<PAGE>
NEUBERGER BERMAN
Neuberger Berman
EQUITY TRUST -Registered Trademark-
NYCDC Socially Responsive Trust
ANNUAL REPORT
August 31, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
THE FUND
CHAIRMAN'S LETTER A-4
PORTFOLIO COMMENTARY A-5
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 PORTFOLIOS
SCHEDULE OF INVESTMENTS C-1
TOP TEN EQUITY
HOLDINGS
FINANCIAL STATEMENTS C-4
FINANCIAL HIGHLIGHTS C-10
REPORT OF INDEPENDENT
ACCOUNTANTS C-11
DIRECTORY D-1
OFFICERS AND TRUSTEES D-2
</TABLE>
The "Neuberger Berman" name and logo are service marks of Neuberger Berman, LLC.
"Neuberger Berman Management Inc." and the fund name in this report are either
service marks or registered trademarks of Neuberger Berman Management Inc.
- -C-1999 Neuberger Berman Management Inc.
A-3
<PAGE>
CHAIRMAN'S LETTER October 1, 1999
Dear Fellow Shareholder,
In the summer of 1998, the sky appeared to be falling. Southeast Asian
economies had collapsed, Russia was imploding, and Latin America seemed to be on
the brink of financial disaster. Many investors feared that even the mighty U.S.
economy would falter, and they began dumping stocks indiscriminately.
At Neuberger Berman, we urged patience. We worked hard to assess the potential
consequences of overseas economic troubles on our own economy. We came to the
conclusion that things were not as bad as they seemed and opined that the drop
in the U.S. stocks should be viewed as a long-term buying opportunity. In my
letter in last year's Annual Report, I asked the rhetorical question, "Is this
the time to abandon equities?" and answered, "We think not." This turned out to
be good advice, as stocks rallied through most of fiscal 1999.
Where do we go from here? Over the near term, we can't predict. A positive
outlook for the U.S. and global economy must be tempered by concern that
domestic equities valuations are quite high by historical yardsticks. We believe
the only predictable thing in the financial markets is that vigorous investment
research and disciplined portfolio management can enhance long-term returns.
Sadly, this will be my last letter to you as Chairman of Neuberger Berman
Equity Funds. After thirty-nine years in the investment business, the last
twenty-five at Neuberger Berman, I am retiring. Although I will continue to
serve as a consultant to the company, I will miss the daily contact with all my
colleagues at Neuberger Berman and the opportunity to share my thoughts with
you. I leave with pride and confidence, however, that the Neuberger Berman
legacy lives on. Your assets remain in the hands of wise and experienced
managers.
Sincerely,
/s/ Stanley Egener
Stanley Egener
Chairman of the Board
Neuberger Berman Equity Trust
A-4
<PAGE>
PORTFOLIO COMMENTARY
Neuberger Berman
- ----------------------------------------------------------------------
NYCDC Socially Responsive Trust
For the six and twelve month periods concluding August 31, 1999, the NYCDC
Socially Responsive Trust gained 10.13% and 37.76%, respectively, compared to
the Standard & Poor's 500 Index's 7.29% and 39.82% returns 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, 1999).*
Value reasserted itself in the second half of fiscal 1999, boosting the
performance of our portfolio to levels competitive with the growth-stock
dominated S&P 500. Beginning in April, value-oriented sectors including basic
materials, energy, capital goods, and industrial and consumer cyclicals rallied
strongly from severely depressed levels. Concurrently, high priced growth
sectors such as branded consumer goods, pharmaceutical companies, and some of
the technology high flyers began to fade.
Is this the beginning of a true value renaissance or only a temporary change
in the growth stock dominance of recent years? Investor behavior is impossible
to predict. However, based on historical valuation benchmarks, value stocks are
still fundamentally cheap and growth stocks are still rather richly priced.
Perhaps more importantly, if the U.S. economy keeps growing at a decent pace and
the rest of the world regains some momentum, we expect economically sensitive
companies in the value camp to continue to enjoy very favorable earnings
comparisons. We are not suggesting growth stock investing won't continue to be
rewarding. However, we do anticipate a broader market in which value stocks will
provide much more competitive returns.
We enjoyed generous returns from our technology holdings in fiscal 1999. This
was not accomplished by owning market darlings with high price-to-earnings
ratios, but rather from our positions in more reasonably priced technology
stocks including Unisys, Intel, and Hewlett Packard. Our success in these stocks
reaffirms our belief that we can generate attractive returns in the technology
sector without sacrificing our value principles. Biotechnology investments
Biogen and Alza also performed quite well.
A-5
<PAGE>
- ----------------------------------------------------------------------
NYCDC Socially Responsive Trust (Cont'd)
Our energy holdings, most notably, oil service company Cooper Cameron,
contributed to portfolio returns, as energy prices rebounded from 1998 lows.
Tyco International, a diversified industrial company with a terrific acquisition
record, and consumer electronics retailer Circuit City made our Top Ten
performance list this year (based on contribution to overall return).
Our two primary sector disappointments were financial stocks and
utilities -- both interest rate sensitive groups that sold off as interest rates
trended higher this summer. If rates continue to rise, financial stocks may come
under more selling pressure. However, if interest rates stabilize around current
levels, we expect financial company earnings to remain relatively strong. With
high quality financial companies now trading at just about half the S&P 500's
price-to-earnings ratio, we view them as outstanding long term investment
bargains. We are less optimistic regarding the prospects for utilities and
consequently, have eliminated them from the portfolio.
As is our custom, we will highlight two socially responsive portfolio
companies we believe have excellent investment potential: Valassis
Communications and Hewlett Packard. Please be advised these are examples of our
investment philosophy at work, not recommendations and we may sell these stocks
without notice if circumstances change. Valassis Communications produces the
coupons accompanying your Sunday newspaper. It's a niche business with only one
major competitor (NewsCorp). We bought Valassis when it was trading at about 12
times earnings and even after an excellent year, it is still trading at 18.5
times next year's estimates -- a discount to the S&P 500's multiple. Named by
Fortune Magazine as one of the 100 best places to work, Valassis' commitment to
the well being of its employees is clearly demonstrated by the fact the company
highlights its progressive workplace policies in its standard presentations to
Wall Street analysts. Good company, good investment value, good corporate
citizen.
A-6
<PAGE>
- ----------------------------------------------------------------------
NYCDC Socially Responsive Trust (Cont'd)
Via an upcoming spin-off, Hewlett Packard is separating its measurement
instrument division from its computer and imaging businesses. We believe this
will help investors focus on HP's strengths, most notably its computer printer
business, which boasts a dominant market share. We believe when the spin-off is
completed, investors will value the sum of the parts higher than the current
price of the whole. Despite excellent performance this year, Hewlett Packard
still trades at a modest price-to-earnings discount to the market. In addition,
HP is a socially responsive role model for corporate America. It is one of the
largest companies led by a woman CEO. In addition to the progressive work-place
policies that earned HP's designation as one of the 100 Best Places to Work, the
company also gets good corporate citizenship grades for its environmentally
friendly product recycling programs.
In closing, although we are stock-specific investors, we also monitor overall
portfolio characteristics to ensure that we are well within the bounds of our
value discipline. The analysis at the close of this reporting period reveals
that the portfolio's price-to-earnings, price-to-cash flow, and price-to-book
value ratios are all below the S&P 500's.
Sincerely,
/s/ Janet W. 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. 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.
Past performance is no guarantee of future results.
The investments for the Portfolio are managed by the same portfolio manager(s)
who manage one or more other mutual funds that have similar names, investment
objectives and investment styles as the Portfolio. You should be aware that the
Portfolio is likely to differ from the other mutual funds in size, cash flow
pattern and tax matters. Accordingly, the holdings and performance of the
Portfolio can be expected to vary from those of the other mutual funds.
A-7
<PAGE>
COMPARISON OF A $10,000 INVESTMENT
Neuberger Berman August 31, 1999
- ----------------------------------------------------------------------
NYCDC Socially Responsive Trust
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C>
Average Annual Total Return(1)
NYCDC Socially Responsive Trust S&P 500(2)
1 Year +37.76% +39.82%
5 year +20.13% +25.11%
Life of Fund +18.71% +23.49%
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
1999 $25,579 $31,706
</TABLE>
The inception date of Neuberger Berman NYCDC Socially Responsive Trust is
3/14/94.
Neuberger Berman Management Inc. ("Management") 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 Management and
include reinvestment of all dividends and capital gain distributions. The
Portfolio may invest 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>
August
31,
(000'S OMITTED EXCEPT PER SHARE AMOUNT) 1999
---------
<S> <C>
ASSETS
Investment in Portfolio, at value (Note A) $253,115
Receivable from administrator -- net (Note B) 6
---------
253,121
---------
LIABILITIES
Payable for Trust shares redeemed 105
Accrued expenses 41
---------
146
---------
NET ASSETS at value $252,975
---------
NET ASSETS consist of:
Par value $ 13
Paid-in capital in excess of par value 165,031
Accumulated undistributed net investment income 1,401
Accumulated net realized gains on investment 17,071
Net unrealized appreciation in value of investment 69,459
---------
NET ASSETS at value $252,975
---------
SHARES OUTSTANDING
($.001 par value; unlimited shares authorized) 12,783
---------
NET ASSET VALUE, offering and redemption price per share $19.79
---------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-2
<PAGE>
STATEMENT OF OPERATIONS
Neuberger Berman
- ----------------------------------------------------------------------
NYCDC Socially Responsive Trust
<TABLE>
For the
Year
Ended
August
31,
(000'S OMITTED) 1999
---------
<S> <C>
INVESTMENT INCOME
Investment income from Portfolio (Note A) $ 2,864
---------
Expenses:
Administration fee (Note B) 117
Shareholder reports 44
Legal fees 20
Shareholder servicing agent fees 17
Custodian fees 10
Auditing fees 8
Trustees' fees and expenses 6
Amortization of deferred organization and initial
offering expenses (Note A) 5
Registration and filing fees 4
Miscellaneous 4
Expenses from Portfolio (Notes A & B) 1,388
---------
Total expenses 1,623
Expenses reimbursed by administrator and reduced by
custodian fee expense offset arrangement (Note B) (221)
---------
Total net expenses 1,402
---------
Net investment income 1,462
---------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS FROM PORTFOLIO
(NOTE A)
Net realized gain on investment securities 17,268
Change in net unrealized appreciation of investment
securities 50,845
---------
Net gain on investments from Portfolio (Note A) 68,113
---------
Net increase in net assets resulting from operations $69,575
---------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-3
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
Neuberger Berman
- ----------------------------------------------------------------------
NYCDC Socially Responsive Trust
<TABLE>
For the
Year
Ended
August 31,
(000'S OMITTED) 1999 1998
----------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 1,462 $ 1,999
Net realized gain on investments from Portfolio
(Note A) 17,268 21,314
Change in net unrealized appreciation of investments
from Portfolio (Note A) 50,845 (34,977)
----------------------
Net increase (decrease) in net assets resulting from
operations 69,575 (11,664)
----------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (1,994) (1,260)
Net realized gain on investments (18,879) (9,382)
----------------------
Total distributions to shareholders (20,873) (10,642)
----------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 40,654 48,075
Proceeds from reinvestment of dividends and
distributions 20,873 10,642
Payments for shares redeemed (43,924) (38,604)
----------------------
Net increase from Trust share transactions 17,603 20,113
----------------------
NET INCREASE (DECREASE) IN NET ASSETS 66,305 (2,193)
NET ASSETS:
Beginning of year 186,670 188,863
----------------------
End of year $252,975 $186,670
----------------------
Accumulated undistributed net investment income at end
of year $ 1,401 $ 1,909
----------------------
NUMBER OF TRUST SHARES:
Sold 2,175 2,554
Issued on reinvestment of dividends and distributions 1,147 619
Redeemed (2,377) (2,052)
----------------------
Net increase in shares outstanding 945 1,121
----------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-4
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Neuberger Berman August 31, 1999
- ----------------------------------------------------------------------
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 (63.74% at August 31, 1999). 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 as indicated in
the notes following the Portfolio's Schedule of Investments.
3) TAXES: The Fund is treated as a separate entity for U.S. 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 U.S.
Federal income tax purposes as capital loss carryforwards) sufficient to
relieve it from all, or substantially all, U.S. Federal income taxes.
Accordingly, the Fund paid no U.S. Federal income taxes and no provision for
U.S. Federal income taxes was required.
4) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: 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.
5) ORGANIZATION EXPENSES: Organization expenses incurred by the Fund were fully
amortized as of August 31, 1999.
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 Inc. ("Management") as its
administrator under an Administration Agreement ("Agreement"). 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 plus 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, 1999, such excess
expenses amounted to $220,269.
As of August 31, 1999, all of the capital stock of Management is owned by
individuals who are also principals of Neuberger Berman, LLC ("Neuberger"), a
B-6
<PAGE>
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 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. In addition, in connection with the Securities Lending
Agreement between the Portfolio and Morgan Stanley & Co. Incorporated
("Morgan"), Morgan had agreed to reimburse the Portfolio for transaction costs
incurred on security lending transactions charged by the custodian through
May 31, 1999. The impact of these arrangements, respectively, reflected in the
Statement of Operations under the caption Expenses from Portfolio, was a
reduction of $129 and $290.
NOTE C -- INVESTMENT TRANSACTIONS:
During the year ended August 31, 1999, additions and reductions in the Fund's
investment in the Portfolio amounted to $24,690,000 and $27,817,000,
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>
For the Year Ended August 31,
1999 1998 1997 1996 1995
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $15.77 $17.62 $14.42 $12.27 $10.43
--------------------------------------------------------------------
Income From Investment Operations
Net Investment Income .12 .17 .17 .14 .13
Net Gains or Losses on Securities (both realized and
unrealized) 5.68 (1.06) 4.38 2.44 1.82
--------------------------------------------------------------------
Total From Investment Operations 5.80 (.89) 4.55 2.58 1.95
--------------------------------------------------------------------
Less Distributions
Dividends (from net investment income) (.17) (.16) (.16) (.12) (.11)
Distributions (from net capital gains) (1.61) (.80) (1.19) (.31) --
--------------------------------------------------------------------
Total Distributions (1.78) (.96) (1.35) (.43) (.11)
--------------------------------------------------------------------
Net Asset Value, End of Year $19.79 $15.77 $17.62 $14.42 $12.27
--------------------------------------------------------------------
Total Return(2) +37.76% -5.49% +33.20% +21.27% +18.95%
--------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $253.0 $186.7 $188.9 $125.6 $ 88.5
--------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets(3) .60% .60% .60% .60% --
--------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets(4) .60% .60% .60% .60% .60%
--------------------------------------------------------------------
Ratio of Net Investment Income to Average Net Assets .63% .92% 1.11% 1.06% 1.26%
--------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-8
<PAGE>
NOTES TO FINANCIAL HIGHLIGHTS
Neuberger Berman August 31, 1999
- ----------------------------------------------------------------------
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) 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) 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.
4) After reimbursement of expenses by Management as described in Note B of Notes
to Financial Statements. Had Management not undertaken such action the
annualized ratios of net expenses to average daily net assets would have
been:
<TABLE>
For the Year Ended August 31,
1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Expenses .69% .70% .73% .80% .85%
----------------------------------------------------
</TABLE>
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,
1999, and the results of its operations, the changes in its net assets, and the
financial highlights for each of the periods indicated, 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 8, 1999
B-10
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman August 31, 1999
- --------------------------------------------------------------------------------
Socially Responsive Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Intel Corp. 3.3%
2. Biogen, Inc. 3.3%
3. Unisys Corp. 3.2%
4. Hewlett-Packard 3.2%
5. Citigroup Inc. 3.1%
6. Tyco International 3.1%
7. MCI WorldCom 2.9%
8. ALZA Corp. 2.8%
9. True North Communications 2.7%
10. Circuit City Stores 2.7%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
COMMON STOCKS (93.9%)
ADVERTISING (2.7%)
330,000 True North Communications $ 10,869
---------
AUTOMOTIVE (1.6%)
137,200 Borg-Warner Automotive 6,500
---------
CHEMICALS (1.3%)
100,000 Minerals Technologies 4,950
---------
CONSUMER GOODS & SERVICES (2.2%)
150,000 Kimberly-Clark 8,541
---------
DIVERSIFIED (3.1%)
120,000 Tyco International 12,157
---------
ENERGY (2.3%)
100,000 Chevron Corp. 9,225
---------
ENTERTAINMENT (2.0%)
350,000 Fox Entertainment Group 8,072(2)
---------
FINANCIAL SERVICES (9.8%)
150,000 Ambac Financial Group 7,922
276,750 Citigroup Inc. 12,298
275,000 Conseco, Inc. 6,600
200,000 Dun & Bradstreet 5,238
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- ---------
<C> <S> <C>
100,000 Fannie Mae $ 6,212
9,300 Goldman Sachs 556
---------
38,826
---------
FURNISHINGS (2.2%)
400,000 Leggett & Platt 8,850
---------
HEALTH CARE (15.8%)
220,000 ALZA Corp. 11,082(2)
170,000 Biogen, Inc. 13,047(2)
260,000 Invacare Corp. 4,859
90,000 Johnson & Johnson 9,203
220,000 McKesson HBOC 6,848
135,000 Warner-Lambert 8,944
118,000 Wellpoint Health Networks 8,599(2)
---------
62,582
---------
HOSPITAL SUPPLIES (2.4%)
200,000 C. R. Bard 9,325
---------
INSURANCE (3.7%)
380,000 ESG Re 5,130
210,000 ReliaStar Financial 9,463
---------
14,593
---------
OIL & GAS (4.3%)
220,000 Anadarko Petroleum 7,480
230,000 Cooper Cameron 9,574(2)
---------
17,054
---------
PAPER & FOREST PRODUCTS (2.2%)
238,000 Mead Corp. 8,880
---------
PUBLISHING & BROADCASTING (2.5%)
225,000 Valassis Communications 9,844
---------
RECYCLING (0.7%)
187,500 IMCO Recycling 2,941
---------
RETAIL GROCERY (1.7%)
140,000 Albertson's Inc. 6,711
---------
RETAIL STORES (6.1%)
250,000 Circuit City Stores 10,750
120,000 Dayton Hudson 6,960
145,000 Federated Department Stores 6,670(2)
---------
24,380
---------
RETAILING (2.0%)
179,000 Wal-Mart Stores 7,932
---------
</TABLE>
C-1
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman August 31, 1999
- --------------------------------------------------------------------------------
Socially Responsive Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- ---------
<C> <S> <C>
TECHNOLOGY (17.9%)
374,000 Compaq Computer $ 8,672
150,000 Electronic Data Systems 8,419
120,000 Hewlett-Packard 12,645
160,000 Intel Corp. 13,150
400,000 Quantum Corp. - DLT & Storage
Systems 7,325(2)
200,000 Quantum Corp. - Hard Disk
Drive 1,425(2)
300,000 Unisys Corp. 12,900(2)
140,000 Xerox Corp. 6,685
---------
71,221
---------
TELECOMMUNICATIONS (3.7%)
150,000 MCI WorldCom 11,363(2)
503,200 Metromedia International Group 3,176
---------
14,539
---------
TRANSPORTATION (2.1%)
140,000 AMR Corp. 8,208(2)
---------
WASTE MANAGEMENT (1.6%)
350,000 Azurix Corp. 6,497(2)
---------
TOTAL COMMON STOCKS (COST
$274,738) 372,697
---------
<CAPTION>
Principal
Amount
- ---------
<C> <S> <C>
U.S. GOVERNMENT AGENCY SECURITIES (2.3%)
$4,000,000 Fannie Mae, Discount Notes,
5.15%, due 9/3/99 3,999
5,000,000 Freddie Mac, Discount Notes,
5.18% & 5.23%, due 9/9/99 &
9/10/99 4,994
---------
TOTAL U.S. GOVERNMENT AGENCY
SECURITIES (COST $8,993) 8,993(3)
---------
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- --------- ---------
<C> <S> <C>
REPURCHASE AGREEMENTS (2.1%)
$8,370,000 State Street Bank and Trust
Co. Repurchase Agreement,
5.25%, due 9/1/99, dated
8/31/99, Maturity Value
$8,371,221, Collateralized by
$8,495,000 U.S. Treasury
Notes, 5.625%, due 5/15/01
(Collateral Value $8,621,966)
(COST $8,370) $ 8,370(3)
---------
SHORT-TERM INVESTMENTS (0.6%)
100,000 Community Capital Bank, 4.05%,
due 9/29/99 100
100,000 Self Help Credit Union, 4.71%,
due 11/24/99 100
2,340,353 N&B Securities Lending Quality
Fund, LLC 2,340
---------
TOTAL SHORT-TERM INVESTMENTS
(COST $2,540) 2,540(3)
---------
TOTAL INVESTMENTS (98.9%)
(COST $294,641) 392,600(4)
Cash, receivables and other
assets, less liabilities
(1.1%) 4,513
---------
TOTAL NET ASSETS (100.0%) $ 397,113
---------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-2
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS
Neuberger Berman August 31, 1999
- ----------------------------------------------------------------------
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 U.S. Federal income tax purposes was
$294,682,000. At August 31, 1999, gross unrealized appreciation of
investments was $115,095,000 and gross unrealized depreciation of investments
was $17,177,000, resulting in net unrealized appreciation of $97,918,000,
based on cost for U.S. Federal income tax purposes.
SEE NOTES TO FINANCIAL STATEMENTS
C-3
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
Neuberger Berman
- ----------------------------------------------------------------------
Socially Responsive Portfolio
<TABLE>
August
31,
(000'S OMITTED) 1999
---------
<S> <C>
ASSETS
Investments in securities, at market value*
(Note A) -- see Schedule of Investments $392,600
Receivable for securities sold 6,779
Dividends and interest receivable 758
Prepaid expenses and other assets 10
---------
400,147
---------
LIABILITIES
Payable for collateral on securities loaned (Note A) 2,340
Accrued expenses 509
Payable to investment manager (Note B) 185
---------
3,034
---------
NET ASSETS Applicable to Investors' Beneficial Interests $397,113
---------
NET ASSETS consist of:
Paid-in capital $299,154
Net unrealized appreciation in value of investment
securities 97,959
---------
NET ASSETS $397,113
---------
*Cost of investments $294,641
---------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-4
<PAGE>
STATEMENT OF OPERATIONS
Neuberger Berman
- ----------------------------------------------------------------------
Socially Responsive Portfolio
<TABLE>
For the
Year Ended
August 31,
(000'S OMITTED) 1999
----------
<S> <C>
INVESTMENT INCOME
Income:
Dividend income $ 3,639
Interest income 775
----------
Total income 4,414
----------
Expenses:
Investment management fee (Note B) 1,956
Custodian fees (Note B) 109
Auditing fees 34
Legal fees 18
Accounting fees 10
Trustees' fees and expenses 9
Insurance expense 4
Amortization of deferred organization and initial
offering expenses (Note A) 4
----------
Total expenses 2,144
Expenses reduced by custodian fee expense offset
arrangement (Note B) (1)
----------
Total net expenses 2,143
----------
Net investment income 2,271
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investment securities sold 22,484
Change in net unrealized appreciation of investment
securities 81,446
----------
Net gain on investments 103,930
----------
Net increase in net assets resulting from operations $106,201
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-5
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
Neuberger Berman
- ----------------------------------------------------------------------
Socially Responsive Portfolio
<TABLE>
For the
Year Ended
August 31,
(000'S OMITTED) 1999 1998
----------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 2,271 $ 2,863
Net realized gain on investments 22,484 26,331
Change in net unrealized appreciation of investments 81,446 (50,773)
----------------------
Net increase (decrease) in net assets resulting from
operations 106,201 (21,579)
----------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS:
Additions 53,231 71,633
Reductions (45,169) (23,485)
----------------------
Net increase in net assets resulting from transactions
in investors' beneficial interests 8,062 48,148
----------------------
NET INCREASE IN NET ASSETS 114,263 26,569
NET ASSETS:
Beginning of year 282,850 256,281
----------------------
End of year $397,113 $282,850
----------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-6
<PAGE>
NOTES TO FINANCIAL STATEMENTS
August 31, 1999
- ----------------------------------------------------------------------
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. Other regulated investment
companies sponsored by Neuberger Berman Management Inc. ("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) 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 U.S. Federal income tax purposes and is therefore not subject to U.S.
Federal income tax.
5) ORGANIZATION EXPENSES: Organization expenses incurred by the Portfolio were
fully amortized as of August 31, 1999.
6) EXPENSE ALLOCATION: The Portfolio bears all costs of its operations. Expenses
incurred by Managers Trust with respect to any two or more portfolios are
allocated in proportion to the net assets of such portfolios, except where a
more appropriate allocation of expenses to each portfolio can otherwise be
made fairly. Expenses directly attributable to a portfolio are charged to
that portfolio.
C-7
<PAGE>
7) 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. 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, 1999, the value of the securities loaned and the value of the
collateral were $2,294,000 and $2,340,000, respectively.
8) 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. 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.
As of August 31, 1999, all of the capital stock of Management is owned by
individuals who are also principals of Neuberger Berman, LLC ("Neuberger"), a
member firm of The New York Stock Exchange and sub-adviser to the Portfolio.
C-8
<PAGE>
Neuberger is retained by 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 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 had agreed to reimburse the
Portfolio for transaction costs incurred on security lending transactions
charged by the custodian through May 31, 1999. The impact of these arrangements,
respectively, reflected in the Statement of Operations under the caption
Custodian fees, was a reduction of $200 and $448.
NOTE C -- SECURITIES TRANSACTIONS:
During the year ended August 31, 1999, there were purchase and sale
transactions (excluding short-term securities) of $186,150,000 and $182,832,000,
respectively.
During the year ended August 31, 1999, brokerage commissions on securities
transactions amounted to $485,000, of which Neuberger received $330,000, and
other brokers received $155,000.
C-9
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Socially Responsive Portfolio
<TABLE>
For the Year Ended August 31,
1999 1998 1997 1996 1995
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(1) .59% .60% .63% .65% --
--------------------------------------------------------------------
Net Expenses .59% .60% .63% .65% .68%
--------------------------------------------------------------------
Net Investment Income .63% .92% 1.08% 1.02% 1.18%
--------------------------------------------------------------------
Portfolio Turnover Rate 53% 47% 51% 53% 58%
--------------------------------------------------------------------
Net Assets, End of Year (in millions) $397.1 $282.9 $256.3 $158.5 $96.7
--------------------------------------------------------------------
</TABLE>
1) For fiscal periods ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements.
C-10
<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 of Equity Managers Trust"), at August 31,
1999, and the results of its operations, the changes in its net assets, and the
financial highlights for each of the periods indicated, in conformity with
general accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Portfolio of Equity Managers 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, and evaluating the overall financial statement presentation.
We believe that our audits, which included the confirmation of securities at
August 31, 1999 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
October 8, 1999
C-11
<PAGE>
DIRECTORY
INVESTMENT MANAGER, ADMINISTRATOR
AND DISTRIBUTOR
Neuberger Berman Management Inc.
605 Third Avenue 2nd Floor
New York, NY 10158-0180
800-877-9700 or 212-476-8800
Institutional Services 800-366-6264
SUB-ADVISER
Neuberger Berman, LLC
605 Third Avenue
New York, NY 10158-3698
CUSTODIAN AND SHAREHOLDER
SERVICING AGENT
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
ADDRESS CORRESPONDENCE TO:
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
160 Federal Street
Boston, MA 02110
- -C- 1999 Neuberger Berman Management Inc.
D-1
<PAGE>
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.
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
D-2
<PAGE>
Statistics and projections in this report
are derived from sources deemed to be reliable
but cannot be regarded as a representation of
future results of the 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.
NEUBERGER BERMAN
NEUBERGER BERMAN MANAGEMENT INC.
605 Third Avenue 2nd Floor
New York, NY 10158-0180
SHAREHOLDER SERVICES
800.877.9700
INSTITUTIONAL SERVICES
800.366.6264
www.nbfunds.com
NMAAR9620899
<PAGE>
<PAGE>
[LOGO]
Neuberger Berman
Equity Trust-Registered Trademark-
Annual Report
August 31, 1999
Focus Trust
Genesis Trust
Guardian Trust
International Trust
Manhattan Trust
Millennium Trust
Partners Trust
Regency Trust
Equity Assets -Registered Trademark-
Socially Responsive Trust
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
THE FUNDS
CHAIRMAN'S LETTER A-4
PORTFOLIO COMMENTARY
Focus Trust A-5
Genesis Trust A-8
Guardian Trust A-11
International Trust A-14
Manhattan Trust A-17
Millennium Trust A-20
Partners Trust A-23
Regency Trust A-26
Socially Responsive Trust A-29
GROWTH OF A DOLLAR CHARTS
COMPARISON OF A
$10,000 INVESTMENT
Focus Trust B-1
Genesis Trust B-3
Guardian Trust B-5
International Trust B-7
Manhattan Trust B-8
Millennium Trust B-10
Partners Trust B-12
Regency Trust B-14
Socially Responsive Trust B-16
FINANCIAL STATEMENTS B-18
FINANCIAL HIGHLIGHTS
PER SHARE DATA
Focus Trust B-31
Genesis Trust B-32
Guardian Trust B-33
International Trust B-34
Manhattan Trust B-35
Millennium Trust B-36
Partners Trust B-37
Regency Trust B-38
Socially Responsive Trust B-39
REPORT OF INDEPENDENT
ACCOUNTANTS/AUDITORS B-42
THE PORTFOLIOS
SCHEDULE OF INVESTMENTS
TOP TEN EQUITY
HOLDINGS
Focus Portfolio C-1
Genesis Portfolio C-3
Guardian Portfolio C-7
International Portfolio C-10
Manhattan Portfolio C-14
Millennium Portfolio C-17
Partners Portfolio C-20
Regency Portfolio C-23
Socially Responsive
Portfolio C-26
FINANCIAL STATEMENTS C-30
FINANCIAL HIGHLIGHTS
Focus Portfolio C-48
Genesis Portfolio C-49
Guardian Portfolio C-50
International Portfolio C-51
Manhattan Portfolio C-52
Millennium Portfolio C-53
Partners Portfolio C-54
Regency Portfolio C-55
Socially Responsive
Portfolio C-56
REPORT OF INDEPENDENT
ACCOUNTANTS/AUDITORS C-57
DIRECTORY D-1
OFFICERS AND TRUSTEES D-2
</TABLE>
The "Neuberger Berman" name and logo are service marks of Neuberger Berman, LLC.
"Neuberger Berman Management Inc." and the individual fund names in this report
are either service marks or registered trademarks of Neuberger Berman Management
Inc. -C-1999 Neuberger Berman Management Inc.
A-3
<PAGE>
CHAIRMAN'S LETTER October 1, 1999
Dear Fellow Shareholder,
In the summer of 1998, the sky appeared to be falling. Southeast Asian
economies had collapsed, Russia was imploding, and Latin America seemed to be on
the brink of financial disaster. Many investors feared that even the mighty U.S.
economy would falter, and they began dumping stocks indiscriminately.
At Neuberger Berman, we urged patience. We worked hard to assess the potential
consequences of overseas economic troubles on our own economy. We came to the
conclusion that things were not as bad as they seemed and opined that the drop
in the U.S. stocks should be viewed as a long-term buying opportunity. In my
letter in last year's Annual Report, I asked the rhetorical question, "Is this
the time to abandon equities?" and answered, "We think not." This turned out to
be good advice, as stocks rallied through most of fiscal 1999.
Where do we go from here? Over the near term, we can't predict. A positive
outlook for the U.S. and global economy must be tempered by concern that
domestic equities valuations are quite high by historical yardsticks. We believe
the only predictable thing in the financial markets is that vigorous investment
research and disciplined portfolio management can enhance long-term returns.
Sadly, this will be my last letter to you as Chairman of Neuberger Berman
Equity Funds. After thirty-nine years in the investment business, the last
twenty-five at Neuberger Berman, I am retiring. Although I will continue to
serve as a consultant to the company, I will miss the daily contact with all my
colleagues at Neuberger Berman and the opportunity to share my thoughts with
you. I leave with pride and confidence, however, that the Neuberger Berman
legacy lives on. Your assets remain in the hands of wise and experienced
managers.
Sincerely,
/s/ Stanley Egener
Stanley Egener
Chairman of the Board
Neuberger Berman Equity Trust
Neuberger Berman Equity Assets
A-4
<PAGE>
PORTFOLIO COMMENTARY
Neuberger Berman
- ----------------------------------------------------------------------
Focus Trust
For the six and twelve month periods ending August 31, 1999, the total return
for the Focus Trust was 1.29% and 38.07%. During the same period of time the
Russell 1000 Value Index was up 6.16% and 30.08%. The S&P 500 advanced 7.29% and
39.82% over the corresponding six and twelve month periods. These results are
gratifying because we achieved them during a 12 month period that tested our
discipline, our resolve and at times our patience. Ultimately, adhering to our
long-held value discipline proved rewarding. (See page B-1 for comparison of
$10,000 investment and average annual total returns as of August 31, 1999).*
It is important to remember that, as its name implies, the Focus portfolio is
by design a concentrated portfolio investing at least 90% of net assets in no
more than six sectors. Since we believe that truly attractive valuations are
unlikely to be evenly distributed throughout the entire market at any given
point in time, this focused approach enables us to invest in those few areas
where we believe real value resides. We usually do this by investing in
industries that we think are temporarily out of favor, and we select what we
believe are the best companies in those industries. We believe this creates a
meaningful distinction between the Focus portfolio and other value portfolios:
We seek higher quality companies and we look for equities that have historically
had a significantly higher earnings growth rate than those found in the average
value fund.
