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NEUBERGER BERMAN
Neuberger Berman
Equity Assets-Registered Trademark-
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ANNUAL REPORT
AUGUST 31, 2000
Focus Assets
Genesis Assets
Guardian Assets
Manhattan Assets
Millennium Assets
Partners Assets
Socially Responsive Assets
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TABLE OF CONTENTS
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<S> <C>
THE FUNDS
CHAIRMAN'S LETTER A-4
PORTFOLIO COMMENTARY
Focus Assets A-5
Genesis Assets A-8
Guardian Assets A-11
Manhattan Assets A-14
Millennium Assets A-17
Partners Assets A-20
Socially Responsive Assets A-23
GROWTH OF A DOLLAR CHARTS
COMPARISON OF A $10,000 INVESTMENT
Focus Assets A-27
Genesis Assets A-29
Guardian Assets A-30
Manhattan Assets A-31
Millennium Assets A-32
Partners Assets A-34
Socially Responsive Assets A-35
FINANCIAL STATEMENTS B-2
FINANCIAL HIGHLIGHTS
PER SHARE DATA
Focus Assets B-14
Genesis Assets B-15
Guardian Assets B-16
Manhattan Assets B-17
Millennium Assets B-18
Partners Assets B-19
Socially Responsive Assets B-20
REPORT OF INDEPENDENT
ACCOUNTANTS/AUDITORS B-23
THE PORTFOLIOS
SCHEDULE OF INVESTMENTS
TOP TEN EQUITY HOLDINGS
Focus Portfolio C-1
Genesis Portfolio C-3
Guardian Portfolio C-7
Manhattan Portfolio C-10
Millennium Portfolio C-13
Partners Portfolio C-16
Socially Responsive Portfolio C-19
FINANCIAL STATEMENTS C-24
FINANCIAL HIGHLIGHTS
Focus Portfolio C-39
Genesis Portfolio C-40
Guardian Portfolio C-41
Manhattan Portfolio C-42
Millennium Portfolio C-43
Partners Portfolio C-44
Socially Responsive Portfolio C-45
REPORT OF INDEPENDENT
ACCOUNTANTS/AUDITORS C-47
OTHER INFORMATION
Directory/Officers and Trustees D-1
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The "Neuberger Berman" name and logo are service marks of Neuberger
Berman, LLC. "Neuberger Berman Management Inc." and the individual fund names in
this report are either service marks or registered trademarks of Neuberger
Berman Management Inc.-C- 2000 Neuberger Berman Management Inc.
A-3
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CHAIRMAN'S LETTER October 20, 2000
Dear Fellow Shareholder,
In recent years many growth stocks have excelled while value stocks have
languished. Some market observers declared value investing dead. We disagreed,
praising the long-term benefits of style diversification.
As measured by the growth and value stock benchmarks, growth stock investing
continued to be the most productive style in our fiscal year 2000. But, value
stocks came back to life, and Neuberger Berman value-oriented funds, most
notably Focus, Genesis, Guardian and Partners, delivered attractive returns.
Going forward, we can't predict which investment style will provide the most
generous short- to intermediate-term returns. Over the longer term, however, we
believe style diversification will work to shareholders' advantage.
We have witnessed a similar pattern in the relative performance of stocks in
different capitalization sectors. In recent years, large-cap stocks materially
outperformed small and mid-cap stocks.(1) In fiscal 2000, small- and mid-cap
stocks generally excelled. Our small- and mid-cap funds, most notably Genesis,
Millennium and Manhattan, were excellent performers. We don't know which market
capitalization sectors will be the best relative performers in the year ahead,
but again, we believe diversification is advantageous over the long haul.
Diversification and patience -- the twin foundations of a prudent long-term
investment strategy -- paid off handsomely in fiscal 2000. We believe they will
continue to benefit shareholders in the years ahead.
In closing, it is with great sadness that we report the recent passing of John
T. Patterson, Jr. John served as a Trustee of our equity funds since 1992. He
was widely respected for his intelligence and caring nature, a gracious man
whose pleasant vitality was a continuous inspiration. We will miss him deeply.
Sincerely,
/s/ Peter Sundman
Peter Sundman
Chairman of the Board
Neuberger Berman Equity Assets
(1) Mid-cap stocks, as represented by the Russell Midcap Index, returned 28.83%
for the fiscal year ending August 31, 2000. Small-cap stocks, as represented
by the Russell 2000 Index, returned 27.15%. Large-cap stocks, as represented
by the Russell 1000 Index, returned 20.14%. In the previous three fiscal
years ending August 31, the Russell 1000 had outperformed both the Russell
Midcap Index and the Russell 2000 Index.
A-4
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PORTFOLIO COMMENTARY
Neuberger Berman
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Focus Assets
For the six and twelve month periods concluding August 31, 2000, the Focus
Assets gained 31.02% and 58.68% respectively, versus an 11.72% and a 16.31%
increase in the S&P 500 and a 14.31% and a 4.15% rise in the Russell 1000 Value
index. These results placed the fund in the top 2% of all Lipper Multi-Cap Value
funds for the year.* It was a good year.
Whether or not such relative performance can be sustained is anyone's guess,
but we can state unequivocally that the investment approach used to manage the
portfolio will not be altered.
The Focus Portfolio is a value fund. We are valuation driven, and the first
question we ask regarding any potential investments is "what is the
price-earnings ratio?" We are not content, however, to buy only those stocks
which are just statistically cheap. We are trying to build a portfolio of stocks
that sell at a discount to the market but whose earnings per share growth will
prove to be superior to that of the overall market. The aim is to have a fund
that is valued like a value fund but has earnings dynamics of a growth fund.
One of the common sense assumptions we make is that value is unlikely to be
evenly distributed throughout the market at any given time. In our opinion, when
value managers attempt to construct a portfolio that does not differ materially
from the S&P 500, they necessarily face some unappealing investment choices. If
an industry sector is currently favored by the market, the best stocks in that
sector will likely be highly priced, and buying them will cause the manager to
violate his or her value discipline. Yet, if the manager maintains his or her
discipline by looking for "cheap" stocks in that sector, it may mean buying a
third or fourth rate company. We find each of these choices unacceptable.
That's why we do not seek to have investments in all areas of the market at
all times. We never invest in a company just to diversify the portfolio. There
is but one reason, and one reason only, that the Portfolio buys a stock: we
think it will prove to be a good investment.
A-5
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Focus Assets (Cont'd)
Looking for stocks with attractive valuations usually takes us to areas which
are out of popular favor. It has been our experience that when an industry or
sector goes out of favor, the disfavor affects all companies in that area to
more or less the same degree. Thus, it is possible to buy even the best
companies in such industries while maintaining a value discipline. While it is a
subjective judgement, we believe that using this approach results in the Focus
Portfolio having a higher percentage of its assets in industry leaders than most
other value funds do.
For example, when the Federal Reserve started to raise interest rates last
year, many investors' knee-jerk reaction was to sell financial stocks due to the
perception that rising rates would hurt earnings. While this perception has
little in the way of empirical evidence to support it, it is widely held, and
the downward movement in financial stocks was both widespread and
indiscriminate. We emerged from this period with substantial positions in
Citigroup, which we consider the leading financial services company; Morgan
Stanley Dean Witter, the leading brokerage firm; Chase Manhattan, the leading
money center bank; as well as Capital One and Providian, which have been the two
fastest growing credit card companies. All of these stocks were purchased at
substantial P/E discounts to the S&P 500.
While our belief that the Portfolio's investments are of higher quality than
those of the average value fund is a subjective one, the numbers show that the
Portfolio's earnings are expected to grow much faster than the typical value
fund. On August 31, 2000 the P/E ratio of the Focus Portfolio was 16.0 times
next year's earnings as opposed to 15.6 times for the Russell 1000 Value Index,
yet the long term expected growth rate in earnings of the Fund was 20.0% as
opposed to 13.2% for the Russell 1000 Value. In other words, with a forward P/E
ratio only 3% higher than the Russell 1000 Value, the Portfolio has an expected
growth rate in earnings that is over 50% higher.
Similarly, the forward P/E ratio of the S&P 500 on August 31st was 23.1, 44%
higher than that of the Focus Fund. At the same time, the S&P 500's expected
earnings growth rate (18.9%) was some 6% lower
A-6
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Focus Assets (Cont'd)
than that of Focus. We find these metrics compelling, and a portfolio like this
doesn't result from mindless diversification. In our opinion, there is only one
way to do it: Focus.
Sincerely,
/s/ Kent Simons
Kent Simons
PORTFOLIO MANAGER
*For index definitions, refer to page A-26, titled "Glossary of Indices." The
Portfolio invests in many securities not included in the indices listed.
Percentage rankings for Multi-Cap Value funds provided by Lipper Inc. These
funds are defined by Lipper as those value funds that, by portfolio practice,
invest in a variety of market capitalization ranges, without concentrating 75%
of their equity assets in any one market capitalization range over an extended
period of time. Lipper Multi-Cap Value funds percentage ratings are calculated
from the funds' one-, and three-year average annual returns, net of expenses,
for the year ending August 31, 2000 and were compared to 476 and 334 funds
respectively. Neuberger Berman Focus Assets began operations on September 4,
1996. Certain expenses were reimbursed to the fund during the period shown, and
had a material effect on returns. Absent such arrangement, the average annual
returns of the fund would have been less.
The composition, industries and holdings of the Portfolio are subject to
change. No single holdings of Focus Portfolio make up more than a small
fraction of the Portfolio's total assets.
While the value-oriented approach is intended to limit risks, the
Portfolio -- with its concentration in sectors -- may be more greatly affected
by any single economic, political or regulatory development than a more
diversified mutual fund.
Past performance is no guarantee of future results. Share prices will vary and
your shares, when redeemed, may be worth more or less than the price you paid
for them.
A-7
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PORTFOLIO COMMENTARY
Neuberger Berman
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Genesis Assets
For the six and twelve month periods concluding August 31, 2000, Genesis
Assets gained 17.59% and 25.42% respectively, compared to the Russell 2000's
drop of 6.38% and gain of 27.15% over the same time periods (see page A-29 for
comparison of a $10,000 investment and average annual total returns as of
August 31, 2000).*
Small-cap value stocks delivered solid returns in fiscal 2000. The Spring 2000
collapse of red-hot small-cap growth stocks with "more sizzle than substance"
(particularly in the Internet sector) appeared to give investors a renewed
appreciation of the fundamental merits of small-cap value stocks. Even after
this year's good performance, we believe small-cap value stocks remain
attractively valued. We think earnings prospects look good and valuations are
still modest compared to other equity asset classes. Value has continued to be
brought to fruition by corporate acquirers targeting bargains in the small-cap
value sector. Importantly, the outflow of capital from small-cap value mutual
funds appears to be abating, or perhaps even turning positive. This may provide
additional momentum for small-cap value stocks going forward.
Our technology stock investments made the greatest performance contribution in
fiscal 2000. As a result of our value discipline, we were materially
under-weighted, relative to our benchmark, in technology stocks throughout the
year. However, our holdings produced returns exceeding 70%, which is why the
technology sector was such a positive contributor. Some of our biggest winners
were somewhat mundane technology companies with small divisions in more
glamorous tech niches. For example, Methode Electronics, which is primarily an
auto electronics systems company, soared when it began talking about spinning
off its much smaller, but more exciting bandwidth enhancing optical electronic
components division. We exited our Methode position with a big gain. Over the
course of fiscal 2000, we booked profits in tech holdings that moved out of our
value range. We redirected some of our profits to technology stock opportunities
that seemed to us more
A-8
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Genesis Assets (Cont'd)
reasonably priced and took some money off the tech table to deploy in other
sectors. We will continue to invest in technology stocks on our own value terms.
Our energy investments also produced excellent gains. We were materially
over-weighted in this sector, with a bias toward oil services companies and
drillers, the leading performers in the energy group. We have taken some
profits, but are still committed to the energy sector. Inventories remain tight
and capacity is constrained. We believe the fundamental prospects for our energy
investments remain attractive, even if oil prices decline modestly from their
current highs.
The portfolio also benefited from the takeover of two portfolio holdings,
Cordant Technology and Central Newspapers. The former soared after the deal
announcement and the latter doubled after putting itself up for sale. We expect
more of the bargains in the portfolio to attract corporate suitors in the years
ahead.
Although our capital goods holdings posted a modest gain for the year -- every
sector represented in the portfolio finished in positive performance
territory -- we had some major disappointments in this sector. Five of the
stocks on our Worst 10 Performance List, AAR Corp, Wallace Computer Services,
Kaydon Corp., Aviall Inc., and Dionex Corp., are in the capital goods category.
Each declined as a result of company specific earnings problems. Our inclination
is to be patient with these investments that we believe can get back on the
earnings track.
Returns from our financial services investments were not as lofty as the gains
in our technology and energy holdings, but we believe we have identified some
excellent bargains. Let us give you an example. Mutual Risk provides
administrative and claims handling services to companies that insure themselves.
Mutual Risk's revenue and earnings growth has been tempered by declining prices
for property and casualty and workman's compensation insurance. Cutthroat
competition in the insurance industry has abated, however, and insurance rates
are now on the rise. This should materially increase the number of companies
A-9
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Genesis Assets (Cont'd)
choosing the self-insurance option, and therefore, the demand for Mutual Risk's
services. We see Mutual Risk's earnings beginning to accelerate in the next two
or three quarters and believe the company can grow earnings at 20% or better
annually over the next several years. At the close of this reporting period,
Mutual Risk stock was trading at 14 times our 2001 earnings estimate. Of course,
Mutual Risk may not live up to our earnings and stock appreciation expectations
and should not be considered a recommendation. However, we think the stock is an
excellent addition to the Genesis Portfolio.
In closing, we are delighted by the rebound in the small-cap value sector and
pleased that the Fund performed as it did. Looking ahead, we believe we will
continue to enjoy a fertile environment for our value-oriented discipline.
Sincerely,
/s/ Judith Vale /s/ Robert D-Alelio
Judith Vale and Robert D'Alelio
PORTFOLIO CO-MANAGERS
*For index definitions, refer to page A-26, titled "Glossary of Indices." The
Portfolio invests in many securities not included in the indices listed.
The composition, industries and holdings of the Portfolio are subject to
change. Genesis Portfolio is invested in a wide array of stocks and no single
holding makes up more than a small fraction of the Portfolio's total assets.
The risks involved in seeking capital appreciation from investments primarily
in companies with small market capitalization are set forth in the prospectus.
Past performance is no guarantee of future results. Share prices will vary and
your shares when redeemed, may be worth more or less than the price you paid
for them.
A-10
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GUARDIAN ASSETS
Neuberger Berman
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Guardian Assets
For the six and twelve month periods concluding August 31, 2000, the Guardian
Assets returned 19.63% and 16.04% respectively, versus the Russell 1000 Value
Index's 14.31% and 4.15% gains over the same time periods. The S&P 500 advanced
11.72% and 16.31% over the corresponding six and twelve month periods (see
page A-30 for comparison of $10,000 investment and average annual total returns
as of August 31, 2000).*
We are pleased with the Fund's excellent returns in fiscal 2000, and gratified
by its continued solid progress toward achieving our objective of superior
long-term performance.
In the first half of fiscal 2000, technology stocks were the only game in
town. Over the last six months, we enjoyed a much broader market, with the
stocks of companies in many other industry groups performing well. Our
technology stock investments (on average about 16% of portfolio assets during
the year) performed exceptionally well, with collective returns exceeding 65%.
We will continue to invest in technology stocks with a very sharp eye on
valuations and a focus on companies that we believe are improving their
competitive position.
Seven of the other ten sectors represented in the portfolio also posted
positive results. Strong returns from our capital goods, consumer staples,
energy, financial services, and health care holdings demonstrated investors'
renewed appreciation of high quality, reasonably valued companies in less
glamorous industries -- the kind of stocks that are staples of the Guardian
Portfolio. Aided by declining market interest rates, good earnings and continued
consolidation in the industry, our financial services holdings finished the year
with solid gains. Our health care holdings also got much healthier during the
year as investors re-appraised quality companies in this previously out-of-favor
sector. Rising oil prices propelled our energy holdings. Finally, five portfolio
companies (Champion, Union Pacific, Nabisco, Warner Lambert, and Associated
First Capital) were hit by takeover lightning -- receiving
A-11
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Guardian Assets (Cont'd)
bids well above our average purchase prices. We believe ongoing merger and
acquisition activity may continue to bring values to fruition in out-of-favor
industries, providing a tailwind for the portfolio.
Our communications services investments were a drag on performance. We were
well aware the tidal wave of capital being used to build advanced communications
networks would create temporary over-capacity and cutthroat competition.
However, we wanted to maintain some exposure in a sector that benefits from the
continued proliferation of digital communications services. We adopted a
defensive posture -- owning established companies like Verizon Communications
(formerly Bell Atlantic), Worldcom, and AT&T, which we viewed as the most
reasonably-valued participants. This strategy struggled as prices for telecom
services fell faster and farther than we anticipated.
Our consumer cyclicals investments also restrained portfolio performance. As
the Federal Reserve increased short-term interest rates to slow the economy,
investors began anticipating earnings problems for consumer cyclicals, such as
retailers and auto manufacturers. To date, earnings have held up relatively
well, and if interest rates stabilize at current levels, future earnings may
come in better than expected. Our current inclination is to be patient with our
consumer cyclicals holdings, one of which we will highlight in this report. Be
advised this should not be viewed as a recommendation, but rather an example of
our investment discipline.
Costco is a leading discount retailer, which until the last several quarters
had an unblemished growth record. The company's rapid expansion finally resulted
in growing pains and an earnings shortfall, which took the stock from a high of
$60 per share to the mid-$20s. We began buying in the low- to mid-$30s. We
believe Costco has a valid business model, plenty of room for growth, and the
ability to manage this growth more successfully in the years ahead. We expect
long-term annual earnings growth approximating 15%. Costco stock has rebounded
from its low, but we think it still represents good value.
A-12
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Guardian Assets (Cont'd)
It's been a rewarding year for Guardian Assets shareholders. Although we can
never be sure of what the market has in store for us, we believe our value
strategy (buying "best in class" companies at below market average valuations)
has better long-term potential than momentum investing -- buying stocks simply
because they are going up in price. We like to buy "momentum
casualties" -- great companies such as Costco, Bristol Myers, GM Hughes, The
Gap, and Lexmark -- that we believe are now back to being great values as well.
We believe quality merchandise bought at bargain prices will continue to be an
effective method for generating superior long-term investment returns.
Sincerely,
/s/ Kevin Risen /s/ Rick White
Kevin Risen and Rick White
PORTFOLIO CO-MANAGERS
*For index definitions, refer to page A-26, titled "Glossary of Indices." The
Portfolio invests in many securities not included in the indices listed.
The composition, industries and holdings of the Portfolio are subject to
change. Guardian Portfolio is invested in a wide array of stocks and no single
holding makes up more than a small fraction of the Portfolio's total assets.
Past performance is no guarantee of future results. Share prices will vary, and
your shares, when redeemed may be worth more or less than the price you paid
for them.
The investments for the Portfolio are managed by the same portfolio
manager(s) who manage one or more other mutual funds that have similar names,
investment objectives and investment styles as the Portfolio. You should be
aware that the Portfolio is likely to differ from the other mutual funds in
size, cash flow pattern and tax matters. Accordingly, the holdings and
performance of the Portfolio can be expected to vary from those of the other
mutual funds.
A-13
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PORTFOLIO COMMENTARY
Neuberger Berman
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Manhattan Assets
For the six and twelve month periods concluding August 31, 2000, the Manhattan
Assets declined 1.42% and gained 86.04% respectively, versus the Russell Midcap
Growth Index's 0.09% decline and 67.18% gain over the same time period, (see
page A-31 for comparison of $10,000 investment and average annual total returns
as of August 31, 2000).*
After five long years of under-performing large-cap stocks, mid-cap stocks
excelled in fiscal 2000.(1) Even after this exceptional year, we believe mid-cap
stocks remain fundamentally attractive relative to large-caps. Earnings growth
rates are materially higher and valuations are still significantly lower. Merger
and acquisition activity affirms there is still great value to be found in the
mid-cap arena.
Of course, fundamental merit is no guarantee that mid-cap stocks will continue
to outperform. However, mid-caps are attracting more investor attention. Over
the last year, we have seen the average capitalizations of large-cap mutual
funds declining and the average capitalization of small-cap funds rising.
Large-cap fund managers appear to be dipping into the mid-cap well for companies
with better earnings growth and more reasonable valuations. Small-cap fund
managers may be straying into mid-cap territory for greater liquidity.
Regardless of the reasons for increased institutional interest in mid-cap
stocks, the positive flow of funds into mid-caps may provide a demand-driven
performance tailwind.
We are delighted to have out-performed the Russell Midcap Growth Index
benchmark by a sizable margin for the fiscal one-year period. We believe this
further validates our investment thesis that stocks which are growing earnings
faster than their competitors and are consistently beating consensus earnings
estimates will be superior performers. In calendar second quarter 2000,
portfolio earnings grew by 65% compared to consensus earnings growth rate
estimates of 48%. Seventy-five percent of our holdings exceeded consensus
earnings estimates. We believe if the portfolio sustains its earnings momentum
and its high percentage of pleasant earnings surprises, the Fund will continue
to deliver superior performance.
A-14
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Manhattan Assets (Cont'd)
Our technology investments continued to lead the performance parade, with
holdings such as Veritas Software, JDS Uniphase, and Network Appliance Inc. more
than tripling in fiscal 2000. Our strategy of investing in profitable Internet
infrastructure companies, rather than profitless "dot.coms," helped generate
impressive absolute returns and resulted in our tech holdings materially
exceeding the tech sector's contribution to our Russell Midcap Growth benchmark.
We employed a similarly fruitful strategy in the healthcare arena, favoring
companies supplying productivity enhancing products to end-users. Our best
performer was PE Biosystems (PEB), which manufactures gene sequencing equipment
for genomic research. PEB sells its equipment to nearly all of the participants
in the genomic drug field. In the course of the year, we added genomic drug
companies Millennium Pharmaceuticals and Human Genome to the portfolio. We
believe these two companies have some potentially profitable genomic drugs
(drugs customized to treat individuals with varying genetic makeups) in their
pipelines. If other factors line up right, this could translate into positive
earnings growth.
Not all our big winners were in glamorous growth industries such as technology
and biotechnology. Calpine, which finished near the top of our performance list,
is a utility using state-of-the-art gas turbine technology to generate
electricity. It is the low cost producer in the generating business and earnings
are accelerating. In second quarter 2000, Calpine's earnings came in 50% above
consensus estimates, which over the previous six months had been raised by more
than 30%.
As usual, our primary portfolio disappointments came in the form of companies
in a variety of sectors that failed to meet earnings expectations. As is our
discipline, these stocks were sold. Communications services holdings such as
McCloud and Winstar performed poorly despite meeting fundamental forecasts. The
same is true for media investments including Westwood One and Univision. We put
these stocks in our "performance in the warehouse" category -- stocks we believe
will ultimately be rewarded for superior earnings growth records.
