<PAGE>
SEMI-ANNUAL REPORT
- ---------------------------------------------------------
February 28, 1997
Neuberger&Berman
EQUITY ASSETS [SERVICE MARK]
Neuberger&Berman
FOCUS ASSETS
Neuberger&Berman
GUARDIAN ASSETS
Neuberger&Berman
MANHATTAN ASSETS
Neuberger&Berman
PARTNERS ASSETS
<PAGE>
TABLE OF CONTENTS
THE FUNDS
CHAIRMAN'S LETTER 4
PORTFOLIO COMMENTARY
Focus Assets 5
Guardian Assets 7
Manhattan Assets 10
Partners Assets 13
PERFORMANCE HIGHLIGHTS 15
FINANCIAL STATEMENTS 16
FINANCIAL HIGHLIGHTS
PER SHARE DATA
Focus Assets 26
Guardian Assets 27
Manhattan Assets 28
Partners Assets 29
THE PORTFOLIOS
SCHEDULE OF INVESTMENTS
TOP TEN EQUITY HOLDINGS
Focus Portfolio 32
Guardian Portfolio 34
Manhattan Portfolio 38
Partners Portfolio 40
FINANCIAL STATEMENTS 44
FINANCIAL HIGHLIGHTS 55
OTHER INFORMATION
Directory/Officers and Trustees 57
3
<PAGE>
CHAIRMAN'S LETTER March 27, 1997
Dear Fellow Shareholder:
During the six months ended February 28, 1997, we witnessed one of the most
explosive rallies in stock market history with the Dow Jones Industrial Average
and Standard & Poor's 500 Index gaining 23.82% and 22.60%, respectively. High
multiple blue chip stocks (particularly branded consumer goods companies),
continued to lead the market parade. Not left out of the rally were technology,
financial services, and health care stocks, which rebounded as well, helping our
funds achieve solid gains.
With the Dow and S&P "500" near record levels and equity valuations well above
historic norms, we are comforted by our conviction that our portfolios are
comprised of high quality companies trading at reasonable fundamental valuations
relative to the market and their long term growth prospects. We have a talented
and experienced group of analysts and portfolio managers who, in keeping with
our firm's heritage, focus primarily on value.
If the economy continues to provide low inflation, relatively low interest
rates and reasonable corporate earnings, stocks can continue to progress. We
believe well managed, financially sound companies in out-of-favor industries
will participate more fully in a market advance. We have faith investors will
ultimately see the folly in chasing a relative handful of blue-chip growth
stocks simply because they are going up in price. Sooner or later, money will
gravitate to equally high-quality companies selling at much more reasonable
fundamental valuations.
Whatever the market holds in store for us over the next six months and beyond,
we will continue to do what we have always done -- focus on quality and
value -- the two most important ingredients in the recipe for long term
investment success.
Sincerely,
/s/ Stanley Egener
Stanley Egener
Chairman of the Board
Neuberger&Berman Equity Assets
4
<PAGE>
PORTFOLIO COMMENTARY
Neuberger&Berman
- ----------------------------------------------------------------------
Focus Assets
PORTFOLIO CO-MANAGERS KENT SIMONS AND KEVIN RISEN EMPLOY A SECTOR-SPECIFIC
APPROACH TO MANAGING THE PORTFOLIO. FIRST, THEY IDENTIFY SIX ECONOMIC
SECTORS (OUT OF A POSSIBLE 13) THEY BELIEVE TO BE MOST UNDERVALUED. THEY
THEN FOCUS ON WELL MANAGED, FINANCIALLY SOUND INDUSTRY LEADERS IN EACH
CHOSEN ECONOMIC SECTOR. THE PORTFOLIO MANAGEMENT TEAM FAVORS COMPANIES
WITH ABOVE MARKET AVERAGE EARNINGS GROWTH POTENTIAL TRADING AT BELOW
MARKET AVERAGE PRICE/ EARNINGS MULTIPLES.
For the six months ended February 28, 1997, the fund returned 21.63% in line
with the Standard & Poor's 500 Index's 22.60% gain (see page 15 for the average
annual total returns, as of February 28, 1997).
Over the last six months, our substantial commitment to financial stocks
(37.6% of the portfolio at the close of the first half of fiscal 1997) was
particularly productive, with bank, insurance, credit and finance company
holdings returning 39% on average. Technology investments, subdivided into
electronics companies and computer and office equipment companies (13.8% of the
portfolio at the close of the first half of fiscal 1997) gained 28% and 37%,
respectively. Media and entertainment were among our worst performing groups,
with our holdings down 6.2% over the period.
Despite the group's stellar performance, we believe selected financial stocks
remain fundamentally undervalued. Travelers Group and Capital One Financial, for
example, still trade at well below market average price/earnings multiples. Why
are these stocks still cheap? Conventional wisdom seems to be that rising
interest rates will hurt earnings. We believe that concern has been overblown
and that top quality financial companies can continue to increase earnings even
if interest rates trend modestly higher. The managements of many financial
companies seem to agree that their stocks are still under-valued, as is
evidenced by ongoing share repurchase activity.
We continue to favor selected technology companies like Compaq Computer and
Seagate Technology. Compaq's product line is selling well, manufacturing costs
are lower, and its product mix is more profitable. In our view, Seagate is well
positioned in the highest growth segment of the computer disk drive market.
Prices have firmed, costs
5
<PAGE>
- ----------------------------------------------------------------------
Focus Assets (Cont'd)
have been reduced and sales volume has risen. Disciplined value investors like
ourselves periodically get the opportunity to buy high-quality technology
companies at below market average multiples. When we do, we add these securities
to our portfolio.
Value investing demands patience. For example, take Exide Corp., the world's
largest manufacturer of automotive, marine and specialty batteries. Exide is
focused on improving profitability in Europe where it is one of the market
leaders. Weather patterns can cause sharp swings in the demand for batteries.
Severely cold weather provokes high levels of battery failures, while unusually
mild winters or cool summers depress demand.
Exide's sales and earnings have been weak in recent periods, due to mild
weather conditions in Europe and restructuring charges. However, we are
encouraged by the improved gross margins seen in the first nine months of fiscal
year 1997 (started March 1996), and we will carefully monitor whether this trend
continues in the future.
In the first half of fiscal 1997, our value discipline once again rewarded
shareholders. We remain committed to the investment strategy -- buying great
companies when they are opportunistically priced -- that has been responsible
for the fund's superior long-term performance record.
The composition, industries and holdings of the portfolio are subject to change.
Focus Assets' portfolio is invested in a wide array of stocks, and no single
holding makes up more than a small fraction of the portfolio's total assets.
While the value-oriented approach is intended to limit risks, the
portfolio -- with its concentration in sectors -- may be more greatly affected
by any single economic, political or regulatory development than a more
diversified mutual fund.
Please remember that past performance is not indicative of future results.
6
<PAGE>
PORTFOLIO COMMENTARY
Neuberger&Berman
- ----------------------------------------------------------------------
Guardian Assets
PORTFOLIO CO-MANAGERS KENT SIMONS AND KEVIN RISEN FOCUS ON "FIRST RATE"
COMPANIES IN INDUSTRIES THAT ARE CURRENTLY OUT-OF-FAVOR. RECOGNIZING THAT
"CHEAP" STOCKS ARE NOT NECESSARILY UNDERVALUED, THEY SEEK WELL MANAGED,
FINANCIALLY SOUND COMPANIES TRADING AT FUNDAMENTALLY ATTRACTIVE
PRICE/EARNINGS MULTIPLES RELATIVE TO THE MARKET AND THEIR LONG-TERM
EARNINGS GROWTH POTENTIAL. BY CONCENTRATING THE PORTFOLIO IN WHAT THEY
BELIEVE ARE HIGH-QUALITY WALL STREET "ORPHANS," THE PORTFOLIO MANAGEMENT
TEAM ATTEMPTS TO TAKE CONSISTENT ADVANTAGE OF OPPORTUNITIES CREATED BY
INVESTORS' OVERREACTION TO REAL OR PERCEIVED PROBLEMS.
For the six months ended February 28, 1997, the fund advanced 19.90% versus
the Standard & Poor's 500 Index's 22.60% return (see page 15 for the average
annual total returns, as of February 28, 1997).
Over this six-month period, the portfolio's concentration in banking,
insurance, credit and finance stocks, including real estate investment trusts,
(collectively, 31.5% at the close of the first half of fiscal 1997) generated
average returns of approximately 37.0%. Technology investments (our second
largest group weighting at 16.8%) also contributed to performance with
electronics company holdings gaining 48.9% and computer and office equipment
stocks returning 31.6%. Our automotive and auto parts holdings modestly
under-performed the market. Returns from our health care investments were mixed.
As is evidenced by their heavy weighting in the portfolio, we continue to like
selected financial stocks. Wall Street seems to believe rising interest rates
will disrupt financial companies' earnings progress. That may not be the case.
We think financial stocks like CITICORP, Travelers Group, Fannie Mae, and
Merrill Lynch, to name just a few of our holdings, have the capacity to grow
earnings at an above market average pace, even if interest rates move modestly
higher. The stocks still trade at well below market average multiples. That is
our definition of value.
One doesn't generally associate technology stocks with value investing.
However, the technology group's volatility actually lends itself to our
discipline of buying first rate companies at discounted multiples. In mid-summer
1996, tech stocks got hit hard. The market's overreaction
7
<PAGE>
- ----------------------------------------------------------------------
Guardian Assets (Cont'd)
to some modest earnings disappointments gave us the opportunity to buy some
seemingly great companies quite cheaply. Seagate Technology, an example of this,
was one of our best performing stocks over the past six months. In our view,
Seagate is well positioned in the highest growth segment of the computer disk
drive market. Prices have firmed, costs have been reduced and sales volume has
risen. We had the opportunity to purchase shares at what we viewed as bargain
prices. We continually monitor the valuations of all the industry groups and
individual stocks in our research universe. When technology stocks are out of
favor, we consider adding them to the portfolio.
The media and entertainment and energy groups (collectively, about 8.6% of our
portfolio) under-performed over the reporting period. Most of our media and
entertainment holdings reported relatively good free cash flow growth -- the
best barometer of progress in these businesses -- but it was largely overlooked
by investors fixated on net earnings growth. In addition, we think investors
have overreacted to energy prices retreating from their 1996 highs. Going
forward, we believe energy prices will stabilize around current levels, and
energy company earnings could then trend higher.
Fertilizer company IMC Global and specialty chemical producer Cabot Corp. were
among our poorer performing stocks over the last six months as both recorded
major earnings disappointments. A weather-induced late start to the planting
season hurt IMC's sales and earnings. However, in our judgment, low worldwide
grain inventories may indicate better times ahead for the fertilizer industry.
Cabot was burdened by weak demand for its core carbon black product and high
expenses associated with new specialty chemical product development. Short-term
earnings may continue to disappoint. In the longer term, however, the company's
recently expanded share repurchase program will leverage returns.
With the sale of its property-casualty unit and its acquisition of U.S.
Healthcare, we believe Aetna (currently our fourth largest holding) has
transformed itself from a relatively slow-growth insurance company to a
8
<PAGE>
- ----------------------------------------------------------------------
Guardian Assets (Cont'd)
dominant player in the faster-growing managed health care business. Aetna's goal
is now to extend U.S. Healthcare's base from small companies to large corporate
customers. The stock has done well, but still trades at a multiple discount to
the market.
In the first half of fiscal 1997, value stocks performed much better than a
year ago. However, the market is still favoring high multiple blue-chip growth
companies. We don't know how long this will last or when the speculative
excesses will be wrung out of the market. We are confident that our portfolio is
comprised of quality companies trading at very reasonable fundamental
valuations.