For example, two years ago difficulties in Asia led to the semiconductor and
semiconductor equipment industries falling into extreme disfavor. We initiated
or added to our positions in what we consider the best companies in those areas:
Applied Materials, KLA-Tencor, Novellus and Texas Instruments. Their substantial
appreciation helped the fund considerably this year. Their valuations have
recently reached such high levels that we eliminated the first three positions
from our portfolio, and pared back Texas Instruments.
Similarly, a year ago the global financial panic sparked by financial problems
in Russia led to an indiscriminate sell-off of all financial stocks.
A-5
<PAGE>
- ----------------------------------------------------------------------
Focus Trust (Cont'd)
We took advantage of this by building up substantial positions in what we
consider the best investment bank (Morgan Stanley Dean Witter); the best money
center bank (Chase Manhattan); the best credit card company (Capital One
Financial); and the best financial services company (CITIGROUP). All of these
contributed noticeably to the fund's performance this year, and all remain
important positions in the fund.
It seems that investors' time horizons have grown increasingly short term,
which in turn has led to higher levels of market volatility. While this can be
disconcerting, it also provides opportunities. Earlier this year, for example,
the stock market became pre-occupied, if not obsessed, with the potential impact
of modifying the nation's computers to handle the transition from 1999 to 2000.
Many investors feared this so-called Y2K problem would require so much spending
that a virtual freeze in software spending would occur. As a result, companies
that rarely show up as real values began coming across our radar screens. While
we recognized that some disruption in typical software spending patterns could
occur, many Y2K issues would be addressed shortly after January 1, 2000. Since
we were willing to endure the discomfort of some short-term volatility, we made
some investments in Oracle, Platinum Technology, BMC Software and Compuware that
have performed well.
As I mentioned at the outset, this has been a year that has tested our
discipline and patience. Our basic discipline, buying the best company in an out
of favor industry at a discount valuation with above average earnings growth,
led both to the successful investments mentioned above, and to two of our most
frustrating investments: Countrywide Credit and Furniture Brands.
Countrywide Credit is the nation's leading mortgage company. While the
company's earnings growth rate has been steady and superior over the last five
years, the stock has significantly underperformed the market over the last year
to the point at which its price-to-earnings ratio is only 25% of the S&P 500's.
The conventional wisdom to explain this unusually low valuation is that the
company's earnings will be pressured by the recent rise in interest rates. We
think this will not be
A-6
<PAGE>
- ----------------------------------------------------------------------
Focus Trust (Cont'd)
the case: Countrywide's earnings have increased in each of the last four
quarters, despite a 100 basis point rise in interest rates. We believe our
patience will be rewarded; in the meantime it is being tested.
Furniture Brands is the leading furniture manufacturer in the country. Its
earnings growth over the past five years has averaged 34% a year, far superior
to the overall market. Similar to Countrywide, Furniture Brands' stock also sold
at 25% of the market multiple and its earnings record has been virtually
ignored. The management of Furniture Brands is doing all that an investor could
ask, and we feel that in time the facts of superior earnings growth will, as is
usually the case, overwhelm the market's negative bias.
Looking forward, we are bothered by how narrow the market has become. A
relatively small number of stocks, selling at very high valuations, are
performing far better than the majority of stocks. Still, the price-to-earnings
ratios of the Focus portfolio's holdings seem very attractive given the
prospects of the companies they represent. Adhering to our value discipline
required fortitude last year, but our patience was rewarded. We think the
rewards will continue to accumulate in the future.
Sincerely,
/s/ Kent Simons
Kent Simons
PORTFOLIO MANAGER
*For index definitions, refer to page A-32, titled "Glossary of Indices." The
Portfolio invests in many securities not included in the indices listed.
The composition, industries and holdings of the Portfolio are subject to
change.
While the value-oriented approach is intended to limit risks, the Portfolio --
with its concentration in sectors -- may be more greatly affected by any single
economic, political or regulatory development than a more diversified mutual
fund.
Past performance is no guarantee of future results.
A-7
<PAGE>
PORTFOLIO COMMENTARY
Neuberger Berman
- ----------------------------------------------------------------------
Genesis Trust
For the six and twelve month periods concluding August 31, 1999, Genesis Trust
gained 10.95% and 19.15%, respectively, compared to the Russell 2000's 9.91% and
28.36% returns over the same time periods (See page B-3 for comparison of a
$10,000 investment and average annual total returns as of August 31, 1999).*
We are pleased with the fund's solid gains in fiscal 1999 following a very
disappointing fiscal 1998. The fund's 12-month returns relative to its Russell
2000 benchmark, however, continue to reflect the large performance gap between
small-cap growth and small-cap value stocks. Indeed, for the fiscal year, the
Russell 2000 Growth Index gained 43.31% compared to the Russell 2000 Value
Index's 14.08% return.
We don't expect the wide performance gulf between growth and value stocks in
the small-cap arena to continue forever. Small-cap value stocks made up some
ground relative to small-cap growth stocks from April through July 1999 as
investor sentiment, especially in Internet stocks, seemed to turn from greed to
fear. We note that the flood of Internet IPOs (Initial Public Offerings) has
slowed to a trickle and that the majority of 1999's Internet IPOs are now
trading below their initial offering prices. We suspect that once-burned,
twice-shy small-cap investors may continue to rotate away from speculative
Internet stocks and into more reasonably valued small companies with operating
track records and positive cash flow and earnings.
At this juncture, however, the investing public is still shying away from
small-cap value stocks. Corporate acquirers, on the other hand, are bargain
hunting, as evidenced by accelerating takeover activity in this market sector.
More than a dozen of our holdings were taken over during this fiscal year and we
suspect more of our portfolio bargains will become targets in the year ahead. We
are also seeing corporate managements aggressively buying their own deeply
discounted stocks. The number of small-cap company share repurchase programs is
approaching the totals seen following the 1987 market crash. This gives us hope
that the investing public will soon become more enthusiastic.
A-8
<PAGE>
- ----------------------------------------------------------------------
Genesis Trust (Cont'd)
In the Genesis portfolio during fiscal 1999, our energy investments, primarily
small oil services companies, posted impressive gains. They were among the
portfolio's poorest performers last year, but we added to our positions in the
energy sector, believing that as the global economy recovered, oil prices and
oil service company profits would rebound strongly. Oil has surged to $23 per
barrel, up from around $10 at the 1998 bottom, and we expect oil services
company earning to follow suit.
The portfolio's technology holdings also contributed to returns. On a relative
performance basis, our focus on what we believed were reasonably valued
technology stocks capable of consistent, if not spectacular, earnings growth
worked against us through most of first half fiscal 1999, when the Internet
stocks were sizzling. This strategy worked to our advantage in the second half,
when the "dot-com" stocks flamed out.
Portfolio disappointments include financial stocks, most notably small savings
and loans institutions, whose earnings were restrained by rising interest rates
and the flat yield curve. We believe modestly higher interest rates are already
baked into current valuations. Should interest rates stabilize around current
levels or drop, the financials could regain momentum. Separately, despite
recording decent operating results, our healthcare investments also languished.
This group remains under a cloud of uncertainty regarding changes in federal
insurance reimbursement programs; it also suffers from a general lack of
interest from small-cap investors focused on the hot technology sector. Going
forward, if our healthcare positions meet earnings expectations, we believe they
will receive a better diagnosis from investors.
Let us give you an example of a current portfolio holding that demonstrates
our value-oriented discipline. Bear in mind this is not a recommendation and we
may sell this stock without notice if circumstances change. Methode Electronics
has two businesses. The first, auto electronics components, has been a "steady
as she goes" growth business benefiting from the secular growth of electronic
systems in automobiles. Methode's second business, electronic components that
A-9
<PAGE>
- ----------------------------------------------------------------------
Genesis Trust (Cont'd)
expand the bandwidth of telecommunications companies' networks, is considerably
more exciting. The Internet requires faster, higher capacity digital
transmission systems, so the demand for greater bandwidth is exploding. Methode
already has several leading telecommunications equipment companies on its
customer list. Yet, despite a promising start in this fast growth business, at
the close of this reporting period, Methode was trading at around 14 times next
calendar year's earnings estimates. We believe our 20% annual earnings growth
rate projections for Methode could prove conservative if the company's bandwidth
enhancing electronics business lives up to its potential. Even if it takes
longer to develop, we believe the stock is supported at current levels by its
stable auto electronics business.
In closing, the Genesis portfolio delivered solid returns in fiscal 1999. We
stuck with our discipline during a very difficult period for small-cap value
stocks. We see excellent value in our portfolio and remain confident these
bargains will attract more investor attention in the year ahead.
Sincerely,
/s/ Judith Vale /s/ Robert D'Alelio
Judith Vale and Robert D'Alelio
PORTFOLIO CO-MANAGERS
*For index definitions, refer to page A-32, titled "Glossary of Indices." The
Portfolio invests in many securities not included in the indices listed.
The composition, industries and holdings of the Portfolio are subject to
change. Genesis Portfolio is invested in a wide array of stocks and no single
holding makes up more than a small fraction of the Portfolio's total assets.
THE RISKS INVOLVED IN SEEKING CAPITAL APPRECIATION FROM INVESTMENTS PRIMARILY
IN COMPANIES WITH SMALL MARKET CAPITALIZATIONS ARE SET FORTH IN THE PROSPECTUS.
Past performance is no guarantee of future results.
A-10
<PAGE>
PORTFOLIO COMMENTARY
Neuberger Berman
- ----------------------------------------------------------------------
Guardian Trust
For the six and twelve month periods concluding August 31, 1999, the Guardian
Trust returned 1.15% and 26.07%, respectively, versus the Russell 1000 Value
Index's 6.16% and 30.08% gains over the same time periods. The S&P 500 advanced
7.29% and 39.82% over the corresponding six and twelve month periods (see
page B-5 for comparison of $10,000 investment and average annual total returns
as of August 31, 1999).*
Technology was a big story in our portfolio in fiscal 1999. In mid-year 1998,
as Wall Street underestimated demand for technology industries, we were able to
buy some solid tech companies at very attractive prices. Then, driven by the
cyclical recovery in semiconductors and semiconductor capital equipment, and
enormous investment in digital communications and Internet infrastructure,
technology companies' operating results began coming in well ahead of
expectations. Analysts' estimates were revised upward through the year and
technology companies kept beating projections. This provided a strong tailwind
for tech stocks, and we saw substantial gains in our technology holdings.
Today, the outlook for technology stocks is somewhat uncertain. Business
conditions continue to be strong, but valuations are high and leave little room
for disappointing earnings. Y2K issues also add a degree of uncertainty about
the future. Although at the end of this reporting period we still have about 15%
of assets in technology, we will likely continue to take profits in this sector.
Our energy investments also delivered strong returns. Oil prices surged and
our positions in the major integrated oil companies took off. As demand trends
continued to improve, we augmented our positions in the integrated oils with
investments in oil services and drilling companies.
Our communications service holdings also closed fiscal 1999 with strong gains.
These stocks have retreated recently due to concern over competitive pricing,
particularly in the long distance business. We
A-11
<PAGE>
- ----------------------------------------------------------------------
Guardian Trust (Cont'd)
believe this will prove to be a passing cloud, however, and that our portfolio
companies have the scale, brand identity, and global assets to allow them to
prosper over the long term.
We would say the same about our financial company investments -- among the
portfolio's more disappointing performers this year. Most of these stocks did
well through February, and then began retreating when bond yields trended higher
and the Federal Reserve reversed course and started tightening. We believe
interest rates will stabilize or perhaps rise modestly above current levels and
that financial companies can continue to deliver favorable earnings. We own the
stocks of strong franchises in the banking, insurance, credit card, and
brokerage/asset management industries. Even if we are wrong about interest
rates, we believe these stocks are supported by very attractive valuations
relative to long-term business prospects.
Our capital goods holdings were a drag on performance, particularly our
investments in waste management, which fell short of expectations. We thought
that consolidation in this fragmented industry would improve margins and
earnings. It didn't happen and it's looking like it won't happen in the
foreseeable future. Consequently, we have substantially reduced our exposure to
this group.
Wellpoint Health Network is an example of our investment philosophy at work.
This is not a recommendation, and if fundamentals deteriorate or the stock runs
up out of our value range, we may sell without notice. Formerly named Blue
Cross, Blue Shield of California, Wellpoint is now a national managed healthcare
company. It has all the things we like: favorable operating characteristics; a
strong balance sheet; a history of superior financial returns; terrific
management; and an attractive valuation. We think management's strategy of
offering a wide variety of plan options to a public which demands choice will
pay off. Wellpoint also has very little Medicare business, and therefore is
subject to less federal government regulatory risk than its peers. We are
A-12
<PAGE>
- ----------------------------------------------------------------------
Guardian Trust (Cont'd)
projecting 15% average annual earnings growth for the company, and at the end of
this reporting period, the stock was trading at just 15 times next year's
earnings projections.
In closing, a few brief comments on the value versus growth issue. Although
value investors are generally loath to admit it, there have been legitimate
reasons for the superior performance of growth stocks in recent years. Economic
trends -- an extended period of modest economic growth and declining interest
rates -- have favored growth companies. This may be changing. We are in the
midst of a more vigorous economic expansion, which unless choked off by the Fed,
appears to have legs. We expect this to lengthen the earnings cycle for cyclical
stocks. Also, interest rates are no longer declining. This means growth stock
multiples aren't likely to expand, and may contract. Finally, by historical
valuation yardsticks, growth is very expensive and value remains attractive. Our
conclusion is that value investing should provide more competitive and, perhaps,
superior returns in the years ahead.
Sincerely,
/s/ Kevin Risen /s/ Allan R. White III
Kevin Risen and Rick White
PORTFOLIO CO-MANAGERS
*For index definitions, refer to page A-32, titled "Glossary of Indices." The
Portfolio invests in many securities not included in the indices listed.
The composition, industries and holdings of the Portfolio are subject to
change. Guardian Portfolio is invested in a wide array of stocks and no single
holding makes up more than a small fraction of the Portfolio's total assets.
Past performance is no guarantee of future results.
The investments for the Portfolio are managed by the same portfolio manager(s)
who manage one or more other mutual funds that have similar names, investment
objectives and investment styles as the Portfolio. You should be aware that the
Portfolio is likely to differ from the other mutual funds in size, cash flow
pattern and tax matters. Accordingly, the holdings and performance of the
Portfolio can be expected to vary from those of the other mutual funds.
A-13
<PAGE>
PORTFOLIO COMMENTARY
Neuberger Berman
- ----------------------------------------------------------------------
International Trust
For the six and twelve month periods ended August 31, 1999 the International
Trust was up 12.72% and 21.99% respectively versus the MSCI EAFE Index's return
of 10.55% and 26.03% for the same periods. (See page B-7 for comparison of
$10,000 investment and average annual total returns as of August 31, 1999).*
We are pleased with our results, having weathered some challenging times for
international investing. At this time last year international investors were
suffering through a protracted global emerging markets crisis which began in
Asia during the summer of 1997 and grew worse after Russia's financial troubles
in August 1998. We had pared back our exposure to Latin America, but emerging
market holdings hurt the portfolio's performance in the third quarter of 1998,
the beginning of this fiscal year. Even our holdings in developed international
markets were adversely affected by the global crisis.
The world has greatly changed since then, as has our portfolio. We have
increased our exposure to the markets of the Pacific Rim, including Japan,
Singapore, Hong Kong, and South Korea. Whereas at the end of August 1998 we had
approximately 7% committed to the region, this weighting has grown to 43%. This
strategy proved fortuitous, as the Asian markets have been the leading
contributors to the portfolio's performance this fiscal year.
Most of the shift in assets came from reducing our holdings throughout
Continental Europe. In total, we have reduced our exposure to Europe by
approximately 23%. We find few exciting opportunities in Europe, and while this
market is still a large overall allocation, we feel that European markets in
general appear to be in a neutral holding pattern. In particular, we withdrew
from many investments in Germany where neither economic prospects nor business
outlook seem particularly dynamic.
We also reduced our exposure to emerging markets in Eastern Europe, where the
economy is closely tied to Russia, and other regions,
A-14
<PAGE>
- ----------------------------------------------------------------------
International Trust (Cont'd)
including South Africa. Conditions in South Africa, where the portfolio enjoyed
excellent performance from such names as Specialised Outsourcing, have come
under pressure. We had already taken profits and trimmed our holdings, and
currently have no exposure to South Africa.
It is also worth noting that our Latin American allocation, all of which is in
Mexico, stands at its lowest in the history of the fund. Our country and
regional commitments are contingent upon our ability to uncover compelling
investment opportunities. As of this writing, we are still quite cautious about
conditions in Latin America, in large part based on the still uncertain economic
situation in Brazil.
The portfolio is currently diversified across 22 countries with the following
regional allocation.(1)
<TABLE>
<CAPTION>
NEUBERGER BERMAN
INTERNATIONAL PORTFOLIO MSCI EAFE INDEX
<S> <C> <C>
- ------------------------------------------------------------------
CONTINENTAL EUROPE 32.8% 46.9%
UNITED KINGDOM 16.9% 21.6%
JAPAN 29.4% 25.3%
PACIFIC BASIN EX
JAPAN 13.6% 6.2%
LATIN AMERICA 0.9% 0.0%
OTHER MARKETS(2) 2.9% 0.0%
</TABLE>
Our industry themes remain constant. We are still very optimistic about the
Telecommunications industry, with 19.4% of the portfolio invested in
telecommunications and related companies. Other industry themes that we favor
are Banking and Finance (13.3% of net assets), Technology (8.2% of net assets)
and Pharmaceuticals (8.7% of net assets). Indeed, our top five performing
stocks, in terms of net contribution for the period, each come from one of these
industries, including: Nokia Corp., Datacraft Asia, Softbank, Venture
Manufacturing, and Takeda Chemical.
1) Regions listed total 96.5% of the Portfolio's holdings.
2) Canada, Bermuda, Russia
A-15
<PAGE>
- ----------------------------------------------------------------------
International Trust (Cont'd)
Looking ahead, we will remain flexible in our regional allocations as market
conditions and investment opportunities warrant. We are committed to our
research driven, bottom-up stock selection process to guide us in selecting the
best investments for the fund.
Sincerely,
/s/ Valerie Chang
Valerie Chang
PORTFOLIO MANAGER
*For index definitions, refer to page A-32, titled "Glossary of Indices." The
Portfolio may invest in many securities not included in the index listed.
The composition, industries and holdings of the Portfolio are subject to
change. International Portfolio is invested in a wide array of stocks and no
single holding makes up more than a small fraction of the Portfolio's total
assets.
INVESTING IN FOREIGN SECURITIES INVOLVES GREATER RISKS THAN INVESTING IN
SECURITIES OF U.S. ISSUERS, INCLUDING CURRENCY FLUCTUATIONS, INTEREST RATES AND
POLITICAL CONDITIONS. IN AN ATTEMPT TO REDUCE OVERALL VOLATILITY, NEUBERGER
BERMAN MANAGEMENT INC. DIVERSIFIES THE PORTFOLIO HOLDINGS OVER A WIDE ARRAY OF
COUNTRIES AND INDIVIDUAL STOCKS.
Past performance is no guarantee of future results.
A-16
<PAGE>
PORTFOLIO COMMENTARY
Neuberger Berman
- ----------------------------------------------------------------------
Manhattan Trust
For the six and twelve month periods ending August 31, 1999, the Manhattan
Trust gained 7.06% and 36.24%, respectively, compared to the Russell Midcap
Growth Index's 11.68% and 48.83% returns over the same time periods (see page
B-8 for comparison of a $10,000 investment and average annual total returns as
of August 31, 1999).*
Our returns were quite healthy this year, although we did lag our benchmark
Russell Midcap Growth Index. We attribute this shortfall to the smaller average
capitalization of our portfolio compared to the benchmark's. Early in the year,
larger stocks materially outperformed smaller ones. We have adjusted our
holdings and the portfolio's weighted average market cap now closely
approximates the benchmark index. We also had a few unpleasant
surprises -- portfolio companies reported earnings below consensus expectations.
The last three months of this reporting period have brought better news,
however, and our fund materially outperformed its benchmark in June, July, and
August.
Our new fiscal year is off to a solid start as well. The corporate earnings
report season that ended in August brought news that 65% of our portfolio
holdings exceeded Wall Street's consensus earnings expectations. These
companies' earnings growth, which had been projected at about 36%, came in
closer to 50%. We believe this will produce some performance momentum as we head
into fiscal 2000.
In fiscal 1999, our technology investments performed exceptionally well. We
took a balanced approach to this sector, allocating assets among software,
semiconductor, telecommunications equipment, and Internet companies. As always,
we had winners and losers, but on average, we earned excellent returns from each
of these tech sectors. Our Internet strategy--favoring companies that provide
essential products and services to a wide range of Internet companies, rather
than putting all our money on narrowly focused companies that may or may not
succeed--served us well, and we believe our strategy will continue to mitigate
risk in this volatile group. While our allocation to Internet stocks remained
fairly constant throughout the fiscal year, we took profits in stocks whose
valuations had soared and redirected that money
A-17
<PAGE>
- ----------------------------------------------------------------------
Manhattan Trust (Cont'd)
to more reasonably priced opportunities. This helped us avoid some of the
Internet stocks that collapsed under the weight of excessive valuations in the
second half of the year.
The portfolio's energy holdings also boosted returns. We modestly overweighted
energy in expectation that rising natural gas prices would produce very
favorable earnings surprises in this out-of-favor group. Indeed, our energy
stock earnings came in well above consensus expectations. Our healthcare
investments, however, were a mixed bag. The portfolio's biotechnology holdings
excelled, but our healthcare services stocks took sick. In some instances, it
was a simple case of investor anxiety over prospective changes in federal
insurance reimbursement programs. In other cases it was more
serious -- disappointing earnings. True to our discipline, we removed companies
in the latter situation from our portfolio.
The performance of our telecommunications services investments, primarily
Competitive Local Exchange Carriers (CLECs), disappointed us despite the fact
that earnings met expectations. We call situations like these "performance in
the warehouse." In other words, the earnings growth and value is effectively
sitting on a shelf in the portfolio. We think it is just a matter of time until
this inventory gets marked up.
We continually monitor the Manhattan portfolio's fundamental characteristics
to make sure they are in line with our investment parameters. At the close of
this reporting period, the portfolio was on target. Based on consensus earnings
estimates from First Call, (an independent research firm that compiles and
distributes Wall Street earnings estimates), the portfolio has a 3-5 year
projected annual earnings growth rate of 29.23% compared to 26.65% for the
Russell Midcap Growth Index. Its price/earnings ratio (consensus calendar 2000
earnings estimates) was 33.79 compared to the benchmark's 29.68.
In closing, it's interesting to note that the Russell Midcap Growth Index
handily beat the S&P 500 in fiscal 1999. This was quite a reversal in fortune
considering the whipping the mid-cap index took in fiscal 1998. Does this
foreshadow another good year for mid-cap growth
A-18
<PAGE>
- ----------------------------------------------------------------------
Manhattan Trust (Cont'd)
stocks versus the large-cap market darlings that have been on top for so long?
We don't know. But judging from the declining average capitalization of some of
the leading large-cap growth funds, it appears portfolio managers are beginning
to move down the capitalization ladder in search of opportunities. We welcome
them to the mid-cap arena and hope all their buying power will provide a
tailwind for the mid-cap stocks in our portfolio.
Sincerely,
/s/ Jennifer K. Silver /s/ Brooke Cobb
Jennifer Silver and Brooke Cobb
PORTFOLIO CO-MANAGERS
*For index definitions, refer to page A-32, titled "Glossary of Indices." The
Portfolio invests in many securities not included in the indices listed.
The composition, industries and holdings of the Portfolio are subject to
change. Manhattan Portfolio is invested in a wide array of stocks and no single
holding makes up more than a small fraction of the Portfolio's total assets.
Past performance is no guarantee of future results.
The investments for the Portfolio are managed by the same portfolio manager(s)
who manage one or more other mutual funds that have similar names, investment
objectives and/or investment styles as the Portfolio. You should be aware that
the Portfolio is likely to differ from the other mutual funds in size, cash
flow pattern and tax matters. Accordingly, the holdings and performance of the
Portfolio can be expected to vary from those of the other mutual funds.
A-19
<PAGE>
PORTFOLIO COMMENTARY
Neuberger Berman
- ----------------------------------------------------------------------
Millennium Trust
For the six month period ended August 31, 1999, the Millennium Trust returned
31.24% compared to the Russell 2000 Growth and Russell 2000 Indexes' 10.85% and
9.91% gains. Since its inception on October 20, 1998 through August 31, 1999,
the Millennium Trust gained 95.00% versus 34.43% and 22.81% for the Russell 2000
Growth and Russell 2000 Indexes, respectively. Because of the fund's aggressive
investment approach, its share price is subject to greater volatility than may
be found in a more conservative fund (see page B-10 for comparison of $10,000
investment and average annual total returns as of August 31, 1999).*
A lot of positive things happened to the Millennium portfolio in our first
year, not the least of which was our launch date. We commenced operations on
October 20, 1998, just 12 days after the small-cap stock market bottomed. We
were able to buy many solid companies at bargain basement prices in what may
prove to have been the small-cap stock "sale of the century." High quality
software, semiconductor, telecommunications equipment, and Internet stocks were
very cheap, and we bought what we view as some of the very best companies in
these businesses at incredible discounts.
We may have bought at the right time and at the right price, but we also made
some timely sell decisions. For example, by the end of March, some of our
Internet holdings were trading at what we believed were unsustainable
valuations. We began taking profits, reducing our Internet stock exposure from
approximately 12% of total assets at the beginning of April to about 4.9% by the
end of the month. As a result, we were able to preserve portfolio gains when
Internet stocks retreated in early summer. Recently, we have taken advantage of
more reasonable pricing to rebuild our Internet exposure to about 12% of assets
at the close of this reporting period.
Technology was not our only productive industry group. We saw nice gains in
our capital goods, consumer cyclicals and financial services investments as
well. Our biggest disappointments came in the healthcare arena. Some qualified
as mistakes and others actually met our
A-20
<PAGE>
- ----------------------------------------------------------------------
Millennium Trust (Cont'd)
expectations, yet failed to attract any investor sponsorship. We have eliminated
the former and held on to the latter. We believe that when the dust clears on
federal insurance reimbursement issues, healthcare companies that grow earnings
will get another look.
Allow us to provide an example of our investment methodology at work. Please
do not consider this a recommendation and be advised we may sell it without
notice should the company not meet our growth expectations. Pinnacle Holdings
owns and manages cellular telephone transmission towers. As the cellular
customer market grows, Pinnacle collects more rent from cellular operators.
Pinnacle is using this cash to build and buy additional towers. At this stage,
Pinnacle is a cash flow story, not an earnings story. We are projecting annual
cash flow growth in the 30-40% range over the next several years. At the end of
this reporting period, Pinnacle stock was trading at just 11.5 times next year's
projected cash flow. We believe that is a very reasonable price for a very good
growth company.
Small-cap growth stocks delivered good returns and performed reasonably well
relative to large-cap growth stocks in fiscal 1999. Can small caps outperform
large caps in the year ahead? We think three things must happen for small caps
to do so. Small caps must grow earnings considerably faster than large caps;
they must present an attractive valuation discount; and investor sentiment must
change. We believe the first two of these requirements are likely to be met.
Russell 2000 earnings are expected to outdistance S&P 500 earnings in coming
years. Despite better projected earnings growth, the Russell currently has a
lower price-to-earnings ratio than the S&P. Investor sentiment, however, does
not seem to have switched direction: After five years of under-performance
relative to large-cap stocks, small-cap mutual funds are still suffering net
redemptions. As mutual fund managers move down the market capitalization
spectrum looking for opportunities, perhaps they will lead the investing public
to what we view as the promised land.
A-21
<PAGE>
- ----------------------------------------------------------------------
Millennium Trust (Cont'd)
In closing, some people say it is better to be lucky than good. We were lucky
this year in that we started operations at a time when the small-cap stock
market was holding a half-off sale. But, we'll take some credit for being good
as well, as is reflected in the portfolio's exceptional returns relative to its
benchmark index. Looking ahead, we don't expect to match this year's rather
spectacular returns. But we do believe there are still some small growth
companies available at very attractive valuations. We are confident that our
research and portfolio management discipline will generate satisfactory returns
for our shareholders in the years ahead.
Sincerely,
/s/ Michael Malouf /s/ Jennifer K. Silver
Michael Malouf and Jennifer Silver
PORTFOLIO CO-MANAGERS
*THESE ARE CUMULATIVE RETURNS AND ARE NOT ANNUALIZED. THE CUMULATIVE RETURNS FOR
NEUBERGER BERMAN MILLENNIUM TRUST, RUSSELL 2000-REGISTERED TRADEMARK- GROWTH
INDEX AND RUSSELL 2000 INDEX ARE FROM OCTOBER 20, 1998, WHICH IS THE INCEPTION
OF THE FUND, THROUGH AUGUST 31, 1999. BECAUSE THIS IS A NEW FUND, SHORT-TERM
RESULTS MAY NOT BE DUPLICATED. AVERAGE NET ASSETS OF THE PORTFOLIO FOR ITS
FIRST TEN MONTHS WERE APPROXIMATELY $32.1 MILLION. IT MAY BE EASIER TO ACHIEVE
HIGHER RETURNS IN A SMALL FUND THAN IN A LARGER FUND. IN PARTICULAR, IPOS HAD A
SIGNIFICANT IMPACT ON THE PERFORMANCE OF THIS FUND. MILLENNIUM TRUST'S
PERFORMANCE CAN ALSO BE ATTRIBUTED TO ITS FOCUS ON THE SMALL-CAP GROWTH SECTOR
OF THE STOCK MARKET, WHICH HAS EXPERIENCED A PERIOD OF ACCELERATED GROWTH.
NEUBERGER BERMAN MANAGEMENT INC. CURRENTLY ABSORBS CERTAIN EXPENSES OF THE
FUND. THIS ARRANGEMENT IS SUBJECT TO CHANGE, AND WITHOUT THIS ARRANGEMENT, THE
FUND'S RETURNS WOULD HAVE BEEN LESS. TOTAL RETURN INCLUDES REINVESTMENT OF
DIVIDENDS AND DISTRIBUTIONS. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS
AND SHARES WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN ORIGINAL COST.
For index definitions, refer to page A-32, titled "Glossary of Indices." The
Portfolio invests in many securities not included in the indices listed.
The composition, industries and holdings of the Portfolio are subject to change.
Millennium Portfolio is invested in a wide array of stocks and no single holding
makes up more than a small fraction of the Portfolio's total assets.
THE RISKS INVOLVED IN SEEKING CAPITAL APPRECIATION FROM INVESTMENTS PRIMARILY IN
COMPANIES WITH SMALL MARKET CAPITALIZATION ARE SET FORTH IN THE PROSPECTUS.
A-22
<PAGE>
PORTFOLIO COMMENTARY
Neuberger Berman
- ----------------------------------------------------------------------
Partners Trust
For the six and twelve month periods concluding August 31, 1999, the Partners
Trust returned 4.76% and 25.91%, respectively, versus the Russell 1000 Value
Index's 6.16% and 30.08% gains over the same time periods. The S&P 500 advanced
7.29% and 39.82% over the corresponding six and twelve month periods (see
page B-12 for comparison of $10,000 investment and average annual total returns
as of August 31, 1999).*
We are pleased to report solid results in fiscal 1999. Growth stocks
materially out-performed value stocks again this year, but investors appear to
be questioning growth stock valuations and reawakening to opportunities in the
value sector. Value stocks in industries such as basic materials, energy,
capital goods, and industrial cyclicals performed quite well in the second half,
while some of the most popular growth stocks retreated. Although the Internet
bubble didn't burst, it lost quite a bit of air. We aren't predicting value will
outpace growth in the year ahead, but we believe the race will be much closer.
Technology stocks made the greatest contribution to our portfolio's returns in
fiscal 1999. For those who question the presence of technology stocks in a value
portfolio, we point out that our gains came from established companies such as
Teradyne, Texas Instruments, Hewlett Packard, and IBM, all of which we bought at
below market average multiples. Technology is not incompatible with value when
high quality companies are available at discounted valuations.
