees' fees and expenses 5
Registration and filing fees 5
Miscellaneous 2
Expenses from Portfolio (Notes A & B) 972
----------
Total expenses 1,138
Expenses reimbursed by administrator and reduced by
custodian fee arrangement (Note B) (207)
----------
Total net expenses 931
----------
Net investment income 1,726
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS FROM PORTFOLIO
(NOTE A)
Net realized gain on investment securities 9,823
Change in net unrealized appreciation of investment
securities 32,327
----------
Net gain on investments from Portfolio (Note A) 42,150
----------
Net increase in net assets resulting from operations $43,876
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-3
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
Neuberger&Berman
- ----------------------------------------------------------------------
NYCDC Socially Responsive Trust
<TABLE>
<CAPTION>
For the
Year Ended
August 31,
(000'S OMITTED) 1997 1996
------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 1,726 $ 1,173
Net realized gain on investments from Portfolio (Note A) 9,823 10,311
Change in net unrealized appreciation of investments
from Portfolio (Note A) 32,327 8,073
------------------
Net increase in net assets resulting from operations 43,876 19,557
------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (1,442) (895)
Net realized gain on investments (10,729) (2,312)
------------------
Total distributions to shareholders (12,171) (3,207)
------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 44,262 32,430
Proceeds from reinvestment of dividends and
distributions 12,171 3,206
Payments for shares redeemed (24,911) (14,893)
------------------
Net increase from Trust share transactions 31,522 20,743
------------------
NET INCREASE IN NET ASSETS 63,227 37,093
NET ASSETS:
Beginning of year 125,636 88,543
------------------
End of year $188,863 $125,636
------------------
Accumulated undistributed net investment income at end
of year $ 1,171 $ 887
------------------
NUMBER OF TRUST SHARES:
Sold 2,775 2,332
Issued on reinvestment of dividends and distributions 812 238
Redeemed (1,582) (1,077)
------------------
Net increase in shares outstanding 2,005 1,493
------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-4
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Neuberger&Berman August 31, 1997
- ----------------------------------------------------------------------
Equity Trust
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1) GENERAL: Neuberger&Berman NYCDC Socially Responsive Trust (the "Fund") is a
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 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.
The Fund seeks to achieve its investment objective by investing all of its
net investable assets in the Neuberger&Berman Socially Responsive Portfolio
of Equity Managers Trust (the "Portfolio") having the same investment
objective and policies as the Fund. The value of the Fund's investment in the
Portfolio reflects the Fund's proportionate interest in the net assets of the
Portfolio (73.67% at August 31, 1997). The Fund was created as an investment
vehicle for participants in the Deferred Compensation Plan of the City of New
York and Related Agencies and Instrumentalities. The performance of the Fund
is directly affected by the performance of the Portfolio. The financial
statements of the Portfolio, including the Schedule of Investments, are
included elsewhere in this report and should be read in conjunction with the
Fund's financial statements.
2) PORTFOLIO VALUATION: The Fund records its investment in the Portfolio at
value. Investment securities held by the Portfolio are valued by Equity
Managers Trust as indicated in the notes following the Portfolio's 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 the Fund to
continue to qualify as a regulated investment company by complying with the
provisions available to certain investment companies, as defined in
applicable sections of the Internal Revenue Code, and to make distributions
of investment company taxable income and net capital gains (after reduction
for any amounts available for Federal income tax purposes as capital loss
carryforwards) sufficient to relieve it from all, or substantially all,
Federal income taxes. Accordingly, the Fund paid no Federal income taxes and
no provision for Federal income taxes was required.
4) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: The Fund earns income, net of
Portfolio expenses, daily on its investment in the Portfolio. Dividends and
B-5
<PAGE>
distributions from net realized capital gains, if any, are normally
distributed in December. Income dividends and capital gain distributions to
shareholders are recorded on the ex-dividend date. To the extent the Fund's
net realized capital gains, if any, can be offset by capital loss
carryforwards, it is the policy of the Fund not to distribute such gains.