The composition, industries and holdings of the portfolio are subject to change.
Guardian Assets' 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.
Please remember that past performance is not indicative of future results.
9
<PAGE>
PORTFOLIO COMMENTARY
Neuberger&Berman
- ----------------------------------------------------------------------
Manhattan Assets
PORTFOLIO MANAGER MARK GOLDSTEIN EMPLOYS A "GROWTH AT A REASONABLE PRICE"
(GARP) APPROACH TO THE EQUITIES MARKET. HE SEEKS WELL-MANAGED COMPANIES
WITH STRONG BALANCE SHEETS, CONSISTENT EARNINGS GROWTH RECORDS,
ABOVE-AVERAGE RETURNS ON EQUITY, HIGH FREE CASH FLOW, AND MOST
IMPORTANTLY, REASONABLE FUNDAMENTAL VALUATIONS. BY SHUNNING "HIGH FLYING"
WALL STREET FAVORITES, HE ATTEMPTS TO AVOID ONE OF THE MOST COMMON AND
COSTLY INVESTMENT ERRORS -- PAYING TOO MUCH FOR GOOD COMPANIES.
For the six months ended February 28, 1997, the fund returned 20.17% compared
to the Standard & Poor's 500 Index's 22.60% gain (see page 15 for the average
annual total returns, as of February 28, 1997).
During the first half of fiscal 1997, value re-asserted itself. Our
portfolio's over-weighting in the financial services and technology industries
paid off handsomely. Returns from our investments in retailers and
communications companies were less productive.
Our positions in bank stocks like CITICORP and Wells Fargo had a very positive
impact on performance, but the real stars of our show were credit card companies
like MBNA and Capital One Financial. We took the opportunity to sell some shares
of these stocks to take advantage of their price appreciation. We still believe,
however, some of these stocks offer a good value. Why are credit card companies
so under-loved? Rising consumer debt and credit card delinquency rates have
spooked investors. This is a problem, but, in our opinion, not nearly as big a
one as most investors perceive. Revenues have been growing rapidly. Despite
heated competition, there has been enough pricing flexibility in the industry to
maintain attractive profit margins. Capital One Financial and MBNA are still
trading at below market average price/earnings multiples. Ironically, even
though most credit card companies were originally sold by or spun-off from bank
holding companies, strong free cash flows could make some of them attractive
acquisition candidates
10
<PAGE>
- ----------------------------------------------------------------------
Manhattan Assets (Cont'd)
for banks looking to add cash-generating subsidiaries, as is apparently the case
in Banc One's pending acquisition of First USA at 20 times earnings.
We have had some disappointments. Poor performance from stocks like Nu-Kote
Holding, Coventry, and a handful of others was a direct result of unanticipated
earnings shortfalls. Other underperformers like cellular telephone giant
Airtouch Communications actually posted relatively good results, but sold off
due to concern over prospects for future competition from Personal
Communications Services (PCS) operators. We think the market is vastly
underestimating the value of Airtouch's extensive foreign operations via
partnerships with cellular operators in Germany, Italy, Spain and elsewhere. We
believe Airtouch's international operations alone are worth two-thirds of its
current stock price and the whole company is trading at about half its true
value.
Recently, we've taken a bite of Lone Star Steakhouse & Saloon, a restaurant
chain that has been growing rapidly. We like what's been on the menu, notably
25% profit margins, among the highest in the industry, and about a 40% cash
return on investment. Lone Star currently has 205 outlets and plans to expand
this number by 20% annually over the next few years. The stock is trading at a
price/earnings multiple well below its annual earnings growth rate.
We have also bought Merrill Lynch, one of the great names in the financial
services industry. In our view, Merrill already has what the Morgan Stanley/Dean
Witter combination is hoping to create -- a dominant global franchise in the
brokerage and asset management businesses. The demographics are in Merrill's
favor with the baby boomers in the early stages of their prime
earnings/savings/investment years. Over 50% of Merrill's compensation expense,
always the largest cost component in this business, is incentive oriented. We
believe this is simply a terrific organization in a historically good long-term
growth industry, yet it trades at a significant multiple discount to the market.
11
<PAGE>
- ----------------------------------------------------------------------
Manhattan Assets (Cont'd)
We are pleased with the fund's performance over the last six months,
particularly in view of the fact that it was achieved without stretching our
guiding philosophy of growth at a reasonable price. We believe by sticking to
our fundamental discipline, we can continue to deliver favorable risk adjusted
returns.
The composition, industries and holdings of the portfolio are subject to change.
Manhattan Assets' 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.
Please remember that past performance is not indicative of future results.
12
<PAGE>
PORTFOLIO COMMENTARY
Neuberger&Berman
- ----------------------------------------------------------------------
Partners Assets
PORTFOLIO CO-MANAGERS MICHAEL KASSEN AND ROBERT GENDELMAN FOCUS ON
OUT-OF-FAVOR LARGE-CAP STOCKS AND MID-SIZED COMPANIES LESS WIDELY FOLLOWED
BY WALL STREET ANALYSTS. THEY ARE PARTICULARLY PARTIAL TO "FALLEN
ANGELS" -- STOCKS OF GROWING COMPANIES THAT HAVE EXPERIENCED TEMPORARY
SETBACKS, BUT WHOSE LONGER-TERM FUNDAMENTAL OUTLOOK REMAINS STRONG. THE
PORTFOLIO MANAGEMENT TEAM VIEWS STOCKS AS PIECES OF BUSINESSES THEY WOULD
LIKE TO OWN, RATHER THAN PIECES OF PAPER TO TRADE BASED ON SHORT-TERM
PRICE FLUCTUATIONS. THEIR GOAL IS TO FIND QUALITY COMPANIES TRADING AT A
DISCOUNT TO THEIR INTRINSIC ECONOMIC VALUE.
For the six months ended February 28, 1997, the fund returned 23.14% compared
to the Standard & Poor's 500 Index's 22.60% gain (see page 15 for the average
annual total returns, as of February 28, 1997).
We build the portfolio from the ground up, stock by stock, but generally end
up over-weighting several industry groups that we believe offer attractive
fundamental values. Over the last six months, our focus on the banking,
insurance, and technology industries has helped us achieve strong absolute and
relative returns. We have been penalized by our limited exposure to drug stocks,
a group we like, but one in which we couldn't find many true fundamental
bargains.
Going forward, we continue to favor selected bank stocks. Wells Fargo is a
good example. Management has extended the franchise through what, in our
opinion, are economically sensible strategic acquisitions. They have found
creative low cost methods, including the Internet, to attract new customers. The
company has moved to penetrate the small business market in a very targeted
fashion. Free cash flow has grown, and management has been using this cash to
buy back stock. Despite the stock's excellent performance, Wells Fargo still
trades at a significant discount to our appraisal of its economic value.
We also would like to highlight Capital One Financial. Capital One is one of
the largest issuers of Visa and Mastercard credit cards. Despite its solid
earnings performance and a history of consistently high return
13
<PAGE>
- ----------------------------------------------------------------------
Partners Assets (Cont'd)
on equity, we believe Capital One still trades below the market average
price/earnings multiple. Credit cards have continued to gain share as a
percentage of personal consumption expenditures, leading to what we perceive as
favorable industry growth trends. Furthermore, the company's conservative credit
line policy, which includes low average credit lines and balances, should keep
charge-offs below industry averages.
On the other side of the ledger, our investments in deep cyclical industries,
such as steel and non-ferrous metals underperfomed the rest of the portfolio.
The industries were hurt as investors anticipated a slowing economy.
In order to buy quality companies at bargain prices, value managers like
ourselves often have to buy during periods of real or perceived crisis. Our goal
is to analyze a company's problems to see if there is light at the end of the
tunnel. For instance, we recently bought McDonald's. McDonald's stock has been
under a lot of pressure due to slower growth in its domestic restaurant
business. However, internationally McDonald's has boomed. It is one of the most
recognized brand names in the world and international expansion has been the
real growth engine for the company -- a factor apparently overlooked by the
market.
The fund's strong performance in the first half of fiscal 1997 reaffirms our
faith in the value discipline. We are confident that buying great companies when
they are cheap will continue to reward our shareholders.
The composition, industries and holdings of the portfolio are subject to change.
Partners Assets' 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.
Please remember that past performance is not indicative of future results.
14
<PAGE>
PERFORMANCE HIGHLIGHTS
<TABLE>
<CAPTION>
FOR PERIODS
ENDED 2/28/97
----------------------------------
SIX MONTH
PERIOD AVERAGE ANNUAL TOTAL
NEUBERGER&BERMAN ENDED RETURNS(1)
EQUITY ASSETS 2/28/97 1 YR 5 YR 10 YR
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
FOCUS ASSETS(2) +21.63% +20.82% +18.18% +14.05%
GUARDIAN ASSETS +19.90% +20.51% +16.87% +14.04%
MANHATTAN ASSETS +20.17% +12.72% +14.08% +11.52%
PARTNERS ASSETS +23.14% +25.36% +17.66% +13.70%
S&P "500"(3) +22.60% +26.19% +16.95% +14.15%
</TABLE>
Each Fund commenced operations in the summer of 1996.
The Funds have identical investment objectives and policies and invest in the
same Portfolio as other funds ("Sister Funds") of similar names, which are also
administered by Neuberger&Berman Management Inc.-Registered Trademark- The
performance information for the Funds prior to their commencement of operations
is for the Sister Funds. Neuberger&Berman Management Inc. voluntarily bears
certain operating expenses of each Fund and their pro rata share of their
Portfolio's operating expenses which, in the aggregate, exceed 1.50% per annum
of each Fund's average daily net assets, until December 31, 1997. Absent such
arrangements, the average annual total returns of the Funds would have been
less. The total returns for periods prior to the Funds' commencement of
operations would have been lower had they reflected the higher expense ratios of
the Funds as compared to those of the Sister Funds.
1) One-year and average annual total returns are for periods ended February 28,
1997. Includes reinvestment of all dividends and capital gain distributions.
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.
2) Prior to November 1, 1991, the investment policies of its Sister Fund
required that it invest a substantial portion of its assets in the energy
field.
3) 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 Portfolios invest in many securities not
included in the above-described index.