A-15
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Manhattan Assets (Cont'd)
Manhattan Assets booked relatively large realized capital gains in fiscal
2000. This is primarily the result of selling holdings that performed so well
that they moved up into the large-cap category. This includes some of our
biggest winners in the technology sector. Our prospectus doesn't mandate the
sale of stocks that grow out of their mid-cap clothing. However, an integral
part of our investment thesis is that over the long term, mid-cap stocks will
outperform large-cap equities. This dictates we preserve the mid-cap character
of the Fund. We believe that recycling cash from the sales of our larger cap
holdings into smaller companies just graduating into the mid-cap category will
enhance long-term returns.
In closing, we are gratified by the strong showing of mid-cap growth stocks
and the Fund's exceptional fiscal 2000 returns. We will be striving to build on
Manhattan Assets successful performance record in the year ahead.
Sincerely,
/s/ Jennifer Silver /s/ Brooke Cobb
Jennifer Silver and Brooke Cobb
PORTFOLIO CO-MANAGERS
*For index definitions, refer to page A-26, titled "Glossary of Indices." The
Portfolio invests in many securities not included in the indices listed.
(1)Mid-cap stocks, as represented by the Russell Midcap Index, returned 28.83%
for the fiscal year ending August 31, 2000. Large-cap stocks, as represented
by the Russell 1000 Index, returned 20.14%. In the previous five fiscal years
ending August 31, the Russell 1000 had outperformed the Russell Midcap Index.
The composition, industries and holdings of the Portfolio are subject to
change. Manhattan Portfolio is invested in a wide array of stocks and no
single holding makes up more than a small fraction of the Portfolio's total
assets.
Past performance is no guarantee of future results.
The investments for the Portfolio are managed by the same portfolio
manager(s) who manage one or more other mutual funds that have similar names,
investment objectives and investment styles as the Portfolio. You should be
aware that the Portfolio is likely to differ from the other mutual funds in
size, cash flow pattern and tax matters. Accordingly, the holdings and
performance of the Portfolio can be expected to vary from those of the other
mutual funds.
A-16
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PORTFOLIO COMMENTARY
Neuberger Berman
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Millennium Assets
For the six and twelve month periods concluding August 31, 2000, Millennium
Assets declined 13.21% and gained 96.36%, respectively, compared to the Russell
2000 Growth Index's 16.24% decline and 39.08% gain over the same time periods.
(See page A-32 for comparison of a $10,000 investment and average annual total
returns as of August 31, 2000)*
We are pleased to have achieved excellent results in fiscal 2000. Technology
stocks comprised approximately 50% of portfolio equity market value, and
collectively generated returns in excess of 130%. These gains were accompanied
by the volatility which is characteristic of the technology sector. More than
any other sector group in today's market, technology stocks are subject to
dramatic shifts in investor sentiment. This year, we saw panic buying in January
and February, which gave way to panic selling in March and April, before a more
orderly summer advance that helped our tech investments close the year with
strong gains. Over the short-term, technology stock performance will almost
surely continue to be erratic, characterized by breathtaking rallies and
dizzying declines. However, over the longer term, we believe investing in small
technology companies that are capable of translating promise into profits will
be rewarding.
Our communications technology investments performed extremely well this year,
with Integrated Device Technologies, Efficient Networks Inc. and Natural
Microsystems finishing near the top of our performance list. We believe
companies providing semiconductors and optical components for next generation
communications systems continue to have exceptional growth and investment
potential.
The Internet category in our technology universe produced some of our major
portfolio disappointments. Many "dot.com" stocks went from market darlings to
market dogs almost overnight. At issue is whether rapidly growing revenues will
ever translate into profits. We believe dot.com companies with good business
plans can succeed, and that discerning investors will acknowledge this going
forward. In fact, some had a positive impact on the Portfolio's performance.
Lifeminders and My Points, for example, are direct marketers specializing in
targeted
A-17
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Millennium Assets (Cont'd)
e-mail programs. Both companies are experiencing rapid revenue growth, and in
our opinion, are on the road to future profitability. We believe the same is
true for About.com, a portal that seems well positioned in the Internet
information niche. Despite the poor performance of these stocks this year, we
continue to have faith in their ability to reward shareholders.
Our energy investments contributed positively to returns this year, with oil
services stocks such as Caldive International posting excellent gains. There is
some concern that natural gas and oil prices will decline from their highs,
restraining energy companies earnings. We believe strong global demand, tight
inventories and constrained capacity will sustain energy prices around current
levels and that oil services company earnings will advance in the year ahead.
Our communications services investments, primarily the publicly traded Sprint
PCS affiliates, also performed well. In return for building their wireless
systems, these companies have the right to market their services under the
Sprint PCS name and receive back office support from Sprint PCS as well. We
think this is a good deal for all involved.
Collectively, our health care investments had a negative impact on our
Portfolio, well below the contribution of this sector to our Russell 2000 Growth
benchmark. Experimental drugs from several of the biotechnology companies in the
portfolio stumbled badly in clinical trials, dimming their prospects. Having
failed our growth tests as well, they were eliminated from the portfolio.
What does the small-cap stock market hold in store for the year ahead? The
performance of technology stocks will probably continue to have the greatest
influence on small-cap stock returns. We believe there are still pockets of
extreme overvaluation in the tech sector. For example, several fuel cell
companies with little revenues and no earnings have multi-billion dollar market
caps. We also see pockets of extreme under-valuation. As mentioned above,
virtually every stock with a dot.com label has been severely punished. We
believe there are some outstanding growth bargains in this category, however. We
are not top-down investors, so we won't venture the blanket statement that
A-18
<PAGE>
----------------------------------------------------------------------
Millennium Assets (Cont'd)
technology stocks are now reasonably valued. However, we are still finding
plenty of small-cap growth stocks that in our analysis, look like great
long-term investment opportunities.
In closing, we are pleased to have delivered strong gains and materially
outperformed our Russell 2000 Growth Index benchmark. We believe this is a
testament to our investment strategy of looking for fast growing companies
capable of consistently exceeding consensus growth expectations. Volatility,
particularly in the technology sector, will continue to present a challenge to
small-cap growth stock investors. It will not undermine our resolve or cause us
to lose confidence in the long-term potential of small-cap growth stock
investing.
Sincerely,
/s/ Michael Malouf /s/ Jennifer Silver
Michael Malouf and Jennifer Silver
PORTFOLIO CO-MANAGERS
*The start up of Millennium Assets roughly coincided with a period of
accelerated growth in the small-cap growth sector of the stock market, and its
investment in IPOs had a significant impact on performance. There can be no
assurance that these factors will continue to have a positive effect on the
fund. And since the fund for much of this period was relatively small in asset
size, it may be easier to achieve higher returns than in a larger fund.
NBMI currently absorbs certain expenses of the fund. This arrangement is
subject to change, and without this arrangement, the fund's returns would have
been less. Results are shown on a "total return" basis and include reinvestment
of all dividends and capital gains 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.
For index definitions, refer to page A-26, titled "Glossary of Indices." The
Portfolio invests in many securities not included in the indices listed.
The composition, industries and holdings of the Portfolio are subject to
change. Millennium Portfolio is invested in a wide array of stocks and no
single holding makes up more than a small fraction of the Portfolio's total
assets.
THE RISKS INVOLVED IN SEEKING CAPITAL APPRECIATION FROM INVESTMENTS PRIMARILY
IN COMPANIES WITH SMALL MARKET CAPITALIZATION ARE SET FORTH IN THE PROSPECTUS.
A-19
<PAGE>
PORTFOLIO COMMENTARY
Neuberger Berman
----------------------------------------------------------------------
Partners Assets
For the six and twelve month periods concluding August 31, 2000, the Partners
Assets returned 11.94% and 7.99% respectively, versus the Russell 1000 Value
Index's 14.31% and 4.15% gains over the same time period. The S&P 500 advanced
11.72% and 16.31% over the corresponding six and twelve month periods (see
page A-34 for comparison of $10,000 investment and average annual total returns
as of August 31, 2000).*
We are pleased to have nearly doubled the performance of our Russell 1000
Value benchmark in fiscal 2000. We were in some of the right places at the right
time: technology, financial services, energy, and healthcare: and stock
selection helped us post good gains in poorer performing sectors such as
consumer cyclicals, and consumer staples.
Although our technology stock holdings provided the greatest contribution to
performance this year, we are particularly proud of the generous returns
achieved by our financial services investments. We significantly under-weighted
financial services stocks, relative to our benchmark, when they began retreating
in the face of Federal Reserve rate hikes in the first half of fiscal 2000. We
gradually increased our exposure to financials as declining market interest
rates spawned a big rebound in the second half. Our stock selection was also
good, with Bank of New York, Morgan Stanley Dean Witter, and XL Capital Ltd.
making our Top Ten Performance List. Although the Portfolio, on average, was
materially under-weighted in financial services throughout fiscal 2000, our
returns in this sector matched that of our benchmark index.
Stock selection was the key to our success in energy, where Portfolio gains
were more than triple this sector's contribution to the Russell 1000 Value
Index. Anadarko Petroleum, which became a much more balanced
exploration/production company through its acquisition of Union Pacific
Resources, was a big winner, as was offshore driller Transocean Sedco. We think
energy prices may have peaked and therefore we currently favor the integrated
oils over more richly valued exploration/production companies and drillers.
A-20
<PAGE>
----------------------------------------------------------------------
Partners Assets (Cont'd)
Our basic materials, capital goods, and communications services investments
disappointed. We expected basic materials and capital goods company earnings to
benefit from global economic expansion. A strong dollar, however, has continued
to keep international demand, pricing and margins down, and we have lost
confidence in earnings prospects for the foreseeable future. In communications
services, we took a defensive approach, favoring established companies such as
Verizon Communications (formerly Bell Atlantic), AT&T and Worldcom. Low
valuations failed to support these stocks when revenues and earnings suffered
from superheated competition and cutthroat pricing in the land line telecom
arena. Even though we think these companies still have stores of
value -- principally in their wireless communications businesses -- we are
re-evaluating our strategy in this area.
Value investors buy technology stocks when valuations are in line with
realistic earnings potential. Such opportunities generally evolve when the tech
sector is out-of-favor or when a good technology company stumbles on the
earnings front. Lexmark, the low cost producer of laser jet and ink jet computer
printers, ran into earnings problems when companies deferred buying new computer
systems during the Y2K hysteria. Lexmark stock retreated from a high of 136 to
the mid-40's. We began buying it shortly afterward. It has continued to retreat,
but become even a better bargain, in our opinion. We believe the revenues and
earnings Lexmark lost in fourth quarter 1999 will begin coming on stream in
fourth quarter 2000. In the interim Lexmark continues to gain market share. In
addition, growth in the Internet should translate into growth in the use of
printers and ink cartridges, particularly the higher margin colored ink
cartridges. This should help improve Lexmark's margins. We think the company can
grow earnings by 30% annually over the next several years, but Lexmark stock is
trading at just about 13 times our 2001 earnings estimates. Although there are
no guarantees Lexmark will live up to our earnings and capital appreciation
expectations, it looks like a great bargain.
A-21
<PAGE>
----------------------------------------------------------------------
Partners Assets (Cont'd)
What can we expect from the stock market in the year ahead? We note that
declining market interest rates (bond yields), infer the economy is beginning to
slow. No one (including us) can predict the precise impact of a slower economy
on earnings. If corporate earnings do disappoint in the year ahead, however, we
believe that richly valued growth stocks will suffer more than the fundamental
value bargains in our portfolio.
Sincerely,
/s/ Basu Mullick /s/ Robert Gendelman
S. Basu Mullick and Robert Gendelman
PORTFOLIO CO-MANAGERS
*For index definitions, refer to page A-26, titled "Glossary of Indices." The
Portfolio invests in many securities not included in the indices listed.
The composition, industries and holdings of the Portfolio are subject to
change. Partners Portfolio is invested in a wide array of stocks and no single
holding makes up more than a small fraction of the Portfolio's total assets.
Past performance is no guarantee of future results. Share prices will vary and
your shares, when redeemed may be worth more or less than the price you paid
for them.
The investments for the Portfolio are managed by the same portfolio manager(s)
who manage one or more other mutual funds that have similar names, investment
objectives and investment styles as the Portfolio. You should be aware that the
Portfolio is likely to differ from the other mutual funds in size, cash flow
pattern and tax matters. Accordingly, the holdings and performance of the
Portfolio can be expected to vary from those of the other mutual funds.
A-22
<PAGE>
PORTFOLIO COMMENTARY
Neuberger Berman
----------------------------------------------------------------------
Socially Responsive Assets
For the six and twelve month periods concluding August 31, 2000, the Socially
Responsive Assets returned 14.77% and 3.35%, respectively, compared to the
Russell 1000 Value Index's 14.31% and 4.15% gains over the same time periods.
The S&P 500 Index returned 11.72% and 16.31% over the corresponding six and
twelve month periods (see page A-35 for comparison of a $10,000 investment and
average annual total returns as of August 31, 2000).*
After a slow start, the Socially Responsive Assets regained momentum in the
second half of fiscal 2000. We finished the fiscal year with competitive gains
versus our Russell 1000 Value benchmark, although we trailed the growth
stock-dominated S&P 500 by a significant margin.
Our energy investments made the greatest contribution to returns. The
Portfolio's energy sector weighting matched that of its Russell 1000 Value Index
benchmark, but the Portfolio's returns were exponentially higher. Our bias
towards oil services and exploration/production companies, which significantly
outperformed the integrated oil companies, was responsible for this big relative
return advantage. Anadarko Petroleum, a natural gas exploration and production
company with a great environmental management record, was high on our Top Ten
Performance List. We still like the energy sector. Inventories are low and
capacity is still constrained, which means, in our opinion, that our energy
investments can earn good money even if energy prices retreat from their current
highs.
Our financial services holdings also performed well, highlighted by good gains
in insurance company holdings such as Hartford Financial and AIG. Property and
casualty insurers and re-insurance companies just now seem to be emerging from
an extended down cycle characterized by intense, margin-eroding price
competition. Competition has been abating and some pricing flexibility has
returned to the business. We accumulated these beaten down stocks at very low
prices relative to severely depressed earnings. We expect these stocks to
continue to march higher, assuming policy pricing continues to firm, earnings
recover, and price/earnings multiples expand.
A-23
<PAGE>
----------------------------------------------------------------------
Socially Responsive Assets (Cont'd)
Our utility holdings, most notably Enron and Keyspan Energy, posted
exceptional revenue and earnings gains in part due to supplementing their
regulated utilities businesses with unregulated operations such as
telecommunications and commodities trading. Coupled with pricing improvements in
the basic utilities business, a growth dimension has been added to these stocks,
which have performed quite well over the last year. Our returns from the health
care sector got a big boost when Pfizer acquired Warner Lambert. Looking ahead,
we are a bit wary about the pharmaceuticals. Political pressure for some form of
price restraints on prescription drugs is mounting. Whether it comes from
government or the insurance companies, price restraints would likely crimp
pharmaceutical companies' earnings growth.
Collectively, our technology investments finished the year at a modest gain
compared to substantial gains for the tech sector in our benchmark index. What
went wrong? Smaller cap tech holdings such as Quantum Corp. were severely
punished for reporting disappointing earnings. Larger cap holdings such as Xerox
and Unisys suffered the same fate. Substantial losses in these stocks offset
good gains in portfolio holdings such as Intel, Hewlett Packard, and Compaq
Computer. We have reoriented our technology stock commitments, focusing on what
we think are reasonably valued blue chips less prone to unpleasant earnings
surprises.
Our communications services holdings also penalized returns. We had taken what
we thought was a defensive posture, focusing on large established companies
including AT&T, Worldcom, and Verizon Communications (formerly Bell Atlantic).
We believed these companies' size and dominant positions would help them succeed
in the increasingly competitive telecommunications market. Instead, newcomers
with more modern networks continued to capture share from these "legacy"
companies, sending their stock prices materially lower. We are rethinking our
communications services sector strategy and may change our focus in the year
ahead.
As the name of our Assets indicates, portfolio companies must be socially
responsive in addition to having good investment potential.
A-24
<PAGE>
----------------------------------------------------------------------
Socially Responsive Assets (Cont'd)
KeySpan Corporation (formerly Brooklyn Union Gas) certainly qualifies. In
addition to its New York Metropolitan Area electric and gas utilities business,
KeySpan has some telecommunications properties and investments in fuel cell
technology. Fuel cells produce electric power by converting energy from natural
gas into electricity without combustion. This is the cleanest, most
environmentally friendly method of producing electricity. KeySpan has operated a
large fuel cell at a Staten Island hospital, which it believes has eliminated
almost 30,000 pounds of air pollution and three million pounds of carbon dioxide
from the air. We think KeySpan has reasonably good earnings prospects and a
yield approximating 5%. Our comments on KeySpan should not be viewed as a
recommendation, but rather an example of the type of stock we want to own: in
short, a good corporate citizen with seemingly excellent investment prospects.
Although the Fund's full fiscal year 2000 results are uninspiring, we are
pleased and encouraged by its strong performance in the second half. We are
striving to maintain this momentum in the year ahead, while maintaining the
socially responsive character of the portfolio.
Sincerely,
/s/ Janet Prindle
Janet Prindle
PORTFOLIO MANAGER
*For index definitions, refer to page A-26, titled "Glossary of Indices." The
Portfolio invests in many securities not included in the indices listed.
The composition, industries and holdings of the Portfolio are subject to
change. 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. Share prices will vary and
your shares, when redeemed, may be worth more or less than their original cost.
The investments for the Portfolio are managed by the same portfolio manager(s)
who manage one or more other mutual funds that have similar names, investment
objectives and investment styles as the Portfolio. You should be aware that the
Portfolio is likely to differ from the other mutual funds in size, cash flow
pattern and tax matters. Accordingly, the holdings and performance of the
Portfolio can be expected to vary from those of the other mutual funds.
A-25
<PAGE>
GLOSSARY OF INDICES
<TABLE>
<S> <C>
S&P 500 INDEX: The S&P 500 Index is widely regarded as
the standard for measuring large-cap
U.S. stock markets performance and
includes a representative sample of
leading companies in leading industries.
RUSSELL 1000-REGISTERED TRADEMARK- Measures the performance of the 1,000
INDEX: largest companies in the
Russell 3000-Registered Trademark-
Index (which measures the performance of
the 3,000 largest U.S. companies based
on total market capitalization). The
Russell 1000 Index represents
approximately 92% of the total market
capitalization of the Russell 3000
Index.
RUSSELL 1000-REGISTERED TRADEMARK- Measures the performance of those
VALUE INDEX: Russell 1000 companies with lower
price-to-book ratios and lower
forecasted growth values.
RUSSELL 1000-REGISTERED TRADEMARK- Measures the performance of the Russell
GROWTH INDEX: 1000-Registered Trademark- companies
with higher price-to-book ratios and
higher forecasted growth values.
RUSSELL 2000-REGISTERED TRADEMARK- An unmanaged index consisting of
INDEX: securities of the 2,000 issuers having
the smallest capitalization in the
Russell 3000-Registered Trademark-
Index, representing approximately 8% of
the Russell 3000 total market
capitalization. The smallest company's
market capitalization is roughly
$178 million.
RUSSELL 2000-REGISTERED TRADEMARK- Measures the performance of those
GROWTH INDEX: Russell 2000-Registered Trademark- Index
companies with higher price-to-book
ratios and higher forecasted growth
values.
RUSSELL 2000-REGISTERED TRADEMARK- Measures the performance of those
VALUE INDEX: Russell 2000-Registered Trademark- Index
companies with lower price-to-book
ratios and lower forecasted growth
values.
EAFE-REGISTERED TRADEMARK- INDEX: Also known as the Morgan Stanley Capital
International Europe, Australasia, Far
East Index. An unmanaged index of over
1,000 foreign stock prices. The index is
translated into U.S. dollars and
includes reinvestment of all dividends
and capital gain distributions.
RUSSELL MIDCAP-REGISTERED TRADEMARK- An unmanaged index that measures the
GROWTH INDEX: performance of those Russell Midcap-
Trademark- Index (the 800 smallest
companies in the Russell 1000 Index)
companies with higher price-to-book
ratios and higher forecasted growth
values.
RUSSELL MIDCAP-REGISTERED TRADEMARK- An unmanaged index that measures the
VALUE INDEX: performance of those Russell Midcap-
Trademark- Index (the 800 smallest
companies in the Russell 1000 Index)
companies with lower price-to-book
ratios and lower forecasted growth
values.
</TABLE>
Please note that indices do not take into account any fees and expenses of 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 may invest in many
securities not included in the above-described indices.
A-26
<PAGE>
COMPARISON OF A $10,000 INVESTMENT
Neuberger Berman August 31, 2000
----------------------------------------------------------------------
Focus Assets
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN(1)
RUSSELL 1000-REGISTERED TRADEMARK-
FOCUS S&P 500(2) VALUE(2)
<S> <C> <C> <C>
1 YEAR +58.68% +16.31% +4.15%
5 YEAR +22.65% +24.03% +18.21%
10 YEAR +20.57% +19.47% +17.18%
</TABLE>
<TABLE>
<CAPTION>
RUSSELL 1000
FOCUS ASSETS S&P 500 VALUE
<S> <C> <C> <C>
1990 $10,000 $10,000 $10,000
1991 $11,596 $12,685 $12,356
1992 $12,965 $13,689 $13,596
1993 $16,627 $15,766 $17,248
1994 $18,348 $16,627 $17,742
1995 $23,389 $20,189 $21,145
1996 $24,254 $23,968 $24,854
1997 $34,731 $33,705 $34,680
1998 $28,574 $36,435 $36,029
1999 $40,904 $50,939 $46,867
2000 $64,906 $59,248 $48,814
</TABLE>
The performance information for Neuberger Berman Focus Assets is as of
August 31, 2000. Neuberger Berman Focus Assets started operating on
September 4, 1996. It has identical investment objectives and policies, and
invests in the same Portfolio as Neuberger Berman Focus Fund ("Sister Fund"),
which is also managed by Neuberger Berman Management Inc. ("Management"). The
performance information shown in the above chart for the period before
September 4, 1996, is for the Sister Fund. Management has agreed to bear certain
operating expenses of Focus Assets which, in the aggregate, exceed 1.50% per
annum of Focus Assets' average daily net assets, until December 31, 2010. Absent
such arrangement, the average annual total returns of Focus Assets would have
been less. The total returns for the periods prior to Focus Assets' commencement
of operations would have been lower had they reflected the higher expense ratios
of Focus Assets as compared to those of its Sister Fund.
Prior to November 1, 1991, the investment policies of the Sister Fund
required that a substantial percentage of its assets be invested in the energy
field; accordingly, performance results prior to that time do not necessarily
reflect the level of performance that may be expected under the Assets' current
investment policies. While the
A-27
<PAGE>
Assets' value-oriented approach is intended to limit risks, the Portfolio, with
its concentration in sectors, may be more greatly affected by any single
economic, political or regulatory development than a more diversified mutual
fund.
1. "Total Return" includes reinvestment of all income dividends and capital gain
distributions. Results represent past performance and do not indicate future
results. The value of an investment in Focus Assets and the return on the
investment both will fluctuate, and redemption proceeds may be higher or lower
than an investor's original cost.