The Fund distinguishes between dividends on a tax basis and a financial
reporting basis and only distributions in excess of tax basis earnings and
profits are reported in the financial statements as a return of capital.
Differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes are classified as
distributions in excess of net investment income or accumulated net realized
gains.
5) ORGANIZATION EXPENSES: Expenses incurred by the Fund in connection with its
organization are being amortized on a straight-line basis over a five-year
period. At August 31, 1997, the unamortized balance of such expenses amounted
to $14,642.
6) EXPENSE ALLOCATION: The 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 the 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:
The Fund retains Neuberger&Berman Management Incorporated ("Management") as
its administrator under an Administration Agreement ("Agreement") dated as of
March 11, 1994. Pursuant to this Agreement the Fund pays Management an
administration fee at the annual rate of 0.05% of the Fund's average daily net
assets. The Fund indirectly pays for investment management services through its
investment in the Portfolio (see Note B of Notes to Financial Statements of the
Portfolio).
Management has voluntarily undertaken to reimburse the Fund for its operating
expenses and its pro rata share of the Portfolio's operating expenses (including
the fees payable to Management but excluding interest, taxes, brokerage
commissions, and extraordinary expenses) which exceed, in the aggregate, 0.60%
per annum of the Fund's average daily net assets. This undertaking is subject to
termination by Management upon at least 60 days' prior written notice to the
Fund. For the year ended August 31, 1997, such excess expenses amounted to
$206,224.
All of the capital stock of Management is owned by individuals who are also
principals of Neuberger&Berman, LLC ("Neuberger"), a member firm of The New
B-6
<PAGE>
York Stock Exchange and sub-adviser to the Portfolio. Several individuals who
are officers and/or trustees of the Trust are also principals of Neuberger
and/or officers and/or directors of Management.
The Fund also has a distribution agreement with Management. Management
receives no compensation therefor and no commissions for sales or redemptions of
shares of beneficial interest of the Fund.
The 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 Portfolio, was a reduction of
$387, which is less than .01% of the Fund's average daily net assets.
NOTE C -- INVESTMENT TRANSACTIONS:
During the year ended August 31, 1997, additions and reductions in the Fund's
investment in the Portfolio amounted to $28,545,672 and $9,192,913,
respectively.
B-7
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
NYCDC Socially Responsive 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 the Portfolio's income and
expenses. It should be read in conjunction with the Portfolio's Financial
Statements and notes thereto.
<TABLE>
<CAPTION>
For the
Period from
For the Year Ended March 14, 1994(1)
August 31, to August 31,
1997 1996 1995 1994
-----------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $14.42 $12.27 $10.43 $10.20
-----------------------------------------
Income From Investment Operations
Net Investment Income .17 .14 .13 .06
Net Gains or Losses on Securities (both realized and unrealized) 4.38 2.44 1.82 .17
-----------------------------------------
Total From Investment Operations 4.55 2.58 1.95 .23
-----------------------------------------
Less Distributions
Dividends (from net investment income) (.16) (.12) (.11) --
Distributions (from capital gains) (1.19) (.31) -- --
-----------------------------------------
Total Distributions (1.35) (.43) (.11) --
-----------------------------------------
Net Asset Value, End of Year $17.62 $14.42 $12.27 $10.43
-----------------------------------------
Total Return(2) +33.20% +21.27% +18.95% +2.26%(3)
-----------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $188.9 $125.6 $ 88.5 $ 68.6
-----------------------------------------
Ratio of Gross Expenses to Average Net Assets(4) .60% .60% -- --
-----------------------------------------
Ratio of Net Expenses to Average Net Assets(5) .60% .60% .60% .60%(6)
-----------------------------------------
Ratio of Net Investment Income to Average Net Assets(5) 1.11% 1.06% 1.26% 1.42%(6)
-----------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-8
<PAGE>
NOTES TO FINANCIAL HIGHLIGHTS
Neuberger&Berman August 31, 1997
- ----------------------------------------------------------------------
NYCDC Socially Responsive Trust
1) The date investment operations commenced.
