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SEMI-ANNUAL REPORT
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February 28, 1998
NEUBERGER&BERMAN
EQUITY TRUST-Registered Trademark-
Neuberger&Berman
FOCUS TRUST
Neuberger&Berman
GENESIS TRUST
Neuberger&Berman
GUARDIAN TRUST
Neuberger&Berman
MANHATTAN TRUST
Neuberger&Berman
PARTNERS TRUST
EQUITY ASSETS-SM-
Neuberger&Berman
SOCIALLY RESPONSIVE TRUST
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TABLE OF CONTENTS
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THE FUNDS
CHAIRMAN'S LETTER A-4
PORTFOLIO COMMENTARY
Focus Trust A-5
Genesis Trust A-8
Guardian Trust A-12
Manhattan Trust A-15
Partners Trust A-18
Socially Responsive Trust A-21
PERFORMANCE HIGHLIGHTS B-1
FINANCIAL STATEMENTS B-2
FINANCIAL HIGHLIGHTS
PER SHARE DATA
Focus Trust B-13
Genesis Trust B-14
Guardian Trust B-15
Manhattan Trust B-16
Partners Trust B-17
Socially Responsive Trust B-18
THE PORTFOLIOS
SCHEDULE OF INVESTMENTS
TOP TEN EQUITY HOLDINGS
Focus Portfolio B-22
Genesis Portfolio B-24
Guardian Portfolio B-29
Manhattan Portfolio B-32
Partners Portfolio B-34
Socially Responsive Portfolio B-37
FINANCIAL STATEMENTS B-42
FINANCIAL HIGHLIGHTS
Focus Portfolio B-56
Genesis Portfolio B-57
Guardian Portfolio B-58
Manhattan Portfolio B-59
Partners Portfolio B-60
Socially Responsive Portfolio B-61
OTHER INFORMATION
Directory/Officers and Trustees C-1
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A-3
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CHAIRMAN'S LETTER April 17, 1998
Dear Fellow Shareholder,
At the end of this semi-annual reporting period (February 28, 1998), the major
market indices stood at record levels. However, the preceding six months have
not been easy. The Asian currency crisis that surfaced in mid-summer caused
considerable damage to a number of sectors of the domestic equities market in
late 1997. In what we viewed as a classic Wall Street "shoot first and ask
questions later" response, technology stocks were among the casualties.
Neuberger&Berman portfolio managers were faced with a classic investment
dilemma -- think short term and retreat, or hold their ground in sectors and
individual stocks they believed to have outstanding long-term performance
potential. I'm proud to say, they chose the latter option, and so far in early
1998, were rewarded for their persistence.
In today's volatile equity markets, investors' patience and discipline is
tested on a daily basis. Experienced investors realize that the prospect for
superior long-term returns is diminished by overreaction to short-term events.
At Neuberger&Berman, we pride ourselves on being farsighted. We are not
influenced by emotion or market fads and fashion. We strive to be coldly
analytical and focus on where we think a stock will be in three years, not three
months. We believe if we can successfully ignore the market's constant static
and focus on the long-term fundamental message, we will achieve our goal of
providing shareholders solid long-term returns.
Sincerely,
/s/ Stanley Egener
Stanley Egener
Chairman of the Board
Neuberger&Berman Equity Trust
A-4
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PORTFOLIO COMMENTARY
Neuberger&Berman
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Focus Trust
THE MANAGEMENT TEAM OF KENT SIMONS AND KEVIN RISEN EMPLOY A
SECTOR-SPECIFIC APPROACH TO SHAPING 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 ending February 28, 1998, the fund returned 9.06% versus
the Standard & Poor's 500 Index's 17.64% gain (see page B-1 for average annual
total returns through March 31, 1998).*
Over this six-month reporting period, our financial holdings, particularly
mortgage lenders and insurance stocks, performed quite well. The portfolio's
retail and auto stocks also contributed to returns. Our technology and
healthcare stocks (primarily HMOs) restrained performance.
Quoting from our 1997 Annual Report letter, "One of the premises of value
investing is that over the long term, the stock market is a rational animal and
that stock prices will ultimately reflect the underlying economic value of
companies. Over the short term, the market and individual stock prices are
influenced by investor emotion, fad, fashion and momentum." In our opinion,
emotion carried the day in calendar fourth quarter 1997. When Asian currencies
began toppling like dominoes last fall, investors bailed out of stocks of
American companies with exposure to Far Eastern markets. Technology stocks were
particularly hard hit.
We can't say we anticipated the Asian currency crisis. However, when Asian
currency problems began surfacing in late summer/early fall, we took a hard look
at our technology holdings, trying to gauge the impact Asian economic problems
would have on earnings. We concluded that barring a real doomsday scenario in
which Korea crashed taking Japan and China down with it, in most cases, any
earnings problems would be short-lived. We then had a choice. We could think
A-5
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Focus Trust (Cont'd)
short term and sell stocks we viewed as exceptional long-term fundamental
bargains or we could stand pat and weather the storm. We chose the latter option
and while the portfolio took on some water in late 1997, the ship righted itself
in early 1998, and progressed at a steady pace propelled in part by a technology
stock recovery. We believe our decision will be further justified in the year
ahead.
In a related issue, today's extreme market volatility is a cross investors may
have to bear for the foreseeable future. Business values rarely change as
rapidly as stock prices, even in more stable markets. This can be a
blessing -- value investors like us depend on inefficient pricing for
opportunities. It can also be a curse when a portfolio holding declines 10%, 15%
and even 25% in a day following a very modest earnings shortfall. We have and
probably will continue to periodically suffer from such silliness. This will not
turn us into day traders. To paraphrase Warren Buffett, short term (and it seems
to be getting shorter by the day), the market is a voting machine, but longer
term, it is a weighing machine. We will continue to weigh the long-term
fundamental merits of companies such as the following.
Chase Manhattan stock declined along with the other money center banks as
investors responded to Asian currency turmoil. It then came roaring back as
investors appeared to collectively realize that the impact of Asian economic
problems would likely be minimal. With the merger with Chemical Bank in 1996,
Chase Manhattan is now the largest bank holding company in the U.S. The
integration of the merged companies is well along and Chase is now prepared to
concentrate on growing revenues and earnings. Chase has a nice balance between
global wholesale banking (investment banking, financial advisory, trading and
investment services) and domestic consumer banking. It is also now the third
largest credit card issuer in the U.S. Management has some ambitious, but in our
opinion, achievable goals for the company, including 15% operating earnings
growth and a return on equity of 18% or higher in 1998. Wall Street appears
under-whelmed by Chase as is evidenced by its well below market average P/E.
However, companies like Citicorp
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Focus Trust (Cont'd)
and Merrill Lynch view Chase as a very strong competitor. We agree. We reserve
the right to change our opinion on Chase without notice if fundamentals warrant
it. However, at present, we view it as a real value.
The preceding six months has tested our patience and discipline. We have
persevered and are encouraged by the portfolio's rapid comeback after a very
tough start. Our value-oriented approach is validated in our long-term
performance record. We believe it will continue to serve our shareholders well.
Sincerely,
/s/ Kent Simons /s/ Kevin Risen
Kent Simons and Kevin Risen
PORTFOLIO CO-MANAGERS
*The S&P "500" Index is an unmanaged index generally considered to be
representative of stock market activity. Please note that indices do not take
into account any fees and expenses of investing in the individual securities
that they track, and that individuals cannot invest directly in any index. Data
about the performance of this index are prepared or obtained by
Neuberger&Berman Management Inc. and include reinvestment of all dividends and
capital gain distributions. The portfolio invests in many securities not
included in the above-described index.
The composition, industries and holdings of the portfolio are subject to
change. No single holding of the portfolio makes up more than a small fraction
of the portfolio's total assets. Prior to November 1, 1991, the investment
policies of the portfolio required that it invest a substantial portion of its
assets in the energy field. While the value-oriented approach is intended to
limit risks, the portfolio -- with its concentration in sectors -- may be more
greatly affected by any single economic, political or regulatory development
than a more diversified mutual fund.
Past performance is no guarantee of future results.
A-7
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PORTFOLIO COMMENTARY
Neuberger&Berman
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Genesis Trust
PORTFOLIO CO-MANAGERS JUDITH VALE AND ROBERT D'ALELIO FOCUS ON
"EASY-TO-UNDERSTAND" COMPANIES IN THE LESS GLAMOROUS SECTORS OF THE
SMALL-CAPITALIZATION STOCK UNIVERSE. BY AVOIDING THE CUTTING EDGE
TECHNOLOGY COMPANIES THAT ATTRACT SO MUCH SPECULATIVE ATTENTION IN THE
SMALL-CAP MARKET, THEY ARE BETTER ABLE TO IDENTIFY FUNDAMENTALLY
UNDERVALUED STOCKS WITH EXCEPTIONAL GROWTH POTENTIAL. THIS VALUE-ORIENTED
APPROACH TO SMALL-CAP INVESTING TRANSLATES INTO A PORTFOLIO WITH FAVORABLE
RISK/REWARD CHARACTERISTICS.
For the six-month period concluding February 28, 1998, the fund returned
5.62%, compared to the Russell 2000's 9.64% gain over the same time period (see
page B-1 for average annual total returns through March 31, 1998).*
During this six-month reporting period, good performance from regional banks,
commercial aerospace component manufacturers, REITs and utilities stocks was
offset by the poor performance of oil services and drilling companies. The
regional banks benefited from declining interest rates, steady earnings gains,
merger activity in the industry, and in some cases, a favorable outlook for the
positive resolution of "goodwill" lawsuits against the federal government. We
took profits in some of our bank holdings, which in our opinion, had become
fully priced. However, we believe selected regional banks still present an
excellent opportunity going forward. We also took some profits in commercial
aerospace manufacturers, but remain committed to the group. New airplane demand
may slacken somewhat with Asian economic weakness, but backlogs remain high and
earnings could continue to advance at an attractive rate.
We think Wall Street has overreacted to the decline in oil prices resulting
from what we believe to be short-term phenomena. More importantly, in our
opinion, the Street is ignoring secular factors strongly benefiting oil service
and drilling companies. El Nino's warm winter weather pattern and inventory
liquidation in Asia has reduced energy demand. Increased production from OPEC
has increased supply. However, depletion rates (the naturally occurring decline
in annual
A-8
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Genesis Trust (Cont'd)
production capacity from existing reserves) have not come down significantly.
With only about 5% "shut in" production (readily available in-ground reserves)
versus 30% five years ago, we believe energy companies will be forced to
maintain drilling activity at or near current levels even with lower oil prices.
Over the short term, we may see some exploration projects curtailed. But, this
is not likely to have a materially negative impact on the oil service and
drilling industries that, due to a long period of under investment, remain
capacity constrained.
Looking ahead, El Nino years have historically been followed by cold winters,
OPEC has shown no taste for extended price wars, and Asia will probably have to
rebuild energy inventories. These are pluses for oil pricing. Also, oil services
and drilling company stocks have been hit so hard, they now appear attractive
relative to underlying asset values. The recent Halliburton/Dresser Industries
merger and EVI's acquisition of Weatherford Entera, may foreshadow extensive
consolidation in the oil patch.
Over the last six months, we have made a significant commitment to utilities.
Utilities have been under the cloud of ongoing deregulation. This cloud has
started to dissipate. Selective electric utilities are being allowed to divest
power-generating assets and become pure power distributors. This is not only
helping to reduce some of the risks that have plagued the industry (most notably
nuclear generating facilities), but is also providing a lot of cash to reduce
debt, repurchase shares and go shopping for other utilities companies.
Regulatory roadblocks for natural gas utilities are also coming down.
We believe the utilities industry is ripe for consolidation. Similar to the
banking industry five years ago, there are just too many utilities.
Consolidation could create economies of scale and enhance profits. We may also
see local and regional electricity companies combining with natural gas
utilities to provide one stop shopping in their operating areas. The portfolio
owns a diversified group of utilities companies --
A-9
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Genesis Trust (Cont'd)
approximately half electric, half gas -- in different geographic areas in the
U.S. We believe these positions will energize the portfolio in the year ahead.
As is our custom, we will discuss a portfolio holding that demonstrates our
value-oriented investment discipline. This should not be construed as a
recommendation and we reserve the right to sell any security without notice
should fundamental developments warrant doing so.
Texas Industries, a cement and specialty steel producer, has done well as
constrained capacity in the cement industry has improved pricing and profits.
Recent years' strong free cash flow has allowed the company to reduce debt,
repurchase shares, buy all of Chapparal Steel and develop a new cement
production process, which it is starting to sell to other cement companies not
competing in its markets. In view of the strong construction market, which we
expect to continue to benefit the company's cement and specialty steel
operations, and the prospects for fee income from selling the new cement
processing technology, we expect earnings growth to continue to be impressive.
Despite a nice run, Texas Industries stock still sells at just about 14 times
earnings. In the interest of full disclosure, we have taken some profits in the
stock to reduce what had become a very large position in the portfolio. However,
we still view Texas Industries as an attractive fundamental situation that
demonstrates our research discipline and value focus.
A-10
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Genesis Trust (Cont'd)
In closing, we are disappointed with the fund's lackluster performance during
this reporting period following its exceptionally good returns in fiscal 1996
and 1997. We believe the portfolio is well positioned to regain performance
momentum in the year ahead.
Sincerely,
/s/ Judith Vale /s/ Robert D'Alelio
Judith Vale and Robert D'Alelio
PORTFOLIO CO-MANAGERS
*The Russell 2000-Registered Trademark- Index is an unmanaged index generally
considered to be representative of small stock market activity. Please note
that indices do not take into account any fees and expenses of investing in the
individual securities that they track, and that individuals cannot invest
directly in any index. Data about the performance of this index are prepared or
obtained by Neuberger&Berman Management Inc. and include reinvestment of all
dividends and capital gain distributions. The portfolio invests in many
securities not included in the above-described index.
The risks involved in seeking capital appreciation from investments principally
in companies with small market capitalization are set forth in the prospectus.
The composition, industries and holdings of the portfolio are subject to
change. Genesis Portfolio is invested in a wide array of stocks and no single
holding makes up more than a small fraction of the portfolio's total assets.
Past performance is no guarantee of future results.
A-11
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PORTFOLIO COMMENTARY
Neuberger&Berman
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Guardian Trust
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 PRICES
RELATIVE TO THEIR LONG-TERM EARNINGS GROWTH POTENTIAL. BY CONCENTRATING
THE PORTFOLIO IN HIGH QUALITY WALL STREET "ORPHANS", THE PORTFOLIO
MANAGEMENT TEAM ATTEMPTS TO CONSISTENTLY TAKE ADVANTAGE OF OPPORTUNITIES
CREATED BY INVESTORS' OVER-REACTION TO REAL OR PERCEIVED PROBLEMS.
For the six-month period concluding February 28, 1998, the fund returned 5.63%
versus the Standard & Poor's 500 Index's 17.64% gain (see page B-1 for average
annual total returns through March 31, 1998).*
Over the last six months, our financial holdings (banks, insurance and
consumer finance) performed quite well. Our auto and airline holdings also
contributed to returns. Our technology holdings, particularly in the computer,
semiconductor and semiconductor equipment sectors, were hit hard. The
portfolio's healthcare holdings, primarily HMOs, also restrained returns.
Over the last six months, equity investors were confronted by two powerful and
conflicting forces -- the potentially negative impact of the Asian currency
crisis on U.S. corporate earnings and a bond rally that drove interest rates to
levels supporting higher valuations for stocks. These crosscurrents resulted in
extreme volatility for the market and our portfolio. Bank stocks were dragged
under briefly, but made it to higher ground by the end of the reporting period.
Technology stocks were really swamped in late 1997 and although they came back
in early 1998, remain underwater.
What were we doing as the waters swirled around us? What we always do -- our
homework. When Asian currency problems began surfacing in late summer, we began
taking a hard look at all our technology stock holdings to assess the impact
Asian economic problems would have on earnings. In general, we concluded that
any earnings problems resulting from Asian economic weakness would likely be
short-lived. So, Wall Street be damned, we decided to stick
A-12
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Guardian Trust (Cont'd)
with what we viewed as outstanding long-term bargains. We paid the price in late
1997. Going forward, we believe our discipline and patience in what we see as a
very undervalued technology group will be rewarded.
With our portfolio under the gun in fourth quarter 1997, we received some
criticism for owning technology stocks in a value portfolio. This prompted us to
review our investment discipline for our critics. We are trying to buy good
companies when they are cheap. This demands intensive research and independent
thinking. We are not influenced by the common perception that certain groups
like technology are for growth stock investors only. We feel perfectly justified
buying outstanding technology companies with well above market average long-term
earnings prospects when they are trading at below market average multiples. In
our opinion, that is the very definition of value. Ironically, we received
similar criticism for our large positions in drug stocks in 1993. The
pharmaceuticals were thought to be another growth group that had no place in
value portfolios. Well, at the time we were buying them, they were fundamentally
cheap and became one of the very best performing groups in our portfolio in the
mid 90's.
Our ongoing commitment to bank stocks has also been questioned. The most
commonly voiced concern has been that after recent years' strong performance,
bank stocks are now trading well above historic valuations and therefore, are no
longer value plays. In our opinion, selected bank stocks are trading above
historic valuations for very good reasons. Declining interest rates,
productivity gains, favorable demographics, a less cyclical economy and
consolidation were helping banking companies grow earnings at a much higher rate
than in the past and in many cases, at above market average rates. Yet, despite
recent years' excellent performance, selected bank stocks are still trading at
P/Es well below the market's. Once again, in our eyes, clearly defined value.
Applied Materials (AMAT) was one of our technology holdings that got beaten up
in late 1997. AMAT is the technological and market leader in equipment that
layers electrically conductive materials on to semiconductor chips. The economic
malaise in the Far East may impact
A-13
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Guardian Trust (Cont'd)
revenues and earnings in the next several quarters. However, looking past any
short-term Asia-induced weakness, we believe AMAT could lead a major
semiconductor industry technology upgrade. If so, we think AMAT's revenues and
earnings will grow well in excess of the market averages over the longer term.