Our basic materials investments performed quite well after a dismal fiscal
1998. The global economy is recovering and revenues for basic materials
companies are exceeding consensus estimates. We believe earnings should begin
reflecting these stronger than anticipated revenue gains. Basic materials
companies still have very little pricing flexibility. But this could change if
demand continues to increase. We believe our basic materials holdings are good
values today, and could become even better ones tomorrow, if some pricing
flexibility returns to their markets in the year ahead.
A-23
<PAGE>
- ----------------------------------------------------------------------
Partners Trust (Cont'd)
Our consumer staples and communications services holdings also boosted our
portfolio performance, with strong performers including Anheuser Busch, Nabisco,
and MCI WorldCom. Rounding out our list of winners is energy. We bought
positions in energy companies because we were confident that as the global
economy stabilized, the price of oil would rebound from its low of $10 per
barrel in 1998. We were delighted to watch it more than double in 1999,
producing excellent gains for our energy holdings.
Financial stocks were among our biggest portfolio disappointments this year,
due in part to the poor performance of our property and casualty insurance
holdings. In our opinion, Ace Ltd. and XL Capital Limited are the premier
underwriters in the business. To their credit, they have refused to participate
in the pricing war that has plagued the industry. But it has cost them revenues
and restrained their earnings. We see a light at the end of the tunnel however,
largely thanks to the declining bond market. Property and casualty insurers have
had huge gains in their bond portfolios in recent years, encouraging them to
pursue business at any price. The losses they are likely to sustain as a result
of under-priced policies, we believe, will eventually eliminate some of the
competition in this business. If we are right, we believe our investments in Ace
and XL Capital Limited could be quite rewarding.
We always provide an example of our investment strategy at work. Please be
advised this not a recommendation, and that we may sell our position without
notice if circumstances warrant it. CIGNA is in the process of overcoming its
identity crisis. It has completed the sale of its property and casualty
insurance assets and is now a pure employee benefits company. Its managed
healthcare business is doing quite well. CIGNA's price-to-earnings multiple has
already expanded from about 12 times earnings (the kind of multiple accorded
property casualty insurers) to around 15. That's only about half-way to the
level of price-to-earnings multiple currently enjoyed by high quality employee
benefits companies. In addition, after a $1 billion share buyback, the company
still has $3.5 billion in cash left from the sale of its insurance
A-24
<PAGE>
- ----------------------------------------------------------------------
Partners Trust (Cont'd)
business. We can't be sure what management will do with this money. However, we
think additional share repurchases or some other effective strategy to enhance
shareholder value is a distinct possibility.
In closing, we are pleased to have rewarded loyal shareholders with solid
returns in fiscal 1999. Although the market continued to favor growth stocks
this year, we believe the tide is turning and that value investing will produce
more competitive returns in the year ahead. Over the long term, we remain
confident that investing in quality companies at opportunistic prices will be an
effective way to grow the assets you have entrusted to us.
Sincerely,
/s/ Robert Gendelman /s/ Michael Kassen /s/S. Basu Mullick
Robert Gendelman, Michael Kassen, and S. Basu Mullick
PORTFOLIO CO-MANAGERS
*For index definitions, refer to page A-32, titled "Glossary of Indices." The
Portfolio invests in many securities not included in the indices listed.
The composition, industries and holdings of the Portfolio are subject to
change. Partners Portfolio is invested in a wide array of stocks and no single
holding makes up more than a small fraction of the Portfolio's total assets.
Past performance is no guarantee of future results.
The investments for the Portfolio are managed by the same portfolio manager(s)
who manage one or more other mutual funds that have similar names, investment
objectives and investment styles as the Portfolio. You should be aware that the
Portfolio is likely to differ from the other mutual funds in size, cash flow
pattern and tax matters. Accordingly, the holdings and performance of the
Portfolio can be expected to vary from those of the other mutual funds.
A-25
<PAGE>
PORTFOLIO COMMENTARY
Neuberger Berman
- ----------------------------------------------------------------------
Regency Trust
From inception on June 1, 1999 through August 31, 1999, the Regency Trust lost
(1.72%) versus a (4.80%) loss for the Russell Midcap Value Index (see page B-14
for comparison of $10,000 investment and average annual total returns as of
August 31, 1999).*
We are pleased to have outperformed our benchmark in our first reporting
period. Of course, three month performance in an uninspiring market can't
provide much insight. So we will comment only briefly on what has occurred in
the Regency portfolio's infancy. We earned very generous returns from our
technology and energy investments, two groups that flourished in a market
stalled by the twin specters of higher inflation and rising interest rates. Our
investments in consumer staples, consumer cyclicals, and healthcare
disappointed, while the balance of our industry categories drifted.
In our first letter to shareholders, we'd like to detail our investment
strategy and provide several examples of how we are implementing it. We'll start
by explaining that we are value investors in the traditional sense of the term.
We buy stocks trading at low price-to-earnings and/ or low price-to-cash flow
multiples. Stocks generally have low valuations for a reason. Sometimes, it is
simply investor misperception -- problems more imagined than real. More often,
stocks are cheap because something has gone wrong at the company. We must
determine if something is likely to go right in the future. So we look for a
catalyst -- some element of favorable change in a company's industry or in the
company itself that will result in better operating results and a materially
higher stock price in the future.
The Regency portfolio's valuation characteristics reflect our discipline. The
portfolio has a price-to-next year's projected earnings ratio of 16 and a
price-to-book value ratio of 2.35. It is also worth noting the portfolio has a
trailing 5-year average annual earnings growth rate of 22.7% and a Return on
Equity of 18.6%. Those are fairly impressive profitability numbers for a value
portfolio.
We employ this value strategy in the mid-cap stock arena. Mid-cap stocks are
less widely followed by Wall Street and generally are less widely owned by large
institutions. Consequently, we believe the mid-
A-26
<PAGE>
- ----------------------------------------------------------------------
Regency Trust (Cont'd)
cap universe presents more opportunities for research driven investors like us.
The Regency portfolio's weighted median market capitalization is approximately
$4 billion and its weighted average market cap is about $6 billion. Roughly
eighty two percent of our holdings have capitalizations under $8.8 billion. All
these capitalization characteristics are consistent with those of our Russell
Midcap Value Index benchmark.
That's our strategy. Now, here is an example of how we are putting it to work.
Take heed, this is an illustration of our investment style, not a
recommendation. W.R. Grace is the industry leader in the fluid cracking catalyst
business, selling to refineries worldwide. Despite the company's dominant market
share, it hasn't been making very good money in this business. That's one of the
reasons the stock is trading at just 12 times earnings. The other reason is an
estimated $400 million in potential asbestos liability. New management, formerly
at Allied Signal, has taken over at W.R. Grace and says it is committed to
cutting costs, increasing productivity, and improving margins. Judging from the
last two quarters' earnings, which were much better than Wall Street's consensus
expectations, it is succeeding. Management reportedly plans to use excess cash
flow initially to repurchase shares and eventually to make acquisitions in other
niche industrial businesses. We applaud this strategy and have faith in
management's ability to execute it effectively.
We have taken a very hard look at the asbestos liability issue. Asbestos
liability lawsuits are stable and Grace has strong cash flow to provide for the
full amount of projected liability. We certainly understand investor concern
over this issue. However, we don't believe it will be a significant factor
impacting the company's future value. To sum up, W.R. Grace is number one in its
industry; it trades at a deeply discounted valuation; and it has a catalyst in
the form of new management. Its new managers appear to be succeeding at
improving operating results. They seem to have a sound strategy for growing the
company, and they appear committed to rewarding shareholders.
A-27
<PAGE>
- ----------------------------------------------------------------------
Regency Trust (Cont'd)
In closing, we welcome our new shareholders. We've explained our investment
strategy and provided an example of how we are implementing it. Now it's back to
work, looking for the kind of value-oriented investment opportunities that can
help us achieve our shared investment objectives.
Sincerely,
/s/ Robert Gendelman /s/ Michael Kassen /s/S. Basu Mullick
Robert Gendelman, Michael Kassen, and S. Basu Mullick
PORTFOLIO CO-MANAGERS
*THESE ARE CUMULATIVE RETURNS AND ARE NOT ANNUALIZED. THE CUMULATIVE RETURNS FOR
REGENCY TRUST AND THE RUSSELL MIDCAP VALUE INDEX ARE FROM JUNE 1, 1999, WHICH
IS THE INCEPTION OF THE FUND, THROUGH AUGUST 31, 1999. BECAUSE THIS IS A NEW
FUND, SHORT-TERM RESULTS MAY NOT BE DUPLICATED. AVERAGE NET ASSETS OF THE
PORTFOLIO FROM INCEPTION THROUGH AUGUST 31, 1999 WERE APPROXIMATELY
$6.1 MILLION. IT MAY BE EASIER TO ACHIEVE HIGHER RETURNS IN A SMALL FUND THAN
IN A LARGER FUND. IN PARTICULAR, IPOS HAD A SIGNIFICANT IMPACT ON THE
PERFORMANCE OF THIS FUND. NEUBERGER BERMAN MANAGEMENT
INC.-REGISTERED TRADEMARK- CURRENTLY ABSORBS CERTAIN EXPENSES OF THE FUND.
WITHOUT THIS ARRANGEMENT, THE FUND'S RETURNS WOULD HAVE BEEN LESS. THE RISKS
INVOLVED IN SEEKING CAPITAL APPRECIATION FROM INVESTMENTS PRIMARILY IN
COMPANIES WITH MEDIUM MARKET CAPITALIZATION ARE SET FORTH IN THE PROSPECTUS.
For index definitions, refer to page A-32, titled "Glossary of Indices." The
Portfolio may invest in many securities not included in the index listed.
The composition, industries and holdings of the Portfolio are subject to
change. Regency 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.
Past performance is no guarantee of future results.
A-28
<PAGE>
PORTFOLIO COMMENTARY
Neuberger Berman
- ----------------------------------------------------------------------
Socially Responsive Trust
For the six and twelve month periods concluding August 31, 1999, the Socially
Responsive Trust gained 9.75% and 36.76%, respectively, compared to the
Standard & Poor's 500 Index's 7.29% and 39.82% returns over the same time
periods (see page B-16 for comparison of a $10,000 investment and average annual
total returns as of August 31, 1999).*
Value reasserted itself in the second half of fiscal 1999, boosting the
performance of our portfolio to levels competitive with the growth-stock
dominated S&P 500. Beginning in April, value-oriented sectors including basic
materials, energy, capital goods, and industrial and consumer cyclicals rallied
strongly from severely depressed levels. Concurrently, high priced growth
sectors such as branded consumer goods, pharmaceutical companies, and some of
the technology high flyers began to fade.
Is this the beginning of a true value renaissance or only a temporary change
in the growth stock dominance of recent years? Investor behavior is impossible
to predict. However, based on historical valuation benchmarks, value stocks are
still fundamentally cheap and growth stocks are still rather richly priced.
Perhaps more importantly, if the U.S. economy keeps growing at a decent pace and
the rest of the world regains some momentum, we expect economically sensitive
companies in the value camp to continue to enjoy very favorable earnings
comparisons. We are not suggesting growth stock investing won't continue to be
rewarding. However, we do anticipate a broader market in which value stocks will
provide much more competitive returns.
We enjoyed generous returns from our technology holdings in fiscal 1999. This
was not accomplished by owning market darlings with high price-to-earnings
ratios, but rather from our positions in more reasonably priced technology
stocks including Unisys, Intel, and Hewlett Packard. Our success in these stocks
reaffirms our belief that we can generate attractive returns in the technology
sector without sacrificing our value principles. Biotechnology investments
Biogen and Alza also performed quite well.
A-29
<PAGE>
- ----------------------------------------------------------------------
Socially Responsive Trust (Cont'd)
Our energy holdings, most notably, oil service company Cooper Cameron,
contributed to portfolio returns, as energy prices rebounded from 1998 lows.
Tyco International, a diversified industrial company with a terrific acquisition
record, and consumer electronics retailer Circuit City made our Top Ten
performance list this year (based on contribution to overall return).
Our two primary sector disappointments were financial stocks and
utilities -- both interest rate sensitive groups that sold off as interest rates
trended higher this summer. If rates continue to rise, financial stocks may come
under more selling pressure. However, if interest rates stabilize around current
levels, we expect financial company earnings to remain relatively strong. With
high quality financial companies now trading at just about half the S&P 500's
price-to-earnings ratio, we view them as outstanding long term investment
bargains. We are less optimistic regarding the prospects for utilities and
consequently, have eliminated them from the portfolio.
As is our custom, we will highlight two socially responsive portfolio
companies we believe have excellent investment potential: Valassis
Communications and Hewlett Packard. Please be advised these are examples of our
investment philosophy at work, not recommendations and we may sell these stocks
without notice if circumstances change. Valassis Communications produces the
coupons accompanying your Sunday newspaper. It's a niche business with only one
major competitor (NewsCorp). We bought Valassis when it was trading at about 12
times earnings and even after an excellent year, it is still trading at 18.5
times next year's estimates -- a discount to the S&P 500's multiple. Named by
Fortune Magazine as one of the 100 best places to work, Valassis' commitment to
the well being of its employees is clearly demonstrated by the fact the company
highlights its progressive workplace policies in its standard presentations to
Wall Street analysts. Good company, good investment value, good corporate
citizen. That's our trifecta.
A-30
<PAGE>
- ----------------------------------------------------------------------
Socially Responsive Trust (Cont'd)
Via an upcoming spin-off, Hewlett Packard is separating its measurement
instrument division from its computer and imaging businesses. We believe this
will help investors focus on HP's strengths, most notably its computer printer
business, which boasts a dominant market share. We believe when the spin-off is
completed, investors will value the sum of the parts higher than the current
price of the whole. Despite excellent performance this year, Hewlett Packard
still trades at a modest price-to-earnings discount to the market. In addition,
HP is a socially responsive role model for corporate America. It is one of the
largest companies led by a woman CEO. In addition to the progressive work-place
policies that earned HP's designation as one of the 100 Best Places to Work, the
company also gets good corporate citizenship grades for its environmentally
friendly product recycling programs.
In closing, although we are stock-specific investors, we also monitor overall
portfolio characteristics to ensure that we are well within the bounds of our
value discipline. The analysis at the close of this reporting period reveals
that the portfolio's price-to-earnings, price-to-cash flow, and price-to-book
value ratios are all below the S&P 500's.
Sincerely,
/s/ Janet W. Prindle
Janet Prindle
PORTFOLIO MANAGER
*For index definitions, refer to page A-32, titled "Glossary of Indices." The
Portfolio invests in many securities not included in the index listed.
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.
Past performance is no guarantee of future results.
The investments for the Portfolio are managed by the same portfolio manager(s)
who manage one or more other mutual funds that have similar names, investment
objectives and investment styles as the Portfolio. You should be aware that the
Portfolio is likely to differ from the other mutual funds in size, cash flow
pattern and tax matters. Accordingly, the holdings and performance of the
Portfolio can be expected to vary from those of the other mutual funds.
A-31
<PAGE>
GLOSSARY OF INDICES
<TABLE>
<S> <C>
S&P 500 INDEX: An unmanaged index generally considered
to be representative of stock market
activity.
RUSSELL 1000-REGISTERED TRADEMARK-INDEX: Measures the performance of the 1,000
largest companies in the Russell
3000-Registered Trademark- Index (which
measures the performance of the 3,000
largest U.S. companies based on total
market capitalization). The Russell
1000 Index represents approximately 92%
of the total market capitalization of
the Russell 3000 Index.
RUSSELL 1000-REGISTERED TRADEMARK-VALUE Measures the performance of those
INDEX: Russell 1000 companies with lower
price-to-book ratios and lower
forecasted growth values.
RUSSELL 2000-REGISTERED TRADEMARK-INDEX: An unmanaged index consisting of
securities of the 2,000 issuers having
the smallest capitalization in the
Russell 3000-Registered Trademark-
Index, representing approximately 8% of
the Russell 3000 total market
capitalization. The smallest company's
market capitalization is roughly $178
million.
RUSSELL 2000-REGISTERED TRADEMARK-GROWTH Measures the performance of those
INDEX: Russell 2000-Registered Trademark-
Index companies with higher
price-to-book ratios and higher
forecasted growth values.
RUSSELL 2000-REGISTERED TRADEMARK-VALUE Measures the performance of those
INDEX: Russell 2000-Registered Trademark-
Index companies with lower
price-to-book ratios and lower
forecasted growth values.
RUSSELL 3000-REGISTERED TRADEMARK-INDEX: Measures the performance of the 3,000
largest U.S. companies based on total
market capitalization.
EAFE-REGISTERED TRADEMARK-INDEX: Also known as the Morgan Stanley
Capital International Europe,
Australasia, Far East Index. An
unmanaged index of over 1,000 foreign
stock prices. The index is translated
into U.S. dollars and includes
reinvestment of all dividends and
capital gain distributions.
RUSSELL MIDCAP-TRADEMARK- INDEX: Measures the performance of the 800
smallest companies in the Russell
1000-Registered Trademark- Index, that
represents approximately 26% of the
total market capitalization of the
Russell 1000 Index (which in turn,
consists of the 1,000 largest US
companies, based on market
capitalization).
RUSSELL MIDCAP-TRADEMARK- GROWTH INDEX: An unmanaged index that measures the
performance of those Russell Midcap
Index companies with higher
price-to-book ratios and higher
forecasted growth values.
RUSSELL MIDCAP-TRADEMARK- VALUE INDEX: An unmanaged index that measures the
performance of those Russell Midcap-
Trademark- Index companies with lower
price-to-book ratios and lower
forecasted growth values.
</TABLE>
Please note that indices do not take into account any fees and expenses of
investing in the individual securities that they track, and that individuals
cannot invest directly in any index. Data about the performance of these indices
are prepared or obtained by Neuberger Berman Management Inc. and include
reinvestment of all dividends and capital gain distributions.
A-32
<PAGE>
COMPARISON OF A $10,000 INVESTMENT
Neuberger Berman August 31, 1999
- ----------------------------------------------------------------------
Focus Trust
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C>
Average Annual Total Return(1)
Focus S&P 500(2)
1 Year +38.07% +39.82%
5 Year +16.72% +25.11%
10 Year +14.69% +17.09%
Focus Trust S&P 500
1989 $10,000 $10,000
1990 $9,627 $9,488
1991 $11,164 $12,048
1992 $12,482 $13,004
1993 $16,002 $14,980
1994 $18,174 $15,806
1995 $23,161 $19,192
1996 $24,000 $22,780
1997 $34,543 $32,057
1998 $28,516 $34,647
1999 $39,371 $48,444
</TABLE>
The performance information for Neuberger Berman Focus Trust is as of
August 31, 1999. Neuberger Berman Focus Trust started operating on August 30,
1993. It has identical investment objectives and policies, and invests in the
same Portfolio as Neuberger Berman Focus Fund ("Sister Fund"), which is also
managed by Neuberger Berman Management Inc. ("Management"). The performance
information shown in the above chart for the period before August 30, 1993, is
for the Sister Fund. Management voluntarily bears certain operating expenses of
the Trust so that its expense ratio per annum will not exceed the expense ratio
per annum of its Sister Fund by more than 0.10% of the Trust's average daily net
assets per annum. This arrangement can be terminated upon 60 days' prior written
notice. In connection with the 12b-1 fee recently submitted to shareholders,
Management has notified the Trust of its intention to raise the allowable annual
differential to 0.20% as of December 1, 1999. Absent such arrangement, the
average annual total returns of the Trust would have been less. The total
returns for periods prior to the Trust's commencement of operations would have
been lower had they reflected the higher expense ratios of the Trust as compared
to those of its Sister Fund.
The Trust's name prior to January 1, 1995 was Neuberger&Berman Selected
Sectors Trust. Prior to November 1, 1991, the investment policies of the Sister
Fund required that a substantial percentage of its assets be invested in the
energy field;
B-1
<PAGE>
accordingly, performance results prior to that time do not necessarily reflect
the level of performance that may be expected under the Trust's current
investment policies. While the Trust's value-oriented approach is intended to
limit risks, the Portfolio, with its concentration in sectors, may be more
greatly affected by any single economic, political or regulatory development
than a more diversified mutual fund.
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 Management and
include reinvestment of all dividends and capital gain distributions. The
Portfolio may invest in many securities not included in the above-described
index.
B-2
<PAGE>
COMPARISON OF A $10,000 INVESTMENT
Neuberger Berman August 31, 1999
- ----------------------------------------------------------------------
Genesis Trust
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C>
Average Annual Total Return(1)
Genesis Russell 2000-Registered Trademark-(2)
1 Year +19.15% +28.36%
5 Year +15.15% +12.31%
10 Year +11.45% +10.97%
Genesis Trust Russell 2000
1989 $10,000 $10,000
1990 $7,847 $8,019
1991 $10,621 $10,525
1992 $11,163 $11,294
1993 $13,853 $14,967
1994 $14,611 $15,846
1995 $17,462 $19,146
1996 $21,206 $21,218
1997 $30,603 $27,362
1998 $24,824 $22,055
1999 $29,577 $28,309
</TABLE>
The performance information for Neuberger Berman Genesis Trust is as of
August 31, 1999. Neuberger Berman Genesis Trust started operating on August 26,
1993. It has identical investment objectives and policies, and invests in the
same Portfolio as Neuberger Berman Genesis Fund ("Sister Fund"), which is also
managed by Neuberger Berman Management Inc. ("Management"). The performance
information shown in the above chart for the period before August 26, 1993, is
for the Sister Fund which commenced operations on September 27, 1988. Management
voluntarily bears certain operating expenses of the Trust so that its expense
ratio per annum will not exceed the expense ratio per annum of its Sister Fund
by more than 0.10% of the Trust's average daily net assets per annum. This
arrangement can be terminated upon 60 days' prior written notice. In connection
with the 12b-1 fee recently submitted to shareholders, Management has notified
the Trust of its intention to raise the allowable annual differential to 0.20%
as of December 1, 1999. Management previously agreed to waive a portion of the
management fee borne directly by Neuberger Berman Genesis Portfolio and
indirectly by Neuberger Berman Genesis Trust. Absent such arrangements, the
average annual total returns of the Trust would have been less. The total
returns for periods prior to the Trust's commencement of operations would have
been lower had they reflected the higher expense ratios of the Trust as compared
to those of its Sister Fund.
B-3
<PAGE>
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 Russell 2000 Index is an unmanaged index that measures the performance of
the 2,000 issuers having the smallest capitalization in the Russell
3000-Registered Trademark- Index, representing approximately 8% of the Russell
3000 total market capitalization. The smallest company's market capitalization
is roughly $178 million. 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 Management and include reinvestment of
all dividends and capital gain distributions. The Portfolio may invest in many
securities not included in the above-described index.
THE RISKS INVOLVED IN SEEKING CAPITAL APPRECIATION FROM INVESTMENTS PRIMARILY IN
COMPANIES WITH SMALL MARKET CAPITALIZATION ARE SET FORTH IN THE PROSPECTUS.
B-4
<PAGE>
COMPARISON OF A $10,000 INVESTMENT
Neuberger Berman August 31, 1999
- ----------------------------------------------------------------------
Guardian Trust
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C> <C>
Average Annual Total Return(1)
Guardian Russell 1000 -Registered Trademark- Value(2) S&P 500(2)
1 Year +26.07% +30.08% +39.82%
5 Year +12.68% +21.44% +25.11%
10 Year +12.36% +15.25% +17.09%
Guardian Trust Russell 1000 Value S&P 500
1989 $10,000 $10,000 $10,000
1990 $8,751 $8,819 $9,488
1991 $11,418 $10,897 $12,048
1992 $13,004 $11,991 $13,004
1993 $15,974 $15,212 $14,980
1994 $17,663 $15,647 $15,806
1995 $21,904 $18,648 $19,192
1996 $23,041 $21,919 $22,780
1997 $32,158 $30,585 $32,057
1998 $25,445 $31,775 $34,647
1999 $32,079 $41,333 $48,444
</TABLE>
The performance information for Neuberger Berman Guardian Trust is as of
August 31, 1999. Neuberger Berman Guardian Trust started operating on August 3,
1993. It has identical investment objectives and policies, and invests in the
same Portfolio as Neuberger Berman Guardian Fund ("Sister Fund"), which is also
managed by Neuberger Berman Management Inc. ("Management"). The performance
information shown in the above chart for the period before August 3, 1993, is
for the Sister Fund. Management voluntarily bears certain operating expenses of
the Trust so that its expense ratio per annum will not exceed the expense ratio
per annum of its Sister Fund by more than 0.10% of the Trust's average daily net
assets per annum. This arrangement can be terminated upon 60 days' prior written
notice. In connection with the 12b-1 fee recently submitted to shareholders,
Management has notified the Trust of its intention to raise the allowable annual
differential to 0.20% as of December 1, 1999. Absent such arrangement, the
average annual total returns of the Trust would have been less. The total
returns for periods prior to the Trust's commencement of operations would have
been lower had they reflected the higher expense ratios of the Trust as compared
to those of its Sister Fund.
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.
B-5
<PAGE>
2. The Russell 1000-Registered Trademark- Index measures the performance of the
1,000 largest companies in the Russell 3000-Registered Trademark- Index (which
measures the performance of the 3,000 largest U.S. companies based on total
market capitalization). The Russell 1000 Index represents approximately 92% of
the total market capitalization of the Russell 3000 Index. The Russell 1000
Value Index measures the performance of those Russell 1000 companies with lower
price-to-book ratios and lower forecasted growth values. 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
these indices are prepared or obtained by Management and include reinvestment of
all dividends and capital gain distributions. The Portfolio may invest in many
securities not included in the above-described indices.
B-6
<PAGE>
COMPARISON OF A $10,000 INVESTMENT
Neuberger Berman August 31, 1999
- ----------------------------------------------------------------------
International Trust
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C>
Average Annual Total Return(1)
International EAFE-Registered Trademark- Index(2)
1 Year +21.99% +26.03%
5 Year +10.50% +8.52%
Life of Fund +10.99% +8.90%
International
Trust EAFE Index
6/15/94 $10,000 $10,000
8/31/94 $10,460 $10,366
1995 $10,732 $10,449
1996 $11,991 $11,305
1997 $14,954 $12,363
1998 $14,124 $12,379
1999 $17,230 $15,601
</TABLE>
The performance information for Neuberger Berman International Trust is as of
August 31, 1999. Neuberger Berman International Trust started operating on
June 29, 1998. It has identical investment objectives and policies, and invests
in the same Portfolio as Neuberger Berman International Fund ("Sister Fund"),
which is also managed by Neuberger Berman Management Inc. ("Management"). The
performance information shown in the above chart for the period before June 29,
1998, is for the Sister Fund. Management voluntarily bears certain operating
expenses of the Trust so that its expense ratio per annum will not exceed the
expense ratio per annum of its Sister Fund by more than 0.10% of the Trust's
average daily net assets per annum, but not to exceed 1.70%. In connection with
the 12b-1 fee recently submitted to shareholders, Management has notified the
Trust of its intention to raise the allowable annual differential to 0.20% as of
December 1, 1999, but not to exceed 1.70%. This arrangement can be terminated
upon 60 days' prior written notice. Absent such arrangement, 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 EAFE Index, also known as the Morgan Stanley Capital International
Europe, Australasia, Far East Index, is an unmanaged index of over 1,000 foreign
stock prices. The index is translated into U.S. dollars and includes
reinvestment of all dividends and capital gain distributions. 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 Management and include reinvestment of all dividends and capital
gain distributions. The Portfolio may invest in many securities not included in
the above-described index.
THE RISKS INVOLVED IN SEEKING CAPITAL APPRECIATION FROM INVESTMENTS PRIMARILY IN
COMPANIES BASED OUTSIDE THE UNITED STATES ARE SET FORTH IN THE PROSPECTUS.
B-7
<PAGE>
COMPARISON OF A $10,000 INVESTMENT
Neuberger Berman August 31, 1999
- ----------------------------------------------------------------------
Manhattan Trust
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C> <C>
Average Annual Total Return(1)
Russell Midcap-TM-
Manhattan Growth Index(2) S&P 500(2)
1 Year +36.24% +48.83% +39.82%
5 Year +15.45% +19.25% +25.11%
10 Year +12.13% +15.22% +17.09%
Manhattan Trust Russell Midcap Growth S&P 500
1989 $10,000 $10,000 $10,000
1990 $8,754 $9,009 $9,488
1991 $11,044 $12,520 $12,048
1992 $11,568 $13,366 $13,004
1993 $14,771 $16,228 $14,980
1994 $15,317 $17,102 $15,806
1995 $19,284 $21,335 $19,192
1996 $18,710 $23,857 $22,780
1997 $25,976 $31,308 $32,057
1998 $23,060 $27,715 $34,647
1999 $31,416 $41,250 $48,444
</TABLE>
The performance information for Neuberger Berman Manhattan Trust is as of
August 31, 1999. Neuberger Berman Manhattan Trust started operating on
August 30, 1993. It has identical investment objectives and policies, and
invests in the same Portfolio as Neuberger Berman Manhattan Fund ("Sister
Fund"), which is also managed by Neuberger Berman Management Inc.
("Management"). The performance information shown in the above chart for the
period before August 30, 1993, is for the Sister Fund. Management voluntarily
bears certain operating expenses of the Trust so that its expense ratio per
annum will not exceed the expense ratio per annum of its Sister Fund by more
than 0.10% of the Trust's average daily net assets per annum. This arrangement
can be terminated upon 60 days' prior written notice. In connection with the
12b-1 fee recently submitted to shareholders, Management has notified the Trust
of its intention to raise the allowable annual differential to 0.20% as of
December 1, 1999. Absent such arrangement, the average annual total returns of
the Trust would have been less. The total returns for periods prior to the
Trust's commencement of operations would have been lower had they reflected the
higher expense ratios of the Trust as compared to those of its Sister Fund.
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.
B-8
<PAGE>
2. The Russell Midcap Growth Index measures the performance of those Russell
Midcap-TM- Index companies with higher price-to-book ratios and higher
forecasted growth values. The Russell Midcap Index measures the performance of
the 800 smallest companies in the Russell 1000-Registered Trademark- Index,
which represents approximately 26% of the total market capitalization of the
Russell 1000 Index (which, in turn, consists of the 1,000 largest U.S.
companies, based on market capitalization). The S&P 500 Index is an unmanaged
index generally considered to be representative of overall stock market
activity. Please note that indices do not take into account any fees and
expenses of investing in the individual securities that they track, and that
individuals cannot invest directly in any index. Data about the performance of
these indices are prepared or obtained by Management and include reinvestment of
all dividends and capital gain distributions. The Portfolio may invest in many
securities not included in the above-described indices.
B-9
<PAGE>
COMPARISON OF A $10,000 INVESTMENT
Neuberger Berman August 31, 1999
- ----------------------------------------------------------------------
Millennium Trust
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C> <C>
Aggregate Total Return(1)
Russell 2000 -Registered Trademark-
Millennium Growth (2) Russell 2000 -Registered Trademark-(2)
Life of Fund +95.10% +34.43% +22.81%
Millennium Trust Russell 2000 Growth Russell 2000
10/20/98 $10,000 $10,000 $10,000
8/31/99 $19,510 $13,443 $12,281
</TABLE>
These are cumulative returns and are not annualized. The cumulative returns
shown above for Neuberger Berman Millennium Trust, the Russell 2000 Growth
Index, and the Russell 2000 Index are from October 20, 1998, which is the
commencement of operations of Neuberger Berman Millennium Fund, through
August 31, 1999. The cumulative return for Millennium Trust from November 4,
1998, which is the commencement of operations of Millennium Trust, through
August 31, 1999 was 82.00%. Because this is a new fund, short-term results may
not be duplicated. Average net assets of Neuberger Berman Millennium Portfolio
through August 31, 1999 were approximately $32.1 million. It may be easier to
achieve higher returns in a small fund than in a larger fund. In particular,
IPO's had a significant impact on the performance of the Trust. Millennium
Trust's performance can also be attributed to its focus on the small-cap growth
sector of the stock market, which has experienced a period of accelerated
growth. Neuberger Berman Management Inc. ("Management") currently absorbs
certain operating expenses so that its expense ratio per annum will not exceed
the expense ratio of Millennium Fund by more than 0.10% of Millennium Trust's
average daily net assets, not to exceed 1.75%. In connection with the 12b-1 fee
recently submitted to shareholders, Management has notified the Trust of its
intention to raise the allowable annual differential to 0.20% as of December 1,
1999, but not to exceed 1.75%. Absent this arrangement, which is subject to
B-10
<PAGE>
change with 60 days' notice, the Trust's returns would have been less. The risks
involved in seeking capital appreciation from investments primarily in companies
with small market capitalization are set forth in the prospectus.
1. "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 Russell 2000 Growth Index measures the performance of those Russell 2000
Index companies with higher price-to-book ratios and higher forecasted growth
values. The Russell 2000 Index is an unmanaged index that measures the
performance of the 2,000 issuers having the smallest capitalization in the
Russell 3000-Registered Trademark- Index, representing approximately 8% of the
Russell 3000 total mark capitalization. The smallest company's market
capitalization is roughly $178 million. Please note that indices do not take
into account any fees and expenses of investing in the individual securities
that they track, and that individuals cannot invest directly in any index. Data
about the performance of these indices are prepared or obtained by Management
and include reinvestment of all dividends and capital gain distributions. The
Portfolio may invest in many securities not included in the above-described
indices.