2) Total return based on per share net asset value reflects the effects of
changes in net asset value on the performance of the Fund during each fiscal
period and assumes dividends and other distributions, if any, were
reinvested. Results represent past performance and do not guarantee future
results. Investment returns and principal may fluctuate and shares when
redeemed may be worth more or less than original cost. Total return would
have been lower if Management had not reimbursed certain expenses.
3) Not annualized.
4) For fiscal periods ending after September 1, 1995, the Fund is required to
calculate an expense ratio without reductions related to expense offset
arrangements. These ratios include expense repayment arrangements.
5) After reimbursement of expenses by Management as described in Note B of Notes
to Financial Statements. Had Management not undertaken such action the
annualized ratios to average daily net assets would have been:
<TABLE>
<CAPTION>
For the
Period from
March 14, 1994
For the Year Ended August 31, to August 31,
1997 1996 1995 1994
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Expenses .73% .80% .85% .84%
-------------------------------------------------
Net Investment Income .98% .86% 1.01% 1.18%
-------------------------------------------------
</TABLE>
6) Annualized.
B-9
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of Neuberger&Berman Equity Trust and
Shareholders of Neuberger&Berman NYCDC Socially Responsive Trust
We have audited the accompanying statement of assets and liabilities of
Neuberger&Berman NYCDC Socially Responsive Trust, as of August 31, 1997, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the periods indicated therein. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. 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 NYCDC Socially Responsive Trust as of August 31, 1997, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and the financial highlights
for each of the periods indicated therein, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
October 3, 1997
B-10
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman August 31, 1997
- --------------------------------------------------------------------------------
Socially Responsive Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Intel Corp. 2.7%
2. Warner-Lambert 2.7%
3. ReliaStar Financial 2.3%
4. Johnson & Johnson 2.2%
5. Raychem Corp. 2.2%
6. A.G. Edwards 2.2%
7. CITICORP 2.1%
8. Dexter Corp. 2.1%
9. Wal-Mart Stores 2.1%
10. Mead Corp. 2.1%
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ----------- ---------------
<C> <S> <C>
COMMON STOCKS (95.1%)
AUTOMOTIVE (1.8%)
90,000 Borg-Warner Automotive $ 4,691
---------------
BANKING (9.6%)
42,000 CITICORP 5,360
80,007 CoreStates Financial 4,920
230,000 Dime Bancorp 4,442
70,000 Mercantile Bancorporation 4,826
90,000 National City 5,085
---------------
24,633
---------------
BUSINESS SERVICES (1.9%)
170,000 Dun & Bradstreet 4,760
---------------
CHEMICALS (8.5%)
65,000 Air Products & Chemicals 5,302
140,300 Dexter Corp. 5,331
60,000 Minerals Technologies 2,385
150,000 Morton International 4,987
50,000 Perkin-Elmer 3,700
---------------
21,705
---------------
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ----------- ---------------
<C> <S> <C>
CONSUMER GOODS & SERVICES (2.7%)
90,000 Kimberly-Clark $ 4,270
20,000 Procter & Gamble 2,661
---------------
6,931
---------------
DIVERSIFIED (1.8%)
60,000 Tyco International 4,706
---------------
ENERGY (1.8%)
100,000 Noble Affiliates 4,638
---------------
FINANCIAL SERVICES (8.0%)
140,000 A.G. Edwards 5,565
120,000 ADVANTA Corp. Class A 3,975
64,000 ADVANTA Corp. Class B 2,032