15
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
Neuberger&Berman
- ----------------------------------------------------------------------
Equity Assets
<TABLE>
<CAPTION>
FOCUS
ASSETS
--------------
<S> <C>
ASSETS
Investment in corresponding Portfolio, at
value (Note A) $ 121,906
Deferred organization costs (Note A) 53,536
Receivable for Trust shares sold --
Receivable from administrator -- net (Note
B) 56,788
--------------
232,230
--------------
LIABILITIES
Payable for Fund expenses (Note B) 30,063
Accrued organization costs (Note A) 59,318
Accrued expenses 21,031
--------------
110,412
--------------
NET ASSETS at value $ 121,818
--------------
NET ASSETS consist of:
Par value $ 10
Paid-in capital in excess of par value 100,000
Accumulated undistributed net investment
loss (297)
Accumulated net realized gains (losses) on
investment 2,784
Net unrealized appreciation in value of
investment 19,321
--------------
NET ASSETS at value $ 121,818
--------------
SHARES OUTSTANDING
($.001 par value; unlimited shares
authorized) 10,001
--------------
NET ASSET VALUE, offering and redemption price per
share $12.18
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
16
<PAGE>
February 28, 1997 (Unaudited)
- ----------------------------------------------------------------------
Equity Assets
<TABLE>
<CAPTION>
GUARDIAN MANHATTAN PARTNERS
ASSETS ASSETS ASSETS
------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investment in corresponding Portfolio, at
value (Note A) $ 1,675,258 $ 120,945 $ 610,685
Deferred organization costs (Note A) 53,537 52,956 52,262
Receivable for Trust shares sold 3,468 -- 1,836
Receivable from administrator -- net (Note
B) 56,957 56,556 74,685
------------------------------------------------
1,789,220 230,457 739,468
------------------------------------------------
LIABILITIES
Payable for Fund expenses (Note B) 32,458 29,541 37,629
Accrued organization costs (Note A) 59,319 58,325 58,474
Accrued expenses 20,687 21,695 31,292
------------------------------------------------
112,464 109,561 127,395
------------------------------------------------
NET ASSETS at value $ 1,676,756 $ 120,896 $ 612,073
------------------------------------------------
NET ASSETS consist of:
Par value $ 140 $ 10 $ 50
Paid-in capital in excess of par value 1,603,922 101,100 584,605
Accumulated undistributed net investment
loss (714) (480) (100)
Accumulated net realized gains (losses) on
investment (1,605) 5,319 4,679
Net unrealized appreciation in value of
investment 75,013 14,947 22,839
------------------------------------------------
NET ASSETS at value $ 1,676,756 $ 120,896 $ 612,073
------------------------------------------------
SHARES OUTSTANDING
($.001 par value; unlimited shares
authorized) 139,745 10,100 50,400
------------------------------------------------
NET ASSET VALUE, offering and redemption price per
share $12.00 $11.97 $12.14
------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
17
<PAGE>
STATEMENTS OF OPERATIONS
Neuberger&Berman
- ----------------------------------------------------------------------
Equity Assets
<TABLE>
<CAPTION>
FOCUS
ASSETS
For the
Period from
September 4,
1996
(Commencement
of
Operations)
to
February 28,
1997
(UNAUDITED)
------------
<S> <C>
INVESTMENT INCOME
Investment income from corresponding Portfolio
(Note A) $ 617
------------
Expenses:
Administration fee (Note B) 220
Amortization of deferred organization and
initial offering expenses (Note A) 5,782
Auditing fees 2,479
Custodian fees 4,950
Distribution fees (Note B) --
Legal fees 5,236
Registration and filing fees 26,162
Shareholder reports 12,670
Shareholder servicing agent fees 39
Trustees' fees and expenses 1
Miscellaneous 89
Expenses from corresponding Portfolio
(Notes A & B) 294
------------
Total expenses 57,922
Deduct -- expenses reimbursed by
administrator (Note B) (57,008)
------------
Total net expenses 914
------------
Net investment income (loss) (297)
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
FROM CORRESPONDING PORTFOLIO (NOTE A)
Net realized gain (loss) on investment
securities 2,843
Net realized loss on option contracts written (59)
Change in net unrealized appreciation of
investment securities and option contracts
written 19,321
------------
Net gain on investments from corresponding
Portfolio (Note A) 22,105
------------
Net increase in net assets resulting from
operations $ 21,808
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE>
- ----------------------------------------------------------------------
Equity Assets
<TABLE>
<CAPTION>
GUARDIAN
ASSETS
For the MANHATTAN
Period from ASSETS
September 4, PARTNERS
1996 For the ASSETS
(Commencement Period from
of September 4, 1996 For the
Operations) (Commencement Six Months
to of Operations) to Ended
February 28, February 28, February 28,
1997 1997 1997
(UNAUDITED) (UNAUDITED) (UNAUDITED)
------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Investment income from corresponding Portfolio
(Note A) $ 3,465 $ 337 $ 1,511
------------------------------------------------
Expenses:
Administration fee (Note B) 1,036 218 391
Amortization of deferred organization and
initial offering expenses (Note A) 5,782 5,369 5,793
Auditing fees 2,439 2,439 3,005
Custodian fees 4,961 4,950 5,021
Distribution fees (Note B) 563 -- 154
Legal fees 5,443 5,861 6,389
Registration and filing fees 27,484 26,144 26,477
Shareholder reports 12,899 12,280 14,800
Shareholder servicing agent fees 291 6 275
Trustees' fees and expenses 46 1 --
Miscellaneous -- -- --
Expenses from corresponding Portfolio
(Notes A & B) 1,209 323 486
------------------------------------------------
Total expenses 62,153 57,591 62,791
Deduct -- expenses reimbursed by
administrator (Note B) (58,270) (56,774) (61,324)
------------------------------------------------
Total net expenses 3,883 817 1,467
------------------------------------------------
Net investment income (loss) (418) (480) 44
------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
FROM CORRESPONDING PORTFOLIO (NOTE A)
Net realized gain (loss) on investment
securities (1,521) 6,419 5,418
Net realized loss on option contracts written (84) -- --
Change in net unrealized appreciation of
investment securities and option contracts
written 75,013 14,947 23,610
------------------------------------------------
Net gain on investments from corresponding
Portfolio (Note A) 73,408 21,366 29,028
------------------------------------------------
Net increase in net assets resulting from
operations $ 72,990 $ 20,886 $ 29,072
------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
19
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
Neuberger&Berman
- ----------------------------------------------------------------------
Equity Assets
<TABLE>
<CAPTION>
FOCUS GUARDIAN
ASSETS ASSETS
Period from Period from
September 4, September 4,
1996 1996
(Commencement (Commencement
of of
Operations) Operations)
to to
February 28, February 28,
1997 1997
(UNAUDITED) (UNAUDITED)
-----------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ (297) $ (418)
Net realized gain (loss) on
investments from corresponding
Portfolio (Note A) 2,784 (1,605)
Change in net unrealized
appreciation of investments from
corresponding Portfolio (Note A) 19,321 75,013
-----------------------------
Net increase (decrease) in net
assets resulting from operations 21,808 72,990
-----------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- (296)
Net realized gain on investments -- --
-----------------------------
Total distributions to shareholders -- (296)
-----------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 100,010 1,607,465
Proceeds from reinvestment of
dividends and distributions -- 296
Payments for shares redeemed -- (3,699)
-----------------------------
Net increase from Trust share
transactions 100,010 1,604,062
-----------------------------
NET INCREASE IN NET ASSETS 121,818 1,676,756
NET ASSETS:
Beginning of period -- --
-----------------------------
End of period $ 121,818 $ 1,676,756
-----------------------------
Accumulated undistributed net
investment income (loss) at end of
period $ (297) $ (714)
-----------------------------
NUMBER OF TRUST SHARES:
Sold 10,001 140,044
Issued on reinvestment of dividends
and distributions -- 26
Redeemed -- (325)
-----------------------------
Net increase in shares outstanding 10,001 139,745
-----------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
20
<PAGE>
- ----------------------------------------------------------------------
Equity Assets
<TABLE>
<CAPTION>
MANHATTAN
ASSETS
PARTNERS
Period from ASSETS
September 4, Period from
1996 August 19,
(Commencement 1996
of (Commencement
Operations) Six Months of
to Ended Operations)
February 28, February 28, to
1997 1997 August 31,
(UNAUDITED) (UNAUDITED) 1996
---------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ (480) $ 44 $ 3
Net realized gain (loss) on
investments from corresponding
Portfolio (Note A) 6,419 5,418 (4)
Change in net unrealized
appreciation of investments from
corresponding Portfolio (Note A) 14,947 23,610 (771)
---------------------------------------------
Net increase (decrease) in net
assets resulting from operations 20,886 29,072 (772)
---------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- (147) --
Net realized gain on investments (1,100) (735) --
---------------------------------------------
Total distributions to shareholders (1,100) (882) --
---------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 100,010 506,651 104,273
Proceeds from reinvestment of
dividends and distributions 1,100 882 --
Payments for shares redeemed -- (27,151) --
---------------------------------------------
Net increase from Trust share
transactions 101,110 480,382 104,273
---------------------------------------------
NET INCREASE IN NET ASSETS 120,896 508,572 103,501
NET ASSETS:
Beginning of period -- 103,501 --
---------------------------------------------
End of period $ 120,896 $ 612,073 $ 103,501
---------------------------------------------
Accumulated undistributed net
investment income (loss) at end of
period $ (480) $ (100) $ 3
---------------------------------------------
NUMBER OF TRUST SHARES:
Sold 10,001 42,140 10,446
Issued on reinvestment of dividends
and distributions 99 76 --
Redeemed -- (2,262) --
---------------------------------------------
Net increase in shares outstanding 10,100 39,954 10,446
---------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Neuberger&Berman February 28, 1997 (Unaudited)
- ----------------------------------------------------------------------
Equity Assets
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1) GENERAL: Neuberger&Berman Focus Assets ("Focus"), Neuberger&Berman Guardian
Assets ("Guardian"), Neuberger&Berman Manhattan Assets ("Manhattan"), and
Neuberger&Berman Partners Assets ("Partners") (collectively, the "Funds") are
separate operating series of Neuberger&Berman Equity Assets (the "Trust"), a
Delaware business trust organized pursuant to a Trust Instrument dated
October 18, 1993. The Trust had no operations until September 4, 1996, for
Focus, Guardian, and Manhattan and until August 19, 1996, for Partners, other
than matters relating to its organization and registration as a diversified,
open-end management investment company under the Investment Company Act of
1940, as amended (the "1940 Act"), and registration of its shares 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.
Each Fund seeks to achieve its investment objective by investing all of
its net investable assets in its corresponding Portfolio of Equity Managers
Trust (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 (0.01%, 0.02%, 0.02%, and 0.02%, for Focus, Guardian,
Manhattan, and Partners, respectively, at February 28, 1997). 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
by Equity Managers Trust as indicated in the notes following the Portfolios'
Schedule of Investments.
3) FEDERAL INCOME TAXES: Each series of the Trust is treated as a separate
entity for Federal income tax purposes. It is the policy of Partners to
continue to qualify and the intention of Focus, Guardian, and Manhattan 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 Federal income tax purposes as
22
<PAGE>
capital loss carryforwards) sufficient to relieve it from all, or
substantially all, Federal income taxes. Accordingly, Partners paid no
Federal income taxes and no provision for Federal income taxes was required.
4) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Each Fund earns income, net of
Portfolio expenses, daily on its investment in its corresponding Portfolio.
Dividends and distributions from net realized capital gains, if any, are
normally distributed in December. Guardian generally distributes
substantially all of its net investment income, 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, it is the policy of each Fund not to distribute such gains.
Each Fund distinguishes between dividends on a tax basis and a financial
reporting basis and only distributions in excess of tax basis earnings and
profits are reported in the financial statements as a return of capital.
Differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes are classified as
distributions in excess of net investment income or accumulated net realized
gains.
5) ORGANIZATION EXPENSES: Expenses incurred by each Fund in connection with its
organization are being amortized by that Fund on a straight-line basis over a
five-year period. At February 28, 1997, the unamortized balance of such
expenses amounted to $53,536, $53,537, $52,956, and $52,262, for Focus,
Guardian, Manhattan, and Partners, respectively. The accrued organization
costs are payable to Neuberger&Berman Management Incorporated ("Management"),
the administrator of each Fund.
6) EXPENSE ALLOCATION: Each Fund bears all costs of its operations. Expenses
incurred by the Trust with respect to any two or more Funds are allocated in
proportion to the net assets of such Funds, except where a more appropriate
allocation of expenses to each Fund can otherwise be made fairly. Expenses
directly attributable to a Fund are charged to that Fund.
7) OTHER: All net investment income and realized and unrealized capital gains
and losses of each Portfolio are allocated pro rata among its respective
Funds and any other investors in the Portfolio.
