<PAGE>
ANNUAL REPORT
------------------------------------------------------
August 31, 1998
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 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
OTHER INFORMATION
Directory/Officers and Trustees C-1
</TABLE>
A-3
<PAGE>
CHAIRMAN'S LETTER October 16, 1998
Dear Fellow Shareholder,
From 1996 through the first half of 1998, we enjoyed a "best of all possible
worlds" for equities -- low inflation, low interest rates and strong corporate
profits. Not surprisingly, investors reacted to all this good news by bidding up
stocks to historically high valuations. When Asian economic problems deepened in
the first half of 1998, and earnings projections were revised downward, the
broad stock market began to deteriorate. Small-cap and mid-cap stocks declined
and, save for a relative handful of market darlings, large-cap stocks began to
drift as well. When Russia imploded in late summer and our own political crisis
escalated, equity investors rushed to the exits.
Is the American economy truly imperiled? Inflation appears to be heading
lower. The Federal Reserve just lowered short-term interest rates by 0.25
percentage point. The yield on the 30-year Treasury Bond hovers near its all
time low. Yes, profits are being squeezed in certain sectors, but the American
economy continues to be sound. Economically sensitive cyclical companies are now
trading at historically low valuations and even some of the market's highest
flyers have come down to earth. Is this the time to abandon equities? We think
not.
At Neuberger&Berman, we believe buying good companies at opportunistic prices
is the best long-term investment strategy. The performance of the S&P "500"
Index itself disguises the fact that 60% of all New York Stock Exchange listed
stocks are down 30% or more from their 52-week highs and 80% of all NASDAQ
traded issues are off by the same amount. Investors' "irrational exuberance" for
a relative handful of companies and disdain for all others has made for
difficult comparisons for value and price sensitive growth-stock investors. We
believe this is a short-term phenomenon, which has set the stage going forward
for much better relative performance for true value investors.
The underperformance of our value-oriented strategies over the last year has
not tempted us to abandon them. Our value funds will continue looking for the
stocks of good companies at favorable prices. Our growth fund managers will
continue to focus on companies with earnings growth and reasonable
price-to-earnings ratios. We, the
A-4
<PAGE>
principals and employees of Neuberger&Berman, LLC, still have in excess of $125
million of our own savings, for our future and that of our children, invested
along with you. In the following pages, our portfolio managers will present
their carefully considered perspectives on the future. We trust you will gain
some valuable insights on the currently volatile markets and a greater
appreciation of our efforts on your behalf.
Sincerely,
/s/ Stanley Egener
Stanley Egener
Chairman of the Board
Neuberger&Berman Equity Trust
A-5
<PAGE>
PORTFOLIO 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
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 fiscal periods concluding August 31, 1998, NYCDC
Socially Responsive Trust-SM- declined -17.04% and -5.49%, respectively,
compared to the Standard & Poor's 500 Index's -8.12% decrease and 8.08% return
over the same time periods (see page B-1 for comparison of a $10,000 investment
and average annual total returns as of August 31, 1998).*
In fiscal 1998, the exceptional performance of the relative handful of
large-cap growth stocks that dominate the capitalization-weighted S&P "500"
masked the underlying deterioration of the stock market. To wit, at the end of
this reporting period, the majority of New York Stock Exchange listed securities
were well below their 52-week highs. A broad market decline during a period of
global economic turmoil is understandable. Uncharacteristically, the
fundamentally attractive stocks value investors favor were punished far more
severely than the high flyers. Our best guess is that if another shoe is to
drop, it will land squarely on those stocks whose valuations still defy
fundamental gravity. Looking ahead, we expect the U.S. stock market to remain
volatile until there is some evidence of global economic stability and our own
political crisis is resolved.
As a result of Asian economic weakness, global commodity deflation (lower
prices for oil, paper, chemicals, steel, etc.), and a worldwide
A-6
<PAGE>
- ----------------------------------------------------------------------
NYCDC Socially Responsive Trust (Cont'd)
slowdown in capital spending (slower computer, construction and industrial
equipment sales), our basic materials, capital goods, energy, and technology
investments performed poorly in fiscal 1998. Going forward, we think these
already beaten-down cyclical stocks will hold up well relative to other market
sectors and at current valuations, represent exceptional long-term opportunity.