100,000 Fannie Mae 4,400
70,000 Travelers Group 4,445
---------------
20,417
---------------
FOOD & BEVERAGE (1.6%)
85,200 McDonald's Corp. 4,031
---------------
FURNISHINGS (1.8%)
110,000 Leggett & Platt 4,730
---------------
HEALTH CARE (8.3%)
200,000 Invacare Corp. 4,200
100,000 Johnson & Johnson 5,669
100,000 SmithKline Beecham ADR 4,331
55,000 Warner-Lambert 6,988
---------------
21,188
---------------
INDUSTRIAL & COMMERCIAL PRODUCTS (2.2%)
60,000 Raychem Corp. 5,584
---------------
INSURANCE (5.9%)
60,000 Chubb Corp. 4,013
80,000 ReliaStar Financial 5,980
70,000 St. Paul Cos. 5,136
---------------
15,129
---------------
LODGING (1.6%)
75,000 HFS, Inc. 4,177(2)
---------------
</TABLE>
B-11
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman August 31, 1997
- --------------------------------------------------------------------------------
Socially Responsive Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ----------- ---------------
<C> <S> <C>
MACHINERY & EQUIPMENT (1.8%)
178,400 Cincinnati Milacron $ 4,594
---------------
OIL & GAS (2.6%)
200,000 Enserch Exploration 1,800(2)
200,000 Seagull Energy 4,887(2)
---------------
6,687
---------------
OIL SERVICES (3.7%)
100,000 Dresser Industries 4,175
100,000 Tidewater Inc. 5,250
---------------
9,425
---------------
PAPER & FOREST PRODUCTS (2.7%)
70,000 American Pad & Paper 1,610(2)
75,000 Mead Corp. 5,320
---------------
6,930
---------------
PUBLISHING & BROADCASTING (2.9%)
120,700 CMP Media 3,229(2)
140,000 Valassis Communications 4,252(2)
---------------
7,481
---------------
RAILROADS (1.4%)
104,600 Illinois Central 3,511
---------------
RECYCLING (1.1%)
150,000 IMCO Recycling 2,878
---------------
RETAIL STORES (2.1%)
90,000 Nordstrom, Inc. 5,265
---------------
RETAILING (4.1%)
145,000 Costco Cos. 5,229(2)
150,000 Wal-Mart Stores 5,325
---------------
10,554
---------------
TECHNOLOGY (8.0%)
100,000 AMP, Inc. 5,000
130,000 Cabletron Systems 3,933(2)
76,000 Hewlett-Packard 4,660
76,000 Intel Corp. 7,001
---------------
20,594
---------------
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ----------- ---------------
<C> <S> <C>
TELECOMMUNICATIONS (5.8%)
300,000 Metromedia International Group $ 3,563(2)
114,000 Southern New England Telecommunications 4,360
50,000 Telephone & Data Systems 1,975
170,000 WorldCom Inc. 5,089(2)
---------------
14,987
---------------
UTILITIES (1.4%)
115,000 Brooklyn Union Gas 3,472
---------------
TOTAL COMMON STOCKS (COST $176,412) 243,698
---------------
<CAPTION>
Principal
Amount
- -----------
<C> <S> <C>
U.S. TREASURY SECURITIES (4.7%)
$12,097,000 U.S. Treasury Bills, 4.90% - 5.34%, due 9/4/97 -
10/16/97 (COST $12,052) 12,052(3)
---------------
CERTIFICATES OF DEPOSIT (0.0%)
100,000 Self Help Credit Union, 5.33%, due 11/25/97 (COST
$100) 100(3)
---------------
TOTAL INVESTMENTS (99.8%) (COST $188,564) 255,850(4)
Cash, receivables and other assets, less
liabilities (0.2%) 431
---------------
TOTAL NET ASSETS (100.0%) $256,281
---------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
B-12
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS
Neuberger&Berman August 31, 1997
- ----------------------------------------------------------------------
Socially Responsive Portfolio
1) Investment securities of the 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 Portfolio
values all other securities by a method that the trustees of Equity Managers
Trust believe accurately reflects fair value. Short-term debt securities with
less than 60 days until maturity may be valued at cost which, when combined
with interest earned, approximates market value.
2) Non-income producing security.
3) At cost, which approximates market value.