B-11
<PAGE>
COMPARISON OF A $10,000 INVESTMENT
Neuberger Berman August 31, 1999
- ----------------------------------------------------------------------
Partners Trust
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C> <C>
Average Annual Total Return(1)
Russell 1000 -Registered Trademark-
Partners Value(2) S&P 500(2)
1 Year +25.91% +30.08% +39.82%
5 Year +18.13% +21.44% +25.11%
10 Year +14.03% +15.25% +17.09%
Partners Trust Russell 1000 Value S&P 500
1989 $10,000 $10,000 $10,000
1990 $9,318 $8,819 $9,488
1991 $10,998 $10,897 $12,048
1992 $11,933 $11,991 $13,004
1993 $15,293 $15,212 $14,980
1994 $16,150 $15,647 $15,806
1995 $19,626 $18,648 $19,192
1996 $22,326 $21,919 $22,780
1997 $32,844 $30,585 $32,057
1998 $29,510 $31,775 $34,647
1999 $37,157 $41,333 $48,444
</TABLE>
The performance information for Neuberger Berman Partners Trust is as of
August 31, 1999. Neuberger Berman Partners Trust started operating on August 30,
1993. It has identical investment objectives and policies, and invests in the
same Portfolio as Neuberger Berman Partners Fund ("Sister Fund"), which is also
managed by Neuberger Berman Management Inc. ("Management"). The performance
information shown in the above chart for the period before August 30, 1993, is
for the Sister Fund. Management voluntarily bears certain operating expenses of
the Trust so that its expense ratio per annum will not exceed the expense ratio
per annum of its Sister Fund by more than 0.10% of the Trust's average daily net
assets per annum. This arrangement can be terminated upon 60 days' prior written
notice. In connection with the 12b-1 fee recently submitted to shareholders,
Management has notified the Trust of its intention to raise the allowable annual
differential to 0.20% as of December 1, 1999. Absent such arrangement, the
average annual total returns of the Trust would have been less. The total
returns for periods prior to the Trust's commencement of operations would have
been lower had they reflected the higher expense ratios of the Trust as compared
to those of its Sister Fund.
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.
B-12
<PAGE>
2. The Russell 1000-Registered Trademark- Index measures the performance of the
1,000 largest companies in the Russell 3000-Registered Trademark- Index (which
measures the performance of the 3,000 largest U.S. companies based on total
market capitalization). The Russell 1000 Index represents approximately 92% of
the total market capitalization of the Russell 3000 Index. The Russell 1000
Value Index measures the performance of those Russell 1000 companies with lower
price-to-book ratios and lower forecasted growth values. 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
these indices are prepared or obtained by Management and include reinvestment of
all dividends and capital gain distributions. The Portfolio may invest in many
securities not included in the above-described indices.
B-13
<PAGE>
COMPARISON OF A $10,000 INVESTMENT
Neuberger Berman August 31, 1999
- ----------------------------------------------------------------------
Regency Trust
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C> <C>
Aggregate Total Return(1)
Regency Russell Midcap -TM- Value(2) Russell Midcap-TM-(2)
Life of Fund -1.72% -4.80% -1.92%
Regency Trust Russell Midcap Value Russell Midcap
6/1/99 $10,000 $10,000 $10,000
8/31/99 $9,828 $9,520 $9,808
</TABLE>
These are cumulative returns and are not annualized. The cumulative returns
shown above for Neuberger Berman Regency Trust, the Russell Midcap Value Index,
and the Russell Midcap Index are from June 1, 1999, which is the commencement of
operations of Neuberger Berman Regency Fund through August 31, 1999. The
cumulative return for Regency Trust from June 10, 1999, which is the
commencement of operations of Regency Trust, through August 31, 1999 was -2.40%.
Because this is a new fund, short-term results may not be duplicated. Average
net assets of Neuberger Berman Regency Portfolio through August 31, 1999 were
$6.1 million. It may be easier to achieve higher returns in a small fund than in
a larger fund. In particular, IPO's had a significant impact on the performance
of the Trust. Neuberger Berman Management Inc. ("Management") currently absorbs
certain operating expenses that exceed, in the aggregate, 1.50% of the average
daily net assets per annum of the Trust, until December 31, 2002. Absent this
arrangement, which is subject to change, the Trust's returns would have been
less. The risks involved in seeking capital appreciation from investments
primarily in companies with medium market capitalization are set forth in the
prospectus.
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 Russell Midcap Value Index measures the performance of those Russell
Midcap Index companies with lower price-to-book ratios and lower forecasted
growth values. The Russell Midcap Index measures
B-14
<PAGE>
the performance of the 800 smallest companies in the Russell
1000-Registered Trademark- Index, which represents approximately 26% of the
total market capitalization of the Russell 1000 Index (which, in turn, consists
of the 1,000 largest U.S. companies, based on market capitalization). Please
note that indices do not take into account any fees and expenses of investing in
the individual securities that they track, and that individuals cannot invest
directly in any index. Data about the performance of these indices are prepared
or obtained by Management and include reinvestment of all dividends and capital
gain distributions. The Portfolio may invest in many securities not included in
the above-described indices.
B-15
<PAGE>
COMPARISON OF A $10,000 INVESTMENT
Neuberger Berman August 31, 1999
- ----------------------------------------------------------------------
Socially Responsive Trust
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C>
Average Annual Total Return(1)
Socially Responsive S&P 500(2)
1 Year +36.76% +39.82%
5 Year +19.14% +25.11%
Life of Fund +17.53% +23.39%
Socially Responsive
Trust S&P 500
3/16/94 $10,000 $10,000
8/31/94 $10,070 $10,279
1995 $11,865 $12,481
1996 $14,261 $14,814
1997 $18,813 $20,848
1998 $17,675 $22,533
1999 $24,171 $31,505
</TABLE>
The performance information for Neuberger Berman Socially Responsive Trust is
as of August 31, 1999. Neuberger Berman Socially Responsive Trust started
operating on March 3, 1997. It has identical investment objectives and policies,
and invests in the same Portfolio as Neuberger Berman Socially Responsive Fund
("Sister Fund"), which is also managed by Neuberger Berman Management Inc.
("Management"). The performance information shown in the above chart for the
period before March 3, 1997, is for the Sister Fund. Management voluntarily
bears certain operating expenses of the Trust so that its expense ratio per
annum will not exceed the expense ratio per annum of its Sister Fund by more
than 0.10% of the Trust's average daily net assets per annum. This arrangement
can be terminated upon 60 days' prior written notice. In connection with the
12b-1 fee recently submitted to shareholders, Management has notified the Trust
of its intention to raise the allowable annual differential to 0.20% as of
December 1, 1999. Absent such arrangement, the average annual total returns of
the Trust would have been less. The total returns for periods prior to the
Trust's commencement of operations would have been lower had they reflected the
higher expense ratios of the Trust as compared to those of its Sister Fund.
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.
B-16
<PAGE>
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 Management and
include reinvestment of all dividends and capital gain distributions. The
Portfolio may invest in many securities not included in the above-described
index.
B-17
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
Neuberger Berman
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY TRUST
---------------------------------
FOCUS GENESIS GUARDIAN
(000'S OMITTED EXCEPT PER SHARE AMOUNTS) TRUST TRUST TRUST
---------------------------------
<S> <C> <C> <C>
ASSETS
Investment in corresponding Portfolio, at
value (Note A) $216,696 $597,219 $1,251,954
Deferred organization costs (Note A) -- -- --
Receivable for Trust shares sold 47 1,963 998
Receivable from administrator -- net
(Note B) -- -- --
---------------------------------
216,743 599,182 1,252,952
---------------------------------
LIABILITIES
Payable for Fund expenses (Note B) -- -- --
Payable for Trust shares redeemed 616 7,627 1,256
Payable to administrator -- net (Note B) 60 209 444
Accrued expenses 47 237 101
---------------------------------
723 8,073 1,801
---------------------------------
NET ASSETS at value $216,020 $591,109 $1,251,151
---------------------------------
NET ASSETS consist of:
Par value $ 9 $ 29 $ 76
Paid-in capital in excess of par value 154,945 591,902 881,344
Accumulated undistributed net investment
income (loss) -- 2,832 2,288
Accumulated net realized gains (losses) on
investment 11,762 (48,174) 227,923
Net unrealized appreciation (depreciation)
in value of investment 49,304 44,520 139,520
---------------------------------
NET ASSETS at value $216,020 $591,109 $1,251,151
---------------------------------
SHARES OUTSTANDING
($.001 par value; unlimited shares
authorized) 9,145 29,177 76,470
---------------------------------
NET ASSET VALUE, offering and redemption price per
share $23.62 $20.26 $16.36
---------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-18
<PAGE>
August 31, 1999
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY
ASSETS
EQUITY TRUST ---------
--------------------------------------------------- SOCIALLY
INTERNATIONAL MANHATTAN MILLENNIUM PARTNERS REGENCY RESPONSIVE
TRUST TRUST TRUST TRUST TRUST TRUST
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investment in corresponding
Portfolio, at value (Note A) $2,303 $45,305 $2,199 $849,259 $ 353 $ 25,267
Deferred organization costs
(Note A) 70 -- -- -- -- 57
Receivable for Trust shares sold 23 30 -- 2,336 -- 59
Receivable from
administrator -- net (Note B) -- -- 19 -- 72 9
---------------------------------------------------------------
2,396 45,335 2,218 851,595 425 25,392
---------------------------------------------------------------
LIABILITIES
Payable for Fund expenses
(Note B) -- -- -- -- 55 --
Payable for Trust shares redeemed -- 2 -- 1,095 -- 60
Payable to administrator -- net
(Note B) 7 18 -- 297 -- --
Accrued expenses 16 31 18 95 13 37
---------------------------------------------------------------
23 51 18 1,487 68 97
---------------------------------------------------------------
NET ASSETS at value $2,373 $45,284 $2,200 $850,108 $ 357 $ 25,295
---------------------------------------------------------------
NET ASSETS consist of:
Par value $ -- $ 3 $ -- $ 45 $ -- $ 2
Paid-in capital in excess of par
value 2,382 29,810 1,724 732,003 371 21,517
Accumulated undistributed net
investment income (loss) (6) -- -- 7,351 -- --
Accumulated net realized gains
(losses) on investment 28 4,426 267 46,100 3 460
Net unrealized appreciation
(depreciation) in value of
investment (31) 11,045 209 64,609 (17) 3,316
---------------------------------------------------------------
NET ASSETS at value $2,373 $45,284 $2,200 $850,108 $ 357 $ 25,295
---------------------------------------------------------------
SHARES OUTSTANDING
($.001 par value; unlimited shares
authorized) 140 3,014 121 45,432 37 1,755
---------------------------------------------------------------
NET ASSET VALUE, offering and redemption
price per share $16.92 $15.02 $18.20 $18.71 $9.76 $14.41
---------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-19
<PAGE>
STATEMENTS OF OPERATIONS
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY TRUST
---------------------------------
FOCUS GENESIS GUARDIAN
TRUST TRUST TRUST
For the For the For the
Year Year Year
Ended Ended Ended
August August August
31, 31, 31,
(000'S OMITTED) 1999 1999 1999
---------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Investment income from corresponding Portfolio
(Note A) $ 2,054 $ 13,052 $ 23,094
---------------------------------
Expenses:
Administration fee (Note B) 931 2,948 6,043
Amortization of deferred organization and
initial offering expenses (Note A) -- -- --
Auditing fees 5 5 6
Custodian fees 10 10 10
Legal fees 15 17 18
Registration and filing fees 49 184 53
Shareholder reports 47 356 174
Shareholder servicing agent fees 20 26 24
Trustees' fees and expenses 4 11 20
Miscellaneous 3 8 23
Expenses from corresponding Portfolio
(Notes A & B) 1,190 5,495 6,975
---------------------------------
Total expenses 2,274 9,060 13,346
Expenses reimbursed by administrator and/or
reduced by custodian fee expense offset
arrangement (Note B) (60) (2) (1)
---------------------------------
Total net expenses 2,214 9,058 13,345
---------------------------------
Net investment income (loss) (160) 3,994 9,749
---------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
FROM CORRESPONDING PORTFOLIO (NOTE A)
Net realized gain (loss) on investment
securities 15,729 (50,517) 193,083
Net realized gain on option contracts 8 -- 1,967
Net realized gain (loss) on financial futures
contracts -- -- 35,670
Net realized loss on foreign currency
transactions -- -- --
Net realized loss on equity swap contracts -- -- --
Change in net unrealized appreciation
(depreciation) of investment securities,
financial futures contracts, option
contracts, equity swap contracts,
translation of assets and liabilities in
foreign currencies, and foreign currency
contracts 55,767 178,420 157,393
---------------------------------
Net gain (loss) on investments from
corresponding Portfolio (Note A) 71,504 127,903 388,113
---------------------------------
Net increase (decrease) in net assets
resulting from operations $ 71,344 $131,897 $397,862
---------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-20
<PAGE>
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY
EQUITY TRUST ASSETS
---------------------------------------------------------------------- ---------
MILLENNIUM
TRUST
REGENCY
For the TRUST SOCIALLY
Period from PARTNERS RESPONSIVE
INTERNATIONAL MANHATTAN November 4, TRUST For the TRUST
TRUST TRUST 1998 Period from
(Commencement For the June 10, 1999 For the
For the For the of Year (Commencement Year
Year Year Operations) Ended of Operations) Ended
Ended Ended to August to August
August 31, August 31, August 31, 31, August 31, 31,
1999 1999 1999 1999 1999 1999
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Investment income from corresponding
Portfolio (Note A) $ 25 $ 257 $ 5 $ 15,361 $ 1 $ 236
----------------------------------------------------------------------------------
Expenses:
Administration fee (Note B) 8 207 4 3,528 -- 78
Amortization of deferred
organization and initial
offering expenses (Note A) 18 -- -- -- -- 23
Auditing fees 4 6 6 5 5 9
Custodian fees 10 10 8 10 3 10
Legal fees 16 16 28 13 25 28
Registration and filing fees 26 30 39 156 36 35
Shareholder reports 17 23 35 120 3 17
Shareholder servicing agent fees 2 18 1 20 -- 18
Trustees' fees and expenses -- 1 -- 12 -- --
Miscellaneous 1 2 -- 10 -- 1
Expenses from corresponding
Portfolio (Notes A & B) 23 298 12 4,137 1 116
----------------------------------------------------------------------------------
Total expenses 125 611 133 8,011 73 335
Expenses reimbursed by
administrator and/or reduced by
custodian fee expense offset
arrangement (Note B) (90) (37) (116) (1) (72) (101)
----------------------------------------------------------------------------------
Total net expenses 35 574 17 8,010 1 234
----------------------------------------------------------------------------------
Net investment income (loss) (10) (317) (12) 7,351 -- 2
----------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS FROM CORRESPONDING
PORTFOLIO (NOTE A)
Net realized gain (loss) on
investment securities 196 4,459 279 45,924 3 429
Net realized gain on option
contracts -- -- -- -- -- --
Net realized gain (loss) on
financial futures contracts (24) -- -- -- -- --
Net realized loss on foreign
currency transactions (36) -- -- -- -- --
Net realized loss on equity swap
contracts (1) -- -- -- -- --
Change in net unrealized
appreciation (depreciation) of
investment securities, financial
futures contracts, option
contracts, equity swap contracts,
translation of assets and
liabilities in foreign currencies,
and foreign currency contracts 314 12,225 209 141,300 (17) 4,701
----------------------------------------------------------------------------------
Net gain (loss) on investments
from corresponding Portfolio
(Note A) 449 16,684 488 187,224 (14) 5,130
----------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations $ 439 $16,367 $ 476 $194,575 $ (14) $ 5,132
----------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-21
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY TRUST
FOCUS GENESIS
TRUST TRUST
Year Year
Ended Ended
August 31, August 31,
(000'S OMITTED) 1999 1998 1999 1998
-------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ (160) $ 374 $ 3,994 $ 5,007
Net realized gain (loss) on
investments from
corresponding Portfolio
(Note A) 15,737 (5,390) (50,517) 7,821
Change in net unrealized
appreciation (depreciation)
of investments from
corresponding Portfolio
(Note A) 55,767 (41,253) 178,420 (208,363)
-------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations 71,344 (46,269) 131,897 (195,535)
-------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (312) (80) (5,066) --
Net realized gain on
investments -- (3,917) (8,444) (4,127)
-------------------------------------------------
Total distributions to
shareholders (312) (3,997) (13,510) (4,127)
-------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 72,867 167,271 577,427 930,187
Proceeds from reinvestment of
dividends and distributions 311 3,473 11,221 3,118
Payments for shares redeemed (121,354) (88,211) (820,431) (411,875)
-------------------------------------------------
Net increase (decrease) from
Trust share transactions (48,176) 82,533 (231,783) 521,430
-------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS 22,856 32,267 (113,396) 321,768
NET ASSETS:
Beginning of year 193,164 160,897 704,505 382,737
-------------------------------------------------
End of year $ 216,020 $ 193,164 $ 591,109 $ 704,505
-------------------------------------------------
Accumulated undistributed net
investment income (loss) at
end of year $ -- $ 223 $ 2,832 $ 5,007
-------------------------------------------------
NUMBER OF TRUST SHARES:
Sold 3,256 7,536 29,655 41,459
Issued on reinvestment of
dividends and distributions 14 174 569 144
Redeemed (5,395) (4,005) (41,810) (18,685)
-------------------------------------------------
Net increase (decrease) in
shares outstanding (2,125) 3,705 (11,586) 22,918
-------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-22
<PAGE>
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY TRUST
INTERNATIONAL
TRUST
Period from
June 29,
GUARDIAN 1998 MANHATTAN
TRUST (Commencement TRUST
of
Year Year Operations) Year
Ended Ended to Ended
August 31, August 31, August 31, August 31,
1999 1998 1999 1998 1999 1998
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 9,749 $ 11,466 $ (10) $ (2) $ (317) $ (297)
Net realized gain (loss) on
investments from
corresponding Portfolio
(Note A) 230,720 157,109 135 (77) 4,459 2,923
Change in net unrealized
appreciation (depreciation)
of investments from
corresponding Portfolio
(Note A) 157,393 (546,539) 314 (344) 12,225 (8,490)
---------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations 397,862 (377,964) 439 (423) 16,367 (5,864)
---------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (8,934) (12,284) -- -- -- --
Net realized gain on
investments (143,039) (161,079) -- -- (2,903) (9,083)
---------------------------------------------------------------------------------
Total distributions to
shareholders (151,973) (173,363) -- -- (2,903) (9,083)
---------------------------------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 451,781 740,850 2,030 2,252 39,767 29,973
Proceeds from reinvestment of
dividends and distributions 151,733 172,922 -- -- 2,902 9,082
Payments for shares redeemed (1,127,748) (1,102,701) (1,857) (68) (56,952) (29,068)
---------------------------------------------------------------------------------
Net increase (decrease) from
Trust share transactions (524,234) (188,929) 173 2,184 (14,283) 9,987
---------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS (278,345) (740,256) 612 1,761 (819) (4,960)
NET ASSETS:
Beginning of year 1,529,496 2,269,752 1,761 -- 46,103 51,063
---------------------------------------------------------------------------------
End of year $1,251,151 $1,529,496 $ 2,373 $ 1,761 $ 45,284 $ 46,103
---------------------------------------------------------------------------------
Accumulated undistributed net
investment income (loss) at
end of year $ 2,288 $ 1,493 $ (6) $ -- $ -- $ --
---------------------------------------------------------------------------------
NUMBER OF TRUST SHARES:
Sold 26,757 38,806 130 132 2,854 2,011
Issued on reinvestment of
dividends and distributions 9,378 10,159 -- -- 200 695
Redeemed (67,053) (58,140) (117) (5) (4,012) (1,971)
---------------------------------------------------------------------------------
Net increase (decrease) in
shares outstanding (30,918) (9,175) 13 127 (958) 735
---------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-23
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS(Cont'd)
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY TRUST
MILLENNIUM
TRUST
Period from
November 4, 1998
(Commencement
of Operations)
to
August 31,
(000'S OMITTED) 1999
----------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ (12)
Net realized gain (loss) on
investments from corresponding
Portfolio (Note A) 279
Change in net unrealized
appreciation (depreciation) of
investments from corresponding
Portfolio (Note A) 209
----------------
Net increase (decrease) in net
assets resulting from operations 476
----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income --
Net realized gain on investments --
----------------
Total distributions to shareholders --
----------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 2,890
Proceeds from reinvestment of
dividends and distributions --
Payments for shares redeemed (1,166)
----------------
Net increase (decrease) from Trust
share transactions 1,724
----------------
NET INCREASE (DECREASE) IN NET ASSETS 2,200
NET ASSETS:
Beginning of year --
----------------
End of year $ 2,200
----------------
Accumulated undistributed net
investment income (loss) at end of
year $ --
----------------
NUMBER OF TRUST SHARES:
Sold 193
Issued on reinvestment of dividends
and distributions --
Redeemed (72)
----------------
Net increase (decrease) in shares
outstanding 121
----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-24
<PAGE>
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY TRUST EQUITY ASSETS
REGENCY
TRUST SOCIALLY
PARTNERS RESPONSIVE
TRUST Period from TRUST
June 10, 1999
Year (Commencement Year
Ended of Operations) to Ended
August 31, August 31, August 31,
1999 1998 1999 1999 1998
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 7,351 $ 5,089 $ -- $ 2 $ 39
Net realized gain (loss) on
investments from
corresponding Portfolio
(Note A) 45,924 29,585 3 429 113
Change in net unrealized
appreciation (depreciation)
of investments from
corresponding Portfolio
(Note A) 141,300 (140,295) (17) 4,701 (1,847)
------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations 194,575 (105,621) (14) 5,132 (1,695)
------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- (2,430) -- (42) (8)
Net realized gain on
investments (22,347) (53,755) -- (139) (82)
------------------------------------------------------------------------
Total distributions to
shareholders (22,347) (56,185) -- (181) (90)
------------------------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 389,153 597,753 488 11,886 9,617
Proceeds from reinvestment of
dividends and distributions 22,046 54,739 -- 181 90
Payments for shares redeemed (462,985) (231,594) (117) (5,139) (2,238)
------------------------------------------------------------------------
Net increase (decrease) from
Trust share transactions (51,786) 420,898 371 6,928 7,469
------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS 120,442 259,092 357 11,879 5,684
NET ASSETS:
Beginning of year 729,666 470,574 -- 13,416 7,732
------------------------------------------------------------------------
End of year $ 850,108 $ 729,666 $ 357 $ 25,295 $ 13,416
------------------------------------------------------------------------
Accumulated undistributed net
investment income (loss) at
end of year $ 7,351 $ -- $ -- $ -- $ 32
------------------------------------------------------------------------
NUMBER OF TRUST SHARES:
Sold 21,341 32,171 48 862 753
Issued on reinvestment of
dividends and distributions 1,228 3,207 -- 14 8
Redeemed (25,015) (12,535) (11) (382) (176)
------------------------------------------------------------------------
Net increase (decrease) in
shares outstanding (2,446) 22,843 37 494 585
------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-25
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Neuberger Berman August 31, 1999
- ----------------------------------------------------------------------
Equity Trust and Equity Assets
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1) GENERAL: Neuberger Berman Focus Trust ("Focus"), Neuberger Berman Genesis
Trust ("Genesis"), Neuberger Berman Guardian Trust ("Guardian"), Neuberger
Berman International Trust ("International"), Neuberger Berman Manhattan
Trust ("Manhattan"), Neuberger Berman Millennium Trust ("Millennium"),
Neuberger Berman Partners Trust ("Partners"), and Neuberger Berman Regency
Trust ("Regency") are separate operating series of Neuberger Berman Equity
Trust ("Equity Trust"), a Delaware business trust organized pursuant to a
Trust Instrument dated May 6, 1993. Neuberger Berman Socially Responsive
Trust ("Socially Responsive") is a separate operating series of Neuberger
Berman Equity Assets ("Equity Assets"), a Delaware business trust organized
pursuant to a Trust Instrument dated October 18, 1993. These nine
aforementioned series are collectively referred to as the "Funds." Equity
Trust and Equity Assets (collectively, the "Trusts") are registered as
diversified, open-end management investment companies under the Investment
Company Act of 1940, as amended (the "1940 Act"), and their shares are
registered under the Securities Act of 1933, as amended (the "1933 Act").
International, Millennium, and Regency had no operations until June 29, 1998,
November 4, 1998, and June 10, 1999, respectively, other than matters
relating to their organization and registration as diversified, open-end
management investment companies under the 1940 Act, and registration of their
shares under the 1933 Act. The trustees of the Trusts may establish
additional series or classes of shares without the approval of shareholders.
The assets of each Fund belong only to that Fund, and the liabilities of
each Fund are borne solely by that Fund and no other.
Each Fund seeks to achieve its investment objective by investing all of
its net investable assets in its corresponding portfolio of Equity Managers
Trust (Global Managers Trust with respect to International) (each a
"Portfolio") having the same investment objective and policies as the Fund.
The value of each Fund's investment in its corresponding Portfolio reflects
that Fund's proportionate interest in the net assets of that Portfolio
(14.01%, 34.11%, 26.50%, 2.01%, 7.39%, 3.22%, 22.53%, 4.26%, and 6.36%, for
Focus, Genesis, Guardian, International, Manhattan, Millennium, Partners,
Regency, and Socially Responsive, respectively, at August 31, 1999). 63.74%
of Neuberger Berman Socially Responsive Portfolio is held by another
regulated investment company, which has decided to redeem its interest in the
Portfolio subsequent to August 31, 1999. Neuberger Berman
B-26
<PAGE>
Management Inc. ("Management") is endeavoring to carry out this transaction
in a way that would minimize the effect on the Portfolio. The performance of
each Fund is directly affected by the performance of its corresponding
Portfolio. The financial statements of each Portfolio, including the Schedule
of Investments, are included elsewhere in this report and should be read in
conjunction with the corresponding Fund's financial statements.
2) PORTFOLIO VALUATION: Each Fund records its investment in its corresponding
Portfolio at value. Investment securities held by each Portfolio are valued
as indicated in the notes following the Portfolios' Schedule of Investments.
3) TAXES: The Funds are treated as separate entities for U.S. Federal income tax
purposes. It is the policy of Focus, Genesis, Guardian, International,
Manhattan, Partners, and Socially Responsive to continue to and the intention
of Millennium and Regency to qualify as regulated investment companies by
complying with the provisions available to certain investment companies, as
defined in applicable sections of the Internal Revenue Code, and to make
distributions of investment company taxable income and net capital gains
(after reduction for any amounts available for U.S. Federal income tax
purposes as capital loss carryforwards) sufficient to relieve it from all, or
substantially all, U.S. Federal income taxes. Accordingly, each Fund paid no
U.S. Federal income taxes and no provision for U.S. Federal income taxes was
required.
4) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Each Fund earns income, net of
Portfolio expenses, daily on its investment in its corresponding Portfolio.
Income dividends and distributions from net realized capital gains, if any,
are normally distributed in December. Guardian generally distributes
substantially all of its net investment income, if any, at the end of each
calendar quarter. Income dividends and capital gain distributions to
shareholders are recorded on the ex-dividend date. To the extent each Fund's
net realized capital gains, if any, can be offset by capital loss
carryforwards ($2,348,587 expiring in 2007 for Genesis, determined as of
August 31, 1999), it is the policy of each Fund not to distribute such gains.
Each Fund distinguishes between dividends on a tax basis and a financial
reporting basis and only distributions in excess of tax basis earnings and
profits are reported in the financial statements as a return of capital.
Differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes are classified as
distributions in excess of net investment income or accumulated net realized
gains. For the year ended August 31, 1999, Focus and Socially Responsive
hereby designate an additional $89,437 and $7,733, respectively, as capital
gain distributions for purposes of the dividend paid deduction.
B-27
<PAGE>
5) ORGANIZATION EXPENSES: Expenses incurred by International and Socially
Responsive in connection with their organization are being amortized on a
straight-line basis over a five-year period. At August 31, 1999, the
unamortized balance of such expenses amounted to $70,052 and $56,800, for
International and Socially Responsive, respectively.
6) EXPENSE ALLOCATION: Each Fund bears all costs of its operations. Expenses
incurred by the Trusts with respect to any two or more funds are allocated in
proportion to the net assets of such funds, except where a more appropriate
allocation of expenses to each fund can otherwise be made fairly. Expenses
directly attributable to a fund are charged to that fund.
7) OTHER: All net investment income and realized and unrealized capital gains
and losses of each Portfolio are allocated pro rata among its respective
Funds and any other investors in the Portfolio.
NOTE B -- ADMINISTRATION FEES, DISTRIBUTION ARRANGEMENTS, AND OTHER TRANSACTIONS
WITH AFFILIATES:
Each Fund retains Management as its administrator under an Administration
Agreement ("Agreement"). Pursuant to this Agreement each Fund pays Management an
administration fee at the annual rate of 0.40% of that Fund's average daily net
assets. Each Fund indirectly pays for investment management services through its
investment in its corresponding Portfolio (see Note B of Notes to Financial
Statements of the Portfolios).
For Regency, Management acts as agent in arranging for the sale of Fund
shares without commission and bears advertising and promotion expenses. The
trustees of the Trust have adopted a plan pursuant to Rule 12b-1 under the 1940
Act (the "Plan"). The Plan provides that, as compensation for administrative and
other services provided to Regency, Management's activities and expenses related
to the sale and distribution of Fund shares, and ongoing services provided to
investors in the Fund, Management receives from Regency a fee at the annual rate
of 0.10% of the Fund's average daily net assets. Management pays this amount to
institutions that distribute Fund shares and provide services to the Fund and
its shareholders. Those institutions may use the payments for, among other
purposes, compensating employees engaged in sales and/or shareholder servicing.
The amount of fees paid by Regency during any year may be more or less than the
cost of distribution and other services provided to the Fund. NASD rules limit
the amount of annual distribution fees that may be paid by a mutual fund and
impose a ceiling on the cumulative distribution fees paid. The Trust's Plan
complies with those rules.
Management has voluntarily undertaken to reimburse each Fund for its
operating expenses plus its pro rata portion of its corresponding Portfolio's
operating expenses (including the fees payable to Management but excluding
interest, taxes, brokerage commissions, and extraordinary expenses) ("Operating
Expenses") which exceed, in the aggregate, by more than 0.10% (for
International, Millennium, and Regency, not
B-28
<PAGE>
to exceed 1.70%, 1.75%, and 1.50%, respectively) the expense ratio per annum
(each an "Expense Limitation") of a certain other mutual fund ("Sister Fund")
which also invests in the same Portfolio. Each undertaking is subject to
termination by Management upon at least 60 days' prior written notice to the
appropriate Fund. For Regency, Management has contractually undertaken to
reimburse any excess Operating Expenses through December 31, 2002. For the year
ended August 31, 1999, such excess expenses amounted to $58,587, $89,443,
$37,105, $115,640, $72,144, and $101,048, for Focus, International, Manhattan,
Millennium, Regency, and Socially Responsive, respectively. For the year ended
August 31, 1999, there was no reimbursement of expenses by Management to
Genesis, Guardian, and Partners. Millennium has agreed to repay Management
through December 31, 2000, for its excess Operating Expenses that Management
reimbursed through December 31, 1999, so long as Millennium's Operating Expenses
during that period do not exceed its Expense Limitation. For the year ended
August 31, 1999, Millennium has not reimbursed Management. Regency has agreed to
repay Management through December 31, 2005, for its excess Operating Expenses
previously reimbursed by Management, so long as its annual Operating Expenses
during that period do not exceed its Expense Limitation, and the repayments are
made within three years after the year in which Management issued the
reimbursement. For the period ended August 31, 1999, Regency has not reimbursed
Management.
Since inception of Regency, Management has voluntarily undertaken to pay
certain expenses of the Fund as an advance. These expenses will be repaid by the
Fund to Management in the future, and are included under the caption Payable for
Fund expenses in the Statements of Assets and Liabilities.
As of August 31, 1999, all of the capital stock of Management is owned by
individuals who are also principals of Neuberger Berman, LLC ("Neuberger"), a
member firm of The New York Stock Exchange and sub-adviser to each Portfolio.
Several individuals who are officers and/or trustees of the Trusts are also
principals of Neuberger and/or officers and/or directors of Management.
Each Fund also has a distribution agreement with Management. Management
receives no compensation therefor (except from Regency) and no commissions for
sales or redemptions of shares of beneficial interest of each Fund, but receives
fees from Regency under the Plan, as described above.