Yet, as of February 28, 1998, based on our 1998 earnings projections, AMAT stock
was still trading at a price/earnings ratio discount to the S&P "500." We think
this represents excellent value. Be reminded that when we discuss individual
securities in our reports to shareholders it is done solely to demonstrate our
investment discipline, not as a recommendation. We offer no guarantee the
portfolio will continue to own this security or any others we may mention if our
fundamental outlook changes.
Our brand of value investing demands hard work, discipline and patience. There
will be periods (like calendar fourth quarter 1997) when the portfolio will
materially underperform the S&P "500." However, the portfolio's long-term
performance record justifies our belief that owning fundamentally undervalued
stocks will generate superior results over time.
Sincerely,
/s/ Kent Simons /s/ Kevin Risen
Kent Simons and Kevin Risen
PORTFOLIO CO-MANAGERS
*The S&P "500" Index is an unmanaged index generally considered to be
representative of stock market activity. Please note that indices do not take
into account any fees and expenses of investing in the individual securities
that they track, and that individuals cannot invest directly in any index. Data
about the performance of this index are prepared or obtained by
Neuberger&Berman Management Inc. and include reinvestment of all dividends and
capital gain distributions. The portfolio invests in many securities not
included in the above-described index.
The composition, industries and holdings of the portfolio are subject to
change. Guardian Portfolio is invested in a wide array of stocks and no single
holding makes up more than a small fraction of the portfolio's total assets.
Past performance is no guarantee of future results.
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PORTFOLIO COMMENTARY
Neuberger&Berman
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Manhattan Trust
PORTFOLIO CO-MANAGERS JENNIFER SILVER AND BROOKE COBB LOVE
SURPRISES -- POSITIVE EARNINGS SURPRISES THAT IS. THEIR RESEARCH REVEALS
THAT THE STOCKS OF COMPANIES CONSISTENTLY EXCEEDING CONSENSUS EARNINGS
ESTIMATES HAVE TENDED TO BE TERRIFIC PERFORMERS. THEY COMPUTER SCREEN THE
MID-CAP GROWTH STOCK UNIVERSE TO ISOLATE STOCKS WHOSE MOST RECENT EARNINGS
HAVE BEATEN THE STREET'S EXPECTATIONS. THEY THEN ROLL UP THEIR SLEEVES,
AND THROUGH DILIGENT FUNDAMENTAL RESEARCH, STRIVE TO IDENTIFY THOSE
COMPANIES MOST LIKELY TO RECORD A STRING OF POSITIVE EARNINGS SURPRISES.
THEIR GOAL IS TO INVEST TODAY IN THE FAST-GROWING MID-SIZED COMPANIES THAT
WILL COMPRISE TOMORROW'S FORTUNE 500.
For the six-month period ending February 28, 1998, the fund returned 10.49%
compared to the Russell Midcap-Trademark- Growth Index's 9.77% and the Standard
& Poor's 500 Index's 17.64% gain (see page B-1 for average annual total returns
through March 31, 1998).*
Over this six-month reporting period, our retail and retail services holdings
performed quite well. Our selections in the media, restaurant, banking and
insurance industries also contributed to returns. Interestingly, in total, our
computer holdings posted decent gains during a period that saw many
technology-oriented securities severely punished due to the potential for
Asian-induced earnings problems. Our healthcare investments were mixed. However,
the portfolio was hurt by the poor performance of HMOs, which in keeping with
our sell discipline, have been liquidated. Although we were under-weighted in
the energy sector, our positions were negatively impacted by declining oil
prices.
The strong economy, high employment, low inflation and low interest rates,
have consumers feeling quite confident. This has created a tailwind for the
retail group in general. Our focus on retailers delivering quality merchandise
at good value to their customers was particularly beneficial, with off-price
retailers like Costco, Staples and TJX & Company all gaining 35% or more over
the last six months. The portfolio's lone airline stock, Southwest Airlines, the
leading low price operator in its industry, also took off, gaining more than
50%. We
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Manhattan Trust (Cont'd)
believe consumer confidence will remain strong and that high quality,
value-oriented retailers will continue to grow earnings at attractive rates.
As the television networks have lost viewers in recent years, national and
large regional advertisers have gravitated to other media including radio and
billboards. Consolidation in these industries is creating larger companies with
bigger market footprints. This enhances advertising revenue and economies of
scale realized through consolidation are improving profit margins and
accelerating earnings for portfolio companies like Chancellor Media (radio) and
Outdoor Systems, Inc. (billboards), which were up strongly over the last six
months. We believe earnings will continue to trend higher for these companies.
Be reminded, our opinions on these and any other portfolio holdings mentioned in
this report are subject to change.
Our relative success in the technology group over the last six months can be
traced to our mid-summer decision to move out of hardware and commodity-oriented
tech stocks (personal computer, disc drive, semiconductor and semiconductor
equipment manufacturers), and into proprietary product companies (software and
specialty systems producers), whose earnings we believe to be less sensitive to
the capital spending cycle. In our carefully considered opinion, these types of
technology companies offer more reliable earnings growth potential, albeit at a
slightly higher valuation level. This decision proved to be particularly timely
as commodity-oriented technology stocks got hit hard in late 1997 when Asian
economic turmoil dampened earnings expectations.
Although mid-cap stocks have a superior long-term performance record, they
have lagged large-cap stocks in recent years. Will this continue? We don't know.
However, on a valuation basis, mid-cap growth companies currently look
attractive relative to large-cap growth companies. To wit: based on consensus
earnings estimates from First Call (an independent research firm that compiles
and distributes Wall Street earnings estimates), S&P "500" earnings are expected
to grow approximately 4% in first quarter 1998, and 10% annually over the next
five years. Also based on First Call data, our portfolio holdings are
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Manhattan Trust (Cont'd)
projected to grow earnings by 40% in first quarter 1998 and 25% annually over
the next five years. Yet, the Manhattan portfolio trades at just one time its
estimated five-year annual earnings growth rate compared to the S&P "500's"
substantial premium to its five-year annual earnings growth projections.
Also, as you know, we believe companies that consistently beat earnings
estimates will ultimately deliver superior investment performance. In fourth
quarter 1997, 90% of the Manhattan portfolio's holdings met or exceeded First
Call earnings estimates, reporting year-to-year earnings gains approximating
45%. Only 62% of the S&P "500" companies met or exceeded First Call estimates,
reporting only about 8% year-to-year earnings advances.
In closing, a highly volatile stock market has and will likely continue to
challenge investors of all stripes. The Manhattan portfolio is positioned in
companies with a recent history of rapid growth, trading at what we view as very
reasonable multiples relative to projected earnings growth rates. We believe
this disciplined investment strategy will reward our shareholders.
Sincerely,
/s/ Jennifer Silver /s/ Brooke Cobb
Jennifer Silver and Brooke Cobb
PORTFOLIO CO-MANAGERS
*The S&P "500" Index is an unmanaged index generally considered to be
representative of stock market activity. The Russell Midcap-Trademark- Growth
Index is an unmanaged index which measures the performance of those Russell
Midcap-Trademark- Index companies with higher price-to-book ratios and higher
forecasted growth values. The Russell Midcap Index measures the performance of
the 800 smallest companies in the Russell 1000-Registered Trademark- Index,
which represents approximately 35% of the total market capitalization of the
Russell 1000 Index (which in turn, consists of the 1,000 largest U.S.
companies, based on market capitalization). Please note that indices do not
take into account any fees and expenses of investing in the individual
securities that they track, and that individuals cannot invest directly in any
index. Data about the performance of these indices are prepared or obtained by
Neuberger& Berman Management Inc. and include reinvestment of all dividends and
capital gain distributions. The portfolio invests in many securities not
included in the above-described indices.
The composition, industries and holdings of the portfolio are subject to
change. Manhattan Portfolio is invested in a wide array of stocks and no single
holding makes up more than a small fraction of the portfolio's total assets.
Past performance is no guarantee of future results.
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PORTFOLIO COMMENTARY
Neuberger&Berman
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Partners Trust
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" -- GROWTH STOCKS 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. THE GOAL IS TO FIND QUALITY COMPANIES TRADING AT A DISCOUNT
TO THEIR INTRINSIC ECONOMIC VALUE.
For the six-month period concluding February 28, 1998, the fund returned 9.78%
versus the Standard & Poor's 500 Index's 17.64% gain (see page B-1 for average
annual total returns through March 31, 1998).*
Over the last six months, portfolio holdings in the retail, cable television,
airline, and financial (banks, consumer finance and insurance) groups
contributed to returns. In the healthcare sector, we were hurt both by what we
owned (HMOs still struggling to get pricing and costs in line) and what we
didn't own (drug stocks, whose high multiples got even higher in the last six
months). Our energy investments, particularly exploration and production
companies where profits are tied directly to oil prices, disappointed. Our
technology investments hindered performance as Asian economic problems spooked
investors. We believe Asian economic weakness will muddy the short-term earnings
outlook for some of our technology holdings, but that the longer-term earnings
picture remains bright.
The strong performance of cable television stocks was particularly gratifying
in that we were more than satisfactorily rewarded for our patience and
discipline -- absolute requirements for value investors. We bought cable
television companies like Comcast and Time Warner (the big entertainment
conglomerate and one of the largest cable operators in the U.S.) back when no
one wanted to own them. We thought the business fundamentals were reasonably
good and likely to get better,
A-18
<PAGE>
- ----------------------------------------------------------------------
Partners Trust (Cont'd)
and that the threat of competition from satellite broadcasters was overblown.
These stocks did nothing for us until 1997, when investors suddenly realized
that cable television was still a good growth business and sent CATV stocks
soaring. Our patience being rewarded, we have recently taken some profits in
both stocks.
The airline stocks also took off during this reporting period. This was an
industry we had avoided because the group never really grew earnings over a full
cycle. Good times prompted all the airlines to add capacity (buy a lot of
expensive new airplanes) which they then couldn't fill without profit-eroding
fare wars. To make matters worse, new airlines kept popping up overnight and
despite hemorrhaging money, were kept on life support systems by the government
and unrealistically optimistic investors.
Proving old dogs are not necessarily resistant to new tricks; we took another
look at the airline industry in late 1996. We recognized three major changes we
believed were improving the industry's outlook. First, the hub system
(individual airlines controlling the majority of gates at airports in selected
cities and effectively creating mini-monopolies) was raising the barrier of
entry in the business, allowing established airlines to dominate certain
markets, and limiting the fare wars that restrained profitability. Secondly,
airline company managements were becoming much more financially savvy,
particularly in controlling capital expenditures. Finally, the strong economy
and lower fuel costs were improving profit margins.
When we put our stock picking hats on -- always the most important element in
our investment wardrobe -- we selected Continental, Delta and Southwest
Airlines. Let's use Continental to demonstrate what was so appealing about the
airlines. Continental's hubs in Newark, Houston and Cleveland provide strong
market footholds in the Northeast, Southwest and Midwest. In recent years,
Continental has added more capacity than the other four top carriers and has had
little problem filling the seats. The company has standardized its
fuel-efficient fleet, in the process saving on training and maintenance costs.
Continental now has an alliance with Northwest Airlines, which expands its
geographic reach and we estimate can add $2.50 to $3.75 to earnings by the year
A-19
<PAGE>
- ----------------------------------------------------------------------
Partners Trust (Cont'd)
2000. We believe Continental can grow total pre-tax earnings at a 12-15% annual
rate for the next several years. Yet, even after its strong run, the stock
trades at just 10 times our 1998 earnings estimates. We believe when investors
recognize the beneficial changes for the airlines in general and Continental's
progress in particular, it will get a better appraisal. Bear in mind, as
positively as we feel about the group and Continental, we may change our opinion
without notice should the stock fly out of our value range or the company fails
to meet our fundamental expectations. We have taken some profit in Delta and
Southwest but we've kept all our seats on Continental.
In closing, after three years of exceptional equity performance, the pickings
are getting slimmer for true value-oriented investors. However, even with the
market indices near record levels, we are still finding fundamental bargains in
industries and companies not swept up in Wall Street's euphoria. We believe that
by maintaining our discipline and providing a home for under-loved stocks, our
shareholders can enjoy the sunshine while it lasts and have a roof over their
heads should the market weather become inclement.
Sincerely,
/s/ Robert Gendelman /s/ Michael Kassen
Robert Gendelman and Michael Kassen
PORTFOLIO CO-MANAGERS
*The S&P "500" Index is an unmanaged index generally considered to be
representative of stock market activity. Please note that indices do not take
into account any fees and expenses of investing in the individual securities
that they track, and that individuals cannot invest directly in any index. Data
about the performance of this index are prepared or obtained by
Neuberger&Berman Management Inc. and include reinvestment of all dividends and
capital gain distributions. The portfolio invests in many securities not
included in the above-described index.
The composition, industries and holdings of the portfolio are subject to
change. Partners Portfolio is invested in a wide array of stocks and no single
holding makes up more than a small fraction of the portfolio's total assets.
Past performance is no guarantee of future results.
A-20
<PAGE>
PORTFOLIO COMMENTARY
Neuberger&Berman
- ----------------------------------------------------------------------
Socially Responsive Trust
PORTFOLIO MANAGER JANET PRINDLE BELIEVES DOING GOOD IS GOOD BUSINESS AND
HAS THE POTENTIAL TO PRODUCE POSITIVE INVESTMENT RESULTS. SHE FOCUSES ON
COMPANIES THAT ARE AGENTS OF FAVORABLE CHANGE IN WORKPLACE POLICIES
(PARTICULARLY FOR WOMEN AND MINORITIES); ARE GOOD CORPORATE CITIZENS; AND
ARE RESPONSIVE TO ENVIRONMENTAL ISSUES. SHE DOES NOT INVEST IN TOBACCO,
ALCOHOL, GAMBLING, NUCLEAR POWER, OR WEAPONS COMPANIES. BUT, SOCIAL
RESPONSIBILITY ALONE DOES NOT QUALIFY A COMPANY AS A GOOD INVESTMENT. TRUE
TO NEUBERGER& BERMAN'S PRINCIPLES, PORTFOLIO CANDIDATES MUST FIRST BE
FOUND TO BE FUNDAMENTALLY ATTRACTIVE. THEN, AND ONLY THEN, ARE SOCIAL
SCREENS APPLIED. THE OBJECTIVE IS SIMPLE AND STRAIGHTFORWARD -- TO SERVE
BOTH SOCIETY AND SHAREHOLDERS.
For the six-month period concluding February 28, 1998, the fund returned
13.55% compared to the Standard & Poor's 500 Index's 17.64% gain (see page B-1
for average annual total returns through March 31, 1998).*
In this six-month reporting period, the portfolio's telecommunications
holdings performed well, highlighted by Southwestern Bell's pending acquisition
of Southern New England Telephone and Wall Street's favorable appraisal of
WorldCom's proposed acquisition of MCI. We think the MCI deal makes great
strategic sense, as well as being potentially additive to earnings and cash
flow. We believe the combined entity would be well positioned to achieve strong
growth from voice and data services, as well as realize large cost efficiencies.
Portfolio positions in pharmaceutical companies also contributed to performance,
with strong earnings and some high profile mergers focusing attention on the
group. Our insurance holdings also continued to perform well.
Our technology company holdings restrained performance. Currency turmoil and
the prospect for Asian economic deceleration sent investors scurrying from
technology stocks in calendar fourth quarter 1997. Tech stocks rebounded in
early 1998, but remain well below their 52-week highs. We believe the sell-off
in technology stocks has been
A-21
<PAGE>
- ----------------------------------------------------------------------
Socially Responsive Trust (Cont'd)
somewhat indiscriminate and that the longer-term earnings prospects even for
those portfolio companies legitimately impacted by Asian economic weakness
remain quite good.
Oil service and energy exploration and production companies had some of the
greatest negative impact on the portfolio. As is evidenced by the price of oil
at a five year low, there is currently too much oil in the marketplace. However,
we believe this is the result of short-term factors -- El Nino's warm winter,
increased OPEC production, and the reduction of energy inventory in the Far
East. Looking ahead, we don't think we will be blessed by another extremely
temperate winter. It certainly isn't in OPEC's best interest to see oil prices
stay at currently depressed levels. Finally, at some point, Asian inventories
will have to be rebuilt. So, we expect oil prices to firm in the year ahead.
Most importantly, in a world with only 2-3% of excess production capacity, we
doubt the industry will stop drilling and risk letting the well run dry. Our
opinion is that lower oil prices or not, energy companies are going to have to
continue poking holes in the ground. Also, consolidation has begun in the oil
services group, with one of our holdings, Dresser Industries, just recently
agreeing to merge with Halliburton, and climbing 16.4% upon announcement of the
merger.
In this report, we've chosen to highlight Fannie Mae as the stock that
demonstrates our value-oriented investment discipline and fulfills our mandate
to own socially-responsible companies. Fannie Mae stock has done quite well by
us, appreciating more than 40% over the last six months. At its current price,
it is no longer a steal. However, we still view it as fundamentally attractive.
We think Fannie Mae management has done an exceptional job managing interest
rate and political risk, while having delivered consistent double-digit earnings
gains.
As a provider of home mortgages for low- to moderate-income households, Fannie
Mae's main product assists the economically disadvantaged. The company also has
a strong record in the area of diversity, with representation of women and
minorities throughout its business. Supporting its employees, the company offers
extensive family-friendly
A-22
<PAGE>
- ----------------------------------------------------------------------
Socially Responsive Trust (Cont'd)
benefits. Finally, Fannie Mae has been recognized for its innovative giving
programs focused on affordable housing and community economic development. We
view Fannie Mae as an ideal portfolio holding -- a strong business that can
reward shareholders and one that serves the community and its employees well.
Remember, this and the other securities mentioned in this report are not
recommendations, and our opinion on all stocks in the portfolio may change
without notice.