Although they finished the fiscal year with only a modest decline, our
investments in the financial services sector were hit particularly hard in
August as investors dumped money center banks and brokerage/asset management
stocks. We believe investor response to the potentially negative impact of
global financial distress and declining stock markets worldwide on financial
companies is to some degree justified, but already overdone. For example,
CITICORP stock was nearly halved in August on fears that loan exposure in Russia
and Latin America would decimate earnings. We don't see the earnings dropping
precipitously, and believe CITICORP is a terrific bargain at current prices.
Neuberger&Berman has excellent coverage in the financial services industry and
we believe our long-term commitment to this traditional value sector will be
rewarded.
Although good news has been a rare commodity over the last year, our
communications services and healthcare investments performed quite admirably. We
were modestly underweighted in communications services, but our stock picks
excelled, gaining more than 50% for the year. Our health care selections led by
Johnson & Johnson, SmithKline Beecham and Warner Lambert, advanced more than
25%.
We have chosen to highlight Warner Lambert as a company that continues to
present excellent long-term investment value and qualifies as a socially
responsive corporate citizen. Warner Lambert's new anti-cholesterol drug,
Lipitor, is gaining market share from competitors and fast approaching
blockbuster status. The company is growing earnings faster than any other U.S.
or U.K. based major pharmaceutical company -- a trend we believe will continue
for the next several years. Like the leading branded consumer goods stocks, the
drug stocks have well
A-7
<PAGE>
- ----------------------------------------------------------------------
NYCDC Socially Responsive Trust (Cont'd)
above market average price-to-earnings (P/E) ratios and can not be categorized
as absolute fundamental bargains. However, drug company earnings have so far
been largely immune to general economic weakness here and abroad and, therefore,
higher P/E ratios appear justified.
Warner Lambert has a good environmental record and now participates in three
voluntary programs with the Environmental Protection Agency. The company has a
great diversity record, with two African Americans and one woman on the Board of
Directors. WLA also has one of the best work-family programs in the country and
is a large charitable giver. This is a company that knows how to make money and
take good care of the environment, its employees and some very worthy causes.
In closing, in fiscal 1998, value investing played the tortoise to the
large-cap growth stock hare. Both have lost ground in recent months. However, we
believe our tortoise is ready to win the next leg of the race and ultimately
triumph in the market marathon.
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.-Registered Trademark- and include reinvestment
of all dividends and capital gain distributions. The Portfolio invests in many
securities not included in the above-described index.
The composition, industries and holdings of the Portfolio are subject to
change. Socially Responsive Portfolio is invested in a wide array of stocks and
no single holding makes up more than a small fraction of the Portfolio's total
assets.
A-8
<PAGE>
COMPARISON OF A $10,000 INVESTMENT
Neuberger&Berman August 31, 1998
- ----------------------------------------------------------------------
NYCDC Socially Responsive Trust
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C>
Average Annual Total Return*
NYCDC Socially
Responsive Trust S&P "500"
1 Year -5.49% +8.08%
Life of Fund +14.82% +20.11%
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
1998 $18,567 $22,677
</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 reimbursement, the average annual total returns of the Trust
would have been less.
1. "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.