4) The cost of investments for Federal income tax purposes was $188,591,000. At
August 31, 1997, gross unrealized appreciation of investments was $69,292,000
and gross unrealized depreciation of investments was $2,033,000, resulting in
net unrealized appreciation of $67,259,000, based on cost for Federal income
tax purposes.
SEE NOTES TO FINANCIAL STATEMENTS
B-13
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
Neuberger&Berman
- ----------------------------------------------------------------------
Socially Responsive Portfolio
<TABLE>
<CAPTION>
August 31,
(000'S OMITTED) 1997
----------
<S> <C>
ASSETS
Investments in securities, at market value* (Note A) -- see
Schedule of Investments $255,850
Cash 1
Receivable for securities sold 2,969
Dividends and interest receivable 279
Deferred organization costs (Note A) 10
Other assets 4
----------
259,113
----------
LIABILITIES
Payable for securities purchased 2,668
Payable to investment manager (Note B) 122
Accrued expenses 42
----------
2,832
----------
NET ASSETS Applicable to Investors' Beneficial Interests $256,281
----------
NET ASSETS consist of:
Paid-in capital $188,995
Net unrealized appreciation in value of investment securities 67,286
----------
NET ASSETS $256,281
----------
*Cost of investments $188,564
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-14
<PAGE>
STATEMENT OF OPERATIONS
Neuberger&Berman
- ----------------------------------------------------------------------
Socially Responsive Portfolio
<TABLE>
<CAPTION>
For the
Year Ended
August 31,
(000'S OMITTED) 1997
----------
<S> <C>
INVESTMENT INCOME
Income:
Dividend income $ 2,887
Interest income 612
Foreign taxes withheld (Note A) (6)
----------
Total income 3,493
----------
Expenses:
Investment management fee (Note B) 1,123
Custodian fees (Note B) 91
Auditing fees 20
Legal fees 19
Accounting fees 10
Trustees' fees and expenses 7
Amortization of deferred organization and initial offering
expenses (Note A) 7
Insurance expense 3
----------
Total expenses 1,280
Expenses reduced by custodian fee arrangement (Note B) (1)
----------
Total net expenses 1,279
----------
Net investment income 2,214
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investment securities sold 11,478
Change in net unrealized appreciation of investment securities 44,043
----------
Net gain on investments 55,521
----------
Net increase in net assets resulting from operations $57,735
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-15
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
Neuberger&Berman
- ----------------------------------------------------------------------
Socially Responsive Portfolio
<TABLE>
<CAPTION>
For the
Year Ended
August 31,
(000'S OMITTED) 1997 1996
------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 2,214 $ 1,307
Net realized gain on investments 11,478 11,385
Change in net unrealized appreciation of investments 44,043 9,035
------------------
Net increase in net assets resulting from operations 57,735 21,727
------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS:
Additions 57,455 45,974
Reductions (17,394) (5,963)
------------------
Net increase in net assets resulting from transactions in
investors' beneficial interests 40,061 40,011
------------------
NET INCREASE IN NET ASSETS 97,796 61,738
NET ASSETS:
Beginning of year 158,485 96,747
------------------
End of year $256,281 $158,485
------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-16
<PAGE>
NOTES TO FINANCIAL STATEMENTS
August 31, 1997
- ----------------------------------------------------------------------
Equity Managers Trust
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1) GENERAL: Neuberger&Berman Socially Responsive Portfolio (the "Portfolio") is
a 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"). Other regulated
investment companies sponsored by Neuberger&Berman Management Incorporated
("Management"), whose financial statements are not presented herein, also
invest in the Portfolio and other portfolios of 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 Portfolio's Schedule of Investments.
3) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Dividend income is recorded on the
ex-dividend date or, for certain foreign dividends, as soon as the Portfolio
becomes aware of the dividends. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, accretion of original issue discount, where
applicable, and accretion of discount on short-term investments is recorded
on the accrual basis. Realized gains and losses from securities transactions
are recorded on the basis of identified cost.