Each Portfolio has an expense offset arrangement in connection with its
custodian contract. In addition, in connection with the Securities Lending
Agreement between each Portfolio and Morgan Stanley & Co. Incorporated
("Morgan"), Morgan had agreed to reimburse each Portfolio for transaction costs
incurred on security lending transactions charged by the custodian through
May 31, 1999. The impact of these arrangements, respectively, reflected in the
Statements of Operations under the caption Expenses from corresponding
Portfolio, was a reduction of $170 and $340, $279
B-29
<PAGE>
and $1,873, $695 and $473, $14 and $41, $82 and $379, $24 and $55, $632 and
$480, $3 and $0, and $11 and $24, for Focus, Genesis, Guardian, International,
Manhattan, Millennium, Partners, Regency, and Socially Responsive, respectively.
NOTE C -- INVESTMENT TRANSACTIONS:
During the year ended August 31, 1999, additions and reductions in each
Fund's investment in its corresponding Portfolio were as follows:
<TABLE>
<CAPTION>
ADDITIONS REDUCTIONS
- -------------------------------------------------------------------------------------
<S> <C> <C>
FOCUS $ 31,849,000 $ 81,132,000
GENESIS 215,749,000 459,911,000
GUARDIAN 147,904,000 842,135,000
INTERNATIONAL 1,941,000 1,851,000
MANHATTAN 27,299,000 44,833,000
MILLENNIUM 2,823,000 1,105,000
PARTNERS 161,127,000 242,301,000
REGENCY 489,000 121,000
SOCIALLY RESPONSIVE 9,991,000 3,312,000
</TABLE>
At August 31, 1999, Neuberger Berman International Portfolio's cost of
investments for U.S. Federal income tax purposes was $84,361,000. Gross
unrealized appreciation of investments was $37,716,000 and gross unrealized
depreciation of investments was $2,829,000, resulting in net unrealized
appreciation of $34,887,000, based on cost for U.S. Federal income tax purposes.
B-30
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Focus Trust(1)(2)
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Year Ended August 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
--------------------------------------------------------------------
Net Asset Value, Beginning of Year $17.14 $21.27 $14.83 $14.41 $11.36
--------------------------------------------------------------------
Income From Investment Operations
Net Investment Income (Loss) (.02) .03 .01 .06 .05
Net Gains or Losses on Securities (both realized and
unrealized) 6.53 (3.66) 6.49 .46 3.05
--------------------------------------------------------------------
Total From Investment Operations 6.51 (3.63) 6.50 .52 3.10
--------------------------------------------------------------------
Less Distributions
Dividends (from net investment income) (.03) (.01) (.06) (.02) (.05)
Distributions (from net capital gains) -- (.49) -- (.08) --
--------------------------------------------------------------------
Total Distributions (.03) (.50) (.06) (.10) (.05)
--------------------------------------------------------------------
Net Asset Value, End of Year $23.62 $17.14 $21.27 $14.83 $14.41
--------------------------------------------------------------------
Total Return(3) +38.07% -17.45% +43.93% +3.62% +27.44%
--------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $216.0 $193.2 $160.9 $ 55.6 $ 14.5
--------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets(4) .95% .94% .96% .99% --
--------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets(5) .95% .94% .96% .99% .96%
--------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net
Assets (.07%) .17% .11% .63% .67%
--------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-31
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Genesis 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 its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Year Ended August 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
----------------------------------------------
Net Asset Value, Beginning of
Year $17.28 $21.45 $14.99 $12.65 $10.59
----------------------------------------------
Income From Investment
Operations
Net Investment Income
(Loss) .13 .12 (.01) (.02) (.01)
Net Gains or Losses on
Securities (both realized
and unrealized) 3.17 (4.14) 6.61 2.68 2.08
----------------------------------------------
Total From Investment
Operations 3.30 (4.02) 6.60 2.66 2.07
----------------------------------------------
Less Distributions
Dividends (from net
investment income) (.12) -- -- -- --
Distributions (from net
capital gains) (.20) (.15) (.14) (.32) (.01)
----------------------------------------------
Total Distributions (.32) (.15) (.14) (.32) (.01)
----------------------------------------------
Net Asset Value, End of Year $20.26 $17.28 $21.45 $14.99 $12.65
----------------------------------------------
Total Return(3) +19.15% -18.88% +44.31% +21.44% +19.51%
----------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year
(in millions) $591.1 $704.5 $382.7 $ 65.2 $ 30.6
----------------------------------------------
Ratio of Gross Expenses to
Average Net Assets(4) 1.23% 1.17% 1.26% 1.38% --
----------------------------------------------
Ratio of Net Expenses to
Average Net Assets 1.23% 1.17%(5) 1.25%(5) 1.38%(5) 1.42%(5)
----------------------------------------------
Ratio of Net Investment
Income (Loss) to Average
Net Assets .54% .68% (.16%) (.27%) (.24%)
----------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-32
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Guardian 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 its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Year Ended August 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
------------------------------------------------------
Net Asset Value, Beginning of
Year $ 14.24 $ 19.47 $ 14.24 $ 13.83 $11.27
------------------------------------------------------
Income From Investment
Operations
Net Investment Income .12 .09 .08 .16 .13
Net Gains or Losses on
Securities (both realized
and unrealized) 3.57 (3.93) 5.48 .55 2.55
------------------------------------------------------
Total From Investment
Operations 3.69 (3.84) 5.56 .71 2.68
------------------------------------------------------
Less Distributions
Dividends (from net
investment income) (.10) (.10) (.10) (.14) (.12)
Distributions (from net
capital gains) (1.47) (1.29) (.23) (.16) --
------------------------------------------------------
Total Distributions (1.57) (1.39) (.33) (.30) (.12)
------------------------------------------------------
Net Asset Value, End of Year $ 16.36 $ 14.24 $ 19.47 $ 14.24 $13.83
------------------------------------------------------
Total Return(3) +26.07% -20.88% +39.56% +5.19% +24.01%
------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year
(in millions) $1,251.2 $1,529.5 $2,269.8 $1,340.1 $683.1
------------------------------------------------------
Ratio of Gross Expenses to
Average Net Assets(4) .88% .87% .88% .92% --
------------------------------------------------------
Ratio of Net Expenses to
Average Net Assets .88% .87% .88% .92%(5) .90%(5)
------------------------------------------------------
Ratio of Net Investment
Income to Average Net
Assets .65% .50% .47% 1.26% 1.35%
------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-33
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
International 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 its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
June 29, 1998(6) to
Year Ended August 31, August 31,
1999 1998
<S> <C> <C>
---------------------------------------------
Net Asset Value, Beginning of Year $13.87 $17.13
---------------------------------------------
Income From Investment Operations
Net Investment Loss (.07) (.02)
Net Gains or Losses on Securities (both
realized and unrealized) 3.12 (3.24)
---------------------------------------------
Total From Investment Operations 3.05 (3.26)
---------------------------------------------
Net Asset Value, End of Year $16.92 $13.87
---------------------------------------------
Total Return(3) +21.99% -19.03%(7)
---------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $ 2.4 $ 1.8
---------------------------------------------
Ratio of Gross Expenses to Average Net
Assets(4) 1.70% 1.70%(8)
---------------------------------------------
Ratio of Net Expenses to Average Net Assets(5) 1.70% 1.70%(8)
---------------------------------------------
Ratio of Net Investment Loss to Average Net
Assets (.49%) (.54%)(8)
---------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-34
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Manhattan 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 its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Year Ended August 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
--------------------------------------------------------------------
Net Asset Value, Beginning of Year $11.61 $15.77 $12.18 $12.99 $10.37
--------------------------------------------------------------------
Income From Investment Operations
Net Investment Loss (.11) (.07) (.04) (.04) --
Net Gains or Losses on Securities (both realized and
unrealized) 4.29 (1.40) 4.55 (.34) 2.67
--------------------------------------------------------------------
Total From Investment Operations 4.18 (1.47) 4.51 (.38) 2.67
--------------------------------------------------------------------
Less Distributions
Dividends (from net investment income) -- -- -- -- (.01)
Distributions (from net capital gains) (.77) (2.69) (.92) (.43) (.04)
--------------------------------------------------------------------
Total Distributions (.77) (2.69) (.92) (.43) (.05)
--------------------------------------------------------------------
Net Asset Value, End of Year $15.02 $11.61 $15.77 $12.18 $12.99
--------------------------------------------------------------------
Total Return(3) +36.24% -11.23% +38.84% -2.98% +25.90%
--------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $ 45.3 $ 46.1 $ 51.1 $ 48.2 $ 35.6
--------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets(4) 1.11% 1.04% 1.09% 1.08% --
--------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets(5) 1.11% 1.04% 1.09% 1.08% 1.06%
--------------------------------------------------------------------
Ratio of Net Investment Loss to Average Net Assets (.61%) (.52%) (.30%) (.38%) (.03%)
--------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-35
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Millennium Trust(1)
The following table includes selected data for a share outstanding throughout
the period and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
November 4, 1998(6) to
August 31,
1999
<S> <C>
----------------------
Net Asset Value, Beginning of Period $10.00
----------------------
Income From Investment Operations
Net Investment Loss (.10)
Net Gains or Losses on Securities (both
realized and unrealized) 8.30
----------------------
Total From Investment Operations 8.20
----------------------
Net Asset Value, End of Period $18.20
----------------------
Total Return(3)(7) +82.00%
----------------------
Ratios/Supplemental Data
Net Assets, End of Period (in millions) $ 2.2
----------------------
Ratio of Gross Expenses to Average Net
Assets(4)(8) 1.76%
----------------------
Ratio of Net Expenses to Average Net
Assets(5)(8) 1.75%
----------------------
Ratio of Net Investment Loss to Average Net
Assets(8) (1.24%)
----------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-36
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Partners 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 its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Year Ended August 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
---------------------------------------------------
Net Asset Value, Beginning of Year $15.24 $18.80 $13.39 $12.68 $10.54
---------------------------------------------------
Income From Investment Operations
Net Investment Income .16 .11 .07 .08 .05
Net Gains or Losses on Securities (both
realized and unrealized) 3.77 (1.82) 6.06 1.59 2.19
---------------------------------------------------
Total From Investment Operations 3.93 (1.71) 6.13 1.67 2.24
---------------------------------------------------
Less Distributions
Dividends (from net investment income) -- (.08) (.08) (.07) (.02)
Distributions (from net capital gains) (.46) (1.77) (.64) (.89) (.08)
---------------------------------------------------
Total Distributions (.46) (1.85) (.72) (.96) (.10)
---------------------------------------------------
Net Asset Value, End of Year $18.71 $15.24 $18.80 $13.39 $12.68
---------------------------------------------------
Total Return(3) +25.91% -10.15% +47.11% +13.76% +21.52%
---------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $850.1 $729.7 $470.6 $128.5 $ 61.3
---------------------------------------------------
Ratio of Gross Expenses to Average Net
Assets(4) .91% .90% .91% .94% --
---------------------------------------------------
Ratio of Net Expenses to Average Net Assets .91% .90%(5) .91%(5) .94%(5) .92%(5)
---------------------------------------------------
Ratio of Net Investment Income to Average Net
Assets .83% .70% .64% .84% .81%
---------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-37
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Regency Trust(1)
The following table includes selected data for a share outstanding throughout
the period and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
June 10, 1999(6)
to
August 31,
1999
<S> <C>
----------------
Net Asset Value, Beginning of Period $10.00
----------------
Income From Investment Operations
Net Investment Income .01
Net Gains or Losses on Securities
(both realized and unrealized) (.25)
----------------
Total From Investment Operations (.24)
----------------
Net Asset Value, End of Period $ 9.76
----------------
Total Return(3)(7) -2.40%
----------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $ 0.4
----------------
Ratio of Gross Expenses to Average
Net Assets(4)(8) 1.51%
----------------
Ratio of Net Expenses to Average Net
Assets(5)(8) 1.50%
----------------
Ratio of Net Investment Income to
Average Net Assets(8) .57%
----------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-38
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
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 its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
March 3, 1997(6) to
Year Ended August 31, August 31,
1999 1998 1997
<S> <C> <C> <C>
---------------------------------------------------
Net Asset Value, Beginning of Year $10.64 $11.43 $10.00
---------------------------------------------------
Income From Investment Operations
Net Investment Income -- .03 --
Net Gains or Losses on Securities (both realized and
unrealized) 3.90 (.71) 1.43
---------------------------------------------------
Total From Investment Operations 3.90 (.68) 1.43
---------------------------------------------------
Less Distributions
Dividends (from net investment income) (.03) (.01) --
Distributions (from net capital gains) (.10) (.10) --
---------------------------------------------------
Total Distributions (.13) (.11) --
---------------------------------------------------
Net Asset Value, End of Year $14.41 $10.64 $11.43
---------------------------------------------------
Total Return(3) +36.76% -6.05% +14.30%(7)
---------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in millions) $ 25.3 $ 13.4 $ 7.7
---------------------------------------------------
Ratio of Gross Expenses to Average Net Assets(4) 1.20% 1.20% 1.58%(8)
---------------------------------------------------
Ratio of Net Expenses to Average Net Assets(5) 1.20% 1.20% 1.58%(8)
---------------------------------------------------
Ratio of Net Investment Income to Average Net Assets .01% .33% .06%(8)
---------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-39
<PAGE>
NOTES TO FINANCIAL HIGHLIGHTS
Neuberger Berman August 31, 1999
- ----------------------------------------------------------------------
Equity Trust and Equity Assets
1) The per share amounts and ratios which are shown reflect income and expenses,
including each Fund's proportionate share of its corresponding Portfolio's
income and expenses.
2) Prior to January 1, 1995, its name was Neuberger&Berman Selected Sectors
Trust.
3) Total return based on per share net asset value reflects the effects of
changes in net asset value on the performance of each Fund during each fiscal
period and assumes dividends and other distributions, if any, were
reinvested. Results represent past performance and do not guarantee future
results. Investment returns and principal may fluctuate and shares when
redeemed may be worth more or less than original cost. Total return would
have been lower if Management had not reimbursed certain expenses. In
addition, for Genesis, total return would have been lower if the investment
manager had not waived a portion of the management fee.
4) 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.
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 of net expenses to average daily net assets would have
been:
<TABLE>
<CAPTION>
Year Ended August 31,
FOCUS 1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Expenses .98% .97% 1.06% 1.27% 2.50%
----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year Ended
August 31,
GUARDIAN 1996 1995
- ------------------------------------------------------------------------------------
<S> <C> <C>
Net Expenses .92% .96%
----------------------
</TABLE>
<TABLE>
<CAPTION>
Period from
Year Ended June 29, 1998 to
August 31, August 31,
INTERNATIONAL 1999 1998
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Net Expenses 5.98% 6.02%
--------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year Ended August 31,
MANHATTAN 1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Expenses 1.18% 1.15% 1.23% 1.25% 1.46%
----------------------------------------------------------------
</TABLE>
B-40
<PAGE>
<TABLE>
<CAPTION>
Period from
November 4, 1998 to
August 31,
MILLENNIUM 1999
- -------------------------------------------------------------------------------------
<S> <C>
Net Expenses 13.39%
-------------------
</TABLE>
<TABLE>
<CAPTION>
Year Ended August 31,
PARTNERS 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Expenses .91% .94% 1.06% 1.24%
--------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Period from
June 10, 1999 to
August 31,
REGENCY 1999
- ------------------------------------------------------------------------------
<S> <C>
Net Expenses 129.45%
----------------
</TABLE>
<TABLE>
<CAPTION>
Period from
Year Ended March 3, 1997 to
August 31, August 31,
SOCIALLY RESPONSIVE 1999 1998 1997
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Expenses 1.72% 2.05% 3.33%
--------------------------------------------
</TABLE>
After reimbursement of expenses by Management as described in Note B of Notes
to Financial Statements and/or the waiver of a portion of the management fee by
the investment manager as described in Note B of Notes to Financial Statements
of Neuberger Berman Genesis Portfolio. Had Management not undertaken such action
the annualized ratios of net expenses to average daily net assets would have
been:
<TABLE>
<CAPTION>
Year Ended August 31,
GENESIS 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Expenses 1.19% 1.35% 1.65% 1.78%
--------------------------------------------------
</TABLE>
6) The date investment operations commenced.
7) Not annualized.
8) Annualized.
B-41
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of Neuberger Berman Equity Trust and
Shareholders of Neuberger Berman Manhattan Trust,
Neuberger Berman Millennium Trust, and
Neuberger Berman Regency Trust
In our opinion, the accompanying statements 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 Manhattan Trust, Neuberger Berman Millennium Trust, and
Neuberger Berman Regency Trust, collectively (the "Trust"), at August 31, 1999,
and the results of their operations, the changes in their net assets, and the
financial highlights for each of the periods indicated, 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 8, 1999
B-42
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of Neuberger Berman Equity Assets and
Shareholders of Neuberger Berman 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 Socially Responsive Trust (the "Trust") at August 31, 1999, and
the results of its operations, the changes in its net assets, and the financial
highlights for each of the periods indicated, 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 8, 1999
B-43
<PAGE>
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS
To the Board of Trustees
Neuberger Berman Equity Trust and
Shareholders of:
Neuberger Berman Focus Trust
Neuberger Berman Genesis Trust
Neuberger Berman Guardian Trust
Neuberger Berman International Trust and
Neuberger Berman Partners Trust
We have audited the accompanying statements of assets and liabilities of the
Neuberger Berman Focus Trust, Neuberger Berman Genesis Trust, Neuberger Berman
Guardian Trust, Neuberger Berman International Trust, and Neuberger Berman
Partners Trust, five of the series constituting the Neuberger Berman Equity
Trust (the "Trust"), as of August 31, 1999, and the related statements of
operations, the statements of changes in net assets, and the financial
highlights for each of the periods indicated therein. These financial statements
and financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the above mentioned series of Neuberger Berman Equity Trust at August 31,
1999, the results of their operations for the year then ended, the changes in
their net assets, and their financial highlights for each of the periods
indicated therein, in conformity with generally accepted accounting principles.
[Signature]
/s/ Ernst & Young LLP
Boston, Massachusetts
October 1, 1999
B-44
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman August 31, 1999
- --------------------------------------------------------------------------------
Focus Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Citigroup Inc. 9.1%
2. Chase Manhattan 7.3%
3. Capital One Financial 6.8%
4. Morgan Stanley Dean Witter 5.7%
5. Compuware Corp. 5.1%
6. Countrywide Credit Industries 4.9%
7. Wellpoint Health Networks 4.9%
8. BankBoston Corp. 3.3%
9. Rational Software 3.1%
10. Atmel Corp. 3.1%
<CAPTION>
Market
Number Value(1)
of (000's
Shares omitted)
- --- ----------
<C> <S> <C>
COMMON STOCKS (96.6%)
AUTOMOTIVE (3.0%)
705,000 General Motors $ 46,618
----------
FINANCIAL SERVICES (47.1%)
833,000 Bank One 33,424
1,090,000 BankBoston Corp. 50,617
2,767,500 Capital One Financial 104,473
1,355,000 Chase Manhattan 113,397
3,183,375 Citigroup Inc. 141,461
2,381,000 Countrywide Credit Industries 76,490
560,000 Hartford Financial Services Group 25,445
1,025,000 Morgan Stanley Dean Witter 87,958
568,700 Nationwide Financial Services 20,758
390,000 Providian Financial 30,274
1,243,000 Travelers Property Casualty 44,126
----------
728,423
----------
HEALTH CARE (6.4%)
1,865,990 Foundation Health Systems $ 23,791(2)
1,040,000 Wellpoint Health Networks 75,790(2)
----------
99,581
----------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ----------
<C> <S> <C>
RETAIL (10.8%)
1,800,000 Furniture Brands International 36,113(2)
1,638,400 Jones Apparel Group 42,496(2)
1,048,700 Kmart Corp. 13,174(2)
345,000 Payless ShoeSource 17,207(2)
995,000 Promus Hotel 28,917(2)
1,525,000 Sterling Commerce 29,166(2)
----------
167,073
----------
TECHNOLOGY (29.3%)
1,380,000 3Com Corp. 34,241(2)
1,200,000 Atmel Corp. 47,175(2)
504,000 Autodesk, Inc. 11,592
657,000 BMC Software 35,355(2)
1,185,000 Compaq Computer 27,477(3)
2,594,800 Compuware Corp. 78,331(2)
175,000 Lattice Semiconductor 10,784(2)
605,000 Microchip Technology 33,124(2)
1,150,000 Oracle Corp. 41,975(2)
1,302,500 Photronics, Inc. 31,097(2)(4)
1,795,000 Rational Software 48,577(2)
495,000 Tech Data 18,346(2)
420,000 Texas Instruments 34,466
----------
452,540
----------
TOTAL COMMON STOCKS (COST $987,085) 1,494,235
----------
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- ---------- ----------
<C> <S> <C>
</TABLE>
C-1
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman August 31, 1999
- --------------------------------------------------------------------------------
Focus Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- ---------- ----------
<C> <S> <C>
REPURCHASE AGREEMENTS (1.5%)
$22,890,000 State Street Bank and Trust Co.
Repurchase Agreement, 5.25%,
due 9/1/99, dated 8/31/99, Maturity
Value $22,893,338, Collateralized by
$22,645,000 U.S. Treasury Bonds, 8.25%,
due 5/15/05 (Collateral Value
$23,579,106) (COST $22,890) $ 22,890(5)
----------
SHORT-TERM INVESTMENTS (0.5%)
7,114,402 N&B Securities Lending Quality Fund, LLC
(COST $7,114) 7,114(5)
----------
TOTAL INVESTMENTS (98.6%) (COST
$1,017,089) 1,524,239(6)
Cash, receivables and other assets, less
liabilities (1.4%) 22,159
----------
TOTAL NET ASSETS (100.0%) $1,546,398
----------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-2
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman August 31, 1999
- --------------------------------------------------------------------------------
Genesis Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Alliant Techsystems 2.8%
2. Dallas Semiconductor 2.7%
3. Newport News Shipbuilding 2.4%
4. Zebra Technologies 2.2%
5. AAR Corp. 2.2%
6. AptarGroup Inc. 2.1%
7. Trigon Healthcare 2.0%
8. Webster Financial 1.8%
9. United Stationers 1.7%
10. Cordant Technologies 1.6%
<CAPTION>
Market
Number Value(1)
of (000's
Shares omitted)
- --- ----------
<C> <S> <C>
COMMON STOCKS (96.5%)
AEROSPACE (6.7%)
1,771,350 AAR Corp. $ 37,863(4)
1,219,500 Aviall Inc. 13,567(2)(4)
658,700 Cordant Technologies 27,254
478,300 DONCASTERS PLC ADR 6,636(2)(4)
299,850 Ducommun Inc. 3,598(2)
205,400 Howmet International 3,672(2)
425,000 Ladish Co. 2,975(2)
344,700 Moog, Inc. Class A 11,289(2)
471,500 Orbital Sciences 10,461(2)
----------
117,315
----------
AUTOMOTIVE (0.7%)
607,200 Donaldson Co. 11,916
----------
BANKING & FINANCIAL (7.2%)
534,200 Bank United 18,330
573,100 Community First Bankshares 11,766
667,600 Cullen/Frost Bankers 17,441
331,400 Highland Bancorp 6,172(4)
291,000 Ocean Financial $ 5,202
1,008,300 Peoples Heritage Financial Group 16,952
116,212 Queens County Bancorp 3,196
726,675 Sterling Bancshares 8,720
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ----------
<C> <S> <C>
300,350 Texas Regional Bancshares 7,678
1,163,400 Webster Financial 31,339
----------
126,796
----------
BASIC MATERIALS (0.5%)
230,200 Lone Star Industries 7,913
----------
BUILDING, CONSTRUCTION & FURNISHING (1.1%)
294,800 Lincoln Electric Holdings 5,970
273,600 Simpson Manufacturing 14,090(2)
----------
20,060
----------
BUSINESS SERVICES (3.0%)
1,075,600 Davox Corp. 14,991(2)(4)
343,500 Fair, Isaac & Co. 9,704
418,300 Navigant Consulting 18,353(2)
209,000 Valassis Communications 9,144(2)
----------
52,192
----------
CONSUMER CYCLICALS (0.4%)
417,600 Coachmen Industries 6,603
----------
CONSUMER PRODUCTS & SERVICES (5.7%)
801,000 Alberto-Culver Class A 17,272
530,637 Block Drug 21,325
101,800 Bush Boake Allen 2,653(2)
521,300 Church & Dwight 24,241
349,800 Matthews International 9,488
1,086,800 Ruddick Corp. 20,174
462,000 The First Years 4,995
----------
100,148
----------
DEFENSE (6.1%)
663,200 Alliant Techsystems $ 48,414(2)(4)
1,309,100 Newport News Shipbuilding 41,155
800,400 Primex Technologies 16,708(4)
----------
106,277
----------
DIAGNOSTIC EQUIPMENT (0.3%)
906,500 ADAC Laboratories 5,326
----------
ELECTRONICS (4.9%)
456,900 Benchmark Electronics 16,820(2)
951,900 Dallas Semiconductor 48,071
</TABLE>
C-3
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Genesis Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ----------
<C> <S> <C>
289,800 Etec Systems 12,751(2)
172,100 SCI Systems 8,573(2)
----------
86,215
----------
ENERGY (1.8%)
692,300 Cabot Oil & Gas 13,197
150,000 Cross Timbers Oil 1,856
808,290 Swift Energy 10,205(2)
875,800 Unit Corp. 6,733(2)
----------
31,991
----------
HEALTH CARE (9.8%)
977,800 Acuson Corp. 15,400(2)
174,600 Arrow International 5,063
275,400 CONMED Corp. 7,711(2)
709,000 DENTSPLY International 17,592
1,207,900 Haemonetics Corp. 23,630(2)
885,300 Mentor Corp. 20,694
389,950 Patterson Dental 15,988(2)
275,000 Respironics, Inc. 2,733(2)
503,700 STAAR Surgical 5,981(2)
940,700 Trigon Healthcare 34,159(2)
679,600 Universal Health Services Class B 22,682(2)
----------
171,633
----------
INDUSTRIAL & COMMERCIAL PRODUCTS & SERVICES (7.2%)
356,300 BMC Industries $ 4,387
474,900 Brady Corp. 14,247
282,000 Dionex Corp. 11,227(2)
1,261,300 Hussmann International 21,442
369,700 IDEX Corp. 10,929
770,200 Kaydon Corp. 23,636
183,100 Roper Industries 6,557
814,400 SOS Staffing Services 4,835(2)(4)
1,247,400 Wallace Computer Services 26,663
203,750 Woodhead Industries 2,248
----------
126,171
----------
INSURANCE (3.5%)
910,200 Annuity and Life Re 20,138
660,800 FBL Financial Group 13,092
857,900 Scottish Annuity & Life Holdings 8,365
858,700 W. R. Berkley 19,535
----------
61,130
----------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ----------
<C> <S> <C>
LODGING (0.5%)
846,000 Prime Hospitality 7,878
----------
MACHINERY & EQUIPMENT (0.8%)
686,600 Gardner Denver Machinery 13,174(2)
----------
OFFICE EQUIPMENT (1.7%)
1,350,900 United Stationers 30,564(2)
----------
OIL SERVICES (9.5%)
390,700 Cal Dive International 14,700(2)
748,600 Friede Goldman International 9,170(2)
1,018,800 Global Industries 11,398(2)
938,100 IRI International 4,397(2)
619,500 Nabors Industries 16,843(2)
1,538,712 National-Oilwell 26,158(2)
793,400 Oceaneering International 15,918(2)
781,600 Offshore Logistics $ 9,135(2)
777,300 Pride International 11,562(2)
579,400 Smith International 27,051(2)
636,000 Tuboscope Inc. 9,262(2)
513,200 UTI Energy 10,264(2)
----------
165,858
----------
PACKING & CONTAINERS (2.1%)
1,450,100 AptarGroup Inc. 37,340
----------
PUBLISHING & BROADCASTING (2.2%)
155,239 Hearst-Argyle Television 3,929(2)
329,300 Houghton Mifflin 15,724
467,100 Meredith Corp. 16,203
78,866 Pulitzer Inc. 3,455
----------
39,311
----------
RESTAURANTS (1.2%)
890,050 Brinker International 21,361(2)
----------
RETAILING (2.7%)
527,968 99 Cents Only Stores 19,007(2)
471,600 Claire's Stores 8,872
340,000 ShopKo Stores 9,732(2)
273,800 Whole Foods Market 9,840(2)
----------
47,451
----------
TECHNOLOGY (8.0%)
798,700 Analysts International 10,683
242,000 Black Box 11,102(2)
</TABLE>
C-4
<PAGE>
August 31, 1999
- --------------------------------------------------------------------------------
Genesis Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ----------
<C> <S> <C>
543,600 CACI International 12,231(2)
2,201,600 Inprise Corp. 9,288(2)
322,400 Jack Henry & Associates 10,478
250,000 Keane, Inc. 5,422(2)
1,507,500 Methode Electronics Class A $ 27,135
1,009,900 Wind River Systems 16,095(2)
812,500 Zebra Technologies 38,187(2)
----------
140,621
----------
TRANSPORTATION, SHIPPING & FREIGHT (0.7%)
232,900 Air Express International 5,692
190,900 Circle International Group 4,725
213,600 Maritrans Inc. 1,081
----------
11,498
----------
UTILITIES, ELECTRIC & GAS (8.2%)
834,700 AGL Resources 15,077
326,000 Atmos Energy 8,170
282,500 Central Hudson Gas & Electric 11,936
190,200 Connecticut Energy 7,109
144,300 Eastern Enterprises 6,484
855,200 Montana Power 26,458
173,000 National Fuel Gas 8,142
180,300 NICOR Inc. 6,975
345,900 NUI Corp. 8,864
283,100 ONEOK, Inc. 8,794
213,500 Otter Tail Power 8,500
766,784 Sierra Pacific Resources 18,690
290,000 Washington Gas Light 7,739
----------
142,938
----------
TOTAL COMMON STOCKS (COST $1,548,759) 1,689,680
----------
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- ---------- ----------
<C> <S> <C>
REPURCHASE AGREEMENTS (1.5%)
$26,740,000 State Street Bank and Trust Co.