2. 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) 1998
--------------
<S> <C>
ASSETS
Investment in Portfolio, at value (Note A) $ 186,655
Receivable from administrator -- net (Note
B) 30
Receivable for Trust shares sold 17
Deferred organization costs (Note A) 5
--------------
186,707
--------------
LIABILITIES
Accrued expenses 33
Payable for Trust shares redeemed 4
--------------
37
--------------
NET ASSETS at value $ 186,670
--------------
NET ASSETS consist of:
Par value $ 12
Paid-in capital in excess of par value 147,292
Accumulated undistributed net investment
income 1,909
Accumulated net realized gains on investment 18,843
Net unrealized appreciation in value of
investment 18,614
--------------
NET ASSETS at value $ 186,670
--------------
SHARES OUTSTANDING
($.001 par value; unlimited shares
authorized) 11,838
--------------
NET ASSET VALUE, offering and redemption price per
share $15.77
--------------
</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) 1998
------------
<S> <C>
INVESTMENT INCOME
Investment income from Portfolio (Note A) $ 3,305
------------
Expenses:
Administration fee (Note B) 109
Shareholder reports 34
Shareholder servicing agent fees 17
Registration and filing fees 10
Custodian fees 10
Amortization of deferred organization and
initial offering expenses (Note A) 10
Legal fees 6
Trustees' fees and expenses 5
Auditing fees 4
Miscellaneous 2
Expenses from Portfolio (Notes A & B) 1,312
------------
Total expenses 1,519
Expenses reimbursed by administrator and
reduced by custodian fee expense offset
arrangement (Note B) (213)
------------
Total net expenses 1,306
------------
Net investment income 1,999
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
FROM PORTFOLIO (NOTE A)
Net realized gain on investment securities 21,314
Change in net unrealized appreciation of
investment securities (34,977)
------------
Net loss on investments from Portfolio
(Note A) (13,663)
------------
Net decrease in net assets resulting from
operations $ (11,664)
------------
</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) 1998 1997
-----------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 1,999 $ 1,726
Net realized gain on investments
from Portfolio (Note A) 21,314 9,823
Change in net unrealized
appreciation of investments from
Portfolio (Note A) (34,977) 32,327
-----------------------------
Net increase (decrease) in net
assets resulting from operations (11,664) 43,876
-----------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (1,260) (1,442)
Net realized gain on investments (9,382) (10,729)
-----------------------------
Total distributions to shareholders (10,642) (12,171)
-----------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 48,075 44,262
Proceeds from reinvestment of
dividends and distributions 10,642 12,171
Payments for shares redeemed (38,604) (24,911)
-----------------------------
Net increase from Trust share
transactions 20,113 31,522
-----------------------------
NET INCREASE (DECREASE) IN NET ASSETS (2,193) 63,227
NET ASSETS:
Beginning of year 188,863 125,636
-----------------------------
End of year $ 186,670 $ 188,863
-----------------------------
Accumulated undistributed net
investment income at end of year $ 1,909 $ 1,171
-----------------------------
NUMBER OF TRUST SHARES:
Sold 2,554 2,775
Issued on reinvestment of dividends
and distributions 619 812
Redeemed (2,052) (1,582)
-----------------------------
Net increase in shares outstanding 1,121 2,005
-----------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-4
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Neuberger&Berman August 31, 1998
- ----------------------------------------------------------------------
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-Registered Trademark- (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 (65.99% at August 31, 1998). 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: The Fund 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. Income
dividends
B-5
<PAGE>
and 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. For the year ended August 31, 1998, the Fund hereby designates an
additional $522,193 as a capital gain distribution for the purpose of the
dividend paid deduction.
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, 1998, the unamortized balance of such expenses amounted
to $5,082.
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 ("N&B Management")
as its administrator under an Administration Agreement ("Agreement") dated as of
March 11, 1994. Pursuant to this Agreement the Fund pays N&B 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).
N&B 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 N&B Management but excluding interest, taxes,
brokerage commissions, and extraordinary expenses) which exceed, in the
aggregate, 0.60% per
B-6
<PAGE>
annum of the Fund's average daily net assets. This undertaking is subject to
termination by N&B Management upon at least 60 days' prior written notice to the
Fund. For the year ended August 31, 1998, such excess expenses amounted to
$212,528.
All of the capital stock of N&B Management is owned by individuals who are
also principals of Neuberger&Berman, LLC ("Neuberger"), a member firm of The New
York Stock Exchange and sub-adviser to the Portfolio. Several individuals who
are officers and/or trustees of the Trust are also principals of Neuberger
and/or officers and/or directors of N&B Management.
The Fund also has a distribution agreement with N&B Management. N&B
Management receives no compensation therefor and no commissions for sales or
redemptions of shares of beneficial interest of the Fund.
The Portfolio has an expense offset arrangement in connection with its
custodian contract. In addition, in connection with the Securities Lending
Agreement between the Portfolio and Morgan Stanley & Co. Incorporated (Morgan),
Morgan has agreed to reimburse the Portfolio for transaction costs incurred on
security lending transactions charged by the custodian. The impact of these
arrangements, respectively, reflected in the Statement of Operations under the
caption Expenses from Portfolio, was a reduction of $184 and $28.