4) 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
will be able to qualify as a regulated investment company. Each portfolio
will be treated as a partnership for Federal income tax purposes and is
therefore not subject to Federal income tax.
5) FOREIGN TAXES: Foreign taxes withheld represents amounts withheld by foreign
tax authorities, net of refunds recoverable.
6) ORGANIZATION EXPENSES: Expenses incurred by the Portfolio in connection with
its organization are being amortized by the Portfolio on a straight-line
basis over a five-year period. At August 31, 1997, the unamortized balance of
such expenses amounted to $10,339.
7) EXPENSE ALLOCATION: The Portfolio bears all costs of its operations. Expenses
incurred by Managers Trust with respect to any two or more portfolios are
B-17
<PAGE>
allocated in proportion to the net assets of such portfolios, except where a
more appropriate allocation of expenses to each portfolio can otherwise be
made fairly. Expenses directly attributable to a portfolio are charged to
that portfolio.
8) SECURITY LENDING: Portfolio securities loans involve certain risks in the
event a borrower should fail financially, including delays or inability to
recover the lent securities or foreclose against the collateral. The
investment manager, under the general supervision of Managers Trust's Board
of Trustees, monitors the creditworthiness of the parties to whom the
Portfolio makes security loans. The Portfolio will not lend securities on
which covered call options have been written, or lend securities on terms
which would prevent each of its investors from qualifying as a regulated
investment company. Portfolio securities loans to Neuberger&Berman, LLC
("Neuberger"), the Portfolio's principal broker and sub-adviser, are made in
accordance with an exemptive order issued by the Securities and Exchange
Commission under the 1940 Act. The Portfolio receives 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
Portfolio receives income earned on the lent securities and a portion of the
income earned on the cash collateral. During the year ended August 31, 1997,
the Portfolio lent securities to Neuberger.
9) REPURCHASE AGREEMENTS: The Portfolio may enter into repurchase agreements
with institutions that the Portfolio's investment manager has determined are
creditworthy. Each repurchase agreement is recorded at cost. The Portfolio
requires that the securities purchased in a repurchase transaction be
transferred to the custodian in a manner sufficient to enable the Portfolio
to obtain those securities in the event of a default under the repurchase
agreement. The 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 the Portfolio under each such
repurchase agreement.
NOTE B -- MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES:
The Portfolio retains Management as its investment manager under a Management
Agreement dated as of March 11, 1994. For such investment management services,
the Portfolio pays Management a fee at the annual rate of 0.55% of the first
$250 million of the Portfolio's average daily net assets, 0.525% of the next
$250 million, 0.50% of the next $250 million, 0.475% of the next $250 million,
0.45% of the next $500 million, and 0.425% of average daily net assets in excess
of $1.5 billion.
All of the capital stock of Management is owned by individuals who are also
principals of Neuberger, a member firm of The New York Stock Exchange and sub-
adviser to the Portfolio. Neuberger is retained by Management to furnish it with
B-18
<PAGE>
investment recommendations and research information without added cost to the
Portfolio. Several individuals who are officers and/or trustees of Managers
Trust are also principals of Neuberger and/or officers and/or directors of
Management.
The 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 Custodian fees was a reduction of $509, which is
less than .01% of the Portfolio's average daily net assets.
NOTE C -- SECURITIES TRANSACTIONS:
During the year ended August 31, 1997, there were purchase and sale
transactions (excluding short-term securities) of $136,770,015 and $98,492,220,
respectively.
During the year ended August 31, 1997, brokerage commissions on securities
transactions amounted to $305,640, of which Neuberger received $232,238, and
other brokers received $73,402.
In addition, Neuberger's share of the total interest income earned for the
year ended August 31, 1997, from the collateralization of securities loaned to
or through Neuberger was $51,639.