Repurchase Agreement, 5.25%,
due 9/1/99, dated 8/31/99, Maturity
Value $26,743,900, Collateralized by
$27,405,000 U.S. Treasury Notes,
5.875%, due 2/15/00 (Collateral Value
$27,543,505) (COST $26,740) $ 26,740(5)
----------
SHORT-TERM INVESTMENTS (3.6%)
10,000,000 American Express Credit Corp., 5.13%,
due 9/3/99 9,997
10,000,000 General Electric Capital Corp., 5.23%,
due 9/8/99 9,990
42,524,723 N&B Securities Lending Quality Fund, LLC 42,525
----------
TOTAL SHORT-TERM INVESTMENTS (COST
$62,512) 62,512(5)
----------
TOTAL INVESTMENTS (101.6%) (COST
$1,638,011) 1,778,932(6)
Liabilities, less cash, receivables and
other assets [(1.6%)] (27,828)
----------
TOTAL NET ASSETS (100.0%) $1,751,104
----------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-5
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman August 31, 1999
- --------------------------------------------------------------------------------
Guardian Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Wellpoint Health Networks 4.0%
2. MCI WorldCom 3.1%
3. Aetna Inc. 3.0%
4. Chase Manhattan 2.8%
5. Capital One Financial 2.8%
6. Wells Fargo 2.7%
7. Conseco, Inc. 2.6%
8. IBM 2.2%
9. Xerox Corp. 2.1%
10. Kimberly-Clark 2.1%
<CAPTION>
Market
Number Value(1)
of (000's
Shares omitted)
- --- ----------
<C> <S> <C>
COMMON STOCKS (86.0%)
BANKING & FINANCIAL (7.9%)
792,400 Bank of America $ 47,940
1,400,800 BankBoston Corp. 65,049
1,576,100 Chase Manhattan 131,900
3,174,500 Wells Fargo 126,385
----------
371,274
----------
BASIC MATERIALS (3.5%)
2,996,000 Cabot Corp. 69,095
367,500 International Paper 17,295
1,340,200 Lyondell Chemical 19,517
2,603,600 Millennium Chemicals 59,883
----------
165,790
----------
CAPITAL GOODS (2.8%)
425,700 Emerson Electric 26,659
4,176,800 Republic Services 45,423(2)
1,227,900 SCI Systems 61,165(2)
----------
133,247
----------
COMMUNICATION SERVICES (6.4%)
1,818,000 AT&T Corp. 81,810
1,214,700 Bell Atlantic 74,401
1,957,100 MCI WorldCom 148,250(2)
----------
304,461
----------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ----------
<C> <S> <C>
CONSUMER CYCLICALS (7.3%)
479,100 Carnival Corp. $ 21,410
4,123,100 Cendant Corp. 73,958
525,000 Federated Department Stores 24,150(2)
976,400 General Motors 64,564
2,077,600 Lear Corp. 83,494(2)
893,200 Lowe's Cos. 40,417
3,545,300 Office Depot 37,004(2)
----------
344,997
----------
CONSUMER STAPLES (5.7%)
1,106,300 AMFM Inc. 54,485(2)
1,715,500 Kimberly-Clark 97,676
1,378,600 McDonald's Corp. 57,040(3)
1,620,000 Philip Morris 60,649
----------
269,850
----------
ENERGY (9.0%)
868,500 Amerada Hess 53,901
356,400 Chevron Corp. 32,878
602,400 Diamond Offshore Drilling 23,042
1,070,400 Halliburton Co. 49,640
680,100 Mobil Corp. 69,625
390,500 Royal Dutch Petroleum - NY Shares 24,162
441,400 Schlumberger Ltd. 29,464
787,400 Texaco Inc. 50,000
627,700 Transocean Offshore 21,342
3,843,700 Union Pacific Resources Group 68,946
----------
423,000
----------
FINANCIAL SERVICES (15.6%)
270,000 American International Group 25,026
1,327,300 Associates First Capital 45,543
3,470,800 Capital One Financial 131,023
1,913,300 Citigroup Inc. 85,022
5,175,900 Conseco, Inc. 124,222
1,162,900 Countrywide Credit Industries 37,358
1,658,200 Hartford Financial Services Group $ 75,344
3,067,100 IndyMac Mortgage Holdings 41,214
579,500 Morgan Stanley Dean Witter 49,728
502,100 Progressive Corp. 51,214
1,576,000 SLM Holding 69,640
----------
735,334
----------
HEALTH CARE (9.3%)
1,801,200 Aetna Inc. 140,043
2,249,200 American Home Products 93,342
</TABLE>
C-7
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Guardian Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ----------
<C> <S> <C>
98,064 PacifiCare Health Systems 5,884(2)
200,000 Warner-Lambert 13,250
2,582,996 Wellpoint Health Networks 188,236(2)(3)
----------
440,755
----------
TECHNOLOGY (15.8%)
230,000 Apple Computer 15,008(2)
1,160,200 Computer Associates 65,551
975,000 Compuware Corp. 29,433(2)
381,200 Gateway Inc. 36,953(2)
678,300 Hewlett-Packard 71,476
829,000 IBM 103,262
734,100 Micron Technology 54,736(2)
560,000 Nortel Networks 22,995
1,728,700 Rational Software 46,783(2)
1,366,700 Seagate Technology 45,357(2)
699,700 Sun Microsystems 55,626(2)
469,500 Teradyne, Inc. 31,955(2)(3)
832,400 Texas Instruments 68,309(3)
2,097,800 Xerox Corp. 100,170
----------
747,614
----------
TRANSPORTATION (2.7%)
962,200 AMR Corp. $ 56,409(2)
1,031,600 Burlington Northern Santa Fe 29,916
1,005,000 Continental Airlines Class B 41,017(2)
----------
127,342
----------
TOTAL COMMON
STOCKS (COST
$3,473,802) 4,063,664
----------
PREFERRED STOCKS (1.6%)
2,878,900 News Corp. ADR (COST $76,136) 76,111
----------
<CAPTION>
Principal
Amount
- ----------
<C> <S> <C>
U.S. TREASURY SECURITIES (1.0%)
$50,000,000 U.S. Treasury Bills, 4.60%,
due 11/18/99 (COST $49,502) 49,502(5)
----------
U.S. GOVERNMENT AGENCY SECURITIES (1.1%)
50,000,000 Federal Home Loan Bank, Discount Notes,
5.40%, due 9/1/99 (COST $50,000) 50,000(5)
----------
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- ---------- ----------
<C> <S> <C>
REPURCHASE AGREEMENTS (2.4%)
$50,000,000 State Street Bank and Trust Co.
Repurchase Agreement, 5.25%,
due 9/1/99, dated 8/31/99, Maturity
Value $50,007,292, Collateralized by
$47,855,000 U.S. Treasury Bonds,
7.875%, due 11/15/07 (Collateral Value
$51,503,944) $ 50,000
50,000,000 State Street Bank and Trust Co.
Repurchase Agreement, 5.25%,
due 9/1/99, dated 8/31/99, Maturity
Value $50,007,292, Collateralized by
$45,880,000 U.S. Treasury Bonds, 7.50%,
due 11/15/16 (Collateral Value
$51,500,300) 50,000
11,170,000 State Street Bank and Trust Co.
Repurchase Agreement, 5.25%,
due 9/1/99, dated 8/31/99, Maturity
Value $11,171,629, Collateralized by
$11,270,000 U.S. Treasury Notes,
7.750%, due 12/31/99 (Collateral Value
$11,506,963) 11,170
----------
TOTAL REPURCHASE AGREEMENTS (COST
$111,170) 111,170(5)
----------
SHORT-TERM INVESTMENTS (6.2%)
$50,000,000 American Express Credit Corp., 5.23%,
due 9/2/99 $ 49,993
50,000,000 General Electric Capital Corp., 5.10%,
due 9/3/99 49,986
50,000,000 Merck & Co., Inc., 5.30%, due 9/3/99 49,985
50,000,000 Ford Motor Credit Co., 5.28%,
due 9/8/99 49,949
50,000,000 Novartis Finance Corp., 5.25%,
due 9/13/99 49,912
</TABLE>
C-8
<PAGE>
August 31, 1999
- --------------------------------------------------------------------------------
Guardian Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- ---------- ----------
<C> <S> <C>
19,057,000 Abbott Laboratories, 5.23%, due 9/23/99 18,996
24,436,603 N&B Securities Lending Quality Fund, LLC 24,437
----------
TOTAL SHORT-TERM INVESTMENTS (COST
$293,258) 293,258(5)
----------
TOTAL INVESTMENTS (98.3%) (COST
$4,053,868) 4,643,705(6)
Cash, receivables and other assets, less
liabilities (1.7%) 80,015
----------
TOTAL NET ASSETS (100.0%) $4,723,720
----------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-9
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
International Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
HOLDING COUNTRY INDUSTRY PERCENTAGE
<C> <S> <C> <C> <C>
1. Takeda Chemical Industries Japan Pharmaceutical 3.3%
2. Datacraft Asia Singapore Telecommunications 3.1%
3. Softbank Corp. Japan Technology 2.9%
4. WPP Group United Kingdom Advertising 2.2%
5. Nokia Corp. ADR Finland Telecommunications 2.0%
6. Mannesmann AG Germany Machinery & Equipment 2.0%
7. NTT Mobile Communication Network Japan Telecommunications 1.9%
8. Barclays PLC United Kingdom Banking & Financial 1.9%
9. British Telecom United Kingdom Telecommunications 1.7%
10. Terumo Corp. Japan Hospital Supplies 1.7%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- -------------
<C> <S> <C>
COMMON STOCKS (95.9%)
AUSTRALIA (1.5%)
58,000 Commonwealth Bank of Australia $ 913
53,000 National Australia Bank 802
---------
1,715
---------
BELGIUM (1.4%)
15,151 Mobistar SA 721(2)
8,060 Telinfo SA 919
---------
1,640
---------
BERMUDA (0.6%)
27,837 Global Crossing 720(2)
---------
CANADA (1.7%)
43,000 BioChem Pharma 1,115(2)
41,400 CGI Group 773(2)
---------
1,888
---------
DENMARK (2.3%)
65,900 Navision Software 1,639(2)
8,100 Vestas Wind Systems 1,025(2)
---------
2,664
---------
FINLAND (5.5%)
27,900 Nokia Corp. ADR 2,326
89,500 Perlos Oyj 1,278(2)
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- ---------
<C> <S> <C>
19,800 Pohjola Group Insurance, B
Shares $ 966
50,000 Tietoenator Oyj 1,693
---------
6,263
---------
FRANCE (6.0%)
14,490 BNP 1,110
7,500 Cap Gemini 1,289
30,000 Dassault Systemes ADR 1,132
37,500 Sanofi-Synthelabo 1,563(2)
22,909 Vivendi 1,772
---------
6,866
---------
GERMANY (2.0%)
15,000 Mannesmann AG 2,304
---------
HONG KONG (0.9%)
365,000 VTech Holdings 1,015
---------
IRELAND (2.3%)
42,920 Allied Irish Banks ADR 1,110
125,745 Bord Telecom Eireann 573(2)
44,200 CRH PLC 1,003
---------
2,686
---------
</TABLE>
C-10
<PAGE>
August 31, 1999
- --------------------------------------------------------------------------------
International Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- ---------
<C> <S> <C>
ITALY (1.5%)
50,000 ENI SpA $ 301
93,023 Telecom Italia 533
149,600 TIM SpA 872
---------
1,706
---------
JAPAN (29.4%)
10,800 Acom Co. 1,097
8,200 Advantest Corp. 1,114
120,000 Bank of Tokyo-Mitsubishi 1,794
8,500 Benesse Corp. 1,477
101,000 Chugai Pharmaceutical 1,118
19,700 FamilyMart Co. 1,013
6,000 Fancl Corp. 1,783
2,300 Internet Initiative Japan ADR 119(2)
77,000 Minebea Co. 930
89,000 Mitsubishi Trust & Banking 936
125,000 NSK Ltd. 805
165 NTT Corp. 1,856
130 NTT Mobile Communication
Network 2,154
18,000 Seven-Eleven Japan 1,319
9,700 Softbank Corp. 3,336
12,800 Sony Corp. 1,660
108,000 Sumitomo Bakelite 1,130
75,000 Takeda Chemical Industries 3,773
60,000 Terumo Corp. 1,921
31,900 THK Co. 1,047
3 Yahoo Japan 1,707
36,000 Yamanouchi Pharmaceutical 1,607
---------
33,696
---------
MALAYSIA (1.1%)
215,820 Malaysia WEBS Index Series 1,214
---------
MEXICO (0.9%)
122,500 Cemex SA, B Shares 542
15,750 Fomento Economico Mexicano ADR 521
---------
1,063
---------
NETHERLANDS (4.5%)
16,000 Aegon NV-New York $ 1,389
28,748 Getronics NV 1,409
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- ---------
<C> <S> <C>
50,000 Laurus NV 1,124
50,000 Versatel Telecom International 688(2)
14,000 VNU NV 538
---------
5,148
---------
RUSSIA (0.6%)
19,200 Global TeleSystems Group 620(2)
---------
SINGAPORE (7.4%)
924,000 Datacraft Asia 3,567
171,000 Natsteel Electronics 853
220,000 Overseas Union Bank 1,150
150,000 United Overseas Bank 1,114
78,000 Venture Manufacturing 746
964,000 Wing Tai Holdings 1,036
---------
8,466
---------
SOUTH KOREA (2.7%)
30,150 Hyundai Securities 712
85,550 Korea Data System 1,178
66,000 Samsung Corp. 1,163(2)
---------
3,053
---------
SPAIN (2.5%)
15,400 Banco Popular Espanol 1,130
35,748 Telefonica SA ADR 1,722(2)
---------
2,852
---------
SWEDEN (2.1%)
106,900 Assa Abloy 1,129
63,600 Skandia Forsakrings 1,298
---------
2,427
---------
SWITZERLAND (2.1%)
387 Disetronic Holding 1,279
300 Kudelski SA 1,124(2)
---------
2,403
---------
UNITED KINGDOM (16.9%)
159,400 Airtours PLC 1,109
88,815 Alliance & Leicester 1,215
71,400 Barclays PLC 2,122
63,028 BP Amoco 1,169
130,200 British Telecom 1,994
42,000 COLT Telecom Group $ 913(2)
33,600 Energis PLC 861(2)
30,500 Glaxo Wellcome 801
</TABLE>
C-11
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman August 31, 1999
- --------------------------------------------------------------------------------
International Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- ---------
<C> <S> <C>
120,000 Hays PLC 1,276
40,000 Sage Group 1,744
120,000 SEMA Group 1,303
50,000 Serco Group 1,207
57,770 Vodafone AirTouch 1,164
266,000 WPP Group 2,486
---------
19,364
---------
TOTAL COMMON STOCKS (COST
$74,914) 109,773
---------
PREFERRED STOCKS (0.6%)
270 Porsche AG, Germany
(COST $653) 681
---------
<CAPTION>
Principal
Amount
- ---------
<C> <S> <C>
REPURCHASE AGREEMENTS (3.4%)
$3,920,000 State Street Bank and Trust
Co. Repurchase Agreement,
5.25%, due 9/1/99, dated
8/31/99, Maturity Value
$3,920,572, Collateralized by
$3,210,000 U.S. Treasury
Bonds, 8.875%, due 8/15/17
(Collateral Value $4,040,937)
(COST $3,920) 3,920(5)
---------
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- --------- ---------
<C> <S> <C>
SHORT-TERM INVESTMENTS (4.2%)
$4,873,994 N&B Securities Lending Quality
Fund, LLC (COST $4,874) $ 4,874(5)
---------
TOTAL INVESTMENTS (104.1%)
(COST $84,361) 119,248
---------
Liabilities, less cash,
receivables and other assets
[(4.1%)] (4,732)
---------
TOTAL NET ASSETS (100.0%) $ 114,516
---------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-12
<PAGE>
SUMMARY SCHEDULE OF INVESTMENTS BY INDUSTRY
Neuberger Berman
- --------------------------------------------------------------------------------
International Portfolio
<TABLE>
<CAPTION>
Market
Value(1) Percentage of
Industry (000's omitted) Net Assets
- -------------------------------------------------- --------------- ---------------
<S> <C> <C>
Telecommunications $ 22,204 19.4%
Banking & Financial 15,205 13.3%
Pharmaceutical 9,976 8.7%
Technology 9,343 8.2%
Electronics 7,790 6.8%
Consumer Goods & Services 5,659 4.9%
Information Technology 5,513 4.8%
Machinery & Equipment 5,506 4.8%
Diversified 5,424 4.7%
Other Assets-Net 4,062 3.5%
Manufacturing 4,042 3.5%
Insurance 3,652 3.2%
Retailing 3,455 3.0%
Hospital Supplies 3,200 2.8%
Advertising 2,486 2.2%
Building Materials 1,546 1.3%
Oil & Gas 1,470 1.3%
Industrial Goods & Services 1,207 1.1%
Holding Companies 1,036 0.9%
Automotive 681 0.6%
Publishing & Broadcasting 538 0.5%
Food & Beverage 521 0.5%
--------------- ---------------
TOTAL NET ASSETS $ 114,516 100.0%
--------------- ---------------
</TABLE>
C-13
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Manhattan Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Citrix Systems 3.0%
2. Sanmina Corp. 2.5%
3. Biogen, Inc. 2.3%
4. TJX Cos. 2.3%
5. NTL Inc. 2.2%
6. Best Buy 2.1%
7. JDS Uniphase 1.9%
8. PMC-Sierra 1.9%
9. Adaptec, Inc. 1.9%
10. VERITAS Software 1.9%
<CAPTION>
Market
Number Value(1)
of (000's
Shares omitted)
- --- ----------
<C> <S> <C>
COMMON STOCKS (93.3%)
BUSINESS SERVICES (4.1%)
257,400 Avis Rent A Car $ 5,663(2)
148,800 Navigant Consulting 6,528(2)
206,500 USWeb Corp. 4,027(2)
202,150 Valassis Communications 8,844
---------
25,062
---------
CAPITAL GOODS (1.4%)
128,900 Waters Corp. 8,499(2)
---------
COMMUNICATIONS (9.2%)
126,400 Comverse Technology 9,859(2)
95,700 E-Tek Dynamics 5,425(2)
315,100 Intermedia Communications 8,193(2)
111,900 JDS Uniphase 11,868(2)
245,400 Metromedia Fiber Network 7,224(2)
58,500 RSL Communications 1,196(2)
76,100 VoiceStream Wireless $ 3,139(2)
184,600 WinStar Communications 9,380(2)
---------
56,284
---------
CONSUMER CYCLICALS (11.1%)
80,000 Adelphia Communications 4,960(2)
212,495 AMFM Inc. 10,465(2)
390,000 Cendant Corp. 6,996
178,700 Fortune Brands 6,701
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ---------
<C> <S> <C>
132,400 Harley-Davidson 7,216
106,000 Jones Intercable Class A 4,651(2)
138,900 NTL Inc. 13,638(2)
237,450 SFX Entertainment 9,780(2)
156,700 Starwood Hotels & Resorts Worldwide 3,731
---------
68,138
---------
CONSUMER STAPLES (0.9%)
116,500 Estee Lauder 5,352
---------
ELECTRICAL EQUIPMENT (9.7%)
230,000 Altera Corp. 9,689(2)
27,700 Broadcom Corp. 3,566(2)
93,000 Conexant Systems 6,684(2)
102,600 Maxim Integrated Products 6,906(2)
98,300 Micron Technology 7,330
126,600 PMC-Sierra 11,774(2)
81,000 Vitesse Semiconductor 5,508(2)
119,100 Xilinx Inc. 8,330(2)
---------
59,787
---------
ENERGY (3.9%)
211,000 Coastal Corp. 9,139
250,700 Enron Oil & Gas 5,985
477,600 Union Pacific Resources Group 8,567
---------
23,691
---------
FINANCIAL SERVICES (4.9%)
179,300 Capital One Financial $ 6,769
118,600 Donaldson, Lufkin & Jenrette 5,671
171,900 E*TRADE Group 4,297(2)
95,600 Lehman Brothers Holdings 5,139
105,500 Providian Financial 8,189
---------
30,065
---------
HARDWARE (5.5%)
298,700 Adaptec, Inc. 11,649(2)
106,500 Network Appliance 6,996(2)
202,300 Sanmina Corp. 15,173(2)
---------
33,818
---------
HEALTH CARE (11.7%)
185,400 Biogen, Inc. 14,229(2)
33,700 C. R. Bard 1,571
</TABLE>
C-14
<PAGE>
August 31, 1999
- --------------------------------------------------------------------------------
Manhattan Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ---------
<C> <S> <C>
301,100 Elan Corp. ADR 9,654(2)
151,400 Immunex Corp. 10,191(2)
41,750 MedImmune, Inc. 4,308
75,600 MiniMed Inc. 6,875(2)
80,700 PE Corp.-PE Biosystems Group 5,553
98,600 Sepracor Inc. 7,383(2)
201,900 The Laser Center 6,032(2)
78,500 Wellpoint Health Networks 5,721(2)
---------
71,517
---------
INTERNET (8.4%)
47,200 BroadVision, Inc. 4,699(2)
284,000 CheckFree Holdings 8,307(2)
75,900 Digex, Inc. 2,524(2)
33,600 DoubleClick Inc. 3,356(2)
41,200 Exodus Communications 3,311(2)
22,800 Inktomi Corp. 2,585(2)
124,200 Intuit Inc. $ 11,124(2)
105,000 Lycos, Inc. 4,266(2)
130,200 PSINet Inc. 6,233(2)
79,300 Safeguard Scientifics 5,333(2)
---------
51,738
---------
RETAIL (11.9%)
202,900 Abercrombie & Fitch 7,076(2)
176,100 Ann Taylor Stores 5,833(2)
180,700 Best Buy 12,694(2)
75,100 Brinker International 1,803(2)
107,200 Circuit City Stores 4,610
197,400 Furniture Brands International 3,960(2)
68,800 Limited, Inc. 2,606
197,500 Linens 'n Things 6,764(2)
324,600 Staples, Inc. 7,060(2)
136,000 Tandy Corp. 6,426
486,200 TJX Cos. 14,039
---------
72,871
---------
SOFTWARE (9.2%)
317,400 Citrix Systems 18,092(2)
129,800 Gemstar International Group 8,956(2)
330,000 Novell, Inc. 7,817(2)
145,300 Siebel Systems 9,980
194,400 VERITAS Software 11,518(2)
---------
56,363
---------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ---------
<C> <S> <C>
UTILITIES (1.4%)
280,400 Montana Power 8,675
---------
TOTAL COMMON STOCKS (COST $449,526) 571,860
---------
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- ----------- ---------
<C> <S> <C>
U.S. GOVERNMENT AGENCY SECURITIES (0.4%)
$ 2,750,000 Federal Home Loan Bank, Discount Notes,
5.15%, due 9/2/99 (COST $2,750) $ 2,750(5)
---------
REPURCHASE AGREEMENTS (2.0%)
12,240,000 State Street Bank and Trust Co.
Repurchase Agreement, 5.25%,
due 9/1/99, dated 8/31/99, Maturity
Value $12,241,785, Collateralized by
$12,445,000 U.S. Treasury Notes,
5.875%, due 6/30/00 (Collateral Value
$12,609,013) (COST $12,240) 12,240(5)
---------
SHORT-TERM INVESTMENTS (22.2%)
11,000,000 Ford Motor Credit Co., 5.14% & 5.20%,
due 9/2/99 & 9/7/99 10,996
3,000,000 AT&T Corp., 5.18%, due 9/7/99 2,998
$ 3,000,000 Emerson Electric Co., 5.30%,
due 9/10/99 $ 2,996
118,910,279 N&B Securities Lending Quality Fund, LLC 118,910
---------
TOTAL SHORT-TERM INVESTMENTS (COST
$135,900) 135,900(5)
---------
TOTAL INVESTMENTS (117.9%) (COST
$600,416) 722,750(6)
Liabilities, less cash, receivables and
other assets [(17.9%)] (109,891)
---------
TOTAL NET ASSETS (100.0%) $612,859
---------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-15
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman August 31, 1999
- --------------------------------------------------------------------------------
Millennium Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Peerless Systems 3.8%
2. Navigant Consulting 2.6%
3. Pinnacle Holdings 2.5%
4. Corinthian Colleges 2.4%
5. American Eagle Outfitters 2.3%
6. CSK Auto 2.3%
7. Visual Networks 2.3%
8. Alkermes, Inc. 2.2%
9. Radiant Systems 2.0%
10. Zoran Corp. 2.0%
<CAPTION>
Market
Number Value(1)
of (000's
Shares omitted)
- --- ----------
<C> <S> <C>
COMMON STOCKS (91.3%)
BUSINESS SERVICES (12.5%)
30,000 Cambridge Technology Partners $ 410(2)
50,000 Coinstar, Inc. 1,156(2)
78,000 Corinthian Colleges 1,604(2)
26,000 Gilat Communications 390(2)
35,000 Iron Mountain 1,103(2)
22,000 Lason, Inc. 994(2)
41,000 Navigant Consulting 1,799(2)
20,000 ProBusiness Services 535(2)
39,200 Provant, Inc. 539(2)
---------
8,530
---------
CONSUMER CYCLICALS (3.1%)
33,000 SFX Entertainment 1,359(2)
20,500 Speedway Motorsports 765(2)
---------
2,124
---------
ELECTRICAL EQUIPMENT (10.8%)
25,000 Asyst Technologies 781(2)
46,000 Cypress Semiconductor 1,064(2)
32,000 Helix Technology $ 904
181,000 Peerless Systems 2,602(2)
26,000 Photronics, Inc. 621(2)
41,000 Zoran Corp. 1,363(2)
---------
7,335
---------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ---------
<C> <S> <C>
ENERGY (1.3%)
25,000 Hanover Compressor 898(2)
---------
FINANCIAL SERVICES (2.4%)
32,000 Affiliated Managers Group 854(2)
20,000 Hambrecht & Quist 764(2)
---------
1,618
---------
HARDWARE (7.4%)
100,000 Artisan Components 975(2)
33,000 DII Group 1,170(2)
18,000 Flextronics International 1,056(2)
10,000 Harmonic Inc. 1,260(2)
8,000 Optical Coating Laboratory 614
---------
5,075
---------
HEALTH CARE (9.0%)
40,000 Alkermes, Inc. 1,485(2)
30,000 Anesta Corp. 345(2)
35,000 Coulter Pharmaceutical 698(2)
33,000 Novoste Corp. 724(2)
30,000 Osteotech, Inc. 619(2)
37,000 Priority Healthcare 1,040(2)
41,500 The Laser Center 1,240(2)
---------
6,151
---------
INTERNET (12.1%)
27,000 CheckFree Holdings 790(2)
34,000 Digex, Inc. 1,130(2)
23,000 Efficient Networks 1,080(2)
39,000 Flycast Communications 902(2)
30,000 Netegrity, Inc. 667(2)
32,000 Netopia, Inc. 884(2)
35,000 Network Event Theater $ 884(2)
70,000 nFront, Inc. 927(2)
14,000 Pegasus Systems 506(2)
25,000 USWeb Corp. 488(2)
---------
8,258
---------
RETAIL (12.3%)
40,000 American Eagle Outfitters 1,570(2)
65,000 CSK Auto 1,544(2)
36,000 Factory 2-U Stores 1,028(2)
23,000 Insight Enterprises 696(2)
29,000 REX Stores 1,160(2)
</TABLE>
C-17
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman August 31, 1999
- --------------------------------------------------------------------------------
Millennium Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ---------
<C> <S> <C>
40,000 Sonic Automotive 482(2)
75,000 Steven Madden 886(2)
33,000 The Children's Place 1,044(2)
---------
8,410
---------
SOFTWARE (10.3%)
50,000 Be Inc. 312(2)
14,000 Gemstar International Group 966(2)
17,000 Micromuse Inc. 971(2)
20,000 Project Software & Development 879(2)
71,000 Radiant Systems 1,398(2)
62,000 RAVISENT Technologies 992(2)
37,000 Visual Networks 1,536(2)
---------
7,054
---------
TECHNOLOGY (1.0%)
34,000 Integrated Device Technology 663(2)
---------
TELECOMMUNICATIONS (9.1%)
70,000 CAIS Internet 849(2)
34,000 Intermedia Communications 884(2)
67,000 Pinnacle Holdings 1,687(2)
60,000 Quanta Services $ 1,346(2)
20,000 RCN Corp. 840(2)
23,000 Time Warner Telecom 621(2)
---------
6,227
---------
TOTAL COMMON STOCKS (COST $56,226) 62,343
---------
<CAPTION>
Principal
Amount
- ----------
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ---------
<C> <S> <C>
U.S. GOVERNMENT AGENCY SECURITIES (3.3%)
$2,250,000 Federal Home Loan Bank, Discount Notes,
5.15% & 5.40%, due 9/1/99 &
9/2/99 (COST $2,250) 2,250(5)
---------
REPURCHASE AGREEMENTS (3.1%)
2,090,000 State Street Bank and Trust Co.
Repurchase Agreement, 5.25%,
due 9/1/99, dated 8/31/99, Maturity
Value $2,090,305, Collateralized by
$1,920,000 U.S. Treasury Bonds, 7.50%,
due 11/15/16 (Collateral Value
$2,155,200) (COST $2,090) 2,090(5)
---------
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- ---------- ---------
<C> <S> <C>
SHORT-TERM INVESTMENTS (21.7%)
$1,500,000 Ford Motor Credit Co., 5.21%,
due 9/2/99 $ 1,500
13,306,051 N&B Securities Lending Quality Fund, LLC 13,306
---------
TOTAL SHORT-TERM INVESTMENTS (COST
$14,806) 14,806(5)
---------
TOTAL INVESTMENTS (119.4%) (COST
$75,372) 81,489(6)
Liabilities, less cash, receivables and
other assets [(19.4%)] (13,252)
---------
TOTAL NET ASSETS (100.0%) $ 68,237
---------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-18
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Partners Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. CIGNA Corp. 3.6%
2. Chase Manhattan 3.5%
3. MCI WorldCom 3.1%
4. Computer Associates 2.9%
5. Xerox Corp. 2.6%
6. The Williams Cos. 2.3%
7. General Motors 2.3%
8. IBM 2.2%
9. News Corp. ADR 2.2%
10. General Motors Class H 2.2%
<CAPTION>
Market
Number Value(1)
of (000's
Shares omitted)
- --- ----------
<C> <S> <C>
COMMON STOCKS (92.1%)
AEROSPACE (1.1%)
600,000 Raytheon Co. Class A $ 40,275
----------
AIRLINES (1.9%)
330,900 AMR Corp. 19,399(2)
1,280,000 Continental Airlines Class B 52,240(2)
----------
71,639
----------
AUTOMOBILE MANUFACTURING (2.3%)
1,315,800 General Motors 87,007
----------
AUTO/TRUCK REPLACEMENT PARTS (1.3%)
1,180,000 Lear Corp. 47,421(2)
----------
BANKING & FINANCIAL (11.3%)
1,305,000 Bank of America 78,953
1,945,000 Bank One 78,043
1,143,800 BankBoston Corp. 53,115
1,560,000 Chase Manhattan 130,553
1,337,000 Countrywide Credit Industries 42,951
1,140,000 Household International 43,035
----------
426,650
----------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ----------
<C> <S> <C>
CHEMICALS (1.5%)
765,000 duPont $ 48,482
620,000 Lyondell Chemical 9,029
----------
57,511
----------
COMMUNICATIONS (4.0%)
600,000 Bell Atlantic 36,750
1,520,000 MCI WorldCom 115,140(2)
----------
151,890
----------
DIVERSIFIED (1.8%)
1,658,500 Monsanto Co. 68,102
----------
ELECTRONICS (1.1%)
353,900 Emerson Electric 22,163
275,000 Teradyne, Inc. 18,717(2)
----------
40,880
----------
ENERGY (0.8%)
1,314,600 McDermott International 29,661
----------
FINANCIAL SERVICES (3.0%)
1,070,000 Ceridian Corp. 29,960(2)
330,000 Morgan Stanley Dean Witter 28,318
1,240,000 SLM Holding 54,793
----------
113,071
----------
FOOD & TOBACCO (3.4%)
1,040,000 Anheuser-Busch 80,080
1,209,500 Nabisco Holdings 47,549
----------
127,629
----------
FOOD PRODUCTS (1.7%)
526,100 ConAgra, Inc. 12,889
1,195,800 Diageo PLC ADR 49,551
----------
62,440
----------
GAS (1.7%)
1,347,400 Praxair, Inc. 63,328
----------
HEALTH CARE (12.9%)
475,000 ALZA Corp. 23,928(2)
1,579,500 American Home Products 65,549
870,000 Baxter International 58,345
1,602,100 Becton, Dickinson & Co. $ 45,059
1,230,000 Centocor, Inc. 73,646(2)
1,498,800 CIGNA Corp. 134,611
</TABLE>
C-20
<PAGE>
August 31, 1999
- --------------------------------------------------------------------------------
Partners Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ----------
<C> <S> <C>
669,800 Merck & Co. 45,002
540,000 Wellpoint Health Networks 39,353(2)
----------
485,493
----------
INDUSTRIAL GOODS & SERVICES (2.9%)
845,800 Fort James 27,277
1,055,700 General Dynamics 66,509
637,300 Owens-Illinois 15,773(2)
----------
109,559
----------
INSURANCE (2.8%)
1,599,200 Ace, Ltd. 34,283
370,000 American International Group 34,294
743,494 XL Capital 37,407
----------
105,984
----------
OIL & GAS (6.5%)
304,000 Chevron Corp. 28,044
840,000 Texaco Inc. 53,340
2,042,200 Tosco Corp. 52,076
1,400,200 Transocean Offshore 47,607
2,077,500 USX-Marathon Group 64,662(2)
----------
245,729
----------
RAILROADS (1.1%)
1,461,800 Burlington Northern Santa Fe 42,392
----------
RETAILING (3.4%)
1,620,000 Consolidated Stores 26,123(2)
990,300 Harcourt General 43,388
243,100 Office Depot 2,537(2)
3,052,600 Rite Aid 56,473
----------
128,521
----------
STEEL (0.9%)
1,639,400 AK Steel Holding $ 34,427
----------
TECHNOLOGY (18.1%)
2,427,500 Cadence Design Systems 33,075(2)
861,300 Compaq Computer 19,971
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ----------
<C> <S> <C>
1,940,000 Computer Associates 109,610
1,592,400 General Motors Class H 82,009(2)
440,000 Hewlett-Packard 46,365
680,000 IBM 84,702
1,840,000 L.M. Ericsson Telephone, B Shares ADR 59,915
1,592,600 Nortel Networks 65,396
2,865,000 Parametric Technology 40,110(2)
537,000 Texas Instruments 44,068
2,038,900 Xerox Corp. 97,357
----------
682,578
----------
TELECOMMUNICATIONS (2.4%)
1,540,000 AT&T Corp.- Liberty Media Group Class A 49,280(2)
600,000 GTE Corp. 41,175
----------
90,455
----------
UTILITIES (3.3%)
2,130,000 The Williams Cos. 87,863
952,400 Unicom Corp. 36,786
----------
124,649
----------
WASTE MANAGEMENT (0.9%)
2,598,200 Allied Waste Industries 33,127(2)
----------
TOTAL COMMON STOCKS (COST $3,107,009) 3,470,418
----------
PREFERRED STOCKS (2.2%)
3,123,800 News Corp. ADR (COST $86,104) 82,586
----------
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- ----------- ----------
<C> <S> <C>
</TABLE>
C-21
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman August 31, 1999
- --------------------------------------------------------------------------------
Partners Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- ----------- ----------
<C> <S> <C>
REPURCHASE AGREEMENTS (1.7%)
$50,000,000 State Street Bank and Trust Co.
Repurchase Agreement, 5.25%,
due 9/1/99, dated 8/31/99, Maturity
Value $50,007,292, Collateralized by
$40,915,000 U.S. Treasury Bonds,
8.875%, due 8/15/17 (Collateral Value
$51,506,216) $ 50,000
13,300,000 State Street Bank and Trust Co.