2. The Russell 1000-Registered Trademark- Index measures the performance of the
1,000 largest companies in the Russell 3000-Registered Trademark- Index (which
measures the performance of the 3,000 largest U.S. companies based on total
market capitalization). The Russell 1000 Index represents approximately 92% of
the total market capitalization of the Russell 3000 Index. The Russell 1000
Value Index measures the performance of those Russell 1000 companies with lower
price-to-book ratios and lower forecasted growth values. The S&P 500 Index is
widely regarded as the standard for measuring large-cap U.S. stock market
performance and includes a representative sample of leading companies in leading
industries. Please note that indices do not take into account any fees and
expenses of investing in the individual securities that they track, and that
individuals cannot invest directly in any index. Data about the performance of
these indices are prepared or obtained by Management and include reinvestment of
all dividends and capital gain distributions. The Portfolio may invest in many
securities not included in the above-described indices.
A-28
<PAGE>
COMPARISON OF A $10,000 INVESTMENT
Neuberger Berman August 31, 2000
----------------------------------------------------------------------
Genesis Assets
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN(1) GENESIS RUSSELL 2000-REGISTERED TRADEMARK-(2)
<S> <C> <C>
1 YEAR +25.42% +27.15%
5 YEAR +16.15% +13.46%
10 YEAR +16.70% +16.20%
</TABLE>
<TABLE>
<CAPTION>
GENESIS ASSETS RUSSELL 2000
<S> <C> <C>
1990 $10,000 $10,000
1991 $13,536 $13,125
1992 $14,226 $14,083
1993 $17,670 $18,664
1994 $18,512 $19,759
1995 $22,157 $23,875
1996 $26,881 $26,459
1997 $38,822 $34,120
1998 $31,450 $27,502
1999 $37,347 $35,301
2000 $46,838 $44,887
</TABLE>
The performance information for Neuberger Berman Genesis Assets is as of
August 31, 2000. Neuberger Berman Genesis Assets started operating on April 2,
1997. It has identical investment objectives and policies, and invests in the
same Portfolio as Neuberger Berman Genesis Fund ("Sister Fund"), which is also
managed by Neuberger Berman Management Inc. ("Management"). The performance
information shown in the above chart for the period before April 2, 1997, is for
the Sister Fund. Management has agreed to bear certain operating expenses of
Genesis Assets which, in the aggregate, exceed 1.50% per annum of Genesis
Assets' average daily net assets, until December 31, 2010. Management previously
agreed to waive a portion of the management fee borne directly by Neuberger
Berman Genesis Portfolio and indirectly by Genesis Assets. Absent such
arrangements, the average annual total returns of Genesis Assets would have been
less. The total returns for the periods prior to Genesis Assets' commencement of
operations would have been lower had they reflected the higher expense ratios of
Genesis Assets as compared to those of its Sister Fund.
1. "Total Return" includes reinvestment of all income dividends and capital gain
distributions. Results represent past performance and do not indicate future
results. The value of an investment in Genesis Assets and the return on the
investment both will fluctuate, and redemption proceeds may be higher or lower
than an investor's original cost.
2. The Russell 2000 Index is an unmanaged index that measures the performance of
the 2,000 issuers having the smallest capitalization in the Russell
3000-Registered Trademark- Index, representing approximately 8% of the Russell
3000 total market capitalization. The smallest company's market capitalization
is roughly $178 million. Please note that indices do not take into account any
fees and expenses of investing in the individual securities that they track, and
that individuals cannot invest directly in any index. Data about the performance
of this index are prepared or obtained by Management and include reinvestment of
all dividends and capital gain distributions. The Portfolio may invest in many
securities not included in the above-described index.
THE RISKS INVOLVED IN SEEKING CAPITAL APPRECIATION FROM INVESTMENTS PRIMARILY IN
COMPANIES WITH SMALL MARKET CAPITALIZATION ARE SET FORTH IN THE PROSPECTUS.
A-29
<PAGE>
COMPARISON OF A $10,000 INVESTMENT
Neuberger Berman August 31, 2000
----------------------------------------------------------------------
Guardian Assets
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN(1)
RUSSELL 1000 -REGISTERED TRADEMARK-
GUARDIAN S&P 500(2) VALUE(2)
<S> <C> <C> <C>
1 YEAR +16.04% +16.31% +4.15%
5 YEAR +10.79% +24.03% +18.21%
10 YEAR +15.37% +19.47% +17.18%
</TABLE>
<TABLE>
<CAPTION>
RUSSELL 1000
GUARDIAN ASSETS S&P 500 VALUE
<S> <C> <C> <C>
1990 $10,000 $10,000 $10,000
1991 $13,048 $12,685 $12,356
1992 $14,860 $13,689 $13,596
1993 $18,491 $15,766 $17,248
1994 $20,177 $16,627 $17,742
1995 $25,032 $20,189 $21,145
1996 $26,350 $23,968 $24,854
1997 $36,545 $33,705 $34,680
1998 $28,744 $36,435 $36,029
1999 $36,003 $50,939 $46,867
2000 $41,778 $59,248 $48,814
</TABLE>
The performance information for Neuberger Berman Guardian Assets is as of
August 31, 2000. Neuberger Berman Guardian Assets started operating on
September 4, 1996. It has identical investment objectives and policies, and
invests in the same Portfolio as Neuberger Berman Guardian Fund ("Sister Fund"),
which is also managed by Neuberger Berman Management Inc. ("Management"). The
performance information shown in the above chart for the period before
September 4, 1996, is for the Sister Fund. Management has agreed to bear certain
operating expenses of Guardian Assets which, in the aggregate, exceed 1.50% per
annum of Guardian Assets' average daily net assets, until December 31, 2010.
Absent such arrangement, the average annual total returns of Guardian Assets
would have been less. The total returns for the periods prior to Guardian
Assets' commencement of operations would have been lower had they reflected the
higher expense ratios of Guardian Assets as compared to those of its Sister
Fund.
1. "Total Return" includes reinvestment of all income dividends and capital gain
distributions. Results represent past performance and do not indicate future
results. The value of an investment in Guardian Assets and the return on the
investment both will fluctuate, and redemption proceeds may be higher or lower
than an investor's original cost.
2. The Russell 1000-Registered Trademark- Index measures the performance of the
1,000 largest companies in the Russell 3000-Registered Trademark- Index (which
measures the performance of the 3,000 largest U.S. companies based on total
market capitalization). The Russell 1000 Index represents approximately 92% of
the total market capitalization of the Russell 3000 Index. The Russell 1000
Value Index measures the performance of those Russell 1000 companies with lower
price-to-book ratios and lower forecasted growth values. The S&P 500 Index is
widely regarded as the standard for measuring large-cap U.S. stock market
performance and includes a representative sample of leading companies in leading
industries. Please note that indices do not take into account any fees and
expenses of investing in the individual securities that they track, and that
individuals cannot invest directly in any index. Data about the performance of
these indices are prepared or obtained by Management and include reinvestment of
all dividends and capital gain distributions. The Portfolio may invest in many
securities not included in the above-described indices.
A-30
<PAGE>
COMPARISON OF A $10,000 INVESTMENT
Neuberger Berman August 31, 2000
----------------------------------------------------------------------
Manhattan Assets
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN(1)
RUSSELL MIDCAP -REGISTERED TRADEMARK-
MANHATTAN S&P 500(2) GROWTH(2)
<S> <C> <C> <C>
1 YEAR +86.04% +16.31% +67.18%
5 YEAR +24.66% +24.03% +26.44%
10 YEAR +20.82% +19.47% +22.57%
</TABLE>
<TABLE>
<CAPTION>
RUSSELL MIDCAP
MANHATTAN ASSETS S&P 500 GROWTH
<S> <C> <C> <C>
1990 $10,000 $10,000 $10,000
1991 $12,617 $12,685 $13,896
1992 $13,215 $13,689 $14,836
1993 $16,883 $15,766 $18,012
1994 $17,472 $16,627 $18,983
1995 $22,014 $20,189 $23,681
1996 $21,374 $23,968 $26,480
1997 $29,506 $33,705 $34,751
1998 $26,175 $36,435 $30,763
1999 $35,622 $50,939 $45,786
2000 $66,270 $59,248 $76,545
</TABLE>
The performance information for Neuberger Berman Manhattan Assets is as of
August 31, 2000. Neuberger Berman Manhattan Assets started operating on
September 4, 1996. It has identical investment objectives and policies, and
invests in the same Portfolio as Neuberger Berman Manhattan Fund ("Sister
Fund"), which is also managed by Neuberger Berman Management Inc.
("Management"). The performance information shown in the above chart for the
period before September 4, 1996, is for the Sister Fund. Management has agreed
to bear certain operating expenses of Manhattan Assets which, in the aggregate,
exceed 1.50% per annum of Manhattan Assets' average daily net assets, until
December 31, 2010. Absent such arrangement, the average annual total returns of
Manhattan Assets would have been less. The total returns for the periods prior
to Manhattan Assets' commencement of operations would have been lower had they
reflected the higher expense ratios of Manhattan Assets as compared to those of
its Sister Fund.
1. "Total Return" includes reinvestment of all income dividends and capital gain
distributions. Results represent past performance and do not indicate future
results. The value of an investment in Manhattan Assets and the return on the
investment both will fluctuate, and redemption proceeds may be higher or lower
than an investor's original cost.
2. The Russell Midcap Growth Index measures the performance of those Russell
Midcap-Registered 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 24% of the
total market capitalization of the Russell 1000 Index (which, in turn, consists
of the 1,000 largest U.S. companies, based on market capitalization). The S&P
500 Index is widely regarded as the standard for measuring large-cap U.S. stock
market performance and includes a representative sample of leading companies in
leading industries. Please note that indices do not take into account any fees
and expenses of investing in the individual securities that they track, and that
individuals cannot invest directly in any index. Data about the performance of
these indices are prepared or obtained by Management and include reinvestment of
all dividends and capital gain distributions. The Portfolio may invest in many
securities not included in the above-described indices.
A-31
<PAGE>
COMPARISON OF A $10,000 INVESTMENT
Neuberger Berman August 31, 2000
----------------------------------------------------------------------
Millennium Assets
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN(1)
RUSSELL 2000-REGISTERED TRADEMARK-
MILLENNIUM GROWTH(2) RUSSELL 2000-REGISTERED TRADEMARK-(2)
<S> <C> <C> <C>
1 YEAR +96.36% +39.08% +27.15%
LIFE OF FUND +105.03% +39.78% +26.94%
</TABLE>
<TABLE>
<CAPTION>
RUSSELL 2000
MILLENNIUM ASSETS GROWTH RUSSELL 2000
<S> <C> <C> <C>
10/20/98 $10,000 $10,000 $10,000
11/30/98 $12,330 $11,714 $11,299
2/28/99 $14,880 $12,127 $11,173
5/31/99 $17,110 $13,690 $12,545
8/31/99 $19,480 $13,443 $12,281
11/30/99 $25,880 $15,540 $13,070
2/29/00 $44,073 $22,321 $16,679
5/31/00 $29,746 $16,386 $13,789
08/31/00 $38,251 $18,696 $15,615
</TABLE>
The performance information for Millennium Assets is as of August 31, 2000.
Neuberger Berman Millennium Assets started operations on January 26, 2000. It
has identical investment objectives and policies, and invests in the same
portfolio as Neuberger Berman Millennium Fund ("Sister Fund"), which is also
managed by Neuberger Berman Management ("Management"). The performance
information shown in the above chart prior to January 26, 2000 is for the Sister
Fund. The cumulative return for Millennium Assets from January 26, 2000, which
is the commencement of operations of Millennium Assets, through August 31, 2000
was 8.40%. The start up of Millennium Fund roughly coincided with a period of
accelerated growth in the small-cap growth sector of the stock market, and its
investment in IPOs had a significant impact on performance. There can be no
assurance that these factors will continue to have a positive effect on the
fund. Since the fund is relatively small in asset size, it may be easier to
achieve higher returns in a small fund than in a larger fund. Management has
contractually agreed to bear certain operating expenses of Millennium Assets
which, in the aggregate, exceed 1.75% per annum of Millennium Assets' average
daily net assets, until December 31, 2002. Absent such arrangement,
A-32
<PAGE>
the average annual total returns of Millennium Assets would have been less. THE
RISKS INVOLVED IN SEEKING CAPITAL APPRECIATION FROM INVESTMENTS PRIMARILY IN
COMPANIES WITH SMALL MARKET CAPITALIZATION ARE SET FORTH IN THE PROSPECTUS.
1. "Total Return" includes reinvestment of all income dividends and capital gain
distributions. Results represent past performance and do not indicate future
results. The value of an investment in the Trust and the return on the
investment both will fluctuate, and redemption proceeds may be higher or lower
than an investor's original cost.
2. The Russell 2000 Growth Index measures the performance of those Russell 2000
Index companies with higher price-to-book ratios and higher forecasted growth
values. The Russell 2000 Index is an unmanaged index that measures the
performance of the 2,000 issuers having the smallest capitalization in the
Russell 3000-Registered Trademark- Index, representing approximately 8% of the
Russell 3000 total market capitalization. The smallest company's market
capitalization is roughly $178 million. Please note that indices do not take
into account any fees and expenses of investing in the individual securities
that they track, and that individuals cannot invest directly in any index. Data
about the performance of these indices are prepared or obtained by Management
and include reinvestment of all dividends and capital gain distributions. The
Portfolio may invest in many securities not included in the above-described
indices.
A-33
<PAGE>
COMPARISON OF A $10,000 INVESTMENT
Neuberger Berman August 31, 2000
----------------------------------------------------------------------
Partners Assets
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN(1)
RUSSELL 1000-REGISTERED TRADEMARK-
PARTNERS S&P 500(2) VALUE(2)
<S> <C> <C> <C>
1 YEAR +7.99% +16.31% +4.15%
5 YEAR +15.06% +24.03% +18.21%
10 YEAR +15.55% +19.47% +17.18%
</TABLE>
<TABLE>
<CAPTION>
RUSSELL 1000
PARTNERS ASSETS S&P 500 VALUE
<S> <C> <C> <C>
1990 $10,000 $10,000 $10,000
1991 $11,803 $12,685 $12,356
1992 $12,806 $13,689 $13,596
1993 $16,410 $15,766 $17,248
1994 $17,322 $16,627 $17,742
1995 $21,051 $20,189 $21,145
1996 $23,972 $23,968 $24,854
1997 $35,062 $33,705 $34,680
1998 $31,315 $36,435 $36,029
1999 $39,305 $50,939 $46,867
2000 $42,444 $59,248 $48,814
</TABLE>
The performance information for Neuberger Berman Partners Assets is as of
August 31, 2000. Neuberger Berman Partners Assets started operating on
August 19, 1996. It has identical investment objectives and policies, and
invests in the same Portfolio as Neuberger Berman Partners Fund ("Sister Fund"),
which is also managed by Neuberger Berman Management Inc. ("Management"). The
performance information shown in the above chart for the period before
August 19, 1996, is for the Sister Fund. Management has agreed to bear certain
operating expenses of Partners Assets which, in the aggregate, exceed 1.50% per
annum of Partners Assets' average daily net assets, until December 31, 2010.
Absent such arrangement, the average annual total returns of Partners Assets
would have been less. The total returns for the periods prior to Partners
Assets' commencement of operations would have been lower had they reflected the
higher expense ratios of Partners Assets as compared to those of its Sister
Fund.
1. "Total Return" includes reinvestment of all income dividends and capital gain
distributions. Results represent past performance and do not indicate future
results. The value of an investment in Partners Assets and the return on the
investment both will fluctuate, and redemption proceeds may be higher or lower
than an investor's original cost.
2. The Russell 1000-Registered Trademark- Index measures the performance of the
1,000 largest companies in the Russell 3000-Registered Trademark- Index (which
measures the performance of the 3,000 largest U.S. companies based on total
market capitalization). The Russell 1000 Index represents approximately 92% of
the total market capitalization of the Russell 3000 Index. The Russell 1000
Value Index measures the performance of those Russell 1000 companies with lower
price-to-book ratios and lower forecasted growth values. The S&P 500 Index is
widely regarded as the standard for measuring large-cap U.S. stock markets
performance and includes a representative sample of leading companies in leading
industries. Please note that indices do not take into account any fees and
expenses of investing in the individual securities that they track, and that
individuals cannot invest directly in any index. Data about the performance of
these indices are prepared or obtained by Management and include reinvestment of
all dividends and capital gain distributions. The Portfolio may invest in many
securities not included in the above-described indices.
A-34
<PAGE>
COMPARISON OF A $10,000 INVESTMENT
Neuberger Berman August 31, 2000
----------------------------------------------------------------------
Socially Responsive Assets
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN(1)
RUSSELL 1000-REGISTERED TRADEMARK-
SOCIALLY RESPONSIVE S&P 500(2) VALUE(2)
<S> <C> <C> <C>
1 YEAR +3.35% +16.31% +4.15%
5 YEAR +16.08% +24.03% +18.21%
LIFE OF FUND +15.22% +22.23% +17.18%
</TABLE>
<TABLE>
<CAPTION>
RUSSELL 1000
SOCIALLY RESPONSIVE ASSETS S&P 500 VALUE
<S> <C> <C> <C>
3/16/94 $10,000 $10,000 $10,000
8/31/94 $10,070 $10,276 $10,128
1995 $11,865 $12,476 $12,071
1996 $14,261 $14,812 $14,188
1997 $18,818 $20,829 $19,797
1998 $17,686 $22,517 $20,568
1999 $24,194 $31,480 $26,754
2000 $25,005 $36,615 $27,866
</TABLE>
The performance information for Neuberger Berman Socially Responsive Assets
is as of August 31, 2000. Neuberger Berman Socially Responsive Assets started
operating on June 9, 1999. It has identical investment objectives and policies,
and invests in the same Portfolio as Neuberger Berman Socially Responsive Fund
("Sister Fund"), which is also managed by Neuberger Berman Management Inc.
("Management"). The performance information shown in the above chart for the
period before June 9, 1999, is for the Sister Fund. Management has agreed to
bear certain operating expenses of Socially Responsive Assets which, in the
aggregate, exceed 1.50% per annum of Socially Responsive Assets' average daily
net assets, until December 31, 2002. Absent such arrangement, the average annual
total returns of Socially Responsive Assets would have been less. The total
returns for the periods prior to Socially Responsive Assets' commencement of
operations would have been lower had they reflected the higher expense ratios of
Socially Responsive Assets as compared to those of its Sister Fund.
1. "Total Return" includes reinvestment of all income dividends and capital gain
distributions. Results represent past performance and do not indicate future
results. The value of an investment in Socially Responsive Assets and the return
on the investment both will fluctuate, and redemption proceeds may be higher or
lower than an investor's original cost.
2. The Russell 1000-Registered Trademark- Index measures the performance of the
1,000 largest companies in the Russell 3000-Registered Trademark- Index (which
measures the performance of the 3,000 largest U.S. companies based on total
market capitalization). The Russell 1000 Index represents approximately 92% of
the total market capitalization of the Russell 3000 Index. The Russell 1000
Value Index measures the performance of those Russell 1000
A-35
<PAGE>
companies with lower price-to-book ratios and lower forecasted growth values.
The S&P 500 Index is widely regarded as the standard for measuring large-cap
U.S. stock market performance and includes a representative sample of leading
companies in leading industries. Please note that indices do not take into
account any fees and expenses of investing in the individual securities that
they track, and that individuals cannot invest directly in any index. Data about
the performance of these indices are prepared or obtained by Management and
include reinvestment of all dividends and capital gain distributions. The
Portfolio may invest in many securities not included in the above-described
indices.
A-36
<PAGE>
(This page has been left blank intentionally.)