In closing, we think weakness in our technology, oil services, and energy
exploration and production holdings will turn into portfolio strengths in the
year ahead. We believe our value focus and sensitivity to social issues will
continue to reward shareholders and the community.
Sincerely,
/s/ Janet Prindle
Janet Prindle
PORTFOLIO MANAGER
*The S&P "500" Index is an unmanaged index generally considered to be
representative of stock market activity. Please note that indices do not take
into account any fees and expenses of investing in the individual securities
that they track, and that individuals cannot invest directly in any index. Data
about the performance of this index are prepared or obtained by
Neuberger&Berman Management Inc. and include reinvestment of all dividends and
capital gain distributions. The portfolio invests in many securities not
included in the above-described index.
The composition, industries and holdings of the portfolio are subject to
change. Socially Responsive Portfolio is invested in a wide array of stocks and
no single holding makes up more than a small fraction of the portfolio's total
assets.
Past performance is no guarantee of future results.
A-23
<PAGE>
(This page has been left blank intentionally.)
A-24
<PAGE>
PERFORMANCE HIGHLIGHTS
<TABLE>
<CAPTION>
FOR PERIODS
ENDED 3/31/98
-------------------------------
SIX MONTH
PERIOD AVERAGE ANNUAL TOTAL
NEUBERGER&BERMAN ENDED RETURNS(1)
EQUITY TRUST AND EQUITY ASSETS 2/28/98(1) 1 YR 5 YR 10 YR
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
FOCUS TRUST(2) +9.06% +42.77% +21.35% +18.28%
GUARDIAN TRUST +5.63% +33.39% +18.05% +17.33%
PARTNERS TRUST +9.78% +41.51% +21.79% +17.73%
SOCIALLY RESPONSIVE TRUST +13.55% +43.34% +21.99%(3) N/A
S&P "500"(4) +17.64% +47.88% +22.35% +18.88%
MANHATTAN TRUST +10.49% +39.77% +16.78% +15.76%
RUSSELL MIDCAP-TRADEMARK- GROWTH INDEX(4) +9.77% +42.36% +18.41% +17.02%
GENESIS TRUST +5.62% +43.66% +19.95% +16.74%(3)
RUSSELL 2000-REGISTERED TRADEMARK- INDEX(4) +9.64% +42.01% +17.67% N/A
</TABLE>
Each Fund commenced operations in August 1993 (except Socially Responsive
Trust, which began in March 1997).
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
are for the Sister Funds. Neuberger&Berman Management Inc. currently absorbs
certain operating expenses of each Fund so that its expense ratio per annum will
not exceed the expense ratio of its Sister Fund by more than 0.10% of the Fund's
average daily net assets. These arrangements can be terminated upon 60 days'
notice. Neuberger&Berman Management Inc. previously waived a portion of the
management fee borne directly by Neuberger&Berman Genesis Portfolio and
indirectly by Neuberger&Berman Genesis Trust-Registered Trademark-. Absent such
arrangements, which are subject to change, the average annual total returns
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) Results are shown on a "total return" basis and include reinvestment of all
dividends and capital gain distributions. Performance data quoted represents
past performance, which is no guarantee of future results. The investment
return and principal value of an investment will fluctuate so that the
shares, when redeemed, may be worth more or less than their 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) From inception of Sister Fund.
4) The S&P "500" Index is an unmanaged index generally considered to be
representative of stock market activity. The Russell Midcap-Trademark- Growth
Index measures the performance of those Russell Midcap-Trademark- Index
companies with higher price-to-book ratios and higher forecasted growth
values. The Russell Midcap Index measures the performance of the 800 smallest
companies in the Russell 1000-Registered Trademark- Index, which represents
approximately 35% of the total market capitalization of the Russell 1000
Index (which, in turn, consists of the 1,000 largest U.S. companies, based on
market capitalization). The Russell 2000-Registered Trademark- Index is an
unmanaged index consisting of the securities of the 2,000 issuers having the
smallest capitalization in the Russell 3000-Registered Trademark- Index,
representing approximately 10% of the Russell 3000 total market
capitalization. The smallest company's market capitalization is roughly $172
million. The risks involved in seeking capital appreciation from investments
primarily in companies with small market capitalization are set forth in the
prospectus. Please note that indices do not take into account any fees and
expenses of investing in the individual securities that they track, and that
individuals cannot invest directly in any index. Data about the performance
of these indices 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 any of the above
described indices.
B-1
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
Neuberger&Berman
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY TRUST
---------------------
FOCUS GENESIS
(000'S OMITTED EXCEPT PER SHARE AMOUNTS) TRUST TRUST
---------------------
<S> <C> <C>
ASSETS
Investment in corresponding Portfolio, at value (Note A) $ 249,871 $779,575
Deferred organization costs (Note A) 5 5
Receivable for Trust shares sold 461 4,886
---------------------
250,337 784,466
---------------------
LIABILITIES
Payable for Trust shares redeemed 344 1,462
Payable to administrator -- net (Note B) 60 227
Accrued expenses 24 49
---------------------
428 1,738
---------------------
NET ASSETS at value $ 249,909 $782,728
---------------------
NET ASSETS consist of:
Par value $ 11 $ 35
Paid-in capital in excess of par value 199,235 685,118
Accumulated undistributed net investment income (loss) 74 1,285
Accumulated net realized gains (losses) on investment (666) 6,893
Net unrealized appreciation in value of investment 51,255 89,397
---------------------
NET ASSETS at value $ 249,909 $782,728
---------------------
SHARES OUTSTANDING
($.001 par value; unlimited shares authorized) 11,045 34,783
---------------------
NET ASSET VALUE, offering and redemption price per share $22.63 $22.50
---------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-2
<PAGE>
February 28, 1998 (Unaudited)
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY ASSETS
EQUITY TRUST -------------
------------------------------------ SOCIALLY
GUARDIAN MANHATTAN PARTNERS RESPONSIVE
TRUST TRUST TRUST TRUST
----------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investment in corresponding Portfolio, at value (Note
A) $2,488,680 $ 57,087 $779,173 $11,325
Deferred organization costs (Note A) 4 5 5 91
Receivable for Trust shares sold 7,295 240 4,007 14
----------------------------------------------------
2,495,979 57,332 783,185 11,430
----------------------------------------------------
LIABILITIES
Payable for Trust shares redeemed 1,331 10 324 5
Payable to administrator -- net (Note B) 754 17 227 3
Accrued expenses 72 26 28 3
----------------------------------------------------
2,157 53 579 11
----------------------------------------------------
NET ASSETS at value $2,493,822 $ 57,279 $782,606 $11,419
----------------------------------------------------
NET ASSETS consist of:
Par value $ 131 $ 4 $ 42 $ 1
Paid-in capital in excess of par value 1,856,935 44,530 672,420 9,760
Accumulated undistributed net investment income (loss) 2,062 (125) 695 5
Accumulated net realized gains (losses) on investment 11,201 1,111 17,891 85
Net unrealized appreciation in value of investment 623,493 11,759 91,558 1,568
----------------------------------------------------
NET ASSETS at value $2,493,822 $ 57,279 $782,606 $11,419
----------------------------------------------------
SHARES OUTSTANDING
($.001 par value; unlimited shares authorized) 130,916 3,965 42,034 888
----------------------------------------------------
NET ASSET VALUE, offering and redemption price per share $19.05 $14.45 $18.62 $12.86
----------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-3
<PAGE>
STATEMENTS OF OPERATIONS
Neuberger&Berman
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY TRUST
--------------------
FOCUS GENESIS
(000'S OMITTED) TRUST TRUST
--------------------
<S> <C> <C>
INVESTMENT INCOME
Investment income from corresponding Portfolio (Note A) $ 950 $ 4,735
--------------------
Expenses:
Administration fee (Note B) 354 1,190
Amortization of deferred organization and initial offering
expenses (Note A) 5 5
Auditing fees 2 3
Custodian fees 5 5
Legal fees 3 3
Registration and filing fees 32 117
Shareholder reports 8 37
Shareholder servicing agent fees 10 11
Trustees' fees and expenses 1 3
Miscellaneous 1 1
Expenses from corresponding Portfolio (Notes A & B) 454 2,076
--------------------
Total expenses 875 3,451
Expenses reimbursed by administrator and/or reduced by custodian
fee offset arrangement (Note B) (53) (1)
--------------------
Total net expenses 822 3,450
--------------------
Net investment income (loss) 128 1,285
--------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS FROM CORRESPONDING
PORTFOLIO (NOTE A)
Net realized gain on investment securities 2 7,203
Net realized loss on option contracts (409) --
Change in net unrealized appreciation of investment securities and
option contracts 16,465 14,934
--------------------
Net gain on investments from corresponding Portfolio (Note A) 16,058 22,137
--------------------
Net increase in net assets resulting from operations $ 16,186 $ 23,422
--------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-4
<PAGE>
For the Six Months Ended February 28, 1998 (Unaudited)
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY ASSETS
EQUITY TRUST -------------
---------------------------------- SOCIALLY
GUARDIAN MANHATTAN PARTNERS RESPONSIVE
TRUST TRUST TRUST TRUST
--------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Investment income from corresponding Portfolio (Note A) $ 17,410 $ 150 $ 4,346 $ 71
--------------------------------------------------
Expenses:
Administration fee (Note B) 4,683 105 1,159 18
Amortization of deferred organization and initial
offering expenses (Note A) 5 5 5 11
Auditing fees 4 4 3 3
Custodian fees 5 5 5 5
Legal fees 5 7 3 9
Registration and filing fees 133 13 91 32
Shareholder reports 38 5 12 3
Shareholder servicing agent fees 14 9 11 8
Trustees' fees and expenses 10 -- 3 --
Miscellaneous 9 1 2 1
Expenses from corresponding Portfolio (Notes A & B) 5,331 152 1,369 29
--------------------------------------------------
Total expenses 10,237 306 2,663 119
Expenses reimbursed by administrator and/or reduced by
custodian fee offset arrangement (Note B) -- (31) (78) (60)
--------------------------------------------------
Total net expenses 10,237 275 2,585 59
--------------------------------------------------
Net investment income (loss) 7,173 (125) 1,761 12
--------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS FROM
CORRESPONDING PORTFOLIO (NOTE A)
Net realized gain on investment securities 31,743 1,163 31,600 98
Net realized loss on option contracts (3,061) -- -- --
Change in net unrealized appreciation of investment
securities and option contracts 94,827 4,449 27,954 1,106
--------------------------------------------------
Net gain on investments from corresponding Portfolio
(Note A) 123,509 5,612 59,554 1,204
--------------------------------------------------
Net increase in net assets resulting from operations $ 130,682 $5,487 $61,315 $1,216
--------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-5
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
Neuberger&Berman
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY TRUST
FOCUS TRUST GENESIS TRUST
Six Months Six Months
Ended Year Ended Year
February 28, Ended February 28, Ended
1998 August 31, 1998 August 31,
(000'S OMITTED) (UNAUDITED) 1997 (UNAUDITED) 1997
-------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 128 $ 112 $ 1,285 $ (250)
Net realized gain (loss) on investments from
corresponding Portfolio (Note A) (407) 3,645 7,203 4,157
Change in net unrealized appreciation of
investments from corresponding Portfolio
(Note A) 16,465 32,689 14,934 62,917
-------------------------------------------------------
Net increase in net assets resulting from
operations 16,186 36,446 23,422 66,824
-------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (80) (289) -- --
Net realized gain on investments (3,917) -- (4,127) (846)
-------------------------------------------------------
Total distributions to shareholders (3,997) (289) (4,127) (846)
-------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold in initial
capitalization of the Fund (Note A) -- -- -- --
Proceeds from shares sold to the public 120,407 111,352 572,703 283,599
Proceeds from reinvestment of dividends and
distributions 3,473 289 3,117 846
Payments for shares redeemed (47,057) (42,514) (195,124) (32,922)
-------------------------------------------------------
Net increase (decrease) from Trust share
transactions 76,823 69,127 380,696 251,523
-------------------------------------------------------
NET INCREASE IN NET ASSETS 89,012 105,284 399,991 317,501
NET ASSETS:
Beginning of period 160,897 55,613 382,737 65,236
-------------------------------------------------------
End of period $249,909 $160,897 $ 782,728 $382,737
-------------------------------------------------------
Accumulated undistributed net investment
income (loss) at end of period $ 74 $ 26 $ 1,285 $ --
-------------------------------------------------------
NUMBER OF TRUST SHARES:
Sold in initial capitalization of the Fund
(Note A) -- -- -- --
Sold to the public 5,526 6,127 25,526 15,306
Issued on reinvestment of dividends and
distributions 174 17 143 51
Redeemed (2,220) (2,329) (8,731) (1,865)
-------------------------------------------------------
Net increase (decrease) in shares outstanding 3,480 3,815 16,938 13,492
-------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-6
<PAGE>
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY TRUST
GUARDIAN TRUST MANHATTAN TRUST PARTNERS TRUST
Six Months Six Months Six Months
Ended Year Ended Year Ended Year
February 28, Ended February 28, Ended February 28, Ended
1998 August 31, 1998 August 31, 1998 August 31,
(UNAUDITED) 1997 (UNAUDITED) 1997 (UNAUDITED) 1997
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 7,173 $ 8,320 $ (125) $ (132) $ 1,761 $ 1,722
Net realized gain (loss) on investments
from corresponding Portfolio (Note A) 28,682 142,935 1,163 9,993 31,600 41,373
Change in net unrealized appreciation of
investments from corresponding
Portfolio (Note A) 94,827 430,378 4,449 4,760 27,954 55,878
-----------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 130,682 581,633 5,487 14,621 61,315 98,973
-----------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (7,425) (9,986) -- -- (2,430) (961)
Net realized gain on investments (161,078) (22,820) (9,083) (2,874) (53,755) (7,693)
-----------------------------------------------------------------------------------
Total distributions to shareholders (168,503) (32,806) (9,083) (2,874) (56,185) (8,654)
-----------------------------------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold in initial
capitalization of the Fund (Note A) -- -- -- -- -- --
Proceeds from shares sold to the public 444,834 743,301 12,286 18,421 310,565 344,075
Proceeds from reinvestment of dividends
and distributions 168,095 32,801 9,082 2,874 54,739 8,113
Payments for shares redeemed (351,038) (395,265) (11,556) (30,177) (58,402) (100,384)
-----------------------------------------------------------------------------------
Net increase (decrease) from Trust share
transactions 261,891 380,837 9,812 (8,882) 306,902 251,804
-----------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 224,070 929,664 6,216 2,865 312,032 342,123
NET ASSETS:
Beginning of period 2,269,752 1,340,088 51,063 48,198 470,574 128,451
-----------------------------------------------------------------------------------
End of period $2,493,822 $2,269,752 $ 57,279 $ 51,063 $782,606 $ 470,574
-----------------------------------------------------------------------------------
Accumulated undistributed net investment
income (loss) at end of period $ 2,062 $ 2,314 $ (125) $ -- $ 695 $ 1,364
-----------------------------------------------------------------------------------
NUMBER OF TRUST SHARES:
Sold in initial capitalization of the
Fund (Note A) -- -- -- -- -- --
Sold to the public 23,523 43,802 820 1,312 16,944 20,951
Issued on reinvestment of dividends and
distributions 9,912 2,055 695 226 3,207 538
Redeemed (19,082) (23,424) (787) (2,257) (3,152) (6,046)
-----------------------------------------------------------------------------------
Net increase (decrease) in shares
outstanding 14,353 22,433 728 (719) 16,999 15,443
-----------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-7
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS(Cont'd)
Neuberger&Berman
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY ASSETS
SOCIALLY
RESPONSIVE
TRUST
Period from
March 3, 1997
Six Months (Commencement
Ended of Operations)
February 28, to
1998 August 31,
(000'S OMITTED) (UNAUDITED) 1997
--------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 12 $ 1
Net realized gain (loss) on investments from corresponding
Portfolio (Note A) 98 69
Change in net unrealized appreciation of investments from
corresponding Portfolio (Note A) 1,106 462
--------------------------------
Net increase in net assets resulting from operations 1,216 532
--------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (8) --
Net realized gain on investments (83) --
--------------------------------
Total distributions to shareholders (91) --
--------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold in initial capitalization of the Fund
(Note A) -- 100
Proceeds from shares sold to the public 3,100 7,261
Proceeds from reinvestment of dividends and distributions 90 --
Payments for shares redeemed (628) (161)
--------------------------------
Net increase (decrease) from Trust share transactions 2,562 7,200
--------------------------------
NET INCREASE IN NET ASSETS 3,687 7,732
NET ASSETS:
Beginning of period 7,732 --
--------------------------------
End of period $11,419 $7,732
--------------------------------
Accumulated undistributed net investment income (loss) at end of
period $ 5 $ 1
--------------------------------
NUMBER OF TRUST SHARES:
Sold in initial capitalization of the Fund (Note A) -- 10
Sold to the public 257 680
Issued on reinvestment of dividends and distributions 8 --
Redeemed (53) (14)
--------------------------------
Net increase (decrease) in shares outstanding 212 676
--------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-8
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Neuberger&Berman February 28, 1998 (Unaudited)
- ----------------------------------------------------------------------
Equity Trust and Equity Assets
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1) GENERAL: Neuberger&Berman Focus Trust-Registered Trademark- ("Focus"),
Neuberger&Berman Genesis Trust-Registered Trademark- ("Genesis"),
Neuberger&Berman Guardian Trust-SM- ("Guardian"), Neuberger&Berman Manhattan
Trust-Registered Trademark- ("Manhattan"), and Neuberger& Berman Partners
Trust-Registered Trademark- ("Partners") are separate operating series of
Neuberger&Berman Equity Trust ("Equity Trust"), a Delaware business trust
organized pursuant to a Trust Instrument dated May 6, 1993. Neuberger& Berman
Socially Responsive Trust-SM- ("Socially Responsive") is a separate operating
series of Neuberger&Berman Equity Assets ("Equity Assets"), a Delaware
business trust organized pursuant to a Trust Instrument dated October 18,
1993. These six aforementioned series are collectively referred to as the
"Funds." Equity Trust and Equity Assets (collectively, the "Trusts") are
registered as diversified, open-end management investment companies under the
Investment Company Act of 1940, as amended (the "1940 Act"), and their shares
are registered under the Securities Act of 1933, as amended (the "1933 Act").