Repurchase Agreement, 5.25%,
due 9/1/99, dated 8/31/99, Maturity
Value $13,301,940, Collateralized by
$13,635,000 U.S. Treasury Notes,
5.875%, due 2/15/00 (Collateral Value
$13,703,911) 13,300
----------
TOTAL REPURCHASE AGREEMENTS (COST
$63,300) 63,300(5)
----------
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- ----------- ----------
<C> <S> <C>
SHORT-TERM INVESTMENTS (6.9%)
$50,000,000 Ford Motor Credit Co., 5.21%,
due 9/2/99 $ 49,993
20,200,000 Novartis Finance Corp., 5.27%,
due 9/7/99 20,182
50,000,000 American Express Credit Corp., 5.31%,
due 9/8/99 49,948
139,642,039 N&B Securities Lending Quality Fund, LLC 139,642
----------
TOTAL SHORT-TERM INVESTMENTS (COST
$259,765) 259,765(5)
----------
TOTAL INVESTMENTS (102.9%) (COST
$3,516,178) 3,876,069(6)
Liabilities, less cash, receivables and
other assets [(2.9%)] (107,329)
----------
TOTAL NET ASSETS (100.0%) $3,768,740
----------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-22
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman August 31, 1999
- --------------------------------------------------------------------------------
Regency Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. BankBoston Corp. 2.7%
2. General Dynamics 2.5%
3. Comdisco, Inc. 2.5%
4. Bear Stearns 2.4%
5. W.R. Grace 2.3%
6. Food Lion Class A 2.2%
7. The Williams Cos. 2.1%
8. Galileo International 2.1%
9. SPX Corp. 2.0%
10. USX-Marathon Group 2.0%
<CAPTION>
Market
Number Value(1)
of (000's
Shares omitted)
- --- ----------
<C> <S> <C>
COMMON STOCKS (87.0%)
AIRLINES (1.3%)
2,700 Continental Airlines Class B $ 110(2)
---------
AUTOMOTIVE (2.6%)
3,700 Lear Corp. 149(2)
1,400 Navistar International 68(2)
---------
217
---------
BANKING & FINANCIAL (5.6%)
4,800 BankBoston Corp. 223
1,900 Countrywide Credit Industries 61
8,600 IndyMac Mortgage Holdings 115
2,600 Valley National Bancorp 68
---------
467
---------
CHEMICALS (1.1%)
6,400 Lyondell Chemical 93
---------
CONSUMER CYCLICALS (1.7%)
1,800 Lexmark International Group 142(2)
---------
CONSUMER PRODUCTS & SERVICES (1.5%)
7,400 American National Can Group $ 121(2)
---------
ELECTRICAL & ELECTRONICS (1.1%)
6,200 Niagara Mohawk Holdings 94(2)
---------
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------- ---------
<C> <S> <C>
ENERGY (2.7%)
3,500 Coastal Corp. 152
3,300 McDermott International 74
---------
226
---------
ENTERTAINMENT (1.0%)
6,500 Mirage Resorts 85(2)
---------
FINANCIAL SERVICES (10.7%)
1,600 Ambac Financial Group 85
4,700 Bear Stearns 196
5,500 Ceridian Corp. 154(2)
4,200 Dun & Bradstreet 110
2,900 FINOVA Group 110
1,600 Kansas City Southern Industries 74
3,600 SLM Holding 159
---------
888
---------
GAS (1.8%)
3,200 Praxair, Inc. 150
---------
HEALTH CARE (3.4%)
4,900 Becton, Dickinson & Co. 138
2,000 Wellpoint Health Networks 146(2)
---------
284
---------
INDUSTRIAL GOODS & SERVICES (8.1%)
4,200 Fort James 135
3,300 General Dynamics 208
1,000 Reynolds Metals 63
4,500 Sherwin-Williams 110
6,200 UCAR International 151(2)
---------
667
---------
INSURANCE (3.2%)
6,300 Ace, Ltd. $ 135
700 CIGNA Corp. 63
1,700 Cincinnati Financial 67
---------
265
---------
MACHINERY & EQUIPMENT (2.7%)
1,300 Grainger, Inc. 57
2,000 SPX Corp. 169(2)
---------
226
---------
</TABLE>
C-23
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman August 31, 1999
- --------------------------------------------------------------------------------
Regency Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------- ---------
<C> <S> <C>
MEDIA (0.7%)
1,200 E.W. Scripps 58
---------
OIL & GAS (7.3%)
3,000 Apache Corp. 136
3,600 Noble Drilling 89(2)
4,400 Tosco Corp. 112
3,000 Transocean Offshore 102
5,200 USX-Marathon Group 162
---------
601
---------
RAILROADS (1.4%)
3,900 Burlington Northern Santa Fe 113
---------
RETAILING (8.1%)
5,700 Consolidated Stores 92(2)
22,800 Food Lion Class A 180
2,200 Harcourt General 96
6,100 Rite Aid 113
9,800 W.R. Grace 188(2)
---------
669
---------
STEEL (0.9%)
3,600 AK Steel Holding 76
---------
TECHNOLOGY (9.7%)
9,900 Cadence Design Systems 135(2)
9,800 Comdisco, Inc. 206
1,000 Computer Associates 57
5,900 Engelhard Corp. 118
3,100 General Motors Class H $ 160(2)
8,800 Parametric Technology 123(2)
---------
799
---------
TELECOMMUNICATIONS (4.2%)
7,700 A.H. Belo 146
5,600 American Tower 127(2)
2,300 AT&T Corp.- Liberty Media Group Class A 74(2)
---------
347
---------
TRANSPORTATION (2.1%)
3,500 Galileo International 170
---------
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------- ---------
<C> <S> <C>
UTILITIES (2.2%)
4,300 The Williams Cos. 177
---------
WASTE MANAGEMENT (1.9%)
12,000 Allied Waste Industries 153(2)
---------
TOTAL COMMON STOCKS (COST $7,700) 7,198
---------
PREFERRED STOCKS (1.2%)
3,800 News Corp. ADR (COST $116) 100
---------
<CAPTION>
Principal
Amount
- ---------
<C> <S> <C>
U.S. GOVERNMENT AGENCY SECURITIES (4.5%)
$ 200,000 Federal Home Loan Bank, Discount Notes,
5.40%, due 9/1/99 200
175,000 Federal Farm Credit Bank, Discount
Notes, 5.09%, due 9/2/99 175
---------
TOTAL U.S. GOVERNMENT AGENCY SECURITIES
(COST $375) 375(5)
---------
<CAPTION>
Market
Principal Value(1)
Amount (000's omitted)
- --------- ---------
<C> <S> <C>
REPURCHASE AGREEMENTS (4.5%)
$ 370,000 State Street Bank and Trust Co.
Repurchase Agreement, 5.25%,
due 9/1/99, dated 8/31/99, Maturity
Value $370,054, Collateralized by
$350,000 U.S. Treasury Bonds, 7.25%,
due 8/15/22 (Collateral Value $382,375)
(COST $370) $ 370(5)
---------
SHORT-TERM INVESTMENTS (0.6%)
50,488 N&B Securities Lending Quality Fund, LLC
(COST $50) 50(5)
---------
TOTAL INVESTMENTS (97.8%) (COST $8,611) 8,093(6)
Cash, receivables and other assets, less
liabilities (2.2%) 185
---------
TOTAL NET ASSETS (100.0%) $ 8,278
---------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-24
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Socially Responsive Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Intel Corp. 3.3%
2. Biogen, Inc. 3.3%
3. Unisys Corp. 3.2%
4. Hewlett-Packard 3.2%
5. Citigroup Inc. 3.1%
6. Tyco International 3.1%
7. MCI WorldCom 2.9%
8. ALZA Corp. 2.8%
9. True North Communications 2.7%
10. Circuit City Stores 2.7%
<CAPTION>
Market
Number Value(1)
of (000's
Shares omitted)
- --- ----------
<C> <S> <C>
COMMON STOCKS (93.9%)
ADVERTISING (2.7%)
330,000 True North Communications $ 10,869
---------
AUTOMOTIVE (1.6%)
137,200 Borg-Warner Automotive 6,500
---------
CHEMICALS (1.3%)
100,000 Minerals Technologies 4,950
---------
CONSUMER GOODS & SERVICES (2.2%)
150,000 Kimberly-Clark 8,541
---------
DIVERSIFIED (3.1%)
120,000 Tyco International 12,157
---------
ENERGY (2.3%)
100,000 Chevron Corp. 9,225
---------
ENTERTAINMENT (2.0%)
350,000 Fox Entertainment Group 8,072(2)
---------
FINANCIAL SERVICES (9.8%)
150,000 Ambac Financial Group 7,922
276,750 Citigroup Inc. 12,298
275,000 Conseco, Inc. 6,600
200,000 Dun & Bradstreet 5,238
100,000 Fannie Mae $ 6,212
9,300 Goldman Sachs 556
---------
38,826
---------
FURNISHINGS (2.2%)
400,000 Leggett & Platt 8,850
---------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- ---------
<C> <S> <C>
HEALTH CARE (15.8%)
220,000 ALZA Corp. 11,082(2)
170,000 Biogen, Inc. 13,047(2)
260,000 Invacare Corp. 4,859
90,000 Johnson & Johnson 9,203
220,000 McKesson HBOC 6,848
135,000 Warner-Lambert 8,944
118,000 Wellpoint Health Networks 8,599(2)
---------
62,582
---------
HOSPITAL SUPPLIES (2.4%)
200,000 C. R. Bard 9,325
---------
INSURANCE (3.7%)
380,000 ESG Re 5,130
210,000 ReliaStar Financial 9,463
---------
14,593
---------
OIL & GAS (4.3%)
220,000 Anadarko Petroleum 7,480
230,000 Cooper Cameron 9,574(2)
---------
17,054
---------
PAPER & FOREST PRODUCTS (2.2%)
238,000 Mead Corp. 8,880
---------
PUBLISHING & BROADCASTING (2.5%)
225,000 Valassis Communications 9,844
---------
RECYCLING (0.7%)
187,500 IMCO Recycling 2,941
---------
RETAIL GROCERY (1.7%)
140,000 Albertson's Inc. 6,711
---------
RETAIL STORES (6.1%)
250,000 Circuit City Stores 10,750
120,000 Dayton Hudson 6,960
145,000 Federated Department Stores 6,670(2)
---------
24,380
---------
RETAILING (2.0%)
179,000 Wal-Mart Stores 7,932
---------
TECHNOLOGY (17.9%)
374,000 Compaq Computer $ 8,672
150,000 Electronic Data Systems 8,419
120,000 Hewlett-Packard 12,645
160,000 Intel Corp. 13,150
400,000 Quantum Corp. - DLT & Storage Systems 7,325(2)
200,000 Quantum Corp. - Hard Disk Drive 1,425(2)
</TABLE>
C-26
<PAGE>
August 31, 1999
- --------------------------------------------------------------------------------
Socially Responsive Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- --------- ---------
<C> <S> <C>
300,000 Unisys Corp. 12,900(2)
140,000 Xerox Corp. 6,685
---------
71,221
---------
TELECOMMUNICATIONS (3.7%)
150,000 MCI WorldCom 11,363(2)
503,200 Metromedia International Group 3,176
---------
14,539
---------
TRANSPORTATION (2.1%)
140,000 AMR Corp. 8,208(2)
---------
WASTE MANAGEMENT (1.6%)
350,000 Azurix Corp. 6,497(2)
---------
TOTAL COMMON STOCKS (COST $274,738) 372,697
---------
<CAPTION>
Principal
Amount
- ---------
<C> <S> <C>
U.S. GOVERNMENT AGENCY SECURITIES (2.3%)
$4,000,000 Fannie Mae, Discount Notes, 5.15%,
due 9/3/99 3,999
5,000,000 Freddie Mac, Discount Notes, 5.18% &
5.23%, due 9/9/99 & 9/10/99 4,994
---------
TOTAL U.S. GOVERNMENT AGENCY SECURITIES
(COST $8,993) 8,993(5)
---------
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- --------- ---------
<C> <S> <C>
REPURCHASE AGREEMENTS (2.1%)
$8,370,000 State Street Bank and Trust Co.
Repurchase Agreement, 5.25%,
due 9/1/99, dated 8/31/99, Maturity
Value $8,371,221, Collateralized by
$8,495,000 U.S. Treasury Notes, 5.625%,
due 5/15/01 (Collateral Value
$8,621,966) (COST $8,370) $ 8,370(5)
---------
SHORT-TERM INVESTMENTS (0.6%)
100,000 Community Capital Bank, 4.05%,
due 9/29/99 100
100,000 Self Help Credit Union, 4.71%,
due 11/24/99 100
2,340,353 N&B Securities Lending Quality Fund, LLC 2,340
---------
TOTAL SHORT-TERM INVESTMENTS (COST
$2,540) 2,540(5)
---------
TOTAL INVESTMENTS (98.9%) (COST
$294,641) 392,600(6)
Cash, receivables and other assets, less
liabilities (1.1%) 4,513
---------
TOTAL NET ASSETS (100.0%) $ 397,113
---------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-27
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS
August 31, 1999
- ----------------------------------------------------------------------
Equity Managers Trust and Global Managers Trust
1) Investment securities of each Portfolio are valued at the latest sales price;
securities for which no sales were reported, unless otherwise noted, are
valued at the mean between the closing bid and asked prices, with the
exception of securities held by Neuberger Berman International Portfolio,
which are valued at the last available bid price. The Portfolios value all
other securities by a method the trustees of Equity Managers Trust or Global
Managers Trust believe accurately reflects fair value. Foreign security
prices are furnished by independent quotation services expressed in local
currency values. Foreign security prices are translated from the local
currency into U.S. dollars using current exchange rates. Short-term debt
securities with less than 60 days until maturity may be valued at cost which,
when combined with interest earned, approximates market value.
2) Non-income producing security.
3) The following securities were held in escrow at August 31, 1999, to cover
outstanding call options written:
<TABLE>
<CAPTION>
SECURITIES AND MARKET VALUE PREMIUM ON MARKET VALUE
NEUBERGER BERMAN SHARES OPTIONS OF SECURITIES OPTIONS OF OPTIONS
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
FOCUS PORTFOLIO 300,000 Compaq Computer $ 6,956,000 $ 441,000 $ 244,000
Corp.
October 1999 @ 25
GUARDIAN PORTFOLIO 1,025,000 McDonald's Corp. 42,409,000 3,379,000 2,563,000
December 1999 @ 42.50
450,000 Teradyne Inc. 30,628,000 5,073,000 2,137,000
October 1999 @ 70
400,000 Texas Instruments 32,825,000 4,009,000 6,375,000
October 1999 @
67.50
500,000 Wellpoint Health 36,438,000 2,985,000 1,781,000
Networks
October 1999 @ 75
</TABLE>
4) Affiliated issuer (see Note E of Notes to Financial Statements).
5) At cost, which approximates market value.
C-28
<PAGE>
6) At August 31, 1999, selected Portfolio information on a U.S. Federal income
tax basis was as follows:
<TABLE>
<CAPTION>
NET
GROSS GROSS UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
NEUBERGER BERMAN COST APPRECIATION DEPRECIATION (DEPRECIATION)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
FOCUS PORTFOLIO $1,022,500,000 $ 548,009,000 $46,270,000 $ 501,739,000
GENESIS PORTFOLIO 1,638,468,000 249,706,000 109,242,000 140,464,000
GUARDIAN PORTFOLIO 4,064,568,000 890,616,000 311,479,000 579,137,000
MANHATTAN PORTFOLIO 601,413,000 147,595,000 26,258,000 121,337,000
MILLENNIUM PORTFOLIO 75,573,000 8,908,000 2,992,000 5,916,000
PARTNERS PORTFOLIO 3,530,723,000 499,471,000 154,125,000 345,346,000
REGENCY PORTFOLIO 8,647,000 143,000 697,000 (554,000)
SOCIALLY RESPONSIVE PORTFOLIO 294,682,000 115,095,000 17,177,000 97,918,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-29
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY MANAGERS TRUST
------------------------------------------------
FOCUS GENESIS GUARDIAN
(000'S OMITTED) PORTFOLIO PORTFOLIO PORTFOLIO
------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in securities, at market value*
(Notes A & E) -- see Schedule of
Investments:
Unaffiliated issuers $ 1,493,142 $ 1,629,745 $ 4,643,705
Non-controlled affiliated issuers 31,097 149,187 --
------------------------------------------------
1,524,239 1,778,932 4,643,705
Cash 304 8 8
Dividends and interest receivable 1,570 3,940 8,995
Prepaid expenses and other assets 34 57 158
Receivable for securities sold 34,235 16,148 115,060
------------------------------------------------
1,560,382 1,799,085 4,767,926
------------------------------------------------
LIABILITIES
Option contracts written, at market value
(Note A) 244 -- 12,856
Payable for collateral on securities loaned
(Note A) 7,114 42,525 24,437
Payable for securities purchased 4,813 2,023 --
Payable for variation margin (Note A) -- -- 1,930
Payable to investment manager (Note B) 670 1,103 1,881
Accrued expenses and other payables 1,143 2,330 3,102
------------------------------------------------
13,984 47,981 44,206
------------------------------------------------
NET ASSETS Applicable to Investors' Beneficial
Interests $ 1,546,398 $ 1,751,104 $ 4,723,720
------------------------------------------------
NET ASSETS consist of:
Paid-in capital $ 1,039,051 $ 1,610,183 $ 4,142,799
Net unrealized appreciation (depreciation)
in value of investment securities,
financial futures contracts, and option
contracts 507,347 140,921 580,921
------------------------------------------------
NET ASSETS $ 1,546,398 $ 1,751,104 $ 4,723,720
------------------------------------------------
*Cost of investments:
Unaffiliated issuers $ 993,477 $ 1,490,335 $ 4,053,868
Non-controlled affiliated issuers 23,612 147,676 --
------------------------------------------------
Total cost of investments $ 1,017,089 $ 1,638,011 $ 4,053,868
------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-30
<PAGE>
August 31, 1999
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL
MANAGERS EQUITY MANAGERS TRUST
TRUST ---------------------------------------------------------
--------- SOCIALLY
INTERNATIONAL MANHATTAN MILLENNIUM PARTNERS REGENCY RESPONSIVE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in securities, at market value*
(Notes A & E) -- see Schedule of
Investments:
Unaffiliated issuers $119,248 $722,750 $81,489 $3,876,069 $8,093 $392,600
Non-controlled affiliated issuers -- -- -- -- -- --
-----------------------------------------------------------------------
119,248 722,750 81,489 3,876,069 8,093 392,600
Cash 3 2 5 36 3 --
Dividends and interest receivable 730 5,002 238 9,703 9 758
Prepaid expenses and other assets 14 56 3 106 2 10
Receivable for securities sold -- 11,968 1,965 92,109 337 6,779
-----------------------------------------------------------------------
119,995 739,778 83,700 3,978,023 8,444 400,147
-----------------------------------------------------------------------
LIABILITIES
Option contracts written, at market value
(Note A) -- -- -- -- -- --
Payable for collateral on securities loaned
(Note A) 4,874 118,910 13,306 139,642 50 2,340
Payable for securities purchased -- 2,773 1,846 62,299 91 --
Payable for variation margin (Note A) -- -- -- -- -- --
Payable to investment manager (Note B) 82 274 45 1,486 4 185
Accrued expenses and other payables 523 4,962 266 5,856 21 509
-----------------------------------------------------------------------
5,479 126,919 15,463 209,283 166 3,034
-----------------------------------------------------------------------
NET ASSETS Applicable to Investors' Beneficial
Interests $114,516 $612,859 $68,237 $3,768,740 $8,278 $397,113
-----------------------------------------------------------------------
NET ASSETS consist of:
Paid-in capital $ 79,630 $490,525 $62,120 $3,408,849 $8,796 $299,154
Net unrealized appreciation (depreciation) in
value of investment securities, financial
futures contracts, and option contracts 34,886 122,334 6,117 359,891 (518) 97,959
-----------------------------------------------------------------------
NET ASSETS $114,516 $612,859 $68,237 $3,768,740 $8,278 $397,113
-----------------------------------------------------------------------
*Cost of investments:
Unaffiliated issuers $ 84,361 $600,416 $75,372 $3,516,178 $8,611 $294,641
Non-controlled affiliated issuers -- -- -- -- -- --
-----------------------------------------------------------------------
Total cost of investments $ 84,361 $600,416 $75,372 $3,516,178 $8,611 $294,641
-----------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-31
<PAGE>
STATEMENTS OF OPERATIONS
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY MANAGERS TRUST
------------------------------------------
FOCUS GENESIS GUARDIAN
PORTFOLIO PORTFOLIO PORTFOLIO
For the For the For the
Year Year Year
Ended Ended Ended
August 31, August 31, August 31,
(000'S OMITTED) 1999 1999 1999
------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Income:
Dividend income -- unaffiliated issuers $ 13,017 $ 25,981 $ 58,766
Dividend income -- non-controlled affiliated
issuers -- 1,078 --
Interest income 1,237 5,441 28,189
Foreign taxes withheld (Note A) (37) -- (800)
------------------------------------------
Total income 14,217 32,500 86,155
------------------------------------------
Expenses:
Investment management fee (Note B) 7,855 13,245 25,003
Accounting fees 10 10 10
Amortization of deferred organization and
initial offering expenses (Note A) -- -- --
Auditing fees 45 46 48
Custodian fees (Note B) 273 342 826
Insurance expense 19 26 88
Legal fees 25 27 28
Trustees' fees and expenses 23 25 69
Miscellaneous -- 45 --
------------------------------------------
Total expenses 8,250 13,766 26,072
Expenses reduced by custodian fee expense
offset arrangement (Note B) (4) (5) (4)
------------------------------------------
Total net expenses 8,246 13,761 26,068
------------------------------------------
Net investment income (loss) 5,971 18,739 60,087
------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investment
securities sold in unaffiliated issuers 203,017 (111,789) 853,341
Net realized gain on investment securities
sold in non-controlled affiliated issuers 36 1,399 --
Net realized gain on option contracts
(Note A) 54 -- 7,672
Net realized gain (loss) on financial futures
contracts (Note A) -- -- 130,832
Net realized loss on foreign currency
transactions (Note A) -- -- --
Net realized loss on equity swap contracts
(Note A) -- -- --
Change in net unrealized appreciation
(depreciation) of investment securities,
financial futures contracts, option
contracts, equity swap contracts,
translation of assets and liabilities in
foreign currencies, and foreign currency
contracts (Note A) 283,206 413,682 406,548
------------------------------------------
Net gain (loss) on investments 486,313 303,292 1,398,393
------------------------------------------
Net increase (decrease) in net assets
resulting from operations $ 492,284 $ 322,031 $ 1,458,480
------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-32
<PAGE>
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL
MANAGERS
TRUST EQUITY MANAGERS TRUST
-------------- ------------------------------------------------
MILLENNIUM
PORTFOLIO
INTERNATIONAL MANHATTAN For the PARTNERS
PORTFOLIO PORTFOLIO Period from PORTFOLIO
October 20,
1998
For the For the (Commencement For the
Year Year of Operations) Year
Ended Ended to Ended
August 31, August 31, August 31, August 31,
1999 1999 1999 1999
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Income:
Dividend income -- unaffiliated issuers $ 1,079 $ 1,091 $ 1 $ 66,443
Dividend income -- non-controlled affiliated
issuers -- -- -- --
Interest income 509 1,979 144 4,684
Foreign taxes withheld (Note A) (170) -- -- (209)
-----------------------------------------------------------------
Total income 1,418 3,070 145 70,918
-----------------------------------------------------------------
Expenses:
Investment management fee (Note B) 1,019 3,282 236 18,165
Accounting fees 10 10 9 10
Amortization of deferred organization and
initial offering expenses (Note A) 9 -- -- --
Auditing fees 33 54 20 47
Custodian fees (Note B) 208 177 48 617
Insurance expense 2 8 -- 48
Legal fees 30 20 15 18
Trustees' fees and expenses 11 12 4 50
Miscellaneous 3 15 1 --
-----------------------------------------------------------------
Total expenses 1,325 3,578 333 18,955
Expenses reduced by custodian fee expense
offset arrangement (Note B) (3) (6) (2) (5)
-----------------------------------------------------------------
Total net expenses 1,322 3,572 331 18,950
-----------------------------------------------------------------
Net investment income (loss) 96 (502) (186) 51,968
-----------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investment
securities sold in unaffiliated issuers 15,646 57,698 8,249 353,820
Net realized gain on investment securities
sold in non-controlled affiliated issuers -- -- -- --
Net realized gain on option contracts
(Note A) -- -- -- --
Net realized gain (loss) on financial futures
contracts (Note A) (1,384) -- -- --
Net realized loss on foreign currency
transactions (Note A) (2,208) -- -- --
Net realized loss on equity swap contracts
(Note A) (274) -- -- --
Change in net unrealized appreciation
(depreciation) of investment securities,
financial futures contracts, option
contracts, equity swap contracts,
translation of assets and liabilities in
foreign currencies, and foreign currency
contracts (Note A) 12,624 135,208 6,117 531,136
-----------------------------------------------------------------
Net gain (loss) on investments 24,404 192,906 14,366 884,956
-----------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $ 24,500 $ 192,404 $ 14,180 $ 936,924
-----------------------------------------------------------------
<CAPTION>
REGENCY
PORTFOLIO
SOCIALLY
For the RESPONSIVE
Period from PORTFOLIO
June 1, 1999
(Commencement For the
of Operations) Year
to Ended
August 31, August 31,
1999 1999
<S> <C> <C>
INVESTMENT INCOME
Income:
Dividend income -- unaffiliated issuers $ 16 $ 3,639
Dividend income -- non-controlled affiliated
issuers -- --
Interest income 17 775
Foreign taxes withheld (Note A) -- --
Total income 33 4,414
Expenses:
Investment management fee (Note B) 8 1,956
Accounting fees 3 10
Amortization of deferred organization and
initial offering expenses (Note A) -- 4
Auditing fees 15 34
Custodian fees (Note B) 9 109
Insurance expense -- 4
Legal fees 5 18
Trustees' fees and expenses -- 9
Miscellaneous -- --
Total expenses 40 2,144
Expenses reduced by custodian fee expense
offset arrangement (Note B) -- (1)
Total net expenses 40 2,143
Net investment income (loss) (7) 2,271
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investment
securities sold in unaffiliated issuers 75 22,484
Net realized gain on investment securities
sold in non-controlled affiliated issuers -- --
Net realized gain on option contracts
(Note A) -- --
Net realized gain (loss) on financial futures
contracts (Note A) -- --
Net realized loss on foreign currency
transactions (Note A) -- --
Net realized loss on equity swap contracts
(Note A) -- --
Change in net unrealized appreciation
(depreciation) of investment securities,
financial futures contracts, option
contracts, equity swap contracts,
translation of assets and liabilities in
foreign currencies, and foreign currency
contracts (Note A) (518) 81,446
Net gain (loss) on investments (443) 103,930
Net increase (decrease) in net assets
resulting from operations $ (450) $ 106,201
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-33
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY MANAGERS
TRUST
FOCUS GENESIS
PORTFOLIO PORTFOLIO
Year Year
Ended Ended
August 31, August 31,
(000'S OMITTED) 1999 1998 1999 1998
-------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 5,971 $ 10,123 $ 18,739 $ 23,438
Net realized gain (loss) on
investments 203,107 74,686 (110,390) 35,406
Change in net unrealized
appreciation (depreciation) of
investments 283,206 (360,086) 413,682 (545,041)
-------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 492,284 (275,277) 322,031 (486,197)
-------------------------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 50,568 178,065 528,302 1,557,053
Reductions (313,932) (158,751) (911,584) (342,152)
-------------------------------------------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests (263,364) 19,314 (383,282) 1,214,901
-------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 228,920 (255,963) (61,251) 728,704
NET ASSETS:
Beginning of year 1,317,478 1,573,441 1,812,355 1,083,651
-------------------------------------------------------------
End of year $ 1,546,398 $ 1,317,478 $ 1,751,104 $ 1,812,355
-------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-34
<PAGE>
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY MANAGERS GLOBAL MANAGERS EQUITY MANAGERS
TRUST TRUST TRUST
GUARDIAN INTERNATIONAL MANHATTAN
PORTFOLIO PORTFOLIO PORTFOLIO
Year Year Year
Ended Ended Ended
August 31, August 31, August 31,
1999 1998 1999 1998 1999 1998
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 60,087 $ 78,026 $ 96 $ 391 $ (502) $ (343)
Net realized gain (loss) on
investments 991,845 893,833 11,780 (10,675) 57,698 45,585
Change in net unrealized
appreciation (depreciation) of
investments 406,548 (2,420,985) 12,624 (596) 135,208 (106,156)
------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 1,458,480 (1,449,126) 24,500 (10,880) 192,404 (60,914)
------------------------------------------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 164,857 391,142 91,521 91,654 47,432 53,069
Reductions (2,687,422) (1,912,418) (129,327) (68,216) (150,336) (90,539)
------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests (2,522,565) (1,521,276) (37,806) 23,438 (102,904) (37,470)
------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (1,064,085) (2,970,402) (13,306) 12,558 89,500 (98,384)
NET ASSETS:
Beginning of year 5,787,805 8,758,207 127,822 115,264 523,359 621,743
------------------------------------------------------------------------------
End of year $ 4,723,720 $ 5,787,805 $ 114,516 $127,822 $ 612,859 $ 523,359
------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-35
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS(Cont'd)
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY
MANAGERS
TRUST
MILLENNIUM
PORTFOLIO
Period from
October 20,
1998
(Commencement
of
Operations)
to
August 31,
(000'S OMITTED) 1999
-------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ (186)
Net realized gain (loss) on
investments 8,249
Change in net unrealized
appreciation (depreciation) of
investments 6,117
-------------
Net increase (decrease) in net
assets resulting from operations 14,180
-------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 57,892
Reductions (3,835)
-------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests 54,057
-------------
NET INCREASE (DECREASE) IN NET ASSETS 68,237
NET ASSETS:
Beginning of year --
-------------
End of year $ 68,237
-------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-36
<PAGE>
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY MANAGERS
TRUST
REGENCY
PORTFOLIO
Period from SOCIALLY
PARTNERS June 1, 1999 RESPONSIVE
PORTFOLIO (Commencement PORTFOLIO
of
Year Operations) Year
Ended to Ended
August 31, August 31, August 31,
1999 1998 1999 1999 1998
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 51,968 $ 46,344 $ (7) $ 2,271 $ 2,863
Net realized gain (loss) on
investments 353,820 408,784 75 22,484 26,331
Change in net unrealized
appreciation (depreciation) of
investments 531,136 (872,798) (518) 81,446 (50,773)
-----------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 936,924 (417,670) (450) 106,201 (21,579)
-----------------------------------------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 230,354 743,583 8,958 53,231 71,633
Reductions (979,875) (320,149) (230) (45,169) (23,485)
-----------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests (749,521) 423,434 8,728 8,062 48,148
-----------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 187,403 5,764 8,278 114,263 26,569
NET ASSETS:
Beginning of year 3,581,337 3,575,573 -- 282,850 256,281
-----------------------------------------------------------------------------
End of year $ 3,768,740 $ 3,581,337 $ 8,278 $ 397,113 $ 282,850
-----------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-37
<PAGE>
NOTES TO FINANCIAL STATEMENTS
August 31, 1999
- ----------------------------------------------------------------------
Equity Managers Trust and Global Managers Trust
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1) GENERAL: Neuberger Berman Focus Portfolio ("Focus"), Neuberger Berman Genesis
Portfolio ("Genesis"), Neuberger Berman Guardian Portfolio ("Guardian"),
Neuberger Berman Manhattan Portfolio ("Manhattan"), Neuberger Berman
Millennium Portfolio ("Millennium"), Neuberger Berman Partners Portfolio
("Partners"), Neuberger Berman Regency Portfolio ("Regency"), and Neuberger
Berman Socially Responsive Portfolio ("Socially Responsive") are separate
operating series of Equity Managers Trust ("Managers Trust"), a New York
common law trust organized as of December 1, 1992. Neuberger Berman
International Portfolio ("International") is a separate operating series of
Global Managers Trust ("Global"), a New York common law trust organized as of
March 18, 1994, with its principal office in the Cayman Islands. These nine
aforementioned series are collectively referred to as the "Portfolios."
Managers Trust and Global (collectively, the "Trusts") are registered as
diversified, open-end management investment companies under the Investment
Company Act of 1940, as amended. Millennium and Regency had no operations
until October 20, 1998 and June 1, 1999, respectively, other than matters
relating to their organization and registration as series' of Managers Trust.
Other regulated investment companies sponsored by Neuberger Berman Management
Inc. ("Management"), whose financial statements are not presented herein,
also invest in the Trusts. Global currently has only one Portfolio.
The assets of each Portfolio belong only to that Portfolio, and the
liabilities of each Portfolio are borne solely by that Portfolio and no
other.
2) PORTFOLIO VALUATION: Investment securities are valued as indicated in the
notes following the Portfolios' Schedule of Investments.