NOTE B -- ADMINISTRATION FEES, DISTRIBUTION ARRANGEMENTS, AND OTHER TRANSACTIONS
WITH AFFILIATES:
Each Fund retains Management as its administrator under an Administration
Agreement ("Agreement") dated as of February 13, 1996, as amended on August 2,
1996. Pursuant to this Agreement each Fund pays Management an administration fee
at the annual rate of .40% of that Fund's average daily net assets. 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). The
23
<PAGE>
Agreement provides that, if with respect to any fiscal year of each Fund, its
total operating expenses plus its pro rata portion of its corresponding
Portfolio's operating expenses (including the fees payable to Management but
excluding interest, taxes, brokerage commissions, and extraordinary expenses)
("Operating Expenses") exceed the most restrictive of the expense limitations
imposed by securities laws of the states in which such Fund's shares are
qualified for sale, the administration fees for that fiscal year will be reduced
by the amount of such excess, provided that Management has no obligation to
reimburse the Fund for any such expenses that exceed the administration fee. The
most restrictive expense limitation applicable during the period ended February
28, 1997 was 2 1/2% of the first $30 million of average daily net assets, 2% of
the next $70 million of average daily net assets, and 1 1/2% of any additional
average daily net assets. No reduction in the administration fee as a result of
the state expense limitation was required for the period ended February 28,
1997. Currently, there is no state limitation applicable to any Fund.
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 the Funds, Management's activities and expenses related to
the sale and distribution of Fund shares, and ongoing services provided to
investors in the Funds, Management receives from each Fund a fee at the annual
rate of .25% of that Fund's average daily net assets. Management pays this
amount to institutions that distribute Fund shares and provide services to the
Funds and their 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 each Fund during any year may be more or
less than the cost of distribution and other services provided to that 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 until December 31, 1997, to reimburse
each Fund for its Operating Expenses which exceed, in the aggregate, 1.50% per
annum of the Fund's average daily net assets. For the period ended February 28,
1997, such excess expenses amounted to $57,008, $58,270, $56,774, and $61,324,
for Focus, Guardian, Manhattan, and Partners, respectively.
Since inception of the Funds, Management has voluntarily undertaken to pay
certain expenses of each Fund as an advance. Those expenses will be repaid by
the Funds to Management in the future, and are included under the caption
Payable for Fund expenses in the Statement of Assets and Liabilities.
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
24
<PAGE>
York Stock Exchange and sub-adviser to each 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.
Each 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 each Fund.
Each Portfolio has an expense offset arrangement in connection with its
custodian contract. The impact of this arrangement, reflected in the Statement
of Operations under the caption Expenses from corresponding Portfolio, was a
reduction of $0.08, $0.12, and $0.08 for Focus, Guardian, and Partners,
respectively, which is less than .01% of each Fund's average daily net assets.
NOTE C -- INVESTMENT TRANSACTIONS:
During the period ended February 28, 1997, additions and reductions in each
Fund's investment in its corresponding Portfolio were as follows:
<TABLE>
<CAPTION>
ADDITIONS REDUCTIONS
- -------------------------------------------------------------------------
<S> <C> <C>
FOCUS $ 100,010 $ 533
GUARDIAN 1,614,272 14,678
MANHATTAN 100,010 445
PARTNERS 504,777 27,643
</TABLE>
NOTE D -- UNAUDITED FINANCIAL INFORMATION:
The financial information included in this interim report is taken from the
records of each Fund without audit by independent accountants/auditors. Annual
reports contain audited financial statements.
25
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Focus Assets
The following table includes selected data for a share outstanding throughout
the period and other performance information derived from the Financial
Statements. The per share amounts and ratios which are shown reflect income and
expenses, including the Fund's proportionate share of its corresponding
Portfolio's income and expenses. It should be read in conjunction with its
corresponding Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period
from
September
4,
1996(1)
to
February
28,
1997
(UNAUDITED)
-------
<S> <C>
Net Asset Value, Beginning of Period $10.00
-------
Income From Investment Operations
Net Investment Income (Loss) (.03)
Net Gains or Losses on Securities
(both realized and unrealized) 2.21
-------
Total From Investment Operations 2.18
-------
Net Asset Value, End of Period $12.18
-------
Total Return(2)(3) +21.80%
-------
Ratios/Supplemental Data
Net Assets, End of Period (in
thousands) $121.8
-------
Ratio of Expenses to Average Net
Assets(4)(5) 1.50%
-------
Ratio of Net Investment Income
(Loss) to Average Net Assets(4)(5) (.38%)
-------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
26
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Guardian Assets
The following table includes selected data for a share outstanding throughout
the period and other performance information derived from the Financial
Statements. The per share amounts and ratios which are shown reflect income and
expenses, including the Fund's proportionate share of its corresponding
Portfolio's income and expenses. It should be read in conjunction with its
corresponding Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period
from
September
4,
1996(1)
to
February
28,
1997
(UNAUDITED)
---------
<S> <C>
Net Asset Value, Beginning of Period $ 10.00
---------
Income From Investment Operations
Net Investment Income --
Net Gains or Losses on Securities
(both realized and unrealized) 2.01
---------
Total From Investment Operations 2.01
---------
Less Distributions
Dividends (from net investment
income) (.01)
---------
Net Asset Value, End of Period $ 12.00
---------
Total Return(2)(3) +20.10%
---------
Ratios/Supplemental Data
Net Assets, End of Period (in
thousands) $1,676.8
---------
Ratio of Expenses to Average Net
Assets(4)(5) 1.50%
---------
Ratio of Net Investment Income
(Loss) to Average Net Assets(4)(5) (.16%)
---------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
27
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Manhattan Assets
The following table includes selected data for a share outstanding throughout
the period and other performance information derived from the Financial
Statements. The per share amounts and ratios which are shown reflect income and
expenses, including the Fund's proportionate share of its corresponding
Portfolio's income and expenses. It should be read in conjunction with its
corresponding Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period
from
September
4,
1996(1)
to
February
28,
1997
(UNAUDITED)
-------
<S> <C>
Net Asset Value, Beginning of Period $10.00
-------
Income From Investment Operations
Net Investment Income (Loss) (.05)
Net Gains or Losses on Securities
(both realized and unrealized) 2.13
-------
Total From Investment Operations 2.08
-------
Less Distributions
Distributions (from capital gains) (.11)
-------
Net Asset Value, End of Period $11.97
-------
Total Return(2)(3) +20.88%
-------
Ratios/Supplemental Data
Net Assets, End of Period (in
thousands) $120.9
-------
Ratio of Expenses to Average Net
Assets(4)(5) 1.50%
-------
Ratio of Net Investment Income
(Loss) to Average Net Assets(4)(5) (.88%)
-------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
28
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Partners Assets
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the Financial
Statements. The per share amounts and ratios which are shown reflect income and
expenses, including the Fund's proportionate share of its corresponding
Portfolio's income and expenses. It should be read in conjunction with its
corresponding Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period
from
Six August
Months 19,
Ended 1996(1)
February to
28, August
1997 31,
(UNAUDITED) 1996
-------------------
<S> <C> <C>
Net Asset Value, Beginning of Period $ 9.91 $10.00
-------------------
Income From Investment Operations
Net Investment Income .01 --
Net Gains or Losses on Securities
(both realized and unrealized) 2.28 (.09)
-------------------
Total From Investment Operations 2.29 (.09)
-------------------
Less Distributions
Dividends (from net investment
income) (.01) --
Distributions (from capital gains) (.05) --
-------------------
Total Distributions (.06) --
-------------------
Net Asset Value, End of Period $12.14 $ 9.91
-------------------
Total Return(2)(3) +23.14% -0.90%
-------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
thousands) $612.1 $103.5
-------------------
Ratio of Expenses to Average Net
Assets(4)(5) 1.50% 1.50%
-------------------
Ratio of Net Investment Income to
Average Net Assets(4)(5) .05% 2.38%
-------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
29
<PAGE>
NOTES TO FINANCIAL HIGHLIGHTS
Neuberger&Berman February 28, 1997 (Unaudited)
- ----------------------------------------------------------------------
Equity Assets
1) The date investment operations commenced.
2) Total return based on per share net asset value reflects the effects of
changes in net asset value on the performance of 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.
3) Not annualized.
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 expense and net investment income ratios to average daily net
assets would have been higher and lower, respectively.
5) Annualized.
30
<PAGE>
(This page has been left blank intentionally.)
31
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Focus Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. CITICORP 4.1%
2. General Motors 3.8%
3. Compaq Computer 3.6%
4. Travelers Group 3.3%
5. Aetna Inc. 3.2%
6. Chrysler Corp. 3.2%
7. Neiman-Marcus Group 3.1%
8. Fannie Mae 3.0%
9. Wellpoint Health Networks 2.8%
10. First USA 2.8%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ------------
<C> <S> <C>
COMMON STOCKS (99.1%)
AUTOMOTIVE (10.5%)
445,900 Cabot Corp. $ 10,479
1,246,000 Chrysler Corp. 42,208
723,000 Exide Corp. 14,189
880,000 General Motors 50,930
675,920 LucasVarity PLC ADR 22,136
------------
139,942
------------
FINANCIAL SERVICES (37.6%)
472,800 ACE Ltd. 30,732
655,000 ADVANTA Corp. Class B 26,282
365,200 Bank of Boston 27,527
735,000 Capital One Financial 29,216
475,000 CITICORP 55,456
1,100,000 Countrywide Credit Industries 32,037
525,000 Dean Witter, Discover 20,147
285,000 EXEL Ltd. 12,576