Socially Responsive had no operations until March 3, 1997, other than matters
relating to its organization and registration as a diversified, open-end
management investment company under the 1940 Act, and registration of its
shares under the 1933 Act, and the sale and issuance of 10,000 shares to
Neuberger&Berman Management Incorporated ("N&B Management") on October 26,
1994. The trustees of the Trusts 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 (14.17%, 33.46%, 28.36%, 8.61%, 18.00%, and 3.58%, for Focus,
Genesis, Guardian, Manhattan, Partners, and Socially Responsive,
respectively, at February 28, 1998). 70.49% of Neuberger&Berman Socially
Responsive Portfolio is held by another regulated investment company, which
has only a single shareholder and is sponsored by N&B Management. The
performance of each Fund is directly affected by the performance of its
corresponding Portfolio. The financial statements of each
B-9
<PAGE>
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 Trusts are treated as a separate
entity for Federal income tax purposes. It is the policy of each Fund to
continue to qualify as a regulated investment company by complying with the
provisions available to certain investment companies, as defined in
applicable sections of the Internal Revenue Code, and to make distributions
of investment company taxable income and net capital gains (after reduction
for any amounts available for Federal income tax purposes as capital loss
carryforwards) sufficient to relieve it from all, or substantially all,
Federal income taxes. Accordingly, each Fund paid no Federal income taxes and
no provision for Federal income taxes was required.
4) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Each Fund earns income, net of
Portfolio expenses, daily on its investment in its corresponding Portfolio.
Income dividends and distributions from net realized capital gains, if any,
are normally distributed in December. Guardian generally distributes
substantially all of its net investment income, if any, at the end of each
calendar quarter. Income dividends and capital gain distributions to
shareholders are recorded on the ex-dividend date. To the extent each Fund's
net realized capital gains, if any, can be offset by capital loss
carryforwards, 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, 1998, the unamortized balance of such
expenses amounted to $4,887, $4,779, $4,141, $4,886, $4,888, and $90,992, for
Focus, Genesis, Guardian, Manhattan, Partners, and Socially Responsive,
respectively.
6) EXPENSE ALLOCATION: Each Fund bears all costs of its operations. Expenses
incurred by the Trusts with respect to any two or more funds are allocated in
B-10
<PAGE>
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 N&B Management as its administrator under an Administration
Agreement ("Agreement"). Pursuant to this Agreement each Fund pays N&B
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).
N&B Management has voluntarily undertaken (subject to termination upon 60
days' prior written notice) to reimburse each Fund for its operating expenses
plus its pro rata portion of its corresponding Portfolio's operating expenses
(including the fees payable to N&B Management but excluding interest, taxes,
brokerage commissions, and extraordinary expenses) which, in the aggregate,
exceed by more than .10% the expense ratio per annum of a certain other mutual
fund ("Sister Fund") which also invests in the same Portfolio. For the six
months ended February 28, 1998, expenses (net of reimbursement) incurred by
Focus, Genesis, Guardian, Manhattan, Partners, and Socially Responsive amounted
to .93%, 1.16%, .87%, 1.05%, .89%, and 1.27%, respectively, of average daily net
assets on an annualized basis.
All of the capital stock of N&B Management is owned by individuals who are
also principals of Neuberger&Berman, LLC ("Neuberger"), a member firm of The New
York Stock Exchange and sub-adviser to each Portfolio. Several individuals who
are officers and/or trustees of the Trusts are also principals of Neuberger
and/or officers and/or directors of N&B Management.
Each Fund also has a distribution agreement with N&B Management. N&B
Management receives no compensation therefor and no commissions for sales or
redemptions of shares of beneficial interest of each Fund.
Each Portfolio has an expense offset arrangement in connection with its
custodian contract. The impact of this arrangement, reflected in the Statements
of Operations under the caption Expenses from corresponding Portfolio, was a
reduction of $53, $685, $107, $20, $49, and $4, for Focus, Genesis, Guardian,
Manhattan, Partners, and Socially Responsive, respectively.
B-11
<PAGE>
NOTE C -- INVESTMENT TRANSACTIONS:
During the six months ended February 28, 1998, additions and reductions in
each Fund's investment in its corresponding Portfolio were as follows:
<TABLE>
<CAPTION>
ADDITIONS REDUCTIONS
- --------------------------------------------------------------------------------
<S> <C> <C>
FOCUS $ 100,618,850 $ 29,890,333
GENESIS 421,138,047 44,275,463
GUARDIAN 250,956,386 171,203,997
MANHATTAN 9,012,630 8,546,015
PARTNERS 252,830,334 6,349,924
SOCIALLY RESPONSIVE 3,611,415 1,239,673
</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.
B-12
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Focus Trust(1)
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>
Six Months Ended Period from
February 28, August 30, 1993(2)
1998 Year Ended August 31, to August 31,
(UNAUDITED) 1997 1996 1995 1994 1993
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $21.27 $14.83 $14.41 $11.36 $10.03 $10.00
---------------------------------------------------------------------
Income From Investment Operations
Net Investment Income .01 .01 .06 .05 .05 --
Net Gains or Losses on Securities (both realized
and unrealized) 1.85 6.49 .46 3.05 1.31 .03
---------------------------------------------------------------------
Total From Investment Operations 1.86 6.50 .52 3.10 1.36 .03
---------------------------------------------------------------------
Less Distributions
Dividends (from net investment income) (.01) (.06) (.02) (.05) (.02) --
Distributions (from net capital gains) (.49) -- (.08) -- (.01) --
---------------------------------------------------------------------
Total Distributions (.50) (.06) (.10) (.05) (.03) --
---------------------------------------------------------------------
Net Asset Value, End of Period $22.63 $21.27 $14.83 $14.41 $11.36 $10.03
---------------------------------------------------------------------
Total Return(3) +9.06%(4) +43.93% +3.62% +27.44% +13.58% +0.30%(4)
---------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in millions) $249.9 $160.9 $ 55.6 $ 14.5 $ 1.6 $ --
---------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets(5) .93%(6) .96% .99% -- -- --
---------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets(7) .93%(6) .96% .99% .96% .85% .92%(6)
---------------------------------------------------------------------
Ratio of Net Investment Income to Average Net
Assets(7) .14%(6) .11% .63% .67% .92% .05%(6)
---------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-13
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Genesis Trust
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>
Six Months Ended Period from
February 28, August 26, 1993(2)
1998 Year Ended August 31, to August 31,
(UNAUDITED) 1997 1996 1995 1994 1993
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $21.45 $ 14.99 $ 12.65 $ 10.59 $ 10.05 $10.00
---------------------------------------------------------------------------------
Income From Investment Operations
Net Investment Income (Loss) .04 (.01) (.02) (.01) (.01) --
Net Gains or Losses on Securities (both
realized and unrealized) 1.16 6.61 2.68 2.08 .56 .05
---------------------------------------------------------------------------------
Total From Investment Operations 1.20 6.60 2.66 2.07 .55 .05
---------------------------------------------------------------------------------
Less Distributions
Distributions (from net capital gains) (.15) (.14) (.32) (.01) (.01) --
---------------------------------------------------------------------------------
Net Asset Value, End of Period $22.50 $ 21.45 $ 14.99 $ 12.65 $ 10.59 $10.05
---------------------------------------------------------------------------------
Total Return(3) +5.62%(4) +44.31% +21.44% +19.51% +5.47% +0.50%(4)
---------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in millions) $782.7 $ 382.7 $ 65.2 $ 30.6 $ 3.1 $ --
---------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net
Assets(5) 1.16%(6) 1.26% 1.38% -- -- --
---------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net
Assets(7) 1.16%(6) 1.25% 1.38% 1.42% 1.36% 1.51%(6)
---------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to
Average Net Assets(7) .43%(6) (.16%) (.27%) (.24%) (.21%) (.44%)(6)
---------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-14
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Guardian Trust
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>
Six Months Ended Period from
February 28, August 3, 1993(2)
1998 Year Ended August 31, to August 31,
(UNAUDITED) 1997 1996 1995 1994 1993
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 19.47 $ 14.24 $ 13.83 $ 11.27 $ 10.27 $10.00
-----------------------------------------------------------------------------------------
Income From Investment Operations
Net Investment Income .06 .08 .16 .13 .09 --
Net Gains or Losses on Securities
(both realized and unrealized) .87 5.48 .55 2.55 .99 .27
-----------------------------------------------------------------------------------------
Total From Investment Operations .93 5.56 .71 2.68 1.08 .27
-----------------------------------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.06) (.10) (.14) (.12) (.07) --
Distributions (from net capital
gains) (1.29) (.23) (.16) -- (.01) --
-----------------------------------------------------------------------------------------
Total Distributions (1.35) (.33) (.30) (.12) (.08) --
-----------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 19.05 $ 19.47 $ 14.24 $ 13.83 $ 11.27 $10.27
-----------------------------------------------------------------------------------------
Total Return(3) +5.63%(4) +39.56% +5.19% +24.01% +10.57% +2.70%(4)
-----------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $2,493.8 $ 2,269.8 $ 1,340.1 $ 683.1 $ 75.8 $ --
-----------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(5) .87%(6) .88% .92% -- -- --
-----------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net
Assets .87%(6) .88% .92%(7) .90%(7) .80%(7) .81%(6)(7)
-----------------------------------------------------------------------------------------
Ratio of Net Investment Income to
Average Net Assets .61%(6) .47% 1.26%(7) 1.35%(7) 1.50%(7) 1.00%(6)(7)
-----------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-15
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Manhattan Trust
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>
Six Months Ended Period from
February 28, August 30, 1993(2)
1998 Year Ended August 31, to August 31,
(UNAUDITED) 1997 1996 1995 1994 1993
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $15.77 $ 12.18 $ 12.99 $ 10.37 $ 10.01 $10.00
---------------------------------------------------------------------------------
Income From Investment Operations
Net Investment Income (Loss) (.03) (.04) (.04) -- .01 --
Net Gains or Losses on Securities
(both realized and unrealized) 1.40 4.55 (.34) 2.67 .36 .01
---------------------------------------------------------------------------------
Total From Investment Operations 1.37 4.51 (.38) 2.67 .37 .01
---------------------------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) -- -- -- (.01) (.01) --
Distributions (from net capital
gains) (2.69) (.92) (.43) (.04) -- --
---------------------------------------------------------------------------------
Total Distributions (2.69) (.92) (.43) (.05) (.01) --
---------------------------------------------------------------------------------
Net Asset Value, End of Period $14.45 $ 15.77 $ 12.18 $ 12.99 $ 10.37 $10.01
---------------------------------------------------------------------------------
Total Return(3) +10.49%(4) +38.84% -2.98% +25.90% +3.70% +0.10%(4)
---------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $ 57.3 $ 51.1 $ 48.2 $ 35.6 $ 12.1 $ --
---------------------------------------------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(5) 1.05%(6) 1.09% 1.08% -- -- --
---------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net
Assets(7) 1.05%(6) 1.09% 1.08% 1.06% .96% 1.04%(6)
---------------------------------------------------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets(7) (.48%)(6) (.30%) (.38%) (.03%) .16% 5.48%(6)
---------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-16
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Partners Trust
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 Months Ended August 30,
February 28, 1993(2)
1998 Year Ended August 31, to August 31,
(UNAUDITED) 1997 1996 1995 1994 1993
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $18.80 $ 13.39 $ 12.68 $ 10.54 $ 10.01 $10.00
--------------------------------------------------------------------------------
Income From Investment Operations
Net Investment Income .04 .07 .08 .05 .03 --
Net Gains or Losses on Securities (both
realized and unrealized) 1.63 6.06 1.59 2.19 .53 .01
--------------------------------------------------------------------------------
Total From Investment Operations 1.67 6.13 1.67 2.24 .56 .01
--------------------------------------------------------------------------------
Less Distributions
Dividends (from net investment income) (.08) (.08) (.07) (.02) (.01) --
Distributions (from net capital gains) (1.77) (.64) (.89) (.08) (.02) --
--------------------------------------------------------------------------------
Total Distributions (1.85) (.72) (.96) (.10) (.03) --
--------------------------------------------------------------------------------
Net Asset Value, End of Period $18.62 $ 18.80 $ 13.39 $ 12.68 $ 10.54 $10.01
--------------------------------------------------------------------------------
Total Return(3) +9.78%(4) +47.11% +13.76% +21.52% +5.61% +0.10%(4)
--------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in millions) $782.6 $ 470.6 $ 128.5 $ 61.3 $ 4.7 $ --
--------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net
Assets(5) .89%(6) .91% .94% -- -- --
--------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net
Assets(7) .89%(6) .91% .94% .92% .81% .84%(6)
--------------------------------------------------------------------------------
Ratio of Net Investment Income to Average
Net Assets(7) .61%(6) .64% .84% .81% .47% 2.65%(6)
--------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-17
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Socially Responsive Trust
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>
Six Months Ended Period from
February 28, March 3, 1997(2)
1998 to August 31,
(UNAUDITED) 1997
-----------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period $11.43 $10.00
-----------------------------------
Income From Investment Operations
Net Investment Income .01 --
Net Gains or Losses on Securities (both realized and
unrealized) 1.53 1.43
-----------------------------------
Total From Investment Operations 1.54 1.43
-----------------------------------
Less Distributions
Dividends (from net investment income) (.01) --
Distributions (from net capital gains) (.10) --
-----------------------------------
Total Distributions (.11) --
-----------------------------------
Net Asset Value, End of Period $12.86 $11.43
-----------------------------------
Total Return(3)(4) +13.55% +14.30%
-----------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in millions) $ 11.4 $ 7.7
-----------------------------------
Ratio of Gross Expenses to Average Net Assets(5)(6) 1.27% 1.58%
-----------------------------------
Ratio of Net Expenses to Average Net Assets(6)(8) 1.27% 1.58%
-----------------------------------
Ratio of Net Investment Income to Average Net
Assets(6)(8) .27% .06%
-----------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-18
<PAGE>
NOTES TO FINANCIAL HIGHLIGHTS
Neuberger&Berman February 28, 1998 (Unaudited)
- ----------------------------------------------------------------------
Equity Trust and Equity Assets
1) Prior to January 1, 1995, its name was Neuberger&Berman Selected Sectors
Trust.
2) The date investment operations commenced.
3) Total return based on per share net asset value reflects the effects of
changes in net asset value on the performance of 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 N&B Management had not reimbursed certain expenses. In
addition, for Genesis, total return would have been lower if N&B Management
had not waived a portion of the management fee.
4) Not annualized.
5) For fiscal periods ending after September 1, 1995, the Fund is required to
calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements. These ratios include
reimbursement of expenses. In addition, for Genesis, these ratios include
management fee waiver.
6) Annualized.
7) After reimbursement of expenses by N&B Management as described in Note B of
Notes to Financial Statements. Had N&B Management not undertaken such action
the annualized ratios of net expenses and net investment income (loss) to
average daily net assets would have been:
<TABLE>
<CAPTION>
Six Months Period from
Ended August 30, 1993
February 28, Year Ended August 31, to August 31,
FOCUS 1998 1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Expenses .99% 1.06% 1.27% 2.50% 2.50% 2.50%
------------------------------------------------------------
Net Investment Income (Loss) .08% .01% .35% (.87%) (.73%) (1.53%)
------------------------------------------------------------
</TABLE>
B-19
<PAGE>
<TABLE>
<CAPTION>
Period from
August 3, 1993
Year Ended August 31, to August 31,
GUARDIAN 1996 1995 1994 1993
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Expenses .92% .96% 1.52% 2.50%
-----------------------------------------
Net Investment Income (Loss) 1.26% 1.29% .78% (.69%)
-----------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Six Months Period from
Ended August 30, 1993
February 28, Year Ended August 31, to August 31,
MANHATTAN 1998 1997 1996 1995 1994 1993
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Expenses 1.16% 1.23% 1.25% 1.46% 2.50% 2.50%
---------------------------------------------------------------
Net Investment Income (Loss) (.59%) (.44%) (.55%) (.43%) (1.38%) 4.02%
---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Six Months Period from
Ended August 30, 1993
February 28, Year Ended August 31, to August 31,
PARTNERS 1998 1997 1996 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Expenses .92% .94% 1.06% 1.24% 2.50% 2.50%
-----------------------------------------------------------
Net Investment Income (Loss) .58% .61% .72% .49% (1.22%) .99%
-----------------------------------------------------------
</TABLE>
After reimbursement of expenses by N&B Management as described in Note B
of Notes to Financial Statements and/or the waiver of a portion of the
management fee as described in Note B of Notes to Financial Statements of
Neuberger&Berman Genesis Portfolio. Had N&B Management not undertaken such
action the annualized ratios of net expenses and net investment income (loss)
to average daily net assets would have been:
<TABLE>
<CAPTION>
Six Months Period from
Ended August 26, 1993
February 28, Year Ended August 31, to August 31,
GENESIS 1998 1997 1996 1995 1994 1993
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Expenses 1.21% 1.35% 1.65% 1.78% 2.50% 2.50%
---------------------------------------------------------------
Net Investment Income (Loss) .38% (.26%) (.54%) (.60%) (1.35%) (1.43%)
---------------------------------------------------------------
</TABLE>
8) After reimbursement of expenses by N&B Management as described in Note B of
Notes to Financial Statements. Had N&B Management not undertaken such action
the annualized ratios of net expenses and net investment income to average
daily net assets would have been higher and lower, respectively.
B-20
<PAGE>
(This page has been left blank intentionally.)