B-1
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
Neuberger Berman
----------------------------------------------------------------------
Equity Assets
<TABLE>
<CAPTION>
FOCUS GENESIS
(000'S OMITTED EXCEPT PER SHARE AMOUNTS) ASSETS ASSETS
<S> <C> <C>
----------------------------
ASSETS
Investment in corresponding Portfolio, at
value (Note A) $ 15,155 $ 99,147
Deferred organization costs (Note A) 12 19
Receivable for Trust shares sold 61 173
Receivable from administrator -- net
(Note B) -- --
----------------------------
15,228 99,339
----------------------------
LIABILITIES
Payable for Fund expenses (Note B) -- --
Payable for Trust shares redeemed -- 294
Payable to administrator -- net (Note B) 6 50
Accrued expenses 20 45
----------------------------
26 389
----------------------------
NET ASSETS at value $ 15,202 $ 98,950
----------------------------
NET ASSETS consist of:
Par value $ 1 $ 6
Paid-in capital in excess of par value 11,660 77,941
Accumulated undistributed net investment
income -- --
Accumulated net realized gains (losses) on
investment (71) 8,246
Net unrealized appreciation in value of
investment 3,612 12,757
----------------------------
NET ASSETS at value $ 15,202 $ 98,950
----------------------------
SHARES OUTSTANDING
($.001 par value; unlimited shares
authorized) 645 6,248
----------------------------
NET ASSET VALUE, offering and redemption price per
share $23.57 $15.84
----------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-2
<PAGE>
August 31, 2000
----------------------------------------------------------------------
Equity Assets
<TABLE>
<CAPTION>
SOCIALLY
GUARDIAN MANHATTAN MILLENNIUM PARTNERS RESPONSIVE
ASSETS ASSETS ASSETS ASSETS ASSETS
<S> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------
ASSETS
Investment in corresponding Portfolio, at
value (Note A) $ 27,749 $ 5,405 $ 233 $ 53,838 $ 288
Deferred organization costs (Note A) 12 12 -- 11 --
Receivable for Trust shares sold -- 42 -- -- 2
Receivable from administrator -- net
(Note B) -- 1 12 -- 114
-------------------------------------------------------------------------
27,761 5,460 245 53,849 404
-------------------------------------------------------------------------
LIABILITIES
Payable for Fund expenses (Note B) -- -- -- -- 108
Payable for Trust shares redeemed 175 4 -- 265 --
Payable to administrator -- net (Note B) 15 -- -- 29 --
Accrued expenses 22 19 18 26 20
-------------------------------------------------------------------------
212 23 18 320 128
-------------------------------------------------------------------------
NET ASSETS at value $ 27,549 $ 5,437 $ 227 $ 53,529 $ 276
-------------------------------------------------------------------------
NET ASSETS consist of:
Par value $ 2 $ -- $ -- $ 3 $ --
Paid-in capital in excess of par value 22,869 3,319 216 45,460 263
Accumulated undistributed net investment
income 2 -- -- 9 --
Accumulated net realized gains (losses) on
investment 301 778 (10) 2,079 (19)
Net unrealized appreciation in value of
investment 4,375 1,340 21 5,978 32
-------------------------------------------------------------------------
NET ASSETS at value $ 27,549 $ 5,437 $ 227 $ 53,529 $ 276
-------------------------------------------------------------------------
SHARES OUTSTANDING
($.001 par value; unlimited shares
authorized) 1,766 201 21 3,340 27
-------------------------------------------------------------------------
NET ASSET VALUE, offering and redemption price per
share $15.60 $27.05 $10.84 $16.03 $10.18
-------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-3
<PAGE>
STATEMENTS OF OPERATIONS
Neuberger Berman
----------------------------------------------------------------------
Equity Assets
<TABLE>
<CAPTION>
FOCUS GENESIS
ASSETS ASSETS
For the For the
Year Year
Ended Ended
August 31, August 31,
(000'S OMITTED) 2000 2000
<S> <C> <C>
------------------------
INVESTMENT INCOME
Investment income from corresponding Portfolio
(Note A) $ 46 $ 1,028
------------------------
Expenses:
Administration fee (Note B) 22 346
Amortization of deferred organization and
initial offering expenses (Note A) 12 12
Auditing fees 5 5
Custodian fees 10 10
Distribution fees (Note B) 13 216
Legal fees 6 5
Registration and filing fees 27 42
Shareholder reports 17 48
Shareholder servicing agent fees 16 19
Trustees' fees and expenses -- 1
Miscellaneous 2 13
Expenses from corresponding Portfolio
(Notes A & B) 27 652
------------------------
Total expenses 157 1,369
Expenses reimbursed by administrator and/or
reduced by custodian fee expense offset
arrangement (Note B) (75) (73)
------------------------
Total net expenses 82 1,296
------------------------
Net investment income (loss) (36) (268)
------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
FROM CORRESPONDING PORTFOLIO (NOTE A)
Net realized gain (loss) on investment
securities (67) 10,032
Net realized gain (loss) on option contracts 1 --
Net realized loss on financial futures
contracts -- --
Change in net unrealized appreciation
(depreciation) of investment securities,
financial futures contracts, and option
contracts 3,270 10,310
------------------------
Net gain on investments from corresponding
Portfolio (Note A) 3,204 20,342
------------------------
Net increase in net assets resulting from
operations $ 3,168 $ 20,074
------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-4
<PAGE>
----------------------------------------------------------------------
Equity Assets
<TABLE>
<CAPTION>
SOCIALLY
GUARDIAN MANHATTAN MILLENNIUM PARTNERS RESPONSIVE
ASSETS ASSETS ASSETS ASSETS ASSETS
For the
Period from
For the For the January 26, 2000 For the For the
Year Year (Commencement Year Year
Ended Ended of Operations) to Ended Ended
August 31, August 31, August 31, August 31, August 31,
2000 2000 2000 2000 2000
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------
INVESTMENT INCOME
Investment income from corresponding Portfolio
(Note A) $ 379 $ 16 $ -- $ 815 $ 2
-----------------------------------------------------------------------------
Expenses:
Administration fee (Note B) 103 15 -- 228 1
Amortization of deferred organization and
initial offering expenses (Note A) 11 11 -- 12 --
Auditing fees 5 6 4 5 4
Custodian fees 10 10 6 10 10
Distribution fees (Note B) 64 9 -- 143 --
Legal fees 6 8 19 5 19
Registration and filing fees 27 25 35 35 52
Shareholder reports 10 11 10 15 18
Shareholder servicing agent fees 17 17 -- 17 9
Trustees' fees and expenses -- -- -- 1 --
Miscellaneous 5 2 -- 9 2
Expenses from corresponding Portfolio
(Notes A & B) 121 21 1 273 1
-----------------------------------------------------------------------------
Total expenses 379 135 75 753 116
Expenses reimbursed by administrator and/or
reduced by custodian fee expense offset
arrangement (Note B) -- (78) (74) (1) (114)
-----------------------------------------------------------------------------
Total net expenses 379 57 1 752 2
-----------------------------------------------------------------------------
Net investment income (loss) -- (41) (1) 63 --
-----------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
FROM CORRESPONDING PORTFOLIO (NOTE A)
Net realized gain (loss) on investment
securities 757 738 (14) 1,953 (20)
Net realized gain (loss) on option contracts (566) -- -- -- --
Net realized loss on financial futures
contracts (27) -- -- -- --
Change in net unrealized appreciation
(depreciation) of investment securities,
financial futures contracts, and option
contracts 3,679 1,269 21 2,077 33
-----------------------------------------------------------------------------
Net gain on investments from corresponding
Portfolio (Note A) 3,843 2,007 7 4,030 13
-----------------------------------------------------------------------------
Net increase in net assets resulting from
operations $ 3,843 $ 1,966 $ 6 $ 4,093 $ 13
-----------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-5
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
Neuberger Berman
----------------------------------------------------------------------
Equity Assets
<TABLE>
<CAPTION>
FOCUS GENESIS
ASSETS ASSETS
Year Year
Ended Ended
August 31, August 31,
(000'S OMITTED) 2000 1999 2000 1999
<S> <C> <C> <C> <C>
------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ (36) $ (9) $ (268) $ 93
Net realized gain (loss) on
investments from corresponding
Portfolio (Note A) (66) 216 10,032 (1,746)
Change in net unrealized
appreciation (depreciation) of
investments from corresponding
Portfolio (Note A) 3,270 435 10,310 8,646
------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 3,168 642 20,074 6,993
------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- -- (66) (113)
Net realized gain on investments (194) (1) -- --
------------------------------------------------------
Total distributions to shareholders (194) (1) (66) (113)
------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold in initial
capitalization of the Fund
(Note A) -- -- -- --
Proceeds from shares sold to the
public 11,810 2,252 39,001 69,021
Proceeds from reinvestment of
dividends and distributions 192 1 33 58
Payments for shares redeemed (1,673) (1,471) (41,897) (18,620)
------------------------------------------------------
Net increase (decrease) from Trust
share transactions 10,329 782 (2,863) 50,459
------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 13,303 1,423 17,145 57,339
NET ASSETS:
Beginning of year 1,899 476 81,805 24,466
------------------------------------------------------
End of year $ 15,202 $ 1,899 $ 98,950 $ 81,805
------------------------------------------------------
Accumulated undistributed net
investment income at end of year $ -- $ -- $ -- $ 19
------------------------------------------------------
NUMBER OF TRUST SHARES:
Sold in initial capitalization of
the Fund (Note A) -- -- -- --
Sold to the public 605 176 2,859 5,696
Issued on reinvestment of dividends
and distributions 11 -- 3 5
Redeemed (88) (101) (3,087) (1,521)
------------------------------------------------------
Net increase (decrease) in shares
outstanding 528 75 (225) 4,180
------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-6
<PAGE>
----------------------------------------------------------------------
Equity Assets
<TABLE>
<CAPTION>
GUARDIAN MANHATTAN MILLENNIUM
ASSETS ASSETS ASSETS
Period from
January 26, 2000
Year Year (Commencement
Ended Ended of Operations) to
August 31, August 31, August 31,
2000 1999 2000 1999 2000
<S> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ -- $ 6 $ (41) $ (5) $ (1)
Net realized gain (loss) on
investments from corresponding
Portfolio (Note A) 164 (164) 738 (16) (14)
Change in net unrealized
appreciation (depreciation) of
investments from corresponding
Portfolio (Note A) 3,679 4,816 1,269 99 21
-------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 3,843 4,658 1,966 78 6
-------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (19) -- -- -- --
Net realized gain on investments (168) -- -- (1) --
-------------------------------------------------------------------------
Total distributions to shareholders (187) -- -- (1) --
-------------------------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold in initial
capitalization of the Fund
(Note A) -- -- -- -- --
Proceeds from shares sold to the
public 2,686 5,961 2,753 1,649 272
Proceeds from reinvestment of
dividends and distributions 182 -- -- 1 --
Payments for shares redeemed (3,804) (3,339) (999) (218) (51)
-------------------------------------------------------------------------
Net increase (decrease) from Trust
share transactions (936) 2,622 1,754 1,432 221
-------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 2,720 7,280 3,720 1,509 227
NET ASSETS:
Beginning of year 24,829 17,549 1,717 208 --
-------------------------------------------------------------------------
End of year $ 27,549 $ 24,829 $ 5,437 $ 1,717 $ 227
-------------------------------------------------------------------------
Accumulated undistributed net
investment income at end of year $ 2 $ 6 $ -- $ -- $ --
-------------------------------------------------------------------------
NUMBER OF TRUST SHARES:
Sold in initial capitalization of
the Fund (Note A) -- -- -- -- --
Sold to the public 191 452 127 114 26
Issued on reinvestment of dividends
and distributions 13 -- -- -- --
Redeemed (272) (241) (44) (15) (5)
-------------------------------------------------------------------------
Net increase (decrease) in shares
outstanding (68) 211 83 99 21
-------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-7
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS(Cont'd)
Neuberger Berman
----------------------------------------------------------------------
Equity Assets
<TABLE>
<CAPTION>
SOCIALLY
PARTNERS RESPONSIVE
ASSETS ASSETS
Period from
June 9, 1999
Year Year (Commencement
Ended Ended of Operations) to
August 31, August 31, August 31,
(000'S OMITTED) 2000 1999 2000 1999
<S> <C> <C> <C> <C>
-----------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 63 $ 249 $ -- $ --
Net realized gain (loss) on
investments from corresponding
Portfolio (Note A) 1,953 3,694 (20) (1)
Change in net unrealized
appreciation (depreciation) of
investments from corresponding
Portfolio (Note A) 2,077 8,416 33 (1)
-----------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 4,093 12,359 13 (2)
-----------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (39) (257) -- --
Net realized gain on investments (3,463) -- -- --
-----------------------------------------------------------
Total distributions to shareholders (3,502) (257) -- --
-----------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold in initial
capitalization of the Fund
(Note A) -- -- -- 100
Proceeds from shares sold to the
public 10,864 41,194 190 11
Proceeds from reinvestment of
dividends and distributions 3,328 238 -- --
Payments for shares redeemed (23,686) (20,381) (36) --
-----------------------------------------------------------
Net increase (decrease) from Trust
share transactions (9,494) 21,051 154 111
-----------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (8,903) 33,153 167 109
NET ASSETS:
Beginning of year 62,432 29,279 109 --
-----------------------------------------------------------
End of year $ 53,529 $ 62,432 $ 276 $ 109
-----------------------------------------------------------
Accumulated undistributed net
investment income at end of year $ 9 $ 9 $ -- $ --
-----------------------------------------------------------
NUMBER OF TRUST SHARES:
Sold in initial capitalization of
the Fund (Note A) -- -- -- 10
Sold to the public 710 2,928 20 1
Issued on reinvestment of dividends
and distributions 223 15 -- --
Redeemed (1,560) (1,301) (4) --
-----------------------------------------------------------
Net increase (decrease) in shares
outstanding (627) 1,642 16 11
-----------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-8
<PAGE>
(This page has been left blank intentionally.)
B-9
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Neuberger Berman August 31, 2000
----------------------------------------------------------------------
Equity Assets
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1) GENERAL: Neuberger Berman Focus Assets ("Focus"), Neuberger Berman Genesis
Assets ("Genesis"), Neuberger Berman Guardian Assets ("Guardian"), Neuberger
Berman Manhattan Assets ("Manhattan"), Neuberger Berman Millennium Assets
("Millennium"), Neuberger Berman Partners Assets ("Partners"), and Neuberger
Berman Socially Responsive Assets ("Socially Responsive") (collectively, the
"Funds") are separate operating series of Neuberger Berman Equity Assets (the
"Trust"), a Delaware business trust organized pursuant to a Trust Instrument
dated October 18, 1993. The Trust is registered as a diversified, open-end
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), and its shares are registered under the Securities
Act of 1933, as amended (the "1933 Act"). Millennium and Socially Responsive
had no operations until January 26, 2000 and June 9, 1999, respectively,
other than matters relating to their organization and registration as
diversified, open-end management investment companies under the 1940 Act, and
registration of their shares under the 1933 Act, and for Socially Responsive
the sale and issuance of 10,000 shares to Neuberger Berman Management Inc.
("Management") on December 24, 1998. The trustees of the Trust may establish
additional series or classes of shares without the approval of shareholders.
The assets of each Fund belong only to that Fund, and the liabilities of
each Fund are borne solely by that Fund and no other.
Each Fund seeks to achieve its investment objective by investing all of
its net investable assets in its corresponding portfolio of Equity Managers
Trust (each a "Portfolio") having the same investment objective and policies
as the Fund. The value of each Fund's investment in its corresponding
Portfolio reflects that Fund's proportionate interest in the net assets of
that Portfolio (0.64%, 5.35%, 0.72%, 0.41%, 0.07%, 1.87%, and 0.21%, for
Focus, Genesis, Guardian, Manhattan, Millennium, Partners, and Socially
Responsive, respectively, at August 31, 2000). On November 16, 1999, 63.72%
of Neuberger Berman Socially Responsive Portfolio was held by another
regulated investment company, which redeemed its interest in the Portfolio
through a redemption in kind on that date. Management carried out this
transaction in a way that minimized the effect on the Portfolio. The
performance of each Fund is directly affected by the performance of its
corresponding Portfolio. The financial statements of each Portfolio,
including the Schedule of Investments, are included elsewhere in this report
and should be read in conjunction with the corresponding Fund's financial
statements.
B-10
<PAGE>
2) PORTFOLIO VALUATION: Each Fund records its investment in its corresponding
Portfolio at value. Investment securities held by each Portfolio are valued
as indicated in the notes following the Portfolios' Schedule of Investments.
3) TAXES: The Funds are treated as separate entities for U.S. Federal income tax
purposes. It is the policy of Focus, Genesis, Guardian, Manhattan, Partners,
and Socially Responsive to continue to and the intention of Millennium to
qualify as regulated investment companies by complying with the provisions
available to certain investment companies, as defined in applicable sections
of the Internal Revenue Code, and to make distributions of investment company
taxable income and net capital gains (after reduction for any amounts
available for U.S. Federal income tax purposes as capital loss carryforwards)
sufficient to relieve them from all, or substantially all, U.S. Federal
income taxes. Accordingly, each Fund paid no U.S. Federal income taxes and no
provision for U.S. Federal income taxes was required.
4) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Each Fund earns income, net of
Portfolio expenses, daily on its investment in its corresponding Portfolio.
Income dividends and distributions from net realized capital gains, if any,
are normally distributed in December. Guardian generally distributes
substantially all of its net investment income, if any, at the end of each
calendar quarter. Income dividends and capital gain distributions to
shareholders are recorded on the ex-dividend date. To the extent each Fund's
net realized capital gains, if any, can be offset by capital loss
carryforwards ($240 and $4,349 expiring in 2007 and 2008, respectively, for
Socially Responsive, determined as of August 31, 2000), 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: Organization expenses incurred by Focus, Genesis,
Guardian, Manhattan, and Partners are being amortized on a straight-line
basis over a five-year period. At August 31, 2000, the unamortized balance of
such expenses amounted to $11,783, $19,261, $11,782, $11,756, and $11,107,
for Focus, Genesis, Guardian, Manhattan, and Partners, respectively.
6) EXPENSE ALLOCATION: Each Fund bears all costs of its operations. Expenses
incurred by the Trust with respect to any two or more Funds are allocated in
proportion to the net assets of such Funds, except where a more appropriate
allocation of expenses to each Fund can otherwise be made fairly. Expenses
directly attributable to a Fund are charged to that Fund.
B-11
<PAGE>
7) OTHER: All net investment income and realized and unrealized capital gains
and losses of each Portfolio are allocated pro rata among its respective
Funds and any other investors in the Portfolio.
NOTE B -- ADMINISTRATION FEES, DISTRIBUTION ARRANGEMENTS, AND OTHER TRANSACTIONS
WITH AFFILIATES:
Each Fund retains Management as its administrator under an Administration
Agreement ("Agreement"). Pursuant to this Agreement each Fund pays Management an
administration fee at the annual rate of 0.40% of that Fund's average daily net
assets. Each Fund indirectly pays for investment management services through its
investment in its corresponding Portfolio (see Note B of Notes to Financial
Statements of the Portfolios).
Management acts as agent in arranging for the sale of Fund shares without
commission and bears advertising and promotion expenses. The trustees of the
Trust have adopted a plan pursuant to Rule 12b-1 under the 1940 Act (the
"Plan"). The Plan provides that, as compensation for administrative and other
services provided to the Funds, Management's activities and expenses related to
the sale and distribution of Fund shares, and ongoing services provided to
investors in the Funds, Management receives from each Fund a fee at the annual
rate of 0.25% of that Fund's average daily net assets. Management pays this
amount to institutions that distribute Fund shares and provide services to the
Funds and their shareholders. Those institutions may use the payments for, among
other purposes, compensating employees engaged in sales and/or shareholder
servicing. The amount of fees paid by each Fund during any year may be more or
less than the cost of distribution and other services provided to that Fund.
NASD rules limit the amount of annual distribution fees that may be paid by a
mutual fund and impose a ceiling on the cumulative distribution fees paid. The
Trust's Plan complies with those rules.
Management has undertaken to reimburse Focus, Genesis, Guardian, Manhattan,
and Partners through December 31, 2010, and Millennium and Socially Responsive
through December 31, 2002, for their operating expenses plus their pro rata
portion of their corresponding Portfolio's operating expenses (including the
fees payable to Management, but excluding interest, taxes, brokerage
commissions, and extraordinary expenses) ("Operating Expenses") which exceed, in
the aggregate, 1.50% (1.75% for Millennium) per annum of their average daily net
assets (each an "Expense Limitation"). For the year ended August 31, 2000, such
excess expenses amounted to $75,274, $73,105, $78,337, $74,383, and $114,442,
for Focus, Genesis, Manhattan, Millennium, and Socially Responsive,
respectively. For the year ended August 31, 2000, there was no reimbursement of
expenses by Management to Guardian and Partners. Socially Responsive has agreed
to repay Management through December 31, 2005, for its excess Operating Expenses
previously reimbursed by Management, so long as its annual Operating Expenses
during that period do not exceed its Expense
B-12
<PAGE>
Limitation, and the repayments are made within three years after the year in
which Management issued the reimbursement. For the year ended August 31, 2000,
Socially Responsive has not reimbursed Management.
Since inception of Socially Responsive, Management has voluntarily undertaken
to pay certain expenses of the Fund as an advance. These expenses will be repaid
by the Fund to Management in the future, and are included under the caption
Payable for Fund expenses in the Statements of Assets and Liabilities.
Management and Neuberger Berman, LLC ("Neuberger"), a member firm of The New
York Stock Exchange and sub-adviser to each Portfolio, are wholly owned
subsidiaries of Neuberger Berman Inc., a publicly held company. Several
individuals who are officers and/or trustees of the Trust are also employees of
Neuberger and/or Management.
Each Fund also has a distribution agreement with Management. Management
receives no commissions for sales or redemptions of shares of beneficial
interest of each Fund, but receives fees under the Plan, as described above.
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 $15, $142, $167, $6, $3, $560, and $1, for Focus, Genesis,
Guardian, Manhattan, Millennium, Partners, and Socially Responsive,
respectively.
NOTE C -- INVESTMENT TRANSACTIONS:
During the year ended August 31, 2000, additions and reductions in each
Fund's investment in its corresponding Portfolio were as follows:
<TABLE>
<CAPTION>
ADDITIONS REDUCTIONS
---------------------------------------------------------------------------
<S> <C> <C>
FOCUS $11,413,000 $ 1,368,000
GENESIS 16,523,000 19,874,000
GUARDIAN 2,414,000 3,621,000
MANHATTAN 2,463,000 776,000
MILLENNIUM 277,000 50,000
PARTNERS 7,393,000 20,526,000
SOCIALLY RESPONSIVE 205,000 48,000
</TABLE>
NOTE D -- SUBSEQUENT EVENT:
On September 7, 2000, the Board of Trustees of Neuberger Berman Equity Assets
approved the cessation of the operations of Socially Responsive effective on or
about December 1, 2000 (the "Closing Date"). Accordingly, the Board has voted to
liquidate and terminate Socially Responsive on the Closing Date. Shareholders
will receive the net asset value per share for all shares they own on that date.
This may be a taxable event for those shareholders not participating in a
qualified retirement vehicle.