1,260,000 Federal Home Loan Mortgage 37,485
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ------------
<C> <S> <C>
992,000 Fannie Mae $ 39,680
780,500 First USA 37,952
232,200 ITT Hartford Group 17,415
285,000 Merrill Lynch 27,360
495,000 PartnerRe Ltd. 16,335
253,800 St. Paul Cos. 17,131
820,000 Travelers Group 43,973
105,000 Wells Fargo 31,946
------------
503,250
------------
HEALTH CARE (13.9%)
517,000 Aetna Inc. 42,846
390,000 Coventry Corp. 2,852
802,000 Foundation Health 30,276
590,000 Health Systems International 17,331
220,000 Mid Atlantic Medical Services 3,245
25,200 PacifiCare Health Systems
Class A 2,016
183,700 PacifiCare Health Systems
Class B 15,385
691,000 Sierra Health Services 18,225
326,300 United Healthcare 16,274
888,000 Wellpoint Health Networks 38,073
------------
186,523
------------
HEAVY INDUSTRY (10.4%)
1,030,000 AGCO Corp. 29,226
230,700 Cleveland-Cliffs 9,920
640,000 DT Industries 18,880 (2)
450,100 Harnischfeger Industries 19,748
367,200 IMC Global 12,806
1,013,600 Rollins Truck Leasing 14,191
804,600 UCAR International 34,598
------------
139,369
------------
</TABLE>
32
<PAGE>
February 28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
Focus Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ------------
<C> <S> <C>
MEDIA & ENTERTAINMENT (2.5%)
620,000 Cabletron Systems $ 18,600
310,000 Harcourt General 14,609
63,900 Scandinavian Broadcasting
System 855
------------
34,064
------------
RETAIL (9.1%)
300,000 Barnes & Noble 9,900
240,000 Dillard Department Stores 7,230
1,850,000 Furniture Brands International 27,288
860,000 Intimate Brands 16,770
1,565,000 Neiman-Marcus Group 42,059
429,800 Payless ShoeSource 18,481
------------
121,728
------------
TECHNOLOGY (13.8%)
410,000 3Com Corp. 13,575
350,000 Applied Materials 17,719
338,000 Arrow Electronics 18,970
590,000 Atmel Corp. 22,051
600,000 Compaq Computer 47,550 (3)
293,000 Komag, Inc. 8,790
650,000 Seagate Technology 30,713
385,000 Silicon Valley Group 8,229
222,500 Texas Instruments 17,160
------------
184,757
------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ------------
<C> <S> <C>
TRANSPORTATION (1.3%)
629,400 Continental Airlines Class B $ 18,017
------------
TOTAL COMMON STOCKS (COST
$910,278) 1,327,650
------------
<CAPTION>
Principal
Amount
- ----------
<C> <S> <C>
U.S. TREASURY SECURITIES (3.4%)
$46,055,000 U.S. Treasury Bills, 4.85% -
4.935%, due 3/27/97 - 4/24/97
(COST $45,825) 45,835
------------
SHORT-TERM CORPORATE NOTES (0.8%)
10,370,000 General Electric Capital
Corp., 5.22%, due 3/3/97
(COST $10,370) 10,370 (4)
------------
TOTAL INVESTMENTS (103.3%)
(COST $966,473) 1,383,855 (5)
Liabilities, less cash,
receivables and other assets
[(3.3%)] (44,573 )
------------
TOTAL NET ASSETS (100.0%) $ 1,339,282
------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
33
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Guardian Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. General Motors 3.2%
2. First USA 2.8%
3. CITICORP 2.8%
4. Aetna Inc. 2.7%
5. Chrysler Corp. 2.7%
6. Compaq Computer 2.4%
7. Foundation Health 2.3%
8. Fannie Mae 2.2%
9. Merrill Lynch 2.0%
10. Travelers Group 1.9%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
COMMON STOCKS (97.0%)
AGRICULTURE (3.0%)
3,093,500 AGCO Corp. $ 87,778
3,960,000 IMC Global 138,105
------------
225,883
------------
AUTOMOTIVE (10.7%)
2,541,400 Cabot Corp. 59,723
6,000,000 Chrysler Corp. 203,250
4,852,400 Coltec Industries 88,556 (2)
4,201,500 General Motors 243,162
3,852,486 LucasVarity PLC ADR 126,169
883,500 Magna International Class A 46,384
1,587,697 Mark IV Industries 36,914
------------
804,158
------------
BANKING (6.9%)
1,554,600 Bank of Boston 117,178
1,820,000 CITICORP 212,485
504,000 First Tennessee National 23,562
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
720,000 Signet Banking $ 22,860
470,000 Wells Fargo 142,997
------------
519,082
------------
DRUGS (0.6%)
480,000 Zeneca Group ADR 42,240
------------
ELECTRONICS (1.9%)
2,210,000 Atmel Corp. 82,599
2,200,000 Teradyne, Inc. 59,950
------------
142,549
------------
ENERGY (4.2%)
3,028,500 Chesapeake Energy 62,841
2,062,500 Enron Oil & Gas 41,766
61,000 Norsk Hydro ADR 3,050
2,297,414 Union Pacific Resources Group 55,999
1,670,000 Unocal Corp. 64,504
1,617,500 Vastar Resources 46,908
1,702,000 Zeigler Coal Holding 43,188 (2)
------------
318,256
------------
FINANCIAL SERVICES (16.9%)
30,000 ADVANTA Corp. Class A 1,241
3,400,000 ADVANTA Corp. Class B 136,425 (2)
216,485 Alleghany Corp. 46,192
2,644,500 Capital One Financial 105,119
4,800,000 Countrywide Credit Industries 139,800
2,900,000 Dean Witter, Discover 111,288
3,100,000 Federal Home Loan Mortgage 92,225
4,080,000 Fannie Mae 163,200
4,388,600 First USA 213,396
1,121,475 MBNA Corp. 35,887
1,600,000 Merrill Lynch 153,600
390,000 MGIC Investment 30,664
</TABLE>
34
<PAGE>
February 28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
Guardian Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
510,000 Security Capital Industrial
Trust $ 11,220
1,040,000 Spieker Properties 37,830
------------
1,278,087
------------
FOOD PRODUCTS (1.0%)
3,335,700 IBP, Inc. 77,555
------------
FOREST PRODUCTS & PAPER (2.8%)
1,105,000 Champion International 48,758
1,200,000 Fort Howard 35,700
470,200 Mead Corp. 27,389
717,400 Temple-Inland 39,547
101,400 Union Camp 4,892
907,000 Willamette Industries 58,048
------------
214,334
------------
HEALTH CARE (6.2%)
4,580,000 Foundation Health 172,895 (2)
1,875,000 Health Systems International 55,078
4,140,400 Humana Inc. 81,255
1,901,800 Mid Atlantic Medical Services 28,052
85,842 PacifiCare Health Systems
Class A 6,867
357,790 PacifiCare Health Systems
Class B 29,965
2,126,396 Wellpoint Health Networks 91,169
------------
465,281
------------
HEAVY INDUSTRY (2.5%)
1,080,000 Aluminum Co. of America 76,950
2,671,900 UCAR International 114,892 (2)
------------
191,842
------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
INDUSTRIAL GOODS & SERVICES (2.6%)
1,655,200 American Standard $ 74,484
763,800 Phelps Dodge 54,612
2,002,500 USG Corp. 70,588
------------
199,684
------------
INSURANCE (7.1%)
2,500,000 Aetna Inc. 207,188
507,500 American International Group 61,407
508,600 Chubb Corp. 29,817
691,600 ITT Hartford Group 51,870
300,000 St. Paul Cos. 20,250
263,500 Transatlantic Holdings 22,233
2,726,666 Travelers Group 146,217
------------
538,982
------------
MEDIA & ENTERTAINMENT (4.4%)
1,100,000 Comcast Corp. Class A 19,181
2,700,000 Comcast Corp. Class A Special 48,262
1,550,000 Harcourt General 73,044
710,000 Jones Intercable Inc. Class A 6,834
1,700,000 Time Warner 69,700
280,000 United International Holdings 2,870
1,300,000 Viacom Inc. Class B 45,825
1,405,000 Vodafone Group ADR 66,738
------------
332,454
------------
PACKAGING & CONTAINERS (0.9%)
2,668,700 Owens-Illinois 64,382
------------
</TABLE>
35
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Guardian Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
REAL ESTATE INVESTMENT TRUSTS (0.6%)
1,405,000 CWM Mortgage Holdings $ 32,491
430,400 Hospitality Properties Trust 13,934 (2)
------------
46,425
------------
RETAIL (1.8%)
885,000 Barnes & Noble 29,205
1,906,500 Fingerhut Cos. 27,883 (2)
2,860,000 Wal-Mart Stores 75,432
------------
132,520
------------
TECHNOLOGY (16.8%)
2,411,800 3Com Corp. 79,853
1,550,000 Applied Materials 78,469
1,475,000 Arrow Electronics 82,784
1,367,500 Avnet, Inc. 85,469
2,864,500 Cabletron Systems 85,935
2,270,000 Compaq Computer 179,898
2,250,000 Digital Equipment 73,687
575,000 Intel Corp. 81,578
2,200,000 KLA Instruments 91,712
1,752,000 Komag, Inc. 52,560
1,208,000 Linear Technology 54,964
1,043,300 LSI Logic 35,994 (3)
203,717 Lucent Technologies 10,975
1,435,200 National Semiconductor 37,495
2,570,000 Seagate Technology 121,433
1,525,000 Texas Instruments 117,616
------------
1,270,422
------------
TELECOMMUNICATIONS (3.1%)
2,280,000 360 Communications 49,305
2,825,000 Airtouch Communications 76,981
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
2,212,000 Tele-Communications
International $ 29,862
450,000 Tele-Communications,
Inc. Class A 5,344
3,975,000 U.S. West Media Group 73,040
------------
234,532
------------
TRANSPORTATION (3.0%)
816,100 Continental Airlines Class B 23,361
855,000 Delta Air Lines 68,828
2,000,000 Ryder System 63,000
650,000 Union Pacific 39,162
1,257,000 USFreightways Corp. 30,325 (2)
------------
224,676
------------
TOTAL COMMON STOCKS (COST
$5,289,213) 7,323,344
------------
PREFERRED STOCKS (0.6%)
52,430 Aetna Inc., Ser. C, Cv., 6.25% 4,227
605,700 Airtouch Communications, Ser.
B, Cv., 6.00% 17,792
388,994 Airtouch Communications, Ser.
C, Cv., 4.25% 18,769
125,000 PacifiCare Health Systems,
Ser. C, Cv., $1.00 4,063
------------
TOTAL PREFERRED STOCKS (COST
$35,476) 44,851
------------
</TABLE>
36
<PAGE>
February 28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
Guardian Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- ----------- ------------
<C> <S> <C>
CONVERTIBLE BONDS (0.2%)
$15,000,000 International CableTel Inc.,
Cv. Sub. Notes, 7.25%, due
4/15/05 (COST $14,997) $ 14,156(6)
------------
U.S. TREASURY SECURITIES (4.7%)
338,545,000 U.S. Treasury Bills, 4.86% -
5.29%, due 3/6/97 - 4/24/97 337,743
15,000,000 U.S. Treasury Notes, 8.00%,
due 5/15/01 15,905
------------
TOTAL U.S. TREASURY SECURITIES
(COST $352,509) 353,648
------------
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- ----------- ------------
<C> <S> <C>
SHORT-TERM CORPORATE NOTES (1.2%)
$89,240,000 General Electric Capital
Corp., 5.22% - 5.26%, due
3/3/97 - 3/13/97 (COST
$89,240) $ 89,240(4)
------------
TOTAL INVESTMENTS (103.7%)
(COST $5,781,435) 7,825,239(5)
Liabilities, less cash,
receivables and other assets
[(3.7%)] (278,340)
------------
TOTAL NET ASSETS (100.0%) $7,546,899
------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
37
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Manhattan Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. General Nutrition 3.1%
2. CITICORP 3.0%
3. Wells Fargo 2.7%
4. GTECH Holdings 2.6%
5. Harrah's Entertainment 2.4%
6. Capital One Financial 2.4%
7. United Healthcare 2.4%
8. First USA 2.2%
9. KLA Instruments 2.1%
10. Staples Inc. 2.1%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- -------------
<C> <S> <C>
COMMON STOCKS (99.4%)
CHEMICALS (1.7%)
5,000 SGL Carbon (Ordinary Shares) $ 682
65,000 SGL Carbon ADR 2,958
145,000 UCAR International 6,235
-------------
9,875
-------------
COMMUNICATIONS (7.6%)
395,000 Airtouch Communications 10,764
585,000 Comcast Corp. Class A Special 10,457
680,000 Comcast UK Cable Partners
Limited 7,990
290,000 ECI Telecommunications 6,887
415,000 International CableTel 8,041
-------------
44,139
-------------
CONSUMER GOODS & SERVICES (8.2%)
510,000 Authentic Fitness 7,395
490,000 CUC International 11,699
175,000 Luxottica Group ADR 10,194
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- -------------
<C> <S> <C>
480,000 Nu-Kote Holding $ 2,700