B-21
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Focus Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Compaq Computer 4.9%
2. Chase Manhattan 4.8%
3. Travelers Group 4.5%
4. Countrywide Credit Industries 4.3%
5. CITICORP 4.2%
6. Capital One Financial 3.6%
7. General Motors 3.5%
8. Fannie Mae 3.4%
9. 3Com Corp. 3.4%
10. Furniture Brands International 3.1%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ------------
<C> <S> <C>
COMMON STOCKS (92.9%)
AUTOMOTIVE (4.9%)
183,100 Cabot Corp. $ 6,454
883,500 General Motors 60,907
503,400 Hertz Corp. 19,947
------------
87,308
------------
FINANCIAL SERVICES (45.8%)
209,000 ACE Ltd. 20,665
964,155 ADVANTA Corp. Class A 22,718 (2)
643,500 Banc One 36,358
383,000 BankBoston Corp. 38,180
940,000 Capital One Financial 63,156
680,000 Chase Manhattan 84,363
555,000 CITICORP 73,538
1,715,000 Countrywide Credit Industries 76,210
940,000 Fannie Mae 59,984
700,000 Freddie Mac 33,075
247,000 Hartford Financial Services Group 24,268
672,500 Merrill Lynch 48,126
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ------------
<C> <S> <C>
700,000 Morgan Stanley, Dean Witter, Discover $ 48,781
640,800 Nationwide Financial Services 28,195
525,600 PartnerRe Ltd. 25,623
177,100 St. Paul Cos. 15,695
107,000 Transamerica Corp. 12,459
1,427,000 Travelers Group 79,555
395,000 Travelers Property Casualty 16,195
------------
807,144
------------
HEALTH CARE (8.0%)
1,857,900 Foundation Health Systems 51,441
940,000 Sierra Health Services 34,427 (2)
934,900 Wellpoint Health Networks 54,633
------------
140,501
------------
HEAVY INDUSTRY (5.2%)
1,330,000 AGCO Corp. 37,406
1,000,000 AK Steel Holding 18,688
1,030,000 DT Industries 36,307 (2)
------------
92,401
------------
RETAIL (9.4%)
1,200,000 Barnes & Noble 42,150
2,014,300 Furniture Brands International 55,142
1,074,000 Neiman-Marcus Group 39,939
420,000 Payless ShoeSource 28,245
------------
165,476
------------
TECHNOLOGY (17.8%)
1,665,000 3Com Corp. 59,524
700,000 Applied Materials 25,769 (3)
525,000 Atmel Corp. 8,531
</TABLE>
B-22
<PAGE>
February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Focus Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ------------
<C> <S> <C>
2,700,000 Compaq Computer $ 86,569
120,000 Credence Systems 4,005
580,000 KLA-Tencor 26,771
964,500 National Semiconductor 23,027
90,000 Rational Software 1,215
1,300,000 Silicon Valley Group 35,425
533,000 Teradyne, Inc. 25,151
320,000 Texas Instruments 18,520
------------
314,507
------------
TRANSPORTATION (1.8%)
644,000 Continental Airlines Class B 32,361
------------
TOTAL COMMON STOCKS (COST $952,034) 1,639,698
------------
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- ---------- ------------
<C> <S> <C>
U.S. TREASURY SECURITIES (2.7%)
$47,880,000 U.S. Treasury Bills, 4.97% - 5.045%, due
3/5/98 & 4/9/98 (COST $47,749) $ 47,756
------------
SHORT-TERM CORPORATE NOTES (3.9%)
68,140,000 General Electric Capital Corp., 5.50%, due
3/2/98 (COST $68,140) 68,140 (4)
------------
TOTAL INVESTMENTS (99.5%) (COST $1,067,923) 1,755,594 (5)
Cash, receivables and other assets, less
liabilities (0.5%) 8,292
------------
TOTAL NET ASSETS (100.0%) $ 1,763,886
------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
B-23
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Genesis Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Thiokol Corp. 1.9%
2. Bank United 1.8%
3. Webster Financial 1.6%
4. AAR Corp. 1.6%
5. Pride International 1.4%
6. Trigon Healthcare 1.4%
7. National-Oilwell 1.3%
8. Richfood Holdings 1.2%
9. AptarGroup Inc. 1.2%
10. Crescent Real Estate Equities 1.1%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ------------ -------------
<C> <S> <C>
COMMON STOCKS (86.5%)
AEROSPACE (6.5%)
1,209,750 AAR Corp. $ 36,746
1,194,100 Aviall Inc. 17,165(2)
259,100 BE Aerospace 7,627
468,300 DONCASTERS PLC ADR 11,708
199,900 Ducommun Inc. 6,434
210,200 Hexcel Corp. 5,531
344,200 Moog, Inc. Class A 12,133
257,300 Orbital Sciences 9,810
463,500 Thiokol Corp. 44,322
-------------
151,476
-------------
AUTOMOTIVE (0.4%)
384,000 Donaldson Co. 9,144
-------------
BANKING & FINANCIAL (12.8%)
237,775 Associated Banc-Corp 12,453
874,900 Bank United 41,230
253,612 Charter One Financial 15,367
196,900 Colonial BancGroup 6,695
121,485 Commerce Bancorp 5,786
321,100 Commercial Federal 11,359
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ------------ -------------
<C> <S> <C>
302,800 Community First Bankshares $ 16,048
328,100 Cullen/Frost Bankers 18,681
211,600 Dime Community Bancorp 5,316
186,700 First Commerce 14,749
281,300 FirstFed Financial 11,358
232,200 Imperial Bancorp 7,663
248,500 Long Island Bancorp 14,957
78,300 North Fork Bancorp 2,677
142,700 Ocean Financial 5,030
82,877 ONBANCorp, Inc. 6,019
511,300 Peoples Heritage Financial Group 23,807
169,175 Queens County Bancorp 6,725
227,600 Reliance Bancorp 8,080
237,700 Sovereign Bancorp 4,605
687,675 Sterling Bancshares 10,315
307,750 Texas Regional Bancshares 10,656
592,600 Webster Financial 38,075
-------------
297,651
-------------
BASIC MATERIALS (1.9%)
101,300 Lone Star Industries 6,103
198,800 Lone Star Technologies 6,163
244,500 Medusa Corp. 11,568
361,600 Texas Industries 20,430
-------------
44,264
-------------
BUILDING, CONSTRUCTION & REFURNISHING (0.8%)
825,600 Apogee Enterprises 10,681
73,000 Lincoln Electric Class A 2,774
95,000 Simpson Manufacturing 3,907
-------------
17,362
-------------
</TABLE>
B-24
<PAGE>
February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Genesis Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ------------ -------------
<C> <S> <C>
CHEMICALS (0.7%)
382,500 Lawter International $ 4,471
201,000 Lilly Industries 4,045
297,000 Lyondell Petrochemical 8,093
-------------
16,609
-------------
CONSUMER CYCLICALS (0.7%)
466,600 Coachmen Industries 13,327
67,800 Monaco Coach 2,678
-------------
16,005
-------------
CONSUMER PRODUCTS & SERVICES (3.9%)
243,791 Block Drug 10,270
138,800 Bush Boake Allen 4,476
477,400 First Brands 12,293
134,100 Libbey Inc. 4,945
579,500 Prime Hospitality 11,011
1,020,800 Richfood Holdings 29,029
273,800 Stewart Enterprises 12,903
166,900 The First Years 4,485
-------------
89,412
-------------
DEFENSE (1.7%)
271,700 Alliant Techsystems 17,066
660,000 Newport News Shipbuilding 17,985
100,000 Primex Technologies 4,325
-------------
39,376
-------------
DIAGNOSTIC EQUIPMENT (0.9%)
793,100 ADAC Laboratories 21,116
-------------
ELECTRONICS (2.0%)
224,800 Continental Circuits 5,311
534,100 Dallas Semiconductor 25,370
25,000 Kent Electronics 558
340,900 SCI Systems 15,340
-------------
46,579
-------------
ENERGY (2.4%)
509,500 Apache Corp. 17,323
410,000 Cabot Oil & Gas 8,610
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ------------ -------------
<C> <S> <C>
701,900 Coho Energy $ 5,571
182,700 Cross Timbers Oil 2,923
54,200 Ocean Energy 2,534
636,990 Swift Energy 11,426
17,994 Titan Exploration 130
765,800 Unit Corp. 6,079
-------------
54,596
-------------
HEALTH CARE (8.0%)
511,000 Acuson Corp. 9,390
92,500 Arrow International 3,619
634,000 Ballard Medical Products 15,929
252,900 CompDent Corp. 3,509
492,200 CONMED Corp. 10,798
445,400 DePuy, Inc. 11,998
871,500 Haemonetics Corp. 14,543
195,877 Henry Schein 7,982
315,000 John Alden Financial 7,068
443,550 Patterson Dental 13,417
370,000 Physio-Control International 6,984
149,100 R.P. Scherer 9,067
154,100 Sofamor Danek Group 11,596
192,500 STAAR Surgical 3,128
1,039,800 Trigon Healthcare 32,234
475,600 Universal Health Services Class B 24,850
-------------
186,112
-------------
INDUSTRIAL & COMMERCIAL PRODUCTS & SERVICES (5.4%)
115,000 Alamo Group 2,084
1,003,800 BMC Industries 19,511
118,700 Dionex Corp. 6,929
1,380,900 Hussmann International 20,972
612,200 Kaydon Corp. 22,766
332,000 NN Ball & Roller 3,528
281,800 Pameco Corp. 4,650(2)
162,000 Pentair, Inc. 6,672
96,600 Roper Industries 2,808
547,200 SOS Staffing Services 11,218
233,600 W.H. Brady 7,709
</TABLE>
B-25
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Genesis Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ------------ -------------
<C> <S> <C>
389,100 Wallace Computer Services $ 14,154
180,750 Woodhead Industries 3,434
-------------
126,435
-------------
INSURANCE (1.9%)
535,150 Allied Group 16,857
290,200 FBL Financial Group 13,494
81,000 Orion Capital 3,954
229,000 Penn-America Group 5,238
150,700 Trenwick Group 5,501
-------------
45,044
-------------
MACHINERY & EQUIPMENT (0.9%)
178,800 Allied Products 4,101
27,900 Gardner Denver Machinery 748
683,300 Stewart & Stevenson Services 16,698
-------------
21,547
-------------
OFFICE EQUIPMENT (1.1%)
415,000 United Stationers 24,848
-------------
OIL SERVICES (8.2%)
50,600 Bayard Drilling Technologies 651
208,200 Cal Dive International 5,621
193,800 Cliffs Drilling 7,510
313,800 Dawson Production Services 3,785
373,500 Friede Goldman International 11,345
630,400 Global Industries 10,874
226,200 Hvide Marine 4,298
405,000 IRI International 4,784
544,500 Nabors Industries 12,455
1,103,091 National-Oilwell 30,887
480,700 Oceaneering International 7,962
742,500 Offshore Logistics 13,087
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ------------ -------------
<C> <S> <C>
1,463,400 Pride International $ 33,384
367,000 R&B Falcon 9,726
287,400 Smith International 15,304
224,400 Trico Marine Services 4,180
192,600 Tuboscope Inc. 3,768
393,200 UTI Energy 5,357
344,800 Willbros Group 5,538
-------------
190,516
-------------
PACKING & CONTAINERS (1.2%)
491,200 AptarGroup Inc. 28,336
-------------
PUBLISHING & BROADCASTING (0.3%)
85,666 Pulitzer Publishing 7,196
-------------
REAL ESTATE/REITS (5.7%)
570,900 CCA Prison Realty Trust 25,119
26,800 Crescent Operating 533
749,500 Crescent Real Estate Equities 25,530
335,000 ElderTrust 6,072(2)
495,000 Health Care Property Investors 18,377
297,000 Imperial Credit Commercial Mortgage
Investment 4,566
140,900 National Health Investors 5,777
339,700 Nationwide Health Properties 8,981
162,800 OMEGA Healthcare Investors 6,319
798,100 Prime Retail 11,622
415,300 SL Green Realty 11,031
540,000 Sunstone Hotel Investors 8,640
-------------
132,567
-------------
RESTAURANTS (0.6%)
706,800 Brinker International 14,754
-------------
</TABLE>
B-26
<PAGE>
February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Genesis Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ------------ -------------
<C> <S> <C>
RETAILING (1.0%)
354,875 99 Cents Only Stores $ 13,663
517,900 Micro Warehouse 7,121
178,500 Schultz Sav-O Stores 2,789
-------------
23,573
-------------
TECHNOLOGY (5.3%)
242,800 Analysts International 8,589
1,072,600 Auspex Systems 10,257
202,600 Black Box 7,243
2,036,300 Borland International 18,963(2)
517,600 CACI International 11,064
1,124,100 Data General 23,185
162,500 Eltron International 3,494
264,900 Emulex Corp. 3,146
483,200 Methode Electronics Class A 6,825
1,027,400 Reynolds & Reynolds 21,832
328,400 Zebra Technologies 9,482
-------------
124,080
-------------
TEXTILES & APPAREL (0.2%)
124,300 St. John Knits 5,252
-------------
TRANSPORTATION, SHIPPING & FREIGHT (0.2%)
78,375 Air Express International 2,195
213,600 Maritrans Inc. 2,136
-------------
4,331
-------------
UTILITIES, ELECTRIC & GAS (11.8%)
582,200 AGL Resources 11,826
183,200 Aquila Gas Pipeline 2,210
248,600 Atmos Energy 7,132
246,500 Central Hudson Gas & Electric 10,014
227,600 Connecticut Energy 6,714
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ------------ -------------
<C> <S> <C>
124,300 Eastern Enterprises $ 5,508
509,800 Eastern Utilities Associates 12,203
400,500 Enova Corp. 10,213
695,600 Illinova Corp. 19,303
628,800 Montana Power 20,122
336,200 National Fuel Gas 15,675
618,200 Nevada Power 15,339
193,300 NICOR Inc. 7,949
48,500 Northwest Natural Gas 1,367
289,800 NUI Corp. 7,662
383,600 ONEOK, Inc. 13,426
200,000 Orange & Rockland Utilities 8,787
66,100 Otter Tail Power 2,504
529,900 Public Service Co. of New Mexico 12,353
475,100 Rochester Gas & Electric 14,817
376,100 Sierra Pacific Resources 13,493
390,000 UtiliCorp United 14,040
457,400 Washington Gas Light 12,321
483,600 Washington Water Power 11,062
152,300 WICOR, Inc. 7,282
249,000 WPL Holdings 7,937
140,000 WPS Resources 4,550
-------------
275,809
-------------
TOTAL COMMON STOCKS (COST $1,700,109) 2,013,990
-------------
PREFERRED STOCKS (0.1%)
60,000 Hvide Capital Trust, Cv., 6.50% (COST $3,000) 2,948(6)
-------------
</TABLE>
B-27
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Genesis Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- ------------ -------------
<C> <S> <C>
U.S. TREASURY SECURITIES (12.3%)
$287,240,000 U.S. Treasury Bills,
4.90% - 5.045%,
due 3/5/98 -
4/9/98 (COST $286,585) $ 286,628
-------------
SHORT-TERM CORPORATE NOTES (2.2%)
51,040,000 General Electric Capital Corp., 5.50%, due
3/2/98 (COST $51,040) 51,040(4)
-------------
TOTAL INVESTMENTS (101.1%) (COST $2,040,734) 2,354,606(5)
Liabilities, less cash, receivables and other
assets [(1.1%)] (24,479)
-------------
TOTAL NET ASSETS (100.0%) $2,330,127
-------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
B-28
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Guardian Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. General Motors 4.0%
2. Compaq Computer 3.9%
3. Chase Manhattan 3.5%
4. Travelers Group 3.5%
5. Capital One Financial 3.4%
6. CITICORP 3.2%
7. Foundation Health Systems 3.1%
8. Morgan Stanley, Dean Witter, 3.1%
Discover
9. Countrywide Credit Industries 3.0%
10. 3Com Corp. 2.9%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
COMMON STOCKS (93.0%)
AGRICULTURE (4.0%)
5,360,200 AGCO Corp. $ 150,756 (2)
3,107,200 IMC Global 118,656
904,600 Potash Corp. of Saskatchewan 80,848
------------
350,260
------------
AUTOMOTIVE (11.1%)
3,040,700 Cabot Corp. 107,185
2,793,250 Chrysler Corp. 108,762
4,893,900 Coltec Industries 127,547 (2)
5,048,000 General Motors 347,997
649,000 Lear Corp. 34,316
2,298,786 LucasVarity PLC ADR 86,492
1,784,800 Magna International Class A 107,980
2,452,081 Mark IV Industries 57,011
------------
977,290
------------
BANKING (12.3%)
4,026,069 Banc One 227,473
2,300,000 BankBoston Corp. 229,281
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
2,495,000 Chase Manhattan $ 309,536
2,095,000 CITICORP 277,588
1,008,000 First Tennessee National 32,130
------------
1,076,008
------------
CONSUMER GOODS & SERVICES (0.4%)
874,728 Cendant Corp. 32,802
------------
ENERGY (1.2%)
150,000 Cooper Cameron 8,044
1,275,000 Praxair, Inc. 60,961
1,125,000 Santa Fe International 39,867
------------
108,872
------------
FINANCIAL SERVICES (17.5%)
2,254,350 ADVANTA Corp. Class B 49,596
220,814 Alleghany Corp. 75,298
4,380,000 Capital One Financial 294,281 (2)
5,830,000 Countrywide Credit Industries 259,071 (2)
3,000,000 Fannie Mae 191,437 (3)
3,020,000 Freddie Mac 142,695
3,300,000 Merrill Lynch 236,156
3,897,700 Morgan Stanley, Dean Witter, Discover 271,621
510,000 Security Capital Industrial Trust 12,367
------------
1,532,522
------------
HEALTH CARE (10.8%)
2,855,000 Aetna Inc. 249,456
9,974,900 Foundation Health Systems 276,180 (2)
4,788,800 Humana Inc. 121,815
1,260,000 Mid Atlantic Medical Services 14,805
1,465,790 PacifiCare Health Systems Class B 91,612 (2)
326,600 Tenet Healthcare 12,186
</TABLE>
B-29
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Guardian Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
800,000 United Healthcare $ 48,550
2,326,396 Wellpoint Health Networks 135,949
------------
950,553
------------
HEAVY INDUSTRY (1.9%)
339,000 Harnischfeger Industries 11,992
537,100 Rockwell International 32,495
3,654,400 UCAR International 125,848 (2)
------------
170,335
------------
INDUSTRIAL GOODS & SERVICES (3.7%)
2,275,200 American Standard 101,246
1,150,000 U.S. Filter 39,028
2,251,500 USA Waste Services 93,719
1,700,700 USG Corp. 92,901
------------
326,894
------------
INSURANCE (6.1%)
1,640,000 Hartford Financial Services Group 161,130
95,000 St. Paul Cos. 8,419
163,100 Transamerica Corp. 18,991
451,050 Transatlantic Holdings 34,111
5,530,000 Travelers Group 308,298
------------
530,949
------------
MEDIA & ENTERTAINMENT (0.4%)
611,900 Harcourt General 33,043
------------
REAL ESTATE INVESTMENT TRUSTS (1.5%)
2,767,100 INMC Mortgage Holdings 72,809
1,542,000 Spieker Properties 61,198
------------
134,007
------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
RETAIL (1.7%)
2,739,600 Barnes & Noble $ 96,228
200,500 Sears, Roebuck 10,639
1,800,000 Woolworth Corp. 42,750
------------
149,617
------------
TECHNOLOGY (17.3%)
7,175,000 3Com Corp. 256,506
3,795,000 Applied Materials 139,703 (3)
2,950,000 Arrow Electronics 98,272
2,846,000 Atmel Corp. 46,247
1,280,000 Avnet, Inc. 81,600