NOTE C -- INVESTMENT TRANSACTIONS:
During the year ended August 31, 1998, additions and reductions in the Fund's
investment in the Portfolio amounted to $28,087,739 and $18,580,358,
respectively.
B-7
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
NYCDC Socially Responsive Trust(1)
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. It should be read in conjunction with the Portfolio's Financial
Statements and notes thereto.
<TABLE>
<CAPTION>
For the
Period from
March 14,
1994(2) to
For the Year Ended August 31, August 31,
1998 1997 1996 1995 1994
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 17.62 $ 14.42 $ 12.27 $ 10.43 $ 10.20
---------------------------------------------------------------
Income From Investment Operations
Net Investment Income .17 .17 .14 .13 .06
Net Gains or Losses on Securities
(both realized and unrealized) (1.06) 4.38 2.44 1.82 .17
---------------------------------------------------------------
Total From Investment Operations (.89) 4.55 2.58 1.95 .23
---------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.16) (.16) (.12) (.11) --
Distributions (from net capital
gains) (.80) (1.19) (.31) -- --
---------------------------------------------------------------
Total Distributions (.96) (1.35) (.43) (.11) --
---------------------------------------------------------------
Net Asset Value, End of Year $ 15.77 $ 17.62 $ 14.42 $ 12.27 $ 10.43
---------------------------------------------------------------
Total Return(3) -5.49% +33.20% +21.27% +18.95% +2.26%(4)
---------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in
millions) $ 186.7 $ 188.9 $ 125.6 $ 88.5 $ 68.6
---------------------------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(5) .60% .60% .60% -- --
---------------------------------------------------------------
Ratio of Net Expenses to Average Net
Assets(6) .60% .60% .60% .60% .60%(7)
---------------------------------------------------------------
Ratio of Net Investment Income to
Average Net Assets(6) .92% 1.11% 1.06% 1.26% 1.42%(7)
---------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-8
<PAGE>
NOTES TO FINANCIAL HIGHLIGHTS
Neuberger&Berman August 31, 1998
- ----------------------------------------------------------------------
NYCDC Socially Responsive Trust
1) 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.
2) The date investment operations commenced.
3) 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 N&B Management had not reimbursed certain expenses.
4) Not annualized.
5) For fiscal periods ending after September 1, 1995, the Fund is required to
calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements.
6) After reimbursement of expenses by N&B Management as described in Note B of
Notes to Financial Statements. Had N&B Management not undertaken such action
the annualized ratios of net expenses and net investment income 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,
1998 1997 1996 1995 1994
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Expenses .70% .73% .80% .85% .84%
-------------------------------------------------------
Net Investment Income .82% .98% .86% 1.01% 1.18%
-------------------------------------------------------
</TABLE>
7) 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
In our opinion, the accompanying statement of assets and liabilities and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Neuberger&Berman NYCDC Socially Responsive Trust (the "Trust") at August 31,
1998, and 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. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Trust's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, 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 the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
October 9, 1998
B-10
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman August 31, 1998
- --------------------------------------------------------------------------------
Socially Responsive Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Warner-Lambert 3.5%
2. Wal-Mart Stores 3.1%
3. WorldCom, Inc. 2.6%
4. Fannie Mae 2.5%
5. Cinergy Corp. 2.5%
6. Biogen, Inc. 2.5%
7. MarketSpan Corp. 2.4%
8. Sears, Roebuck 2.4%
9. TYCO International 2.4%
10. ESG Re 2.3%
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ---------- ---------------
<C> <S> <C>
COMMON STOCKS (93.9%)
ADVERTISING (1.9%)
240,000 True North Communications $ 5,460
---------------
AUTOMOTIVE (2.1%)