B-13
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
--------------------------------------------------------------------------------
Focus Assets(1)
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
September 4, 1996(2)
Year Ended August 31, to August 31,
2000 1999 1998 1997
<S> <C> <C> <C> <C>
---------------------------------------------------
Net Asset Value, Beginning of Year $16.18 $11.31 $14.34 $ 10.00
---------------------------------------------------
Income From Investment Operations
Net Investment Loss (.06) (.08) (.03) (.05)
Net Gains or Losses on Securities
(both realized and unrealized) 8.99 4.96 (2.42) 4.39
---------------------------------------------------
Total From Investment Operations 8.93 4.88 (2.45) 4.34
---------------------------------------------------
Less Distributions
Distributions (from net capital
gains) (1.54) (.01) (.58) --
---------------------------------------------------
Net Asset Value, End of Year $23.57 $16.18 $11.31 $ 14.34
---------------------------------------------------
Total Return(3) +58.68% +43.15% -17.73% +43.40%(4)
---------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in
millions) $ 15.2 $ 1.9 $ 0.5 $ 0.1
---------------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(5) 1.50% 1.50% 1.50% 1.50%(6)
---------------------------------------------------
Ratio of Net Expenses to Average Net
Assets(7) 1.50% 1.50% 1.50% 1.50%(6)
---------------------------------------------------
Ratio of Net Investment Loss to
Average Net Assets (.66%) (.58%) (.36%) (.43%)(6)
---------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-14
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
--------------------------------------------------------------------------------
Genesis Assets(1)
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
April 2, 1997(2)
Year Ended August 31, to August 31,
2000 1999 1998 1997
<S> <C> <C> <C> <C>
----------------------------------------------
Net Asset Value, Beginning of Year $12.64 $10.67 $13.21 $ 10.00
----------------------------------------------
Income From Investment Operations
Net Investment Income (Loss) (.04) .01 .02 (.01)
Net Gains or Losses on Securities
(both realized and unrealized) 3.25 1.99 (2.52) 3.22
----------------------------------------------
Total From Investment Operations 3.21 2.00 (2.50) 3.21
----------------------------------------------
Less Distributions
Dividends (from net investment
income) (.01) (.03) -- --
Distributions (from net capital
gains) -- -- (.04) --
----------------------------------------------
Total Distributions (.01) (.03) (.04) --
----------------------------------------------
Net Asset Value, End of Year $15.84 $12.64 $10.67 $ 13.21
----------------------------------------------
Total Return(3) +25.42% +18.75% -18.99% +32.10%(4)
----------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in
millions) $ 99.0 $ 81.8 $ 24.5 $ 0.7
----------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(5) 1.50% 1.50% 1.50% 1.50%(6)
----------------------------------------------
Ratio of Net Expenses to Average Net
Assets(7) 1.50% 1.50% 1.50% 1.50%(6)
----------------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets (.31%) .16% .60% (.36%)(6)
----------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-15
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
--------------------------------------------------------------------------------
Guardian Assets(1)
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
September 4, 1996(2)
Year Ended August 31, to August 31,
2000 1999 1998 1997
<S> <C> <C> <C> <C>
-----------------------------------------------------
Net Asset Value, Beginning of Year $13.54 $10.81 $13.88 $10.00
-----------------------------------------------------
Income From Investment Operations
Net Investment Income (Loss) -- -- (.02) .01
Net Gains or Losses on Securities
(both realized and unrealized) 2.16 2.73 (2.92) 3.88
-----------------------------------------------------
Total From Investment Operations 2.16 2.73 (2.94) 3.89
-----------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.01) -- -- (.01)
Distributions (from net capital
gains) (.09) -- (.13) --
-----------------------------------------------------
Total Distributions (.10) -- (.13) (.01)
-----------------------------------------------------
Net Asset Value, End of Year $15.60 $13.54 $10.81 $13.88
-----------------------------------------------------
Total Return(3) +16.04% +25.25% -21.34% +38.92%(4)
-----------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in
millions) $ 27.5 $ 24.8 $ 17.5 $ 9.3
-----------------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(5) 1.48% 1.50% 1.50% 1.50%(6)
-----------------------------------------------------
Ratio of Net Expenses to Average Net
Assets 1.47% 1.50%(7) 1.50%(7) 1.50%(6)(7)
-----------------------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets -- .03% (.16%) (.12%)(6)
-----------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-16
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
--------------------------------------------------------------------------------
Manhattan Assets(1)
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
September 4, 1996(2)
Year Ended August 31, to August 31,
2000 1999 1998 1997
<S> <C> <C> <C> <C>
--------------------------------------------------
Net Asset Value, Beginning of Year $14.54 $10.76 $13.75 $10.00
--------------------------------------------------
Income From Investment Operations
Net Investment Loss (.21) (.04) (.11) (.08)
Net Gains or Losses on Securities
(both realized and unrealized) 12.72 3.92 (1.22) 3.94
--------------------------------------------------
Total From Investment Operations 12.51 3.88 (1.33) 3.86
--------------------------------------------------
Less Distributions
Distributions (from net capital
gains) -- (.10) (1.66) (.11)
--------------------------------------------------
Net Asset Value, End of Year $27.05 $14.54 $10.76 $13.75
--------------------------------------------------
Total Return(3) +86.04% +36.09% -11.29% +38.86%(4)
--------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in
millions) $ 5.4 $ 1.7 $ 0.2 $ 0.1
--------------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(5) 1.50% 1.50% 1.50% 1.50%(6)
--------------------------------------------------
Ratio of Net Expenses to Average Net
Assets(7) 1.50% 1.50% 1.50% 1.50%(6)
--------------------------------------------------
Ratio of Net Investment Loss to
Average Net Assets (1.09%) (1.00%) (.98%) (.70%)(6)
--------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-17
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
--------------------------------------------------------------------------------
Millennium Assets(1)
The following table includes selected data for a share outstanding throughout
the period and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
January 26, 2000(2)
to August 31,
2000
<S> <C>
-------------------
Net Asset Value, Beginning of Period $ 10.00
-------------------
Income From Investment Operations
Net Investment Loss (.05)
Net Gains or Losses on Securities
(both realized and unrealized) .89
-------------------
Total From Investment Operations .84
-------------------
Net Asset Value, End of Period $ 10.84
-------------------
Total Return(3)(4) +8.40%
-------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $ 0.2
-------------------
Ratio of Gross Expenses to Average
Net Assets(5)(6) 1.75%
-------------------
Ratio of Net Expenses to Average Net
Assets(6)(7) 1.75%
-------------------
Ratio of Net Investment Loss to
Average Net Assets(6) (1.34%)
-------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-18
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
--------------------------------------------------------------------------------
Partners Assets(1)
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
August 19, 1996(2)
Year Ended August 31, to August 31,
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
----------------------------------------------------------------
Net Asset Value, Beginning of Year $ 15.74 $ 12.59 $ 14.42 $ 9.91 $ 10.00
----------------------------------------------------------------
Income From Investment Operations
Net Investment Income .02 .06 .01 .01 --
Net Gains or Losses on Securities
(both realized and unrealized) 1.17 3.15 (1.51) 4.56 (.09)
----------------------------------------------------------------
Total From Investment Operations 1.19 3.21 (1.50) 4.57 (.09)
----------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.01) (.06) (.01) (.01) --
Distributions (from net capital
gains) (.89) -- (.32) (.05) --
----------------------------------------------------------------
Total Distributions (.90) (.06) (.33) (.06) --
----------------------------------------------------------------
Net Asset Value, End of Year $ 16.03 $ 15.74 $ 12.59 $ 14.42 $ 9.91
----------------------------------------------------------------
Total Return(3) +7.99% +25.51% -10.69% +46.26% -0.90%(4)
----------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in
millions) $ 53.5 $ 62.4 $ 29.3 $ 5.8 $ 0.1
----------------------------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(5) 1.32% 1.31% 1.50% 1.50% 1.50%(6)
----------------------------------------------------------------
Ratio of Net Expenses to Average Net
Assets 1.32% 1.31% 1.50%(7) 1.50%(7) 1.50%(6)(7)
----------------------------------------------------------------
Ratio of Net Investment Income to
Average Net Assets .11% .41% .12% .08% 2.38%(6)
----------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-19
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
--------------------------------------------------------------------------------
Socially Responsive Assets(1)
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
Year Ended June 9, 1999(2)
August 31, to August 31,
2000 1999
<S> <C> <C>
-----------------------------
Net Asset Value, Beginning of Year $ 9.85 $10.00
-----------------------------
Income From Investment Operations
Net Investment Loss (.02) (.01)
Net Gains or Losses on Securities
(both realized and unrealized) .35 (.14)
-----------------------------
Total From Investment Operations .33 (.15)
-----------------------------
Net Asset Value, End of Year $10.18 $ 9.85
-----------------------------
Total Return(3) +3.35% -1.50%(4)
-----------------------------
Ratios/Supplemental Data
Net Assets, End of Year (in
millions) $ 0.3 $ 0.1
-----------------------------
Ratio of Gross Expenses to Average
Net Assets(5) 1.50% 1.50%(6)
-----------------------------
Ratio of Net Expenses to Average Net
Assets(7) 1.50% 1.50%(6)
-----------------------------
Ratio of Net Investment Loss to
Average Net Assets (.27%) (.56%)(6)
-----------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-20
<PAGE>
NOTES TO FINANCIAL HIGHLIGHTS
Neuberger Berman August 31, 2000
----------------------------------------------------------------------
Equity Assets
1) The per share amounts and ratios which are shown reflect income and expenses,
including each Fund's proportionate share of its corresponding Portfolio's
income and expenses.
2) 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 Management had not reimbursed certain expenses. In
addition, for Genesis, total return would have been lower if the investment
manager had not waived a portion of the management fee.
4) Not annualized.
5) The Fund is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset arrangements.
6) Annualized.
7) After reimbursement of expenses by Management as described in Note B of Notes
to Financial Statements. Had Management not undertaken such action the
annualized ratios of net expenses to average daily net assets would have
been:
<TABLE>
<CAPTION>
Period from
September 4, 1996 to
Year Ended August 31, August 31,
FOCUS 2000 1999 1998 1997
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Expenses 2.89% 7.08% 28.01% 76.74%
----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Period from
September 4, 1996 to
Year Ended August 31, August 31,
GUARDIAN 1999 1998 1997
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Expenses 1.56% 1.63% 5.65%
------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Period from
September 4, 1996 to
Year Ended August 31, August 31,
MANHATTAN 2000 1999 1998 1997
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Expenses 3.57% 19.99% 42.53% 77.83%
------------------------------------------------------------
</TABLE>
B-21
<PAGE>
<TABLE>
<CAPTION>
Period from
January 26, 2000 to
August 31,
MILLENNIUM 2000
-----------------------------------------------------------------------
<S> <C>
Net Expenses 103.09%
--------------------
</TABLE>
<TABLE>
<CAPTION>
Period from
August 19, 1996 to
Year Ended August 31, August 31,
PARTNERS 1998 1997 1996
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Expenses 1.56% 8.74% 11,685.89%
------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year Period from
Ended June 9, 1999 to
August 31, August 31,
SOCIALLY RESPONSIVE 2000 1999
-------------------------------------------------------------------------------------
<S> <C> <C>
Net Expenses 62.49% 507.01%
------------------------------------
</TABLE>
After reimbursement of expenses by Management as described in Note B of Notes
to Financial Statements and/or the waiver of a portion of the management fee by
the investment manager of Neuberger Berman Genesis Portfolio. Had Management not
undertaken such action the annualized ratios of net expenses to average daily
net assets would have been:
<TABLE>
<CAPTION>
Period from
April 2, 1997 to
Year Ended August 31, August 31,
GENESIS 2000 1999 1998 1997
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Expenses 1.59% 1.63% 2.40% 25.91%
------------------------------------------------------------
</TABLE>
B-22
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of Neuberger Berman Equity Assets and
Shareholders of Neuberger Berman Manhattan Assets,
Neuberger Berman Millennium Assets, and
Neuberger Berman Socially Responsive Assets
In our opinion, the accompanying statements of assets and liabilities and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Neuberger Berman Manhattan Assets, Neuberger Berman Millennium Assets, and
Neuberger Berman Socially Responsive Assets (collectively, the "Funds") at
August 31, 2000, and the results of each of their operations, the changes in
each of their net assets and the financial highlights for each of the periods
indicated therein, in conformity with accounting principles generally accepted
in the United States of America. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Funds' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States of America which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
PricewaterhouseCoopers LLC
Boston, Massachusetts
October 9, 2000
B-23
<PAGE>
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS
To the Board of Trustees
Neuberger Berman Equity Assets and
Shareholders of:
Neuberger Berman Focus Assets
Neuberger Berman Genesis Assets
Neuberger Berman Guardian Assets and
Neuberger Berman Partners Assets
We have audited the accompanying statements of assets and liabilities of the
Neuberger Berman Focus Assets, Neuberger Berman Genesis Assets, Neuberger Berman
Guardian Assets, and Neuberger Berman Partners Assets, four of the series
constituting the Neuberger Berman Equity Assets (the "Trust"), as of August 31,
2000, and the related statements of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods indicated therein.
These financial statements and financial highlights are the responsibility of
the Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the above mentioned series of the Neuberger Berman Equity Assets at August
31, 2000, the results of their operations for the year then ended, the changes
in their net assets for each of the two years in the period then ended, and
their financial highlights for each of the periods indicated therein, in
conformity with accounting principles generally accepted in the United States.
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
October 2, 2000
B-24
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman August 31, 2000
--------------------------------------------------------------------------------
Focus Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
----------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Citigroup Inc. 10.5%
2. Rational Software 7.9%
3. Morgan Stanley Dean Witter 7.4%
4. Capital One Financial 7.0%
5. Providian Financial 6.6%
6. Countrywide Credit Industries 5.9%
7. Chase Manhattan 5.0%
8. FleetBoston Financial 4.3%
9. Wellpoint Health Networks 4.0%
10. Compaq Computer 3.2%
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
--------------------- ---------------
<C> <S> <C>
COMMON STOCKS (97.8%)
FINANCIAL SERVICES (50.9%)
2,767,500 Capital One Financial $ 166,915
2,122,500 Chase Manhattan 118,595
4,244,500 Citigroup Inc. 247,773
3,687,400 Countrywide Credit Industries 139,660
2,380,000 FleetBoston Financial 101,596
440,000 Hartford Financial Services
Group 29,315
1,626,000 Morgan Stanley Dean Witter 174,896
1,745,000 Nationwide Financial Services 69,582(5)
1,366,000 Providian Financial 157,005
----------
1,205,337
----------
HEALTH CARE (5.0%)
1,360,000 Foundation Health Systems 23,885(2)
1,098,000 Wellpoint Health Networks 94,771(2)
----------
118,656
----------
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
--------------------- ---------------
<C> <S> <C>
RETAIL (8.9%)
1,025,000 American Eagle Outfitters $ 30,558(2)
3,500,000 Furniture Brands International 56,437(2)(5)
2,510,000 Jones Apparel Group 61,495(2)
369,500 Neiman Marcus Group Class B 11,639(2)
970,000 Pacific Sunwear of California 12,913(2)
2,040,000 TJX Cos. 38,378
----------
211,420
----------
TECHNOLOGY (33.0%)
1,285,000 Amkor Technology 43,851(2)
1,560,000 Atmel Corp. 31,200(2)
2,235,000 Compaq Computer 76,130
885,000 Cypress Semiconductor 43,752(2)
2,340,000 Gartner Group Class A 31,005(2)
845,000 International Rectifier 53,182(2)
700,000 Lattice Semiconductor 54,513(2)
807,000 Microchip Technology 54,926(2)
713,000 Oracle Corp. 64,838(2)
165,000 Photronics, Inc. 4,837(2)(5)
1,458,000 Rational Software 187,626(2)
1,313,500 Tech Data 67,809(2)
1,875,000 WorldCom, Inc. 68,438(2)
----------
782,107
----------
TOTAL COMMON STOCKS (COST
$1,126,849) 2,317,520
----------
</TABLE>
C-1
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman August 31, 2000
--------------------------------------------------------------------------------
Focus Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Principal Value(1)
Amount (000's omitted)
--------------------- ---------------
<C> <S> <C>
REPURCHASE AGREEMENTS (1.2%)
$28,494,000 State Street Bank and Trust
Co. Repurchase Agreement,
6.58%, due 9/1/00, dated
8/31/00, Maturity Value
$28,499,208, Collateralized
by $28,655,000 Fannie Mae,
Notes, 6.40%, due 9/27/01
(Collateral Value
$29,350,715) (COST $28,494) $ 28,494(3)
----------
</TABLE>
<TABLE>
<CAPTION>
Market
Principal Value(1)
Amount (000's omitted)
--------------------- ---------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (0.4%)
$10,008,312 N&B Securities Lending Quality
Fund, LLC (COST $10,008) $ 10,008(3)
----------
TOTAL INVESTMENTS (99.4%)
(COST $1,165,351) 2,356,022(4)
Cash, receivables and other
assets, less liabilities
(0.6%) 14,236
----------
TOTAL NET ASSETS (100.0%) $2,370,258
----------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-2
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman August 31, 2000
--------------------------------------------------------------------------------
Genesis Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
----------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. National-Oilwell 2.7%
2. Zebra Technologies 2.5%
3. Dallas Semiconductor 2.4%
4. Newport News Shipbuilding 2.4%
5. Alliant Techsystems 2.2%
6. AptarGroup Inc. 2.2%
7. Mutual Risk Management 2.1%
8. Fair, Isaac & Co. 2.1%
9. Trigon Healthcare 2.0%
10. United Stationers 1.7%
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
--------------------- ---------------
<C> <S> <C>
COMMON STOCKS (94.7%)
AEROSPACE (1.9%)
1,427,050 AAR Corp. $ 16,054(5)
754,100 Aviall Inc. 4,525(2)(5)
248,750 Ducommun Inc. 3,607(2)
329,700 Moog, Inc. Class A 10,715(2)
----------
34,901
----------
AUTOMOTIVE (0.8%)
674,100 Donaldson Co. 14,240
----------
BANKING & FINANCIAL (8.2%)
1,347,400 Banknorth Group 22,064
745,600 Cullen/Frost Bankers 23,114
100,000 Haven Bancorp 2,662
331,400 Highland Bancorp 8,368(5)
178,199 Hudson United Bancorp 4,488
28,200 M&T Bank 13,668
195,800 MBIA, Inc. 12,874
532,100 OceanFirst Financial 10,975
125,000 Queens County Bancorp 3,297
130,000 Richmond County Financial 2,616
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
--------------------- ---------------
<C> <S> <C>
1,031,975 Sterling Bancshares $ 14,625
317,350 Texas Regional Bancshares 8,092
1,014,100 Webster Financial 25,004
----------
151,847
----------
BUILDING, CONSTRUCTION & FURNISHING (0.9%)
238,300 Lincoln Electric Holdings 3,485
298,500 Simpson Manufacturing 14,030(2)
----------
17,515
----------
BUSINESS SERVICES (0.1%)
789,400 SOS Staffing Services 2,171(2)(5)
----------
CONSUMER CYCLICALS (0.4%)
226,300 Valassis Communications 6,534(2)
----------
CONSUMER PRODUCTS & SERVICES (5.3%)
854,700 Alberto-Culver Class A 20,513
560,238 Block Drug 22,690
1,353,200 Church & Dwight 24,273
396,000 Matthews International 11,484
1,105,200 Ruddick Corp. 13,539
475,500 The First Years 5,230
----------
97,729
----------
DEFENSE (5.6%)
532,800 Alliant Techsystems 41,059(2)(5)
1,062,700 Newport News Shipbuilding 45,165
729,300 Primex Technologies 17,685(5)
----------
103,909
----------
ELECTRONICS (4.2%)
334,100 Benchmark Electronics 17,394(2)
1,092,000 Dallas Semiconductor 45,181
</TABLE>
C-3
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
--------------------------------------------------------------------------------
Genesis Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
--------------------- ---------------
<C> <S> <C>
151,800 SCI Systems $ 9,374(2)
49,600 Technitrol, Inc. 6,324
----------
78,273
----------
ENERGY (3.7%)
677,300 Cabot Oil & Gas 13,546
655,200 Cross Timbers Oil 17,322
808,290 Swift Energy 23,390(2)
894,500 Unit Corp. 13,976(2)
----------
68,234
----------
FINANCIAL TECHNOLOGY (2.4%)
839,500 Fair, Isaac & Co. 38,565(5)
123,900 Investment Technology Group 5,947(2)
----------
44,512
----------
HEALTH CARE (9.9%)
148,000 Acuson Corp. 2,128(2)
303,700 Charles River Laboratories
International 8,333(2)
286,500 Datascope Corp. 10,099
669,300 DENTSPLY International 22,338
1,105,800 Haemonetics Corp. 27,852(2)
1,191,100 Mentor Corp. 25,236(5)
1,138,800 Patterson Dental 27,047(2)
198,700 STAAR Surgical 3,316(2)
714,000 Trigon Healthcare 36,860(2)
280,600 Universal Health Services
Class B 19,852(2)
----------
183,061
----------
INDUSTRIAL & COMMERCIAL PRODUCTS (7.4%)
615,500 Brady Corp. 17,811
733,700 Dionex Corp. 21,644(2)
689,600 IDEX Corp. 20,947
1,247,600 Kaydon Corp. 27,525
645,800 Roper Industries 20,908
2,135,300 Wallace Computer Services 24,823(5)
207,650 Woodhead Industries 4,101
----------
137,759
----------
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
--------------------- ---------------
<C> <S> <C>
INSURANCE (8.5%)
949,200 Annuity and Life Re $ 24,916
514,200 Brown & Brown 13,723
652,800 FBL Financial Group 9,629
698,600 HCC Insurance Holdings 14,758
1,822,500 Mutual Risk Management 38,728
579,500 PartnerRe Ltd. 24,303
891,500 Scottish Annuity & Life