1,046,600 Cabletron Systems 16,222
10,602,500 Compaq Computer 339,943 (3)
1,830,000 KLA-Tencor 84,466
3,265,000 National Semiconductor 77,952
3,150,000 Teradyne, Inc. 148,641
3,906,000 Texas Instruments 226,060
------------
1,515,612
------------
TRANSPORTATION (3.1%)
1,510,600 Continental Airlines Class B 75,908
930,270 Delta Air Lines 105,179
550,000 Union Pacific 28,050
926,000 US Airways Group 58,627
------------
267,764
------------
TOTAL COMMON STOCKS (COST $5,357,418) 8,156,528
------------
PREFERRED STOCKS (0.1%)
52,430 Aetna Inc., Ser. C, Cv., 6.25% 4,371
125,000 PacifiCare Health Systems, Ser. C, Cv., $1.00 3,031
------------
TOTAL PREFERRED STOCKS (COST $7,557) 7,402
------------
</TABLE>
B-30
<PAGE>
February 28, 1998 (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) $ 18,112(6)
------------
U.S. TREASURY SECURITIES (5.3%)
243,025,000 U.S. Treasury Bills,
4.96% - 5.06%,
due 3/5/98 -
4/9/98 242,724
15,000,000 U.S. Treasury Notes, 8.00%, due 5/15/01 16,045
100,000,000 U.S. Treasury Bonds, 6.25%, due 8/15/23 103,344
100,000,000 U.S. Treasury Bonds, 6.00%, due 2/15/26 100,156
------------
TOTAL U.S. TREASURY SECURITIES (COST
$449,843) 462,269
------------
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- ----------- ------------
<C> <S> <C>
SHORT-TERM CORPORATE NOTES (0.4%)
$38,310,000 General Electric Capital Corp., 5.50%, due
3/2/98 (COST $38,310) $ 38,310 (4)
------------
TOTAL INVESTMENTS (99.0%) (COST $5,868,125) 8,682,621 (5)
Cash, receivables and other assets, less
liabilities (1.0%) 91,203
------------
TOTAL NET ASSETS (100.0%) $ 8,773,824
------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
B-31
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Manhattan Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. General Nutrition 2.7%
2. CKE Restaurants 2.6%
3. Staples, Inc. 2.3%
4. Chancellor Media 2.3%
5. TJX Cos. 2.1%
6. Promus Hotel 2.0%
7. Network Associates 1.9%
8. Finova Group 1.9%
9. AES Corp. 1.8%
10. Omnicare, Inc. 1.8%
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
------------ ---------------
<C> <S> <C>
COMMON STOCKS (95.7%)
BASIC MATERIALS (1.9%)
169,300 Cytec Industries $ 8,274
318,100 NS Group 4,533
---------------
12,807
---------------
CAPITAL GOODS (7.1%)
562,900 Corporate Express 5,699
131,000 HON INDUSTRIES 8,613
809,400 Philip Services 7,740
107,200 Sanmina Corp. 8,543
167,100 U.S. Filter 5,671
266,900 USA Waste Services 11,110
---------------
47,376
---------------
COMMUNICATIONS (4.3%)
131,600 Advanced Fibre Communications 3,940
97,700 CIENA Corp. 4,097
229,500 NEXTLINK Communications 6,914
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
------------ ---------------
<C> <S> <C>
286,300 RSL Communications $ 7,480
128,200 Saville Systems Ireland ADR 6,009
---------------
28,440
---------------
CONSUMER CYCLICALS (20.2%)
130,800 American Skiing 1,962
335,000 Authentic Fitness 7,035
230,900 Costco Cos. 11,285
88,300 Dollar Thrifty 1,766
447,200 General Nutrition 17,776
302,600 Hayes Lemmerz International 9,816
233,350 Outdoor Systems 6,957
278,742 Promus Hotel 13,449
240,500 Robert Half International 10,883
734,700 Staples, Inc. 15,520
210,400 Sylvan Learning Systems 9,639
166,700 Tiffany & Co. 7,835
366,600 TJX Cos. 14,160
251,100 Viking Office Products 5,524
---------------
133,607
---------------
CONSUMER STAPLES (11.6%)
134,400 Cardinal Health 11,004
341,300 Chancellor Media 15,273
166,600 Cheesecake Factory 5,373
398,420 CKE Restaurants 16,908
322,300 Comcast Corp. Class A Special 11,281
135,500 Estee Lauder 7,927
139,900 Suiza Foods 9,067
---------------
76,833
---------------
ENERGY (5.5%)
241,200 BJ Services 8,291
152,800 Cooper Cameron 8,194
313,900 Noble Drilling 8,907
</TABLE>
B-32
<PAGE>
February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Manhattan Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
------------ ---------------
<C> <S> <C>
233,800 Oryx Energy $ 5,947
296,200 Seagull Energy 4,999
---------------
36,338
---------------
FINANCIAL SERVICES (14.1%)
100,900 ACE Ltd. 9,976
173,100 Bear Stearns 8,071
153,500 Equitable Cos. 8,030
160,000 EXEL Ltd. 10,590
225,500 Finova Group 12,402
187,600 FIRSTPLUS Financial Group 6,191
111,900 GreenPoint Financial 8,309
133,800 Northern Trust 10,177
147,300 State Street 9,105
237,200 SunAmerica, Inc. 10,748
---------------
93,599
---------------
HEALTH CARE (9.3%)
148,100 Alternative Living Services 5,072
96,300 Biogen, Inc. 4,249
168,100 Elan Corp. ADR 10,433
314,500 Omnicare, Inc. 11,637
215,000 Quintiles Transnational 10,508
126,100 Rexall Sundown 4,666
71,300 Sofamor Danek Group 5,365
265,500 Watson Pharmaceuticals 9,525
---------------
61,455
---------------
TECHNOLOGY (18.4%)
201,900 Analog Devices 6,511
81,500 Applied Micro Circuits 1,528
127,400 BMC Software 9,746
220,400 Cadence Design Systems 7,700
109,400 CBT Group ADR 10,010
220,900 CHS Electronics 4,556
225,850 Citrix Systems 9,500
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
------------ ---------------
<C> <S> <C>
113,400 Equifax, Inc. $ 4,076
159,000 HBO & Co. 8,606
285,000 J.D. Edwards & Co. 9,405
136,300 KLA-Tencor 6,291
323,900 Network Appliance 9,555
198,000 Network Associates 12,796
229,000 Sterling Commerce 10,448
233,200 Teradyne, Inc. 11,004
---------------
121,732
---------------
TRANSPORTATION (1.5%)
346,500 Southwest Airlines 9,940
---------------
UTILITIES (1.8%)
277,800 AES Corp. 12,223
---------------
TOTAL COMMON STOCKS (COST $498,478) 634,350
---------------
<CAPTION>
Principal
Amount
------------
<C> <S> <C>
U.S. TREASURY SECURITIES (2.6%)
$ 17,440,000 U.S. Treasury Bills, 4.95%, due 3/26/98 (COST
$17,380) 17,385
---------------
SHORT-TERM CORPORATE NOTES (3.8%)
24,880,000 General Electric Capital Corp., 5.50%, due
3/2/98 (COST $24,880) 24,880(4)
---------------
TOTAL INVESTMENTS (102.1%) (COST $540,738) 676,615(5)
Liabilities, less cash, receivables and other
assets [(2.1%)] (13,684)
---------------
TOTAL NET ASSETS (100.0%) $ 662,931
---------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
B-33
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Partners Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Sears, Roebuck 2.2%
2. Allstate Corp. 2.0%
3. CITICORP 2.0%
4. Unicom Corp. 1.9%
5. EXEL Ltd. 1.9%
6. Enron Corp. 1.9%
7. Chase Manhattan 1.8%
8. McDonald's Corp. 1.8%
9. duPont 1.8%
10. Crown Cork & Seal 1.8%
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
------------- ----------------
<C> <S> <C>
COMMON STOCKS (95.9%)
AEROSPACE (1.4%)
1,100,000 Boeing Co. $ 59,675
----------------
AIRLINES (2.5%)
1,103,300 Continental Airlines Class B 55,441
100,000 Delta Air Lines 11,306
1,400,000 Southwest Airlines 40,163
----------------
106,910
----------------
AUTO/TRUCK REPLACEMENT PARTS (3.1%)
1,012,500 AutoZone, Inc. 30,628
682,500 Cummins Engine 39,499
954,600 Goodyear Tire & Rubber 65,987
----------------
136,114
----------------
AUTOMOBILE MANUFACTURING (1.4%)
1,600,000 Chrysler Corp. 62,300
----------------
BANKING & FINANCIAL SERVICES (6.7%)
1,070,960 Banc One 60,509
628,000 Chase Manhattan 77,911
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
------------- ----------------
<C> <S> <C>
648,000 CITICORP $ 85,860
1,466,000 Countrywide Credit Industries 65,146
----------------
289,426
----------------
BUILDING, CONSTRUCTION & REFURNISHING (1.4%)
1,115,900 USG Corp. 60,956
----------------
CHEMICALS (3.0%)
1,250,000 duPont 76,641
1,357,600 Morton International 44,886
153,079 Rhone-Poulenc ADR 7,070
----------------
128,597
----------------
COMMUNICATIONS (2.3%)
844,400 BCE, Inc. 30,029
1,855,000 WorldCom Inc. 70,838
----------------
100,867
----------------
DIVERSIFIED (1.9%)
370,000 Minnesota Mining & Manufacturing 31,566
1,271,600 Tenneco Inc. 52,294
----------------
83,860
----------------
ELECTRONICS (2.7%)
1,172,900 KLA-Tencor 54,137
1,412,500 Raychem Corp. 61,355
17,500 Rockwell International 1,059
----------------
116,551
----------------
ENERGY (2.0%)
637,300 CalEnergy Co. 17,087
1,757,200 McDermott International 69,190
----------------
86,277
----------------
ENTERTAINMENT (2.2%)
1,982,900 Mirage Resorts 45,359
750,000 Time Warner 50,625
----------------
95,984
----------------
</TABLE>
B-34
<PAGE>
February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Partners Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
------------- ----------------
<C> <S> <C>
FINANCIAL SERVICES (1.1%)
1,174,400 SLM Holding $ 48,517
----------------
FOOD & TOBACCO (4.7%)
1,524,100 Anheuser-Busch 71,442
200,000 Nabisco Holdings 9,438
1,100,000 Philip Morris 47,781
2,083,500 UST, Inc. 73,834
----------------
202,495
----------------
GAS (1.7%)
1,554,800 Praxair, Inc. 74,339
----------------
HEALTH CARE (6.4%)
994,500 Amgen, Inc. 52,833
1,373,400 Biogen, Inc. 60,601
269,000 CIGNA Corp. 51,379
1,780,950 Columbia/HCA Healthcare 48,308
713,042 Novartis AG ADR 65,065
----------------
278,186
----------------
INDUSTRIAL GOODS & SERVICES (3.5%)
700,000 Corning Inc. 28,438
1,406,800 Crown Cork & Seal 75,967
1,205,000 Owens-Illinois 46,242
----------------
150,647
----------------
INSURANCE (11.2%)
634,000 Aetna Inc. 55,396
934,000 Allstate Corp. 87,095
284,200 Aon Corp. 16,999
1,245,800 EXEL Ltd. 82,456
1,373,550 Orion Capital 67,046
329,000 Progressive Corp. 38,123
713,800 St. Paul Cos. 63,261
1,361,000 Travelers Group 75,876
----------------
486,252
----------------
MEDIA (1.4%)
1,724,181 Comcast Corp. Class A Special 60,346
----------------
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
------------- ----------------
<C> <S> <C>
OIL & GAS (7.6%)
1,485,200 Cabot Corp. $ 52,353
76,000 Chevron Corp. 6,166
1,746,000 Enron Corp. 82,062
4,555,900 Gulf Canada Resources 26,766
1,343,000 Noble Affiliates 52,377
104,600 Schlumberger Ltd. 7,884
1,918,155 Union Pacific Resources Group 42,919
1,792,000 YPF SA ADR 56,672
----------------
327,199
----------------
PAPER & FOREST PRODUCTS (2.5%)
1,420,000 Mead Corp. 48,546
1,190,800 Weyerhaeuser Co. 59,466
----------------
108,012
----------------
PUBLISHING & BROADCASTING (1.3%)
968,500 Knight Ridder 54,478
----------------
RAILROADS (1.7%)
720,000 Burlington Northern Santa Fe 71,730
----------------
REAL ESTATE (2.1%)
3,426,100 Host Marriott 67,880
1,607,700 Security Capital U.S. Realty 22,347(6)
----------------
90,227
----------------
RESTAURANTS (1.8%)
1,418,500 McDonald's Corp. 77,663
----------------
RETAILING (1.2%)
984,200 Harcourt General 53,147
----------------
RETAILING & APPAREL (3.0%)
700,000 Costco Cos. 34,212
1,784,400 Sears, Roebuck 94,685
----------------
128,897
----------------
SPECIALTY CHEMICAL (0.9%)
979,300 Millipore Corp. 37,030
----------------
</TABLE>
B-35
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Partners Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
------------- ----------------
<C> <S> <C>
STEEL (1.7%)
2,176,000 AK Steel Holding $ 40,664
661,000 Nucor Corp. 34,041
----------------
74,705
----------------
TECHNOLOGY (5.0%)
705,000 First Data 23,970
1,400,000 Komag, Inc. 20,125
2,020,000 National Semiconductor 48,228
550,000 Quantum Corp. 13,819
1,125,500 Texas Instruments 65,138
774,800 Varian Associates 44,938
----------------
216,218
----------------
TRANSPORTATION (1.6%)
1,123,200 FDX Corp. 71,534
----------------
UTILITIES (4.9%)
2,426,000 Edison International 67,018
2,057,000 PG&E Corp. 62,096
2,600,000 Unicom Corp. 83,362
----------------
212,476
----------------
TOTAL COMMON STOCKS (COST $3,409,726) 4,151,615
----------------
PREFERRED STOCKS (0.0%)
566,700 Fresenius National Medical Care, Class D
(COST $108) 31
----------------
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
------------- ----------------
<C> <S> <C>
WARRANTS (0.0%)
44,356 Security Capital Group, Class B, Expire
9/18/98 (COST $0) $ 163
----------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount
-------------
<C> <S> <C>
U.S. TREASURY SECURITIES (2.8%)
$ 120,000,000 U.S. Treasury Bills, 5.00% - 5.08%, due
4/2/98 & 4/9/98 (COST $119,432) 119,449
----------------
SHORT-TERM CORPORATE NOTES (1.3%)
57,420,000 General Electric Capital Corp., 5.50%, due
3/2/98 (COST $57,420) 57,420(4)
----------------
TOTAL INVESTMENTS (100.0%) (COST $3,586,686) 4,328,678(5)
Liabilities, less cash, receivables and other
assets [(0.0%)] (13)
----------------
TOTAL NET ASSETS (100.0%) $ 4,328,665
----------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
B-36
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Socially Responsive Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. A.G. Edwards 2.8%
2. Warner-Lambert 2.5%
3. ReliaStar Financial 2.4%
4. Hasbro, Inc. 2.3%
5. Southern New England 2.3%
Telecommunications
6. Wal-Mart Stores 2.2%
7. WorldCom Inc. 2.2%
8. Intel Corp. 2.2%
9. Ambac Financial Group 2.2%
10. Cincinnati Milacron 2.1%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- -------------
<C> <S> <C>
COMMON STOCKS (94.2%)
ADVERTISING (2.0%)
240,000 True North Communications $ 6,195
-------------
AUTOMOTIVE (1.8%)
100,000 Borg-Warner Automotive 5,863
-------------
BANKING (9.6%)
45,000 CITICORP 5,962
200,000 Dime Bancorp 6,100
105,000 Mercantile Bancorporation 5,841
90,000 National City 5,873
165,000 Southtrust Corp. 6,744
-------------
30,520
-------------
CHEMICALS (4.6%)
140,300 Dexter Corp. 5,700
60,000 Minerals Technologies 2,865
80,000 Perkin-Elmer 5,855
-------------
14,420
-------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- -------------
<C> <S> <C>
CONSUMER GOODS & SERVICES
(5.5%)
200,000 Hasbro, Inc. $ 7,262
120,000 Kimberly-Clark 6,682
40,000 Procter & Gamble 3,398
-------------
17,342
-------------
DIVERSIFIED (3.4%)
53,000 Minnesota Mining & Manufacturing 4,522
120,000 Tyco International 6,090
-------------
10,612
-------------
ENERGY (1.5%)
120,000 Noble Affiliates 4,680
-------------
FINANCIAL SERVICES (9.6%)
210,000 A.G. Edwards 8,833
68,400 ADVANTA Corp. Class A 1,612
36,480 ADVANTA Corp. Class B 802
128,000 Ambac Financial Group 6,816
100,000 Fannie Mae 6,381
105,000 Travelers Group 5,854
-------------
30,298
-------------
FOOD & BEVERAGE (1.7%)
100,000 McDonald's Corp. 5,475
-------------
FURNISHINGS (1.7%)
110,000 Leggett & Platt 5,521
-------------
HEALTH CARE (9.8%)
140,000 Biogen, Inc. 6,177
200,000 Invacare Corp. 4,588
80,000 Johnson & Johnson 6,040
100,000 SmithKline Beecham ADR 6,187
55,000 Warner-Lambert 8,044
-------------
31,036
-------------
</TABLE>
B-37
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Socially Responsive Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- -------------
<C> <S> <C>
INDUSTRIAL & COMMERCIAL PRODUCTS
(3.3%)
110,000 Corning Inc. $ 4,469
140,000 Raychem Corp. 6,081
-------------
10,550
-------------
INSURANCE (6.0%)
200,000 ESG Re 5,300
160,000 ReliaStar Financial 7,610
70,000 St. Paul Cos. 6,204
-------------
19,114
-------------
MACHINERY & EQUIPMENT (2.1%)
220,000 Cincinnati Milacron 6,792
-------------
OIL & GAS (1.2%)
220,000 Seagull Energy 3,713
-------------
OIL SERVICES (3.0%)
120,000 Dresser Industries 5,362
90,000 Tidewater Inc. 4,005
-------------
9,367
-------------
PUBLISHING & BROADCASTING (3.2%)
188,200 CMP Media 4,446
150,000 Valassis Communications 5,719
-------------
10,165
-------------
RECYCLING (1.0%)
187,500 IMCO Recycling 3,246
-------------
RETAIL STORES (2.1%)
125,000 Sears, Roebuck 6,633
-------------
RETAILING (3.7%)
100,000 Costco Cos. 4,887
150,000 Wal-Mart Stores 6,947
-------------
11,834
-------------
TECHNOLOGY (7.5%)
110,000 AMP, Inc. 4,861
91,000 Hewlett-Packard 6,097
76,000 Intel Corp. 6,816
330,000 Unisys Corp. 5,899
-------------
23,673
-------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- -------------
<C> <S> <C>
TELECOMMUNICATIONS (6.1%)
450,000 Metromedia International Group $ 5,119
114,000 Southern New England Telecommunications 7,196
180,000 WorldCom Inc. 6,874
-------------
19,189
-------------
UTILITIES, ELECTRIC & GAS (3.8%)
110,000 Cinergy Corp. 3,829
225,000 DPL Inc. 4,092
115,000 KeySpan Energy 4,090
-------------
12,011
-------------
TOTAL COMMON STOCKS (COST $209,454) 298,249
-------------
<CAPTION>
Principal
Amount
- ----------
<C> <S> <C>
U.S. TREASURY SECURITIES (4.7%)
$14,885,000 U.S. Treasury Bills, 4.97% & 5.245%, due
3/5/98 & 4/23/98 (COST $14,828) 14,828(4)
-------------
CERTIFICATES OF DEPOSIT (0.0%)
100,000 Self Help Credit Union, 5.20%, due 5/26/98
(COST $100) 100 (4)
-------------
TOTAL INVESTMENTS (98.9%) (COST $224,382) 313,177 (5)
Cash, receivables and other assets, less
liabilities (1.1%) 3,386
-------------
TOTAL NET ASSETS (100.0%) $ 316,563
-------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
B-38
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS
February 28, 1998 (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 E of Notes to Financial Statements).