80,000 Philip Morris 10,810
315,000 Regis Corp. 5,158
-------------
47,956
-------------
DRUGS & HEALTH CARE (12.2%)
510,000 Coventry Corp. 3,729
285,000 Healthsource Inc. 5,949
260,000 Nellcor Puritan Bennett 4,518
110,000 Novartis AG ADR 6,298
100,000 PacifiCare Health Systems
Class B 8,375
95,000 R.P. Scherer 5,486
115,000 Sierra Health Services 3,033
280,000 United Healthcare 13,965
70,300 Warner-Lambert 5,905
190,000 Watson Pharmaceuticals 8,289
120,000 Wellpoint Health Networks 5,145
-------------
70,692
-------------
ENTERTAINMENT (9.7%)
150,000 Circus Circus Enterprises 4,687
475,000 GTECH Holdings 14,903
760,000 Harrah's Entertainment 14,060
750,000 Players International 4,031
215,000 Promus Hotel 7,606
545,000 Showboat, Inc. 11,173
-------------
56,460
-------------
FINANCIAL SERVICES (18.5%)
210,000 Bear Stearns 6,300
352,400 Capital One Financial 14,008
150,000 CITICORP 17,512
140,000 Finova Group 10,692
257,000 First USA 12,497
360,000 MBNA Corp. 11,520
80,000 Merrill Lynch 7,680
</TABLE>
38
<PAGE>
February 28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
Manhattan Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- -------------
<C> <S> <C>
185,000 Morgan Stanley Group $ 11,678
51,000 Wells Fargo 15,517
-------------
107,404
-------------
INSURANCE (8.6%)
165,000 ACE Ltd. 10,725
160,000 EXEL Ltd. 7,060
295,000 Highlands Insurance 6,637
85,000 Loews Corp. 8,681
155,000 PennCorp Financial Group 5,425
215,333 Travelers Group 11,547
-------------
50,075
-------------
OIL & GAS (0.3%)
35,000 Enron Oil & Gas 709
30,000 Noble Affiliates 1,170
-------------
1,879
-------------
RESTAURANTS (6.9%)
659,450 Buffets Inc. 4,740
420,000 Cheesecake Factory 8,925
610,000 CKE Restaurants 11,819
170,000 IHOP Corp. 4,398
223,500 Lone Star Steakhouse & Saloon 5,923
230,000 Sonic Corp. 4,169
-------------
39,974
-------------
SPECIALTY RETAIL (11.3%)
168,000 Federated Department Stores 5,838
985,000 General Nutrition 17,730
345,000 Intimate Brands 6,727
190,000 Lowe's Cos. 6,935
140,000 Office Depot 2,660
560,000 Staples Inc. 12,110
240,000 Viking Office Products 5,670
295,000 Wal-Mart Stores 7,781
-------------
65,451
-------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- -------------
<C> <S> <C>
TECHNOLOGY (13.6%)
335,000 Informix Corp. $ 5,821
75,000 Intel Corp. 10,641
295,000 KLA Instruments 12,298
250,000 LSI Logic 8,625
305,000 Micron Technology 11,437
110,000 Nokia Corp. ADR 6,435
55,000 SAP AG (Ordinary Shares) 8,465
125,000 Seagate Technology 5,906
110,000 Texas Instruments 8,484
100,000 Xeikon N.V. ADR 901
-------------
79,013
-------------
TRANSPORTATION (0.8%)
250,000 RailTex Inc. 4,531
-------------
TOTAL COMMON STOCKS (COST
$449,499) 577,449
-------------
RIGHTS (0.0%)
3,500 Ciba Specialty Chemicals
Holding, Expire 3/12/97 (COST
$0) 220
-------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount
- ----------
<C> <S> <C>
U.S. TREASURY SECURITIES (3.9%)
$22,960,000 U.S. Treasury Bills, 4.89% -
4.935%, due 3/6/97 - 4/17/97
(COST $22,896) 22,903
-------------
TOTAL INVESTMENTS (103.3%)
(COST $472,395) 600,572(5)
Liabilities, less cash,
receivables and other assets
[(3.3%)] (19,468)
-------------
TOTAL NET ASSETS (100.0%) $ 581,104
-------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
39
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Partners Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Columbia/HCA Healthcare 2.6%
2. Costco Cos. 2.5%
3. Wells Fargo 2.5%
4. Texas Instruments 2.1%
5. EXEL Ltd. 2.1%
6. duPont 2.0%
7. Allstate Corp. 1.9%
8. Wal-Mart Stores 1.9%
9. Knight-Ridder 1.8%
10. American Express 1.8%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
COMMON STOCKS (94.0%)
AIRLINES (0.6%)
570,300 Continental Airlines Class B $ 16,325
------------
AUTOMOTIVE (0.4%)
290,800 Chrysler Corp. 9,851
------------
BANKING & FINANCIAL SERVICES (8.6%)
725,000 American Express 47,397
989,500 Capital One Financial 39,333
331,400 CITICORP 38,691
1,303,400 Countrywide Credit Industries 37,961
217,800 Wells Fargo 66,266
------------
229,648
------------
BUILDING, CONSTRUCTION & REFURNISHING (1.7%)
1,300,000 USG Corp. 45,825
------------
CHEMICALS (4.7%)
500,000 duPont 53,625
398,500 Great Lakes Chemical 18,480
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
947,700 Morton International $ 39,093
273,500 W.R. Grace 14,496
------------
125,694
------------
COMMUNICATIONS (1.5%)
1,450,500 Airtouch Communications 39,526
------------
CONSUMER GOODS & SERVICES (3.0%)
1,535,000 Fort Howard 45,666
756,900 Tupperware Corp. 33,872
------------
79,538
------------
ELECTRONICS (3.5%)
364,500 Analog Devices 8,474
858,500 KLA Instruments 35,789
1,443,100 Loral Space & Communications 23,270
469,700 Varian Associates 27,125
------------
94,658
------------
ENTERTAINMENT (5.1%)
965,200 Evergreen Media 28,956
1,674,100 Mirage Resorts 41,643
760,300 Royal Caribbean Cruises 22,239
1,100,000 Time Warner 45,100
------------
137,938
------------
FOOD & DRUG STORES (1.0%)
632,600 Revco D.S. 25,858
------------
FOOD & TOBACCO (3.2%)
1,350,200 IBP, Inc. 31,392
305,100 Philip Morris 41,227
350,000 RJR Nabisco Holdings 12,819
------------
85,438
------------
HEALTH CARE (4.3%)
1,690,550 Columbia/HCA Healthcare 71,003
798,642 Novartis AG ADR 45,722
------------
116,725
------------
</TABLE>
40
<PAGE>
February 28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
Partners Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
INDUSTRIAL GOODS & SERVICES (6.0%)
931,400 AK Steel Holding $ 33,531
695,400 Goodyear Tire & Rubber 36,682
875,764 LucasVarity PLC ADR 28,681
1,783,300 Owens-Illinois 43,022
450,000 XTRA Corp. 18,253
------------
160,169
------------
INSURANCE (11.3%)
790,800 Allstate Corp. 50,117
1,255,400 Equitable Cos. 39,388
1,270,100 EXEL Ltd. 56,043
273,500 MBIA, Inc. 26,700
641,775 Orion Capital 41,074
669,200 Progressive Corp. 44,251
852,200 Travelers Group 45,699
------------
303,272
------------
MEDIA (3.9%)
2,540,281 Comcast Corp. Class A Special 45,407
269,500 E.W. Scripps 9,702
1,245,000 Knight-Ridder 49,489
------------
104,598
------------
OIL & GAS (6.1%)
800,000 Cabot Corp. 18,800
2,957,500 Gulf Canada Resources 20,702
695,500 Noble Affiliates 27,124
269,800 Schlumberger, Ltd. 27,149
780,950 Tejas Gas 34,167
1,495,055 Union Pacific Resources Group 36,442
------------
164,384
------------
OIL SERVICES (1.0%)
629,900 Tidewater Inc. 27,086
------------
PUBLISHING & BROADCASTING (0.4%)
1,208,800 Hollinger International 12,239
------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
RAILROADS (2.6%)
465,000 Burlington Northern Santa Fe $ 38,711
500,000 Union Pacific 30,125
------------
68,836
------------
REAL ESTATE (3.6%)
200,700 CBL & Associates Properties 4,992
600,000 Del Webb 9,675
1,900,000 Host Marriott 34,200
200,000 Macerich Co. 5,525
873,500 Security Capital Industrial
Trust 19,217
1,607,700 Security Capital U.S. Realty 22,508 (6)
------------
96,117
------------
RESTAURANTS (1.6%)
978,600 McDonald's Corp. 42,324
------------
RETAILING (4.7%)
800,000 Harcourt General 37,700
699,000 Home Depot 38,095
1,881,400 Wal-Mart Stores 49,622
------------
125,417
------------
RETAILING & APPAREL (3.3%)
2,600,000 Costco Cos. 66,625
600,000 Nordstrom, Inc. 22,050
------------
88,675
------------
SPECIALTY CHEMICAL (1.3%)
832,000 Millipore Corp. 35,880
------------
TECHNOLOGY (10.6%)
530,000 Applied Materials 26,831
474,700 Autodesk, Inc. 16,081
533,100 Cabletron Systems 15,993
1,030,000 Komag, Inc. 30,900
774,100 NCR Corp. 25,545
952,900 Seagate Technology 45,025
761,200 Sundstrand Corp. 33,207
</TABLE>
41
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman February 28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
Partners Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
734,600 Texas Instruments $ 56,656
554,300 Xerox Corp. 34,644
------------
284,882
------------
TOTAL COMMON STOCKS (COST
$1,976,161) 2,520,903
------------
PREFERRED STOCKS (0.7%)
566,700 Fresenius National Medical
Care, Class D 57
280,000 Loral Space & Communications,
Cv., 6.00% 14,210 (6)
550,000 RJR Nabisco, Ser. C, Dep.
Shares 3,919
------------
TOTAL PREFERRED STOCKS (COST
$17,784) 18,186
------------
RIGHTS (0.1%)
39,932 Ciba Specialty Chemicals
Holding, Expire 3/12/97 (COST
$0) 2,516
------------
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- ----------- ------------
<C> <S> <C>
U.S. TREASURY SECURITIES (5.0%)
$134,580,000 U.S. Treasury Bills, 4.88% -
5.00%, due 3/6/97 - 4/24/97
(COST $134,244) $ 134,284
------------
SHORT-TERM CORPORATE NOTES (1.7%)
46,500,000 General Electric Capital
Corp., 5.22%, due 3/3/97
(COST $46,500) 46,500 (4)
------------
TOTAL INVESTMENTS (101.5%)
(COST $2,174,689) 2,722,389 (5)
Liabilities, less cash,
receivables and other assets
[(1.5%)] (40,996 )
------------
TOTAL NET ASSETS (100.0%) $ 2,681,393
------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
42
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS
February 28, 1997 (Unaudited)
- ----------------------------------------------------------------------
Equity Managers Trust
1) Investment securities of each Portfolio are valued at the latest sales price;
securities for which no sales were reported, unless otherwise noted, are
valued at the mean between the closing bid and asked prices. The Portfolios
value all other securities by a method that the trustees of Equity Managers
Trust believe accurately reflects fair value. Foreign security prices are
furnished by independent quotation services expressed in local currency
values. Foreign 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) Affiliated Issuer (see Note D of Notes to Financial Statements).
3) The following securities were held in escrow at February 28, 1997 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 60,000 Compaq Computer $ 4,755,000 $ 125,696 $ 22,500
March 1997 @ 90
GUARDIAN PORTFOLIO 500,000 LSI Logic $ 17,250,000 $1,147,461 $1,281,250
April 1997 @ 35
</TABLE>
4) At cost, which approximates market value.
5) At February 28, 1997, selected Portfolio information on a Federal income tax
basis was as follows:
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED NET UNREALIZED
NEUBERGER&BERMAN COST APPRECIATION DEPRECIATION APPRECIATION
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FOCUS PORTFOLIO $ 966,867,000 $ 438,296,000 $ 21,308,000 $ 416,988,000
GUARDIAN PORTFOLIO 5,782,750,000 2,165,388,000 122,899,000 2,042,489,000
MANHATTAN PORTFOLIO 472,452,000 158,383,000 30,263,000 128,120,000
PARTNERS PORTFOLIO 2,179,284,000 561,414,000 18,309,000 543,105,000
</TABLE>
6) Security exempt from registration under the Securities Act of 1933. These
securities may be resold in transactions exempt from registration, normally
to qualified institutional buyers under Rule 144A. At February 28, 1997,
these securities amounted to $14,156,000 or .2% of net assets for
Neuberger&Berman Guardian Portfolio, and $36,718,000 or 1.4% of net assets
for Neuberger&Berman Partners Portfolio.