150,000 Borg-Warner Automotive 6,075
---------------
BANKING (7.2%)
45,000 CITICORP 4,865
200,000 Dime Bancorp 3,800
90,000 National City 5,288
195,000 Southtrust Corp. 6,313
---------------
20,266
---------------
CHEMICALS (2.9%)
100,000 Minerals Technologies 3,631
80,000 Perkin-Elmer 4,630
---------------
8,261
---------------
CONSUMER GOODS & SERVICES (4.2%)
200,000 Hasbro, Inc. 6,262
150,000 Kimberly-Clark 5,719
---------------
11,981
---------------
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ---------- ---------------
<C> <S> <C>
DIVERSIFIED (4.3%)
80,000 Minnesota Mining &
Manufacturing $ 5,480
120,000 TYCO International 6,660
---------------
12,140
---------------
ENERGY (3.1%)
80,000 Chevron Corp. 5,925
120,000 Noble Affiliates 2,775
---------------
8,700
---------------
FINANCIAL SERVICES (10.2%)
64,800 A.G. Edwards 1,758
128,000 Ambac Financial Group 6,040
180,000 Conseco, Inc. 4,972
125,000 Fannie Mae 7,102
100,000 Heller Financial 1,975(2)
300,000 Indigo Aviation ADR 2,325(2)
105,000 Travelers Group 4,659
---------------
28,831
---------------
FOOD & BEVERAGE (2.0%)
100,000 McDonald's Corp. 5,606
---------------
FURNISHINGS (2.1%)
300,000 Leggett & Platt 6,019
---------------
HEALTH CARE (11.5%)
150,000 Biogen, Inc. 6,937(2)
200,000 Invacare Corp. 4,050
80,000 Johnson & Johnson 5,520
150,000 Warner-Lambert 9,788
118,000 Wellpoint Health Networks 6,298(2)
---------------
32,593
---------------
HOSPITAL SUPPLIES (3.6%)
64,500 Beckman Coulter 3,572
200,000 C.R. Bard 6,550
---------------
10,122
---------------
INDUSTRIAL & COMMERCIAL PRODUCTS (2.1%)
200,000 Raychem Corp. 5,800
---------------
</TABLE>
B-11
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman August 31, 1998
- --------------------------------------------------------------------------------
Socially Responsive Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ---------- ---------------
<C> <S> <C>
INSURANCE (6.3%)
380,000 ESG Re $ 6,603
160,000 ReliaStar Financial 6,280
160,000 St. Paul Cos. 4,890
---------------
17,773
---------------
MACHINERY & EQUIPMENT (1.4%)
200,000 Cincinnati Milacron 3,875
---------------
OIL SERVICES (1.1%)
120,000 Dresser Industries 3,067
---------------
PUBLISHING & BROADCASTING (3.3%)
200,000 CMP Media 3,275(2)
200,000 Valassis Communications 5,963(2)
---------------
9,238
---------------
RECYCLING (0.8%)
187,500 IMCO Recycling 2,273
---------------
RETAIL GROCERY (1.1%)
60,000 Albertson's Inc. 3,034
---------------
RETAIL STORES (2.4%)
150,000 Sears, Roebuck 6,816
---------------
RETAILING (3.1%)
150,000 Wal-Mart Stores 8,813
---------------
TECHNOLOGY (7.4%)
250,000 Analog Devices 3,516(2)
120,000 Hewlett-Packard 5,828
80,000 Intel Corp. 5,695
330,000 Unisys Corp. 5,919(2)
---------------
20,958
---------------
TELECOMMUNICATIONS (3.0%)
303,200 Metromedia International Group 1,250(2)
180,000 WorldCom, Inc. 7,369(2)
---------------
8,619
---------------
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- ---------- ---------------
<C> <S> <C>
UTILITIES, ELECTRIC & GAS (6.8%)
200,000 Cinergy Corp. $ 6,950
300,000 DPL Inc. 5,400
250,000 MarketSpan Corp. 6,844
---------------
19,194
---------------
TOTAL COMMON STOCKS (COST
$249,001) 265,514
---------------
<CAPTION>
Principal
Amount
- ----------
<C> <S> <C>
U.S. TREASURY SECURITIES (6.3%)
$17,991,000 U.S. Treasury Bills, 4.66% &
4.87%, due 9/10/98 & 10/8/98
(COST $17,914) 17,914(3)
---------------
SHORT-TERM INVESTMENTS (0.9%)
2,537,784 N&B Securities Lending Quality
Fund, LLC 2,538(3)
100,000 Self Help Credit Union, 5.25%,
due 11/24/98 100(3)
---------------
TOTAL SHORT-TERM INVESTMENTS
(COST $2,638) 2,638
---------------
TOTAL INVESTMENTS (101.1%)
(COST $269,553) 286,066(4)
Liabilities, less cash,
receivables and other assets
[(1.1%)] (3,216)
---------------
TOTAL NET ASSETS (100.0%) $ 282,850
---------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
B-12
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS
Neuberger&Berman August 31, 1998
- ----------------------------------------------------------------------
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 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
security prices are translated from the local currency into U.S. dollars
using current exchange rates. Short-term debt securities with less than 60
days until maturity may be valued at cost which, when combined with interest
earned, approximates market value.