Holdings 8,135(5)
878,600 W. R. Berkley 23,283
----------
157,475
----------
INTERMEDIATES (0.8%)
612,900 Delta & Pine Land 14,978
----------
LODGING (0.2%)
441,700 Prime Hospitality 4,583(2)
----------
MACHINERY & EQUIPMENT (0.5%)
612,120 Gardner Denver Machinery 8,914(2)
----------
OFFICE EQUIPMENT (1.7%)
977,800 United Stationers 31,717(2)
----------
OIL SERVICES (9.4%)
302,700 Cal Dive International 17,405(2)
651,600 Friede Goldman Halter 3,665(2)
978,800 Global Industries 12,174(2)
320,400 Nabors Industries 15,239(2)
1,467,278 National-Oilwell 50,896(2)
798,400 Oceaneering International 13,922(2)
781,600 Offshore Logistics 13,580(2)
767,300 Pride International 18,895(2)
33,500 Smith International 2,663(2)
345,600 UTI Energy 12,874(2)
631,000 Varco International 12,739(2)
----------
174,052
----------
PACKING & CONTAINERS (2.2%)
1,723,900 AptarGroup Inc. 40,188
----------
</TABLE>
C-4
<PAGE>
August 31, 2000
--------------------------------------------------------------------------------
Genesis Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
--------------------- ---------------
<C> <S> <C>
PUBLISHING & BROADCASTING (1.0%)
258,300 Houghton Mifflin $ 12,705
232,900 Meredith Corp. 6,361
----------
19,066
----------
RESTAURANTS (1.1%)
650,050 Brinker International 20,639(2)
----------
RETAILING (4.7%)
28,224 99 Cents Only Stores 1,268(2)
212,800 Ann Taylor Stores 7,661(2)
1,299,900 Claire's Stores 25,592
693,900 Linens 'n Things 18,735(2)
181,500 Payless ShoeSource 9,688(2)
575,000 ShopKo Stores 6,577(2)
360,300 Whole Foods Market 18,195(2)
----------
87,716
----------
TECHNOLOGY (11.4%)
847,500 Analysts International 7,045
442,200 Black Box 26,311(2)
496,200 CACI International 11,164(2)
1,453,200 CIBER, Inc. 14,986(2)
807,900 Davox Corp. 10,200(2)(5)
1,085,500 Electronics for Imaging 28,223(2)
565,000 InterVoice-Brite 7,027(2)
126,400 Jack Henry & Associates 5,609
238,500 Keane, Inc. 4,129(2)
389,000 Kronos Inc. 14,539(2)
625,000 META Group 9,062(5)
625,400 MICROS Systems 10,984(2)
10,800 Power Intergrations 184(2)
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
--------------------- ---------------
<C> <S> <C>
289,200 SBS Technologies $ 14,912(2)
859,400 Zebra Technologies 46,408(2)
----------
210,783
----------
TRANSPORTATION (1.8%)
869,900 Circle International Group 31,153
213,600 Maritrans Inc. 1,228
----------
32,381
----------
UTILITIES, ELECTRIC & GAS (0.6%)
144,900 Montana Power 5,225
183,500 NUI Corp. 5,517
----------
10,742
----------
TOTAL COMMON STOCKS (COST
$1,439,732) 1,753,919
----------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount
---------------------
--------------------- ---------------
<C> <S> <C>
REPURCHASE AGREEMENTS (2.3%)
$42,140,000 State Street Bank and Trust
Co. Repurchase Agreement,
6.58%, due 9/1/00, dated
8/31/00, Maturity Value
$42,147,702, Collateralized
by $42,380,000 Fannie Mae,
Notes, 6.40%, due 9/27/01
(Collateral Value
$43,408,944) (COST $42,140) 42,140(3)
----------
</TABLE>
C-5
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman August 31, 2000
--------------------------------------------------------------------------------
Genesis Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Principal Value(1)
Amount (000's omitted)
--------------------- ---------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (5.2%)
$30,000,000 Prudential Funding Corp.,
6.48%, due 9/5/00 $ 29,978
30,000,000 American Express Credit Corp.,
6.46%, due 9/7/00 29,968
36,226,183 N&B Securities Lending Quality
Fund, LLC 36,226
----------
TOTAL SHORT-TERM INVESTMENTS
(COST $96,172) 96,172(3)
----------
TOTAL INVESTMENTS (102.2%)
(COST $1,578,044) 1,892,231(4)
Liabilities, less cash,
receivables and other assets
[(2.2%)] (41,103)
----------
TOTAL NET ASSETS (100.0%) $1,851,128
----------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-6
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman August 31, 2000
--------------------------------------------------------------------------------
Guardian Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
----------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Wellpoint Health Networks 3.8%
2. Citigroup Inc. 3.3%
3. Exxon Mobil 2.9%
4. Gateway Inc. 2.8%
5. Capital One Financial 2.7%
6. News Corp. ADR 2.7%
7. SCI Systems 2.6%
8. Chase Manhattan 2.5%
9. Wells Fargo 2.4%
10. Lexmark International Group 2.4%
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
--------------------- ---------------
<C> <S> <C>
COMMON STOCKS (83.7%)
BANKING & FINANCIAL (5.5%)
402,400 Bank of America $ 21,554
1,745,600 Chase Manhattan 97,535
2,132,000 Wells Fargo 92,076
----------
211,165
----------
BASIC MATERIALS (3.3%)
2,090,000 Cabot Corp. 77,330
1,424,000 Dow Chemical 37,291
250,700 duPont 11,250
----------
125,871
----------
CAPITAL GOODS (5.3%)
193,600 Emerson Electric 12,814
490,200 General Dynamics 30,852
375,900 Illinois Tool Works 21,074
1,292,900 Republic Services 18,909(2)
1,606,000 SCI Systems 99,170(2)
349,100 United Technologies 21,797
----------
204,616
----------
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
--------------------- ---------------
<C> <S> <C>
COMMUNICATIONS (2.7%)
1,815,600 AT&T Corp. $ 57,191
1,040,000 NTL Inc. 45,565(2)
----------
102,756
----------
CONSUMER CYCLICALS (2.7%)
1,159,400 Carnival Corp. 23,116
1,051,300 Costco Wholesale 36,204(2)
429,800 Lear Corp. 9,268(2)
745,615 Safeway Inc. 36,768(2)
----------
105,356
----------
CONSUMER GOODS & SERVICES (0.5%)
445,400 PepsiCo, Inc. 18,985
----------
CONSUMER STAPLES (4.6%)
820,996 Clear Channel Communications 59,419(2)
1,292,219 Kimberly-Clark 75,595
889,700 McDonald's Corp. 26,580
293,300 Nabisco Holdings 15,673
----------
177,267
----------
DRUGS (2.2%)
836,550 Pfizer Inc. 36,181(6)
1,196,095 Schering-Plough 47,993
----------
84,174
----------
ENERGY (10.8%)
907,200 Amerada Hess 62,087
523,715 Anadarko Petroleum 34,445
608,700 Chevron Corp. 51,435
887,200 Diamond Offshore Drilling 39,758
1,344,446 Exxon Mobil 109,740
692,474 Halliburton Co. 36,701
513,900 Royal Dutch Petroleum - NY
Shares 31,444
439,000 The Williams Cos. 20,221
511,200 Transocean Sedco Forex 30,544
----------
416,375
----------
</TABLE>
C-7
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
--------------------------------------------------------------------------------
Guardian Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
--------------------- ---------------
<C> <S> <C>
FINANCIAL SERVICES (12.8%)
1,275,200 Associates First Capital $ 35,865
1,716,600 Capital One Financial 103,532
2,182,533 Citigroup Inc. 127,405(6)
1,510,200 Household International 72,490
634,900 MetLife, Inc. 15,436(2)
609,300 Morgan Stanley Dean Witter 65,538
462,300 Providian Financial 53,136
481,600 USA Education 18,873
----------
492,275
----------
FOOD PRODUCTS (0.6%)
922,300 Kroger Co. 20,925(2)
----------
HEALTH CARE (7.4%)
1,531,700 American Home Products 82,999
924,400 Bristol-Myers Squibb 48,993
100,000 Pharmacia Corp. 5,856
1,689,900 Wellpoint Health Networks 145,859(2)(6)
----------
283,707
----------
TECHNOLOGY (18.2%)
1,463,800 Apple Computer 89,200(2)
1,790,000 Compaq Computer 60,972
644,600 Computer Sciences 50,964(2)
1,581,100 Gateway Inc. 107,673(2)
2,246,300 General Motors Class H 74,409(2)
125,890 Hewlett-Packard 15,201(6)
487,200 IBM 64,310
1,345,000 Lexmark International Group 91,208(2)
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
--------------------- ---------------
<C> <S> <C>
581,400 Micron Technology $ 47,529(2)
1,046,400 Motorola, Inc. 37,736
290,800 Rational Software 37,422(2)(6)
374,800 Seagate Technology 22,254(2)
----------
698,878
----------
TELECOMMUNICATIONS (4.8%)
1,586,400 AT&T Wireless Group 41,544(2)
428,200 Lucent Technologies 17,904
637,800 Nextel Communications 35,358(2)
1,033,600 Verizon Communications 45,091
1,160,050 WorldCom, Inc. 42,342(2)
----------
182,239
----------
TRANSPORTATION (1.4%)
574,500 AMR Corp. 18,851(2)
711,000 Continental Airlines Class B 34,217(2)
----------
53,068
----------
MISCELLANEOUS (0.9%)
387,700 Minnesota Mining &
Manufacturing 36,056
----------
TOTAL COMMON STOCKS (COST
$2,452,175) 3,213,713
----------
PREFERRED STOCKS (2.6%)
2,313,500 News Corp. ADR (COST $67,929) 102,372
----------
</TABLE>
C-8
<PAGE>
August 31, 2000
--------------------------------------------------------------------------------
Guardian Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Principal Value(1)
Amount (000's omitted)
--------------------- ---------------
<C> <S> <C>
U.S. GOVERNMENT AGENCY SECURITIES (0.7%)
$ 10,000,000 Federal Farm Credit Bank,
Discount Notes, 6.36%,
due 9/18/00 $ 9,970
8,000,000 Fannie Mae, Discount Notes,
6.38%, due 9/21/00 7,971
8,000,000 Freddie Mac, Discount Notes,
6.41%, due 9/28/00 7,962
----------
TOTAL U.S. GOVERNMENT AGENCY
SECURITIES (COST $25,903) 25,903(3)
----------
REPURCHASE AGREEMENTS (1.8%)
67,823,000 State Street Bank and Trust
Co. Repurchase Agreement,
6.58%, due 9/1/00, dated
8/31/00, Maturity Value
$67,835,397, Collateralized
by $68,205,000 Fannie Mae,
Notes, 6.40%, due 9/27/01
(Collateral Value
$69,860,949) (COST $67,823) 67,823(3)
----------
</TABLE>
<TABLE>
<CAPTION>
Market
Principal Value(1)
Amount (000's omitted)
--------------------- ---------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (12.4%)
$ 69,206,000 Panasonic Finance Co., 6.63%,
due 9/1/00 $ 69,206
100,000,000 Ford Motor Credit Corp., 6.45%
& 6.48%, due 9/6/00 & 9/8/00 99,892
50,000,000 General Electric Capital
Corp., 6.50%, due 9/14/00 49,883
50,000,000 Prudential Funding Corp.,
6.50%, due 9/15/00 49,874
30,000,000 GOVCO Inc., 6.52%,
due 9/18/00 29,908
40,000,000 American Express Credit Corp.,
6.47%, due 9/20/00 39,863
50,000,000 Coca-Cola Co., 6.48%,
due 9/25/00 49,784
89,019,109 N&B Securities Lending Quality
Fund, LLC 89,019
----------
TOTAL SHORT-TERM INVESTMENTS
(COST $477,429) 477,429(3)
----------
TOTAL INVESTMENTS (101.2%)
(COST $3,091,259) 3,887,240(4)
Liabilities, less cash,
receivables and other assets
[(1.2%)] (47,361)
----------
TOTAL NET ASSETS (100.0%) $3,839,879
----------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-9
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
--------------------------------------------------------------------------------
Manhattan Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
----------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Applied Micro Circuits 2.9%
2. Calpine Corp. 2.8%
3. Rational Software 2.3%
4. Sanmina Corp. 2.2%
5. Integrated Device Technology 2.2%
6. Bea Systems 2.1%
7. Gemstar-TV Guide International 2.0%
8. Portal Software 1.9%
9. Anadarko Petroleum 1.9%
10. MedImmune, Inc. 1.9%
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
--------------------- ---------------
<C> <S> <C>
COMMON STOCKS (96.0%)
BUSINESS SERVICES - IT BUSINESS SERVICES (4.3%)
248,800 Amdocs Ltd. $ 17,774(2)
534,200 Concord EFS 17,161(2)
197,200 CSG Systems International 8,911(2)
233,900 Fiserv, Inc. 12,674(2)
----------
56,520
----------
COMMUNICATIONS EQUIPMENT (5.0%)
166,600 Comverse Technology 15,317(2)
228,300 Phone.com 21,103(2)
128,000 Redback Networks 19,120(2)
28,300 SDL, Inc. 11,244(2)
----------
66,784
----------
COMMUNICATION SERVICES (3.9%)
155,000 Digex, Inc. 13,127(2)
554,300 McLeodUSA Inc. 8,765(2)
259,800 Metromedia Fiber Network 10,376(2)
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
--------------------- ---------------
<C> <S> <C>
76,100 VoiceStream Wireless 8,566(2)
385,800 WinStar Communications 10,368(2)
----------
51,202
----------
COMPUTER RELATED (2.1%)
100,600 Brocade Communications Systems 22,717(2)
48,600 QLogic Corp. 5,516(2)
----------
28,233
----------
CONSUMER CYCLICAL - LEISURE & CONSUMER SERVICE (1.2%)
57,000 Four Seasons Hotels 4,318
237,800 Harley-Davidson 11,845
----------
16,163
----------
CONSUMER STAPLES (0.8%)
256,900 Estee Lauder 10,517
----------
ELECTRICAL EQUIPMENT (0.4%)
109,200 RF Micro Devices 4,873
----------
ENERGY (9.2%)
390,857 Anadarko Petroleum 25,707
374,900 Calpine Corp. 37,115(2)
200,300 Cooper Cameron 15,586(2)
392,000 Dynegy Inc. 17,640
544,000 Rowan Cos. 16,864(2)
194,800 Weatherford International 9,143(2)
----------
122,055
----------
FINANCE (3.3%)
181,800 Capital One Financial 10,965
81,500 Lehman Brothers Holdings 11,817
180,600 Providian Financial 20,758
----------
43,540
----------
</TABLE>
C-10
<PAGE>
August 31, 2000
--------------------------------------------------------------------------------
Manhattan Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
--------------------- ---------------
<C> <S> <C>
HEALTH CARE (13.8%)
126,100 ALZA Corp. 9,536(2)
165,000 Forest Laboratories 16,149(2)
527,900 Health Management Associates 8,611(2)
58,600 Human Genome Sciences 9,783(2)
121,900 IDEC Pharmaceuticals 17,020(2)
148,900 Immunex Corp. 7,482(2)
189,100 King Pharmaceuticals 6,075(2)
305,200 MedImmune, Inc. 25,675(2)
114,100 Millennium Pharmaceuticals 16,331(2)
242,000 MiniMed Inc. 17,375(2)
216,800 PE Corp.-PE Biosystems Group 21,328
160,200 QLT PhotoTherapeutics 11,865(2)
142,600 Sepracor Inc. 15,686(2)
----------
182,916
----------
INSTRUMENTS (3.8%)
244,500 Millipore Corp. 14,884
183,700 Tektronix, Inc. 13,996
261,400 Waters Corp. 20,797(2)
----------
49,677
----------
INTERNET (6.7%)
109,125 CacheFlow Inc. 11,936(2)
298,900 Gemstar-TV Guide International 26,976(2)
372,100 Intuit Inc. 22,279(2)
218,750 PurchasePro.com 12,640(2)
265,600 Safeguard Scientifics 7,586(2)
38,000 VeriSign, Inc. 7,557(2)
----------
88,974
----------
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
--------------------- ---------------
<C> <S> <C>
MEDIA (5.4%)
149,100 Charter Communications 2,283
379,200 Emmis Communications 12,442(2)
207,900 Entercom Communications 8,589(2)
283,581 NTL Inc. 12,424(2)
351,200 Univision Communications 15,497
750,800 Westwood One 20,882(2)
----------
72,117
----------
RETAIL (3.3%)
234,400 Best Buy 14,474(2)
131,500 Dollar Tree Stores 5,334(2)
241,600 Starbucks Corp. 8,849(2)
352,600 Tiffany & Co. 14,677
----------
43,334
----------
SEMICONDUCTORS (13.2%)
77,700 Analog Devices 7,809(2)
191,200 Applied Micro Circuits 38,802(2)
1,123,000 Atmel Corp. 22,460(2)
193,600 GlobeSpan, Inc. 23,317(2)
327,400 Integrated Device Technology 28,729(2)
325,800 Intersil Holding 17,593(2)
341,700 KLA-Tencor 22,424(2)
35,100 Rambus Inc. 2,867(2)
116,300 Vitesse Semiconductor 10,329(2)
----------
174,330
----------
SOFTWARE (14.5%)
87,700 Adobe Systems 11,401
139,900 Art Technology Group 14,261(2)
401,900 Bea Systems 27,354(2)
190,700 Mercury Interactive 23,301(2)
77,900 Micromuse Inc. 11,831(2)
484,100 Peregrine Systems 15,461(2)
465,900 Portal Software 25,741(2)
234,900 Rational Software 30,229(2)
</TABLE>
C-11
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman August 31, 2000
--------------------------------------------------------------------------------
Manhattan Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
--------------------- ---------------
<C> <S> <C>
236,100 RealNetworks 11,495(2)
525,900 Vignette Corp. 20,050(2)
----------
191,124
----------
SYSTEMS (5.1%)
204,000 Flextronics International 16,996(2)
183,200 Jabil Circuit 11,691(2)
251,300 Sanmina Corp. 29,653(2)
217,800 Vishay Intertechnology 8,780(2)
----------
67,120
----------
TOTAL COMMON STOCKS (COST
$920,749) 1,269,479
----------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount
---------------------
<C> <S> <C>
REPURCHASE AGREEMENTS (2.9%)
$ 37,934,000 State Street Bank and Trust
Co. Repurchase Agreement,
6.58%, due 9/1/00, dated
8/31/00, Maturity Value
$37,940,933, Collateralized
by $38,150,000 Fannie Mae,
Notes, 6.40%, due 9/27/01
(Collateral Value
$39,076,244)
(COST $37,934) 37,934(3)
----------
</TABLE>
<TABLE>
<CAPTION>
Market
Principal Value(1)
Amount (000's omitted)
--------------------- ---------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (11.2%)
20,000,000 Prudential Funding Corp.,
6.45%, due 9/5/00 19,986
127,345,387 N&B Securities Lending Quality
Fund, LLC 127,345
----------
TOTAL SHORT-TERM INVESTMENTS
(COST $147,331) 147,331(3)
----------
TOTAL INVESTMENTS (110.1%)
(COST $1,106,014) 1,454,744(4)
Liabilities, less cash,
receivables and other assets
[(10.1%)] (132,981)
----------
TOTAL NET ASSETS (100.0%) $1,321,763
----------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-12
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman August 31, 2000
--------------------------------------------------------------------------------
Millennium Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
----------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. AirGate PCS 3.7%
2. Insight Enterprises 3.6%
3. MCK Communications 3.5%
4. LifeMinders, Inc. 2.9%
5. IONA Technologies ADR 2.5%
6. Integrated Device Technology 2.5%
7. AudioCodes Ltd. 2.3%
8. Corinthian Colleges 2.2%
9. Osicom Technologies 2.2%
10. About.com 2.1%
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
--------------------- ---------------
<C> <S> <C>
COMMON STOCKS (96.6%)
BUSINESS SERVICES (13.0%)
50,200 Cal Dive International $ 2,887(2)
138,400 Corinthian Colleges 7,473(2)
239,000 Crown Media Holdings 3,839(2)
114,450 Iron Mountain 3,906(2)
89,600 Manufacturers' Services
Limited 2,285(2)
97,200 Marine Drilling 2,643(2)
102,600 National-Oilwell 3,559(2)
90,400 Photon Dynamics 4,243(2)
78,200 Precision Drilling 2,659(2)
82,600 UTI Energy 3,077(2)
78,900 Veeco Instruments 7,071(2)
--------
43,642
--------
BUSINESS SERVICES - IT BUSINESS SERVICES (0.6%)
60,300 Hall, Kinion & Associates 1,990(2)
--------
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
--------------------- ---------------
<C> <S> <C>
CONSUMER CYCLICAL - CONSUMER MEDIA (1.6%)
201,800 Entravision Communications 3,998(2)
80,000 Oakley, Inc. 1,355(2)
--------
5,353
--------
CONSUMER GOODS & SERVICES (0.8%)
50,400 Advanced Lighting Technologies 806(2)
32,000 Proxim, Inc. 1,922(2)
--------
2,728
--------
ENERGY (4.0%)
105,100 Hanover Compressor 3,337(2)
189,400 Maverick Tube 5,315(2)
149,000 Patterson Energy 4,675(2)
--------
13,327
--------
FINANCIAL SERVICES (2.5%)
86,000 Affiliated Managers Group 4,794(2)
111,500 eSPEED, Inc. 3,429(2)
--------
8,223
--------
HEALTH CARE (9.0%)
13,600 Arena Pharmaceuticals 629(2)
53,800 Cephalon, Inc. 2,707(2)
35,500 Charles River Laboratories
International 974(2)
189,200 ChromaVision Medical Systems 2,365(2)
25,900 Cubist Pharmaceuticals 1,583(2)
15,100 CV Therapeutics 1,133(2)
62,200 Enzon, Inc. 3,786(2)
196,400 InKine Pharmaceutical 1,866(2)
42,500 Noven Pharmaceuticals 1,785(2)
50,200 OSI Pharmaceuticals 2,509(2)
51,900 Pharmacyclics, Inc. 2,601(2)
61,320 Physiometrix, Inc. 1,418(2)
</TABLE>
C-13
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
--------------------------------------------------------------------------------
Millennium Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
--------------------- ---------------
<C> <S> <C>
112,200 PolyMedia Corp. 3,983(2)
25,600 Tanox, Inc. 1,191(2)
36,800 Titan Pharmaceuticals 1,727(2)
--------
30,257
--------
HEALTH PRODUCTS & SERVICES (0.4%)
45,200 Orthodontic Centers of America 1,480(2)
--------
INTERNET (11.1%)
164,300 About.com 7,167(2)
128,800 IntraNet Solutions 5,836(2)
208,700 iVillage Inc. 1,396(2)
329,600 LifeMinders, Inc. 9,888(2)
484,548 MyPoints.com 6,602(2)
112,300 PurchasePro.com 6,489(2)
--------
37,378
--------
RETAIL (5.1%)
8,600 Christopher & Banks 305(2)
130,500 Factory 2-U Stores 4,511(2)
241,700 Insight Enterprises 12,145(2)
--------
16,961
--------
SEMICONDUCTORS (2.3%)
104,300 Helix Technology 3,950
85,500 SIPEX Corp. 3,682(2)
--------
7,632
--------
SOFTWARE (4.2%)
124,300 Accrue Software 2,649(2)
203,200 Actuate Software 5,270(2)
94,700 Eprise Corp. 1,474(2)
63,700 Jack Henry & Associates 2,827
85,900 Primus Knowledge Solutions 2,024(2)
--------
14,244
--------
TECHNOLOGY (6.2%)
62,300 Keithley Instruments 4,731
45,100 LightPath Technologies 2,379(2)
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
--------------------- ---------------
<C> <S> <C>
127,300 Rainbow Technologies 5,044(2)
195,150 REMEC, Inc. 5,562(2)
38,400 Zygo Corp. 3,048(2)
--------
20,764
--------
TECHNOLOGY - HARDWARE (9.6%)
67,600 AudioCodes Ltd. 7,596(2)
73,700 Natural MicroSystems 5,495(2)
175,800 Netopia, Inc. 6,439(2)
123,000 Osicom Technologies 7,257(2)
78,800 Virata Corp. 5,418(2)
--------
32,205
--------
TECHNOLOGY - SEMICONDUCTOR (7.7%)
434,500 Artisan Components 4,997(2)
95,100 Integrated Device Technology 8,345(2)
138,100 Kopin Corp. 4,618(2)
140,900 Oak Technology 4,104(2)
96,900 Parlex Corp. 3,694(2)
--------
25,758
--------
TECHNOLOGY - SOFTWARE (5.4%)
114,000 Allaire Corp. 3,869(2)
101,500 IONA Technologies ADR 8,456(2)
14,000 Netegrity, Inc. 1,232(2)
102,400 SERENA Software 4,506(2)
--------
18,063
--------
TELECOMMUNICATIONS (13.1%)
180,800 AirGate PCS 12,306(2)
86,300 Alamosa PCS Holdings 2,147(2)
403,600 MCK Communications 11,603(2)
146,800 Pinnacle Holdings 5,909(2)
35,600 SBA Communications 1,588(2)
203,200 SMTC Corp. 4,877(2)
</TABLE>
C-14
<PAGE>
August 31, 2000
--------------------------------------------------------------------------------
Millennium Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
--------------------- ---------------
<C> <S> <C>
200,400 UbiquiTel Inc. 2,279(2)
210,800 US Unwired 3,149(2)
--------
43,858
--------
TOTAL COMMON STOCKS (COST
$269,160) 323,863
--------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount
---------------------
<C> <S> <C>
REPURCHASE AGREEMENTS (1.1%)
$ 3,760,000 State Street Bank and Trust
Co. Repurchase Agreement,
6.58%, due 9/1/00, dated
8/31/00, Maturity Value
$3,760,687, Collateralized by
$3,785,000 Fannie Mae, Notes,
6.40%, due 9/27/01
(Collateral Value $3,876,896)
(COST $3,760) 3,760(3)
--------
</TABLE>
<TABLE>
<CAPTION>
Market
Principal Value(1)
Amount (000's omitted)
--------------------- ---------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (15.9%)
$53,425,725 N&B Securities Lending Quality
Fund, LLC (COST $53,426) $ 53,426(3)
--------
TOTAL INVESTMENTS (113.6%)
(COST $326,346) 381,049(4)
Liabilities, less cash,
receivables and other assets
[(13.6%)] (45,481)
--------
TOTAL NET ASSETS (100.0%) $335,568
--------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-15
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
--------------------------------------------------------------------------------
Partners Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
----------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Lexmark International Group 3.5%
2. Kroger Co. 3.5%
3. Chase Manhattan 3.1%
4. Computer Sciences 2.9%
5. CIGNA Corp. 2.6%
6. News Corp. ADR 2.5%
7. IBM 2.4%
8. Exxon Mobil 2.4%
9. The Williams Cos. 2.4%
10. XL Capital 2.3%
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
--------------------- ---------------
<C> <S> <C>
COMMON STOCKS (95.4%)
AUTOMOBILE MANUFACTURING (0.7%)
265,500 General Motors $ 19,166
----------
AUTO/TRUCK REPLACEMENT PARTS (0.8%)
1,007,800 Lear Corp. 21,731(2)
----------
BANKING & FINANCIAL (8.6%)
987,700 Bank of New York 51,793
1,611,750 Chase Manhattan 90,056
847,600 Citigroup Inc. 49,479
73,200 Countrywide Credit Industries 2,772
1,252,100 Wells Fargo 54,075
----------
248,175
----------
CHEMICALS (2.7%)
1,374,000 Alcoa Inc. 45,685
704,000 duPont 31,592
----------
77,277
----------
COMMUNICATIONS (3.5%)
885,300 AT&T Corp. 27,887
588,500 NTL Inc. 25,783(2)
1,310,000 WorldCom, Inc. 47,815(2)
----------
101,485
----------
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
--------------------- ---------------
<C> <S> <C>
CONSUMER PRODUCTS & SERVICES (2.1%)
458,532 Clear Channel Communications $ 33,186(2)