SEE NOTES TO FINANCIAL STATEMENTS
43
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
- ----------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
FOCUS
(000'S OMITTED) PORTFOLIO
--------------
<S> <C>
ASSETS
Investments in securities, at market value*
(Notes A & D) -- see Schedule of
Investments:
Unaffiliated issuers $ 1,364,975
Non-controlled affiliated issuers 18,880
--------------
1,383,855
Cash 3,050
Deferred organization costs (Note A) 12
Dividends and interest receivable 807
Prepaid expenses and other assets 23
Receivable for securities sold 9,893
--------------
1,397,640
--------------
LIABILITIES
Option contracts written, at market value
(Note A) 23
Payable for collateral on securities loaned
(Note A) 37,879
Payable for securities purchased 19,736
Payable to investment manager (Note B) 518
Accrued expenses 202
--------------
58,358
--------------
NET ASSETS Applicable to Investors' Beneficial
Interests $ 1,339,282
--------------
NET ASSETS consist of:
Paid-in capital $ 921,797
Net unrealized appreciation in value of
investment securities and option contracts
written 417,485
--------------
NET ASSETS $ 1,339,282
--------------
*Cost of investments:
Unaffiliated issuers $ 944,686
Non-controlled affiliated issuers 21,787
--------------
Total cost of investments $ 966,473
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
44
<PAGE>
February 28, 1997 (Unaudited)
- ----------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
GUARDIAN MANHATTAN PARTNERS
PORTFOLIO PORTFOLIO PORTFOLIO
------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in securities, at market value*
(Notes A & D) -- see Schedule of
Investments:
Unaffiliated issuers $ 7,269,283 $ 600,572 $ 2,722,389
Non-controlled affiliated issuers 555,956 -- --
------------------------------------------------
7,825,239 600,572 2,722,389
Cash 42 2,497 1
Deferred organization costs (Note A) 36 14 25
Dividends and interest receivable 5,786 120 1,797
Prepaid expenses and other assets 116 15 51
Receivable for securities sold 32,321 3,065 12,676
------------------------------------------------
7,863,540 606,283 2,736,939
------------------------------------------------
LIABILITIES
Option contracts written, at market value
(Note A) 1,281 -- --
Payable for collateral on securities loaned
(Note A) 200,188 21,345 6,849
Payable for securities purchased 111,780 3,485 47,593
Payable to investment manager (Note B) 2,569 243 945
Accrued expenses 823 106 159
------------------------------------------------
316,641 25,179 55,546
------------------------------------------------
NET ASSETS Applicable to Investors' Beneficial
Interests $ 7,546,899 $ 581,104 $ 2,681,393
------------------------------------------------
NET ASSETS consist of:
Paid-in capital $ 5,503,228 $ 452,927 $ 2,133,693
Net unrealized appreciation in value of
investment securities and option contracts
written 2,043,671 128,177 547,700
------------------------------------------------
NET ASSETS $ 7,546,899 $ 581,104 $ 2,681,393
------------------------------------------------
*Cost of investments:
Unaffiliated issuers $ 5,289,254 $ 472,395 $ 2,174,689
Non-controlled affiliated issuers 492,181 -- --
------------------------------------------------
Total cost of investments $ 5,781,435 $ 472,395 $ 2,174,689
------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
45
<PAGE>
STATEMENTS OF OPERATIONS
- ----------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
FOCUS
(000'S OMITTED) PORTFOLIO
------------
<S> <C>
INVESTMENT INCOME
Income:
Dividend income -- unaffiliated issuers $ 6,257
Dividend income -- non-controlled affiliated
issuers 12
Interest income 611
Foreign taxes withheld (Note A) (28)
------------
Total income 6,852
------------
Expenses:
Investment management fee (Note B) 3,096
Accounting fees 5
Amortization of deferred organization and
initial offering expenses (Note A) 5
Auditing fees 21
Custodian fees (Note B) 148
Insurance expense 12
Legal fees 8
Trustees' fees and expenses 9
------------
Total expenses 3,304
------------
Net investment income 3,548
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investment securities
sold in unaffiliated issuers 112,150
Net realized loss on investment securities
sold in non-controlled affiliated issuers --
Net realized loss on option contracts written
(Note A) (643)
Change in net unrealized appreciation of
investment securities and option contracts
written 131,395
------------
Net gain on investments 242,902
------------
Net increase in net assets resulting from
operations $ 246,450
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
46
<PAGE>
For the Six Months Ended February 28, 1997 (Unaudited)
- ----------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
GUARDIAN MANHATTAN PARTNERS
PORTFOLIO PORTFOLIO PORTFOLIO
------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Income:
Dividend income -- unaffiliated issuers $ 38,991 $ 1,577 $ 14,625
Dividend income -- non-controlled affiliated
issuers 888 -- --
Interest income 7,768 191 2,544
Foreign taxes withheld (Note A) (239) (14) (39)
------------------------------------------------
Total income 47,408 1,754 17,130
------------------------------------------------
Expenses:
Investment management fee (Note B) 15,220 1,536 5,424
Accounting fees 5 5 5
Amortization of deferred organization and
initial offering expenses (Note A) 13 5 9
Auditing fees 25 17 22
Custodian fees (Note B) 512 121 199
Insurance expense 64 7 22
Legal fees 9 13 9
Trustees' fees and expenses 37 5 14
------------------------------------------------
Total expenses 15,885 1,709 5,704
------------------------------------------------
Net investment income 31,523 45 11,426
------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investment securities
sold in unaffiliated issuers 278,687 64,034 151,459
Net realized loss on investment securities
sold in non-controlled affiliated issuers (48,143) -- --
Net realized loss on option contracts written
(Note A) (2,991) -- --
Change in net unrealized appreciation of
investment securities and option contracts
written 1,018,651 45,541 319,744
------------------------------------------------
Net gain on investments 1,246,204 109,575 471,203
------------------------------------------------
Net increase in net assets resulting from
operations $ 1,277,727 $ 109,620 $ 482,629
------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
47
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
FOCUS
PORTFOLIO
Six Months
Ended Year
February 28, Ended
1997 August 31,
(000'S OMITTED) (UNAUDITED) 1996
-----------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 3,548 $ 11,390
Net realized gain on investments 111,507 51,701
Change in net unrealized
appreciation of investments 131,395 (21,728)
-----------------------------
Net increase (decrease) in net
assets resulting from operations 246,450 41,363
-----------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 96,472 231,514
Reductions (126,011) (119,679)
-----------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests (29,539) 111,835
-----------------------------
NET INCREASE (DECREASE) IN NET ASSETS 216,911 153,198
NET ASSETS:
Beginning of period 1,122,371 969,173
-----------------------------
End of period $ 1,339,282 $ 1,122,371
-----------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
48
<PAGE>
- ----------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
GUARDIAN MANHATTAN PARTNERS
PORTFOLIO PORTFOLIO PORTFOLIO
Six Months Six Months Six Months
Ended Year Ended Year Ended
February 28, Ended February 28, Ended February 28,
1997 August 31, 1997 August 31, 1997
(UNAUDITED) 1996 (UNAUDITED) 1996 (UNAUDITED)
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 31,523 $ 97,934 $ 45 $ 829 $ 11,426
Net realized gain on investments 227,553 307,410 64,034 59,509 151,459
Change in net unrealized
appreciation of investments 1,018,651 (111,192) 45,541 (74,167) 319,744
-----------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 1,277,727 294,152 109,620 (13,829) 482,629
-----------------------------------------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 284,106 1,540,028 26,138 70,833 291,119
Reductions (247,476) (214,834) (122,080) (134,984) (91,958)
-----------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests 36,630 1,325,194 (95,942) (64,151) 199,161
-----------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 1,314,357 1,619,346 13,678 (77,980) 681,790
NET ASSETS:
Beginning of period 6,232,542 4,613,196 567,426 645,406 1,999,603
-----------------------------------------------------------------------------
End of period $ 7,546,899 $ 6,232,542 $ 581,104 $ 567,426 $ 2,681,393
-----------------------------------------------------------------------------
<CAPTION>
Year
Ended
August 31,
1996
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 23,394
Net realized gain on investments 240,765
Change in net unrealized
appreciation of investments (30,217)
Net increase (decrease) in net
assets resulting from operations 233,942
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 309,196
Reductions (167,061)
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests 142,135
NET INCREASE (DECREASE) IN NET ASSETS 376,077
NET ASSETS:
Beginning of period 1,623,526
End of period $ 1,999,603
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
49
<PAGE>
NOTES TO FINANCIAL STATEMENTS
February 28, 1997 (Unaudited)
- ----------------------------------------------------------------------
Equity Managers Trust
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1) GENERAL: Neuberger&Berman Focus Portfolio ("Focus"), Neuberger&Berman
Guardian Portfolio ("Guardian"), Neuberger&Berman Manhattan Portfolio
("Manhattan"), and Neuberger&Berman Partners Portfolio ("Partners")
(collectively, the "Portfolios") are separate operating series of Equity
Managers Trust ("Managers Trust"), a New York common law trust organized as
of December 1, 1992. Managers Trust is registered as a diversified, open-end
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"). Other regulated investment companies sponsored by
Neuberger& Berman Management Incorporated ("Management"), whose financial
statements are not presented herein, also invest in Managers Trust.
The assets of each series belong only to that series, and the liabilities
of each series are borne solely by that series and no other.
2) PORTFOLIO VALUATION: Investment securities are valued as indicated in the
notes following the Portfolios' Schedule of Investments.
3) FOREIGN CURRENCY TRANSLATION: The accounting records of the Portfolios are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars at the current rate of exchange of such currency against the U.S.
dollar to determine the value of investments, other assets and liabilities.
Purchase and sale prices of securities, and income and expenses are
translated into U.S. dollars at the prevailing rate of exchange on the
respective dates of such transactions.
4) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Dividend income is recorded on the
ex-dividend date or, for certain foreign dividends, as soon as the Portfolio
becomes aware of the dividends. Interest income, 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) FEDERAL INCOME TAXES: Managers Trust intends to comply with the requirements
of the Internal Revenue Code of 1986, as amended. Each Portfolio of Managers
Trust also intends to conduct its operations so that each of its investors
will be able to qualify as a regulated investment company. Each Portfolio
will be treated as a partnership for Federal income tax purposes and is
therefore not subject to Federal income tax.
6) FOREIGN TAXES: Foreign taxes withheld represent amounts withheld by foreign
tax authorities, net of refunds recoverable.
50
<PAGE>
7) ORGANIZATION EXPENSES: Expenses incurred by each Portfolio in connection with
its organization are being amortized by that Portfolio on a straight-line
basis over a five-year period. At February 28, 1997, the unamortized balance
of such expenses amounted to $12,399, $36,364, $13,840, and $25,205, for
Focus, Guardian, Manhattan, and Partners, respectively.
8) EXPENSE ALLOCATION: Each Portfolio bears all costs of its operations.
Expenses incurred by Managers Trust with respect to any two or more
Portfolios are allocated in proportion to the net assets of such Portfolios,
except where a more appropriate allocation of expenses to each Portfolio can
otherwise be made fairly. Expenses directly attributable to a Portfolio are
charged to that Portfolio.