B-19
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Socially Responsive Portfolio
<TABLE>
<CAPTION>
For the
Period from
March 14, 1994(1)
For the Year Ended August 31, to August 31,
1997 1996 1995 1994
------------------------------------------------------------
<S> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(2) .63% .65% -- --
------------------------------------------------------------
Net Expenses .63% .65% .68% .69%(3)
------------------------------------------------------------
Net Investment Income 1.08% 1.02% 1.18% 1.33%(3)
------------------------------------------------------------
Portfolio Turnover Rate 51% 53% 58% 14%
------------------------------------------------------------
Average Commission Rate Paid $0.0568 $0.0587 -- --
------------------------------------------------------------
Net Assets, End of Year (in millions) $256.3 $158.5 $96.7 $70.7
------------------------------------------------------------
</TABLE>
1) The date investment operations commenced.
2) For fiscal periods ending after September 1, 1995, the Fund is required to
calculate an expense ratio without expense reductions related to expense
offset arrangements.
3) Annualized.
B-20
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of Equity Managers Trust and
Owners of Beneficial Interest of
Neuberger&Berman Socially Responsive Portfolio
We have audited the accompanying statement of assets and liabilities of
Neuberger&Berman Socially Responsive Portfolio (the "Portfolio"), including the
schedule of investments, as of August 31, 1997, and the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the periods indicated therein. These financial statements and financial
highlights are the responsibility of the 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, 1997, 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 Socially Responsive Portfolio as of August 31, 1997, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and the financial highlights
for each of the periods indicated therein, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
October 3, 1997
B-21
<PAGE>
DIRECTORY
INVESTMENT MANAGER, ADMINISTRATOR
AND DISTRIBUTOR
Neuberger&Berman Management Incorporated
605 Third Avenue 2nd Floor
New York, NY 10158-0180
800-877-9700
Institutional Services 800-366-6264
SUB-ADVISER
Neuberger&Berman, LLC
605 Third Avenue
New York, NY 10158-3698
CUSTODIAN AND SHAREHOLDER
SERVICING AGENT
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
ADDRESS CORRESPONDENCE TO:
Deferred Compensation Plan of the
City of New York and Related Agencies
and Instrumentalities
40 Rector Street 3rd Floor
New York, NY 10006
212-306-7760
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, NW
2nd Floor
Washington, DC 20036-1800
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
Neuberger&Berman Management Inc. & Neuberger&Berman NYCDC Socially Responsive
Trust are service marks of Neuberger&Berman Management Inc.
- -C- 1997 Neuberger&Berman Management Inc.
C-1
<PAGE>
OFFICERS AND TRUSTEES
Stanley Egener
CHAIRMAN OF THE BOARD AND TRUSTEE
Lawrence Zicklin
PRESIDENT AND TRUSTEE
Faith Colish
TRUSTEE
Donald M. Cox
TRUSTEE
Howard A. Mileaf
TRUSTEE
Edward I. O'Brien
TRUSTEE
John T. Patterson, Jr.
TRUSTEE
John P. Rosenthal
TRUSTEE
Cornelius T. Ryan
TRUSTEE
Gustave H. Shubert
TRUSTEE
Daniel J. Sullivan
VICE PRESIDENT
Michael J. Weiner
VICE PRESIDENT
Richard Russell
TREASURER
Claudia A. Brandon
SECRETARY
Barbara DiGiorgio
ASSISTANT TREASURER
Celeste Wischerth
ASSISTANT TREASURER
Stacy Cooper-Shugrue
ASSISTANT SECRETARY
C. Carl Randolph
ASSISTANT SECRETARY
C-2
<PAGE>
NEUBERGER&BERMAN MANAGEMENT INC. -Registered Trademark-
605 THIRD AVENUE 2ND FLOOR
NEW YORK, NY 10158-0180
SHAREHOLDER SERVICES
800.877.9700
INSTITUTIONAL SERVICES
800.366.6264
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 Fund. This report is prepared for the general
information of shareholders and is not an offer of shares of the Fund.
Shares are sold only through the currently effective prospectus, which
must precede or accompany this report.
- -RECYCLE LOGO- PRINTED ON RECYCLED PAPER
NBNYCAR30897