734,900 Pitney Bowes 26,870
----------
60,056
----------
DIVERSIFIED (3.2%)
19,000 Berkshire Hathaway Class B 36,347(2)
766,900 Procter & Gamble 47,404
375,400 Thermo Electron 8,728(2)
----------
92,479
----------
ENTERTAINMENT (1.1%)
1,628,800 Carnival Corp. 32,474
----------
FINANCIAL SERVICES (5.1%)
1,535,900 Ceridian Corp. 37,150(2)
284,200 Morgan Stanley Dean Witter 30,569
494,900 Providian Financial 56,883
549,200 USA Education 21,522
----------
146,124
----------
FOOD & TOBACCO (2.0%)
727,900 Anheuser-Busch 57,368
----------
FOOD PRODUCTS (3.5%)
4,386,600 Kroger Co. 99,521(2)
----------
GAS (1.9%)
1,216,900 Praxair, Inc. 53,848
----------
HEALTH CARE (10.8%)
774,200 American Home Products 41,952
735,700 Bristol-Myers Squibb 38,992
757,000 CIGNA Corp. 73,618
407,200 Johnson & Johnson 37,437
920,200 Merck & Co. 64,299
479,800 Pharmacia Corp. 28,098
681,600 Schering-Plough 27,349
----------
311,745
----------
INDUSTRIAL GOODS & SERVICES (2.2%)
1,022,300 General Dynamics 64,341
----------
</TABLE>
C-16
<PAGE>
August 31, 2000
--------------------------------------------------------------------------------
Partners Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
--------------------- ---------------
<C> <S> <C>
INSURANCE (5.7%)
507,500 American International Group $ 45,231
1,379,800 Aon Corp. 51,484
960,159 XL Capital 66,191
----------
162,906
----------
MEDIA & ENTERTAINMENT (1.8%)
1,306,000 Walt Disney 50,852
----------
OIL & GAS (7.9%)
549,900 Anadarko Petroleum 36,167
473,900 Chevron Corp. 40,045
848,500 Exxon Mobil 69,259
807,000 Halliburton Co. 42,771
670,400 Transocean Sedco Forex 40,056
----------
228,298
----------
RESTAURANTS (1.1%)
1,073,100 McDonald's Corp. 32,059
----------
RETAILING (1.4%)
736,600 Costco Wholesale 25,367(2)
610,900 Target Corp. 14,203
----------
39,570
----------
TECHNOLOGY (20.4%)
400,000 Apple Computer 24,375(2)
2,027,400 Cadence Design Systems 43,082(2)
1,062,300 Computer Associates 33,728
1,047,400 Computer Sciences 82,810(2)
599,300 Gateway Inc. 40,812(2)
1,648,500 General Motors Class H 54,606(2)
528,800 IBM 69,802
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
--------------------- ---------------
<C> <S> <C>
1,478,800 Lexmark International Group $ 100,281(2)
405,600 Micron Technology 33,158(2)
1,685,800 Motorola, Inc. 60,794
1,911,400 Parametric Technology 25,565(2)
144,300 Samsung Electronics GDR 18,182(7)
----------
587,195
----------
TELECOMMUNICATIONS (6.5%)
1,771,800 AT&T Corp.- Liberty Media
Group Class A 37,872(2)
765,500 AT&T Wireless Group 20,047(2)
237,400 Crown Castle International 8,235(2)
793,500 Nextel Communications 43,990(2)
1,341,582 Verizon Communications 58,526
709,400 WinStar Communications 19,065(2)
----------
187,735
----------
UTILITIES (2.4%)
1,490,900 The Williams Cos. 68,674
----------
TOTAL COMMON STOCKS (COST
$2,396,081) 2,743,079
----------
PREFERRED STOCKS (2.5%)
1,617,100 News Corp. ADR (COST $42,513) 71,557
----------
</TABLE>
C-17
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman August 31, 2000
--------------------------------------------------------------------------------
Partners Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Principal Value(1)
Amount (000's omitted)
--------------------- ---------------
<C> <S> <C>
REPURCHASE AGREEMENTS (1.5%)
$42,017,000 State Street Bank and Trust
Co. Repurchase Agreement,
6.58%, due 9/1/00, dated
8/31/00, Maturity Value
$42,024,680, Collateralized
by $42,255,000 Fannie Mae,
Notes, 6.40%, due 9/27/01
(Collateral Value
$43,280,909) (COST $42,017) $ 42,017(3)
----------
</TABLE>
<TABLE>
<CAPTION>
Market
Principal Value(1)
Amount (000's omitted)
--------------------- ---------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (2.2%)
$64,211,597 N&B Securities Lending Quality
Fund, LLC (COST $64,212) $ 64,212(3)
----------
TOTAL INVESTMENTS (101.6%)
(COST $2,544,823) 2,920,865(4)
Liabilities, less cash,
receivables and other assets
[(1.6%)] (46,733)
----------
TOTAL NET ASSETS (100.0%) $2,874,132
----------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-18
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman August 31, 2000
--------------------------------------------------------------------------------
Socially Responsive Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
----------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Citigroup Inc. 5.1%
2. Intel Corp. 4.9%
3. Anadarko Petroleum 4.6%
4. Compaq Computer 3.7%
5. Hewlett-Packard 3.4%
6. KeySpan Corp. 3.0%
7. Comcast Corp. Class A Special 3.0%
8. Enron Corp. 2.9%
9. Hartford Financial Services Group 2.9%
10. Tyco International 2.9%
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
--------------------- ---------------
<C> <S> <C>
COMMON STOCKS (98.6%)
BANKING (2.4%)
180,000 Dime Bancorp $ 3,308
--------
BASIC MATERIALS (1.1%)
46,200 Alcoa Inc. 1,536
--------
COMMUNICATIONS (3.0%)
109,000 Comcast Corp. Class A Special 4,060(2)
--------
CONSUMER GOODS & SERVICES (5.0%)
53,300 Kimberly-Clark 3,118
94,000 Marriott International 3,713
--------
6,831
--------
DIVERSIFIED (8.1%)
60,000 Danaher Corp. 3,371
40,000 Minnesota Mining &
Manufacturing 3,720
70,000 Tyco International 3,990
--------
11,081
--------
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
--------------------- ---------------
<C> <S> <C>
ENERGY (7.3%)
50,000 BP Amoco ADR $ 2,762
120,000 KeySpan Corp. 4,133
37,000 Schlumberger Ltd. 3,157
--------
10,052
--------
ENTERTAINMENT (2.9%)
137,000 Fox Entertainment Group 3,964(2)
--------
FINANCIAL SERVICES (16.6%)
40,500 American International Group 3,610
62,000 AXA Financial 3,208
56,400 Chase Manhattan 3,151
120,000 Citigroup Inc. 7,005
60,000 Hartford Financial Services
Group 3,998
16,000 Morgan Stanley Dean Witter 1,721
--------
22,693
--------
HEALTH CARE (11.3%)
60,000 Bristol-Myers Squibb 3,180
150,000 IMS Health 2,831
22,800 Johnson & Johnson 2,096
86,250 Pfizer Inc. 3,730
42,900 Wellpoint Health Networks 3,703(2)
--------
15,540
--------
OIL & GAS (11.7%)
95,000 Anadarko Petroleum 6,248
44,000 Cooper Cameron 3,424(2)
47,300 Enron Corp. 4,014
50,600 Nabors Industries 2,407(2)
--------
16,093
--------
PUBLISHING & BROADCASTING (1.7%)
78,800 Valassis Communications 2,275(2)
--------
</TABLE>
C-19
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman August 31, 2000
--------------------------------------------------------------------------------
Socially Responsive Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
--------------------- ---------------
<C> <S> <C>
RETAIL (3.3%)
60,000 Safeway Inc. $ 2,959(2)
67,200 Target Corp. 1,562
--------
4,521
--------
RETAILING (1.4%)
40,000 Wal-Mart Stores 1,898
--------
TECHNOLOGY (16.9%)
55,100 Agilent Technologies 3,323(2)
150,000 Compaq Computer 5,110
39,100 Hewlett-Packard 4,721
25,000 IBM 3,300
88,800 Intel Corp. 6,649
--------
23,103
--------
TELECOMMUNICATIONS (5.9%)
40,000 NTL Inc. 1,753(2)
70,000 SBC Communications 2,923
8,900 TyCom, Ltd. 370(2)
81,900 WorldCom, Inc. 2,989(2)
--------
8,035
--------
TOTAL COMMON STOCKS (COST
$95,854) 134,990
--------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount
---------------------
<C> <S> <C>
REPURCHASE AGREEMENTS (1.3%)
$1,720,000 State Street Bank and Trust
Co. Repurchase Agreement,
6.58%, due 9/1/00, dated
8/31/00, Maturity Value
$1,720,314, Collateralized by
$1,730,000 Fannie Mae, Notes,
6.40%, due 9/27/01
(Collateral Value $1,772,003)
(COST $1,720) 1,720(3)
--------
</TABLE>
<TABLE>
<CAPTION>
Market
Principal Value(1)
Amount (000's omitted)
--------------------- ---------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (0.3%)
$ 100,000 Community Capital Bank, 5.00%,
due 9/30/00 $ 100
100,000 Self Help Credit Union, 5.92%,
due 11/21/00 100
244,761 N&B Securities Lending Quality
Fund, LLC 245
--------
TOTAL SHORT-TERM INVESTMENTS
(COST $445) 445(3)
--------
TOTAL INVESTMENTS (100.2%)
(COST $98,019) 137,155(4)
Liabilities, less cash,
receivables and other assets
[(0.2%)] (254)
--------
TOTAL NET ASSETS (100.0%) $136,901
--------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-20
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS
August 31, 2000
----------------------------------------------------------------------
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 the trustees of Equity Managers Trust
believe accurately reflects fair value. Foreign security prices are furnished
by independent quotation services expressed in local currency values. Foreign
security prices are translated from the local currency into U.S. dollars
using current exchange rates. Short-term debt securities with less than 60
days until maturity may be valued at cost which, when combined with interest
earned, approximates market value.
2) Non-income producing security.
3) At cost, which approximates market value.
4) At August 31, 2000, selected Portfolio information on a U.S. 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 $1,168,582,000 $1,196,466,000 $ 9,026,000 $1,187,440,000
GENESIS PORTFOLIO 1,579,972,000 420,625,000 108,366,000 312,259,000
GUARDIAN PORTFOLIO 3,115,046,000 839,660,000 67,466,000 772,194,000
MANHATTAN PORTFOLIO 1,106,100,000 380,421,000 31,777,000 348,644,000
MILLENNIUM PORTFOLIO 329,240,000 72,651,000 20,842,000 51,809,000
PARTNERS PORTFOLIO 2,555,689,000 472,050,000 106,874,000 365,176,000
SOCIALLY RESPONSIVE PORTFOLIO 98,032,000 40,680,000 1,557,000 39,123,000
</TABLE>
5) Affiliated issuer (see Note E of Notes to Financial Statements).
C-21
<PAGE>
6) The following securities were held in escrow at August 31, 2000, to cover
outstanding call options written:
<TABLE>
<CAPTION>
PREMIUM
SECURITIES AND MARKET VALUE ON MARKET VALUE
NEUBERGER BERMAN SHARES OPTIONS OF SECURITIES OPTIONS OF OPTIONS
<S> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------
GUARDIAN PORTFOLIO 800,000 Pfizer Inc. $34,600,000 $4,575,847 $ 2,150,000
December 2000
@ 45
97,000 Wellpoint Health 8,372,313 870,061 606,250
Networks
January 2001 @ 100
160,000 Citigroup Inc. 9,340,000 415,186 320,000
October 2000 @ 60
280,000 Rational Software 36,032,500 5,976,474 10,080,000
January 2001 @ 105
125,000 Hewlett-Packard 15,093,750 1,511,824 1,945,313
November 2000
@ 115
</TABLE>
7) 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 August 31, 2000, these
securities amounted to $18,182,000 or 0.6% of net assets for Neuberger Berman
Partners Portfolio.
SEE NOTES TO FINANCIAL STATEMENTS
C-22
<PAGE>
(This page has been left blank intentionally.)
C-23
<PAGE>
(This page has been left blank intentionally.)
<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 $ 2,225,166 $ 1,686,348
Non-controlled affiliated issuers 130,856 205,883
----------------------------
2,356,022 1,892,231
Cash 1 1
Dividends and interest receivable 936 1,609
Prepaid expenses and other assets 16 28
Receivable for securities sold 33,969 1,994
Receivable for variation margin (Note A) -- --
----------------------------
2,390,944 1,895,863
----------------------------
LIABILITIES
Option contracts written, at market value
(Note A) -- --
Payable for collateral on securities loaned
(Note A) 10,008 36,226
Payable for securities purchased 9,666 7,124
Payable to investment manager (Note B) 869 1,088
Accrued expenses and other payables 143 297
----------------------------
20,686 44,735
----------------------------
NET ASSETS Applicable to Investors' Beneficial
Interests $ 2,370,258 $ 1,851,128
----------------------------
NET ASSETS consist of:
Paid-in capital $ 1,179,587 $ 1,536,941
Net unrealized appreciation in value of
investment securities, financial futures
contracts, and option contracts 1,190,671 314,187
----------------------------
NET ASSETS $ 2,370,258 $ 1,851,128
----------------------------
*Cost of investments:
Unaffiliated issuers $ 1,063,334 $ 1,343,716
Non-controlled affiliated issuers 102,017 234,328
----------------------------
Total cost of investments $ 1,165,351 $ 1,578,044
----------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-24
<PAGE>
August 31, 2000
----------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
SOCIALLY
GUARDIAN MANHATTAN MILLENNIUM PARTNERS RESPONSIVE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------
ASSETS
Investments in securities, at market value*
(Notes A & E) -- see Schedule of
Investments:
Unaffiliated issuers $ 3,887,240 $ 1,454,744 $ 381,049 $ 2,920,865 $ 137,155
Non-controlled affiliated issuers -- -- -- -- --
-------------------------------------------------------------------------
3,887,240 1,454,744 381,049 2,920,865 137,155
Cash 1 1 -- 1 --
Dividends and interest receivable 4,586 703 265 3,880 110
Prepaid expenses and other assets 65 80 28 68 3
Receivable for securities sold 127,496 3,355 21,254 28,678 --
Receivable for variation margin (Note A) 4,136 -- -- -- --
-------------------------------------------------------------------------
4,023,524 1,458,883 402,596 2,953,492 137,268
-------------------------------------------------------------------------
LIABILITIES
Option contracts written, at market value
(Note A) 15,102 -- -- -- --
Payable for collateral on securities loaned
(Note A) 89,019 127,345 53,426 64,212 245
Payable for securities purchased 77,540 8,544 13,073 13,557 --
Payable to investment manager (Note B) 1,432 518 220 1,106 61
Accrued expenses and other payables 552 713 309 485 61
-------------------------------------------------------------------------
183,645 137,120 67,028 79,360 367
-------------------------------------------------------------------------
NET ASSETS Applicable to Investors' Beneficial
Interests $ 3,839,879 $ 1,321,763 $ 335,568 $ 2,874,132 $ 136,901
-------------------------------------------------------------------------
NET ASSETS consist of:
Paid-in capital $ 3,037,228 $ 973,033 $ 280,865 $ 2,498,090 $ 97,765
Net unrealized appreciation in value of
investment securities, financial futures
contracts, and option contracts 802,651 348,730 54,703 376,042 39,136
-------------------------------------------------------------------------
NET ASSETS $ 3,839,879 $ 1,321,763 $ 335,568 $ 2,874,132 $ 136,901
-------------------------------------------------------------------------
*Cost of investments:
Unaffiliated issuers $ 3,091,259 $ 1,106,014 $ 326,346 $ 2,544,823 $ 98,019
Non-controlled affiliated issuers -- -- -- -- --
-------------------------------------------------------------------------
Total cost of investments $ 3,091,259 $ 1,106,014 $ 326,346 $ 2,544,823 $ 98,019
-------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-25
<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 $ 12,183 $ 12,039
Dividend income -- non-controlled affiliated
issuers 1,013 2,354
Interest income 1,702 5,017
Foreign taxes withheld (Note A) -- --
------------------------
Total income 14,898 19,410
------------------------
Expenses:
Investment management fee (Note B) 8,689 11,889
Accounting fees 10 10
Auditing fees 45 41
Custodian fees (Note B) 308 320
Insurance expense 21 21
Legal fees 23 20
Trustees' fees and expenses 27 25
Miscellaneous -- 33
------------------------
Total expenses 9,123 12,359
Expenses reduced by custodian fee expense
offset arrangement (Note B) (5) (3)
------------------------
Total net expenses 9,118 12,356
------------------------
Net investment income (loss) 5,780 7,054
------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investment securities
sold in unaffiliated issuers 162,326 201,347
Net realized gain (loss) on investment
securities sold in non-controlled affiliated
issuers 13,304 (3,841)
Net realized gain (loss) on option contracts
(Note A) 263 --
Net realized loss on financial futures
contracts (Note A) -- --
Change in net unrealized appreciation of
investment securities, financial futures
contracts and option contracts (Note A) 683,324 173,266
------------------------
Net gain on investments 859,217 370,772
------------------------
Net increase in net assets resulting from
operations $ 864,997 $ 377,826
------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-26
<PAGE>
For the Year Ended August 31, 2000
----------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
SOCIALLY
GUARDIAN MANHATTAN MILLENNIUM PARTNERS RESPONSIVE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------
INVESTMENT INCOME
Income:
Dividend income -- unaffiliated issuers $ 47,067 $ 624 $ 33 $ 41,798 $ 1,630
Dividend income -- non-controlled affiliated
issuers -- -- -- -- --
Interest income 13,511 3,307 1,012 4,009 476
Foreign taxes withheld (Note A) (347) -- -- (220) (3)
-----------------------------------------------------------------------
Total income 60,231 3,931 1,045 45,587 2,103
-----------------------------------------------------------------------
Expenses:
Investment management fee (Note B) 18,304 4,978 2,006 14,477 1,033
Accounting fees 10 10 10 10 10
Auditing fees 51 40 17 48 30
Custodian fees (Note B) 616 217 117 497 80
Insurance expense 63 8 1 48 5
Legal fees 22 27 25 22 38
Trustees' fees and expenses 51 17 9 42 7
Miscellaneous -- 23 6 -- --
-----------------------------------------------------------------------
Total expenses 19,117 5,320 2,191 15,144 1,203
Expenses reduced by custodian fee expense
offset arrangement (Note B) (26) (2) (9) (31) (1)
-----------------------------------------------------------------------
Total net expenses 19,091 5,318 2,182 15,113 1,202
-----------------------------------------------------------------------
Net investment income (loss) 41,140 (1,387) (1,137) 30,474 901
-----------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investment securities
sold in unaffiliated issuers 461,016 313,974 42,114 198,792 61,526
Net realized gain (loss) on investment
securities sold in non-controlled affiliated
issuers -- -- -- -- --
Net realized gain (loss) on option contracts
(Note A) (92,778) -- -- -- --
Net realized loss on financial futures
contracts (Note A) (5,940) -- -- -- --
Change in net unrealized appreciation of
investment securities, financial futures
contracts and option contracts (Note A) 221,730 226,396 48,586 16,151 (58,823)
-----------------------------------------------------------------------
Net gain on investments 584,028 540,370 90,700 214,943 2,703
-----------------------------------------------------------------------
Net increase in net assets resulting from
operations $ 625,168 $ 538,983 $ 89,563 $ 245,417 $ 3,604
-----------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-27
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
----------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
FOCUS GENESIS
PORTFOLIO PORTFOLIO
Year Year
Ended Ended
August 31, August 31,
(000'S OMITTED) 2000 1999 2000 1999
<S> <C> <C> <C> <C>
------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 5,780 $ 5,971 $ 7,054 $ 18,739
Net realized gain (loss) on
investments 175,893 203,107 197,506 (110,390)
Change in net unrealized
appreciation (depreciation) of
investments 683,324 283,206 173,266 413,682
------------------------------------------------------
Net increase in net assets resulting
from operations 864,997 492,284 377,826 322,031
------------------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 293,813 50,568 242,189 528,302
Reductions (334,950) (313,932) (519,991) (911,584)
------------------------------------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests (41,137) (263,364) (277,802) (383,282)
------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 823,860 228,920 100,024 (61,251)
NET ASSETS:
Beginning of year 1,546,398 1,317,478 1,751,104 1,812,355
------------------------------------------------------
End of year $ 2,370,258 $ 1,546,398 $ 1,851,128 $ 1,751,104
------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-28
<PAGE>
----------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
GUARDIAN MANHATTAN MILLENNIUM
PORTFOLIO PORTFOLIO PORTFOLIO
Period from
October 20, 1998
Year Year Year (Commencement
Ended Ended Ended of Operations) to
August 31, August 31, August 31, August 31,
2000 1999 2000 1999 2000 1999
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 41,140 $ 60,087 $ (1,387) $ (502) $ (1,137) $ (186)
Net realized gain (loss) on
investments 362,298 991,845 313,974 57,698 42,114 8,249
Change in net unrealized
appreciation (depreciation) of
investments 221,730 406,548 226,396 135,208 48,586 6,117
---------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 625,168 1,458,480 538,983 192,404 89,563 14,180
---------------------------------------------------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 61,327 164,857 350,012 47,432 256,345 57,892
Reductions (1,570,336) (2,687,422) (180,091) (150,336) (78,577) (3,835)
---------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests (1,509,009) (2,522,565) 169,921 (102,904) 177,768 54,057
---------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (883,841) (1,064,085) 708,904 89,500 267,331 68,237
NET ASSETS:
Beginning of year 4,723,720 5,787,805 612,859 523,359 68,237 --
---------------------------------------------------------------------------------------
End of year $ 3,839,879 $ 4,723,720 $ 1,321,763 $ 612,859 $ 335,568 $ 68,237
---------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-29
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS(Cont'd)
----------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
SOCIALLY
PARTNERS RESPONSIVE
PORTFOLIO PORTFOLIO
Year Year
Ended Ended
August 31, August 31,
(000'S OMITTED) 2000 1999 2000 1999
<S> <C> <C> <C> <C>
------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 30,474 $ 51,968 $ 901 $ 2,271
Net realized gain (loss) on
investments 198,792 353,820 61,526 22,484
Change in net unrealized
appreciation (depreciation) of
investments 16,151 531,136 (58,823) 81,446
------------------------------------------------------
Net increase in net assets resulting
from operations 245,417 936,924 3,604 106,201
------------------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 114,599 230,354 34,685 53,231
Reductions (1,254,624) (979,875) (298,501) (45,169)
------------------------------------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests (1,140,025) (749,521) (263,816) 8,062
------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (894,608) 187,403 (260,212) 114,263
NET ASSETS:
Beginning of year 3,768,740 3,581,337 397,113 282,850
------------------------------------------------------
End of year $ 2,874,132 $ 3,768,740 $ 136,901 $ 397,113
------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-30
<PAGE>
(This page has been left blank intentionally.)
C-31
<PAGE>
NOTES TO FINANCIAL STATEMENTS
August 31, 2000
----------------------------------------------------------------------
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
Millennium Portfolio ("Millennium"), 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"). Millennium had no
operations until October 20, 1998, other than matters relating to its
organization and registration as a series of Managers Trust. Other regulated
investment companies sponsored by Neuberger Berman Management Inc.
("Management"), whose financial statements are not presented herein, also
invest in Managers Trust.
The assets of each Portfolio belong only to that Portfolio, and the
liabilities of each Portfolio are borne solely by that Portfolio and no
other.
2) PORTFOLIO VALUATION: Investment securities are valued as indicated in the
notes following the Portfolios' Schedule of Investments.
3) FOREIGN CURRENCY TRANSLATION: The accounting records of the Portfolios are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars at the current rate of exchange of such currency against the U.S.
dollar to determine the value of investments, other assets and liabilities.