9) CALL OPTIONS: Premiums received by each Portfolio upon writing a covered call
option are recorded in the liability section of each Portfolio's Statement of
Assets and Liabilities and are subsequently adjusted to the current market
value. When an option is exercised, closed, or expires, 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 six months ended February 28, 1997:
<TABLE>
<CAPTION>
VALUE WHEN
FOCUS NUMBER WRITTEN
- ------------------------------------------------------------
<S> <C> <C>
CONTRACTS OUTSTANDING 8/31/96 0 $ 0
CONTRACTS WRITTEN 4,100 1,346,615
CONTRACTS EXPIRED 0 0
CONTRACTS EXERCISED (1,000 ) (313,679)
CONTRACTS CLOSED (2,500 ) (907,240)
-----------------------
CONTRACTS OUTSTANDING 2/28/97 600 $ 125,696
-----------------------
</TABLE>
<TABLE>
<CAPTION>
VALUE WHEN
GUARDIAN NUMBER WRITTEN
- ------------------------------------------------------------------
<S> <C> <C>
CONTRACTS OUTSTANDING 8/31/96 0 $ 0
CONTRACTS WRITTEN 15,000 4,499,828
CONTRACTS EXPIRED 0 0
CONTRACTS EXERCISED (5,000) (1,568,397)
CONTRACTS CLOSED (5,000) (1,783,970)
-----------------------------
CONTRACTS OUTSTANDING 2/28/97 5,000 $ 1,147,461
-----------------------------
</TABLE>
51
<PAGE>
10) SECURITY LENDING: Portfolio securities loans involve certain risks in the
event a borrower should fail financially, including delays or inability to
recover the lent securities or foreclose against the collateral. The
investment manager, under the general supervision of Managers Trust's Board
of Trustees, monitors the creditworthiness of the parties to whom the
Portfolios make security loans. The Portfolios will not lend securities on
which covered call options have been written, or lend securities on terms
which would prevent each of their investors from qualifying as a regulated
investment company. Portfolio securities loans to Neuberger&Berman, LLC
("Neuberger"), the Portfolios' principal broker and sub-adviser, are made in
accordance with an exemptive order issued by the Securities and Exchange
Commission under the 1940 Act. The Portfolios receive cash as collateral
against the lent securities, which must be maintained at not less than 100%
of the market value of the lent securities during the period of the loan.
The Portfolios receive income earned on the lent securities and a portion of
the income earned on the cash collateral. During the six months ended
February 28, 1997, Focus, Guardian, Manhattan, and Partners lent securities
to Neuberger. At February 28, 1997, cash collateral received by Focus,
Guardian, Manhattan, and Partners, was equal to or in excess of 100% of the
market value of the loaned securities.
11) REPURCHASE AGREEMENTS: Each Portfolio may enter into repurchase agreements
with institutions that each Portfolio's investment manager has determined
are creditworthy. Each repurchase agreement is recorded at cost. A Portfolio
requires that the securities purchased in a repurchase transaction be
transferred to the custodian in a manner sufficient to enable a Portfolio to
obtain those securities in the event of a default under the repurchase
agreement. A Portfolio monitors, on a daily basis, the value of the
securities transferred to ensure that their value, including accrued
interest, is greater than amounts owed to a Portfolio under each such
repurchase agreement.
NOTE B -- MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES:
Each Portfolio retains Management as its investment manager under a
Management Agreement. For such investment management services, each Portfolio
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.
All of the capital stock of Management is owned by individuals who are also
principals of Neuberger, a member firm of The New York Stock Exchange and sub-
adviser to each Portfolio. Neuberger is retained by Management to furnish it
with
52
<PAGE>
investment recommendations and research information without cost to each
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.
Each Portfolio has an expense offset arrangement in connection with its
custodian contract. The impact of this arrangement, reflected in the Statement
of Operations under the caption Custodian fees was a reduction of $939, $1,595,
and $895 for Focus, Guardian, and Partners, respectively, which is less than
.01% of each Portfolio's average daily net assets.
NOTE C -- SECURITIES TRANSACTIONS:
During the six months ended February 28, 1997, there were purchase and sale
transactions (excluding short-term securities and option contracts written) as
follows:
<TABLE>
<CAPTION>
PURCHASES SALES
- ---------------------------------------------------------------------
<S> <C> <C>
FOCUS $ 530,416,045 $ 518,273,318
GUARDIAN 1,616,370,266 1,397,631,626
MANHATTAN 126,828,594 227,455,028
PARTNERS 1,006,818,489 742,840,515
</TABLE>
During the six months ended February 28, 1997, there were brokerage
commissions on securities paid to Neuberger and other brokers as follows:
<TABLE>
<CAPTION>
NEUBERGER OTHER BROKERS TOTAL
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
FOCUS $ 643,449 $ 552,787 $ 1,196,236
GUARDIAN 2,261,803 1,712,015 3,973,818
MANHATTAN 274,937 119,821 394,758
PARTNERS 1,782,038 612,466 2,394,504
</TABLE>
In addition, Neuberger's share of the total interest income earned for the
six months ended February 28, 1997, from the collateralization of securities
loaned to or through Neuberger was $242,525, $1,338,584, $336,304, and $214,684,
for Focus, Guardian, Manhattan, and Partners, respectively.
53
<PAGE>
NOTE D -- INVESTMENTS IN NON-CONTROLLED AFFILIATES*:
<TABLE>
<CAPTION>
FOCUS
BALANCE OF GROSS GROSS BALANCE OF
SHARES HELD PURCHASES SALES SHARES HELD VALUE
AUGUST 31, AND AND FEBRUARY 28, FEBRUARY 28,
NAME OF ISSUER: 1996 ADDITIONS REDUCTIONS 1997 1997
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DT Industries 0 640,000 0 640,000 $ 18,880,000
</TABLE>
<TABLE>
<CAPTION>
GUARDIAN
BALANCE OF GROSS GROSS BALANCE OF
SHARES HELD PURCHASES SALES SHARES HELD VALUE
AUGUST 31, AND AND FEBRUARY 28, FEBRUARY 28,
NAME OF ISSUER: 1996 ADDITIONS REDUCTIONS 1997 1997
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ADVANTA Corp. Class B 857,000 2,543,000 0 3,400,000 $136,425,000
Coltec Industries 4,778,900 73,500 0 4,852,400 88,556,300
Fingerhut Cos.** 3,241,700 0 1,335,200 1,906,500 27,882,563
Foundation Health 3,020,000 1,560,000 0 4,580,000 172,895,000
Healthsource Inc. 4,190,000 0 4,190,000 0 0
Hospitality Properties
Trust** 1,442,600 0 1,012,200 430,400 13,934,200
J & L Specialty Steel 3,278,200 10,000 3,288,200 0 0
USFreightways Corp.** 1,257,000 0 0 1,257,000 30,325,125
UCAR International 0 2,671,900 0 2,671,900 114,891,700
Zeigler Coal Holding 1,702,000 0 0 1,702,000 43,188,250
</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 FEBRUARY 28, 1997, THESE SECURITIES WERE NO LONGER AFFILIATED ISSUERS.
NOTE E -- UNAUDITED FINANCIAL INFORMATION:
The financial information included in this interim report is taken from the
records of each Portfolio without audit by independent accountants/auditors.
Annual reports contain audited financial statements.
54
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
FOCUS GUARDIAN
PORTFOLIO PORTFOLIO
Period
from
Six August Six
Months 2, Months
Ended 1993(1) Ended Year
February to February Ended
28, August 28, August
1997 Year Ended August 31, 31, 1997 31,
(UNAUDITED) 1996 1995 1994 1993 (UNAUDITED) 1996
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Expenses .53%(2) .54% .57% .58% .58%(2) .46%(2) .46%
--------------------------------------------------------------------------------------
Net Investment Income .57%(2) 1.04% 1.05% 1.16% 1.46%(2) .91%(2) 1.72%
--------------------------------------------------------------------------------------
Portfolio Turnover Rate 42% 39% 36% 52% 4% 20% 37%
--------------------------------------------------------------------------------------
Average Commission Rate Paid $0.0569 $0.0578 -- -- -- $0.0538 $0.0580
--------------------------------------------------------------------------------------
Net Assets, End of Period
(in millions) $1,339.3 $1,122.4 $969.2 $645.0 $574.0 $7,546.9 $6,232.5
--------------------------------------------------------------------------------------
<CAPTION>
Period
from
August
2,
1993(1)
to
August
31,
1995 1994 1993
<S> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Expenses .48% .50% .51%(2)
Net Investment Income 1.72% 1.66% 2.45%(2)
Portfolio Turnover Rate 26% 24% 3%
Average Commission Rate Paid -- -- --
Net Assets, End of Period
(in millions) $4,613.2 $2,480.3 $1,777.6
</TABLE>
1) The date investment operations commenced.
2) Annualized.
55
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
MANHATTAN PARTNERS
PORTFOLIO PORTFOLIO
Period
from
Six August Six
Months 2, Months
Ended 1993(1) Ended Year
February to February Ended
28, August 28, August
1997 Year Ended August 31, 31, 1997 31,
(UNAUDITED) 1996 1995 1994 1993 (UNAUDITED) 1996
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Expenses .59%(2) .58% .59% .59% .59%(2) .49%(2) .51%
--------------------------------------------------------------------------------------
Net Investment Income .02%(2) .13% .42% .53% .55%(2) .99%(2) 1.26%
--------------------------------------------------------------------------------------
Portfolio Turnover Rate 22% 53% 44% 50% 3% 33% 96%
--------------------------------------------------------------------------------------
Average Commission Rate Paid $0.0587 $0.0373 -- -- -- $0.0480 $0.0494
--------------------------------------------------------------------------------------
Net Assets, End of Period
(in millions) $581.1 $567.4 $645.4 $521.7 $536.8 $2,681.4 $1,999.6
--------------------------------------------------------------------------------------
<CAPTION>
Period
from
August
2,
1993(1)
to
August
31,
1995 1994 1993
<S> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Expenses .53% .54% .54%(2)
Net Investment Income 1.13% .75% 1.19%(2)
Portfolio Turnover Rate 98% 75% 8%
Average Commission Rate Paid -- -- --
Net Assets, End of Period
(in millions) $1,623.5 $1,340.3 $1,182.1
</TABLE>
1) The date investment operations commenced.
2) Annualized.
56
<PAGE>
OTHER INFORMATION
DIRECTORY
INVESTMENT MANAGER, ADMINISTRATOR
AND DISTRIBUTOR
Neuberger&Berman Management Incorporated
605 Third Avenue 2nd Floor
New York, NY 10158-0180
800-877-9700
Institutional Services 800-366-6264
SUB-ADVISER
Neuberger&Berman, LLC
605 Third Avenue
New York, NY 10158-3698
CUSTODIAN AND SHAREHOLDER
SERVICING AGENT
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
ADDRESS CORRESPONDENCE TO:
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
OFFICERS AND TRUSTEES
Stanley Egener
CHAIRMAN OF THE BOARD AND TRUSTEE
Lawrence Zicklin
PRESIDENT AND TRUSTEE
Faith Colish
TRUSTEE
Donald M. Cox
TRUSTEE
Alan R. Gruber
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
Neuberger&Berman Management Inc., Neuberger&Berman Focus Assets,
Neuberger&Berman Guardian Assets, Neuberger&Berman Manhattan Assets, and
Neuberger&Berman Partners Assets are registered service marks of
Neuberger&Berman Management Inc.
[COPYRIGHT] 1997 Neuberger&Berman Management Inc.
57
<PAGE>
Neuberger&Berman Management Inc. -Registered Trademark-
605 THIRD AVENUE 2ND FLOOR
NEW YORK, NY 10158-0180
SHAREHOLDER SERVICES
800.877.9700
INSTITUTIONAL SERVICES
800.366.6264
Statistics and projections in this report are derived from sources
deemed to be reliable but cannot be regarded as a representation of
future results of the 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.
(recycle PRINTED ON RECYCLED PAPER
logo) NBASAR000297