3) The following securities were held in escrow at February 28, 1998, 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 100,000 Applied $ 3,681,250 $ 96,997 $ 50,000
Materials March
1998 @ 40
GUARDIAN PORTFOLIO 300,000 Applied $ 11,043,750 $ 347,238 $ 150,000
Materials March
1998 @ 40
100,000 Compaq Computer $ 3,206,250 $ 234,492 $ 112,500
April 1998 @ 35
200,000 Compaq Computer $ 6,412,500 $ 818,853 $1,050,000
April 1998 @ 55
200,000 Fannie Mae $ 12,762,500 $ 693,977 $ 800,000
March 1998 @ 60
100,000 Fannie Mae $ 6,381,250 $ 546,981 $ 525,000
April 1998 @ 60
</TABLE>
4) At cost, which approximates market value.
5) At February 28, 1998, 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 $1,069,699,000 $ 704,548,000 $ 18,653,000 $ 685,895,000
GENESIS PORTFOLIO 2,040,734,000 369,078,000 55,206,000 313,872,000
GUARDIAN PORTFOLIO 5,868,350,000 2,981,275,000 167,004,000 2,814,271,000
MANHATTAN PORTFOLIO 540,738,000 153,708,000 17,831,000 135,877,000
PARTNERS PORTFOLIO 3,587,977,000 789,866,000 49,165,000 740,701,000
SOCIALLY RESPONSIVE PORTFOLIO 224,409,000 91,974,000 3,206,000 88,768,000
</TABLE>
B-39
<PAGE>
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, 1998,
these securities amounted to $2,948,000 or .1% of net assets for
Neuberger&Berman Genesis Portfolio, $18,112,000 or .2% of net assets for
Neuberger&Berman Guardian Portfolio, and $22,347,000 or .5% of net assets for
Neuberger&Berman Partners Portfolio.
SEE NOTES TO FINANCIAL STATEMENTS
B-40
<PAGE>
(This page has been left blank intentionally.)
B-41
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
- ----------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
FOCUS GENESIS
(000'S OMITTED) PORTFOLIO PORTFOLIO
------------------------
<S> <C> <C>
ASSETS
Investments in securities, at market value*
(Notes A & E) -- see Schedule of Investments:
Unaffiliated issuers $1,662,141 $2,307,756
Non-controlled affiliated issuers 93,453 46,850
------------------------
1,755,594 2,354,606
Cash 10 4
Deferred organization costs (Note A) 4 1
Dividends and interest receivable 969 1,413
Prepaid expenses and other assets 24 13
Receivable for securities sold 29,134 448
------------------------
1,785,735 2,356,485
------------------------
LIABILITIES
Option contracts written, at market value (Note A) 50 --
Payable for collateral on securities loaned (Note A) -- 3,300
Payable for securities purchased 21,098 21,758
Payable to investment manager (Note B) 623 1,193
Accrued expenses 78 107
------------------------
21,849 26,358
------------------------
NET ASSETS Applicable to Investors' Beneficial Interests $1,763,886 $2,330,127
------------------------
NET ASSETS consist of:
Paid-in capital $1,076,169 $2,016,255
Net unrealized appreciation in value of investment securities and option
contracts 687,717 313,872
------------------------
NET ASSETS $1,763,886 $2,330,127
------------------------
*Cost of investments:
Unaffiliated issuers $ 990,099 $1,997,751
Non-controlled affiliated issuers 77,824 42,983
------------------------
Total cost of investments $1,067,923 $2,040,734
------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-42
<PAGE>
February 28, 1998 (Unaudited)
- ----------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
SOCIALLY
GUARDIAN MANHATTAN PARTNERS RESPONSIVE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments in securities, at market value*
(Notes A & E) -- see Schedule of Investments:
Unaffiliated issuers $7,357,326 $676,615 $4,328,678 $313,177
Non-controlled affiliated issuers 1,325,295 -- -- --
------------------------------------------------
8,682,621 676,615 4,328,678 313,177
Cash 8 14 9 2
Deferred organization costs (Note A) 11 4 7 7
Dividends and interest receivable 7,281 187 4,944 379
Prepaid expenses and other assets 138 10 54 4
Receivable for securities sold 161,519 10,559 80,070 3,165
------------------------------------------------
8,851,578 687,389 4,413,762 316,734
------------------------------------------------
LIABILITIES
Option contracts written, at market value (Note A) 2,638 -- -- --
Payable for collateral on securities loaned (Note A) 35,000 17,094 784 --
Payable for securities purchased 36,888 6,987 82,745 --
Payable to investment manager (Note B) 2,885 260 1,430 136
Accrued expenses 343 117 138 35
------------------------------------------------
77,754 24,458 85,097 171
------------------------------------------------
NET ASSETS Applicable to Investors' Beneficial Interests $8,773,824 $662,931 $4,328,665 $316,563
------------------------------------------------
NET ASSETS consist of:
Paid-in capital $5,959,324 $527,054 $3,586,673 $227,768
Net unrealized appreciation in value of investment securities and option
contracts 2,814,500 135,877 741,992 88,795
------------------------------------------------
NET ASSETS $8,773,824 $662,931 $4,328,665 $316,563
------------------------------------------------
*Cost of investments:
Unaffiliated issuers $4,901,488 $540,738 $3,586,686 $224,382
Non-controlled affiliated issuers 966,637 -- -- --
------------------------------------------------
Total cost of investments $5,868,125 $540,738 $3,586,686 $224,382
------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-43
<PAGE>
STATEMENTS OF OPERATIONS
- ----------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
FOCUS GENESIS
(000'S OMITTED) PORTFOLIO PORTFOLIO
---------------------
<S> <C> <C>
INVESTMENT INCOME
Income:
Dividend income -- unaffiliated issuers $ 7,523 $ 9,369
Dividend income -- non-controlled affiliated issuers 288 --
Interest income 747 4,530
Foreign taxes withheld (Note A) -- --
---------------------
Total income 8,558 13,899
---------------------
Expenses:
Investment management fee (Note B) 3,875 5,790
Accounting fees 5 5
Amortization of deferred organization and initial offering expenses (Note
A) 4 1
Auditing fees 22 12
Custodian fees (Note B) 146 179
Insurance expense 11 7
Legal fees 11 46
Trustees' fees and expenses 10 11
Miscellaneous -- 19
---------------------
Total expenses 4,084 6,070
Fee waived by investment manager and/or expenses reduced by custodian fee
expense offset arrangement (Note B) (1) (2)
---------------------
Total net expenses 4,083 6,068
---------------------
Net investment income (loss) 4,475 7,831
---------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investment securities sold in unaffiliated issuers 32,299 24,505
Net realized gain (loss) on investment securities sold in non-controlled
affiliated issuers 6,405 --
Net realized loss on option contracts (Note A) (3,764) --
Change in net unrealized appreciation of investment securities and option
contracts 103,490 41,592
---------------------
Net gain on investments 138,430 66,097
---------------------
Net increase in net assets resulting from operations $142,905 $73,928
---------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-44
<PAGE>
For the Six Months Ended February 28, 1998 (Unaudited)
- ----------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
SOCIALLY
GUARDIAN MANHATTAN PARTNERS RESPONSIVE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Income:
Dividend income -- unaffiliated issuers $ 45,631 $ 909 $ 23,952 $ 1,805
Dividend income -- non-controlled affiliated issuers 1,961 -- -- --
Interest income 16,550 877 4,422 332
Foreign taxes withheld (Note A) (341) (3) -- (5)
----------------------------------------------
Total income 63,801 1,783 28,374 2,132
----------------------------------------------
Expenses:
Investment management fee (Note B) 18,716 1,655 8,593 763
Accounting fees 5 5 5 5
Amortization of deferred organization and initial offering expenses (Note
A) 12 5 9 3
Auditing fees 26 25 23 12
Custodian fees (Note B) 639 85 304 51
Insurance expense 62 4 24 2
Legal fees 12 13 12 12
Trustees' fees and expenses 42 6 20 4
Miscellaneous -- 6 -- --
----------------------------------------------
Total expenses 19,514 1,804 8,990 852
Fee waived by investment manager and/or expenses reduced by custodian fee
expense offset arrangement (Note B) -- -- -- --
----------------------------------------------
Total net expenses 19,514 1,804 8,990 852
----------------------------------------------
Net investment income (loss) 44,287 (21) 19,384 1,280
----------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investment securities sold in unaffiliated issuers 216,558 21,812 319,848 14,653
Net realized gain (loss) on investment securities sold in non-controlled
affiliated issuers (1,853) -- -- --
Net realized loss on option contracts (Note A) (11,852) -- -- --
Change in net unrealized appreciation of investment securities and option
contracts 219,142 42,595 40,439 21,509
----------------------------------------------
Net gain on investments 421,995 64,407 360,287 36,162
----------------------------------------------
Net increase in net assets resulting from operations $466,282 $64,386 $379,671 $37,442
----------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-45
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
FOCUS GENESIS
PORTFOLIO PORTFOLIO
Six Months Six Months
Ended Year Ended Year
February 28, Ended February 28, Ended
1998 August 31, 1998 August 31,
(000'S OMITTED) (UNAUDITED) 1997 (UNAUDITED) 1997
------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 4,475 $ 7,119 $ 7,831 $ 1,728
Net realized gain on investments 34,940 176,471 24,505 18,411
Change in net unrealized appreciation of
investments 103,490 298,137 41,592 211,059
------------------------------------------------------
Net increase in net assets resulting from
operations 142,905 481,727 73,928 231,198
------------------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS:
Additions 136,750 156,839 1,238,836 609,195
Reductions (89,210) (187,496) (66,288) (16,606)
------------------------------------------------------
Net increase (decrease) in net assets
resulting from transactions in investors'
beneficial interests 47,540 (30,657) 1,172,548 592,589
------------------------------------------------------
NET INCREASE IN NET ASSETS 190,445 451,070 1,246,476 823,787
NET ASSETS:
Beginning of period 1,573,441 1,122,371 1,083,651 259,864
------------------------------------------------------
End of period $1,763,886 $1,573,441 $2,330,127 $1,083,651
------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-46
<PAGE>
- ----------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
GUARDIAN MANHATTAN PARTNERS
PORTFOLIO PORTFOLIO PORTFOLIO
Six Months Six Months Six Months
Ended Year Ended Year Ended Year
February 28, Ended February 28, Ended February 28, Ended
1998 August 31, 1998 August 31, 1998 August 31,
(UNAUDITED) 1997 (UNAUDITED) 1997 (UNAUDITED) 1997
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 44,287 $ 66,858 $ (21) $ 1,154 $ 19,384 $ 28,316
Net realized gain on investments 202,853 871,150 21,812 180,525 319,848 531,668
Change in net unrealized appreciation of
investments 219,142 1,570,338 42,595 10,646 40,439 473,597
------------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 466,282 2,508,346 64,386 192,325 379,671 1,033,581
------------------------------------------------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 285,502 592,646 24,255 41,417 477,524 715,909
Reductions (736,167) (575,327) (47,453) (179,425) (104,103) (173,520)
------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from transactions in
investors' beneficial interests (450,665) 17,319 (23,198) (138,008) 373,421 542,389
------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 15,617 2,525,665 41,188 54,317 753,092 1,575,970
NET ASSETS:
Beginning of period 8,758,207 6,232,542 621,743 567,426 3,575,573 1,999,603
------------------------------------------------------------------------------------
End of period $8,773,824 $8,758,207 $662,931 $ 621,743 $4,328,665 $3,575,573
------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-47
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS(Cont'd)
- ----------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
SOCIALLY
RESPONSIVE
PORTFOLIO
Six Months
Ended Year
February 28, Ended
1998 August 31,
(000'S OMITTED) (UNAUDITED) 1997
----------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 1,280 $ 2,214
Net realized gain on investments 14,653 11,478
Change in net unrealized appreciation of investments 21,509 44,043
----------------------------
Net increase in net assets resulting from operations 37,442 57,735
----------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS:
Additions 32,087 57,455
Reductions (9,247) (17,394)
----------------------------
Net increase (decrease) in net assets resulting from transactions in
investors' beneficial interests 22,840 40,061
----------------------------
NET INCREASE IN NET ASSETS 60,282 97,796
NET ASSETS:
Beginning of period 256,281 158,485
----------------------------
End of period $316,563 $256,281
----------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-48
<PAGE>
NOTES TO FINANCIAL STATEMENTS
February 28, 1998 (Unaudited)
- ----------------------------------------------------------------------
Equity Managers Trust
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1) GENERAL: Neuberger&Berman Focus Portfolio ("Focus"), Neuberger&Berman Genesis
Portfolio ("Genesis"), Neuberger&Berman Guardian Portfolio ("Guardian"),
Neuberger&Berman Manhattan Portfolio ("Manhattan"), Neuberger& Berman
Partners Portfolio ("Partners"), and Neuberger&Berman Socially Responsive
Portfolio ("Socially Responsive") (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
("N&B 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. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, including accretion of original issue discount,
where applicable, and accretion of discount on short-term investments, are
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. Each Portfolio of Managers Trust also intends
to conduct its operations so that each of its investors will be able to
qualify
B-49
<PAGE>
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.
7) ORGANIZATION EXPENSES: Expenses incurred by each Portfolio in connection with
its organization are being amortized by each Portfolio on a straight-line
basis over a five-year period. At February 28, 1998, the unamortized balance
of such expenses amounted to $3,668, $809, $10,741, $4,091, $7,440, and
$6,989, for Focus, Genesis, Guardian, Manhattan, Partners, and Socially
Responsive, 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 expired, the Portfolio
realizes a gain or loss and the liability is eliminated. A Portfolio bears
the risk of a decline in the price of the security during the period,
although any potential loss during the period would be reduced by the amount
of the option premium received. In general, written covered call options may
serve as a partial hedge against decreases in value in the underlying
securities to the extent of the premium received. All securities covering
outstanding options are held in escrow by the custodian bank.