Purchase and sale prices of securities, and income and expenses are
translated into U.S. dollars at the prevailing rate of exchange on the
respective dates of such transactions.
4) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Dividend income is recorded on the
ex-dividend date or, for certain foreign dividends, as soon as the Portfolio
becomes aware of the dividends. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, including accretion of original issue discount,
where applicable, and accretion of discount on short-term investments, is
recorded on the accrual basis. Realized gains and losses from securities
transactions and foreign currency transactions are recorded on the basis of
identified cost.
5) TAXES: Managers Trust intends to comply with the requirements of the Internal
Revenue Code. Each Portfolio of Managers Trust also intends to conduct its
C-32
<PAGE>
operations so that each of its investors will be able to qualify as a
regulated investment company. Each Portfolio will be treated as a partnership
for U.S. Federal income tax purposes and is therefore not subject to U.S.
Federal income tax.
6) FOREIGN TAXES: Foreign taxes withheld represent amounts withheld by foreign
tax authorities, net of refunds recoverable.
7) 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.
8) 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 year ended August 31, 2000:
<TABLE>
<CAPTION>
VALUE
WHEN
FOCUS NUMBER WRITTEN
<S> <C> <C>
-------------------------------------------------------------
CONTRACTS OUTSTANDING 8/31/99 3,000 $ 441,000
CONTRACTS WRITTEN 2,000 1,078,000
CONTRACTS EXPIRED (1,600) (533,000)
CONTRACTS EXERCISED 0 0
CONTRACTS CLOSED (3,400) (986,000)
------------------------
CONTRACTS OUTSTANDING 8/31/00 0 $ 0
------------------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
WHEN
GUARDIAN NUMBER WRITTEN
<S> <C> <C>
-----------------------------------------------------------------
CONTRACTS OUTSTANDING 8/31/99 23,750 $ 15,446,000
CONTRACTS WRITTEN 86,796 79,702,000
CONTRACTS EXPIRED (5,000) (2,985,000)
CONTRACTS EXERCISED (4,769) (2,647,000)
CONTRACTS CLOSED (86,157) (76,167,000)
----------------------------
CONTRACTS OUTSTANDING 8/31/00 14,620 $ 13,349,000
----------------------------
</TABLE>
C-33
<PAGE>
9) FINANCIAL FUTURES CONTRACTS: Each Portfolio may buy and sell stock index
futures contracts for purposes of managing cash flow. Millennium and Socially
Responsive may each buy and sell financial futures contracts to hedge against
a possible decline in the value of their portfolio securities. At the time a
Portfolio enters into a financial futures contract, it is required to deposit
with its custodian a specified amount of cash or liquid securities, known as
"initial margin," ranging upward from 1.1% of the value of the financial
futures contract being traded. Each day, the futures contract is valued at
the official settlement price of the board of trade or U.S. commodity
exchange on which such futures contract is traded. Subsequent payments, known
as "variation margin," to and from the broker are made on a daily basis as
the market price of the financial futures contract fluctuates. Daily
variation margin adjustments, arising from this "mark to market," are
recorded by the Portfolios as unrealized gains or losses.
Although some financial futures contracts by their terms call for actual
delivery or acceptance of financial instruments, in most cases the contracts
are closed out prior to delivery by offsetting purchases or sales of matching
financial futures contracts. When the contracts are closed, a Portfolio
recognizes a gain or loss. Risks of entering into futures contracts include
the possibility there may be an illiquid market and/or a change in the value
of the contract may not correlate with changes in the value of the underlying
securities.
For U.S. Federal income tax purposes, the futures transactions undertaken
by a Portfolio may cause that Portfolio to recognize gains or losses from
marking to market even though its positions have not been sold or terminated,
may affect the character of the gains or losses recognized as long-term or
short-term, and may affect the timing of some capital gains and losses
realized by the Portfolios. Also, a Portfolio's losses on transactions
involving futures contracts may be deferred rather than being taken into
account currently in calculating such Portfolio's taxable income. During the
year ended August 31, 2000, Focus, Genesis, Manhattan, Millennium, Partners,
and Socially Responsive did not enter into any financial futures contracts.
At August 31, 2000, open positions in financial futures contracts for
Guardian were as follows:
<TABLE>
<CAPTION>
UNREALIZED
EXPIRATION OPEN CONTRACTS POSITION APPRECIATION
<S> <C> <C> <C>
-----------------------------------------------------------------------
September 2000 940 S&P 500 Futures Long $8,422,000
</TABLE>
C-34
<PAGE>
At August 31, 2000, Guardian had the following securities deposited in a
segregated account to cover margin requirements on open financial futures
contracts:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT SECURITY
<S> <C>
--------------------------------------------------------------------------
$8,000,000 Federal Farm Credit Bank, Discount Notes, 6.36%, due 9/18/2000
8,000,000 Fannie Mae, Discount Notes, 6.38%, due 9/21/2000
8,000,000 Freddie Mac, Discount Notes, 6.41%, due 9/28/2000
</TABLE>
10) SECURITY LENDING: Securities loans involve certain risks in the event a
borrower should fail financially, including delays or inability to recover
the lent securities or foreclose against the collateral. The investment
manager, under the general supervision of Managers Trust's Board of
Trustees, monitors the creditworthiness of the parties to whom the
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. The Portfolios entered into a Securities Lending
Agreement with Morgan Stanley & Co. Incorporated ("Morgan"). The Portfolios
receive cash collateral equal to at least 100% of the current market value
of the loaned securities. The Portfolios invest the cash collateral in the
N&B Securities Lending Quality Fund, LLC ("investment vehicle"), which is
managed by State Street Bank and Trust Company ("State Street") pursuant to
guidelines approved by Managers Trust's investment manager. Income earned on
the investment vehicle is paid to Morgan monthly. The Portfolios receive a
fee, payable monthly, negotiated by the Portfolios and Morgan, based on the
number and duration of the lending transactions. At August 31, 2000, the
value of the securities loaned and the value of the collateral were as
follows:
<TABLE>
<CAPTION>
VALUE OF
SECURITIES VALUE OF
LOANED COLLATERAL
<S> <C> <C>
-------------------------------------------------------------------
FOCUS $ 9,812,000 $ 10,008,000
GENESIS 35,516,000 36,226,000
GUARDIAN 87,274,000 89,019,000
MANHATTAN 124,848,000 127,345,000
MILLENNIUM 52,378,000 53,426,000
PARTNERS 62,953,000 64,212,000
SOCIALLY RESPONSIVE 240,000 245,000
</TABLE>
11) REPURCHASE AGREEMENTS: Each Portfolio may enter into repurchase agreements
with institutions that the Portfolio's investment manager has determined are
creditworthy. Each repurchase agreement is recorded at cost. A Portfolio
requires that the securities purchased in a repurchase transaction be
transferred to the
C-35
<PAGE>
custodian in a manner sufficient to enable a Portfolio to obtain those
securities in the event of a default under the repurchase agreement. A
Portfolio monitors, on a daily basis, the value of the securities
transferred to ensure that their value, including accrued interest, is
greater than amounts owed to a Portfolio under each such repurchase
agreement.
NOTE B -- MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES:
Each Portfolio retains Management as its investment manager under a
Management Agreement. For such investment management services, each Portfolio
(except Genesis and Millennium) pays Management a fee at the annual rate of
0.55% of the first $250 million of that Portfolio's average daily net assets,
0.525% of the next $250 million, 0.50% of the next $250 million, 0.475% of the
next $250 million, 0.45% of the next $500 million, and 0.425% of average daily
net assets in excess of $1.5 billion. Genesis and Millennium pay Management a
fee for investment management services at the annual rate of 0.85% of the first
$250 million of that Portfolio's average daily net assets, 0.80% of the next
$250 million, 0.75% of the next $250 million, 0.70% of the next $250 million,
and 0.65% of average daily net assets in excess of $1 billion.
Management and Neuberger Berman, LLC ("Neuberger"), a member firm of The New
York Stock Exchange and sub-adviser to each Portfolio, are wholly owned
subsidiaries of Neuberger Berman Inc., a publicly held company. Neuberger is
retained by Management to furnish it with investment recommendations and
research information without added cost to each Portfolio. Several individuals
who are officers and/or trustees of Managers Trust are also employees of
Neuberger and/or 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 $5,067,
$2,694, $26,334, $1,460, $9,400, $31,086, and $888, for Focus, Genesis,
Guardian, Manhattan, Millennium, Partners, and Socially Responsive,
respectively.
C-36
<PAGE>
NOTE C -- SECURITIES TRANSACTIONS:
During the year ended August 31, 2000, there were purchase and sale
transactions (excluding short-term securities, financial futures contracts, and
option contracts) as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
<S> <C> <C>
-------------------------------------------------------------------
FOCUS $ 985,133,000 $1,020,999,000
GENESIS 592,552,000 899,085,000
GUARDIAN 3,199,167,000 4,688,263,000
MANHATTAN 1,124,602,000 967,149,000
MILLENNIUM 563,624,000 392,803,000
PARTNERS 2,963,180,000 3,916,490,000
SOCIALLY RESPONSIVE 139,353,000 379,760,000
</TABLE>
During the year ended August 31, 2000, 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 $ 895,000 $ 775,000 $ 1,670,000
GENESIS 681,000 965,000 1,646,000
GUARDIAN 5,141,000 3,978,000 9,119,000
MANHATTAN 199,000 600,000 799,000
MILLENNIUM 58,000 80,000 138,000
PARTNERS 3,901,000 3,199,000 7,100,000
SOCIALLY RESPONSIVE 261,000 111,000 372,000
</TABLE>
NOTE D -- LINE OF CREDIT:
At August 31, 2000, Genesis, Manhattan, and Millennium were three of the
holders of a single committed, unsecured $100,000,000 line of credit with State
Street, to be used only for temporary or emergency purposes. Interest is charged
on borrowings under this agreement at the overnight Federal Funds Rate plus
0.75% per annum. A facility fee of 0.09% (0.07% prior to October 1, 1999) per
annum of the available line of credit is charged, of which Genesis, Manhattan,
and Millennium each has agreed to pay its pro rata share, based on the ratio of
its individual net assets to the net assets of all the participants at the time
the fee is due and payable. The fee is paid quarterly in arrears. No
compensating balance is required. Other investment companies managed by
Management also participate in this line of credit on the same terms. Because
several investment companies participate, there is no assurance that an
individual Portfolio will have access to the entire $100,000,000 at any
particular time. Genesis, Manhattan, and Millennium had no loans outstanding
pursuant to this line of credit at August 31, 2000. During the year ended
August 31, 2000, Genesis, Manhattan, and Millennium did not utilize this line of
credit.
C-37
<PAGE>
NOTE E -- INVESTMENTS IN NON-CONTROLLED AFFILIATES*:
<TABLE>
<CAPTION>
FOCUS
BALANCE OF GROSS GROSS BALANCE OF
SHARES HELD PURCHASES SALES SHARES HELD VALUE
AUGUST 31, AND AND AUGUST 31, AUGUST 31,
NAME OF ISSUER: 1999 ADDITIONS REDUCTIONS 2000 2000
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Furniture Brands International 1,800,000 1,700,000 0 3,500,000 $56,437,000
Nationwide Financial Services 568,700 1,235,400 59,100 1,745,000 69,582,000
Photronics, Inc.** 1,302,500 0 1,137,500 165,000 4,837,000
</TABLE>
<TABLE>
<CAPTION>
GENESIS
BALANCE OF GROSS GROSS BALANCE OF
SHARES HELD PURCHASES SALES SHARES HELD VALUE
AUGUST 31, AND AND AUGUST 31, AUGUST 31,
NAME OF ISSUER: 1999 ADDITIONS REDUCTIONS 2000 2000
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AAR Corp. 1,771,350 85,900 430,200 1,427,050 $16,054,000
Alliant Techsystems 663,200 6,000 136,400 532,800 41,059,000
Aviall Inc.** 1,219,500 0 465,400 754,100 4,525,000
Davox Corp.** 1,075,600 386,300 654,000 807,900 10,200,000
DONCASTERS PLC ADR** 478,300 0 478,300 0 0
Fair, Isaac & Co. 343,500 500,200 4,200 839,500 38,565,000
Highland Bancorp 331,400 0 0 331,400 8,368,000
Mentor Corp. 885,300 310,800 5,000 1,191,100 25,236,000
META Group 0 632,000 7,000 625,000 9,062,000
Primex Technologies 800,400 7,000 78,100 729,300 17,685,000
SOS Staffing Services 814,400 0 25,000 789,400 2,171,000
Scottish Annuity & Life Holdings 857,900 33,600 0 891,500 8,135,000
Wallace Computer Services 1,247,400 892,100 4,200 2,135,300 24,823,000
</TABLE>
*AFFILIATED ISSUERS, AS DEFINED IN THE 1940 ACT, INCLUDE ISSUERS IN WHICH THE
PORTFOLIO HELD 5% OR MORE OF THE OUTSTANDING VOTING SECURITIES.
**AT AUGUST 31, 2000, THE ISSUERS OF THESE SECURITIES WERE NO LONGER AFFILIATED
WITH THE PORTFOLIO.
C-38
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
--------------------------------------------------------------------------------
Focus Portfolio
<TABLE>
<CAPTION>
Year Ended August 31,
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
--------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(1) .50% .51% .51% .53% .54%
--------------------------------------------------------
Net Expenses .50% .51% .51% .53% .54%
--------------------------------------------------------
Net Investment Income .32% .37% .59% .54% 1.04%
--------------------------------------------------------
Portfolio Turnover Rate 55% 57% 64% 63% 39%
--------------------------------------------------------
Net Assets, End of Year (in millions) $2,370.3 $1,546.4 $1,317.5 $1,573.4 $1,122.4
--------------------------------------------------------
</TABLE>
1) The Portfolio is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset arrangements.
C-39
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
--------------------------------------------------------------------------------
Genesis Portfolio
<TABLE>
<CAPTION>
Year Ended August 31,
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
--------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(1) .76% .75% .72% .77% .85%
--------------------------------------------------------
Net Expenses .75% .75% .72%(2) .77%(2) .85%(2)
--------------------------------------------------------
Net Investment Income .43% 1.02% 1.13% .32% .27%
--------------------------------------------------------
Portfolio Turnover Rate 38% 33% 18% 18% 21%
--------------------------------------------------------
Net Assets, End of Year (in millions) $1,851.1 $1,751.1 $1,812.4 $1,083.7 $259.9
--------------------------------------------------------
</TABLE>
1) The Portfolio is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset arrangements.
2) Had the investment manager not waived a portion of the management fee, the
annualized ratios of net expenses to average daily net assets would have
been:
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
1998 1997 1996
<S> <C> <C> <C>
---------------------------------------------------------------------
Net Expenses .74% .87% .95%
</TABLE>
C-40
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
--------------------------------------------------------------------------------
Guardian Portfolio
<TABLE>
<CAPTION>
Year Ended August 31,
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
--------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(1) .47% .46% .46% .46% .46%
--------------------------------------------------------
Net Expenses .47% .46% .46% .46% .46%
--------------------------------------------------------
Net Investment Income 1.01% 1.06% .92% .89% 1.72%
--------------------------------------------------------
Portfolio Turnover Rate 83% 73% 60% 50% 37%
--------------------------------------------------------
Net Assets, End of Year (in millions) $3,839.9 $4,723.7 $5,787.8 $8,758.2 $6,232.5
--------------------------------------------------------
</TABLE>
1) The Portfolio is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset arrangements.
C-41
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
--------------------------------------------------------------------------------
Manhattan Portfolio
<TABLE>
<CAPTION>
Year Ended August 31,
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(1) .55% .58% .57% .59% .58%
------------------------------------------------
Net Expenses .55% .58% .57% .59% .58%
------------------------------------------------
Net Investment Income (Loss) (.14%) (.08%) (.05%) .20% .13%
------------------------------------------------
Portfolio Turnover Rate 105% 115% 90% 89% 53%
------------------------------------------------
Net Assets, End of Year (in millions) $1,321.8 $612.9 $523.4 $621.7 $567.4
------------------------------------------------
</TABLE>
1) The Portfolio is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset arrangements.
C-42
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
--------------------------------------------------------------------------------
Millennium Portfolio
<TABLE>
<CAPTION>
Period from
Year Ended October 20, 1998 (1)
August 31, to August 31,
2000 1999
<S> <C> <C>
----------------------------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(2) .93% 1.20%(3)
----------------------------------
Net Expenses .92% 1.19%(3)
----------------------------------
Net Investment Loss (.48%) (.67%)(3)
----------------------------------
Portfolio Turnover Rate 176% 208%
----------------------------------
Net Assets, End of Year (in millions) $335.6 $68.2
----------------------------------
</TABLE>
1) The date investment operations commenced.
2) The Portfolio is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset arrangements.
3) Annualized.
C-43
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
--------------------------------------------------------------------------------
Partners Portfolio
<TABLE>
<CAPTION>
Year Ended August 31,
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
--------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(1) .48% .47% .47% .48% .51%
--------------------------------------------------------
Net Expenses .48% .47% .47% .48% .51%
--------------------------------------------------------
Net Investment Income .96% 1.29% 1.11% 1.05% 1.26%
--------------------------------------------------------
Portfolio Turnover Rate 95% 132% 109% 77% 96%
--------------------------------------------------------
Net Assets, End of Year (in millions) $2,874.1 $3,768.7 $3,581.3 $3,575.6 $1,999.6
--------------------------------------------------------
</TABLE>
1) The Portfolio is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset arrangements.
C-44
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
--------------------------------------------------------------------------------
Socially Responsive Portfolio
<TABLE>
<CAPTION>
Year Ended August 31,
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
----------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(1) .64% .59% .60% .63% .65%
----------------------------------------------
Net Expenses .64% .59% .60% .63% .65%
----------------------------------------------
Net Investment Income .48% .63% .92% 1.08% 1.02%
----------------------------------------------
Portfolio Turnover Rate 76% 53% 47% 51% 53%
----------------------------------------------
Net Assets, End of Year (in millions) $136.9 $397.1 $282.9 $256.3 $158.5
----------------------------------------------
</TABLE>
1) The Portfolio is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset arrangements.
C-45
<PAGE>
(This page has been left blank intentionally.)
C-46
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of Equity Managers Trust and
Owners of Beneficial Interest of
Neuberger Berman Manhattan Portfolio,
Neuberger Berman Millennium Portfolio, and
Neuberger Berman Socially Responsive Portfolio
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Neuberger Berman Manhattan
Portfolio, Neuberger Berman Millennium Portfolio, and Neuberger Berman Socially
Responsive Portfolio (collectively, the "Portfolios") at August 31, 2000, the
results of each of their operations, the changes in each of their net assets and
the financial highlights for each of the periods indicated therein, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Portfolios'
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with auditing standards generally accepted in the
United States of America which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at August 31, 2000 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
October 9, 2000
C-47
<PAGE>
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS
To the Board of Trustees
Equity Managers Trust and
Owners of Beneficial Interest of
Neuberger Berman Focus Portfolio
Neuberger Berman Genesis Portfolio
Neuberger Berman Guardian Portfolio and
Neuberger Berman Partners Portfolio
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of the Neuberger Berman Focus Portfolio,
Neuberger Berman Genesis Portfolio, Neuberger Berman Guardian Portfolio, and
Neuberger Berman Partners Portfolio, four of the series constituting Equity
Managers Trust (the "Trust"), as of August 31, 2000, and the related statements
of operations for the year then ended, the statements of changes in net assets
for each of the two years in the period then ended, and the financial highlights
for each of the five years in the period then ended. These financial statements
and financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of August 31, 2000, by correspondence with
the custodian and brokers or other appropriate auditing procedures where replies
from brokers were not received. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the above mentioned series of Equity Managers Trust at August 31, 2000, the
results of their operations for the year then ended, the changes in their net
assets for each of the two years in the period then ended, and their financial
highlights for each of the five years in the period then ended, in conformity
with accounting principles generally accepted in the United States.
Boston, Massachusetts /s/ ERNST & YOUNG LLP
October 2, 2000
C-48
<PAGE>
OTHER INFORMATION
DIRECTORY
INVESTMENT MANAGER, ADMINISTRATOR
AND DISTRIBUTOR
Neuberger Berman Management Inc.
605 Third Avenue 2nd Floor
New York, NY 10158-0180
800.877.9700 or 212.476.8800
Institutional Services 800.366.6264
SUB-ADVISER
Neuberger Berman, LLC
605 Third Avenue
New York, NY 10158-3698
CUSTODIAN AND SHAREHOLDER
SERVICING AGENT
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
ADDRESS CORRESPONDENCE TO:
Neuberger Berman Funds
Institutional Services
605 Third Avenue 2nd Floor
New York, NY 10158-0180
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, NW
2nd Floor
Washington, DC 20036-1800
INDEPENDENT ACCOUNTANTS/AUDITORS
PricewaterhouseCoopers LLP
160 Federal Street
Boston, MA 02110
Ernst & Young LLP
200 Clarendon Street
Boston, MA 02116
OFFICERS AND TRUSTEES
Peter E. Sundman
CHAIRMAN OF THE BOARD AND TRUSTEE
Michael M. Kassen
PRESIDENT AND TRUSTEE
Faith Colish
TRUSTEE
Howard A. Mileaf
TRUSTEE
Edward I. O'Brien
TRUSTEE
John P. Rosenthal
TRUSTEE
Cornelius T. Ryan
TRUSTEE
Gustave H. Shubert
TRUSTEE
Daniel J. Sullivan
VICE PRESIDENT
Richard Russell
TREASURER
Claudia A. Brandon
SECRETARY
Barbara DiGiorgio
ASSISTANT TREASURER
Celeste Wischerth
ASSISTANT TREASURER
Stacy Cooper-Shugrue
ASSISTANT SECRETARY
-C- 2000 Neuberger Berman Management Inc.
D-1
<PAGE>
Statistics and projections in this report are
derived from sources deemed to be reliable
but cannot be regarded as a representation of
future results of the Funds. This report is
prepared for the general information of
shareholders and is not an offer of shares of
the Funds. Shares are sold only through the
currently effective prospectus, which must
precede or accompany this report.
NEUBERGER BERMAN
NEUBERGER BERMAN MANAGEMENT INC.
605 Third Avenue 2nd Floor
New York, NY 10158-0180
SHAREHOLDER SERVICES
800.877.9700
INSTITUTIONAL SERVICES
800.366.6264
www.nbfunds.com
[GRAPHIC] A0087 10/00
Kirkpatrick & Lockhart
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036
October 27, 2000
VIA EDGAR
---------
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: NEUBERGER BERMAN EQUITY ASSETS:
Neuberger Berman Focus Assets
Neuberger Berman Genesis Assets
Neuberger Berman Guardian Assets
Neuberger Berman Manhattan Assets
Neuberger Berman Millennium Assets
Neuberger Berman Partners Assets
Neuberger Berman Socially Responsive Assets
1933 Act File No. 33-82568
1940 ACT FILE NO. 811-8106
--------------------------
Dear Sir or Madam:
Transmitted herewith for filing is the Annual Report to Shareholders of
the above-referenced series of Neuberger Berman Equity Assets for the period
ended August 31, 2000. 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 at (202) 778-9223.
Sincerely,
/s/ Fatima Sulaiman
-------------------
Fatima Sulaiman
Enclosures