3) FOREIGN CURRENCY TRANSLATION: The accounting records of the Portfolios are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars at the current rate of exchange of such currency against the U.S.
dollar to determine the value of investments, other assets and liabilities.
Purchase and sale prices of securities, and income and expenses are
translated into U.S. dollars at the prevailing rate of exchange on the
respective dates of such transactions.
4) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Dividend income is recorded on the
ex-dividend date or, for certain foreign dividends, as soon as the Portfolio
becomes aware of the dividends. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income,
C-38
<PAGE>
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 and foreign
currency transactions are recorded on the basis of identified cost.
5) FORWARD FOREIGN CURRENCY CONTRACTS: The Portfolios may enter into forward
foreign currency contracts ("contracts") in connection with planned purchases
or sales of securities to hedge the U.S. dollar value of portfolio securities
denominated in a foreign currency. International may also enter into such
contracts to increase or decrease its exposure to a currency other than U.S.
dollars. The gain or loss arising from the difference between the original
contract price and the closing price of such contract is included in net
realized gains or losses on foreign currency transactions. Fluctuations in
the value of forward foreign currency contracts are recorded for financial
reporting purposes as unrealized gains or losses by each Portfolio. The
Portfolios have no specific limitation on the percentage of assets which may
be committed to these types of contracts. The Portfolios could be exposed to
risks if a counterparty to a contract were unable to meet the terms of its
contract or if the value of the foreign currency changes unfavorably. The
U.S. dollar value of foreign currency underlying all contractual commitments
held by each Portfolio is determined using forward foreign currency exchange
rates supplied by an independent pricing service.
6) TAXES: Managers Trust intends to comply with the requirements of the Internal
Revenue Code. Each Portfolio of the Trusts also intends to conduct its
operations so that each of its investors (in the case of Global, its U.S.
investors) will be able to qualify as a regulated investment company. Each
Portfolio will be treated as a partnership for U.S. Federal income tax
purposes and is therefore not subject to U.S. Federal income tax. There is,
at present, no direct taxation in the Cayman Islands, and therefore interest,
dividends, and capital gains derived by Global are not subject to taxes in
that jurisdiction.
7) FOREIGN TAXES: Foreign taxes withheld represent amounts withheld by foreign
tax authorities, net of refunds recoverable.
8) ORGANIZATION EXPENSES: Organization expenses incurred by International and
Socially Responsive were fully amortized as of August 31, 1999.
9) EXPENSE ALLOCATION: Each Portfolio bears all costs of its operations.
Expenses incurred by each of the Trusts with respect to any two or more
Portfolios are allocated in proportion to the net assets of such Portfolios,
except where a more appropriate allocation of expenses to each Portfolio can
otherwise be made fairly. Expenses directly attributable to a Portfolio are
charged to that Portfolio.
10) CALL OPTIONS: Premiums received by each Portfolio upon writing a covered
call option are recorded in the liability section of each Portfolio's
Statement of Assets and Liabilities and are subsequently adjusted to the
current market value. When
C-39
<PAGE>
an option is exercised, closed, or expired, the Portfolio realizes a gain or
loss and the liability is eliminated. A Portfolio bears the risk of a
decline in the price of the security during the period, although any
potential loss during the period would be reduced by the amount of the
option premium received. In general, written covered call options may serve
as a partial hedge against decreases in value in the underlying securities
to the extent of the premium received. All securities covering outstanding
options are held in escrow by the custodian bank.
Summary of option transactions for the year ended August 31, 1999:
<TABLE>
<CAPTION>
VALUE
WHEN
FOCUS NUMBER WRITTEN
- -----------------------------------------------------------------------------------
<S> <C> <C>
CONTRACTS OUTSTANDING 8/31/98 0 $ 0
CONTRACTS WRITTEN 13,180 3,866,000
CONTRACTS EXPIRED (1,880) (920,000)
CONTRACTS EXERCISED (3,525) (870,000)
CONTRACTS CLOSED (4,775) (1,635,000)
---------------------
CONTRACTS OUTSTANDING 8/31/99 3,000 $ 441,000
---------------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
WHEN
GUARDIAN NUMBER WRITTEN
- -------------------------------------------------------------------------------------
<S> <C> <C>
CONTRACTS OUTSTANDING 8/31/98 7,018 $ 3,498,000
CONTRACTS WRITTEN 87,950 45,460,000
CONTRACTS EXPIRED (12,518) (5,082,000)
CONTRACTS EXERCISED (20,000) (10,046,000)
CONTRACTS CLOSED (38,700) (18,384,000)
-----------------------
CONTRACTS OUTSTANDING 8/31/99 23,750 $ 15,446,000
-----------------------
</TABLE>
11) FINANCIAL FUTURES CONTRACTS: International, Millennium, and Socially
Responsive may each buy and sell financial futures contracts to hedge
against a possible decline in the value of their portfolio securities. Also,
Focus, Guardian, and Regency may each buy and sell stock index futures
contracts for purposes of managing cash flow. International may also buy and
sell financial futures contracts for non-hedging purposes. At the time a
Portfolio enters into a financial futures contract, it is required to
deposit with its custodian a specified amount of cash or liquid securities,
known as "initial margin," ranging upward from 1.1% of the value of the
financial futures contract being traded. Each day, the futures contract is
valued at the official settlement price of the board of trade or U.S.
commodity exchange on which such futures contract is traded. Subsequent
payments, known as "variation margin," to and from the broker are made on a
daily basis as the
C-40
<PAGE>
market price of the financial futures contract fluctuates. Daily variation
margin adjustments, arising from this "mark to market," are recorded by the
Portfolios as unrealized gains or losses.
Although some financial futures contracts by their terms call for actual
delivery or acceptance of financial instruments, in most cases the contracts
are closed out prior to delivery by offsetting purchases or sales of
matching financial futures contracts. When the contracts are closed, a
Portfolio recognizes a gain or loss. Risks of entering into futures
contracts include the possibility there may be an illiquid market and/or a
change in the value of the contract may not correlate with changes in the
value of the underlying securities.
For U.S. Federal income tax purposes, the futures transactions undertaken
by a Portfolio may cause that Portfolio to recognize gains or losses from
marking to market even though its positions have not been sold or
terminated, may affect the character of the gains or losses recognized as
long-term or short-term, and may affect the timing of some capital gains and
losses realized by the Portfolios. Also, a Portfolio's losses on
transactions involving futures contracts may be deferred rather than being
taken into account currently in calculating such Portfolio's taxable income.
During the period ended August 31, 1999, Focus, Millennium, Regency, and
Socially Responsive did not enter into any financial futures contracts.
During the year ended August 31, 1999, International had entered into
various financial futures contracts. At August 31, 1999, there were no open
positions.
At August 31, 1999, open positions in financial futures contracts for
Guardian were as follows:
<TABLE>
<CAPTION>
UNREALIZED
EXPIRATION OPEN CONTRACTS POSITION DEPRECIATION
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
SEPTEMBER 1999 1,245 S&P 500 FUTURES LONG $11,506,000
</TABLE>
At August 31, 1999, Guardian had the following securities deposited in a
segregated account to cover margin requirements on open financial futures
contracts:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT SECURITY
- ------------------------------------------------------------------
<C> <S>
$34,200,000 U.S. Treasury Bills, 4.60%, due 11/18/1999
</TABLE>
12) SECURITY LENDING: Securities loans involve certain risks in the event a
borrower should fail financially, including delays or inability to recover
the lent securities or foreclose against the collateral. The investment
manager, under the general supervision of the Trusts' Boards of Trustees,
monitors the creditworthiness of the parties to whom the Portfolios make
security loans. The Portfolios will not lend
C-41
<PAGE>
securities on which covered call options have been written, or lend
securities on terms which would prevent each of their investors from
qualifying as a regulated investment company. The Portfolios entered into a
Securities Lending Agreement with Morgan Stanley & Co. Incorporated
("Morgan"). The Portfolios receive cash collateral equal to at least 100% of
the current market value of the loaned securities. The Portfolios invest the
cash collateral in the N&B Securities Lending Quality Fund, LLC ("investment
vehicle"), which is managed by State Street Bank and Trust Company ("State
Street") pursuant to guidelines approved by the Trusts' investment manager.
Income earned on the investment vehicle is paid to Morgan monthly. The
Portfolios receive a fee, payable monthly, negotiated by the Portfolios and
Morgan, based on the number and duration of the lending transactions. At
August 31, 1999, the value of the securities loaned and the value of the
collateral were as follows:
<TABLE>
<CAPTION>
VALUE OF
SECURITIES VALUE OF
LOANED COLLATERAL
- -------------------------------------------------------------------------------------
<S> <C> <C>
FOCUS $ 6,975,000 $ 7,114,000
GENESIS 41,691,000 42,525,000
GUARDIAN 23,957,000 24,437,000
INTERNATIONAL 4,778,000 4,874,000
MANHATTAN 116,579,000 118,910,000
MILLENNIUM 13,045,000 13,306,000
PARTNERS 136,904,000 139,642,000
REGENCY 50,000 50,000
SOCIALLY RESPONSIVE 2,294,000 2,340,000
</TABLE>
13) REPURCHASE AGREEMENTS: Each 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. A Portfolio
requires that the securities purchased in a repurchase transaction be
transferred to the custodian in a manner sufficient to enable a Portfolio to
obtain those securities in the event of a default under the repurchase
agreement. A Portfolio monitors, on a daily basis, the value of the
securities transferred to ensure that their value, including accrued
interest, is greater than amounts owed to a Portfolio under each such
repurchase agreement.
14) SWAPS: International has entered into equity swap contracts to gain exposure
to specific foreign equities. A swap is an agreement that obligates two
parties to exchange a series of cash flows at specified intervals based upon
or calculated by
C-42
<PAGE>
reference to changes in specified security prices or interest rates. The
payment flows are usually netted against each other, with the difference
being paid by one party to the other.
Risks may arise as a result of the failure of another party to the swap
contract to comply with the terms of the swap contract. The loss incurred by
the failure of a counterparty is generally limited to the net payment to be
received by the Portfolio and/or the termination value at the end of the
contract. Therefore, International considers the creditworthiness of each
counterparty to a swap contract in evaluating potential credit risk.
Additionally, risks may arise from unanticipated movements in interest rates
or in the value of the underlying equities.
International records a net receivable or payable for the amount expected
to be received or paid under the contract. The fluctuation in the market
value of the underlying security is recorded as unrealized
appreciation/depreciation of investments. Premium payments made to enter
into a swap contract are capitalized and amortized over the life of the swap
contract. Management periodically reviews the value of the unamortized
balance of the premium payment and may accelerate the amortization. At
August 31, 1999, International had no outstanding equity swap contracts.
NOTE B -- MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES:
Each Portfolio retains Management as its investment manager under a
Management Agreement. For such investment management services, each Portfolio
(except Genesis, International, and Millennium) pays Management a fee at the
annual rate of 0.55% of the first $250 million of that Portfolio's average daily
net assets, 0.525% of the next $250 million, 0.50% of the next $250 million,
0.475% of the next $250 million, 0.45% of the next $500 million, and 0.425% of
average daily net assets in excess of $1.5 billion. Genesis and Millennium pay
Management a fee for investment management services at the annual rate of 0.85%
of the first $250 million of that Portfolio's average daily net assets, 0.80% of
the next $250 million, 0.75% of the next $250 million, 0.70% of the next $250
million, and 0.65% of average daily net assets in excess of $1 billion. Prior to
December 15, 1997, Management had voluntarily agreed to waive a portion of the
management fee borne directly by Genesis and indirectly by any entity that
invested in Genesis to reduce the annual fee by 0.10% per annum of average daily
net assets of Genesis. Effective December 15, 1997, the above waiver was
terminated. International pays Management a fee for investment management
services at the annual rate of 0.85% of the first $250 million of that
Portfolio's average daily net assets, 0.825% of the next $250 million, 0.80% of
the next $250 million, 0.775% of the next $250 million, 0.75% of the next $500
million, and 0.725% of average daily net assets in excess of $1.5 billion.
C-43
<PAGE>
As of August 31, 1999, all of the capital stock of Management is owned by
individuals who are also principals of Neuberger Berman, LLC ("Neuberger"), a
member firm of The New York Stock Exchange and sub-adviser to each Portfolio.
Neuberger is retained by Management to furnish it with investment
recommendations and research information without added cost to each Portfolio.
Several individuals who are officers and/or trustees of the Trusts are also
principals of Neuberger and/ or officers and/or directors of Management.
Each Portfolio has an expense offset arrangement in connection with its
custodian contract. In addition, in connection with the Securities Lending
Agreement between each Portfolio and Morgan, Morgan had agreed to reimburse each
Portfolio for transaction costs incurred on security lending transactions
charged by the custodian through May 31, 1999. The impact of these arrangements,
respectively, reflected in the Statements of Operations under the caption
Custodian fees, was a reduction of $1,177 and $2,359, $699 and $4,592, $2,599
and $1,768, $798 and $2,336, $978 and $4,544, $696 and $1,600, $2,894 and
$2,200, $76 and $0, and $200 and $448, for Focus, Genesis, Guardian,
International, Manhattan, Millennium, Partners, Regency, and Socially
Responsive, respectively.
NOTE C -- SECURITIES TRANSACTIONS:
During the year ended August 31, 1999, there were purchase and sale
transactions (excluding short-term securities, financial futures contracts,
forward foreign currency contracts, option contracts, and equity swap contracts)
as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
- --------------------------------------------------------------------------------------
<S> <C> <C>
FOCUS $ 898,828,000 $1,171,958,000
GENESIS 573,691,000 868,673,000
GUARDIAN 3,678,666,000 6,448,039,000
INTERNATIONAL 105,866,000 140,526,000
MANHATTAN 677,511,000 795,813,000
MILLENNIUM 108,650,000 60,657,000
PARTNERS 5,124,066,000 5,825,740,000
REGENCY 9,701,000 1,960,000
SOCIALLY RESPONSIVE 186,150,000 182,832,000
</TABLE>
During the year ended August 31, 1999, International had entered into various
contracts to deliver currencies at specified future dates. At August 31, 1999,
there were no open contracts.
C-44
<PAGE>
During the year ended August 31, 1999, there were brokerage commissions on
securities paid to Neuberger and other brokers as follows:
<TABLE>
<CAPTION>
OTHER
NEUBERGER BROKERS TOTAL
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
FOCUS $ 984,000 $ 988,000 $ 1,972,000
GENESIS 1,035,000 1,115,000 2,150,000
GUARDIAN 3,975,000 6,818,000 10,793,000
INTERNATIONAL 5,000 712,000 717,000
MANHATTAN 495,000 660,000 1,155,000
MILLENNIUM 28,000 23,000 51,000
PARTNERS 7,694,000 6,523,000 14,217,000
REGENCY 15,000 2,000 17,000
SOCIALLY RESPONSIVE 330,000 155,000 485,000
</TABLE>
NOTE D -- LINE OF CREDIT:
At August 31, 1999, Genesis, Manhattan, and Millennium were three of the
holders of a single committed, unsecured $100,000,000 line of credit with State
Street, to be used only for temporary or emergency purposes. Interest is charged
on borrowings under this agreement at the overnight Federal Funds Rate plus
0.75% per annum. A facility fee of 0.07% (0.09% effective September 1, 1999) per
annum of the available line of credit is charged, of which Genesis, Manhattan,
and Millennium each has agreed to pay its pro rata share, based on the ratio of
its individual net assets to the net assets of all the participants at the time
the fee is due and payable. The fee is paid quarterly in arrears. No
compensating balance is required. Other investment companies managed by
Management also participate in this line of credit on the same terms. Because
several investment companies participate, there is no assurance that an
individual Portfolio will have access to the entire $100,000,000 at any
particular time. Genesis, Manhattan, and Millennium had no loans outstanding
pursuant to this line of credit at August 31, 1999. During the year ended
August 31, 1999, Genesis, Manhattan, and Millennium did not utilize this line of
credit.
At August 31, 1999, International was one of two holders of a single
$20,000,000 uncommitted, secured line of credit with State Street to be used for
temporary or emergency purposes or for leverage. Interest is charged at LIBOR,
or the overnight Federal Funds Rate, plus a spread to be determined at the time
of borrowing. Another investment company managed by Management also participates
in this line of credit on the same terms. Because another investment company
participates, there is no assurance that an individual Portfolio will have
access to the entire $20,000,000 at any particular time. International had no
loans outstanding pursuant to this line of credit at August 31, 1999, nor had it
utilized this line of credit at any time prior to that date.
C-45
<PAGE>
NOTE E -- INVESTMENTS IN NON-CONTROLLED AFFILIATES*:
FOCUS
<TABLE>
<CAPTION>
BALANCE OF GROSS GROSS BALANCE OF
SHARES HELD PURCHASES SALES SHARES HELD VALUE
AUGUST 31, AND AND AUGUST 31, AUGUST 31,
NAME OF ISSUER: 1998 ADDITIONS REDUCTIONS 1999 1999
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ADVANTA Corp.
Class A** 948,694 0 948,694 0 $ 0
ADVANTA Corp.
Class B** 910,000 0 910,000 0 0
Photronics Inc. 940,000 447,500 85,000 1,302,500 31,097,000
Sierra Health
Services** 1,360,000 0 1,360,000 0 0
</TABLE>
GENESIS
<TABLE>
<CAPTION>
BALANCE OF GROSS GROSS BALANCE OF
SHARES HELD PURCHASES SALES SHARES HELD VALUE
AUGUST 31, AND AND AUGUST 31, AUGUST 31,
NAME OF ISSUER: 1998 ADDITIONS REDUCTIONS 1999 1999
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AAR Corp. 1,748,650 60,900 38,200 1,771,350 $37,863,000
ADAC Laboratories** 1,003,100 42,200 138,800 906,500 5,326,000
Alliant Techsystems 648,500 110,900 96,200 663,200 48,414,000
Aviall Inc. 1,194,100 50,400 25,000 1,219,500 13,567,000
Davox Corp. 0 1,075,600 0 1,075,600 14,991,000
DONCASTERS PLC ADR 468,300 10,000 0 478,300 6,636,000
Eltron
International** 420,000 0 420,000 0 0
Highland Bancorp 0 331,400 0 331,400 6,172,000
Inprise Corp.** 2,606,300 0 404,700 2,201,600 9,288,000
Pameco Corp.** 281,800 0 281,800 0 0
Primex Technologies 235,000 565,400 0 800,400 16,708,000
SOS Staffing Services 641,900 172,500 0 814,400 4,835,000
</TABLE>
C-46
<PAGE>
GUARDIAN
<TABLE>
<CAPTION>
BALANCE OF GROSS GROSS BALANCE OF
SHARES HELD PURCHASES SALES SHARES HELD VALUE
AUGUST 31, AND AND AUGUST 31, AUGUST 31,
NAME OF ISSUER: 1998 ADDITIONS REDUCTIONS 1999 1999
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cabot Corp.** 3,841,000 0 845,000 2,996,000 $ 69,095,000
Capital One
Financial** 3,087,900 2,599,100 2,216,200 3,470,800 131,023,000
Coltec Industries** 4,863,900 0 4,863,900 0 0
Countrywide Credit
Industries** 6,590,000 0 5,427,100 1,162,900 37,358,000
Foundation Health
Systems** 9,939,900 0 9,939,900 0 0
Mark IV Industries** 2,942,081 0 2,942,081 0 0
PacifiCare Health
Systems Class B** 1,988,564 7,000 1,995,564 0 0
UCAR International** 2,176,200 0 2,176,200 0 0
Wellpoint Health
Networks** 3,674,996 25,000 1,117,000 2,582,996 188,236,000
</TABLE>
* AFFILIATED ISSUERS, AS DEFINED IN THE 1940 ACT, INCLUDE ISSUERS IN WHICH THE
PORTFOLIO HELD 5% OR MORE OF THE OUTSTANDING VOTING SECURITIES.
**AT AUGUST 31, 1999, THE ISSUERS OF THESE SECURITIES WERE NO LONGER AFFILIATED
WITH THE PORTFOLIO.
C-47
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Focus Portfolio
<TABLE>
<CAPTION>
Year Ended August 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
--------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(1) .51% .51% .53% .54% --
--------------------------------------------------------------------
Net Expenses .51% .51% .53% .54% .57%
--------------------------------------------------------------------
Net Investment Income .37% .59% .54% 1.04% 1.05%
--------------------------------------------------------------------
Portfolio Turnover Rate 57% 64% 63% 39% 36%
--------------------------------------------------------------------
Net Assets, End of Year (in millions) $1,546.4 $1,317.5 $1,573.4 $1,122.4 $969.2
--------------------------------------------------------------------
</TABLE>
1) For fiscal periods ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements.
C-48
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Genesis Portfolio
<TABLE>
<CAPTION>
Year Ended August 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
---------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(1) .75% .72% .77% .85% --
---------------------------------------------------------
Net Expenses .75% .72%(2) .77%(2) .85%(2) .94%(2)
---------------------------------------------------------
Net Investment Income 1.02% 1.13% .32% .27% .25%
---------------------------------------------------------
Portfolio Turnover Rate 33% 18% 18% 21% 37%
---------------------------------------------------------
Net Assets, End of Year (in millions) $1,751.1 $1,812.4 $1,083.7 $259.9 $142.2
---------------------------------------------------------
</TABLE>
1) For fiscal periods ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements.
2) Had the investment manager not waived a portion of the management fee, the
annualized ratios of net expenses to average daily net assets would have
been:
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
1998 1997 1996 1995
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------
Net Expenses .74% .87% .95% .97%
</TABLE>
C-49
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Guardian Portfolio
<TABLE>
<CAPTION>
Year Ended August 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
--------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(1) .46% .46% .46% .46% --
--------------------------------------------------------------------
Net Expenses .46% .46% .46% .46% .48%
--------------------------------------------------------------------
Net Investment Income 1.06% .92% .89% 1.72% 1.72%
--------------------------------------------------------------------
Portfolio Turnover Rate 73% 60% 50% 37% 26%
--------------------------------------------------------------------
Net Assets, End of Year (in millions) $4,723.7 $5,787.8 $8,758.2 $6,232.5 $4,613.2
--------------------------------------------------------------------
</TABLE>
1) For fiscal periods ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements.
C-50
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
International Portfolio
<TABLE>
<CAPTION>
Year Ended August 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(1) 1.11% 1.18% 1.21% 1.37% --
------------------------------------------------------------------
Net Expenses 1.10% 1.18% 1.21% 1.37%(2) .70%(2)
------------------------------------------------------------------
Net Investment Income .08% .29% .47% .58% 1.74%
------------------------------------------------------------------
Portfolio Turnover Rate 94% 46% 37% 45% 41%
------------------------------------------------------------------
Net Assets, End of Year (in millions) $114.5 $127.8 $115.3 $57.0 $26.4
------------------------------------------------------------------
</TABLE>
1) For fiscal periods ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements.
2) After reimbursement of expenses by the investment adviser. Had the investment
adviser not undertaken such action, the annualized ratios of net expenses to
average daily net assets would have been:
<TABLE>
<CAPTION>
YEAR ENDED
AUGUST 31,
1996 1995
<S> <C> <C>
- ---------------------------------------------
Net Expenses 1.49% 2.24%
</TABLE>
C-51
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Manhattan Portfolio
<TABLE>
<CAPTION>
Year Ended August 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
--------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(1) .58% .57% .59% .58% --
--------------------------------------------------------------------
Net Expenses .58% .57% .59% .58% .59%
--------------------------------------------------------------------
Net Investment Income (Loss) (.08%) (.05%) .20% .13% .42%
--------------------------------------------------------------------
Portfolio Turnover Rate 115% 90% 89% 53% 44%
--------------------------------------------------------------------
Net Assets, End of Year (in millions) $612.9 $523.4 $621.7 $567.4 $645.4
--------------------------------------------------------------------
</TABLE>
1) For fiscal periods ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements.
C-52
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Millennium Portfolio
<TABLE>
<CAPTION>
Period from
October 20, 1998(1) to
August 31,
1999
<S> <C>
----------------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(2)(3) 1.20%
----------------------
Net Expenses(3) 1.19%
----------------------
Net Investment Loss(3) (.67%)
----------------------
Portfolio Turnover Rate 208%
----------------------
Net Assets, End of Period (in millions) $68.2
----------------------
</TABLE>
1) The date investment operations commenced.
2) The Portfolio is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset arrangements.
3) Annualized.
C-53
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Partners Portfolio
<TABLE>
<CAPTION>
Year Ended August 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
--------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(1) .47% .47% .48% .51% --
--------------------------------------------------------------------
Net Expenses .47% .47% .48% .51% .53%
--------------------------------------------------------------------
Net Investment Income 1.29% 1.11% 1.05% 1.26% 1.13%
--------------------------------------------------------------------
Portfolio Turnover Rate 132% 109% 77% 96% 98%
--------------------------------------------------------------------
Net Assets, End of Year (in millions) $3,768.7 $3,581.3 $3,575.6 $1,999.6 $1,623.5
--------------------------------------------------------------------
</TABLE>
1) For fiscal periods ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements.
C-54
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Regency Portfolio
<TABLE>
<CAPTION>
Period from
June 1, 1999(1) to
August 31,
1999
<S> <C>
------------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(2)(3) 2.65%
------------------
Net Expenses(3) 2.64%
------------------
Net Investment Loss(3) (.48%)
------------------
Portfolio Turnover Rate 42%
------------------
Net Assets, End of Period (in millions) $8.3
------------------
</TABLE>
1) The date investment operations commenced.
2) The Portfolio is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset arrangements.
3) Annualized.
C-55
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Socially Responsive Portfolio
<TABLE>
<CAPTION>
Year Ended August 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
--------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(1) .59% .60% .63% .65% --
--------------------------------------------------------------------
Net Expenses .59% .60% .63% .65% .68%
--------------------------------------------------------------------
Net Investment Income .63% .92% 1.08% 1.02% 1.18%
--------------------------------------------------------------------
Portfolio Turnover Rate 53% 47% 51% 53% 58%
--------------------------------------------------------------------
Net Assets, End of Year (in millions) $397.1 $282.9 $256.3 $158.5 $96.7
--------------------------------------------------------------------
</TABLE>
1) For fiscal periods ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements.
C-56
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of Equity Managers Trust and
Owners of Beneficial Interest of
Neuberger Berman Manhattan Portfolio,
Neuberger Berman Millennium Portfolio,
Neuberger Berman Regency Portfolio, and
Neuberger Berman Socially Responsive Portfolio
In our opinion, the accompanying statements of assets and liabilities, including
the schedules 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 Manhattan
Portfolio, Neuberger Berman Millennium Portfolio, Neuberger Berman Regency
Portfolio, and Neuberger Berman Socially Responsive Portfolio (collectively the
"Portfolios") at August 31, 1999, and the results of their operations, the
changes in their net assets, and the financial highlights for each of the
periods indicated, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Portfolios' 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, which included confirmation of
securities at August 31, 1999 by correspondence with the custodian and brokers,
provide a reasonable basis for the opinion expressed above.
PricewatehouseCoopers LLP
Boston, Massachusetts
October 8, 1999
C-57
<PAGE>
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS
To the Board of Trustees
Equity Managers Trust and
Owners of Beneficial Interest of
Neuberger Berman Focus Portfolio
Neuberger Berman Genesis Portfolio
Neuberger Berman Guardian Portfolio and
Neuberger Berman Partners Portfolio
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of the Neuberger Berman Focus Portfolio,
Neuberger Berman Genesis Portfolio, Neuberger Berman Guardian Portfolio, and
Neuberger Berman Partners Portfolio, four of the series constituting Equity
Managers Trust (the "Trust"), as of August 31, 1999, and the related statements
of operations for the year then ended, the statements of changes in net assets
for each of the two years in the period then ended, and the financial highlights
for each of the five years in the period then ended. These financial statements
and financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of August 31, 1999, by correspondence with the custodian and
brokers or other appropriate auditing procedures where replies from brokers were
not received. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the above mentioned series of Equity Managers Trust at August 31, 1999, the
results of their operations for the year then ended, the changes in their net
assets for each of the two years in the period then ended, and their financial
highlights for each of the five years in the period then ended, in conformity
with generally accepted accounting principles.
[SIGNATURE]
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
October 1, 1999
C-58
<PAGE>
REPORT OF ERNST & YOUNG,
INDEPENDENT AUDITORS
To the Board of Trustees
Global Managers Trust and
Owners of Beneficial Interest of
Neuberger Berman International Portfolio
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of the Neuberger Berman International
Portfolio, the only series constituting Global Managers Trust (the "Trust"), as
of August 31, 1999, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended. 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 auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements and financial highlights. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Neuberger Berman International Portfolio of Global Managers Trust at August 31,
1999, 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 five years in the period then ended, in conformity
with accounting principles generally accepted in the United States of America.
[SIGNATURE]
/s/ ERNST & YOUNG LLP
Grand Cayman, Cayman Islands
October 1, 1999
C-59
<PAGE>
DIRECTORY
INVESTMENT MANAGER, ADMINISTRATOR
AND DISTRIBUTOR
Neuberger Berman Management Inc.
605 Third Avenue 2nd Floor
New York, NY 10158-0180
800.877.9700 or 212.476.8800
Institutional Services 800.366.6264
SUB-ADVISER
Neuberger Berman, LLC
605 Third Avenue
New York, NY 10158-3698
CUSTODIAN AND SHAREHOLDER
SERVICING AGENT
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
ADDRESS CORRESPONDENCE TO:
Neuberger Berman Funds
Institutional Services
605 Third Avenue 2nd Floor
New York, NY 10158-0180
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, NW
2nd Floor
Washington, DC 20036-1800
INDEPENDENT ACCOUNTANTS/AUDITORS
PricewaterhouseCoopers LLP
160 Federal Street
Boston, MA 02110
Ernst & Young LLP
200 Clarendon Street
Boston, MA 02116
Ernst & Young
One Capital Place
Shedden Road
George Town
Grand Cayman, Cayman Islands
- -C- 1999 Neuberger Berman Management Inc.
D-1
<PAGE>
OFFICERS AND TRUSTEES
EQUITY MANAGERS TRUST/
NEUBERGER BERMAN EQUITY TRUST/
NEUBERGER BERMAN EQUITY ASSETS
Stanley Egener
CHAIRMAN OF THE BOARD AND TRUSTEE
Lawrence Zicklin
PRESIDENT AND TRUSTEE
Faith Colish
TRUSTEE
Howard A. Mileaf
TRUSTEE
Edward I. O'Brien
TRUSTEE
John T. Patterson, Jr.
TRUSTEE
John P. Rosenthal
TRUSTEE
Cornelius T. Ryan
TRUSTEE
Gustave H. Shubert
TRUSTEE
Daniel J. Sullivan
VICE PRESIDENT
Michael J. Weiner
VICE PRESIDENT
Richard Russell
TREASURER
Claudia A. Brandon
SECRETARY
Barbara DiGiorgio
ASSISTANT TREASURER
Celeste Wischerth
ASSISTANT TREASURER
Stacy Cooper-Shugrue
ASSISTANT SECRETARY
C. Carl Randolph
ASSISTANT SECRETARY
GLOBAL MANAGERS TRUST
Stanley Egener
CHAIRMAN OF THE BOARD AND TRUSTEE
Lawrence Zicklin
PRESIDENT
Howard A. Mileaf
TRUSTEE
John T. Patterson, Jr.
TRUSTEE
John P. Rosenthal
TRUSTEE
Daniel J. Sullivan
VICE PRESIDENT
Michael J. Weiner
VICE PRESIDENT
Richard Russell
TREASURER
Claudia A. Brandon
SECRETARY
Barbara DiGiorgio
ASSISTANT TREASURER
Jacqueline Henning
ASSISTANT TREASURER
Celeste Wischerth
ASSISTANT TREASURER
Stacy Cooper-Shugrue
ASSISTANT SECRETARY
Lenore Joan McCabe
ASSISTANT SECRETARY
C. Carl Randolph
ASSISTANT SECRETARY
D-2
<PAGE>
Notice to Shareholders (Unaudited)
For Neuberger Berman Guardian Trust 90% of the dividends distributed during
the fiscal year ended August 31, 1999, qualifies for the dividend received
deduction for corporate shareholders. The Fund will notify shareholders in
January 2000 of the applicable percentage of qualifying dividends for corporate
shareholders for use in preparing 1999 income tax returns.
D-3
<PAGE>
Statistics and projections in this report are
derived from sources deemed to be reliable
but cannot be regarded as a representation
of future results of the Funds. This report
is prepared for the general information of
shareholders and is not an offer of shares
of the Funds. Shares are sold only through
the currently effective prospectus, which
must precede or accompany this report.
[LOGO]
NEUBERGER BERMAN MANAGEMENT INC.
605 Third Avenue 2nd Floor
New York, NY 10158-0180
SHAREHOLDER SERVICES
800.877.9700
INSTITUTIONAL SERVICES
800.366.6264
www.nbfunds.com
NMAAR9640899