2) Non-income producing security.
3) At cost, which approximates market value.
4) The cost of investments for Federal income tax purposes was $269,594,000. At
August 31, 1998, gross unrealized appreciation of investments was $45,152,000
and gross unrealized depreciation of investments was $28,680,000, resulting
in net unrealized appreciation of $16,472,000, 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) 1998
--------------
<S> <C>
ASSETS
Investments in securities, at market value*
(Note A) -- see Schedule of Investments $ 286,066
Cash 9
Dividends and interest receivable 507
Deferred organization costs (Note A) 4
Other assets 2
--------------
286,588
--------------
LIABILITIES
Payable for collateral on securities loaned
(Note A) 2,538
Payable for securities purchased 951
Payable to investment manager (Note B) 150
Accrued expenses and other payables 99
--------------
3,738
--------------
NET ASSETS Applicable to Investors' Beneficial
Interests $ 282,850
--------------
NET ASSETS consist of:
Paid-in capital $ 266,337
Net unrealized appreciation in value of
investment securities 16,513
--------------
NET ASSETS $ 282,850
--------------
*Cost of investments $ 269,553
--------------
</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) 1998
------------
<S> <C>
INVESTMENT INCOME
Income:
Dividend income $ 3,988
Interest income 760
Foreign taxes withheld (Note A) (7)
------------
Total income 4,741
------------
Expenses:
Investment management fee (Note B) 1,696
Custodian fees (Note B) 106
Legal fees 24
Auditing fees 23
Accounting fees 10
Amortization of deferred organization and
initial offering expenses (Note A) 6
Trustees' fees and expenses 8
Insurance expense 4
Miscellaneous 1
------------
Total expenses 1,878
------------
Net investment income 2,863
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investment securities
sold 26,331
Change in net unrealized appreciation of
investment securities (50,773)
------------
Net loss on investments (24,442)
------------
Net decrease in net assets resulting from
operations $ (21,579)
------------
</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) 1998 1997
-----------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 2,863 $ 2,214
Net realized gain on investments 26,331 11,478
Change in net unrealized
appreciation of investments (50,773) 44,043
-----------------------------
Net increase (decrease) in net
assets resulting from operations (21,579) 57,735
-----------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 71,633 57,455
Reductions (23,485) (17,394)
-----------------------------
Net increase in net assets resulting
from transactions
in investors' beneficial interests 48,148 40,061
-----------------------------
NET INCREASE IN NET ASSETS 26,569 97,796
NET ASSETS:
Beginning of year 256,281 158,485
-----------------------------
End of year $ 282,850 $ 256,281
-----------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-16
<PAGE>
NOTES TO FINANCIAL STATEMENTS
August 31, 1998
- ----------------------------------------------------------------------
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
("N&B 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, including accretion of original issue discount,
where applicable, and accretion of discount on short-term investments, is
recorded on the accrual basis. Realized gains and losses from securities
transactions 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. 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, 1998, the unamortized balance of
such expenses amounted to $3,583.
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: 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.
Prior to June 1, 1998, the Portfolio made securities loans to
Neuberger&Berman, LLC ("Neuberger"), the Portfolio's principal broker and
sub-adviser. These loans were made in accordance with an exemptive order
issued by the Securities and Exchange Commission under the 1940 Act. The
Portfolio received cash as collateral against the lent securities, which was
maintained at not less than 100% of the market value of the lent securities
during the period of the loan. The Portfolio received income earned on the
lent securities and a portion of the income earned on the cash collateral.