Summary of option transactions for the six months ended February 28, 1998:
<TABLE>
<CAPTION>
VALUE WHEN
FOCUS NUMBER WRITTEN
- -------------------------------------------------------------
<S> <C> <C>
CONTRACTS OUTSTANDING 8/31/97 1,250 $ 1,985,185
CONTRACTS WRITTEN 2,500 654,978
CONTRACTS EXPIRED 0 0
CONTRACTS EXERCISED (1,000) (371,987)
CONTRACTS CLOSED (1,750) (2,171,179)
------------------------
CONTRACTS OUTSTANDING 2/28/98 1,000 $ 96,997
------------------------
</TABLE>
B-50
<PAGE>
<TABLE>
<CAPTION>
VALUE WHEN
GUARDIAN NUMBER WRITTEN
- ------------------------------------------------------------------
<S> <C> <C>
CONTRACTS OUTSTANDING 8/31/97 7,997 $ 5,491,034
CONTRACTS WRITTEN 13,000 3,460,513
CONTRACTS EXPIRED 0 0
CONTRACTS EXERCISED (8,030) (5,376,565)
CONTRACTS CLOSED (3,967) (933,441)
-----------------------------
CONTRACTS OUTSTANDING 2/28/98 9,000 $ 2,641,541
-----------------------------
</TABLE>
10) SECURITY LENDING: Portfolio securities loans involve certain risks in the
event a borrower should fail financially, including delays or inability to
recover the lent securities or foreclose against the collateral. The
investment manager, under the 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, 1998, Focus, Genesis, Guardian, Manhattan, Partners, and
Socially Responsive lent securities to Neuberger. At February 28, 1998, the
value of the securities loaned and the value of the collateral were as
follows:
<TABLE>
<CAPTION>
VALUE OF
SECURITIES VALUE OF
LOANED COLLATERAL
- ---------------------------------------------------------------------
<S> <C> <C>
GENESIS $ 3,187,500 $ 3,300,000
GUARDIAN 33,937,500 35,000,000
MANHATTAN 16,613,094 17,094,400
PARTNERS 755,000 784,000
</TABLE>
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
B-51
<PAGE>
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 N&B Management as its investment manager under a
Management Agreement. For such investment management services, each Portfolio
(except Genesis) pays N&B Management a fee at the annual rate of 0.55% of the
first $250 million of that Portfolio's average daily net assets, 0.525% of the
next $250 million, 0.50% of the next $250 million, 0.475% of the next $250
million, 0.45% of the next $500 million, and 0.425% of average daily net assets
in excess of $1.5 billion. Genesis has contracted to pay N&B Management a fee
for investment management services at the annual rate of 0.85% of the first $250
million of that Portfolio's average daily net assets, 0.80% of the next $250
million, 0.75% of the next $250 million, 0.70% of the next $250 million, and
0.65% of average daily net assets in excess of $1 billion. Prior to December 15,
1997, N&B Management had voluntarily agreed to waive a portion of the management
fee borne directly by Genesis and indirectly by Neuberger&Berman Genesis Trust
to reduce the annual fee by 0.10% per annum of average daily net assets of
Genesis. Effective December 15, 1997, the above waiver was terminated.
All of the capital stock of N&B Management is owned by individuals who are
also principals of Neuberger, a member firm of The New York Stock Exchange and
sub-adviser to each Portfolio. Neuberger is retained by N&B Management to
furnish it with investment recommendations and research information without
added cost to each Portfolio. Several individuals who are officers and/or
trustees of Managers Trust are also principals of Neuberger and/or officers
and/or directors of N&B Management.
Each Portfolio has an expense offset arrangement in connection with its
custodian contract. The impact of this arrangement, reflected in the Statements
of Operations under the caption Custodian fees, was a reduction of $474, $2,002,
$378, $241, $269, and $108, for Focus, Genesis, Guardian, Manhattan, Partners,
and Socially Responsive, respectively.
B-52
<PAGE>
NOTE C -- SECURITIES TRANSACTIONS:
During the six months ended February 28, 1998, there were purchase and sale
transactions (excluding short-term securities and option contracts) as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
- ---------------------------------------------------------------------
<S> <C> <C>
FOCUS $ 447,275,784 $ 489,078,798
GENESIS 1,056,190,516 124,203,828
GUARDIAN 1,776,344,276 1,849,371,286
MANHATTAN 267,343,782 273,721,632
PARTNERS 2,192,592,514 1,791,409,499
SOCIALLY RESPONSIVE 89,435,007 71,045,986
</TABLE>
During the six months ended February 28, 1998, there were brokerage
commissions on securities paid to Neuberger and other brokers as follows:
<TABLE>
<CAPTION>
OTHER
NEUBERGER BROKERS TOTAL
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
FOCUS $ 467,982 $ 467,990 $ 935,972
GENESIS 803,599 869,152 1,672,751
GUARDIAN 2,136,335 1,745,085 3,881,420
MANHATTAN 264,094 266,094 530,188
PARTNERS 2,544,056 1,693,940 4,237,996
SOCIALLY RESPONSIVE 165,745 44,308 210,053
</TABLE>
In addition, Neuberger's share of the total interest income earned for the
six months ended February 28, 1998, from the collateralization of securities
loaned to or through Neuberger was $2,092, $93,415, $296,469, $95,451, $32,622,
and $10,833, for Focus, Genesis, Guardian, Manhattan, Partners, and Socially
Responsive, respectively.
NOTE D -- COMBINED LINE OF CREDIT:
At February 28, 1998, Genesis and Manhattan were two of the holders of an
unsecured $60,000,000 combined line of credit with State Street Bank and Trust
Company, to be used only for temporary or emergency purposes. Interest is
charged on borrowings under this agreement at the overnight Federal Funds Rate
plus .75% per annum. A facility fee of .1% per annum of the available line of
credit is charged, of which Genesis and Manhattan each has agreed to pay its pro
rata share, based on the ratio of its individual net assets to the net assets of
all the participants at the time the fee is due and payable. The fee is paid
quarterly in arrears, commencing June 30, 1997. No compensating balance is
required. Another investment company managed by N&B Management also participates
in the line of credit on the same terms. Because several investment companies
participate, there is no assurance that an individual Portfolio will have access
to the entire $60,000,000 at any particular time. Genesis and
B-53
<PAGE>
Manhattan had no loans outstanding pursuant to this line of credit at February
28, 1998. During the six months ended February 28, 1998, neither Genesis nor
Manhattan utilized this line of credit.
NOTE E -- INVESTMENTS IN NON-CONTROLLED AFFILIATES*:
FOCUS
<TABLE>
<CAPTION>
BALANCE OF GROSS GROSS BALANCE OF
SHARES HELD PURCHASES SALES SHARES HELD VALUE
AUGUST 31, AND AND FEBRUARY 28, FEBRUARY 28,
NAME OF ISSUER: 1997 ADDITIONS REDUCTIONS 1998 1998
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ADVANTA Corp. Class A 1,691,500 0 727,345 964,155 $22,717,902
DT Industries 1,045,000 0 15,000 1,030,000 36,307,500
Sierra Health Services 934,500 5,500 0 940,000 34,427,500
</TABLE>
GENESIS
<TABLE>
<CAPTION>
BALANCE OF
SHARES GROSS GROSS BALANCE OF
HELD PURCHASES SALES SHARES HELD VALUE
AUGUST 31, AND AND FEBRUARY 28, FEBRUARY 28,
NAME OF ISSUER: 1997 ADDITIONS REDUCTIONS 1998 1998
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aviall Inc. 947,000 247,100 0 1,194,100 $17,165,188
Borland International 1,378,700 657,600 0 2,036,300 18,963,044
ElderTrust 0 335,000 0 335,000 6,071,875
Pameco Corp. 119,900 161,900 0 281,800 4,649,700
</TABLE>
GUARDIAN
<TABLE>
<CAPTION>
BALANCE OF GROSS GROSS BALANCE OF
SHARES HELD PURCHASES SALES SHARES HELD VALUE
AUGUST 31, AND AND FEBRUARY 28, FEBRUARY 28,
NAME OF ISSUER: 1997 ADDITIONS REDUCTIONS 1998 1998
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AGCO Corp. 4,737,400 622,800 0 5,360,200 $150,755,625
Capital One Financial 4,445,000 0 65,000 4,380,000 294,281,250
Coltec Industries 4,893,900 0 0 4,893,900 127,547,269
Countrywide Credit Industries 5,445,000 385,000 0 5,830,000 259,070,625
Foundation Health Systems 9,065,800 909,100 0 9,974,900 276,180,044
PacifiCare Health Systems
Class B 1,327,790 138,000 0 1,465,790 91,611,875
UCAR International 3,404,400 575,000 325,000 3,654,400 125,848,400
Zeigler Coal Holding** 1,702,000 0 1,702,000 0 0
</TABLE>
*AFFILIATED ISSUERS, AS DEFINED IN THE 1940 ACT, INCLUDE ISSUERS IN WHICH THE
PORTFOLIO HELD 5% OR MORE OF THE OUTSTANDING VOTING SECURITIES.
**AT FEBRUARY 28, 1998, THE ISSUERS OF THESE SECURITIES WERE NO LONGER
AFFILIATED WITH THE PORTFOLIO.
B-54
<PAGE>
NOTE F -- 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.
B-55
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Focus Portfolio
<TABLE>
<CAPTION>
Six Months
Ended Period from
February 28, August 2, 1993(1)
1998 Year Ended August 31, to August 31,
(UNAUDITED) 1997 1996 1995 1994 1993
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(2) .51%(3) .53% .54% -- -- --
--------------------------------------------------------------------
Net Expenses .51%(3) .53% .54% .57% .58% .58%(3)
--------------------------------------------------------------------
Net Investment Income .56%(3) .54% 1.04% 1.05% 1.16% 1.46%(3)
--------------------------------------------------------------------
Portfolio Turnover Rate 29% 63% 39% 36% 52% 4%
--------------------------------------------------------------------
Average Commission Rate Paid $0.0536 $0.0555 $0.0578 -- -- --
--------------------------------------------------------------------
Net Assets, End of Period (in millions) $1,763.9 $1,573.4 $1,122.4 $969.2 $645.0 $574.0
--------------------------------------------------------------------
</TABLE>
1) The date investment operation commenced.
2) For fiscal periods ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements.
3) Annualized.
B-56
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Genesis Portfolio
<TABLE>
<CAPTION>
Six Months
Ended Period from
February 28, August 2, 1993(1)
1998 Year Ended August 31, to August 31,
(UNAUDITED) 1997 1996 1995 1994 1993
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(2) .70%(3) .77% .85% -- -- --
---------------------------------------------------------------------------------------
Net Expenses .70%(3)(4) .77%(4) .85%(4) .94%(4) .98% 1.07%(3)
---------------------------------------------------------------------------------------
Net Investment Income .91%(3)(4) .32%(4) .27%(4) .25%(4) .18% .37%(3)
---------------------------------------------------------------------------------------
Portfolio Turnover Rate 8% 18% 21% 37% 63% 3%
---------------------------------------------------------------------------------------
Average Commission Rate Paid $0.0550 $0.0565 $0.0576 -- -- --
---------------------------------------------------------------------------------------
Net Assets, End of Period (in millions) $2,330.1 $1,083.7 $259.9 $142.2 $138.6 $118.6
---------------------------------------------------------------------------------------
</TABLE>
1) The date investment operations commenced.
2) For fiscal periods ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements. These ratios include the
management fee waiver.
3) Annualized.
4) Had N&B Management not waived a portion of the management fee, the annualized
ratios of net expenses and net investment income to average net assets would
have been:
<TABLE>
<CAPTION>
Six Months
Ended
February 28, Year Ended
1998 August 31,
(UNAUDITED) 1997 1996 1995
<S> <C> <C> <C> <C>
- ------------------------------------------
Net Expenses .75% .87% .95% .97%
Net Investment Income .86% .22% .17% .22%
</TABLE>
B-57
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Guardian Portfolio
<TABLE>
<CAPTION>
Six Months
Ended Period from
February 28, August 2, 1993(1)
1998 Year Ended August 31, to August 31,
(UNAUDITED) 1997 1996 1995 1994 1993
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(2) .46%(3) .46% .46% -- -- --
----------------------------------------------------------------------------
Net Expenses .46%(3) .46% .46% .48% .50% .51%(3)
----------------------------------------------------------------------------
Net Investment Income 1.03%(3) .89% 1.72% 1.72% 1.66% 2.45%(3)
----------------------------------------------------------------------------
Portfolio Turnover Rate 22% 50% 37% 26% 24% 3%
----------------------------------------------------------------------------
Average Commission Rate Paid $0.0541 $0.0538 $0.0580 -- -- --
----------------------------------------------------------------------------
Net Assets, End of Period (in millions) $8,773.8 $8,758.2 $6,232.5 $4,613.2 $2,480.3 $1,777.6
----------------------------------------------------------------------------
</TABLE>
1) The date investment operations commenced.
2) For fiscal periods ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements.
3) Annualized.
B-58
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Manhattan Portfolio
<TABLE>
<CAPTION>
Six Months
Ended Period from
February 28, August 2, 1993(1)
1998 Year Ended August 31, to August 31,
(UNAUDITED) 1997 1996 1995 1994 1993
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(2) .58%(3) .59% .58% -- -- --
-----------------------------------------------------------------------------
Net Expenses .58%(3) .59% .58% .59% .59% .59%(3)
-----------------------------------------------------------------------------
Net Investment Income (Loss) (.01%)(3) .20% .13% .42% .53% .55%(3)
-----------------------------------------------------------------------------
Portfolio Turnover Rate 45% 89% 53% 44% 50% 3%
-----------------------------------------------------------------------------
Average Commission Rate Paid $0.0580 $0.0573 $0.0373 -- -- --
-----------------------------------------------------------------------------
Net Assets, End of Period (in millions) $662.9 $621.7 $567.4 $645.4 $521.7 $536.8
-----------------------------------------------------------------------------
</TABLE>
1) The date investment operations commenced.
2) For fiscal periods ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements.
3) Annualized.
B-59
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Partners Portfolio
<TABLE>
<CAPTION>
Six Months
Ended Period from
February 28, August 2, 1993(1)
1998 Year Ended August 31, to August 31,
(UNAUDITED) 1997 1996 1995 1994 1993
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(2) .47%(3) .48% .51% -- -- --
----------------------------------------------------------------------------
Net Expenses .47%(3) .48% .51% .53% .54% .54%(3)
----------------------------------------------------------------------------
Net Investment Income 1.02%(3) 1.05% 1.26% 1.13% .75% 1.19%(3)
----------------------------------------------------------------------------
Portfolio Turnover Rate 49% 77% 96% 98% 75% 8%
----------------------------------------------------------------------------
Average Commission Rate Paid $0.0548 $0.0522 $0.0494 -- -- --
----------------------------------------------------------------------------
Net Assets, End of Period (in millions) $4,328.7 $3,575.6 $1,999.6 $1,623.5 $1,340.3 $1,182.1
----------------------------------------------------------------------------
</TABLE>
1) The date investment operations commenced.
2) For fiscal periods ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements.
3) Annualized.
B-60
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Socially Responsive Portfolio
<TABLE>
<CAPTION>
Six Months
Ended Period from
February 28, March 14, 1994(1)
1998 Year Ended August 31, to August 31,
(UNAUDITED) 1997 1996 1995 1994
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(2) .61%(3) .63% .65% -- --
------------------------------------------------------------
Net Expenses .61%(3) .63% .65% .68% .69%(3)
------------------------------------------------------------
Net Investment Income .92%(3) 1.08% 1.02% 1.18% 1.33%(3)
------------------------------------------------------------
Portfolio Turnover Rate 26% 51% 53% 58% 14%
------------------------------------------------------------
Average Commission Rate Paid $0.0550 $0.0568 $0.0587 -- --
------------------------------------------------------------
Net Assets, End of Period (in millions) $316.6 $256.3 $158.5 $96.7 $70.7
------------------------------------------------------------
</TABLE>
1) The date investment operations commenced.
2) For fiscal periods ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements.
3) Annualized.
B-61
<PAGE>
Neuberger&Berman Management Inc.-Registered Trademark-
605 THIRD AVENUE 2ND FLOOR
NEW YORK, NY 10158-0180
SHAREHOLDER SERVICES
800-877-9700
INSTITUTIONAL SERVICES
800-366-6264
WWW.NBFUNDS.COM
Statistics and projections in this report are derived from sources
deemed to be reliable but cannot be regarded as a representation of
future results of the Funds. This report is prepared for the
general information of shareholders and is not an offer of shares
of the Funds. Shares are sold only through the currently
effective prospectus, which must precede or accompany this report.
[LOGO] PRINTED ON RECYCLED PAPER NBESAR030298
KIRKPATRICK & LOCKHART LLP
1800 MASSACHUSETTS AVENUE, N.W.
2ND FLOOR
WASHINGTON, D.C. 10036-1800
TELEPHONE (202) 778-9000
FACSIMILE (202) 778-9100
May 4, 1998
VIA EDGAR
- ---------
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Neuberger & Berman Equity Trust:
Neuberger & Berman Focus Trust
Neuberger & Berman Genesis Trust
Neuberger & Berman Guardian Trust
Neuberger & Berman Manhattan Trust
Neuberger & Berman Partners Trust
1933 Act File No. 33-64368
1940 Act File No. 811-7784
Neuberger & Berman Equity Assets:
Neuberger & Berman Socially Responsive Trust
1933 Act File No. 33-82568
1940 Act File No. 811-8106
--------------------------------------------
Dear Sir or Madam:
Transmitted herewith for filing is the Semi-Annual Report to
Shareholders of the above-referenced series of Neuberger & Berman Equity Trust
and the above-named series of Neuberger & Berman Equity Assets for the period
ended February 28, 1998. This filing is being made pursuant to Section 30(b)(2)
of the Investment Company Act of 1940, as amended, and Rule 30b2-1 thereunder.
If you should have any questions regarding this filing, please contact
the undersigned.
Sincerely,
/s/ Lori L. Schneider
----------------------
Lori L. Schneider
Enclosures