During the year ended August 31, 1998, the Portfolio lent securities to
Neuberger. Effective June 1, 1998, the Portfolio entered into a Securities
Lending Agreement with Morgan Stanley & Co. Incorporated ("Morgan"). The
Portfolio receives cash collateral equal to at least 100% of the current
market value of the loaned securities. The Portfolio invests the cash
collateral in the N&B Securities Lending Quality Fund, LLC ("investment
vehicle"), which is managed by State Street Bank and Trust Company pursuant
to guidelines approved by Managers Trust's investment manager. Income earned
on the investment vehicle is paid to Morgan monthly. The Portfolio receives a
fee, payable monthly, negotiated by the Portfolio and Morgan, based on the
number and duration of the lending transactions. At August 31, 1998, the
value of the securities loaned and the value of the collateral were
$2,128,588 and $2,537,784, respectively.
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.
B-18
<PAGE>
NOTE B -- MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES:
The Portfolio retains N&B Management as its investment manager under a
Management Agreement dated as of March 11, 1994. For such investment management
services, the Portfolio pays N&B 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 N&B Management is owned by individuals who are
also principals of Neuberger, a member firm of The New York Stock Exchange and
sub-adviser to the Portfolio. Neuberger is retained by N&B Management to furnish
it with 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 N&B Management.
The Portfolio has an expense offset arrangement in connection with its
custodian contract. In addition, in connection with the Securities Lending
Agreement between the Portfolio and Morgan, Morgan has agreed to reimburse the
Portfolio for transaction costs incurred on security lending transactions
charged by the custodian. The impact of these arrangements, respectively,
reflected in the Statement of Operations under the caption Custodian fees, was a
reduction of $264 and $40.
NOTE C -- SECURITIES TRANSACTIONS:
During the year ended August 31, 1998, there were purchase and sale
transactions (excluding short-term securities) of $183,937,505 and $137,674,368,
respectively.
During the year ended August 31, 1998, brokerage commissions on securities
transactions amounted to $401,601, of which Neuberger received $296,353, and
other brokers received $105,248.
In addition, Neuberger's share of the total interest income earned for the
year ended August 31, 1998, from the collateralization of securities loaned to
or through Neuberger was $10,803.
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,
1998 1997 1996 1995 1994
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(2) .60% .63% .65% -- --
--------------------------------------------------------------
Net Expenses .60% .63% .65% .68% .69%(3)
--------------------------------------------------------------
Net Investment Income .92% 1.08% 1.02% 1.18% 1.33%(3)
--------------------------------------------------------------
Portfolio Turnover Rate 47% 51% 53% 58% 14%
--------------------------------------------------------------
Net Assets, End of Year (in millions) $ 282.9 $ 256.3 $ 158.5 $ 96.7 $ 70.7
--------------------------------------------------------------
</TABLE>
1) The date investment operations commenced.
2) For fiscal periods ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements.
3) Annualized.
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
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Neuberger&Berman Socially
Responsive Portfolio (the "Portfolio"), at August 31, 1998, 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. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Portfolio's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at August 31, 1998 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
October 9, 1998
B-21
<PAGE>
OTHER INFORMATION
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
PricewaterhouseCoopers LLP
One Post Office Square
Boston, MA 02109
OFFICERS AND TRUSTEES
Stanley Egener
CHAIRMAN OF THE BOARD AND TRUSTEE
Lawrence Zicklin
PRESIDENT AND TRUSTEE
Faith Colish
TRUSTEE
Howard A. Mileaf
TRUSTEE
Edward I. O'Brien
TRUSTEE
John T. Patterson, Jr.
C-1
<PAGE>
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
Neuberger&Berman Management Inc. & Neuberger&Berman NYCDC Socially Responsive
Trust are service marks of Neuberger&Berman Management Inc.
- -C- 1998 Neuberger&Berman Management Inc.
C-2
<PAGE>
Neuberger&Berman Management Inc.-Registered Trademark-
605 THIRD AVENUE 2ND FLOOR
NEW YORK, NY 10158-0180
SHAREHOLDER SERVICES
800.877.9700
INSTITUTIONAL SERVICES
800.366.6264
WWW.NBFUNDS.COM
Statistics and projections in this report are derived from sources
deemed to be reliable but cannot be regarded as a representation of
future results of the 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.
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